Opinions

In re Pahl, Case No. 09-30495-rld7 (May 14, 2013)

Professional compensation, 11 USC §330(a)(1), reconsideration, FRCP 59 and 60(b)

Debtor objected to his accountant’s fee application; the court held an evidentiary hearing and concluded the fees were both necessary and reasonable. The debtor moved for reconsideration 25 days after the order awarding compensation was entered. The court denied the motion: it was untimely under FRCP 59 and did not suggest mistake, inadvertence, surprise or excusable neglect warranting relief under FRCP 60(b).

In re Grogan, Case No. 11-65409-fra11 (April 26, 2013)

11 USC §§1111(b), 1129(a)(11), 1129(b)(1), 1129(b)(2)(A)(I), 1129(b)(2)(A)(iii); adequate protection; balloon payment; cash collateral; fair and equitable; feasibility; indubitable equivalent; interest; present value

The court sustained a secured creditor’s objection to confirmation of a chapter 11 plan, finding it was neither fair and equitable nor feasible. The Plan proposed using half a million dollars in cash collateral to pay junior claims, and paying the secured creditor over a 25-year period.

In re Whitescorn, Case No. 13-60159-fra13 (March 14, 2013)

Motion to extend automatic stay, 11 USC §362(c)(3)

The 2009 chapter 13 case of debtor and his then-wife was dismissed in September 2012 on the Trustee’s unopposed motion. Debtor filed this case in January 2013. Under §362(c)(3), the automatic stay terminates on the 30th day following a new filing of a debtor whose previous case was dismissed within a year, unless extended after notice and a hearing within that period. Here the debtor filed his motion to extend the stay on the 29th day before the 30-day period expired, but a hearing on the motion was not held within the 30-day period. Therefore the court lacked discretion to extend the stay, which had already been automatically terminated.

In re Kline, Case No. 12-65099-fra11 (February 14, 2013)

Sale of business, interrelated agreements, cross-default provisions, severability of individual agreements, assumption of unexpired lease

Debtors defaulted on a note for the remainder of the purchase price under an Asset Sale Agreement (ASA). The seller had retained property in Eugene and Springfield on which the business operates and leased it back to debtors, the leases executed at the same time as the ASA. The leases contained cross-default provisions referring to the note and the ASA. The debtors moved to assume only the Eugene lease. The court held the lease agreements were severable from the note and ASA despite the cross-default provisions, and allowed the debtors to assume the lease without curing the default on the note by paying the balance due.

In re Culpepper, Case No. 09-38599-rld7 (February 11, 2013)

Attorney fees, contempt, discharge injunction, §§330 and 524

In an opinion entered November 5, 2012, the court determined that Wells Fargo was in contempt for violating the discharge injunction of §524. In this Memorandum Opinion the court awarded attorney fees and costs to the debtor based on detailed findings on appropriateness of billing rates, reasonableness of itemized services (including issues of duplicative services, vagueness of time entries, time spent on expert witness), and reasonableness of costs. The court reduced the fees from a requested $55,113 to $37,011, and costs from $5,404 to $1,359.50.

In re Salyers, Case #13-60140-tmr7 (January 31, 2013)

11 USC §§521(e)(2)(A) and 521(e)(2)(B), FRBP 1008 and 4002(b)(3)

Five weeks before the scheduled §341(a) meeting, chapter 7 debtor moved for an order waiving the requirement to provide the trustee with his most recent federal tax return. The court denied the motion as premature and as more in the nature of an anticipatory affirmative defense to the trustee’s as yet unfiled motion to dismiss. The court directed the debtor to provide the trustee with a verified statement, at least 7 days before the §341(a) meeting date, that the return did not exist or was unavailable.

Rios v. Hiday, Adv. No. 11-6247-fra, Case No. 11-63883-fra12 (December 19, 2012)

Land sale contract, mutual rescission

The court denied defendants' motion for summary judgment seeking a ruling that as a matter of law the elements of mutual rescission of a land sale contract existed. It held that the documents defendants relied on were not unambiguous, and also questioned the voluntariness of plaintiffs’ relinquishment of possession of the land.

In re Maritime Services Corp., Case No. 12-34978-rld11 (December 17, 2012)

Attorney’s fees and costs, limited percentage reduction, §330(a)

The bankruptcy court reduced by 5% the fees requested by lawyers for chapter 11 debtors, noting “procedural and substantive errors” that, while they did not affect the overall disposition of the case, did add to administrative costs.

In re Nork, Case No. 12-63141-fra7 (December 4, 2012)

Homestead exemption, ground lease for cell phone tower

Citing the Oregon Supreme Court's directive to construe the homestead exemption liberally, the court held that the exemption applies to proceeds of rental of land for a cell phone tower.

Monk v. LSI Title, Adv. No. 10-6067-fra, Case No. 04-60712-fra13 (December 3, 2012)

Summary judgment, novation, due process, res judicata

In the debtors' chapter 13 case, the trustee objected to creditor’s claim with claimed trust deed security interest. The creditor never responded and the order denying the claim became final. After the debtors received their discharge and their case was closed, creditor’s successor in interest sought to collect the debt and began foreclosure proceedings. Debtors reopened their case and filed this adversary proceeding seeking an injunction of the foreclosure action, sanctions for violating the discharge injunction, stripping of defendant's lien and quiet title. Both parties moved for summary judgment; both motions were denied. The court rejected defendant’s arguments that a post-bankruptcy loan modification constituted a novation, that the plan should have provided that defendant retained its lien, and that the action voiding the lien should have been made via adversary proceeding rather than contested matter. The court denied plaintiff's summary judgment because there was a question of fact as to whether notice of the contested matter violated defendant’s due process rights.

In re Culpepper, Case No. 09-38599-rld7 (November 5, 2012)

§521, §524(a)(2), contempt, discharge injunction

Following a chapter 7 discharge the mortgage creditor made over 100 telephone calls to debtors, purportedly to advise debtors of foreclosure options. These calls took place after debtors had been locked out of their home. Four calls were transcribed. Debtors moved to reopen the case and hold creditor in contempt. The court held that the calls constituted efforts to collect on the debt, and awarded debtors $1,000 for emotional distress for each of the four transcribed calls. The court also awarded attorney fees and costs to debtors, because it took filing the contempt motion to make the calls stop. The court declined to award punitive damages because debtors had applied for loan modifications three times after discharge, contrary to representations in the §521 statement of intent.

In re Lane, Case No. 12-36873-elp7 (October 25, 2012)

Next friend, FRBP 1004.1

In response to a motion to appoint an individual as “next friend” for debtors, the court issued a Memorandum Opinion setting forth the legal standard for next-friend appointments and a procedure for use in future motions. The legal standard under FRBP 1004.1 is that the debtor be financially incapable (drawn from Oregon’s conservatorship statute, ORS 125.440), that the movant know about the debtor’s financial situation, and that the movant be dedicated to the debtor’s best interests.

In re Tucker, Case No. 10-67281-fra11 (October 11, 2012)

Absolute priority rule, individual chapter 11 debtors, fair and equitable standard, good faith, In re Friedman, 11 USC §1129(b)

Absolute priority rule, individual chapter 11 debtors, fair and equitable standard, good faith, In re Friedman, 11 USC §1129(b)

Chapter 11 debtors’ original plan did not satisfy the absolute priority rule and the court denied confirmation. Debtors filed an amended plan that did satisfy the rule but before an order confirming it could be entered, the 9th Circuit BAP held in In re Friedman, 466 BR 471, that the absolute priority rule does not apply to individual chapter 11 debtors. An unsecured creditor objected to debtors’ second amended plan (which was similar to their original plan) and argued that the BAP opinion was not binding. The bankruptcy court ruled to the contrary, and further found that the new plan satisfied the “fair and equitable” requirement. It rejected the creditor’s objection that the plan was not proposed in good faith, and confirmed the plan.

