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9,456,027 | 11,757,909 |
2001-12-07
|
United States Bankruptcy Court for the Eastern District of Michigan
|
Hutchison v. Birmingham (In re Hutchison)
|
Hutchison v. Birmingham (In re Hutchison), 270 B.R. 429 (2001)
|
1999-02-22
|
United States Bankruptcy Appellate Panel for the Ninth Circuit
|
Leibowitz v. County of Orange (In re Leibowitz)
|
Leibowitz v. County of Orange (In re Leibowitz), 230 B.R. 392 (1999)
|
11757909_3
|
for ... support of ... [a] child.
|
For these reasons, we hold that the narrow-construction rule has full application in deciding whether a debt is “for... support of... [a] child.” And in our view, this rule precludes the extension of § 523(a)(5)/(18) to debts which are only related to a child’s support.
|
9,456,027 | 11,757,909 |
2001-12-07
|
United States Bankruptcy Court for the Eastern District of Michigan
|
Hutchison v. Birmingham (In re Hutchison)
|
Hutchison v. Birmingham (In re Hutchison), 270 B.R. 429 (2001)
|
1999-02-22
|
United States Bankruptcy Appellate Panel for the Ninth Circuit
|
Leibowitz v. County of Orange (In re Leibowitz)
|
Leibowitz v. County of Orange (In re Leibowitz), 230 B.R. 392 (1999)
|
11757909_0
|
[a] debt (as defined in section 101 of Title 11) owed under State law to a State (as defined in such section) ... that is in the nature of support and that is enforceable under this part is not released by a discharge in bankruptcy.
|
Neither of these provisions, however, purports to specify the kind of obligation which will pass muster under § 523(a)’s “nature of support” standard. Mirroring § 523(a)(18), part D provides that “[a] debt (as defined in section 101 of Title 11) owed under State law to a State (as defined in such section)... that is in the nature of support and that is enforceable under this part is not released by a discharge in bankruptcy.
|
9,456,027 | 11,757,909 |
2001-12-07
|
United States Bankruptcy Court for the Eastern District of Michigan
|
Hutchison v. Birmingham (In re Hutchison)
|
Hutchison v. Birmingham (In re Hutchison), 270 B.R. 429 (2001)
|
1999-02-22
|
United States Bankruptcy Appellate Panel for the Ninth Circuit
|
Leibowitz v. County of Orange (In re Leibowitz)
|
Leibowitz v. County of Orange (In re Leibowitz), 230 B.R. 392 (1999)
|
11757909_1
|
any rights ... to support from any other person ... which accrue (or have accrued) before the date the family ceases to receive assistance.
|
Pursuant to § 608 of the Social Security Act (subchapter IV, part A), families receiving state-provided, federally funded assistance are required to assign to the state "any rights... to support from any other person... which accrue (or have accrued) before the date the family ceases to receive assistance.
|
9,448,420 | 11,772,503 |
2002-04-05
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Holbert
|
United States v. Holbert, 285 F.3d 1257 (2002)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_2
|
the offense of conviction and all relevant conduct under § 1B1.3 (Relevant Conduct) unless a different meaning is specified or is otherwise clear from the context.
|
The Guidelines do not define the phrase “in the course of the offense,” but they define the term “offense” as “
|
9,448,420 | 11,772,503 |
2002-04-05
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Holbert
|
United States v. Holbert, 285 F.3d 1257 (2002)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_2
|
offense means offense of conviction and all relevant conduct ...,
|
Aplt. Br. at 7. “Two for one” presumably means that, should the defendant adhere to jail regulations, he would be granted two days of credit for each day served.
We agree with the district court that the application of § 4A1.2(b) was appropriate because a 90-day sentence was imposed. Criminal history points given under § 4A1.2 (b) are based on the sentence pronounced, not the length of time actually served. U.S.S.G. § 4A1.2, cmt. n.2. Regardless of Holbert’s potential compliance with jailhouse regulations and the possibility of release after serving only 45 days, the original imposition of a 90-day sentence warrants the assignment of two criminal history points under § 4A1.2(b).
AFFIRMED.
1
. Though Mr. Holbert waived his right to appeal, the Government, citing the interests of justice, withdrew its motion to dismiss on that basis.
2
. Defendant also objected to a two-point increase in the base offense level for obstruction of justice under U.S.S.G. § 3C1.1(A), arguing that Defendant’s statement to his wife, "I’ll see you real soon,” did not rise to the level of obstruction of justice. Defendant abandons this issue on appeal.
3
. Most notably, U.S.S.G. § 1B1.1, cmt, n.l(/), states that "offense means offense of conviction and all relevant conduct...," implying that “offense of conviction” is but a subpart of an “offense.
|
8,957,258 | 11,772,503 |
2005-06-15
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Garcia
|
United States v. Garcia, 411 F.3d 1173 (2005)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_1
|
[i]f the offense involved causing, transporting, permitting, or offering or seeking by notice or advertisement, a minor to engage in sexually explicit conduct for the purpose of producing'a visual depiction of such conduct, apply § 2G2.1.
|
” Aplt. Bf. Appx., at 22.
Based on the foregoing, Mr. Garcia was charged with interstate distribution of child pornography in violation of 18 U.S.C. §§ 2252A(a)(l) and (b)(1). Mr. Garcia pleaded guilty and in the plea agreement acknowledged that he had been advised of U.S.S.G. § 1B1.3 regarding the use of relevant'conduct in establishing his sentence. For the crime to which Mr. Garcia pleaded guilty, the base offense level for purposes of sentencing is normally 17, as provided in U.S.S.G. § 2G2.2 (2003). This cross-reference states that “
|
8,957,258 | 11,772,503 |
2005-06-15
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Garcia
|
United States v. Garcia, 411 F.3d 1173 (2005)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_1
|
offer[ed] or [sought] by notice or advertisement, a minor to engage in sexually explicit conduct. ...
|
In Tagore, the district court applied the cross-reference for the crime of sending and receiving child pornography when it found that although the defendant had not “produced” child pornography in the sense of taking pictures, he belonged to a sophisticated internet group that sought to facilitate the production and distribution of child pornography. Tagore, 158 F.3d at 1126-27. Mr. Garcia argues that because he did not personally produce the two images that he sent on August 3, 2003, and because he was not involved in a sophisticated internet group dedicated to the production of child pornography, the cross-reference does not apply.
Mr. Garcia’s reliance on Wilkinson and Tagore is misplaced and he improperly characterizes the reason the district court applied the cross-reference. The district court applied the cross-reference not because Mr. Garcia produced the two images sent on August 3rd, but because he sought to have “ibalissasmom” engage in sexual activity with her two minor daughters and to photograph this activity. Even if we were to construe Mr. Garcia’s argument as contesting the finding that he sought to “produce” these latter images, his argument would find no support in law or fact.
Mr. Garcia urges us to adopt a narrow and hyper-technical interpretation of the cross-reference. According to Mr. Garcia, if one is not physically standing behind the camera or involved in a multi-person conspiracy to distribute child pornography, then one is not “producing” child pornography, and thus the cross-reference does not apply. Such an interpretation is contradicted by a plain reading of the cross-reference, the commentary following the guideline, and case law. Where, as here, the images are not actually produced, the cross-reference may still apply so long as the defendant “offer[ed] or [sought] by notice or advertisement, a minor to engage in sexually explicit conduct.
|
3,689,689 | 11,772,503 |
2006-07-18
|
United States District Court for the District of Maine
|
United States v. Croll
|
United States v. Croll, 441 F. Supp. 2d 158 (2006)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_0
|
for [the] crime[] of which he was not convicted,
|
United States v. Lata, 415 F.3d 107, 110 (1st Cir.2005).
Nevertheless, Mr. Croll’s argument fails because in imposing a sentence within the statutory maximum that takes into account relevant conduct, the Court is not punishing Mr. Croll “
|
3,689,689 | 11,772,503 |
2006-07-18
|
United States District Court for the District of Maine
|
United States v. Croll
|
United States v. Croll, 441 F. Supp. 2d 158 (2006)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_0
|
the manner in which he committed the crime of conviction.
|
Nevertheless, Mr. Croll’s argument fails because in imposing a sentence within the statutory maximum that takes into account relevant conduct, the Court is not punishing Mr. Croll “for [the] crime[] of which he was not convicted,” but rather it is increasing his sentence for “
|
3,689,689 | 11,772,503 |
2006-07-18
|
United States District Court for the District of Maine
|
United States v. Croll
|
United States v. Croll, 441 F. Supp. 2d 158 (2006)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_3
|
cross-reference merely implements the common sense notion that a receiver or possessor who has manufactured the pornography in his possession is both more culpable and more dangerous than one who has received or possessed the pornography and no more.
|
The Seventh Circuit made short work of his argument:
Time and again, we have been presented with arguments that the Sentencing Guidelines, when they take into account conduct beyond the offense of conviction, deprive the defendant of the panoply of constitutional and other rights associated with criminal trials. Time and again, those arguments have failed. The cases make clear that sentencing judges may look to the conduct surrounding the offense of conviction in fashioning an appropriate sentence, regardless of whether the defendant was ever charged with or convicted of that conduct, and regardless of whether he could be. The lesson of these cases is that taking into account conduct related to the offense of conviction in sentencing is not the same thing as holding the defendant criminally culpable for that conduct. The offense of conviction remains paramount, in terms of both the statutory minimum and maximum punishments and what is relevant for sentencing purposes. Indeed, the very purpose of looking to circumstances beyond the offense of conviction is to decide what degree of punishment to impose within the typically broad range authorized by the criminal statute, by determining what a particular defendant actually did. In this way a felon who uses a gun to commit assault, for example, is punished more harshly than one who simply keeps a gun underneath his mattress for protection, notwithstanding that both are convicted of the same offense. However much it may look like the defendant is being sentenced for a different offense — and the cross-referencing provisions of the Guidelines often make it appear very much as though he were — he is actually being sentenced solely for the crime or crimes of which he was convicted. Thus, as Dawn explained, the “
|
3,689,689 | 11,772,503 |
2006-07-18
|
United States District Court for the District of Maine
|
United States v. Croll
|
United States v. Croll, 441 F. Supp. 2d 158 (2006)
|
1999-02-12
|
United States Court of Appeals for the Tenth Circuit
|
United States v. Wilkinson
|
United States v. Wilkinson, 169 F.3d 1236 (1999)
|
11772503_1
|
causing ... a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct
|
United States v. Regan, 989 F.2d 44, 48 (1st Cir.1993). To avoid the increased penalties for possession of child pornography that he produced, all Mr. Croll had to do was to rid himself of the pornography before the new Guidelines provisions became effective. This he manifestly did not do and, as a consequence, he is now subject to the provisions of the law and the version of the Guidelines in effect when he violated the criminal law.
III. Conclusion
No e* post facto or fair warning issue exists from considering as relevant conduct under the current Guidelines the Defendant’s 1991 production of the child pornography he criminally possessed in 2005.
1
. On February 24, 2006, Mr. Croll pleaded guilty to two counts of possession of child pornography, violations of 18 U.S.C. § 2252A(a)(5)(B). Count One alleged possession of a photograph; Count Two possession of a computer graphic image. To be precise, possession of child pornography is usually covered by U.S.S.G. § 2G2.2, but under § 2G2.2(c)(l), there is a cross reference to § 2G2.1, if the offense involved "causing... a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct” and "if the resulting offense level is greater than that determined [in § 2G2.2].”
|
9,410,962 | 11,753,371 |
2002-04-16
|
United States Bankruptcy Court for the Southern District of New York
|
Pincus v. Graduate Loan Center (In re Pincus)
|
Pincus v. Graduate Loan Center (In re Pincus), 280 B.R. 303 (2002)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
an educational benefit overpayment or loan,
|
” Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6, 120 S.Ct. 1942, 147 L.Ed.2d 1 (2000) (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)); accord N.Y. State Pesticide Coalition, Inc. v. Jorling, 874 F.2d 115, 118 (2d Cir.1989).
A. Partial Discharge Approach
Courts holding that partial discharge of educational loans is an appropriate remedy have relied on one of two arguments in drawing their conclusion: (1) The statutory language of Code § 523(a)(8) permits such flexibility because of its ambiguity; or (2) Code § 105(a) — the basis for a bankruptcy court’s broad exercise of power in administering a case — allows a court to effectuate a partial discharge, even though Code § 523(a)(8) does not expressly contemplate that result. See Grigas v. Sallie Mae Servicing Corp. (In re Grigas), 252 B.R. 866, 871-72 (Bankr.D.N.H.2000) (summarizing various approaches by courts that have applied partial discharge to student loans). This Court rejects both arguments. First, no language in Code § 523(a)(8), which refers to “
|
9,410,962 | 11,753,371 |
2002-04-16
|
United States Bankruptcy Court for the Southern District of New York
|
Pincus v. Graduate Loan Center (In re Pincus)
|
Pincus v. Graduate Loan Center (In re Pincus), 280 B.R. 303 (2002)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_4
|
more reliably guarantees that the hardship presented is ‘undue.’
|
4 Collier on Bankruptcy ¶ 523.14, at 523-98 (Lawrence P. King ed., 15th rev. ed.2001).
B. Application of the Brunner Test to the Debtor.
The Court finds that the Debtor has satisfied the second and third factors of the Brunner test. However, the problematic nature of the Court determining that repayment of the loans will cause the Debtor undue hardship stems from the first Brunner factor. In view of that, the Court will conduct its Brunner analysis by beginning with the second and third prongs and concluding with the first prong.
1. The Second Brunner Factor.
The second prong of the Brunner test requires the Debtor to show that there are additional circumstances suggesting that his current financial condition will likely continue for a significant portion of the repayment period of his educational loans. Brunner, 831 F.2d at 396. As previously stated by this Court,
[t]he type of ‘additional circumstance’ that would affect the debtor’s continuing ability to repay would be a circumstance that impacted on the debtor’s future earning potential but which was either not present when the debtor applied for the loans or has since been exacerbated. Otherwise, the debtor could have calculated that factor into [his] cost-benefit analysis at the time the debtor obtained the loan. The presence of circumstances indicating the persistence of a debtor’s financial condition “more reliably guarantees that the hardship presented is ‘undue.
|
9,410,962 | 11,753,371 |
2002-04-16
|
United States Bankruptcy Court for the Southern District of New York
|
Pincus v. Graduate Loan Center (In re Pincus)
|
Pincus v. Graduate Loan Center (In re Pincus), 280 B.R. 303 (2002)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_5
|
efforts ‘to maximize income and minimize expenses.’
|
A debtor must also establish that he has made “efforts ‘to maximize income and minimize expenses.
|
9,410,962 | 11,753,371 |
2002-04-16
|
United States Bankruptcy Court for the Southern District of New York
|
Pincus v. Graduate Loan Center (In re Pincus)
|
Pincus v. Graduate Loan Center (In re Pincus), 280 B.R. 303 (2002)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_10
|
examine current income and expenses and determine, through the application of common sense, a minimal standard of living level which is sensitive to the particular circumstances of each case.
|
While courts have noted that the proportion of student loans to total scheduled debt is a relevant factor when determining whether a debtor has made a showing of good faith, e.g. Markley, 236 B.R. at 248; Harris v. Pa. Higher Educ. Assistance Agency (In re Harris), 103 B.R. 79, 82 (Bankr.W.D.N.Y.1989), none of the circumstances in this case suggests that the Debtor seeks to have his educational loans discharged before embarking on a lucrative career. Rather, the evidence points to the contrary — that the Debtor’s current financial position mirrors his future earning potential. Moreover, the Debtor did not seek a discharge of his loans until four years after he graduated law school, further indicating that he has not exploited the Code as a means of shirking his financial obligations. The only evidence (as discussed below) that might preclude the Court from finding a good faith effort by the Debtor to repay his loans is that he has not sought to minimize his expenses. All other evidence, however, outweighs this fact and supports a finding to the contrary. The Court concludes that the Debtor has made a good faith effort to repay his loans.
