Judge Shodeen - Decision Index
|Entry Date||File Name||Decision Summary|
Clarke County State Bank v. Scott (Adversary No. 12-30052, Case No. 10-05725-als7)
Plaintiffs filed a complaint to revoke the Debtors' discharge under 11 U.S.C. section 727(d)(1). The defendant argues that the plaintiff's complaint was barred by the time limitations under 11 U.S.C. section 727(e)(1). The Court dismissed the complaint holding that the complaint was not brought within the one-year time limit and the bank's motion to reopen did not suffice as a request to revoke the debtor's discharge.
In re: Martin (Case No. 13-01872)
In an action under 707(b) to dismiss the debtors' case, the Court held that the debtors' student loan debt was not a priority claim that could properly be included in the Means Test calculation. In addition, the Court held that the debtors failed to meet the procedural burden under 11 U.S.C. section 707(b)(2)(B) to rebut the presumption of abuse by special circumstance.
Farmers State Bank v. Pille (Adv. Pro. 12-30047-als, Case No. 12-01008-als7)
Debt was excepted from discharge under section 523(a)(6) because the Plaintiff met its burden of proving that the Defendant's conduct was willful and malicious. To determine whether these elements are met, courts look at whether the debtor attempted to conceal the disposition of collateral. Here, the Defendant did attempt to conceal the disposition of collateral when he breached the Plaintiff's security agreement and offered various and contradictory explanations for the missing collateral. Also, the Defendant's sale of livestock, which the Plaintiff had a security interest in, was conducted with an intentional disregard of the Plaintiff's rights. The Court held this conduct equated to willful and malicious conduct.
Petersen v. Cargill Incorporated (Adv. Pro. 13-30024-als, Case No. 13-00001-als7)
The Defendant brought a Motion to Dismiss the complaint by the Trustee for turnover of grain proceeds, injunctive relief, and violation of automatic stay. The Court granted the Motion to Dismiss as to the injunctive relief as moot in a telephonic hearing. The Court denied the Motion to Dismiss the complaint by the Trustee for turnover of grain proceeds and violation of automatic stay. The Defendant argued that its interpretation of the statutory provisions is equivalent to an affirmative defense that requires dismissal of the Trustee's complaint under Rule 12(b)(6). The Court disagreed and did not find the Defendant's arguments to rise to the level of dismissal. The Trustee is required to plead only enough facts to state a claim for relief that is plausible on its face and the Court found that the Trustee met this standard. The Defendant did not make a showing that the Trustee failed to allege a claim upon which relief can be granted.
In re: Auxier (Case No. 11-04871-als7)
The Debtor was listed as the sole beneficiary on his mother's IPERS account and received a lump sum death payment upon the death of his mother. The Debtor claimed as exempt the benefit paid under the IPERS account pursuant to Iowa Code section 97B.39 and the Trustee objected to the Debtor's claim of exemption. Based on statutory interpretation, the Court held Iowa Code section 97B.39 protects the IPERS retirement payments from attachment, execution, garnishment, or administration in bankruptcy. The statutory language of the section does not identify similar protection for a death benefit payable to a beneficiary. Therefore, the Trustee's objection to exemption was sustained and the Debtor's claim of exemption was denied.
Peoples State Bank v. Robinson (Adv. Pro. 12-30058-als, Case No. 12-01523-als7)
The Plaintiff claimed that a debt the Debtors owed the Plaintiff was non-dischargeable pursuant to section 11 U.S.C. section 523(a)(2). The Court held that the Plaintiff's objection to the Debtors' motion for summary judgment raised an entirely new set of facts and was an attempt to amend its complaint after the pleadings closed and after the expiration of the complaint deadline, deeming it untimely. The Court held that granting leave to amend the original complaint is not justified. The Plaintiff bears the burden of proving the elements of section 523(a)(2), which could not be accomplished under the Plaintiff's original complaint. Therefore, the Plaintiff's objection was overruled and the Defendant's motion for summary judgment was granted.
In re: Diwan, L.L.C. (Case No. 12-00424-als11)
The Debtor entered into a contract with the Claimant to purchase the Claimant's motel, with the Debtor's real estate used as collateral under the contract. The motel had previous damage, which was stated in the contract, but the Debtor chose not to read the contract fully nor obtain an attorney. After the Debtor filed his Bankruptcy Petition, the Claimant filed a proof of claim stating it was owed an amount secured by the mortgage. The Debtor requested that the claim filed by the Claimant be equitably subordinated pursuant to 11 U.S.C. section 510(c). The Court held that there was no evidence of fraudulent misrepresentation by the Claimant nor any undue influence or control in the sale and operation of the motel. However, the Court found that the Claimant had a duty to mitigate the damages caused by the Debtor's breach. The Claimant's bid at the sale of the property ignored any reasonable recognition of value for the motel and failed to demonstrate any effort to mitigate its loss. Absent this conduct, the amount the Debtor would have been required to pay under its guarantee would have been substantially smaller. For these reasons, the Court held the Claimant's secured claim was partially subordinated.