Legacy Financial Services, Inc., v. Lynch, Adv. No. 11-6224-fra, Case No. 11-62730-fra (August 31, 2012)

Nondischargeability, 22 USC sec 523(a)(6), defamation

Plaintiff filed a complaint to except from discharge a claim for defamation and also to liquidate the claim. The court dismissed the complaint. Plaintiff claimed that defendant had defamed it by sending a letter that accused plaintiff of knowingly employing an ex-felon who improperly borrowed funds from clients. The claim of employing an ex-felon who improperly borrowed client funds turned out to be true, although the plaintiff had not employed the ex-felon knowingly. The court denied plaintiff's claims for general and special damages -- for injury to plaintiff's reputation in the industry -- because it determined that audits following on defendant's letter had not shown the hiring was knowing; thus plaintiff's reputation had not been damaged.

Campbell v. SOU, Adv. No. 11-6051-fra, Case No. 08-65172-fra7, Appellate No. OR-11-1342 (August 15, 2012)

Qualified education expense, §523(a)(8), award of attorney fees

The BAP affirmed the bankruptcy court’s holding that a debt to SOU (Southern Oregon University) for room and board and miscellaneous fees came within the scope of the “qualified education loan” exception to discharge under §523(a)(8). The BAP reversed the bankruptcy court’s ruling that SOU was entitled to attorney fees for defending against debtor’s adversary proceeding for declaratory judgment.

In re Williams, Case No. 11-61683-fra7, Appellate No. 6:12-cv-67HO (August 9, 2012)

Means test of §707(b)(2), Constitutionality, bad faith, dismissal under §707(b)

The district court affirmed the bankruptcy court’s dismissal of a chapter 7 case based on an unrebutted presumption of abuse under §707(b)(2), and on totality-of-the-circumstances and bad-faith grounds under §707(b)(3).

Sequoia Partners, LLC, v. Rogue River Mortgage, LLC, Adv. No. 10-06270-fra, Case No. 10-67547-fra11 (July 31, 2012)

Summary judgment, fraudulent transfers, §§544(b) and 548(a), ORS 95.230 and 95.240, judicial estoppel

Plaintiff real estate developer moved for summary judgment on a claim alleging that trust deeds in favor of defendant should be avoided as fraudulent transfers. The court denied the motion, finding material unresolved facts on the issues of reasonably equivalent value and solvency. It granted defendant’s cross-motion on three counts of the claim, finding that defendant’s retention of a security interest was not a "parting with property or an interest in property" so as to constitute a "transfer" under Oregon or federal bankruptcy law.

Grogan v. Harvest Co., Adv. No. 11-6276-tmr (July 26, 2012)

Collateral description; constructive severance; crops; doctrine of last antecedent; judicial lien; levy; personal property; reasonable identification; ORS 18.345, 18.878, 72.1070, 79.0108, 79.0203, 79.0334(9), 79.0502; 11 USC §§ 101(36), 544(a)(I)

In this dispute over rights in Christmas trees on a Christmas tree farm, the court held that the debtors' lien rights in the trees as personal property had priority over the creditor-defendant’s asserted real estate interest in the trees. Nevertheless, the court ruled in defendant's favor on cross-motions for summary judgment. The trees were sufficiently identified in the documents for the defendant’s security interest to be properly perfected and thus not avoidable.

Shamrock Bldg. Materials, Inc. v. Dawson, Adv. No. 12-3042, Case No. 11-39917-rld13 (June 22, 2012)

Amended complaint, embezzlement, express trust, failure to state a claim, fiduciary capacity, 11 USC §523(a)(4), BR 7015 & 7016

The court dismissed plaintiff’s first and second claims for failure to state a claim for relief under §523(a)(4) but allowed plaintiff an opportunity to submit legal authority to support its claim that plaintiff’s credit agreement created an express trust. Plaintiff’s memorandum failed to provide such authority, so the court dismissed claims based on defalcation of fiduciary duty. In its memorandum plaintiff asserted a new theory - embezzlement. The court construed the memorandum as a motion to amend. It concluded, however, that plaintiff could not state a claim for embezzlement, so it denied the motion to amend the complaint.

In re Iaquinta, Case No. 10-63501-fra13 (June 13, 2012)

Fee applications

The court ruled on trustee's objection to debtors' attorney’s application for post-confirmation fees. It disallowed portions of the fee that did not directly benefit the estate or creditors, and reduced the remaining fee by 15% not because the fee was unreasonable, but because "the total fees charged should not be borne entirely by the creditors."

Sugar v. Eimstad, Case No. 11-63635-fra7, Adv No. 11-6231-fra (May 24, 2012)

Dischargeability, preclusive effect of state court judgment

The court granted plaintiff’s motion for summary judgment on her claim that a debt owed by the debtor pursuant to a general judgment of the Lane county Circuit Court is nondischargeable under 11 USC §523(a)(6). (The debtor did not file a response to the motion but sent a letter to the court, in which he objected to the claim, after the response deadline had passed.) The court held that the state court’s judgment explicitly finding the debtor’s actions both intentional and intended to harm satisfied the requirements for nondischargeability under §523(a)(6).

In re Hickey, Adv. No. 11-06204-fra, Case No. 11-62694-fra7
In re Scudder, Adv. No. 11-06206-fra, Case No. 11-63252-fra7 (May 10, 2012)

ORS 11.620, 11 USC §§523(a)(2) and 523(a)(5), §101(14A), exception from discharge, domestic support obligation, default

In both cases the State of Oregon sought to except from discharge obligations resulting from overpayment of food stamp or public assistance benefits. The overpayments resulted from debtors’ failure to report income to the State. The court first concluded that the overpayment obligations did not fit within the definition of domestic support obligation; it then noted that the debtors had an affirmative duty to report income. Debtors did not appear in response to the State’s motions to dismiss. The court held the State had alleged a prima facie case in both bankruptcies and was entitled to a default judgment excepting the overpayment obligations from discharge.

In re Torrez, Case No. 10-64385, Appellate No. 6:12-cv-251-HO (May 7, 2012)

ORS 18.345(n)

Chapter 7 trustee objected to debtor’s claim of an exemption for her “making work pay” tax credit as an earned income tax credit under ORS 18.345(n). The bankruptcy court overruled the objection and the district court affirmed, noting that ORS 18.345(n) uses the indefinite article an and so does not restrict the exemption to the earned income tax credit in 26 USC §32.

In re Eugene Pipe, LLC, Case No. 11-60920-fra11 (May 7, 2012)

11 USC §§1129 and 1125, best interests of creditors, disclosure, good faith

The court confirmed a chapter 11 liquidation plan over the objection of a creditor that had submitted a competing plan. It concluded that the debtor’s plan satisfied the best interests of creditors test of §1129(a)(7); further, the debtor’s Disclosure Statement provided adequate information to meet the requirements of §1125 and the plan was otherwise proposed in good faith.

In re Lynch, Adv. No. 11-6224-fra, Case No. 11-62730-fra7 (April 30, 2012)

11 USC §523(a)(6), discharge, default

The plaintiff obtained an order of default against debtor in state court and sought exception from discharge for that debt in bankruptcy court. The court denied plaintiff’s motion for summary judgment, holding that it had not met its burden of establishing there was no issue of material fact. The order of default in state court did not have the same binding effect on the bankruptcy court that a judgment of default would have.

Paulson v. Arbaugh, Adv. No. 11-3309-rld, Case No. 09-32439-rld7 (April 11, 2012)

Judicial immunity, settlement, summary judgment

After the bankruptcy court approved a settlement, proposed by the trustee, of state court litigation that was property of the estate, the debtor sued the trustee in state court. That case was removed to bankruptcy court, where the trustee moved for summary judgment and debtor failed to respond. The court granted summary judgment based not on the debtor’s default but because on the undisputed facts the trustee was entitled to derived judicial immunity for her acts in settling the state court litigation.