§. The First Brunner Factor.
The first prong of the Brunner test requires a debtor to show that, given the debtor’s current level of income and expenses, a minimal standard of living cannot be maintained if the debtor is forced to repay his student loans. Brunner, 831 F.2d at 396. The minimal standard of living factor has been interpreted to require a showing beyond significant forbearance in personal and financial matters or beyond a restricted budget. Thoms, 257 B.R. at 148. Such forbearance, however, does not require the debtor to live at or below the poverty level. In the end, a Court must “
|
9,464,424 | 11,753,371 |
2001-11-19
|
United States Bankruptcy Court for the Southern District of Indiana
|
Shirzadi v. U.S.A. Group Loan Services (In re Shirzadi)
|
Shirzadi v. U.S.A. Group Loan Services (In re Shirzadi), 269 B.R. 664 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
impose an undue hardship on the debtor and the debtor’s dependents.
|
Shirzadi had believed until recently that Habibi returned to his native Iran following the divorce, and she has been unable to locate him. At this time, Habibi owes over $22,000 in back child support. Despite this arrearage, Shirzadi has not taken legal action against her ex-husband, either by contacting any state agency or by seeking judgment against him. Nor has she taken any significant steps to locate him.
Evidence introduced by ECMC indicates, however, that Habibi may still be living in the United States, possibly at the same residence in Indianapolis he had during the couple’s separation. This residence was known to Shirzadi and happens to be only a few miles from her home. Habibi is listed in the telephone book for Indianapolis at this address. Certified records from the Indiana Bureau of Motor Vehicles also provide this same address and indicate that he has registered several vehicles every year since the couple’s separation. These records further indicate that he continued to pay for Shirzadi’s car insurance as late as December of 2000.
Testimony from an investigator hired by ECMC, Daniel Basil, revealed that a 1989 silver Mercedes Benz automobile, of the same make and model year as the car that Habibi drove during his marriage to Shir-zadi, was parked outside the above-referenced address shortly before trial. It bore a “For Sale” sign with a telephone number. When Mr. Basil called this number, he was forwarded to voicemail for “Michael Habibi.” Shirzadi testified during the second day of the trial that she investigated this address and was told by the apartment manager that Habibi had recently moved.
Discussion and Decision
While government guaranteed student loans generally may not be discharged in bankruptcy, Code § 523(a)(8)(B) permits the discharge of such loans when the failure to do so would “
|
9,464,424 | 11,753,371 |
2001-11-19
|
United States Bankruptcy Court for the Southern District of Indiana
|
Shirzadi v. U.S.A. Group Loan Services (In re Shirzadi)
|
Shirzadi v. U.S.A. Group Loan Services (In re Shirzadi), 269 B.R. 664 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_8
|
more than a showing of tight finances, and is not met ‘merely because repayment of the borrowed funds would require some major personal or financial sacrifices.’
|
” This test requires “more than a showing of tight finances, and is not met ‘merely because repayment of the borrowed funds would require some major personal or financial sacrifices.
|
9,464,424 | 11,753,371 |
2001-11-19
|
United States Bankruptcy Court for the Southern District of Indiana
|
Shirzadi v. U.S.A. Group Loan Services (In re Shirzadi)
|
Shirzadi v. U.S.A. Group Loan Services (In re Shirzadi), 269 B.R. 664 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_0
|
undue hardship encompasses a notion that the debtor may not willfully or negligently cause his own default, but rather his condition must result from ‘factors beyond his reasonable control.’
|
She earns a respectable income, is not physically or mentally disabled, has healthy children, and owns a home with substantial equity. There is no reason to believe that Shirzadi’s current earning potential will be reduced or eliminated in the foreseeable future.
Shirzadi blames much of her financial troubles on her divorce and on her ex-husband’s failure to pay his child support obligation. However, as previously stated, the Court is confident that Shirzadi will locate Habibi-even though he has allegedly moved in recent months-with reasonable effort. Shirzadi has several enforcement options available to her to recover not only the support arrearage but also current payments due under the Divorce Settlement. As indicated later in this memorandum, the Court will be more willing to conclude that Shirzadi’s financial situation, as it relates to her ex-husband’s failure to pay child support, is permanent only after upon a showing that the support due is uncollectible.
In any event, the Court disagrees that Shirzadi’s inability to collect child support is the only contributing factor to her alleged financial distress. As explained in Section I, supra, Shirzadi has failed to minimize her expenses or maximize her income-factors within her control. There is no reason to believe that she cannot rectify these matters and generate enough funds to at least partially service the Loans. See Section IV, infra.
III.
Finally, under the Brunner test, Shirzadi must prove that she made a good faith effort to repay the Loans. Good faith in this instance is measured by efforts to obtain employment, maximize income and minimize expenses. Furthermore, “undue hardship encompasses a notion that the debtor may not willfully or negligently cause his own default, but rather his condition must result from ‘factors beyond his reasonable control.
|
9,243,711 | 11,753,371 |
2004-04-01
|
United States Bankruptcy Court for the Eastern District of New York
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner)
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner), 309 B.R. 405 (2004)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_3
|
There is no justification for ignoring the impact of a non-petitioning spouse’s income on a debtor’s financial situation.
|
Under the three prong test adopted by the Second Circuit in Brunner, 831 F.2d at 396, the Debtor will establish undue hardship only if he can demonstrate by a preponderance of the evidence that (1) the Debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for himself and his dependents if forced to repay the student loans; (2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) the Debtor has made good faith efforts to repay the loans. Id. Each part of the Brunner test for undue hardship discharge of student loans stands independently, and the Debtor bears the burden to prove each prong of the test. In re Maulin, 190 B.R. 153 (Bankr.W.D.N.Y.1995).
The Bankruptcy Code is silent on the issue of whether a non-debtor spouse’s income is to be considered in determining “undue hardship.” Courts may find guidance on this issue in the existing body of case law dealing with the issue of a non-debtor spouse’s income relative to, inter alia, Chapter 13 plan confirmation and dismissal of Chapter 7 cases due to substantial abuse. In re Elmore, 230 B.R. 22, 27 (Bankr.D.Conn.1999). See, e.g., In re Dressler, 194 B.R. 290, 304 (Bankr.D.R.I.1996), citing In re Cardillo, 170 B.R. 490, 491 (Bankr.D.N.H.1994) (non-debtor spouse’s income is considered in applying disposable income test); In re Jodoin, 209 B.R. 132, 142 (9th Cir. BAP 1997) (same); In re Kern, 40 B.R. 26 (Bankr.S.D.N.Y.1984) (“
|
9,243,711 | 11,753,371 |
2004-04-01
|
United States Bankruptcy Court for the Eastern District of New York
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner)
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner), 309 B.R. 405 (2004)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
cannot maintain, based on current income and expenses, a ‘minimal’ standard of living for [himself] and [his] dependents if forced to repay the loans.
|
”) Consequently, this Court holds that the income of the Plaintiffs non-debtor spouse is properly considered in determining whether requiring repayment of the student loans would create an undue hardship. See In re White, 243 B.R. 498 (Bankr.N.D.Ala.1999), reh’g denied, 243 B.R. 515 (Bankr.N.D.Ala.1999).
I.
The first prong of the Brunner test requires a showing that the Plaintiff “
|
9,243,711 | 11,753,371 |
2004-04-01
|
United States Bankruptcy Court for the Eastern District of New York
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner)
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner), 309 B.R. 405 (2004)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_0
|
encompasses a notion that the debtor may not willfully or negligently cause his own default, but rather his condition must result from ‘factors beyond his reasonable control.’
|
Others who own their own business find it useful to hire support staff to provide day-to-day management.
NIMH publication on Attention Deficit Hyperactivity Disorder (NIH Publication No. 96-3572, Printed 1994, Reprinted 1996) (available on the Internet). Based upon the foregoing, it is not unreasonable to believe that Plaintiff will become successful in his construction business and earn sufficient money to repay his student loans.
Plaintiff relies on In re Doherty, 219 B.R. 665 (Bankr.W.D.N.Y.1998), in which the bankruptcy court found, based solely on the debtor’s own testimony, that she suffered from bipolar disorder, which evidenced “additional circumstances” that her current financial situation was likely to persist for a significant portion of any repayment period. The facts of that case are clearly distinguishable from the case at bar, as there is no known cure for bipolar disorder and there was virtually no likelihood that the debtor in that case would ever be able to earn a living sufficient to pay off her student loan debt. In this case, Debtor’s disorder is treatable by medication, and Debtor is able to function well in his expanding home improvement business.
In sum, the Plaintiff has not proven the second prong of the Brunner test. The Court finds he is able to function in his non-legal business and is able to provide income to his family and to repay his student loan over time. In the event there is a future change in circumstances, ECMC can provide appropriate relief at that time.
III. Plaintiff Has Not Demonstrated Good Faith Efforts to Repay Student Loans. This prong of the analysis recognizes that undue hardship “encompasses a notion that the debtor may not willfully or negligently cause his own default, but rather his condition must result from ‘factors beyond his reasonable control.
|
9,243,711 | 11,753,371 |
2004-04-01
|
United States Bankruptcy Court for the Eastern District of New York
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner)
|
Pobiner v. Educational Credit Management Corp. (In re Pobiner), 309 B.R. 405 (2004)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_5
|
Moreover, upon receiving the taxpayer-guaranteed' loan and consequent educational benefit, a debtor assumes an obligation to make a good faith attempt at full repayment as ‘measured by his or her efforts to obtain employment, maximize income and minimize expenses.’ and to undertake all other reasonable efforts to insure repayment.
|
’ ” “
|
8,951,242 | 11,753,371 |
2005-03-31
|
United States Bankruptcy Court for the Southern District of New York
|
Doe v. Educational Credit Management Corp. (In re Doe)
|
Doe v. Educational Credit Management Corp. (In re Doe), 325 B.R. 69 (2005)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
for an educational ... loan made, insured or guaranteed by a governmental unit ... unless excepting such debt from discharge ... will impose an undue hardship on the debtor and the debtor’s dependents.
|
Rent $1,237.48
Medical Expenses 1044.26
Food/Grocery 400.00
Utilities 120.00
Transportation (Subway) 70.00
Laundry 66.23
Cellular Phone 49.64
Cable Television 44.54
Telephone (Land line) 34.20
Transportation For Her Mother 30.00
Internet 21.95
Dry-cleaning 20.00
International Calling Card 20.00
Emergency 100.00
Total: $3,358.30.
The Debtor’s expenses for food, laundry and emergency include amounts she pays on behalf of her mother, and her medical expenses can be further broken down to $395.16 for the Debtor, $659.62 for the Debtor’s mother and $15.49 for the Debt- or’s brother. At trial, the Debtor testified further that she does not any longer purchase an international calling card or subscribe to cable, thus reducing her monthly budget to $3,293.76. The Debtor’s present monthly income is $2,340, leaving the Debtor with a monthly deficit of $953.76.
In its Post-Trial Memorandum, ECMC submitted what can best be termed a counter-budget:
Rent $1,237.48
Medical Expenses 200.00
Food/Grocery 200.00
Utilities 120.00
Transportation (Subway) 70.00
Laundry 33.00
Cellular Phone 49.64
Cable Television 0.00
Telephone (Land line) 34.20
Transportation For Her Mother 0.00
Internet 21.95
Dry-cleaning 20.00
International Calling Card 0.00
Emergency 50.00
Total: $2,086.64.
This budget eliminates all items in the Debtor’s budget for her mother and reduces the amount the Debtor pays for her own medical needs by over $100. Under ECMC’s budget, the Debtor would have a monthly surplus of $253.36 that could be applied to her student loans. Section 523(a)(8) states in pertinent part that a debtor is not granted a discharge of any debt “for an educational... loan made, insured or guaranteed by a governmental unit... unless excepting such debt from discharge... will impose an undue hardship on the debtor and the debtor’s dependents.
|
8,951,242 | 11,753,371 |
2005-03-31
|
United States Bankruptcy Court for the Southern District of New York
|
Doe v. Educational Credit Management Corp. (In re Doe)
|
Doe v. Educational Credit Management Corp. (In re Doe), 325 B.R. 69 (2005)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
the debtor and the debtor’s dependents
|
As stated above, the Debtor has a substantial deficit, in a budget that demonstrates a frugal life-style and a standard of living that cannot be called extravagant. ECMC nevertheless argues that the Debt- or’s income is too high and, in any event, sufficiently above the Federal Poverty Guidelines that she is disqualified, as a matter of law, under the first prong of the Brunner test. ECMC further contends that the Debtor’s expenses could be significantly lowered by eliminating all those expenses that the Debtor pays on behalf of her mother. As discussed below, the Court is not persuaded by either of these arguments.
A. The Debtor’s Revised Budget Is Reasonable and Need Not Be Further Amended
ECMC argues that the Debtor’s proposed budget is inflated and can be trimmed so that the Debtor would have the ability to repay her student loans. Other than her mother’s expenses and $100 in medical costs, however, ECMC’s proposed “counter-budget” for the Debtor does not eliminate any expense as extravagant or above the minimum level. Since the Debtor would still have a deficit if she reduced her medical expenses by $100 per month, ECMC’s real argument is that the Debtor is not legally obligated to care for her mother and that the Court should exclude any expenses the Debtor pays on her mother’s behalf.
As quoted above, Congress provided specifically for consideration of both “
|
8,951,242 | 11,753,371 |
2005-03-31
|
United States Bankruptcy Court for the Southern District of New York
|
Doe v. Educational Credit Management Corp. (In re Doe)
|
Doe v. Educational Credit Management Corp. (In re Doe), 325 B.R. 69 (2005)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
impose an undue hardship on the debtor and the debtor’s dependents.
|
IRS Publication 17 at 30.
In the present case, the testimony is that the Debtor provides nearly all the support for her mother, except for her sister’s de minimis help. She testified without contradiction that her sister is employed in a temporary, low-paying job and does not have the ability to pay for their mother’s expenses. The Debtor has two brothers but, as indicated above, both are disabled and are a drain on the Debtor’s resources. Based on the credible testimony, the Court finds that the Debtor would also satisfy the Support Test as to her mother.
