An employer’s office manager, who had responsibility for filing returns and causing the employer to pay the Georgia unemployment tax was liable to the Department of Labor for the amount of that tax pursuant to O.C.G.A. 34-8-1167(e). But that debt is not a debt for a “tax required to be collected or withheld and for which the
debtor is liable in whatever capacity” within the meaning of 11 U.S.C. § 507(a)(8)(C) and is therefore dischargeable. The Georgia unemployment tax is a direct tax on the employer and the Employment Security Act does not require its collection and forbids charging employees for that tax. Nor was the debt rendered nondischargeable under 11 U.S.C. § 507(a)(8)(D) because that section applies only to employers, and the Debtor was not the employer.
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Opinions
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Judge James E. Massey (Retired)
Plaintiff sued for a determination that a debt owed by the Debtor and embodied in a state court judgment arose from fraud and was not dischargeable under section 523(a)(6). The issue on Plaintiff’s motion for summary judgment was whether the state court judgment collaterally estopped the Debtor from contesting the fraud claim. The state court judgment was “against Defendants as to all claims asserted by Plaintiff,” which included a fraud count, and awarded damages for breach of contract and punitive damages but no damages for fraud. Held: Collateral estoppel did not apply because the failure to award damages for fraud made it impossible to determine the basis for the punitive damage award. More importantly, a determination of damages is a necessary element to prove fraud in Georgia.
The Debtor’s former spouse and a guardian ad litem for their child sought determinations of the dischargeability of debts under §§ 523(a)(5), (a)(15), and (a)(6), stemming from Debtor’s frivolous custody battle in state court. Debts owed for attorneys fees in the litigation were not in the nature of support and thus not excepted by 523(a)(5), but were nonetheless nondischargeable under 523(a)(15). The Court held that a guardian ad litem appointed in child custody case was a “legal guardian” under 101(14A), rendering fees awarded by the state court to the guardian ad litem nondischargeable under 523(a)(5).
The Debtor in this Chapter 7 case sought to hold the Defendant in civil contempt for alleged violations of the discharge injunction under section 524. The Debtor repeatedly told the Defendant she wanted to continue to make payments and remain in her home. Defendant’s actions in calling the Debtor to remind her missed payments, sending letters to the Debtor reminding her of missed payments, and inspecting the property for occupancy when the payments were in arrears of 31 days or more were not attempts to collect debt from the Debtor as her personal liability. The lender’s intent was to encourage the Debtor to catch up the missed payments and thereby avoid foreclosure, which was consistent with the Debtor’s goal to keep her home. The Court held there is no private right of action under section 524(a)(2).
The Court granted the Chapter 11 Trustee’s motion to hold the Debtor’s chairman in civil contempt for deliberately violating the Barton Doctrine. The Respondent had initiated meritless lawsuits in Ohio against the Chapter 11 Trustee, his counsel, and their respective spouses. The Court ordered the Respondent to dismiss that lawsuit with prejudice.
The Court granted the Chapter 7 Trustee’s motion for summary judgment, avoiding preferential transfers made by the Debtor within 90 days of filing his petition and unauthorized postpetition transfers. Defendant could not show that there was a history of late payment from Debtor and therefore could show that the payments were made in the ordinary course of business between the parties under 11 U.S.C. § 547(c)(2)(A).
The Court denied a motion to dismiss the chapter 7 Trustee’s complaint seeking to recover property under 11 U.S.C. § 550(a) after avoiding a transfer under §548. The Trustee was not required to plead the absence of an affirmative defense under §550(b) to successfully state a claim for recovery under §550(a).
Plaintiffs held a state court judgment against the Debtor, initiated a garnishment proceeding, and the garnishee had paid funds into the state court, all prior the petition date. Plaintiffs never requested the state court to distribute the funds to them. Debtor filed bankruptcy and Plaintiffs sought a declaratory judgment that the funds in the hands of the state court clerk belonged to them Held: the garnishment proceeds, became property of the estate when the Debtor filed his bankruptcy petition, subject to Plaintiff’s lien. But Debtor’s motion to avoid that lien was unopposed, leaving Plaintiffs without a remedy.
The Court denied a motion seeking recusal of the judge. Movant’s allegations were conclusory, wholly unsupported by facts, and failed to show any bias or prejudice against Movant. If dissatisfied with the Court’s ruling, Movant’s remedy was to appeal. Dissatisfaction with the Court’s ruling was not a basis for recusal.
The Court abstained from hearing an adversary proceeding brought by the Debtor to recover property allegedly stored prepetition with Defendant. The Trustee has abandoned the claim, the case was closed, and the Debtor had received a discharge. Hence, the relief sought would benefit only the Debtor, not the estate, and served no bankruptcy purpose.