In re Kiraz, Case No. 11-35743-tmb7, Adv. No. 11-03294-tmb (April 3, 2012)

Automatic stay, ministerial acts

Plaintiffs sued defendant in state court on a disagreement over a lease; the court ruled in plaintiffs favor and the judge stated he was prepared to sign the appropriate judgment. The defendant filed a chapter 7 petition before such a judgment was signed and docketed. In bankruptcy court, plaintiffs argued the entry of the judgment was a “ministerial act” and thus not subject to the automatic stay. The court disagreed and ruled that because the judgment was not signed until after the bankruptcy filing, it was not excepted from the stay and was void.

In re Nguyen, Case No. 11-35979-rld13 (April 2, 2012)

§1325(a)(5)(B)(iii)(I), cramdown, nonresidential real property

Bankruptcy court denied confirmation of cramdown plan with respect to nonresidential real property, applying In re Bollinger, 2011 WL 3882275 (Bankr D Or).

In re Williams, Case No. 11-61683-fra7 (March 19, 2012)

11 USC §707(b), dismissal, means test

The court granted the US Trustee’s motion to dismiss the case based both on bad faith filing and on the totality of the circumstances. Debtor had purchased the apartment he was living in, the sale closed the day he filed for bankruptcy, and this transaction effectively moved $800 of debtor’s income out of reach of his creditors. Further, the UST presented credible evidence that the debtor had enough disposable income to sustain a chapter 13 plan.

Penn. Higher Educ. Assist. Agency v. Hedlund, D. Or. Civ. #11-6281-AA (March 5, 2012)

11 USC §523(a)(8), undue hardship, student loan

In a case involving student loan debt with a complicated procedural history, the District Court reversed a bankruptcy court’s finding that the debtor was entitled to discharge of all but $32,080 of his $85,000 student loan debt. Although the debtor had satisfied the first two prongs of the three-pronged Brunner test for discharge based on undue hardship, the court found he had not satisfied the third prong, which required him to make a good faith effort to repay the loan. First, he did not use his best efforts to maximize his income. Further, the court was troubled by the debtor’s failure to make voluntary payments and to cooperate in negotiations with the lender to change payment terms. The court reinstated the full debt as excepted from discharge.

In re Sequoia Village, LLC, Adv. No. 11-06220-fra, Case No. 11-64880-fra11 (February 14, 2012)

Removal, remand, withdrawal of reference

Several months before debtor’s bankruptcy petition, South Valley Bank & Trust sued debtor and other defendants in state court for breach of a promissory note, foreclosure of a deed of trust and breach of guarantees. Debtor removed the case to bankruptcy court, then moved for withdrawal of the reference. Plaintiff objected to withdrawal of the reference and moved for remand to state court. The bankruptcy court denied the motion for remand and forwarded the motion to withdraw the reference to US District Court with a recommendation that reference be withdrawn. The court cited several reasons for its ruling, but judicial economy appeared paramount: a case was already pending in District Court involving common parties and transactions.

Williams, Love, O’Leary & Powers, LLC v. Brann, Adv. No. 11-3279, Case No. 11-37021-elp11 (February 7, 2012)

Attorney’s lien, ORS 87.445 and 9.310, quantum meruit, Minn. Stat. 481.13, judicial estoppel

Debtor law firm hired Brann, a lawyer, to provide services on cases in which debtor represented the client. Brann claimed an attorney’s lien when she was not paid in full. The court held there was no attorney’s lien because there was no agreement, express or implied, between Brann and the client. The court also rejected quantum meruit as a basis for an attorney’s lien because there was a contract between Brann and debtor law firm, and further held that judicial estoppel did not apply.

In re Taggart, Case No. 09-39216-rld7 (January 31, 2012)

Motion to Reconsider, FRBP 8002(b) and 9023, FRCP 59

Before filing his petition, debtor was sued in state court by an LLC in which he had owned a 25% member interest (before transferring that interest to an LLC he formed and then transferring his interest in that LLC to his attorney). The suit against debtor also named the LLC he had formed and his attorney. The state court action (stayed during the debtor’s bankruptcy) was revived after he received his discharge, and judgment entered against him. He sought relief for violation of the discharge injunction; the bankruptcy court denied his motion for contempt and subsequent motion for reconsideration.

In re Wedblad, Case No. 10-65055-fra7 (January 26, 2012)

Abuse; Administrative Procedures Act; BAPCPA; delegation; IRS Local Standards; IRS National Standards; legislative rules, means test; presumption; standing; statutory construction; Art. 1 §1 US Const.; 5 USC §§ 553 and 702; 11 USC §707(b)(2)(A)(ii)(I); 26

The US Trustee moved to dismiss the debtors’ chapter 7 case for abuse under §707(b). Debtors conceded they had not rebutted the presumption of abuse of §707(b)(2) but challenged the validity of the IRS National and Local Standard expenses used in the means test to determine whether the presumption arose. The court rejected all of debtors’ arguments (see list of issues above), granted the US Trustee’s motion and gave debtors 14 days to move to convert, absent which motion the case would be dismissed.

In re Reddco Development Co., LLC, Case No. 10-64783-fra11 (December 15, 2011)

Post-confirmation injunction, Rohnert Park Auto Parts

The bankruptcy court, relying on In re Rohnert Park Auto Parts, Inc., 113 BR 610 (9th Cir BAP 1990), denied confirmation to a Plan of Reorganization that enjoined creditors from attempting to collect claims against the debtor’s principal and guarantor, or against his property. Rohnert Park held that a post-confirmation injunction protecting a nondebtor third party violates 11 USC §524.

In re Benafel, Case No. 10-61542-fra13, Appellate No. OR-11-1005 (December 9, 2011)

Anti-modification – 11 USC §1322(b)(2), date for determination of principal residence

The BAP reversed the bankruptcy court’s ruling about the applicable date for determining whether a property is the debtor’s principal residence. The bankruptcy court had ruled the date is the date the loan secured by the residence was incurred. Under this ruling, the plan violated §1322(b)(2), which does not allow a loan secured only by a debtor’s principal residence to be modified in chapter 13. The BAP held that the petition date is the applicable date, and remanded for determination of whether the property in question was the debtor’s principal residence on the petition date.

In re Taggart, Case No. 09-39216-rld7 (December 9, 2011)

Motion for contempt, violation of discharge injunction, 11 USC §524(a)(2)

Before his bankruptcy the debtor owned a 25% interest in SPBC. He transferred this interest to BT, an LLC he formed, then transferred his interest in BT to his lawyer. SPBC sued the debtor, his attorney and BT in state court, with claims including breach of contract and breach of fiduciary duty. The debtor answered and asserted a counterclaim for attorney fees. Before trial, the debtor filed a chapter 7 petition and the action was stayed. The debtor scheduled his state court counterclaim, the trustee filed a no-asset report, and the debtor received a discharge.

In the revived state court action, the court found in favor of SPBC, dismissed debtor’s counterclaim and entered judgment against the debtor. The debtor appealed, and also filed a motion in bankruptcy court against SPBC members and their lawyer for alleged violation of the discharge injunction. The court denied the motion, applying both the “clearly erroneous” standard and the “de novo” standard to the state court ruling.

In re Tucker, Case No. 10-67281-fra11 (November 28, 2011)

Absolute priority rule, new value exception, individual chapter 11, 11 USC §1129(b)(2)(B)

The court ruled that the Absolute Priority Rule applies to individual chapter 11 debtors; the New Value Exception is also applicable. Based on these conclusions, the court denied confirmation of a plan rejected by unsecured creditors. The plan provided that unsecured creditors would receive about 16% of their claims over five years, and that the debtors would retain their interest in all assets and would pay creditors from future income and cash flow. The court ruled that an unsecured promise of payments from anticipated future salary does not constitute new value as defined by the Supreme Court in Northwest Bank Worthington v. Albers, 485 US 197, 204 (1988).

