Judge Jacqueline P. Cox - Opinions / Outlines

Judge Jacqueline P. Cox

03 B 13825, 04 A 01861

In re Dianne Logan Creditor brought an adversary proceeding against this chapter 7 debtor requesting that the debt the debtor incurred borrowing money from it to purchase a car be excepted from her discharge under 11 U.S.C. §§ 523(a)(2), (a)(4) & (a)(6). The seller of the car never registered the car’s title showing that it was transferred from the prior owner to himself and then to the debtor. Neither was the seller able to produce the title during the trial. Debtor testified that an unidentified person or company towed the car to an unidentified location after she abandoned it on the side of a road near her home because of mechanical problems. The court’s ruling in favor of the Creditor was based, in part, on the gaping holes, inconsistencies, and implausible nature of the debtor’s evidence and theory of what happened to the car.

04 B 06663, 04 A 02415

Chapter 13 debtor sought to invalidate a mortgage on her residential real estate because she did not know or understand that she was entering into a mortgage transaction due to a medical condition. Court found against the debtor due to a lack of medical evidence relating to the debtor’s medical condition at the time the mortgage was created.

04 B 02682, 04 A 02054

The debtor’s former spouse initiated an adversary proceeding against the debtor to determine whether the debtor’s obligation under a marital settlement agreement to hold him harmless on certain joint liabilities was excepted from discharge under 11 U.S.C. §§ 523(a)(5) and (a)(15). On a motion for summary judgment, the court found that the debt owed by the debtor to her former spouse was nondischargeable under § 523(a)(5).

In re Lugean Brooks
March 30, 2005

04 B 39514

Prior to the debtor’s bankruptcy filing, a “Consent Judgment of Foreclosure” was entered in a suit filed in state court to dispossess the debtor of his residence under the Illinois Mortgage Foreclosure Law. The property was purchased under an installment land contract. The debtor’s proposed chapter 13 plan attempted to cure his default under the installment land contract. The debtor filed a motion requesting the court to vacate its prior order denying confirmation of his chapter 13 plan. The debtor also moved to have his chapter 13 plan confirmed over the objection of the official title holders and the sellers under an installment land contract. The court denied the debtor’s motion and found that the debtor held merely a possessory interest in the property at the time of filing and did not possess a right to cure the default in a chapter 13 plan under 11 U.S.C. §§ 108(b) and 1322(c).

03 B 46296

After a corporate debtor’s chapter 7 case was dismissed on creditor’s motion, creditor moved under Bankruptcy Rule 9011 to be reimbursed from the debtor’s counsel for legal work its attorney performed in response to the debtor’s improperly filed voluntary petition. The court concluded that the debtor and its attorney violated Rule 9011(b)(1) of the Federal Rules of Bankruptcy Procedure by filing its chapter 7 case with the intent to delay, frustrate, and cause expense to the creditor. The court imposed a sanction under Bankruptcy Rule 9011(c) against the debtor’s counsel for the creditor’s attorneys fees.

04 B 13843

The United States Trustee filed a motion to dismiss or convert a chapter 11 case arguing that the case was not filed in good faith, that the debtor had no real need for bankruptcy reorganization, that the debtor’s plan was both unconfirmable and unfeasible, and that the true creditor body (as opposed to shareholders) would not be well served by continued prosecution of a trade-secret-misappropriation action in state court. The court concluded that “cause” existed under 11 U.S.C. §§ 1112(b)(1) and (b)(2) to dismiss the case due to the highly speculative nature of the state court action which was the debtor’s primary asset. The court alternatively found that “cause” existed that the chapter 11 case was filed in bad faith.

In re Griffin
August 26, 2004

04 B 19670

Through counsel, the chapter 7 debtors moved to redeem a vehicle under § 722. The court granted the motion but requested that counsel provide the court with additional information on the fee arrangement between the debtors and the debtors’ counsel. Supplemental documents revealed that (1) although the bankruptcy case was not filed until May 20, 2004, counsel began billing for the motion on February 8, 2004; and (2) a tripartite arrangement existed between the debtors, debtors’ counsel and a third party where the third party made a post-petition loan to the debtors to pay counsel for the pre-petition debt created by counsel’s pre-petition retainer agreement with the debtors and to redeem the vehicle from the secured creditor. The court found that the additional revenue from the redemption motion was not voluntarily disclosed to the court. The court concluded that counsel was not entitled to a fee for bringing the motion to redeem.

04 A 02333, 04 B 09265

United States Trustee made a variety of legal challenges to a bankruptcy petition preparer’s conduct under various subsections of 11 U.S.C. § 110 in two separate chapter 7 cases. After conducting an evidentiary hearing, the court found that the bankruptcy petition preparer violated 11 U.S.C. § 110(b)(1), § 110(c)(1)-(2) and § 110(g)(1). The court imposed the maximum fine for each violation. The court also granted the United States Trustee’s request under 11 U.S.C. § 110(j) for an injunction permanently barring the defendant from operating as a bankruptcy petition preparer.

04 B 00114

Prior to the debtor filing a chapter 13 bankruptcy, the debtor’s personal residence was purchased by a third party at a foreclose sale initiated by the holder of the second mortgage against the property. The debtor and the successful bidder entered into an oral agreement whereby the debtor could retain the fee simple interest in her personal residence in exchange for the purchase price paid plus interest. Both parties agreed to extend the state court order for possession, which normally accompanies a sale-confirmation order, several times between August and December of 2003. The successful bidder alleged that the debtor filed her chapter 13 case for the sole purpose of delaying or thwarting its pursuit of an order for possession that was likely to be issued by the state court in the foreclosure proceeding. The successful bidder requested relief from the automatic stay pursuant to 11 U.S.C. § 362(d)(1) or an order of dismissal with a 180-day bar against refiling pursuant to 11 U.S.C. §§ 1307(c) and 349(a) so that it could seek to have the debtor dispossessed from the property. The court concluded that under the totality of the circumstances, dismissal under 11 U.S.C. § 1307(c) and 11 U.S.C. § 349(a) was not appropriate, as the debtor had not abused the bankruptcy process. However, the court did hold that “cause” existed to grant relief from the automatic stay because the debtor no longer held an interest in the property.

03 B 45189

The debtor filed for chapter 11 bankruptcy after MB Financial Bank unexpectedly set off funds in one of its bank accounts to satisfy an overdue loan obligation. While a settlement to return some of those funds was pending, the debtor’s president loaned the debtor “emergency advances” to ensure a construction project could proceed smoothly and to pay employee insurance premiums. The advances were made without notice to other parties or prior court approval. The debtor moved to repay the advances as an administrative expense. Two creditors objected. At issue was whether the advances qualified as valid post-petition extensions of credit to the debtor under 11 U.S.C. § 364. The Court held they were not since the advances were not incurred during the ordinary course of business as they were “emergency” advances. Also, the advances did not meet the vertical dimensions test that examines the reasonable expectations of creditors in light of their past relationship with the debtor and its incurrence of debt, including the amount, terms, frequency, sources, and timing of pre-petition extensions of credit from various sources. The Court also held that the debtor’s president did not hold a general unsecured claim since the advance was made post-petition.

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