Based on the foregoing, the Debtor has established that her mother would be a dependent under the IRS definition. Nor are there special circumstances in this case that would make the IRS definition of “dependent” inappropriate for § 523(a)(8) purposes. For example, there is no evidence that the Debtor’s other family members are better able to provide for their mother’s support, or that her mother’s expenses have been assumed by her as a means of inflating her obligations at the expense of the ECMC. On the contrary, as quoted above, the statute provides that a student loan should be discharged where repayment would “
|
8,951,242 | 11,753,371 |
2005-03-31
|
United States Bankruptcy Court for the Southern District of New York
|
Doe v. Educational Credit Management Corp. (In re Doe)
|
Doe v. Educational Credit Management Corp. (In re Doe), 325 B.R. 69 (2005)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
significant portion of the repayment period.
|
Grigas v. Sallie Mae Servicing Corp. (In re Grigas), 252 B.R. 866, 875 (Bankr.D.N.H.2000). But, in this case, the uncontroverted evidence is that the Debtor’s financial condition is anything but of her own making and that her future prospects are grim. If, as ECMC argues, the best indicia of the Debtor’s future prospects is her past, then the Debtor is in for a long winter.
The Debtor also established that she expends considerable funds for the care of her mother and that such expenses are likely to continue throughout the repayment period. These circumstances constitute the “additional circumstances” required by the second prong of the Brunner test. On this point, ECMC argues that the Debtor’s mother is not a qualifying dependent and therefore cannot be considered under the second prong of the Brunner analysis. That argument is rejected for the reasons stated above. Moreover, cases have held that the “additional circumstances” test is met where a debtor shows that being forced to repay student loans will have a negative impact on dependents. See Lebovits, 223 B.R. at 265; In re Windland, 201 B.R. 178 (Bankr.N.D.Ohio 1996). In the case at bar, the uncontroverted evidence is that the majority of the Debtor’s “discretionary” spending is for her sick, aged mother. If the Debtor were forced to repay her student loans, she would no longer have the resources to pay her mother’s medical or other expenses.
The Court must next consider whether these “additional circumstances” are likely to continue through a “
|
8,951,242 | 11,753,371 |
2005-03-31
|
United States Bankruptcy Court for the Southern District of New York
|
Doe v. Educational Credit Management Corp. (In re Doe)
|
Doe v. Educational Credit Management Corp. (In re Doe), 325 B.R. 69 (2005)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
good faith efforts to repay the loans.
|
ECMC argues that because the Ford Direct Loan Program extends the repayment period for twenty years, the Court should consider whether the Debtor’s circumstances are likely to persist for the better part of twenty years. The Debtor contends that since her financial condition does not allow her to participate in the Ford Program (as further discussed below), an extended repayment period would not be applicable. There is no need to resolve this issue because, on the basis of this record, the Debtor’s circumstances are likely to continue for a significant portion of the repayment period, even if the period were extended to twenty years.
Thus, the Court cannot accept ECMC’s argument that the Debtor’s hardship will abate when she receives full-time employment with health benefits. The Court cannot assume that she will receive such employment. In any event, many of the Debtor’s medical expenses are for her mother, and no evidence was presented that the Debtor’s medical insurance would likely cover her mother’s care. Thus, even if the Debtor were to obtain health care for herself, she would still have to pay over $600 per month on health care for her mother. Moreover, there is no evidence that the Debtor’s mother will not be a dependent during the greater part of the repayment period.
On this record the Debtor has satisfied her burden of showing that it is likely that the hardship will continue throughout the repayment period, and therefore the Debt- or has satisfied the second prong of Brun-ner. The Debtor Has Made a Good Faith Effort to Repay Her Loans
Finally, as the third part of the Brunner analysis, the Court must consider whether the Debtor has made “
|
8,951,242 | 11,753,371 |
2005-03-31
|
United States Bankruptcy Court for the Southern District of New York
|
Doe v. Educational Credit Management Corp. (In re Doe)
|
Doe v. Educational Credit Management Corp. (In re Doe), 325 B.R. 69 (2005)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_9
|
make the discharge of student loans more difficult than that of other nonexcepted debt.
|
See Lebovits, 223 B.R. at 274.
ECMC argues that the Debt- or’s failure to enter the Ford Program is a per se failure to satisfy of the third prong of the Brunner test. Courts generally treat refusal to enter an income contingent repayment plan as some evidence of bad faith; however, it is not dispositive. See Ford v. Student Loan Guarantee Foundation of Arkansas, 269 B.R. 673 (8th Cir. BAP2001). In any event, the Debtor did consider the Ford Program, but correctly concluded it would not work for her. The evidence is that the Debtor would still be forced to pay $150 per month under the Ford Program — payments that she cannot afford in a budget pared down to necessities. Under the present circumstances, the Court finds that the Debtor’s failure to enter the Ford Program does not evidence bad faith.
Most important, the uncontroverted evidence demonstrates that the Debtor diligently paid her student loans while she was able, making approximately 54 monthly payments totaling almost $13,000 toward her overall student loan balance. Upon losing her full-time position, she became unable to continue to make payments, and ultimately filed a Chapter 7 petition. Considering all the circumstances, the Court finds that the Debtor’s attempts to minimize expenses and maximize income, and the fact that she paid her student loans when able sufficiently demonstrates the Debtor’s good faith.
Conclusion
Congress drafted the bankruptcy laws so as to provide an honest debtor with a discharge and a fresh start. Congress clearly intended to “
|
8,450,919 | 11,753,371 |
2006-09-21
|
United States Bankruptcy Court for the Eastern District of New York
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp.
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp., 351 B.R. 45 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_10
|
[T]his test requires the Court to examine the [d]ebtor’s current income and expenses and determine a flexible minimal standard of living level sensitive to the particular circumstances of each case through the application of common sense.
|
A discharge under section... 1328(b) of this title does not discharge an individual debtor from any debt... for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor’s dependents.
11 U.S.C.A. § 523(a)(8).
Establishing an undue hardship is a “heavy burden” for any debtor. In this Circuit, the existence of “undue hardship” is determined according to the three prong test announced in Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir.1987). According to Brunner, to demonstrate undue hardship, a debtor must prove that (1) she cannot maintain, based on current income and expenses, a “minimum” standard of living for herself if forced to repay the loans; (2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) she has made good faith efforts to repay the loans. Id. Preponderance of the evidence is the standard of proof used in student loan discharge cases. Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); In re Thoms, 257 B.R. 144, 148 (Bankr.S.D.N.Y.2001); In re Fowler, 250 B.R. 828, 830 (Bankr.D.Conn.2000). The failure to prove any of the three elements is fatal to a plaintiffs claim. In re Williams, 296 B.R. 298, 302 (S.D.N.Y.2003); In re Faish, 72 F.3d 298, 306 (3d Cir.1995).
A. “
|
8,450,919 | 11,753,371 |
2006-09-21
|
United States Bankruptcy Court for the Eastern District of New York
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp.
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp., 351 B.R. 45 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_8
|
this minimum standard of living test requires more than a showing of tight finances,
|
While “
|
8,450,919 | 11,753,371 |
2006-09-21
|
United States Bankruptcy Court for the Eastern District of New York
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp.
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp., 351 B.R. 45 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_6
|
does not require the [djebtor to demonstrate that repayment of the loan would cause [her] ... to live at or below the poverty line.
|
While “this minimum standard of living test requires more than a showing of tight finances,” it “does not require the [djebtor to demonstrate that repayment of the loan would cause [her]... to live at or below the poverty line.
|
8,450,919 | 11,753,371 |
2006-09-21
|
United States Bankruptcy Court for the Eastern District of New York
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp.
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp., 351 B.R. 45 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_9
|
the clear congressional intent exhibited in section 523(a)(8) to make the discharge of student loans more difficult than that of other nonexcepted debt.
|
In re Faish, 72 F.3d at 306; In re Elmore, 230 B.R. 22, 26 (Bankr.D.Conn.1999); In re Stein, 218 B.R. 281, 287 (Bankr.D.Conn.1998).
The Court has little difficulty determining that the plaintiff has satisfied the first Brunner prong. Plaintiffs sole source of income is SSI. She receives $1,133 per month. Plaintiff testified at trial that her recurring monthly expenses, without any payments on her student loans, consist of payments for rent ($925), food ($100) and telephone ($20). These monthly expenses total $1,045.00, leaving her $98.00 in excess income over expenses. Although plaintiff would appear to have sufficient funds to repay her loans each month if she enrolled in the ICRP of the Ford Program ($23.58/month) and renegotiated her debt with Sallie Mae ($50.00/ month), the Court understands that plaintiff might have other expenses such as laundry and transportation that she did not accurately account for in her budget. Plaintiff maintains a minimum standard of living devoid of excessive spending on discretionary items, and neither defendant has suggested that she has failed to meet the first prong of the Brunner test. The Court finds that if forced to repay her debt to ECMC and Sallie Mae, plaintiff would not be able to maintain a minimal standard of living, and has satisfied the first prong of the Brunner test.
B. The Second Prong — Additional circumstances do not exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans.
When the Court finds that plaintiff has shown by sufficient evidence that she has satisfied the first prong of the Brun-ner test, the Court then proceeds to assess the likely persistence of that state of affairs. The second prong puts into effect “
|
8,450,919 | 11,753,371 |
2006-09-21
|
United States Bankruptcy Court for the Eastern District of New York
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp.
|
Kelly v. Sallie Mae Servicing & Educational Credit Management Corp., 351 B.R. 45 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_0
|
This prong of the analysis recognizes that undue hardship encompasses a notion that the debtor may not willfully or negligently cause [her] own default, but rather [her] condition must result from factors beyond [her] reasonable control.
|
From 1996 through 1998, plaintiff worked as a freelance graphic designer. In 1998, she worked on a full time basis for Coco Raines and earned $30,000 per year. In 1999, the Museum of Fine Arts in Boston hired plaintiff as a full time graphic designer and paid her an annual salary of $44,000. She stayed at this job until the fall of 2003, when she decided to relocate to New York City to pursue graduate school.
The Court concludes that plaintiffs alleged inability to work will not likely persist for a significant portion of the repayment period. Plaintiffs expert witness, Dr. Stewart, testified that plaintiffs future prognosis is based on her medical history. See Tr. at 19:20-23. Thus, he acknowledged that if plaintiff had been highly functional in the past, she would likely be highly functional in the future. Id. at 19:23-25, 20:1-9.
The Court is likewise not convinced that plaintiff cannot work in some capacity at the present. Dr. Stewart testified that plaintiff is unable to work a full-time job in her current condition mainly because she has trouble getting herself places on time. Id. at 26:10-25. Dr. Stewart further testified that plaintiffs lack of punctuality is primarily due to her inability to fall asleep before three in the morning. Tr. at 13:20-25. Dr. Stewart acknowledged that plaintiff has been able to get to places on time if the task were important enough. For example, he testified that plaintiff appeared on time for the start of her Trial, which was scheduled for 10:00 a.m. Id. at 27:4-5.
Based on these facts, the Court finds that the plaintiff has not proven that her sub-minimal standard of living will persist for a significant portion of the repayment period of the student loans.
C. “
|
3,777,932 | 11,753,371 |
2010-11-01
|
United States District Court for the Eastern District of Michigan
|
Hart v. ECMC
|
Hart v. ECMC, 438 B.R. 406 (2010)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_5
|
efforts to obtain employment, maximize income, and minimize expenses.
|
Among the primary considerations for measuring good faith are the debtor’s “
|
4,094,824 | 11,753,371 |
2009-07-20
|
United States Bankruptcy Court for the Eastern District of New York
|
Benjumen v. AES/Charter Bank (In re Benjumen)
|
Benjumen v. AES/Charter Bank (In re Benjumen), 408 B.R. 9 (2009)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_0
|
‘encompasses a notion that the debtor may not willfully or negligently cause his own default, but rather his condition must result from factors beyond his reasonable control.’
|
Social Security Disability
The Defendants point out that unlike the Plaintiff, the debtors in Nash, 446 F.3d 188, and Burton v. Educ. Credit Mgmt. Corp. (In re Burton), 339 B.R. 856 (Bankr.E.D.Va.2006), were found to be eligible for disability benefits by the SSA, and nevertheless failed to satisfy the second prong of the Bnmner Test. They contend that the Plaintiffs bipolar disorder is not as severe as the disabilities of the debtors in the cases cited by the Plaintiff, because those debtors were also found to be disabled by the SSA, whereas the Plaintiff was not.
It is undisputed that the SSA denied Mr. Benjumen’s claim for Social Security disability benefits. However, the SSA’s determination with respect to disability is not conclusive to establish that a debtor is not entitled to a discharge under 523(a)(8). See Hertzel v. Educ. Credit Mgmt Corp. (In re Hertzel), 329 B.R. 221, 229-230, (6th Cir.BAP2005) (student loans discharged based on undue hardship despite SSA finding that Debtor with Multiple Sclerosis was not disabled); see also Congdon, 365 B.R. at 443-444 (court noting distinction between the definition of “disabled” in a SSA proceeding and the determination that the bankruptcy court must make for purposes of the second Bnmner prong).
For all of these reasons, summary judgment is denied on the second prong of the Bnmner Test.
2. The Third Brunner Prong — Good Faith
The third prong of the Bnmner Test requires that the Plaintiff show that he made a good faith effort to repay his student loans. The good faith requirement “ ‘encompasses a notion that the debtor may not willfully or negligently cause his own default, but rather his condition must result from factors beyond his reasonable control.
|
11,435,498 | 11,753,371 |
2002-07-02
|
United States Bankruptcy Court for the Northern District of Ohio
|
Flores v. U.S. Dept. of Education (In re Flores)
|
Flores v. U.S. Dept. of Education (In re Flores), 282 B.R. 847 (2002)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
excepting such debt from discharge ... will impose an undue hardship on the debtor and the debtor’s dependents[.]
|
DECISION AND ORDER
RICHARD L. SPEER, Bankruptcy Judge. As it pertains to her cause of action, the Debtor argues that her educational debts should be found to be dischargeable in accordance with 11 U.S.C. § 523(a)(8) which provides for the dischargeability of a student loan obligation if “excepting such debt from discharge... will impose an undue hardship on the debtor and the debtor’s dependents[.]”
|
11,088,366 | 11,753,371 |
2001-07-02
|
United States Bankruptcy Court for the Eastern District of Texas
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron)
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron), 264 B.R. 833 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
a loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit ... unless excepting such debt from discharge ... will impose an undue hardship on the debtor and the debtor’s dependents.
|
Rent 815.00
Phone 90.00
Utilities 125.00
Cable TV 60.00
Truck Payment 260.00
Auto Payment 316.00
Auto Insurance 105.00
Renter’s Insurance 25.00
Food/Toiletries 500.00
IRS 100.00
Medical Expenses:
Drug Co-Pays 125.00
Medical Co-Pays 100.00
Lab Co-Pays 60.00
Post-petition Doctor Bills 25.00
Gas/Auto Maint/Repair 200.00
Haircuts/Miscellaneous 100.00
Clothing (if funds avail) 20.00
Dry Cleaning (if funds avail) 20.00
$3,046.00
The Debtor testified that, notwithstanding the budgetary numbers, she and her husband endure a monthly struggle to make their financial ends meet. Mr. Barron suffers from serious medical problems which require continuous monitoring and treatment, as well as significant monthly drug expenses. The Debtor is also required to incur monthly drug expenditures. These monthly medical expenses are subject to substantial variation and cannot be accurately predicted. However, they obviously must be paid by the Debtor as they are incurred, even though such payments may significantly reduce the amount of discretionary funds available in any particular month. On occasion, the Debtor has been forced to seek salary advances from her employer in order to pay such unanticipated drug expenses.