Eiler v. Nolan, Adv. No. 11-3220-tmb (November 23, 2011)

Cashier’s check, conduit, delivery, judgment on the pleadings, property of the estate, remitter, transferee, FRBP 7012(b) and 12(c), ORS 73.0104(5) and 73.0203, 11 USC §§541(a), 549(a) and 550(a)

The trustee brought an adversary proceeding to avoid under §549 a $42,000 payment in the form of a cashier’s check, which the debtor mailed before filing for chapter 7 but which was received and deposited post-petition. The court granted trustee’s motion for judgment on the pleadings. The court rejected the debtor’s argument that he had no legal or equitable interest in the check when he filed his petition, as well as the argument that the transfer was prepetition.

In re Krouse Ranch, Inc., Case No. 09-65465-fra7 In re Krouse, Case No. 09-65459-fra7 (November 21, 2011)

Compromise of claims

Both cases began in chapter 12, were converted to chapter 11 – where joint administration was ordered – and thereafter converted to chapter 7. The only asset of Krouse Ranch, Inc. (KRI), was real property and some tenant rights; the only substantial asset of Krouse was a 74% ownership interest in KRI. The chapter 7 trustees proposed to settle unresolved claims and related litigation through a transfer of Krouse’s controlling interest to two creditors, in return for which one of the creditors would contribute cash to the Krouse estate and the KRI estate. The court approved the settlement as maximizing the value of assets for the benefit of creditors while avoiding the capital gains tax that would result from outright sale of the real property.

Carter v. Department of Education, Adv. No. 10-3136, Case No. 10-30555, BAP No. OR-11-1191-ClPaJu (November 8, 2011)

11 USC §523(a)(8)

Debtor sought a determination that his student loan debt was dischargeable. The bankruptcy court found the debt nondischargeable under the Brunner test. On appeal the debtor argued the court had applied the test incorrectly. The BAP disagreed and affirmed.

In re Pruitt, Case No. 09-65328-fra7 (November 1, 2011)

Compromise, front pay, settlement, wrongful discharge, FRBP 9019, ORE 408, ORS 659A.203 and 659A.885

The court approved a settlement of the debtor’s wrongful termination claims against the State of Oregon, based largely on expert testimony and the factors in In re A & C Properties, 784 F2d 1377, 1381 (9th Cir 1986).

Waller v. Heckman, Adv. No. 11-3161-elp, Case No. 11-30902-elp7 (October 28, 2011)

11 USC §523(a)(6), nondischargeability

Plaintiff sought to except from discharge a judgment debt arising from damage to plaintiff’s rental property while debtor and his family lived there. Based on the evidence and relevant legal authority, the court concluded that some but not all of the debt was excepted from discharge under §523(a)(6).

McKittrick v. Gavilon LLC, Adv. No. 11-3038, Case No. 09-30508-elp7 (October 28, 2011)

Forward contract, 11 USC §§546(e) and 101(25)(A), maturity date

The court addressed the question of what is meant by "maturity date" in the definition of forward contracts in §101(25)(A), and concluded that where contracts provide that title and risk of loss pass to the buyer upon delivery, the delivery date is the "maturity date." Thus the contracts at issue in this case were forward contracts, payments under which are protected from preference actions by §546(e).

Thorud v. Thorud, Adv. No. 10-6107-elp (October 26, 2011)

Domestic support obligation, support, 11 USC §§101(14A), 507(a)(1)(A), 523(a)(5)

Debtor's ex-wife sued under §523(a)(5) to determine dischargeability of a stipulated judgment obtained in a divorce proceeding. The issue was whether the judgment was a domestic support obligation under §101(14A). The court concluded it was more in the nature of a property division than support, based on provisions of the judgment and underlying documents. This conclusion also resolved the identical issue in the main case about whether the claim was entitled to priority under §507(a)(1)(A).

UST v. Knowling, Adv. No. 10-03298-rld, Case No. 09-40551-rld7 (October 20, 2011)

§727(a)(3), financial condition, inadequate records, justification

The court denied debtor's discharge, based on his unjustified failure to prepare and maintain adequate financial records from which his prepetition financial condition could be determined. His business generated millions of dollars of gross income and the debtor took annual compensation of hundreds of thousands of dollars, but he failed to file tax returns accounting for his income or that of the business.

In re Glanville, Case No. 11-21815-tmb7, In re Waits, Case No. 11-32616-tmb7 (October 12, 2011)

ORS 18.345(1)(n), earned income credit, exemption, tracing

These two cases involved debtors who had received federal tax refunds with earned income credit (EIC) and non-EIC components, deposited EIC funds in bank accounts, then claimed exemptions in the EIC funds on deposit under ORS 18.345(1)(n). The trustees in both cases objected, arguing the court should use a pro rata approach to tracing funds on deposit. The court ruled in debtors' favor, adopting the "recipient-directed" approach to tracing when funds have been commingled. The law should allow debtors a practical means of protecting their exempt interests, and exemption statutes should be liberally construed.

In re Bollinger, Case No. 10-62344-fra13 (September 2, 2011)

11 USC §1325(a)(5)(B)(iii)(I), FRBP 9023, balloon payments, equal monthly payments, statutory construction

Upon secured creditor’s Motion to Amend or Alter Order Confirming Debtor’s Chapter 13 Plan of Reorganization, the court held that a balloon payment in the plan violated §1325(a)(5)(B)(iii)(I). Thus the order confirming the plan was erroneous; the court vacated the order and gave debtor 30 days to file a further amended plan.

In re Cooper, Case No. 10-66447-fra12 (September 2, 2011)

11 USC §§101(18)(A), 101(21), 102(1), 109(f), 506(a), 1225(a)(5)(B); chapter 12; eligibility; family farmer; farming operation; gross income; valuation

After creditors objected to confirmation of a chapter 12 plan on valuation grounds, the court sua sponte raised debtors’ eligibility. It held that because one of debtors’ three businesses was not a "farming operation," the debtors failed the gross income test for chapter 12. The court also addressed valuation of a parcel of real property containing a vineyard, but did not fix a value for the parcel because debtors in any event were ineligible. The court gave debtors 14 days to convert to another chapter; if they failed to do so, the case would be dismissed.

Wilkes v. Cancelosi, Adv. No. 10-3099-rld, Case No. 10-30182-rld7 (August 26, 2011)

Motion to amend or alter judgment, motion to extend time to appeal, motion for stay of proceedings to enforce judgment, motion for stay of proceedings pending appeal without bond, FRCP 59 and 62, FRBP 9023, 8002 and 7062

Following entry of a judgment against debtor in an exception from discharge proceeding, the debtor filed omnibus post-judgment motions (1) to alter or amend the judgment or for new trial, (2) to extend time to file notice of appeal, (3) to stay proceedings pending disposition of motion, and (4) to stay proceedings pending appeal without bond. The court denied motions (1) and (4) and determined no order was necessary on motion (2). It determined the debtor need not put up security or bond as requested in motion (3). It terminated the stay on collection of the judgment that had been established by order entered July 28, 2011.

In re Reed, Case No. 10-38478-elp13 (August 16, 2011)

Amended Opinion August 9, 2011 (amending opinion issued 7/8/11)

§§1325(b)(1), (2), (4); projected disposable income, burden of proof, applicable commitment period
As in its original opinion, the court confirmed, over the trustee’s objections, the plan of chapter 13 debtors with above-median income but no projected disposable income. The court addressed how to project disposable income after the Supreme Court’s decision in Hamilton v. Lanning, 130 S.Ct 2464 (2010), adjusted the debtors’ projected disposable income accordingly, and concluded it was still a negative number. The court also concluded that the applicable-commitment- period portion of In re Kagenveama, 541 F3d 868 (9th Cir 2008), had not been overruled by the Supreme Court’s decisions in Lanning and Ransom v. FIA Card Services, NA, 131 S.Ct. 716 (2011).