Nielsen v. ACS (Adv. Nos. 10-30016-als & 10-30018-als, Case No. 09-04888-als7)
A request made by the Debtor for discharge of her student loans based upon 11 U.S.C. section 523(8) for undue hardship was denied. The Court held that the Debtor failed to meet her burden to establish an undue hardship under a totality of her circumstances. The Court found that the Debtor had not engaged in meaningful employment for the past 17 years and had the ability to do so. She did not put forth her best efforts in attempting to find employment or in making payments to her student loans. The Court also found that, based on the Debtor's age, the possibility of future economic improvement and job opportunities would increase. Also, the Debtor's option to participate in the ICRP program and have a zero payment plan imposed no additional burden on the Debtor's current finances and afforded her an opportunity to repay the loans if her financial situation improved. For these reasons, the Court held the request for discharge was denied.
In re: Gary E. Burton (Case No. 12-00676-als7)
The issue in this case was whether the Debtors tax liability was properly characterized as "consumer" debt for purposes of 11 U.S.C. section 707(b). The Court stated that if a credit transaction involves a profit motive, then it is not consumer debt. The Debtors in this case believed that business losses could be used to offset personal income tax obligations, which would result in them retaining more of their earnings. The Court held this is closer to profit motive than a consumer transaction. Therefore, the Court held the Debtors' tax debt was not consumer debt.
In re: Natural Pork Production, II, LLP (Case No. 12-02872-als11)
The Court allowed $133,203.35 of the $202,405.50 fees requested in the First Interim Fee Application for employment as counsel to the Official Unsecured Creditors Committee. The Court relied on the principles stated in In re Pothoven in its evaluation of the services. It held that SFGH did not demonstrate that its services were reasonable and necessary to the extent and amount provided. The rates charged by SFGH were higher than local practitioners' rates, but the blended hourly rate after the courtesy reduction was within reasonable limits.
Hackert v. De Ronde (Adv. Pro. 10-30138-als, Case No. 10-03202-als7)
The Plaintiffs objected to the Debtor's discharge based upon the Debtor's accumulation of assets during a time period not too remote from her bankruptcy filing, and then on the date she filed her petition, she no longer had the assets. The Court held that the Plaintiffs met their initial burden under 11 U.S.C. section 727(a)(5). Due to the Debtor's non-appearance at trial, the Debtor failed to meet her burden to explain her loss of assets and the Court determined the exhibits were insufficient to explain the loss. Based on these findings, the Court held the Debtor's discharge was denied.
Richard J. Cobb, Celeste L. Cobb (Case No. 12-01273-als7)
The Court overruled the trustee's objection to the debtors' claim of exemption in a tractor. The debtors claimed that the tractor was exempt as a household good. The Court allowed the exemption because the tractor was not used for any commercial purpose and it allowed them to maintain their long driveway, access their property and reach their jobs. The tractor was necessary to the debtors' fresh start.
Lehm's Omaha LLC v. Thomas J. Stanley (Case No. 11-30083), Thomas J. Stanley and Kristen R. Stanley (Case No. 11-02508-als7)
The defendant sold a skid loader and trailer to the plaintiff. The skid loader was subject to a purchase money lien, and the defendant did not inform the plaintiff of the lien or pay the lien off from the proceeds of the sale. The plaintiff was forced to make a payment to the lien-holder in order to keep the equipment that he purchased. The Court held that the amount that the plaintiff was forced to pay to the lien-holder was a non-dischargeable debt in the defendant's bankruptcy pursuant to 11 U.S.C. section 523(a)(2)(A). The Court held that the defendant's silence as to the existence of a lien met the element of misrepresentation under the statute, which resulted in the defendant knowing that the representation was false at the time he made it and making it with the intent to deceive. The plaintiff justifiably relied on the defendant's misrepresentation, and as a result, sustained damages.
High Plains Investment, Inc. (Case No. 12-00829-als7)
The Creditors of the Debtor initiated this involuntary bankruptcy petition when the Debtor ceased operations. The Debtor asked the Court to dismiss the petition at the conclusion of the Creditors' case. The issue is whether the requisite amount of creditors - three - holds claims that are not the subject of a bona fide dispute. The petition creditors bear the initial burden that no bona fide dispute exists, then the burden shifts to the debtor to prove that a bona fide dispute does exist. The Court found that the minimum number of three creditors did not exist as required under section 303(b)(1). Therefore, the Court held that the involuntary petition was dismissed without prejudice.