Discussion
Undue Hardship Test
§ 523(a)(8) of the Bankruptcy Code excepts from an individual’s discharge “a loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit... unless excepting such debt from discharge... will impose an undue hardship on the debtor and the debtor’s dependents.
|
11,088,366 | 11,753,371 |
2001-07-02
|
United States Bankruptcy Court for the Eastern District of Texas
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron)
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron), 264 B.R. 833 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_8
|
more than a showing of tight finances, and is not met ‘merely because repayment of the borrowed funds would require some major personal and financial sacrifices.’
|
Most courts have endorsed a three-prong test articulated by the Second Circuit Court of Appeals in Brunner v. New York State Higher Educ. Serv. Corp., 831 F.2d 395 (2d Cir.1987) under which a debtor is required to show:
(1) that the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loan;
(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loan; and
(3) that the debtor has made good faith efforts to repay the loan.
Id. at 396. This test has been essentially adopted by the Third Circuit, the Sixth Circuit, the Seventh Circuit, and the Ninth Circuit. While the Eighth Circuit purports to apply its own independent “totality of the circumstances” test, the Eighth Circuit test requires an examination of the same factors articulated by Brunner, including the debtor’s current and future financial resources, the reasonableness of the debtor’s living expenditures, and any other relevant facts or circumstances. Many courts within the Fifth Circuit have also utilized the Brun-ner analysis. In recognition of the general consensus in this area, this Court will review the Debtor’s evidentiary presentation in light of the Brunner factors in order to determine whether she has met her burden to demonstrate the existence of an undue hardship.
Under the first Brunner element, the Debtor is required to show that she cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if she is forced to repay the student loan. This analysis is actually a two-step process encompassing: (1) the evaluation of the debtor’s present standard of living based upon her lifestyle attributes which appear from the record and (2) whether the forced repayment of the student loan obligation will preclude the debtor from maintaining a minimal standard of living. The test requires “more than a showing of tight finances, and is not met ‘merely because repayment of the borrowed funds would require some major personal and financial sacrifices.
|
11,088,366 | 11,753,371 |
2001-07-02
|
United States Bankruptcy Court for the Eastern District of Texas
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron)
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron), 264 B.R. 833 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_4
|
more reliably guarantees that the hardship presented is ‘undue.’
|
This factor “more reliably guarantees that the hardship presented is ‘undue.
|
11,088,366 | 11,753,371 |
2001-07-02
|
United States Bankruptcy Court for the Eastern District of Texas
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron)
|
Barron v. Texas Guaranteed Student Loan Corp. (In re Barron), 264 B.R. 833 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_0
|
encompasses a notion that the debtor may not wilfully or negligently cause his own default,' but rather his condition must result from ‘factors beyond his reasonable control.’
|
In re Elmore, 230 B.R. at 27, citing Brunner, 831 F.2d at 396.
Because of the entry of the Travis County judgment, there is no longer any repayment period for this loan. That judgment may remain valid against the Debtor for the remainder of her life, pursuant to the Defendant’s exercise of the rather simple state law procedures regarding the dormancy and revival of judgments. Thus, regardless of whether any future improvement in the Debtor’s financial affairs may be anticipated as a result of the entry of a discharge order, the fact that this judgment will otherwise remain pending against the Debtor in the post-discharge period, with all post-judgment collection remedies available to the Defendant until such time as the judgment is fully and completely satisfied, leads this Court to conclude that the Debtor has satisfactorily demonstrated the existence of additional circumstances under which the undue hardship of requiring the payment of this debt to the Defendant in such an “all or nothing” mode will persist throughout the foreseeable future. This aspect recognizes that undue hardship “
|
11,139,727 | 11,753,371 |
2001-01-05
|
United States Bankruptcy Court for the Southern District of New York
|
Thoms v. Educational Credit Management Corp. (In re Thoms)
|
Thoms v. Educational Credit Management Corp. (In re Thoms), 257 B.R. 144 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
undue hardship on the debtor and the debtor’s dependents.
|
Id. Thus, the borrower has the burden of evaluating the investment and bears the risk of an imprudent decision. Brunner, 46 B.R. at 756 n. 3.
A discharge under section 727... of this title does not discharge an individual debtor from any debt—
(8) for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor’s dependents;
Pursuant to this section, the only situation that would allow a debtor to avoid the nondischargeability of a student loan would be a showing that requiring payment of such loan would impose an “
|
11,139,727 | 11,753,371 |
2001-01-05
|
United States Bankruptcy Court for the Southern District of New York
|
Thoms v. Educational Credit Management Corp. (In re Thoms)
|
Thoms v. Educational Credit Management Corp. (In re Thoms), 257 B.R. 144 (2001)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_5
|
to maximize income and minimize expenses.
|
Brunner, 831 F.2d at 396. This further requirement serves the purpose of making the discharge of student loans more difficult to obtain and insures that the hardship is “undue.” Id.
The type of “additional circumstance” that would affect the debtor’s continuing ability to repay would be a circumstance that impacted on the debtor’s future earning potential but which was either not present when the debtor applied for the loans or has since been exacerbated. Otherwise, the debtor could have calculated that factor into its cost-benefit analysis at the time the debtor obtained the loan. An example of an additional circumstance impacting on the debtor’s future earnings would be if the debtor experienced an illness, developed a disability, or became responsible for a large number of dependents after receiving the loan.
The third element requires a showing that the debtor made a good faith effort to repay the student loan. In considering this factor, in addition to reviewing actual payments made on the loan, courts consider whether the debtor has attempted other remedies available such as requesting deferment of payment. Brunner, 831 F.2d at 397. Moreover, to establish good faith, the default cannot stem from the debtor’s wilful conduct or the debtor’s neglect. Rather, it must result from factors beyond the debtor’s reasonable control. The debtor must prove its efforts “
|
343,908 | 11,753,371 |
2003-06-02
|
United States District Court for the Southern District of New York
|
Williams v. New York State Higher Education Services Corp. (In re Williams)
|
Williams v. New York State Higher Education Services Corp. (In re Williams), 296 B.R. 298 (2003)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
will impose an undue hardship on the debtor and the debtor’s dependents.
|
On March 25, 2002, the Bankruptcy Court held a trial and ruled that Williams was not entitled to discharge her student loans on the ground that the loans created a financial hardship. The court also issued an opinion on August 13, 2002, holding that Williams’ Stafford Loans were ineligible for loan forgiveness or deferment based on her employment as a teacher in a low-income area, pursuant to 20 U.S.C. § 1078-10 and FFEL Program. See id. at 5. In addition, the court held that the UMDNJ Loans were ineligible for deferment or cancellation based on the terms of the promissory notes. See id. The court did not make a determination on the accuracy of the amounts claimed by each defendant. Williams filed this appeal on October 24, 2002, arguing that the Bankruptcy Court erred, and that her loans should be discharged, forgiven, or deferred.
II. STANDARD OF REVIEW
A district court sits as an appellate court in bankruptcy cases and applies dual standards of review. Questions of law are subject to de novo review. See In re Maxwell Newspapers, Inc., 981 F.2d 85, 89 (2d Cir.1992); Seaman Furniture Co., Inc. v. Seaman-Mitchel Assoc. (In re Seaman Furniture Co. of Union Square), No. 96 Civ. 4268, 1996 WL 741604, at *1 (S.D.N.Y. Dec.27, 1996). The Bankruptcy Court’s findings of fact will only be set aside if they are clearly erroneous. See Fed. R. Bankr.P. 8013; In re Artha Mgmt., Inc., 91 F.3d 326, 328 (2d Cir.1996).
III. STAFFORD LOANS
A. Loan Discharge
1. However, pursuant to 11 U.S.C. § 523(a)(8), a student loan can be discharged if repayment of the debt “
|
9,082,415 | 11,753,371 |
2003-06-25
|
United States District Court for the Northern District of Florida
|
Educational Credit Management Corp. v. Stanley
|
Educational Credit Management Corp. v. Stanley, 300 B.R. 813 (2003)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
impose an undue hardship on the debtor and the debtor’s dependents.
|
A finding is clearly erroneous if, based on the entire record, the appellate court is left with a definite and firm conviction that a mistake has been committed. See, e.g., Anderson v. Bessemer City, 470 U.S. 664, 578, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985); United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948); Walker v. Mortham, 158 F.3d 1177, 1193 (11th Cir.1998). See also Wardwell v. Sch. Bd. of Palm Beach County, 786 F.2d 1554, (11th Cir.1986) (finding district court’s findings were clearly erroneous).
The Bankruptcy Court’s conclusions of law are reviewed de novo. See Nordberg v. Arab Banking Corp. (In re Chase & Sanborn Corp.), 904 F.2d 588, 593 (11th Cir.1990); Fed. Bankr.R. 8013.
“Undue hardship” is a mixed question of fact and law. Factual findings that inform the determination are reviewed for clear error, while the application of the proper legal standard to the facts as found by the Bankruptcy Court is subject to plenary review. See, e.g., Pullman-Standard v. Swint, 456 U.S. 273, 289-91 n. 19, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982); Int’l Ins. Co. v. Johns, 874 F.2d 1447, 1453 (11th Cir.1989).
III
Student loans afford borrowers an opportunity to obtain an education they otherwise might not be able to afford. When borrowers graduate, their liabilities typically exceed their assets. If student loans were subject to discharge in bankruptcy on the same terms as ordinary debts, borrowers often would be able to declare bankruptcy and avoid payment. The availability of funds for student loans undoubtedly would diminish. Such loans may be discharged only if denying discharge would “
|
3,716,907 | 11,753,371 |
2006-08-31
|
United States Bankruptcy Court for the Middle District of Louisiana
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer)
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer), 348 B.R. 66 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_7
|
unless excepting such debt from discharge ... will impose an undue hardship on the debtor or the debtor’s dependents.
|
The debtors’ three daughters were born twelve weeks before their expected due date, and all have disabilities for which they receive monthly Supplemental Security Income (“SSI”) totaling $1809.
Melissa Salyer is a claims adjuster for SIF Consultants. Her annual salary is $28,000. Samuel Salyer was not working outside the home at the time of trial, though he receives $1091 each month from the government for an unspecified service-connected disability. He spends his days caring for the three children, who were just over fourteen months old on the date of trial. In addition to feeding and changing the children, he attends to their heart monitors, breathing equipment and their other physical needs. He also takes the children to doctors’ appointments.
Mr. Salyer has an unimpressive work history. He received his G.E.D. in 1989. After serving in the United States Army, he was a student worker while attending college; worked briefly at Baton Rouge General Hospital; and briefly held a job at a fast food restaurant before being terminated. He testified on cross-examination that he has been unable to find work he could do in the home while also caring for the triplets. He also testified that if he did not care for the children, outside child care could cost $400 per week per child. He also stated that he believes the triplets’ SSI benefits and Medicaid eligibility will terminate if either his wife’s salary increases significantly or he goes to work outside the home (a belief Mrs. Salyer adopted in her testimony).
LAW AND ANALYSIS
Section 523(a)(8) of the Bankruptcy Code prevents the discharge of student loan debt “unless excepting such debt from discharge... will impose an undue hardship on the debtor or the debtor’s dependents.
|
3,716,907 | 11,753,371 |
2006-08-31
|
United States Bankruptcy Court for the Middle District of Louisiana
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer)
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer), 348 B.R. 66 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_8
|
merely because repayment of [the student loans] would require some major personal or financial sacrifices.
|
” (emphasis added). “Undue hardship” is not defined by the Bankruptcy Code. However, the statute requires a showing of “undue” hardship; mere “garden-variety” hardship is insufficient justification for a discharge of student loan debt.
The Fifth Circuit in Gerhardt adopted the Second Circuit’s Brunner test for the “undue hardship” determination under 11 U.S.C. § 523(a)(8). Brunner and Gerhardt allow a debtor to discharge student loan debts if the debtor establishes:
(1) inability to maintain a minimal standard of living for himself and dependents if forced to repay the loans;
(2) additional circumstances indicating that the state of affairs is likely to exist for a significant period; and
(3) good faith efforts to repay the loans.
The debtor bears the burden of proving all three elements by a preponderance of the evidence. If the debtor fails to prove even one of these, the inquiry ends and the student loan cannot be discharged.
I. THE DEBTORS DID NOT PROVE THAT REPAYMENT WOULD LEAVE THEM UNABLE TO MAINTAIN A MINIMAL STANDARD OF LIVING FOR THEMSELVES AND THEIR CHILDREN.
Gerhardt first directs bankruptcy courts to determine whether a debtor can maintain a minimal standard of living for herself and her dependents based on current income and expenses, if she is forced to repay the student loan. To assess the debtors’ request for a discharge, the court must consider:
1. The debtor’s present standard of living based upon the debtor’s lifestyle attributes which appear from the record; and
2.
Debtors cannot satisfy this test “
|
3,716,907 | 11,753,371 |
2006-08-31
|
United States Bankruptcy Court for the Middle District of Louisiana
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer)
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer), 348 B.R. 66 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
has made good faith efforts to repay [her] loans.
|
The debtors also contend that assuming even the most optimistic series of future events (in which the triplets’ SSI and Medicaid eligibility is not terminated and the family’s expenses do not increase), the Salyers’ financial condition inevitably will decline. The record does not support their claims.
First, the Salyers make significant discretionary expenditures. For example, in November 2005 alone, the Salyers made purchases at Major Video and Blockbuster, and “fast food” establishments including Egg Roll King, McDonald’s, Subway, Sonic, Burger King, China House, Piccadilly, Raisin’ Cane’s, CC’s Coffee and Taco Bell.
Next, the debtors also have not economized where they could. For instance, every month the Salyers spend $146 for digital cable television and internet access. The debtors also spend an average of $87 a month for unlimited long distance home telephone service through BellSouth, plus an average of $146 a month for Sprint cellular phones. Notwithstanding Mr. Salyer’s explanations, the dual long distance services are duplicative. Simply by settling for basic cable television and economizing on their telephone service, the Salyers easily could reduce their monthly expenses without foregoing a comfortable quality of life and afford to make some, if not all, of their student loan payments.
The evidence supports a finding that the Salyers have not proven that they cannot afford reasonably necessary living expenses and maintain a minimal standard of living for themselves and their children, if they must repay their student loans. THE SALYERS FAILED TO PROVE THEY MADE GOOD FAITH EFFORTS TO REPAY THEIR STUDENT LOANS
Under Gerhardt, the good faith element requires the debtor to show that she “
|
3,716,907 | 11,753,371 |
2006-08-31
|
United States Bankruptcy Court for the Middle District of Louisiana
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer)
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer), 348 B.R. 66 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_5
|
efforts to obtain employment, maximize income, and minimize expenses.
|
Thus bankruptcy courts examine the debtor’s “
|
3,716,907 | 11,753,371 |
2006-08-31
|
United States Bankruptcy Court for the Middle District of Louisiana
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer)
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer), 348 B.R. 66 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans.
|
Although Mr. Salyer testified that he and his wife could not afford the $14.80 monthly payment each would make to participate in the ICRP based upon their monthly income and expenses at the time of trial, the evidence supports a finding that that Mr. and Mrs. Salyer easily could have afforded to participate in the ICRP had they reduced spending on cable television, fast food, movie rentals, long distance telephone calls and movie tickets. Those reductions would not significantly reduce their lifestyle.