In re Warkentin, Case No. 10-35332-rod11 (August 16, 2011)

Objection to claim, 11 USC §§502(b) and 1111(b)(2), FRBP 3014

The bank held a promissory note for an amount far in excess of the real property securing it; it filed a proof of claim claiming a secured claim in the amount as of the petition date, and filed an election to have its claim treated as fully secured under §1111(b)(2). The court allowed the bank’s claim as fully secured as part of confirmation of the debtor’s chapter 11 plan. The bank later amended its claim to include postpetition attorney fees and costs; the debtor objected. The court overruled the debtor’s objection, relying on In re SNTL Corp., 571 F3d 829 (9th Cir 2009), and 11 USC §§502(b) and 1111(b)(2).

In re Jones, Case No. 10-65478-fra12 (August 2, 2011)

11 USC §§101(18)(A), 101(21), 102(1), 109(f), 1112(f), 1208; FRBP 1017(f)(1) and 9014(a); chapter 12; due process; eligibility; family farmer; farming operation; preclusion; waiver

The court addressed whether debtor, who boarded and trained horses, was engaged in a “farming operation” and thus eligible for chapter 12. Debtor had originally filed chapter 11; the case converted to chapter 12 on her motion and thereafter creditors objected to eligibility. The court concluded based on a totality of the circumstances test that the business was not a farm because it was service oriented; however, the debtor deserved the opportunity to reorganize under chapter 11. The court therefore set aside the conversion order.

In re Shuhmann, Civ. No. 11-6050-AA, aff’g 2010 WL 5125321 (July 27, 2011)

Homestead exemption; prepaid rent; ORS 18.395(1), 18.402, 90.220, 90.300(7), 90.414(2)

The District Court affirmed Judge Radcliffe’s ruling at 2010 WL 5125321 that money debtors “prepaid” to their landlord as rent under a month-to-month tenancy was not exempt under ORS 18.395(1), Oregon’s homestead exemption. The court rejected the argument that by accepting the prepayment, the landlord had converted the tenancy to a lease.

Rinaldi v. Aguirre, Adv. No. 11-6050-fra, Case No. 11-60599-fra7 (July 14, 2011)

Nondischargeability – fraud, 11 USC §523(a)(2)(A), collateral estoppel, state-court default judgment

A default judgment for $350,000 was entered against debtor in state court after he failed to file a responsive pleading to a complaint alleging fraud and breach of contract. Debtor then filed a chapter 7 case and plaintiffs sued to except the judgment from discharge. The court granted summary judgment to plaintiffs, holding that the default judgment preclusively established the elements of §523(a)(2)(A).

In re Reed, Case No. 10-38478-elp13 (July 8, 2011)

§1325 (b)(1), (2), (4); projected disposable income; burden of proof, applicable commitment period

The court confirmed, over the trustee’s objections, the plan of chapter 13 debtors with above-median income but no projected disposable income. The court addressed how to project disposable income after the Supreme Court’s decision in Hamilton v. Lanning, 130 S.Ct 2464 (2010), adjusted the debtors’ projected disposable income accordingly, and concluded it was still a negative number. The court also concluded that the applicable-commitment- period portion of In re Kagenveama, 541 F3d 868 (9th Cir 2008), had not been overruled by the Supreme Court’s decisions in Lanning and Ransom v. FIA Card Services, NA, 131 S.Ct. 716 (2011).

McKittrick v. Brown, Adv. No. 10-03148-rld, Case No. 09-40551-rld7 (July 5, 2011)

New value, preferential transfer, substitute collateral, 11 USC §547(b), (c)

In a preference action by the chapter 7 trustee, the creditor argued as a defense that the transfer was a contemporaneous exchange for new value. The court rejected the defense, ruling that none of the following constituted new value: “release” of an unperfected security interest; an alleged extension of time in which to repay the underlying loan, where the duration of the extension was not specified in the security agreement; and any alleged release of a fraud claim against the debtor.

In re Synergy Joint Venture, LLC, Case No. 10-62766-fra11 (June 29, 2011)

Administrative claim, unpaid rent, 11 USC §365(d)(5)

The court allowed an administrative priority claim to a landlord for rent accrued postpetition and pre-rejection of a nonresidential lease, holding that under the current language of §365(d)(5) administrative priority status is granted such claims without regard to whether the lease benefits the estate.

Fountain Village Development v. Weiner Investment Co., Adv. No. 10-03018-rld, Case No. 09-39718-rld11 (June 28, 2011)

Party wall, prescriptive easement, trespass

The east wall of debtor’s four-story building straddled the lot line; thus the wall was a party wall and debtor was entitled only to a right of support. The owner of the adjacent lot had the right to use the face of the wall for advertising. The debtor was, however, entitled to damages for trespass as its right of support had been implicated by improper mounting of the advertising sign on the wall.

In re McGinnis, Case No. 11-60010 (June 9, 2011)

Chapter 13 confirmation, controlled substance, good faith, medical marijuana, ORS 475.304(7) and 475.316, 11 USC §1325.

The court ruled that it could not under §1325 confirm a plan that depended on medical marijuana for its income stream; although cultivation and sale of marijuana as envisioned by debtor’s plan complied with state law, it was illegal under federal law. The court also examined the good faith requirement for plan confirmation.

LT Builders Group, LLC v. Blue Sky AvGroup, LLC, Case No. 09-38458-rld11, Adv. No. 10-3246-rld (June 8, 2011)

Motions to Strike

In conjunction with the motion discussed above, plaintiff filed motions to strike declarations submitted by defendants. Based on its review of the declarations, motions and supporting memoranda, and applicable legal authority, the court granted the motion only with respect to specified paragraphs of some of the declarations.

LT Builders Group, LLC v. Blue Sky AvGroup, LLC, Case No. 09-38458-rld11, Adv. No. 10-3246-rld (June 8, 2011)

Motion for partial summary judgment, FRCP 52(a), FRBP 7052

The court granted summary judgment to plaintiff on one claim and partial summary judgment on another, in a dispute arising out of a sale of debtor’s assets to plaintiff (as assignee of another entity) under §363(f). The dispute involved competing claims to certain items of inventory. The inventory had been conducted by plaintiff and the chapter 11 trustee and approved by the court under a Stipulated Inventory Order.

In re Pruitt, Case No. 09-65328-fra7 (June 8, 2011)

Community assets – Louisiana law, contract interpretation – Florida law, separate assets – Oregon law, settlement, substantive consolidation, FRBP 9028, FRCP 63, 11 USC §302(b)

The court denied a motion to substantively consolidate separate estates of married chapter 7 debtors who had filed a joint petition. It found that less than 10% of the debt in the case was joint, and that disentangling their financial affairs would not threaten recovery to creditors.

The court also denied the trustee’s motion to approve settlement of a wrongful termination claim of the husband. The trustee had failed to present sufficient evidence relating to probability of success of the litigation, its complexity, and the expense, inconvenience and delay attending it.

Smith-Canfield v. Spencer, Adv. No. 09-6327-fra (May 17, 2011)

Breach of fiduciary duty, core, informed consent, malpractice, 28 USC §157(b), ORS 696.810, 11 USC §329, ORPC 1.7 and 1.8

In this amended opinion (opinion originally filed March 2, 2011), the court ruled in debtor’s favor against her former counsel, who had advised her to purchase a house as part of pre-bankruptcy planning and then acted as her real estate broker in the purchase. The claims were for malpractice, breach of fiduciary duty and disgorgement of attorney fees. The former lawyer had failed to disclose a conflict of interest and adverse pecuniary interest; further, the house purchased had an undisclosed defect. The court held the matter was a core matter.

