Plaintiff filed a motion for discovery sanctions under FRBP 7037 and FRCP 37(d), seeking to strike Defendant’s answer, entry of default judgment, and attorney fees. The Court declined to strike the answer and grant default judgment but did award costs, including attorney fees.
NOT INTENDED FOR PUBLICATION
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Honorable Barbara Ellis-Monro, Chief Judge
Non-debtor plaintiffs, who purchased debtor’s house and informally assumed payments on his mortgage, filed a claim against debtor’s mortgage company seeking a return of those payments. The mortgage company filed a motion to dismiss for lack of jurisdiction, and the plaintiffs filed a motion to amend the complaint to add claims for injunctive relief against the mortgage company and the debtor to prevent any transfer or foreclosure of the property. The Court granted the motion to dismiss, concluding the claim for damages was a non-core claim unrelated to the bankruptcy case because any recovery by plaintiffs would have no effect on administration of the bankruptcy case. The Court denied the motion to amend on the grounds of futility. The Court has no jurisdiction over the injunction claims, and even if it did have jurisdiction, it would abstain from hearing the claims.
ADR Financial Services, Inc. v. Rogers (In re: Rogers), BK 13-70614, AP 14-5164, Doc # 11 01/30/2015
Plaintiff filed complaint to determine dischargeability of debt pursuant to 11 U.S.C. § 523(a)(7). Plaintiff argued that debt owed by Defendant to Plaintiff was court-ordered restitution as a condition of Defendant’s probation and as such non-dischargeable. The Court agreed and held that a restitution obligation, imposed in a criminal proceeding which is payable as a condition of probation is not subject to discharge in a Chapter 7 proceeding regardless of whether the recipient of the restitution payments is a private party or a governmental entity.
NOT INTENDED FOR PUBLICATION
Order on Motion to Dismiss; “amounts scheduled as contractually due to secured creditors” under § 707(b)(2)(A)(iii)(I) are calculated without regard to a debtor’s intent to surrender the underlying collateral for purposes of the Chapter 7 Means Test; distinguishing Hamilton v. Lanning, 560 U.S. 505 (2010) and Ransom v. FIA Card Services, N.A., 562 U.S. 61 (2011)
Denying Motion to Strike; declining to strike a late-filed answer where the answer was 7 days late, Plaintiff had not sought entry of default, and Plaintiff did not point to prejudice or a pattern of delay.
Creditor Beach Community Bank (Beach) sought a determination that its claim for a commercial mortgage deficiency judgment against Debtor was nondischargeable as money obtained by false financial statements under 11 U.S.C. § 523(a)(2)(B). Beach moved for summary judgment, and Debtor failed to respond to its motion. Further, Debtor did not contest that she signed several documents in connection with the loan which contained false information, including a fictitious income figure in Debtor’s own handwriting. While the record contained evidence that Debtor may not have known what she was signing, Beach contended that Debtor’s signing of the documents without reviewing them for truthfulness was reckless indifference that met the requisite intent standard under section 523(a)(2)(B). The Court held that Debtor’s reckless indifference as to the truth of the documents, coupled with Debtor’s handwritten, overstated income, was sufficient for a finding of intent to deceive. Accordingly, the Court found the debt nondischargeable and did not reach Beach’s other claim for actual fraud under 11 U.S.C. § 523(a)(2)(A).
The Court granted the defendant's unopposed motion to dismiss a complaint for lack of proper service, subject to the opportunity of the plaintiff to effectuate proper service.
The Court denied the secured creditor's motion for relief pursuant to section 362(d)(4). Although the debtor and his wife, who was also a debtor in a separate case, had several prior bankruptcy cases, the Court found no evidence that the debtor or his wife transferred ownership of real property to any party in an attempt to hinder, delay, or defraud creditors and that the prior cases and the instant case were filed in a good faith attempt to reorganize and retain the debtor's home.
Honorable James R. Sacca
The Court ruled on a split among the bankruptcy courts in the Eleventh Circuit regarding the interplay between §§ 541(a)(5) and 1306(a)(1). It concluded, based on the plain language of the statute, that property the Debtor inherited more than 180 days post-petition but before the case was closed, dismissed, or converted, was property of the bankruptcy estate.
INTENDED FOR PUBLICATION
Honorable Wendy L. Hagenau
Order on Plaintiffs’ Motion for Partial Summary Judgment. Plaintiffs moved for partial summary judgment seeking a determination that certain sums invested with Debtor constituted a non-dischargeable debt under Section 523(a)(4), defalcation while acting in a fiduciary capacity, or Section 523(a)(2)(A), false representations, false pretenses, or actual fraud. The Court held the doctrine of offensive collateral estoppel applied; thus the Debtor was bound by the findings of a prior SEC enforcement order. The Court concluded one Plaintiff’s investment was non-dischargeable under Section 523(a)(2)(A) because the Debtor forged a signature on a letter on which the party relied. The forgery was tortious conduct of the Debtor and the statements contained in the forged letter were attributable to the Debtor, personally, as the managing member of the general partner. The Court also concluded the Plaintiffs’ claim for funds misappropriated by the Debtor was non-dischargeable. Summary judgment was denied on the remaining claims, because issues of fact remained as to i) whether Debtor was a fiduciary for purposes of Section 523(a)(4) under the terms of the Limited Partnership Agreement and Michigan law, and ii) various elements of other fraud claims.