The Salyers readily admit that they have not made a single payment on any of their student loan obligations since the debts first came due. Mr. Salyer’s testimony suggests that the loans were in deferment before they filed bankruptcy, but the testimony concerning deferment was confusing and incomplete. Mr. Salyer testified that he and his wife called Sallie Mae on numerous occasions claiming that they were entitled to deferment, and that he even contacted the Governor’s Office and the Louisiana Attorney General to assist the couple in obtaining deferments. However, Mr. Salyer’s testimony is uncorroborated by independent evidence.
To summarize, the debtors’ failure to make any payment on their student loan debt, to economize and to seek a reduced payment plan through The William D. Ford Program income contingent repayment plan, in combination demonstrate their lack of good faith.
III.
Gerhardt’s third test is whether “
|
3,716,907 | 11,753,371 |
2006-08-31
|
United States Bankruptcy Court for the Middle District of Louisiana
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer)
|
Salyer v. Sallie Mae Servicing Corp. (In re Salyer), 348 B.R. 66 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
likely to persist for a significant portion of the repayment period of the student loans.
|
Second, the debtors point to the challenge of raising their children, who as a result of their prematurity face physical and perhaps other developmental challenges, and require specialized care. Absent that evidence, the record does not support a finding that the children’s conditions are “
|
8,450,856 | 11,753,371 |
2006-09-28
|
United States District Court for the District of Connecticut
|
Educational Credit Management Corp. v. Curiston
|
Educational Credit Management Corp. v. Curiston, 351 B.R. 22 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
additional circumstances exist indicating that this state of affairs [namely, the debtor’s inability to maintain a minimal standard of living] is likely to persist for a significant portion of the repayment period of the student loans.
|
Id. Accordingly, the Court will exercise its discretion to address ECMC’s preexisting condition argument even though it was not raised in the Bankruptcy Court.
2. The Second Circuit has not yet had occasion to consider whether a court can as a matter of law consider a preexisting condition in assessing the second prong of its Brunner test.
As articulated in Brunner, the second element of its test requires the debtor to establish that “
|
8,450,856 | 11,753,371 |
2006-09-28
|
United States District Court for the District of Connecticut
|
Educational Credit Management Corp. v. Curiston
|
Educational Credit Management Corp. v. Curiston, 351 B.R. 22 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_9
|
clear congressional intent exhibited in section 523(a)(8) to make the discharge of student loans more difficult than that of other nonexcepte.d debt.
|
Moreover, there is “
|
8,450,856 | 11,753,371 |
2006-09-28
|
United States District Court for the District of Connecticut
|
Educational Credit Management Corp. v. Curiston
|
Educational Credit Management Corp. v. Curiston, 351 B.R. 22 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_2
|
that additional circumstances exist indicating that [her inability to maintain a minimal standard of living for herself if forced to repay the loans] is likely to persist for a significant portion of the repayment period of the student loans.
|
The following factors appear most relevant in considering that requirement: (1) Ms. Curiston’s age and the limited number of working years remaining in which to repay her loans, see Curiston, 2004 Bankr.LEXIS 2322, at * 12; (2) her lack of more lucrative job skills than those she is using, see id. at *11; (3) her psychological and physical disabilities, which prevent full-time employment, see id. at * 13; and (4) the likelihood that her expense-to-income ratio will continue to increase, see id. at *7, *10, *12 (noting that Ms. Curiston has made no provision for retirement, that the $450 her mother contributes monthly will cease when her mother moves to a nursing home, that the debtor will need to repair and eventually replace her car, and that her income is likely to decrease). All of those factors support the Bankruptcy Court’s conclusion that Ms. Curiston satisfied the second element of the Brunner standard.
ECMC argues that the Bankruptcy Court erred because it found that Ms. Curiston’s health had improved. Therefore, ECMC argues, Ms. Curiston could not demonstrate that her poor health would continue to affect her earnings potential for a substantial portion of the repayment period. ECMC confuses the requirements of Brunner’s second prong. Rather, she must prove “
|
8,450,856 | 11,753,371 |
2006-09-28
|
United States District Court for the District of Connecticut
|
Educational Credit Management Corp. v. Curiston
|
Educational Credit Management Corp. v. Curiston, 351 B.R. 22 (2006)
|
1999-02-26
|
United States Bankruptcy Court for the District of Connecticut
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore)
|
Elmore v. Massachusetts Higher Education Assistance Corp. (In re Elmore), 230 B.R. 22 (1999)
|
11753371_5
|
measured by [a debtor’s] efforts to obtain employment, maximize income and minimize expenses, and to undertake all other reasonable efforts to insure repayment.
|
Id. at *14. Furthermore, Ms. Curiston may also be facing a large, non-dischargeable tax liability at the end of the payment period, see id. at *15, at a time when her annual earnings are likely to have decreased even further. Finally, the Bankruptcy Court found that Ms. Curiston had sought less drastic means of managing her debts held by ECMC in the past. The Bankruptcy Court specifically found that she had requested and received several deferments of the loans currently held by ECMC. See id. at *14. Good faith is “
|
4,183,907 | 11,766,134 |
2011-08-11
|
United States Bankruptcy Court for the Eastern District of Pennsylvania
|
Fledderman v. Glunk (In re Glunk)
|
Fledderman v. Glunk (In re Glunk), 455 B.R. 399 (2011)
|
1999-01-15
|
United States Bankruptcy Court for the Western District of Pennsylvania
|
Nazario v. Nazario (In re Nazario)
|
Nazario v. Nazario (In re Nazario), 228 B.R. 394 (1999)
|
11766134_0
|
false pretenses, a false representation or actual fraud.
|
to M
c. procedures Dr. Glunk performed at his private facility ^ to DO
Did Dr. Glunk misrepresent his private facility as affiliated with the MLH System?. ^ DO CO
Did Dr. Glunk make a material misrepresentation by failing to disclose that his private office was not licensed by the Commonwealth of Pennsylvania?. CO cn
Did Dr. Glunk misrepresent the risks of the 2001 procedure?.... DO
Did Dr. Glunk make misrepresentations regarding the anesthesia services for the 2001 Procedure?. DO ÍO
a. the presence of an anesthesiologist. DO CO
b. the type of anesthesia administered to Amy Fledderman... CO M
Did Dr. Glunk make misrepresentations concerning the 1999 Procedure. CO DO
V. CONCLUSION..433
I. INTRODUCTION
Debtor Richard Paul Glunk (“Dr. Glunk”) is a plastic surgeon. On May 23, 2001, Dr. Glunk performed elective, liposuction surgery on an 18-year-old woman named Amy Fledderman (sometimes referred to as “Amy”) at his private ambulatory surgical center in King of Prussia, Pennsylvania. Amy Fledderman died two days later as a result of complications arising from the surgery.
On August 31, 2001, Amy’s parents, Daniel Fledderman and Colleen Fledder-man (“Mrs. Fledderman”) (collectively, “the Plaintiffs”), filed a lawsuit (“the State Court Action”) on behalf of their daughter’s estate and themselves against Dr. Glunk in the Court of Common Pleas of Philadelphia County (“the C.P. Court”). After a jury trial, the C.P. Court entered judgment in favor of the Plaintiffs and against Dr. Glunk in the amounts of $3,525 million in compensatory damages and $15.0 million in punitive damages. The sole issue in this proceeding is whether the debt is nondischargeable under § 523(a)(2)(A) of the Bankruptcy Code because it arose from “
|
4,183,907 | 11,766,134 |
2011-08-11
|
United States Bankruptcy Court for the Eastern District of Pennsylvania
|
Fledderman v. Glunk (In re Glunk)
|
Fledderman v. Glunk (In re Glunk), 455 B.R. 399 (2011)
|
1999-01-15
|
United States Bankruptcy Court for the Western District of Pennsylvania
|
Nazario v. Nazario (In re Nazario)
|
Nazario v. Nazario (In re Nazario), 228 B.R. 394 (1999)
|
11766134_0
|
false pretenses, a false representation, or actual fraud
|
It is unnecessary for me to resolve this issue of fact.
14
.This was a major factual issue at trial. This finding is discussed further in Part IV. B.l.a., infra.
15
. When MAC is used, the patient is breathing on his/her own and is easily arousable, such that, if the medication for sedation is not longer administered, the patient will quickly arouse. (3 N.T. at 56-57). In the majority of MAC cases, healthcare providers can continue to have a conversation with the patient. (3 N.T. at 127). However, when a patient is under general anesthesia, they are unconscious. (3 N.T. at 57).
16
. The record lacks testimonial or evidentiary support regarding the precise details of Amy Fledderman’s post-operative complications and treatment and ultimate cause of her death. Those facts were not material factual issues in this proceeding. However, through representations made by counsel during the course of the proceeding, it is undisputed that on the day of the 2001 Procedure, Amy Fled-derman was transferred post-operatively from Dr. Glunk's private facility to a hospital and that she died two (2) days later as a result of complications, which included "fat embolism syndrome.” Findings of Fact No. 88 and 89 are included to provide context to the factual narrative set forth above.
17
. As stated earlier, the Plaintiffs' complaint stated causes of action under 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(6). The Plaintiffs voluntarily dismissed the § 523(a)(6) claim prior to trial. Therefore, my discussion is limited the Plaintiffs’ claim under § 523(a)(2)(A).
18
. In Field v. Mans, 516 U.S. 59, 68, 116 5.Ct. 437, 133 L.Ed.2d 351 (1995), the Supreme Court stated that "common sense would balk" at any reading of § 523(a)(2)(A) that did not require intentional misrepresentation. The Court held that "
|
11,669,237 | 11,761,579 |
1999-07-06
|
United States Bankruptcy Court for the Middle District of Florida
|
Sibson v. Midland Mortgage Co. (In re Sibson)
|
Sibson v. Midland Mortgage Co. (In re Sibson), 235 B.R. 672 (1999)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_3
|
left a dramatic ambiguity in the notification,
|
The plaintiff then entered into a stipulation in an attempt to settle the adversary proceeding, and failed to file an amended complaint. When the Court denied approval of the compromise, the plaintiff moved for relief pursuant to Rule 9024, Fed.R.Bankr.P., from an order dismissing the adversary proceeding. Id. at 769.
This Court denied the motion, holding that a lawyer’s carelessness does not present cognizable grounds for relief under Rule 60(b), Fed.R.Civ.P. Id. The Court noted that these rulings comport with the Supreme Court’s rejection of the claim in Link v. Wabash R.R., 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962), that a client should not suffer for the sins of the client’s attorney. Accordingly, this Court found that the plaintiffs motion was not well taken. Id.
This Court’s holding in Marston is in accord with numerous cases in other juris dictions finding an absence of excusable neglect in connection with the failure to timely file a complaint. See, e.g., In re A.H. Robins Co., Inc., 1998 WL 904717, at *1 (4th Cir.1998) (affirming denial of Rule 60(b) motion for relief where plaintiff negligently failed to timely file suit in compliance with court’s order); Martini v. A. Finkl & Sons Co., 955 F.Supp. 905, 907 (N.D.Ill.1997) (attorney negligence in failing to timely file complaint did not did not constitute excusable neglect); Lynch v. Cannatella, 122 F.R.D. 195, 199 (E.D.La.1987) (failure to timely amend complaint was not excusable neglect where attorney assumed that his secretary would prepare and file the amended complaint). In Pioneer, the Court found that the failure to timely file a proof of claim, where the notice of the bar date was “inconspicuous,” “peculiar,” and “
|
11,669,237 | 11,761,579 |
1999-07-06
|
United States Bankruptcy Court for the Middle District of Florida
|
Sibson v. Midland Mortgage Co. (In re Sibson)
|
Sibson v. Midland Mortgage Co. (In re Sibson), 235 B.R. 672 (1999)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_4
|
[t]his is not to say, of course, that respondents’ counsel was not remiss in failing to apprehend the notice. To be sure, were there any evidence of prejudice to petitioner or to judicial administration in this case, or any indication at all of bad faith, we could not say that the Bankruptcy court abused its discretion in declining to find the neglect to be ‘excusable.’
|
In Pioneer, the Court found that the failure to timely file a proof of claim, where the notice of the bar date was “inconspicuous,” “peculiar,” and “left a dramatic ambiguity in the notification,” was excusable. The Court placed great emphasis on the less than clear notice, stating that “[t]his is not to say, of course, that respondents’ counsel was not remiss in failing to apprehend the notice.
|
11,669,375 | 11,761,579 |
1999-07-06
|
United States Bankruptcy Court for the Middle District of Florida
|
Bautista v. Midfirst Bank (In re Bautista)
|
Bautista v. Midfirst Bank (In re Bautista), 235 B.R. 678 (1999)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_3
|
left a dramatic ambiguity in the notification,
|
The plaintiff then entered into a stipulation in an attempt to settle the adversary proceeding, and failed to file an amended complaint. When the Court denied approval of the compromise, the plaintiff moved for relief pursuant to Rule 9024, Fed.R.Bankr.P., from an order dismissing the adversary proceeding. Id. at 769.
This Court denied the motion, holding that a lawyer’s carelessness does not present cognizable grounds for relief under Rule 60(b), Fed.R.Civ.P. Id. The Court noted that these rulings comport with the Supreme Court’s rejection of the claim in Link v. Wabash R.R., 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962), that a client should not suffer for the sins of the client’s attorney. Accordingly, this Court found that the plaintiffs motion was not well taken. Id.
This Court’s holding in Marston is in accord with numerous cases in other jurisdictions finding an absence of excusable neglect in connection with the failure to timely file a complaint. See, e.g., In re A.H. Robins Co., Inc., 1998 WL 904717 *1, 1998 U.S.App. Lexis 32560, 32560 (4th Cir.1998) (affirming denial of Rule 60(b) motion for relief where plaintiff negligently failed to timely file suit in compliance with court’s order); Martini v. A. Finkl & Sons Co., 955 F.Supp. 905, 907 (N.D.Ill.1997) (attorney negligence in failing to timely file complaint did not did not constitute excusable neglect); Lynch v. Cannatella, 122 F.R.D. 195, 199 (E.D.La.1987) (failure to timely amend complaint was not excusable neglect where attorney assumed that his secretary would prepare and file the amended complaint). In Pioneer, the Court found that the failure to timely file a proof of claim,-where the notice of the bar date was “inconspicuous,” “peculiar,” and “
|
11,669,375 | 11,761,579 |
1999-07-06
|
United States Bankruptcy Court for the Middle District of Florida
|
Bautista v. Midfirst Bank (In re Bautista)
|
Bautista v. Midfirst Bank (In re Bautista), 235 B.R. 678 (1999)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_4
|
[t]his is not to say, of course, that respondents’ counsel was not remiss in failing to apprehend the notice. To be sure, were there any evidence of prejudice to petition er or to judicial administration in this case, or any indication at all of bad faith, we could not say that the Bankruptcy court abused its discretion in declining to find the neglect to be ‘excusable.’
|
In Pioneer, the Court found that the failure to timely file a proof of claim,-where the notice of the bar date was “inconspicuous,” “peculiar,” and “left a dramatic ambiguity in the notification,” was excusable. The Court placed great emphasis on the less than clear notice, stating that “[t]his is not to say, of course, that respondents’ counsel was not remiss in failing to apprehend the notice.
|
9,361,617 | 11,761,579 |
2003-01-17
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Pittman
|
In re Pittman, 289 B.R. 448 (2003)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_1
|
Judicial estoppel is applied to the calculated assertion of divergent sworn positions ... and is designed to prevent parties from making a mockery of justice by inconsistent pleadings.
|
See In re Weske, 203 B.R. 694, 695 (Bankr.E.D.Wis.1996) (noting that §§ 1322(b)(2) and 1325 do not apply to lessor because it is not a secured claimant); In re Ramirez-Arellano, 113 B.R. 796, 797 (Bankr.S.D.Fla.1990) (finding that § 1322(b)(2) did not apply to option to purchase in lease agreement).