Freeman v. Names, Adv. No. 10-6244, Case No. 10-65697 (appears on list of opinions as Names v. Freeman) (May 13, 2011)

ORS 86.737, 86.745, 86.770; nonjudicial foreclosure; trust deed; notice of trustee’s sale

Debtor defaulted on a trust deed and her residence was sold to plaintiffs at a trustee’s sale. Debtor then complained she had not received the notice required by ORS 86.745(9). Plaintiffs sued to quiet title and debtor counterclaimed to quiet title in herself. The court ruled that debtor had suffered no infringement of her rights under Oregon’s nonjudicial foreclosure statute.

U.S. Trustee v. Howell, Adv. No. 10-3040-rld, Case No. 09-36520-rld7 (April 26, 2011)

§727(a)(4)(A); denial of discharge; false statement, oath or account

The US Trustee brought an adversary proceeding to deny debtor’s discharge. Following trial, the court issued a lengthy memorandum opinion analyzing the evidence and finding the debtor had knowingly and intentionally made false material oaths with respect to his assets and his business with the intent to deceive; the court denied discharge under §727(a)(4)(A).

In re Morgan, Case No. 10-67114 (April 26, 2011)

§§507(a), 1322(a)(2), and 101(14A); domestic support obligation (DSO)

Ex-husband objected to confirmation of debtor’s chapter 13 plan because it did not give priority status to an obligation to make monthly payments to him, and debtor objected to ex-husband’s priority claim. The issue was whether the obligation was a domestic support obligation entitled to priority. The court overruled ex-husband’s objection: the dissolution judgment did not refer to spousal support and labeled the obligation an equalizing judgment; thus it was not a DSO and was not a priority claim.

In re Nelson, Case No. 10-40718 (April 22, 2011)

Domestic support obligation (DSO); 11 USC §§101(14A), 507(a)(1)(A), 1322(a)(2); stipulated dissolution judgment; hold-harmless

Creditor (debtor’s ex-wife) objected to confirmation of chapter 13 plan because it did not provide for payment of an obligation arising from a marital dissolution judgment as a priority claim. The issue was whether the obligation was a DSO entitled to priority. The court concluded, after lengthy analysis of the law and the language of the parties’ settlement agreement, that the obligation was not in the nature of support. Thus the claim was not entitled to priority and the plan could be confirmed.

Lenz v. Auto Acceptance, Adv. No. 10-3294-rld, Case No. 09-30778-rld7 (April 7, 2011)

11 USC §§107(c) and 105(a), FRBP 9037, Gramm-Leach-Bliley Act, Invasion of Privacy, Intentional/Negligent Infliction of Emotional Distress

Auto Acceptance filed a proof of claim that included the social security number of one of the debtors. The debtors sued and sought damages for invasion of privacy and infliction of emotional distress, and under the Gramm-Leach-Bliley Act. The court denied the motion by Auto Acceptance to dismiss for lack of subject-matter jurisdiction, but granted its motion to dismiss for failure to state a claim.

Palen v. Olsen, Case No. 10-60190-fra7, Adv. No. 10-6111-fra (March 23, 2011)

28 USC §1920, FRBP 7054(b) and 9016, FRCP 45(b)(1), costs, witness fees

Plaintiff sued to deny debtor’s discharge, and after extensive discovery debtor withdrew her answer and waived discharge. Plaintiff then sought costs, to which debtor objected. The court allowed costs for filing fees, a transcript of the §341 meeting, and service fees for document subpoenas. It disallowed witness fees paid in conjunction with 29 subpoenas duces tecum as those sought only production of records, not appearances at deposition, hearing or trial.

In re South Star Oil Co., Case No. 08-61072-fra7 (March 21, 2011)

Value of partner’s interest, proof of claim

Debtor is a general partnership with four partners, all members of the same family. Following conversion of debtor’s chapter 11 case to chapter 7, involuntary petitions were filed against the general partners. The trustee of one general partner filed a proof of claim in the partnership case based on the theory that certain property belonged to the partner’s estate rather than the partnership’s. The court denied the claim, giving two reasons why the claim had no value.

In re Warren, Case No. 07-60674-fra7, App. No. OR-10-1110-MkHJu (March 15, 2011)

Motion to Settle and Compromise, California law: bad faith, failure to settle, A & C Properties

In a case involving a serious automobile accident, the subsequent bankruptcy of the driver at fault, and a claim for bad-faith failure to settle against debtor’s insurer, the bankruptcy court approved a settlement with the insurer. It applied guidelines set by A & C Properties, 784 F3d 1377, and found the settlement fair and equitable to all creditors. The BAP vacated the order approving settlement on several grounds, including that the settlement violated the pro rata distribution scheme of §726, and that the bankruptcy court had not weighed the relative value to the estate of a competing bid.

Willms v. Sanderson, Adv. No. 10-3071-rld, Case No. 09-38818-rld7 (March 8, 2011)

Motion to reconsider, motion to amend or alter judgment, FRCP 59(e), FRBP 9023, FRCP 60(b), FRBP 9024, FRCP 52(b), FRBP 7052, 11 USC 523(a)(2)(A)

Following a trial to except a claim from discharge, court ruled for plaintiffs and held the debtor had acted with fraudulent intent. Before judgment was entered, the debtor moved to reconsider or alter or amend the judgment based on newly discovered evidence that plaintiffs had received payment. The court allowed the motion, considered the new evidence and reversed its previous finding of fraudulent intent. The debtor was accordingly entitled to dismissal of the adversary proceeding.

Smith-Canfield v. Spencer, Adv. No. 09-6327-fra (March 2, 2011)

Breach of fiduciary duty, core, informed consent, malpractice, 28 USC §157(b), ORS 696.810, 11 USC §329, Oregon RPC 1.7 and 1.8

Defendant had advised debtor pre-bankruptcy to purchase a house, then acted as her broker in the purchase. The house proved to have undisclosed defects. Debtor brought an adversary proceeding for malpractice, breach of fiduciary duty and disgorgement of attorney fees. The court held this was a core matter and ruled in favor of debtor.

McCoy v. BNC Mortgage, Adv. No. 10-6224-fra, Case No. 10-63814-fra13 (February 7, 2011)

Nonjudicial foreclosure, MERS, unrecorded transfers

The court denied a motion to dismiss a wrongful foreclosure claim. Under Oregon law, nonjudicial foreclosure is available only when the beneficiary’s interest is clearly documented in the public record. Here the complaint alleged a number of unrecorded assignments of the beneficial interest in the trust deed.

O'Hagan v. von Borstel, Adv. No. 03-3523, Case No. 01-42235-elp7 (February 3, 2011)

FRBP 9024; FRCP 60(b)(2), 60(b)(3), 60(b)(6), 60(c)(1), 50(d)(3)

The court denied plaintiff’s motion to set aside a judgment entered three years earlier on grounds of alleged fraud. The lengthy opinion addresses the issue of timeliness of the motion, and also legal standards for setting aside a judgment for fraud by a third party or for fraud on the court. It concludes that evidence did not establish either.

In re Boyce, Case No. 08-64228, Appellate No. 10-6286-HO (January 28, 2011)

11 USC §707(b), dismissal for abuse

The bankruptcy court granted US Trustee’s motion to dismiss a chapter 7 case for bad faith and abuse based on the debtor’s failure to disclose the portion of his income that came from a profit-sharing arrangement, his understatement of his income even if profit sharing was not taken into account, and his purchase of consumer goods he did not need and could not afford both before and after filing. The district court affirmed.

Vineyard v. Vineyard, Adv. No. 10-6168-fra, Case No. 10-63518-fra13 (January 27, 2011)

Property of the estate, preclusive effect of settlement, life insurance / dissolution agreement

Plaintiff’s dissolution agreement required her husband to continue a life insurance policy naming her as beneficiary. Husband remarried and changed the beneficiary to his current wife. Husband died, new wife collected policy proceeds and spent them. Plaintiff sued in state court and defendant settled twice but breached the settlement agreement each time, then filed bankruptcy. The bankruptcy court held that the property purchased with life insurance proceeds was property of the bankruptcy estate over which it had jurisdiction, that plaintiff had an equitable interest in the policy and its proceeds superior to that of defendant, and that the release of claims in one of the settlement agreements did not prevent the court from determining the nature of the property and plaintiff’s interest in it. The court denied defendant’s motion for summary judgment.

