Order granting Debtor’s Motion to Reopen his chapter 7 case to allow the Trustee to administer a claim held by the Debtor that was omitted from his original schedules. The Defendant objected to the Debtor’s Motion to Reopen, arguing that the Debtor’s failure to disclose the lawsuit was in bad faith and the Debtor was unable to prove the claim had any value. The Court found that although the Debtor had not acted in good faith by failing to disclose the pre-petition claim, the case should be reopened. Reopening the case was not prejudicial to the Defendant, there was sufficient evidence that allowing the Trustee to pursue the claim could provide a substantial recovery for the benefit of unsecured creditors, and the Trustee supported reopening the case.
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Opinions
Effective January 1, 2017, Orders in the United States Bankruptcy Court for the Northern District of Georgia designated by the Court as "opinions" will be transmitted to the Government Publishing Office (GPO) and made available to the public at no cost. To view these opinions, click HERE to be transferred to GPO site.
Orders designated as Opinions and issued between January 1, 2004 and December 31, 2016 are maintained on this website. Many of these Opinions are not intended for publication and are so designated. Each entry includes the style of the matter, the case number, the date entered on the docket, and a short parenthetical expression of the issue(s) raised. The most recent opinions appear first.
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Order granting Debtor’s objection to a post-bar-date claim amendment to add an unsecured claim for attorneys’ fees. The Court rejected the Creditor’s argument that language in the timely-filed proof of claim, which reserved the right to file an unsecured deficiency claim and reserved its right to collect post-petition attorneys’ fees under Section 506(b), provided sufficient notice of Claimant’s right to later amend the claim to add the attorneys’ fees. The claim was not oversecured, so the only right to attorney fees arose under O.C.G.A. § 13-1-11. The Court held that the amendment was not covered by the reservation and equitable reasons justified disallowing the late-filed amendment.
Order denying motions to dismiss of Joseph Harman, Linda Harman, et. al.; pleading alter ego, invalidation of a trust, turnover under 11 U.S.C. § 542, transfer avoidance under 11 U.S.C. §§ 544, 548, and 549, and substantive consolidation
FOR PUBLICATION
Order denying Shadrix Lane’s Motion to Dismiss; pleading 11 U.S.C. §§ 548(a)(1) and 550; “mere conduit” exception is an affirmative defense inappropriate for the Motion to Dismiss stage
FOR PUBLICATION
In Chapter 7 Trustee’s avoidance action, closing attorney’s affidavit does not cure lack of unofficial witness on the face of a security deed; motion for summary judgment
FOR PUBLICATION
Court denied the Debtors' Motion to strip the lien of second lien holder as the Debtors' Chapter 13 plan had been confirmed by order of the Court and the lien strip process set forth in In re Tanner, 217 F.3d 1357 (11th Cir. 2000) is not proper post-confirmation, given the res judicata effect of a confirmed chapter 13 plan; and, the Court denied the Debtors' Motion to Strip under a theory applying section 502(j) of the Bankruptcy Code; additionally, the Court denied the Debtors' corresponding request to modify their plan to reflect the proposed post-confirmation lien strip, given the res judicata effect of the confirmed plan.
NOT INTENDED FOR PUBLICATION
Honorable Mary Grace Diehl (Recall)
Defendant’s motion to dismiss for failure to state a section 523(a)(2)(A) dischargeability claim was granted and Plaintiff was given leave to amend. The complaint failed allege sufficient facts to allow the Court to make a reasonable inference that Defendant had made any misrepresentation or material omission to support a false pretenses or false representation claim. The Complaint also failed to allege facts to infer Defendant’s design, artifice, or intent to deceive
the Plaintiff under the actual fraud theory. Defendant’s lack of personal income, execution of a Personal Loan Agreement, and petition for relief under Chapter 7 alone are insufficient to support any plausible inference that the Defendant intended to deceive the Plaintiff when incurring the debt.
Honorable Paul W. Bonapfel
In joint chapter 13 case, the debtor wife died after confirmation of a zero percent plan and more than 180 days after the filing of the case. The surviving husband received $250,000 in life insurance proceeds and amended his schedules to disclose them and claimed them as exempt. The trustee objected to the exemption and filed a modification of the plan under 11 U.S.C. § 1329 to require the payment of approximately $105,000 into the plan to pay all unsecured claims in full. The debtor filed a modification to pay unsecured creditors $15,000 from the proceeds. Held:
1. The life insurance proceeds are not property of the estate under 11 U.S.C. § 541(a)(5)(C) because the debtor became entitled to them more than 180 days after the filing of the petition. The Court declined to follow the contrary view that all property a chapter 13 debtor receives after confirmation is property of the estate under 11 U.S.C. § 1306(a). The Court therefore did not resolve the Trustee’s contention that the debtor could not exempt them because he was not a dependent of his wife at the time of her death under O.C.G.A. § 44-13-100(a)(11)(C), which permits the exemption of life insurance proceeds arising from the death of a person on whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
2. Neither the “best interest of creditors” test of 11 U.S.C. § 1325(a)(4) nor the projected disposable income test of 11 U.S.C. § 1325(b) requires the use of the life insurance proceeds to pay creditors. Section 1329 permits modification by a trustee or unsecured creditor to require increased payments in accordance with a debtor’s ability to pay. Nevertheless, a modification proposed by a trustee or unsecured creditor cannot require the debtor to use proceeds of property that is exempt or is not property of the estate to pay claims under Gamble v. Brown (In re Gamble), 168 F.3d 442 (11th Cir. 1999), and Thomas v. Walden (In re Walden), Docket No. 02-6013 (11th Cir. June 13, 2002) (unpublished). (A copy of the unpublished opinion in Walden is in the record at Docket No. 72.)
3. Accordingly, the Trustee’s modification does not meet the requirements of § 1329.
4. Alternatively, if either of the rulings in (1) or (2) are erroneous, the Court, in the exercise of its discretion, does not approve the Trustee’s modification under the circumstances of the case in view of the debtor’s age, his medical condition that precluded substantial employment, and his need for the proceeds for the current and future support of himself and his family.
5. Because the debtor’s modification meets the requirements for modification in § 1329, it is approved.
NOT FOR PUBLICATION
Honorable James R. Sacca
The Court denied Bank’s motion for summary judgment in case Chapter 7 Trustee brought against it seeking to recover the value of an allegedly fraudulent transfer. The Trustee had previously obtained a judgment against the Debtor’s daughter for fraudulently transferring the Debtor’s house by selling it to a third party. The trustee then brought an action under 11 U.S.C. §550(a) against the buyers (who settled) and against the Bank that financed the purchase and took an interest in the property via security deed, arguing that he could recover from them as mediate or immediate transferees. The bank raised the “good faith transferee” affirmative defense contained in 11 U.S.C. §550(b), arguing that it took its interest in the property in good faith and without knowledge that the transfer was fraudulent, and it moved for summary judgment. The Court denied summary judgment, concluding that questions of fact remained regarding whether the bank performed a reasonably diligent investigation according to customary practices in the mortgage lending industry and considering the unique facts of this case.
Judge James E. Massey (Retired)
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.