Julilath Kouangvan, Minh Kouangvan (Case No. 10-05009-als), United States Trustee v. Julilath Kouangvan (Case No. 10-30170-als)
The debtor's discharge was denied pursuant to 11 U.S.C. section 727(a)(3) and 727(a)(5) for her failure to keep records and failure to explain the dissipation of substantial amounts of money. She took out many sizable loans, dealt primarily in cash and kept minimal records. Her insufficient records were not justified under the circumstances. Additionally, the debtor offered only vague explanations about how she used the loan amounts that she received from her lenders.
Julie O. Waterman (Case No. 10-01849-als), Waterman v. IRS (Case No. 10-30073-als)
Debtor's tax debt was discharged because the IRS failed to prove that the Debtor willfully evaded paying her taxes. While Debtor was aware that she had the obligation to pay the taxes, she did not have the wherewithal to pay them and her use of divorce settlement funds on discretionary expenses was not sufficient to show that she took steps to avoid paying the taxes.
Jerry R. McKeever (Case No. 11-04187-als)
The Court denied creditor's motion to reconsider the ruling denying approval of a reaffirmation agreement. The Court held that the reaffirmation agreement was made after the debtor's discharge had entered and was, therefore, untimely and could not meet the requirements of 11 U.S.C. section 524(c).
Jasper vs. Hussain (Case No. 10-30090-als)
The debt owed to Plaintiff by the Debtor under a state court judgment for the intentional tort of wrongful discharge from employment in violation of public policy was held to be nondischargeable pursuant to 11 U.S.C. section 523(a)(6). The Court found that collateral estoppel applied to the Plaintiff's claim because the state court's decision had already determined that the Debtor's conduct was both willful and malicious sufficient to satisfy the requirements under the Bankruptcy Code.
In re: Steven Robert Gates (Case No. 11-03226-als7)
Trustee's Objection to Debtor's claimed exemption in life insurance policies was overruled because the $10,000 limit on interest acquired within two years found in Iowa Code § 627.10 applied to the increase in the net cash value of the policies rather than the gross cash value.
Bank Iowa v. Villalobos (Case No. 10-30071-als7)
Plaintiff filed an adversary proceeding objecting to the dischargeability of a debt pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (B). Defendant had ownership interests in several businesses and had signed personal guaranties for loans taken out by many of these businesses. Plaintiff argued that the Defendant was responsible for the amounts due on two separate loans and that these loans were not dischargeable because Defendant has fraudulently failed to disclose his other personal guaranties when filling out two financial statements he submitted before obtaining the loans. The Court held that the debts were not excepted from discharge because Plaintiff failed to prove that Defendant intended to deceive in making the representation and that Plaintiff reasonably relied on the representation under the reliance standard for either subsection.
In re Dunkin, (Case No. 11-00168-als7)
Trustee filed an objection to Debtor's claim of exemptions of accrued wages, garnished funds and bank accounts pursuant to Iowa Code sections 642.21 and 537.5105. Debtor argued that she was entitled to a percentage of pre-petition garnished funds as disposable earnings pursuant to Iowa Code sections 642.21 and 537.5105. The Court held that this expansion of In re Irish was not permissible, and the amounts she received after her garnished wages were taken out represented the amount available to her under these Iowa Code provisions. The Court applied In re Irish to the accrued wages that were not subject to the pre-petition garnishment.
In re: Brown v. Iowa Department of Revenue (Adv. Pro. 10-30088-als, Case No. 10-03083-als7)
The Court held that Debtor's tax debts were not discharged pursuant to 11 U.S.C. § 523(a)(1)(C) because Debtor willfully evaded his tax obligation. In so finding, the Court relied on the Debtor's consistent late filing of tax returns, which often contained inaccurate information, the Debtor's failure to keep records of his business expenses, Debtor's failure to cooperate in reducing his tax obligation, and Debtor's apparent ability to pay at least some amount to reduce his tax obligation.
In re: Chay Linette Williams (Case No. 10-03620-als7, Adv. Pro. 10-30088-als)
The Court granted United States Trustee's motion to dismiss pursuant to 11 U.S.C. § 707(b)(3). The Court held that the totality of the circumstances demonstrated abuse and the petition was filed in bad faith because of inflated expenses listed on schedule B.
In re: Chambers (Case No. 10-00856-als7)
The Court granted the United States Trustee's motion to dismiss pursuant to 11 U.S.C. § 707(b) because the presumption of abuse arose under the Means Test and Debtors failed to show special circumstances. Further, the totality of the circumstances demonstrated abuse.
In re: Vest v. United States Department of Education (Adv. Pro. 10-30106-als, Case No. 10-01950-als7)
The Court granted Defendant's unopposed motion for summary judgment because Defendant met its burden to show that no genuine issue of material fact existed for trial and because Plaintiff had not demonstrated any ability to sustain her burden of proof related to the discharge of her student loan obligation.