Monk v. LSI Title Co. of Oregon, Adv. No. 10-6067-fra, Case No. 04-60712-fra13 (January 21, 2011)

Effect of disallowance of secured claim, dismissal - FRCP 12(b)(6), subject matter jurisdiction

The Chapter 13 Trustee had filed an objection to a claim purportedly secured by debtors’ residence; the creditor did not respond to the objection; an order disallowing the claim in full became effective. Debtors continued to make mortgage payments until their plan was completed, their discharge entered and the case closed. The successor to the original creditor began collection efforts following post-bankruptcy default by the debtors and debtors reopened their bankruptcy case and brought an adversary proceeding. Defendant moved to dismiss. The court dismissed two of debtors’ six claims but denied the motion to dismiss the others, ruling that the effect of disallowance of the secured claim was that the creditor no longer had a valid claim and its lien was void.

Schoor v. Cal-Western Reconveyance, Adv. No. 10-6029-fra, Case No. 09-64432-fra7 (January 19, 2011)

Bona fide purchaser, pre-existing leasehold

The court ruled that the defendant lender’s security interest in real property was subject to a leasehold interest retained by the plaintiff seller. The lender had failed in its duty to make reasonable inquiry about the status of the person in possession of the property at the time of the loan, and thus could not claim BFP status. The court granted plaintiff’s motion for summary judgment.

In re Benafel, Case No. 10-61542-fra13 (December 22, 2010)

11 USC §1322(b)(2), claim secured by principal residence

The court held that, although debtor did not currently live in the real property securing creditor’s claim, the property had been her principal residence at the time she obtained the loan. Therefore under §1322(b)(2) the loan could not be modified. The court denied confirmation of a plan that proposed to modify the loan. Debtor has appealed denial of confirmation to the BAP.

In re Collins, Case No. 10-32098-tmb12 (December 15, 2010)

11 USC §1325(a)(5)

The court denied confirmation of a plan that proposed to cram down a claim secured by real property to the value of the property. The court agreed with the objections of trustee and the affected creditor, who argued that because the debtor was ineligible for discharge, he could not retain the property without creditor consent unless his plan provided for full payment of the underlying claim.

In re Vincent, Case No. 10-61848-fra13 (December 13, 2010)

Late-filed claim by secured creditor; FRBP 3002(c)

A creditor did not file its secured claim until after the bar date had passed and the chapter 13 plan had been confirmed. The court denied the creditor’s motion to allow its claim to be treated as timely filed, but noted that based on the equities in this particular case, it would limit the effect of the claim’s treatment in the plan and give parties in interest 28 days to object to the creditor’s claim. The court cautioned that parties should not rely in future on the court’s exercise of equity when a claim in a chapter 13 case is filed late.

In re Schuhmann, Case No. 10-63024-aer7 (December 9, 2010)

Homestead exemption; prepaid rent; ORS 18.395(1), 18.618(1)(a)(E), and 90.300(16)(a)

Debtors claimed "prepaid rent" as exempt under Oregon's homestead exemption. The court sustained the trustee's objection, noting that the prepaid rent was not required under the month-to-month tenancy agreement and thus was severable from the tenancy.

In re Grignon/Hendrix, Case No. 10-34196-tmb13 (December 7, 2010)

11 USC §1328(f)

The court held that nothing in the Code prohibits a debtor who is ineligible for discharge from filing a chapter 13 case and enjoying the rights and privileges of a chapter 13 debtor, including the right to strip off a wholly unsecured lien, provided the case was filed in good faith and not solely for the purpose of stripping the lien.

Pioneer Village Investments, LLC, Case No. 10-62852-fra11 (December 3, 2010)

11 USC §363(f)(5), sale free and clear of liens, Clear Channel v. Knupfer

The court denied chapter 11 debtor’s motion to sell a portion of its real property free and clear of liens; the debtor could not point to anything in Oregon law that would compel the secured creditor to accept a portion of its debt for sale of a portion of its collateral. Further, sale of a portion of the property would violate local zoning ordinances.

Steinhauser v. Promociones Tropical, Inc., Adv. No. 09-3284-rld, Case No. 09-35218-rld13 (November 29, 2010)

Validity of lien, quiet title

The bankruptcy court ruled in favor of plaintiff-debtor in an adversary proceeding to quiet title. Title was brought into question by a previous transaction involving a “loan” to plaintiff (the proceeds of which plaintiff did not receive) and a purported transfer of title to real property. The court rejected defendants’ equitable affirmative defenses but did award an equitable lien against the real property in the amount of property taxes paid pursuant to the “loan” transaction.

Kerivan v. Frohnmayer, Deatherage, Adv. No. 10-6115-fra; In re Krouse Ranch, Inc., Case No. 09-65465-fra11 (October 22, 2010)

Fraudulent transfer, standing, summary judgment

Plaintiffs sued debtor’s former attorneys seeking to avoid under §548 a prepetition trust deed securing current and future attorney fees. Defendant moved for summary judgment. The court denied the motion – defendant had not presented sufficient evidence to overcome badges of fraud. The court also noted, however, that only the trustee has authority to bring an avoidance action under §548; it instructed plaintiffs to seek court authority to act for the estate in this case.

Blocker v. Nomura Home Equity Loan, Inc., Adv. No. 09-03361-rld, Case No. 09-31131-rld7 (September 27, 2010)

Standing, summary judgment, violation of automatic stay, wrongful foreclosure

Debtor filed an adversary proceeding for violation of the automatic stay and wrongful foreclosure on real property he had transferred immediately before filing, but in which he also claimed an ownership interest and exemption. The lender had obtained an order granting relief from stay before foreclosing. The court granted summary judgment against debtor on all his claims. It discussed standing but concluded a genuine issue of material fact existed on that issue.

Remington Ranch, LLC v. Hooker Creek Companies, LLC, Adv. No. 10-3093, Case No. 10-30406-elp11 (September 24, 2010)

Motion for summary judgment, construction lien, ORS 701.131

Debtor sought declaratory judgment that defendant’s construction lien was invalid on both a contract theory (that defendant was not the contracting party) and defendant’s failure to obtain a licence from the CCB. The court found insufficient evidence to rule on contract issues on summary judgment, but ruled the construction lien invalid because the defendant did not hold a CCB license at the time it perfected the lien.

In re Odlin, Case No. 07-62298 (September 22, 2010)

Post-confirmation modified plan; §1329, surrender of motor vehicle

More than two years into her plan, debtor sought to modify the plan to surrender her motor vehicle. The plan had provided for retention of the vehicle and payment in full of the debt securing it. Unfortunately the debtor’s insurance had lapsed and the vehicle had been damaged to the extent that its value was only $500. In these circumstances, the court denied confirmation of the modified plan.

Knappenberger v. Knight, Adv. No. 10-3092-rld; Case No. 10-30580-rld7 (September 17, 2010)

Motion to Amend or Alter Judgment, FRCP 59(e), FRBP 9023, 11 USC §523(a)(6)

The plaintiff filed a complaint to except a debt from discharge under 11 USC §523(a)(6). After trial, the bankruptcy court found that the plaintiff had not met his burden of proof and entered a judgment dismissing his complaint. The plaintiff moved to alter or amend the judgment on the ground that the court’s legal conclusions were incorrect. The motion was denied.