The issue before the Court is instead governed 'by § 1322(b)(7). Section 1322(b)(7) permits a Chapter 13 debtor to assume an un-expired lease, subject to the provisions of § 365. However, a debtor who assumes an unexpired lease pursuant to § 1322(b)(7) and subject to § 365 may not vary the terms thereof. In re Rigg, 198 B.R. 681, 685 (Bankr.N.D.Tex.1996). Cf. In re Jackson, 105 B.R. 418, 419 (Bankr.S.D.Ohio 1989) (noting that assumption of un-expired lease pursuant to 11 U.S.C. §§ 365 and 1322(b)(7) does not augment debtor’s rights under contract other than to permit debtor to cure defaults and ignore ipso facto clauses and sustaining objection to confirmation of plan which required lessor to finance purchase option over life of the plan); Blackburn v. Sec. Pac. Credit Corp. (In re Blackburn), 88 B.R. 273, 276 (Bankr.S.D.Cal.1988) (denying confirmation of Chapter 13 plan by which debtors attempted to finance residual purchase price of leased vehicle upon lease’s expiration because lease contained no such enabling provision). The Court holds that § 1322(b)(7) does not permit a Chapter 13 debtor to finance the residual purchase price of a leased vehicle over the life of a Chapter 13 plan.
Finally, Debtor argues that GE’s objection to confirmation is at odds with the legal position it has taken in other pleadings filed in the case. “Judicial estoppel is applied to the calculated assertion of divergent sworn positions... and is designed to prevent parties from making a mockery of justice by inconsistent pleadings.
|
9,184,115 | 11,761,579 |
2004-10-06
|
United States Bankruptcy Court for the Western District of Missouri
|
Woodcock v. United States ex rel. Department of Education (In re Woodcock)
|
Woodcock v. United States ex rel. Department of Education (In re Woodcock), 315 B.R. 487 (2004)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_2
|
any other reason justifying relief from the operation of the judgment.
|
Cf., In re Gerhardt, 348 F.3d 89, 93 (5th Cir.2003) (citing In re Grigas, 252 B.R. 866, 875 (Bankr.D.N.H.2000)) (concluding debtor could not claim undue hardship where financial distress was self-imposed by choosing low paying job when qualified for higher paying jobs); In re Healey, 161 B.R. 389, 394-95 (E.D.Mich.1993) (“A resolute determination to work in one’s field of dreams, no matter how little it pays, cannot be the fundamental standard from which ‘undue hardship’ under § 523(a)(8)(B) is measured”); cf. also, In re Ford, 151 B.R. 135, 139-40 (Bankr.M.D.Tenn.1993) (denying undue hardship discharge because debtor voluntarily placed limitations on her availability for work).
As noted, Woodcock certainly has other remedies available should he wish to have the undue hardship of his student loans redetermined, such as filing a new complaint as part of a new bankruptcy case. Thus, weighing the equities of granting the debtor a fresh start and the need for finality, this Court finds that the changed circumstances asserted by Woodcock do not outweigh the need for finality in student loan adversary proceedings, nor do the asserted changed circumstances cause enforcement of the previous judgment to no longer be equitable. See, e.g., In re Kapsin, 265 B.R. at 780-82; Fed.R.Civ.P. 60(b)(5). Relief Under Rule 60(b)(6)
Rule 60(b)(6) permits a court to grant relief from a final judgment or order for “
|
11,447,434 | 11,761,579 |
2001-02-13
|
United States Bankruptcy Court for the Southern District of Alabama
|
In re Kelly
|
In re Kelly, 281 B.R. 62 (2001)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_2
|
the court may relieve a party or a party’s legal representative from a final judgment, order or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect
|
The IRS filed a motion to dismiss the Debtors’ case based on the theory that the plan was filed in bad faith. As an initial ruling, the Court finds no evidence of bad faith on the part of the Debtors or their counsel. The Debtors used the form authorized by this District to outline their Chapter 13 plan. The area allowed in paragraph 2 for treatment of priority claims did not have sufficient space for the Debtors to fully explain their treatment of the IRS’s claim. As a result, the Debtors added a second page to the plan to outline their plan to turn over the vehicles to the IRS. The original plan contained in the Court’s file has two pages that are clearly marked “Page 1 of 2” and “Page 2 of 2”. There was no evidence that the Debtors sought to conceal the terms of their Chapter 13 plan from the IRS. Therefore, the Court finds that the Debtors’ plan was not filed in bad faith as to the IRS, and the IRS’s motion to dismiss on these grounds is due to be denied.
The IRS asks the Court to modify the Debtors’ Chapter 13 plan under 11 U.S.C. § 1829(a) to increase the Debtors’ plan payment to provide for a payout of the IRS’s claim within in the life of the plan. In the alternative, the IRS maintains that the Debtors’ plan is contradictory as to paragraphs 2(a) and paragraph 5 of the plan. The IRS asks the Court to construe the plan’s meaning, or to modify to allow cash payment of the IRS priority claim. The Debtors assert that the IRS has shown no grounds for modifying the plan, and that the plan is not contradictory or ambiguous. Under Rule 60(b)(1), “
|
11,447,434 | 11,761,579 |
2001-02-13
|
United States Bankruptcy Court for the Southern District of Alabama
|
In re Kelly
|
In re Kelly, 281 B.R. 62 (2001)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_3
|
left a dramatic ambiguity in the notification
|
Under Rule 60(b)(1), “the court may relieve a party or a party’s legal representative from a final judgment, order or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect”. The IRS asked in its memorandum of law that its motion to construe the plan be treated as a motion for relief under Bankruptcy Rule 9024. Based on the evidence submitted and the IRS’s request, the Court will treat the IRS’s motion to construe the plan as a motion for relief from the confirmation order.
In Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993), the United States Supreme Court held that “excusable neglect” under Rule 60(b)(1) should be determined from the totality of the circumstances surrounding the incident, including the following factors: the danger of prejudice to the debtor, the length of the delay and potential impact on judicial proceedings, the reason for the delay including whether it is within the reasonable control of the movant, and whether the movant acted in good faith. In determining that a creditor’s failure to file a timely proof of claim was “excusable neglect” under Bankruptcy Rule 9006(b)(2), the Pioneer Court focused on inadequacies in the notice of the bar date, observing that the notice was “inconspicuous”, “peculiar” and “
|
11,447,434 | 11,761,579 |
2001-02-13
|
United States Bankruptcy Court for the Southern District of Alabama
|
In re Kelly
|
In re Kelly, 281 B.R. 62 (2001)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_0
|
undone or unattended ... due to carelessness.
|
In determining that a creditor’s failure to file a timely proof of claim was “excusable neglect” under Bankruptcy Rule 9006(b)(2), the Pioneer Court focused on inadequacies in the notice of the bar date, observing that the notice was “inconspicuous”, “peculiar” and “left a dramatic ambiguity in the notification”.
The IRS’s failure to correctly interpret the Debtors’ plan was neglect under the Pioneer Court’s definition of neglect as giving “little attention or respect” to a matter, or, leaving “undone or unattended... due to carelessness.
|
11,530,086 | 11,761,579 |
2000-03-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Stewart
|
In re Stewart, 247 B.R. 515 (2000)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_1
|
directed against those who would attempt to manipulate the court system through calculated assertion of divergent sworn positions in judicial proceedings[,]
|
C. § 1322(b)(2)
EMC argues that as a mortgagee it is entitled to receive the amounts due and owing pursuant to a final summary judgment of foreclosure with statutory interest because anything less would violate 11 U.S.C. § 1322(b)(2). It is well settled that a creditor who fails to timely object to a proposed plan or appeal from a confirmation order cannot later attack a plan on the basis that one of its provisions is inconsistent with the Bankruptcy Code. See Lawrence Tractor Co. v. Gregory (In re Gregory), 705 F.2d 1118, 1121 (9th Cir.1983); Andersen v. UNIPAC-NEBHELP (In re Andersen), 179 F.3d 1253 (10th Cir.1999); Great Lakes Higher Educ. Corp. v Pardee (In re Pardee), 193 F.3d 1083 (9th Cir.1999). In re Chappell, 984 F.2d 775, 782 (7th Cir.1993). But see In re Escobedo, 28 F.3d 34, 35 (7th Cir.1994) (holding that confirmed plan that did not provide for full payment of priority claim was “nugatory” and not res judicata.) A Chapter 13 plan’s failure to comply with § 1322(b)(2) is a ground for a valid objection to or appeal from a confirmation order, but not a legitimate ground to attack a plan that was confirmed three years ago. All of the cases cited by EMC are procedurally valid objections to or appeals from confirmation orders and are therefore inapposite to the issue before the Court. EMC’s belated argument is not a substitute for a timely objection to confirmation, is not well taken, and is not a sufficient basis for the Court to upset the Order of Confirmation.
V. Judicial estoppel is a doctrine “
|
11,530,086 | 11,761,579 |
2000-03-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Stewart
|
In re Stewart, 247 B.R. 515 (2000)
|
1998-12-15
|
United States Bankruptcy Court for the Middle District of Florida
|
In re Norris
|
In re Norris, 228 B.R. 27 (1998)
|
11761579_1
|
[and] is designed to prevent parties from making a mockery of justice by [these] inconsistent pleadings.
|
Judicial estoppel is a doctrine “directed against those who would attempt to manipulate the court system through calculated assertion of divergent sworn positions in judicial proceedings[,]” “
|
11,184,665 | 11,763,357 |
2000-03-07
|
United States Bankruptcy Court for the Southern District of Ohio
|
Chapman v. Pomainville (In re Pomainville)
|
Chapman v. Pomainville (In re Pomainville), 254 B.R. 699 (2000)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_2
|
§ 523(a)(4) is limited to only those situations involving an express or technical trust relationship arising from placement of a specific res in the hands of the debt- or.
|
As a result, Richley received $14,504.00 in insurance proceeds. Neither Gabel nor Ravenscraft were aware of the property loss or the insurance proceeds. Ten years later, Gabel and Ravenscraft learned about the other’s involvement with Richley. When confronted, Richley agreed to transfer his entire interest in the property to Gabel and Ravenscraft. Four years later, Gabel and Ravenscraft learned of the 1978 property loss and the insurance proceeds paid to Richley. When Richley refused to tender the proceeds, Gabel and Ravenscraft initiated suit to recover the same under the theory of implied trust.
The trial court ruled in favor of Richley, finding that although a resulting trust existed with respect to the real estate no such trust existed with respect to the in surance proceeds. The appellate court affirmed. Relevant to this proceeding, the appellate court began its analysis by noting the distinction between implied and express trusts. Significantly, the appellate court found that there was no express trust created with respect to the insurance proceeds. Gabel, 101 Ohio App.3d at 363, 655 N.E.2d at 778. Although the court did not elaborate upon its reasoning in support of this finding because the parties themselves conceded the same, the finding appears to have been premised upon the absence of intent by the parties to create a fiduciary relationship with respect to the insurance proceeds given that Gabel and Ravenscraft did not even know about the property loss and the insurance proceeds until fourteen years after the fact.
Similarly, in this proceeding there is no evidence in the record that the Plaintiff and the Defendant intended to create a fiduciary relationship concerning the insurance proceeds. The Sixth Circuit, elaborating upon the express trust requirement set forth in Interstate Agency, has stated that “
|
11,184,665 | 11,763,357 |
2000-03-07
|
United States Bankruptcy Court for the Southern District of Ohio
|
Chapman v. Pomainville (In re Pomainville)
|
Chapman v. Pomainville (In re Pomainville), 254 B.R. 699 (2000)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_1
|
The existence of an express trust requires a clearly defined trust res, an unambiguous trust relationship, and specific, affirmative duties undertaken by a trustee.
|
R.E. America, Inc. v. Garver (In re Garver), 116 F.3d 176, 180 (6th Cir.1997) (emphasis added); see also Magisano, 228 B.R. at 191 (“
|
9,267,759 | 11,763,357 |
2003-11-03
|
United States Bankruptcy Court for the Eastern District of Virginia
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow)
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow), 306 B.R. 812 (2003)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_6
|
the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact.
|
In re Biondo, 180 F.3d at 130 (citing Cohen v. de la Cruz, 523 U.S. 213, 217, 118 S.Ct. 1212, 140 L.Ed.2d 341 (1998)). The exceptions at issue in this case arise under § 523, which makes debts non-dischargeable:
“(4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny;...
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity;”
11 U.S.C. §§ 523(a)(4), and 523(a)(6) (2002). Under Bankruptcy Rule 4005, the plaintiff has the burden of proof to make a debt non-dischargeable. Under § 523(a), the plaintiff must prove non-dischargeability by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); Farouki v. Emirates Bank Int’l., Ltd., 14 F.3d 244, 249 (4th Cir.1994); Combs v. Richardson, 838 F.2d 112 (4th Cir.1988); Whitson v. Middleton (In re Middleton), 100 B.R. 814, 818 (Bankr.EJD.Va.1988). Therefore, Hamm must prove by a preponderance of the evidence whether any of these provisions of § 523 apply to the case at issue.
A. Summary Judgment
In determining whether to grant summary judgment to a moving party, the Court looks to Rule 56(c) of the Federal Rules of Civil Procedure Rule which is made applicable to this proceeding by Federal Bankruptcy Rule 7056. Fed. R. Bankr P. 7056. First, “
|
9,267,759 | 11,763,357 |
2003-11-03
|
United States Bankruptcy Court for the Eastern District of Virginia
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow)
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow), 306 B.R. 812 (2003)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_6
|
the moving party is entitled to judgment as a matter of law.
|
Fed.R. The second requirement is that “
|
9,267,759 | 11,763,357 |
2003-11-03
|
United States Bankruptcy Court for the Eastern District of Virginia
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow)
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow), 306 B.R. 812 (2003)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_6
|
entitled to judgment as a matter of law,
|
In re Speaks, 193 B.R. at 440 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).
