The Court denied the Debtor's objections and allowed two claims filed by the creditor, one arising from the purchase of a vehicle and the second from a renewal of a debt consolidation loan. The Court allowed the first claim because the vehicle was not unlawfully repossessed but rather picked up by a towing company after being abandoned, and because the Georgia Court of Appeals decision, Suntrust Ban v. Venable, 299 Ga. 655, 791 S.E.2d 5 (2016), did not apply to the fact of this case. Venale involved a sale transaction whereas the underlying transaction here was only a finance transaction. The Court also allowed the second claim because the Debtor had two loans, the original and renewal, rather than one as alleged in the objection.
NOT INTENDED FOR PUBLICATION
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Opinions
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Honorable James R. Sacca
The Court granted the Debtor's motion to hold the creditor in contempt for knowingly violating the automatic stay, awarding damages under section 362(k)(1). The Court concluded that the creditor knowingly violated the automatic stay of section 362(a) when it failed to take any steps to revoke a default judgment issued by the state court, despite the creditor having received notice of the bankruptcy. Because default judgment was actually entered against the Debtor, the case here was materially distinguishable from Alle Cassetty Cos. v. Wren, 502 B.R. 609 (N.D. Ga. 2013), as the Court discussed.
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On the creditor's request, the Court confirmed the automatic stay of section 362(a) was terminated pursuant to section 362(c)(3). The Debtor filed a second bankruptcy case a week after the first bankruptcy was dismissed and the Debtor did not seek an order extending the automatic stay within thirty days. The Court followed the cases interpreting the language "with respect to the debtor" in section 362(c)(3) as terminating the automatic stay as to the debtor, his property, and the property of the estate. The Court determined such an interpretation is more practical and better serves the purpose of section 362(c)(3).
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The Court granted, in part, Defendant's motion for parial summary judgment regarding Plantiff's interests to a settlement between Defendant and the company issuing the insurance policy. Specfically, the Court concluded that the New York Standard mortgage clause within the insurance policy created a separate contract between the mortgagee and the issuing company. As such, the Plaintiffs did not have any interest in that contract because they were not parties to that separate contract. Thus, the Plaintiffs were not entitled to any proceeds of the settlement between tose parties to the contract and they did not have an interest in any claim if the settlement failed. The Court also held that, because the Plaintiffs' attorneys' efforts did not produce the settlement and because the New York Standard mortgage clause acts as a pre-appropriation of the settlement proceeds, the attorneys were not entitled to a lien against the settlement proceeds.
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Order granting chapter 13 trustee's objection to debtor's claimed real property exemption. Court held that debtor could not apply extraterritorially the Florida homestead exemption to real property situated in Georgia, but purchased with proceeds from the sale of real property situated in Florida.
Order denying motion to amend complaint. Court held that the proposed amendment to the complaint would be futile because plaintiff failed to plead with specific damages as required in an action for slander of title pursuant to OCGA 51-9-11, and that the trustee's bill of sale refers only to the sale of the debtor's interest in the real property and not plainiff's inerest in the property.
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Order denying defendant's motion to disqualify plaintiff's counsel. Court held that the Georgia Rules of Professional Conduct do not prohibit counsel's representation of plaintiff in this adversary proceeding. Counsel's representation of former client did not create a conflict of interest because counsel's former client and plaintiff do not have conflicting interests in this adversary proceeding. Moreover plaintiff is not an officer or director breaching a fiduciary duty to the former client or other members of counsel's former client. The Court also held that defendant's purchase of an economic interest only in counsel's former client did not create an attorney-client relationship between counsel and defendant.
The Court denied cross-motions for summary judgment on the Plaintiff’s § 523(a)(2)(B) claim concluding that questions of fact still existed as to whether the Plaintiff reasonably relied on the false financial statement and whether the Debtor had the intent to deceive when he provided the false financial statement. The suit was not barred by the Georgia statute of limitations for fraud since the Plaintiff previously obtained a judgment in state court for breach of contract which established the debt and made the only relevant time limit that contained in FRBP 4007. In addition, any staleness of the five month old financial statement was cured when the debtor reaffirmed it by signing a guaranty that stated no material adverse changes had occurred in his financial condition since he previously provided a financial statement to the Plaintiff. Finally, the Court agreed with the majority of other courts and concluded that the Plaintiff did not need to prove a separate element of damages to prevail on his § 523(a)(2)(B) claim. It distinguished this case which dealt with the renewal of an already existing loan from a previous Eleventh Circuit case discussing the proximate causation requirement in § 523(a)(2)(B) claims.
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The Court granted the trustee’s objection to confirmation and held that the chapter 13 debtors were ineligible to be chapter 13 debtors in a joint case because their aggregate unsecured debts exceeded the limit set forth in § 109(e). Although each debtor’s separate unsecured debts did not exceed the debt limit and each debtor was individually eligible to be a chapter 13 debtor because their aggregate unsecured debts exceeded the limit they were ineligible to be joint debtors. Relying on the plain meaning of the statute, and particularly the placing of the word “aggregate” in connection with the unsecured debt limit, the Court concluded that in chapter 13 cases a debtor who files an individual case and debtors who file a joint case are subject to the same unsecured debt limits under § 109(e).
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The Court granted in part and denied in part cross-motions for summary judgment on the Debtor’s objection to the creditor’s claim for $955,880.22. The claim arose out of a default judgment for unjust enrichment from a Tennessee state court against a company for which the Debtor guaranteed the “debts and obligations arising out of contracting activities” as defined by the Tennessee Contractors Licensing Act of 1994, Tenn. Code Ann. § 62-6-101, et seq. The Court concluded that state choice of law rules applied to determine whether the claim was valid under state law since no compelling federal interest existed. It then applied Tennessee’s choice of law rules because filing the claim in the bankruptcy case was functionally an extension of the creditor’s prepetition claim that was pending in a Tennessee state court when the bankruptcy case was filed. The Court found that under Tennessee law the default judgment from a Tennessee state court against the principal company was not binding on the Debtor as a guarantor. Applying Tennessee law, the Court determined that the guaranty was enforceable and the creditor was a third-party beneficiary of the guaranty. However, the Court concluded that the Debtor was not liable for any claims of unjust enrichment against the principal company by way of the guaranty because unjust enrichment is not a contracting activity within the scope of the Tennessee statute. An obligation under the guaranty would only arise if the principal company had an obligation to a creditor arising from the activities performed by that principal company described in Tenn. Code Ann. § 62-6-102(4)(A)(i). Questions of fact still existed with respect to whether the principal company was a contractor engaged in contracting activities as defined by the Tennessee statute, and if so, whether the principal company had any obligation to the creditor arising out of those contracting activities.
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