Smith v. FMCC, Adv. No. 10-6091, Case No. 09-64658 (September 13, 2010)

Motion to dismiss, bankruptcy court jurisdiction, assumption of lease

After filing their chapter 7 petition, debtors continued to make payments on a leased vehicle in their possession. No reaffirmation agreement was filed with the court and the Trustee did not assume the lease. The vehicle was repossessed after discharge and closure of the case. The debtors reopened the case and sought damages for violation of the discharge injunction and for breach of the lease agreement. The court dismissed the bankruptcy claim for failure to comply with Code notice provisions and the breach of lease claim for lack of jurisdiction.

Miranda v. Tucci, Adv. No. 09-6031, Case No. 08-63589 (September 10, 2010)

Denial of discharge - §727(a); dischargeability - §§523(a)(2) and (6); trade secrets

Debtor’s bankruptcy followed entry of a state court judgment against him in settlement of an account claim; claims against him based on contract, conversion and violation of Oregon’s Trade Secrets Act were dismissed without prejudice. In the bankruptcy case, the plaintiff in the state court case sued for denial of discharge and nondischargeability on fraud and trade secrets theories. Finding insufficient evidence to support either claim, the court granted judgment to the debtor.

In re McMillin, Case No. 10-61929-aer7 (September 3, 2010)

automobile, vehicle, ORS 18.345(1)(d)

The debtors claimed an assemblage of parts sufficient to assemble a 1926 Ford Model A automobile as exempt under ORS 18.345(1)(d). The trustee objected and the court denied the claim of exemption.

First American Title v. CIT Group, Adv. No. 08-3245; In re Allman, Case No. 08-31282-elp7 (August 24, 2010)

Priority of trust deed, ORS 93.640(1), ORS 86.715, release of trust deed, ORS 87.920, ORS 86.720, MERS, ORS 93.740, attorney fees

Deeds of trust were recorded against two parcels of real property; judgments and lis pendens were also recorded. The debtors refinanced the real property and paid off the underlying debt and the deeds of trust were released. CIT, holder of the deeds of trust, argued the release was invalid. The court rejected CIT’s arguments and held the release was valid.

OCCU v. Angulo, Adv. No. 10-6061, Case No. 09-67031 (August 11, 2010)

Dismissal of affirmative defenses, unclean hands defense, judgment on the pleadings, dischargeability: 11 USC §523(a)(2)(A)

Plaintiff’s action for nondischargeability elicited affirmative defenses relating to unclean hands, based on alleged failure to comply with various reporting requirements. The court granted plaintiff’s motion to dismiss the affirmative defenses.

In re McDonald, Case No. 09-65482 (August 11, 2010)

Computation of arrearage

The court sustained a secured creditor’s objection to the chapter 13 plan based on computation of the arrearage. The court held that, pursuant to the promissory note and deed of trust, the arrearage computation should include out of pocket amounts advanced by the creditor to protect his lien rights.

In re Pfannenstiel, Case No. 09-31350-rld7, Adv. No. 09-3280-rld (July 23, 2010)

Reschedule trial, adequate cause Pro se debtor who sought to discharge his student loan debt did not appear for his trial and did not notify the court in advance he would not be able to appear. The day after the trial the debtor filed a letter seeking a new trial date but offering no explanation for his failure to appear. The court treated the letter as a motion and denied it for lack of adequate cause.

Ford-Torres v. O’Shea, Adv. No. 07-6084-fra, Case No. 07-60265-fra7 (July 21, 2010)

Dischargeability under §523(a)(6)

The court determined that certain claims in a case pending against debtor in federal district court were dischargeable and others were nondischargeable under §523(a)(6). The pending case alleges wrongful discharge, intentional infliction of emotional distress, intentional injury of an employee and battery.

In re Kindell, Case No. 10-63489-fra7 (June 30, 2010)

Motion to expedite meeting of creditors

The debtors asked trustee to reschedule the meeting of creditors to an earlier date, the trustee refused, and the debtors moved to expedite the meeting. The court held the trustee’s refusal to reschedule was an abuse of discretion, as neither the trustee nor creditors would be prejudiced by moving the meeting to another date.

In re Stubblefield, Case No. 09-38572-rld7 (June 21, 2010)

11 USC §707(b)(3)(B), abuse of chapter 7, totality of circumstances

The court held the debtor's case was an abuse of chapter 7. The debtor was a financially sophisticated woman whose income, while it had declined since 2007, was still substantial at the time of her bankruptcy filing and would allow her to propose a chapter 13 plan that would result in significant payment to creditors. The court considered the factors set forth in In re Price, 353 F3d 1135 (9th Cir 2004), in reaching this conclusion. The debtor’s ability to pay a substantial portion of her unsecured debt was of primary importance.

Simons and Gales v. Kolwitz, Case No. 07-62870-fra7, Adv. No. 08-6067-fra (May 27, 2010)

11 USC §523(a)(2)

After the debtor, Kolwitz, fell behind on a construction project for Simons and Gales, Simons and Gales terminated the project and denied debtor’s request for additional funds to continue the project. They sought to have their claim for damages related to the project excepted from discharge under §523(a)(2). The court held for debtor, because Simons and Gales had not presented evidence that any misrepresentation was material, intentional or made in writing.

In re Schulke, Case No. 09-65100 (May 4, 2010)

Motion to use tax refund, modified plan, chapter 13

The court denied the debtor's motion to use her tax refund of $4,000 for personal expenses rather than tender it to the trustee as required by her confirmed chapter 13 plan. In order to use the tax refund other than as provided in the plan, the debtor must file a modified plan.

Commercial and Residential Maintenance, Inc. v. Abblit, Case No. 09-61935-fra7, Adv. No. 09-6094-fra (December 21, 2009)

ORICO claim, subject matter jurisdiction, 11 USC §523(a)(4)

Debtor was convicted of stealing from his employer and required to pay restitution of $23,714. Employer sued debtor in state court and obtained a default judgment under ORICO for three times actual damages. Employer brought an adversary proceeding in bankruptcy court seeking a declaration that this debt was not dischargeable. The court granted summary judgment to employer.

In re Applebaum & Finley, Case No. 08-63391-fra7, Appellate No. OR-09-1134-MkHPa (December 18, 2009)

California bankruptcy-only exemptions

Debtors lived in California before moving to Oregon and filing for bankruptcy. They claimed exemptions under California’s exemption statute, applicable only to debtors in bankruptcy. The trustee objected to the exemptions and argued that the California statute was unconstitutional. The bankruptcy court ruled the statute constitutional and the BAP affirmed, with one judge dissenting.

United Services Associated v.Lupo, Adv. No. 08-6196-fra, Case no. 08-63556-fra13 (June 30, 2009)

Nondischargeability, §523(a)(4) - larceny, intentional interference with economic relations, punitive damages

Debtor’s former employer accused him of using his position in the company to steal customers and diverting payments from customers to himself. The court awarded $109,156 in damages based on lost profits and diversion of funds, and held the debt was nondischargeable as larceny or embezzlement. The court declined to award punitive damages

In re Schenk, Case No. 05-47887-elp13 (January 27, 2009)

Trustee and debtor had different understandings of how a plan provision worked for MBNA and other unsecured creditors. The court interpreted the ambiguous provision against debtor, who drafted the plan.

Bergemann v. Brion & Higgins, Case Nos. 10-37631-tmb7 and 10-37632-rld7; Adv. Nos. 10-3281-tmb (lead case) and 10-3282-tmb ()

Arbitration, categorical harm, collateral estoppel, damages, issue preclusion, malice, punitive damages, res judicata, summary judgment, unclean hands, willful injury, FRCP 56(a), 11 USC §101(12) and §523(a)(6)

The court granted summary judgment for plaintiff, ruling that arbitration awards against the two debtors had preclusive effect under federal law and were excepted from discharge under §523(a)(6). The debtors had been employees of plaintiff and, it was contended in the arbitration, had formed and operated a company to compete with plaintiff, while still employed by plaintiff.

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