In determining whether to grant summary judgment, the Court is presented with several interpretations of the Rule 56 elements. With respect to the first element that there not be a genuine issue of material fact, the Supreme Court has defined a “material fact” as one that might affect the outcome of the suit. With respect to the second requirement that the moving party be “
|
9,267,759 | 11,763,357 |
2003-11-03
|
United States Bankruptcy Court for the Eastern District of Virginia
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow)
|
E.L. Hamm & Associates, Inc. v. Sparrow (In re Sparrow), 306 B.R. 812 (2003)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_7
|
The Minnesota District Court’s order granting summary judgment to Paine Webber refers to breach of a fiduciary duty between Magisano and Paine Webber ... Paine Webber has neither alleged nor proven the existence of the type of fiduciary relationship required to invoke 11 U.S.C. § 523(a)(4), and merely referring to the employee-employer relationship is insufficient
|
Despite this determination, the employee was found not to be a fiduciary under § 523(a)(4):
The precise issue presented is whether [the employee] was acting in a “fiduciary capacity” as Director of Data Processing at [the employer] during the period 1984 through October 1990.
It is true that [the employee] was held liable on a state law cause of action for breach of fiduciary duty as an employee of [the employer]. The jury verdict and the judgment of the state court with respect to that state law claim are res judicata as between the parties and cannot be relitigated in this Court. But the concept of “fiduciary” under Section 523(a)(4) of the Bankruptcy Code is different form and narrower than analogous state law concepts. The meaning and scope of the term “fiduciary” under Section 523(a)(4) has been discussed at length in In re Zoldan, 221 B.R. 79 (Bankr.S.D.N.Y.1998), and reference is made to that decision for the views of this Court on the issue. The issue in In re Zoldan was whether a general partner acting in respect to partnership property could be deemed a fiduciary under Section 523(a)(4).
The question here is whether Luppino as a management level employee was acting in a fiduciary capacity. See also Solar Systems and Peripherals, Inc. v. Burress (In re Burress), 245 B.R. 871, 877 (Bankr.D.Colo.2000) (former employee against whom state court judgment was obtained for breach of duty of loyalty was not a fiduciary pursuant to § 23(a)(4)); and Paine-Webber, Inc. v. Magisano (In re Magisano), 228 B.R. 187, 191 (Bankr.S.D.Ohio 1998) (“The Minnesota District Court’s order granting summary judgment to Paine Webber refers to breach of a fiduciary duty between Magisano and Paine Webber... Paine Webber has neither alleged nor proven the existence of the type of fiduciary relationship required to invoke 11 U.S.C. § 523(a)(4), and merely referring to the employee-employer relationship is insufficient”).
|
4,142,274 | 11,763,357 |
2012-06-14
|
United States Bankruptcy Court for the District of Massachusetts
|
Stewart Title Guaranty Co. v. McCarthy (In re McCarthy)
|
Stewart Title Guaranty Co. v. McCarthy (In re McCarthy), 473 B.R. 485 (2012)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_0
|
anjr debt ... for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.
|
Cadle Co. v. Hayes, 116 F.3d 957, 959 (1st Cir.1997).
Discussion
Stewart’s Summary Judgment Motion
Count I: Section 523(a)(2)
Stewart alleges that any debt for which it may be obligated under its title insurance policy as a result of the title defect arising from the Ipswich mortgage is one for which Mr. McCarthy will ultimately be liable to Stewart and that such debt of Mr. McCarthy should be found to be nondischargeable under Bankruptcy Code § 523(a)(2). Although its complaint in this proceeding does not use the term indemnification, the concept of indemnification is the foundation for Stewart’s debt. Section 523(a)(2)(A) of the Bankruptcy Code makes nondischargeable “anjr debt... for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.
|
4,142,274 | 11,763,357 |
2012-06-14
|
United States Bankruptcy Court for the District of Massachusetts
|
Stewart Title Guaranty Co. v. McCarthy (In re McCarthy)
|
Stewart Title Guaranty Co. v. McCarthy (In re McCarthy), 473 B.R. 485 (2012)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_5
|
fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.
|
The only documents in the record that are relevant to the question of whether Mr. McCarthy even knew the Firm’s malpractice insurance policy had been terminated are those attached to Mr. McCarthy’s affidavit. They do not indicate that Mr. McCarthy had knowledge of the cancellation before American Guarantee’s May 2, 2008 letter to him. Thus there is no basis for finding that Mr. McCarthy’s March 2008 certification to the BBO was made with the requisite fraudulent intent.
Similarly, Stewart’s unsubstantiated and disputed allegations in its complaint about relying on Mr. McCarthy’s certification to the BBO and actions it would have taken had it known of the lapse in insurance coverage do not support summary judgment in its favor on count I of the complaint even if Stewart had shown Mr. McCarthy acted with the requisite fraudulent intent. Bonardi, 2006 WL 1366942, at *1.
To the extent that Stewart’s claim under § 523(a)(2) is grounded in its allegations in the complaint that Mr. McCarthy failed to maintain his malpractice insurance policy without any gaps in coverage as required by the Agency Agreement, such a claim is a mere garden variety breach of contract claim. Stewart has proffered nothing that could form the basis for nondischargeability of such a claim under a section that demands proof of false pretense, a false representation or actual fraud. Gulati v. McClendon (In re McClendon), 415 B.R. 170, 182 (Bankr. D.Md.2009).
For the foregoing reasons, summary judgment in favor of Stewart on count I of the complaint shall be denied.
Count II: Section 523(a)(1)
Section 523(a)(4) excepts from discharge debts arising as a result of “
|
5,243,526 | 11,763,357 |
2006-10-30
|
United States Bankruptcy Court for the District of Massachusetts
|
Farley v. Romano (In re Romano)
|
Farley v. Romano (In re Romano), 353 B.R. 738 (2006)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_5
|
[a] discharge under section 727 ... of this title does not discharge an individual debtor from any debt ... for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.
|
333 Mass. at 452, 131 N.E.2d 376 (quoting Albert Richards Co., Inc. v. The Mayfair, Inc., 287 Mass. 280, 289, 191 N.E. 430 (1934); Burke v. Marlboro Awning Co., 330 Mass. 294, 300-301, 113 N.E.2d 222 (1953)).
Allstate was insolvent at least at the time of the sale to Casella. Romano did not rebut the evidence of Allstate’s insolvency in the form of Farley’s June 20, 2003 letter prepared in conjunction with the settlement of the Wheelabrator account in which he stated that Allstate’s liabilities exceeded its assets. Neither Farley nor the Romanos presented any direct evidence of when Allstate became insolvent, although Farley testified that Allstate had financial problems and may-have been insolvent at the time he first became associated with Romano. At least at the time of the sale to Casella, though, both Romano and Farley owed duties to Allstate’s creditors, as well as to each other, and their decisions to take $46,000 and $84,000, respectively, from one of the escrow accounts established for the payment of Allstate’s creditors constituted a breach of that fiduciary duty. Thus, the Court questions whether Farley, individually, is estopped from challenging Romano’s conduct in view of his own conduct. Cf. Ellis v. Varney, No. 9801397, 2004 WL 574827, at *38 (Mass.Super. Jan. 9, 2004).
B. Defalcation Applicable Law
Section 523(a)(4) of the Bankruptcy Code provides that “[a] discharge under section 727... of this title does not discharge an individual debtor from any debt... for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.
|
343,992 | 11,763,357 |
2003-07-18
|
United States Bankruptcy Court for the Central District of Illinois
|
Urological Group, Ltd. v. Petersen (In re Petersen)
|
Urological Group, Ltd. v. Petersen (In re Petersen), 296 B.R. 766 (2003)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_5
|
fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.
|
Nor did the DEBTOR, after Dr. Weimer’s death, inform any of the physicians of her use of the card while she was working for the GROUP. The DEBTOR never made a single repayment while she was employed by the GROUP despite earning substantial amounts of overtime pay. Although the DEBTOR maintained that she kept a separate file in her desk identifying the personal charges, none was discovered when she left. It was only after she left that she told Dr. Petersen. The DEBTOR’S nondisclosure is evidence of her intent to defraud. Most telling, in the Court’s view, is the contemporaneous improper coding of all of the personal charges as office expenses, in order to conceal her actions from the accountant. Accordingly, this Court determines that the debt found owing to the GROUP in the amount of $8,446.46 is nondischargeable under Section 523(a)(2)(A).
The DEBTOR contends that she is entitled to a credit of $2,763.52 for a payment made on July 8, 1998, to VISA. A check evidencing that payment was introduced into evidence. Because the GROUP’S account statement dated June 17, 1998, shows a balance due on the account of $2,020.54, the GROUP questions whether this payment to VISA was made on its account, or on another account of the DEBTOR. The statement for the prior month, dated May 17, 1998, showed a previous balance of $2,967.46 and a current balance due of $2,370.55. The DEBTOR maintained, however, that the payment was made on the GROUP’S account, but a credit for that amount does not appear on the account statements. The DEBTOR has failed to trace the payment to the GROUP’S account and her request for a credit will be denied. Section 523(a)(4)
Section 523(a)(4) excepts from discharge debts resulting from “
|
3,782,567 | 11,763,357 |
2010-10-14
|
United States Bankruptcy Court for the Western District of Michigan
|
Maloney v. Harte (In re Harte)
|
Maloney v. Harte (In re Harte), 440 B.R. 133 (2010)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_2
|
limited to only those situations involving an express or technical trust relationship arising from placement of a specific res in the hands of the debtor.
|
Board of Trustees v. Bucci (In re Bucci), 493 F.3d 635, 642 (6th Cir.2007). The term “fiduciary” has a narrower meaning in non-dischargeability litigation than in other contexts because 523(a)(4) covers only “express” or “technical” trusts and not trusts arising out of “the very act of wrongdoing.” Patel v. Shamrock Floorcovering Services, Inc. (In Patel), 565 F.3d 963, 968 (6th Cir.2009) (citing Davis v. Aetna Acceptance Co., 293 U.S. 328, 331, 55 S.Ct. 151, 79 L.Ed. 393 (1934)). These “constructive trusts,” arising at the time the wrong is done, do not satisfy the “fiduciary capacity” requirement because the debtor was not “a trustee before the wrong.”
In short, the scope of § 523(a)(4) is “
|
3,821,902 | 11,763,357 |
2006-09-28
|
United States Bankruptcy Court for the Northern District of Indiana
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy)
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy), 350 B.R. 820 (2006)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_6
|
if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
|
” R. 15, Ex. H, at 22.
In conclusion, the court finds that the plaintiffs conduct after the defendant commenced his bankruptcy case cannot be construed as collection actions or as continuations of the judicial proceedings in the Ohio district court. The court determines therefore that the plaintiff did not violate the automatic stay under § 362(a)(1) or (6) and certainly did not willfully violate it pursuant to § 362(h). Having found against the defendant on his counterclaims, the court now turns to the issues raised in the plaintiffs summary judgment motion.
B. Under Rule 56(c), which is made applicable in this court by Rule 7056 of the Federal Rules of Bankruptcy Procedure, summary judgment is proper “
|
3,821,902 | 11,763,357 |
2006-09-28
|
United States Bankruptcy Court for the Northern District of Indiana
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy)
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy), 350 B.R. 820 (2006)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_5
|
for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.
|
The court’s holding is perfectly applicable to the circumstances before this court:
We conclude that a garnishment or attachment does not transfer money or other property to a creditor, for pur poses of determining whether the transfer is an avoidable preference, until a final order of garnishment or attachment is issued. Until then, the transfer is tentative, its amount uncertain, and control or influence retained by the debtor to be used possibly to play favorites among his creditors.
Id. In Freedom Group, the transfer of the defendant’s funds occurred at the time of the final order of garnishment or attachment, not the notice of garnishment. In the case before this court, however, only the Notice of Garnishment issued. The Notice required the garnishees EEM, PIC, and TFP to freeze the assets of the defendant but not to turn them over. There was no further order or hearing concerning the garnishment. Without a final order of attachment, Freedom Group teaches that the plaintiff as judgment creditor is not yet entitled to the stocks.
The court finds, therefore, that there was no transfer or levy upon the stock held by EEM, PIC, or TFP, and therefore no lien on the stock of the defendant. The court determines that the plaintiff is not a secured creditor with liens on those stocks. Summary judgment on Count I of the plaintiffs Complaint is denied. Count II: Breach of Fiduciary Duty
The plaintiff also claims that it should be awarded summary judgment in this adversary proceeding pursuant to 11 U.S.C. § 523(a)(4), which provides that a bankruptcy discharge does not discharge an individual debtor from any debt “
|
3,821,902 | 11,763,357 |
2006-09-28
|
United States Bankruptcy Court for the Northern District of Indiana
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy)
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy), 350 B.R. 820 (2006)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_5
|
fraud or defalcation while acting in a fiduciary capacity
|
[I]t is very often necessary to consult substantive principles of state law in order to determine the scope of the earlier judgment or the parties who are bound by its terms.
Havoco of America, Ltd. v. Freeman, Atkins & Coleman, Ltd., 58 F.3d 303, 307-08 (7th Cir.1995).
In this case, the plaintiff insists that the same parties, with competent counsel, litigated the same facts in the Ohio lawsuit that they would litigate in this discharge-ability adversary proceeding. Because collateral estoppel applies to preclude reliti-gation of issues and facts previously heard and decided, it argues that this court should determine that the plaintiffs judgment in the fiduciary breach case is excepted from the debtor’s discharge under § 523(a)(4). The defendant responds that a state law fiduciary is not necessarily a fiduciary for the purposes of § 523(a)(4) and therefore the finding of breach of fiduciary duty in the Ohio district court jury verdict is not controlling in this bankruptcy adversary proceeding.
The record reflects that the plaintiff litigated its fiduciary breach lawsuit in federal court in Ohio, won a jury verdict against the defendant, and was awarded damages after both parties had a full and fair opportunity to litigate the issue. The parties were represented by counsel in the prior action, as well. However, the court finds that the plaintiff has not shown that the same issues presented in this adversary proceeding were involved in the former lawsuit. According to the plaintiff, the prior determination was based on a jury finding that the defendant violated his fiduciary duties to the plaintiff under Ohio Revised Code § 1701.54. See R. 15 at 10, R. 20 at 6. The plaintiff has not explained how the issues litigated pursuant to this Ohio statute are the same as the issues of “
|
3,821,902 | 11,763,357 |
2006-09-28
|
United States Bankruptcy Court for the Northern District of Indiana
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy)
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy), 350 B.R. 820 (2006)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_5
|
for defalcation while acting in a fiduciary capacity
|
The plaintiff has not explained how the issues litigated pursuant to this Ohio statute are the same as the issues of “fraud or defalcation while acting in a fiduciary capacity” that must be litigated in the present dischargeability proceeding. Accordingly, the court finds that the statutory basis of the Ohio jury verdict is not comparable to the § 523(a)(4) exception to discharge provision of the Bankruptcy Code. See Ronk v. Maresh (In re Maresh), 277 B.R. 339, 348-50 (Bankr.N.D.Ohio 2001) (finding that, when the state statute does not create the elements required to establish “fiduciary capacity” under § 523(a)(4), then the plaintiff cannot sustain her burden under the defalcation exception to discharge).