In re: Riverbend Leasing LLC (Case No. 10-00428-als11)
The Court denied confirmation of Debtor's second amended plan for failure to satisfy the factors set forth at 11 U.S.C. § 1129(a).
In re: Bank Iowa v. Torres (Adv. Pro. 10-30048-als, Case No. 09-06195-als7)
The Court held that part of the debt owed by Defendant to Plaintiff was excepted from discharge pursuant to 11 U.S.C. § 523(a)(2)(A) because Defendant intentionally misrepresented the purpose of the draw requests he made on a line of credit and because Plaintiff justifiably relied on Defendant's misrepresentations. The remainder of the amounts owed to Plaintiff were not excepted from discharge pursuant to 11 U.S.C. § 523(a)(2)(B) because Plaintiff failed to prove that Defendant intended to deceive and that Plaintiff reasonably relied. None of the claims were excepted from discharge pursuant to 11 U.S.C. § 523(a)(6) because Plaintiff did not act willfully and maliciously.
In re: MP Investments, L.L.C, dba Vito's on the Plaza (Case No. 10-02659-als7)
The Court denied Debtor in Possession's Motion to Assume Executory Contract seeking to assume a lease pursuant to 11 U.S.C. § 365. The Court held that notwithstanding the importance of the Lease to DIP's reorganization, because of DIP's failure to meet the standards in § 365, the Motion to Assume was denied.
In re: Randy Dean Tritch, Debora Jean Tritch (Case No. 10-02695-als7),
Court held that Debtor/Defendant could not strip down a fully unsecured lien on real property in a chapter 7 proceeding using 11 U.S.C. sections 506(a) and 506(d).
In re: Phillip L. Vlieger, fdba Byblos Coporation, dba PineApple Homes (Case No. 09-03290-lmj7),
The court granted Plaintiff's motion for summary judgment. Pro se Defendant did not attend the hearing nor did he file a response to Plaintiff's motion for summary judgment. Defendant filed a post-hearing response which did not raise genuine issues of material fact for trial. Based on the undisputed facts in Plaintiff's motion, summary judgment was granted for the claims asserted pursuant to 11 U.S.C. sections 523(a)(2)(A), 523(a)(4) and 523(a)(6).
In re: John A. Dittmer (Case No. 09-04669-als7), Bonny K. Dittmer (Case No. 09-04862-als7)
Objection to Debtors' claims of homestead exemption was overruled. Although Debtors sold their home and the land adjacent to it on two different dates, Debtors sold their entire homestead to one purchaser and intended to apply the proceeds to a new homestead. The funds were segregated and properly used to purchase exempt homestead.
In re: Sharon A. Arthur (Case No. 10-00463-als7), Corey L. McKillip and Jamie L. McKillip (Case No. 09-04332-als7)
Trustee objected to Debtor's claims of exemption in tax refunds and tax credits. The Court ruled that tax refunds do not qualify for the protections afforded by the garnishment provisions identified in Iowa Code section 627.6(10). The Making Work Pay and the Hope Scholarship tax credits are not exempt as public assistance benefits under Iowa Code section 627.6(8)(a).
In re: Jody May Walters (Case No. 10-00003, Filed 01/03/2010)
Objection to homestead exemption by antecedent claim holder sustained. Under Iowa Code sections 561.16, 561.20 and 561.21, the debtor's current property was not acquired with proceeds of a prior homestead and is liable for those debts contracted prior to its acquisition.
In re: Kathleen Lobdell vs. Todd A. Rodruck (Case No. 07-30134, Filed 09/21/2007)
Creditor failed to sustain its burden under 11 U.S.C. § 523(a)(2)(A) and (a)(6) for damages based upon allegations of improper construction of a home. Creditor did, however, sustain its burden for payment of costs arising after the initial contract which were personally guaranteed by Debtor, and the Court found that those debts were nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A).
In re: Richard Timothy Anderson and Ethel M Anderson (Case No. 09-04486, Filed 09/16/2009)
The Court granted Debtors' Motion for Sanctions for violation of 11 U.S.C. section 362(a). The Court found that Creditor violated the automatic stay by continuing contact directly with the Debtor in an attempt to collect on a credit card account despite having received notice of Debtor's bankruptcy filing and correspondence from his counsel. In awarding punitive damages, the Court took into consideration the nature of Creditor's actions, Creditor's size and Creditor's sophistication in the credit industry.
In re: Michael Dean Larsen and Kimberly Kay Larsen (Case No. 09-00219, Filed 01/26/2009)
Creditor's security interest was not superior to the interest of the chapter 7 trustee. The court found that one loan was unsecured, a second loan was not properly perfected because no financing statement was filed under the name of the borrower or the individual executing the note, and a third loan was secured, but the financing statement was seriously misleading under Iowa Code §554.9506.