The plaintiff has not presented to this court the factual bases underlying the fiduciary breach trial of the defendant. The court is unable to determine that the facts or issues sought to be precluded in this adversary are the same as those involved in the prior action. This court must find, therefore, that the verdict in the fiduciary breach case was based upon the same facts necessary to except a debt from discharge “
|
3,821,902 | 11,763,357 |
2006-09-28
|
United States Bankruptcy Court for the Northern District of Indiana
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy)
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy), 350 B.R. 820 (2006)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_3
|
Case law in the Sixth Circuit uniformly recognizes a distinction between a common law fiduciary relationship, and the ‘fiduciary capacity’ within which a debtor must be acting for a fraud or defalcation to be excepted from discharge under 11 U.S.C. § 523(a)(4).
|
In re McGee, 353 F.3d 537, 540 (7th Cir.2003). “
|
3,821,902 | 11,763,357 |
2006-09-28
|
United States Bankruptcy Court for the Northern District of Indiana
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy)
|
Kramer Consulting, Inc. v. McCarthy (In re McCarthy), 350 B.R. 820 (2006)
|
1998-10-23
|
United States Bankruptcy Court for the Southern District of Ohio
|
PaineWebber Inc. v. Magisano (In re Magisano)
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187 (1998)
|
11763357_4
|
The definition of a fiduciary under § 523(a)(4) is narrower than the traditional definition, and requires the existence of technical or express trusts.
|
PaineWebber Inc. v. Magisano (In re Magisano), 228 B.R. 187, 191 (Bankr.S.D.Ohio 1998) (“
|
11,628,591 | 11,763,406 |
1999-03-16
|
United States Bankruptcy Court for the Eastern District of Tennessee
|
Kirk v. Hendon (In re Heinsohn)
|
Kirk v. Hendon (In re Heinsohn), 231 B.R. 48 (1999)
|
1998-12-14
|
United States Bankruptcy Court for the Eastern District of Tennessee
|
Kuydendall v. Lawson (In re Lawson)
|
Kuydendall v. Lawson (In re Lawson), 228 B.R. 195 (1998)
|
11763406_0
|
this proceeding is a core proceeding.
|
On November 24, 1997, the defendant filed an amended notice of removal containing the allegation that “
|
11,628,591 | 11,763,406 |
1999-03-16
|
United States Bankruptcy Court for the Eastern District of Tennessee
|
Kirk v. Hendon (In re Heinsohn)
|
Kirk v. Hendon (In re Heinsohn), 231 B.R. 48 (1999)
|
1998-12-14
|
United States Bankruptcy Court for the Eastern District of Tennessee
|
Kuydendall v. Lawson (In re Lawson)
|
Kuydendall v. Lawson (In re Lawson), 228 B.R. 195 (1998)
|
11763406_1
|
related to a case under title 11 but not arising under title 11 or arising in a case under title 11.
|
As quoted above, § 1334(c)(2) provides that in order for mandatory abstention to apply, the proceeding must be “
|
1,024,200 | 11,769,184 |
2002-07-18
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Holmes Environmental, Inc. v. Suntrust Banks, Inc. (In re Holmes Environmental, Inc.)
|
Holmes Environmental, Inc. v. Suntrust Banks, Inc. (In re Holmes Environmental, Inc.), 287 B.R. 363 (2002)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_0
|
creditor to or for whose benefit such transfer was made.
|
To establish the new value defense, the creditor essentially must prove three elements. First, the creditor must demonstrate that it is a “
|
1,024,200 | 11,769,184 |
2002-07-18
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Holmes Environmental, Inc. v. Suntrust Banks, Inc. (In re Holmes Environmental, Inc.)
|
Holmes Environmental, Inc. v. Suntrust Banks, Inc. (In re Holmes Environmental, Inc.), 287 B.R. 363 (2002)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_5
|
[T]he critical factor is whether the parties intended a contemporaneous exchange.
|
In the instant case, the first element is satisfied as Hazmed is a creditor for whose benefit the transfers at issue were made. See, e.g., In re Presidential Airways, Inc., 228 B.R. 594, 599 (Bankr.E.D.Va.1999) (“
|
1,024,200 | 11,769,184 |
2002-07-18
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Holmes Environmental, Inc. v. Suntrust Banks, Inc. (In re Holmes Environmental, Inc.)
|
Holmes Environmental, Inc. v. Suntrust Banks, Inc. (In re Holmes Environmental, Inc.), 287 B.R. 363 (2002)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_0
|
‘to the extent’ the transfer was a contemporaneous exchange for new value.
|
Everlock Fastening Sys., Inc. v. Health Alliance Plan (In re Everlock Fastening Sys., Inc.), 171 B.R. 251, 255 (Bankr.E.D.Mich.1994). The requisite intent is evident from the Subcontract and the Escrow Agreement. These documents contemplate Hazmed will perform services and supply goods to perform those tasks under the Corps Contract as delegated to Hazmed by Holmes. In exchange for these goods and services, Hazmed is to be paid by the payment of the Corps Contract proceeds into the escrow established at Suntrust by the Escrow Agreement. Suntrust in turn would pay Hazmed the actual amount owed for its goods and services from the escrowed monies. Section 547(c)(1) excepts transfers from the Trustee’s avoidance powers only “
|
12,270,088 | 11,769,184 |
2017-07-12
|
United States District Court for the District of Delaware
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.)
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), 569 B.R. 593 (2017)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_3
|
on account of an antecedent debt owed by the [Debtors] before such transfer was made
|
AP Services, LLC v. McKesson Corp. (In re CRC Parent Corp.), 2013 WL 2149492, *2 (Bankr. D. Del. May 16, 2013) (quotations and citations omitted). Trustee is required to establish each element by a preponderance of the evidence. See 11 U.S.C. § 547(g). Kadant relied on the terms of the agreement and the facts set forth in its affidavits to show there was no genuine issue of fact that the EDS payment was a payment in advance and, therefore, not made “
|
12,270,088 | 11,769,184 |
2017-07-12
|
United States District Court for the District of Delaware
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.)
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), 569 B.R. 593 (2017)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_1
|
the debt must have been incurred ‘before the transfer was made.’
|
Kadant relied on the terms of the agreement and the facts set forth in its affidavits to show there was no genuine issue of fact that the EDS payment was a payment in advance and, therefore, not made “on account of an antecedent debt owed by the [Debtors] before such transfer was made” as required under § 547(b)(2).
The Bankruptcy Code does not define “antecedent debt.” “Debt” is defined by the Bankruptcy Code as “liability on a claim.” 11 U.S.C. § 101(12). A claim is a “right to payment,” regardless of whether that right is fixed, contingent, matured, or unsecured. The Third Circuit has said that for a debt to be antecedent, “the debt must have been incurred ‘before the transfer was made.
|
12,270,088 | 11,769,184 |
2017-07-12
|
United States District Court for the District of Delaware
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.)
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), 569 B.R. 593 (2017)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_1
|
was not for or on account of an antecedent debt.
|
(R509 (citing Dots, 533 B.R. at 438)) (R509 (citing CRC Parent, 2013 WL 2149492, *4 (wire transfers that cleared before delivery of product were advance payments and were not payments on account of antecedent debt))
The bankruptcy court concluded that the EDS payment was “an advance payment” and “
|
12,270,088 | 11,769,184 |
2017-07-12
|
United States District Court for the District of Delaware
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.)
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), 569 B.R. 593 (2017)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_1
|
was not for or on account of an antecedent debt.
|
Based on the foregoing, the bankruptcy court determined that the EDS payment was “an advance payment” and “
|
12,270,088 | 11,769,184 |
2017-07-12
|
United States District Court for the District of Delaware
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.)
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), 569 B.R. 593 (2017)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_6
|
on account of an antecedent debt
|
” (See D.I. 8 at 1 (quoting Enron, 357 B.R. at 37)) (See D.I. 8 at 2 (arguing, with respect to its alleged contingent claim, that “
|
12,270,088 | 11,769,184 |
2017-07-12
|
United States District Court for the District of Delaware
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.)
|
Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), 569 B.R. 593 (2017)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_6
|
on account of an antecedent claim
|
(See D.I. 8 at 2 (arguing, with respect to its alleged contingent claim, that “on account of an antecedent debt” means “
|
11,613,896 | 11,769,184 |
1999-05-04
|
United States Bankruptcy Court for the District of Maine
|
Perrino v. Salem, Inc. (In re Mainely Payroll, Inc.)
|
Perrino v. Salem, Inc. (In re Mainely Payroll, Inc.), 233 B.R. 591 (1999)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_7
|
immediate or mediate transferee of [the] initial transferee.
|
The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily—
(A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or
(B)(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
(ii)(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation!.]
§ 548(a)(1).
The stipulation establishes all elements of a voidable, fraudulent transfer. MPI’s property ($31,084.06), was transferred to Salem, within one year of MPI’s voluntary petition, while MPI was insolvent, and MPI received less than reasonably equivalent value (nothing) in return.
The extent of a fraudulent transfer recipient’s liability, and whether defenses are available to it, are set forth in § 550. Insofar as pertinent, it states:
(a) Except as otherwise provided in this section, to the extent that a transfer is avoided under section... 548... of this title, the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from—
(1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or
(2) any immediate or mediate transferee of such initial transferee.
(b) The trustee may not recover under section (a)(2) of this section from—
(1) a transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith, and without knowledge of the voidability of the transfer avoided; or
(2) any immediate or mediate good faith transferee of such transferee.
§ 550(a)-(b). The only question relates to Salem’s status as either the “initial transferee” of the money, § 550(a)(1), or an “
|
11,492,535 | 11,769,184 |
2000-01-14
|
United States Bankruptcy Appellate Panel for the Tenth Circuit
|
Bailey v. Hazen (In re Ogden)
|
Bailey v. Hazen (In re Ogden), 243 B.R. 104 (2000)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_3
|
any transfer of an interest of the debtor in property
|
With the $135,000.00 mistakenly credited to the Property File, Cherry believed that the $396,000.00 had been fully repaid.
Later, when Durbano learned that the Bowhuis transaction had failed, he instructed Cherry to return the $396,000.00. Durbano asked that Avis & Archibald issue two checks, one to Big Sky in the amount of $300,000.00 and a second check to Appellant in the amount of $100,000.00. At that time, neither Appellant nor Durba-no knew that Avis & Archibald had disbursed any funds to Debtor in relation to this transaction. After those checks were disbursed, the Avis & Archibald trust account held no funds segregated to the Property File.
When Avis & Archibald discovered that it had mistakenly disbursed the $135,000 twice-once to Teak Jones, and once to AppellantyDurbano-Avis & Archibald made a claim on its errors and omission insurance for $135,000 and was reimbursed by its insurance carrier.
On June 16, 1997, Debtor’s creditors filed an involuntary petition for bankruptcy against him. The Trustee was appointed permanent chapter 7 trustee of Debtor’s estate at the § 341 meeting. Approximately one year later, on June 2, 1998, the Trustee filed a complaint against Appellant (“Complaint”), asking to avoid the transfer of $100,000.00 to Appellant as a preferential transfer under § 547(b), and to recover the property under § 550.
In March 1999, both the Appellant and the Trustee filed Motions for Summary Judgment on the Complaint. The Motions were heard on May 18, 1999. Ruling from the bench, the bankruptcy judge granted the Trustee’s Motion. This appeal timely followed.
IV. Discussion
At issue is whether the Trustee can recover from Appellant the $100,000.00 Avis & Archibald returned to Appellant from its escrow account.
Under § 547(b), a trustee may avoid “
|
11,492,535 | 11,769,184 |
2000-01-14
|
United States Bankruptcy Appellate Panel for the Tenth Circuit
|
Bailey v. Hazen (In re Ogden)
|
Bailey v. Hazen (In re Ogden), 243 B.R. 104 (2000)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_4
|
the creditor would be able to assert a claim against the estate if the payment had not been made
|
One who has a claim against a Debtor “that arose at the time of or before the order for relief concerning the debtor” is a creditor. 11 U.S.C. § 101(9).
The term “antecedent debt” is not defined by the Code. However, courts have assumed a debt to be antecedent if the debt is incurred prior to the transfer. Clark v. Frank B. Hall & Co. (In re Sharoff Food Serv., Inc.), 179 B.R. 669, 676 (Bankr.D.Colo.1995). See generally In re Presidential Airways, Inc., 228 B.R. 594, 598 (Bankr.E.D.Va.1999) (finding that courts determine whether a debt is an antecedent debt by looking to whether “
|
11,492,535 | 11,769,184 |
2000-01-14
|
United States Bankruptcy Appellate Panel for the Tenth Circuit
|
Bailey v. Hazen (In re Ogden)
|
Bailey v. Hazen (In re Ogden), 243 B.R. 104 (2000)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_3
|
interest of the debtor in property,
|
The Twitchell court held that, “ ‘[wjhile ordinarily money represented by a general debt cannot be the subject of conversion, an exception is recognized for misappropriated funds placed in the eusto-dy of another for a definite application.’” Twitchell, 832 P.2d at 870 (alteration in original) (quoting Boyd v. Wimes, 664 S.W.2d 596, 599 (Mo.Ct.App.1984)). Money is converted when the party charged with conversion wrongfully receives the money. Id.
Here, before the Debtor returned money to Avis & Archibald, the Appellant may have had a good faith claim for conversion under Utah state law. The record indicates that Appellant placed a specific sum of money in a trust account and instructed that the money was not to leave the account until certain conditions were met. Through misrepresentation, the Debtor obtained the money in the trust account and used it. While the bankruptcy court made no express findings with respect to this issue, for the purposes of this opinion and since the substance of our opinion is based on other grounds, we note that there is some evidence of a good faith conversion claim.
Second, Appellant argues that even if the Trustee can establish an antecedent debt and a debtor/creditor relationship, the Trustee did not prove that the Debtor had an interest in the funds disbursed to the Appellant. Under § 547(b) a preferential transfer occurs only when the debtor has an interest in the property transferred. The Bankruptcy Code does not define the phrase “
|
11,492,535 | 11,769,184 |
2000-01-14
|
United States Bankruptcy Appellate Panel for the Tenth Circuit
|
Bailey v. Hazen (In re Ogden)
|
Bailey v. Hazen (In re Ogden), 243 B.R. 104 (2000)
|
1999-01-13
|
United States Bankruptcy Court for the Eastern District of Virginia
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.)
|
Rosenberg v. Rollins, Burdick, Hunter Co. (In re Presidential Airways, Inc.), 228 B.R. 594 (1999)
|
11769184_3
|
interest of the debtor in property.
|
The Bankruptcy Code does not define the phrase “interest of the debtor in property,” nor does the Code ever specifically define “property.” Courts have defined the term broadly. Danning v. Bozek (In re Bullion Reserve of North Am.), 836 F.2d 1214, 1217 (9th Cir.1988). We note that the purpose of § 547 is to treat creditors similarly during the preference period. Id. Toward that end, through § 547 the trustee can recover property that would have been part of the estate but for the preferential transfer. Payne v. Clarendon Nat’l Ins. Therefore, we look to the Code’s definition of “property of the estate” to help us determine the meaning of the phrase “
|
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