Judge Timothy A. Barnes - Opinions

Judge Timothy A. Barnes

14 B 31070, 15 A 00560
Upon the defendant’s motion to dismiss the debtor’s adversary complaint for failure to state a claim upon which relief may be granted, held: By predicating his claim against the defendant solely on the filing of a proof of claim but asserting no other indicia of deceptive behavior within the gambit of the Fair Debt Collection Practices Act or fraudulent intent, the debtor has failed to state a claim upon which relief may be granted under the Fair Debt Collection Practices Act. The filing of a proof of claim on a time-barred debt is not deceptive per se. The defendant is owed a debt that gives rise to a claim within the meaning of the Bankruptcy Code and is entitled to assert that claim. The court will not create a per se rule that potentially denies the defendant the due process built into the Bankruptcy Code and guaranteed by the Fifth Amendment to the United States Constitution. For similar reasons, the filing of a proof of claim on account of a time-barred debt is not a fraud on the court. The defendant’s motion to dismiss is GRANTED, without prejudice to the debtor’s ability to bring an action based on actual deceptive behavior, should such behavior exist.

14 B 01361, 14 A 00098
Upon creditor’s adversary complaint seeking a determination that debts allegedly owed by the debtor are nondischargeable under 11 U.S.C. § 523(a)(2)(A), wherein the creditor alleged that the debtor obtained construction services through false pretenses, false representation or actual fraud, held: While the debtor appears to be obligated on the debts, the creditor did not prove by a preponderance of the evidence that the debts were incurred by false pretenses, false representations or actual fraud. As a result, the debts are dischargeable. Judgment is entered in favor of the debtor.

13 B 30975, 13 A 01294
Upon a creditor’s complaint seeking a determination that a debt allegedly owed by the debtor to the creditor is nondischargeable under 11 U.S.C. § 523(a)(2) and (a)(6), wherein the creditor alleged that the debtor withheld monies from the creditor through false pretenses, false representations or actual fraud and that the debt was the result of willful and malicious injury by the debtor, and seeking a denial of the debtor’s discharge under 11 U.S.C. § 727(a)(4) and (a)(5), wherein the creditor alleged that the debtor failed to disclose all income in his bankruptcy petition and failed to account for a loss or deficiency of assets, held: The creditor has not proved by a preponderance of the evidence that a debt was incurred by false pretenses, false representation, or actual fraud or was the result of willful and malicious injury by the debtor as is required under 11 U.S.C. § 523(a)(2) and (a)(6). As a result, the debt is dischargeable. Likewise, the creditor has failed to prove by a preponderance of the evidence that the debtor knowingly and fraudulently concealed income or assets on his bankruptcy petition, elements of 11 U.S.C. § 727(a)(4). The creditor also failed to prove by a preponderance of the evidence that the debtor’s explanation as to any loss of assets or deficiency of assets to meet the debtor’s liabilities is unsatisfactory, pursuant to 11 U.S.C. § 727(a)(5). As a result, the debtor will not be denied a discharge on the grounds alleged. Judgment is entered in favor of the debtor on all counts.

In re David J. Hardesty
August 7, 2015

14 B 42906
Upon the chapter 7 Trustee’s objections to the Debtor’s claimed exemptions in (1) installment payments under a personal injury settlement agreement and (2) proceeds from a life insurance policy received post-petition following the death of the Debtor’s step-father, held: Under the terms of the marital settlement agreement, entered into by and between the Debtor and his ex-wife and incorporated into the state court divorce decree, the Debtor’s limited interest in and control over the installment payments is insufficient to bring the installment payments into the estate, therefore, the Trustee’s objection to the Debtor’s exemption in the personal injury settlement is OVERRULED. With respect to the life insurance proceeds, however, the Debtor has failed to establish that he is “dependent upon the insured” for the purposes of 735 ILCS 5/12-1001(f) and, therefore, cannot claim an exemption in the life insurance proceeds, thus, the Trustee’s objection to the Debtor’s exemption in the life insurance proceeds is SUSTAINED.

In re Mesha E. Ware
July 17, 2015

15B03414
Upon an objection to confirmation of the debtor’s chapter 13 plan, wherein a creditor alleged that the debtor could not comply with the requirements of “surrender” in section 1325(a)(5)(C) of the United States Bankruptcy Code as the debtor proposed to surrender a vehicle that had been previously stolen and that, therefore, could not be delivered to the creditor, held: “Surrender” in section 1325(a)(5)(C) does not always require the debtor to physically deliver the vehicle.  Because the Debtor proposes surrender in good faith, physical delivery is not required.  As a result, the creditor’s objection is overruled.

10 B 51428
Upon the creditor’s motion to allow claim under Federal Rule of Bankruptcy Procedure 9006, wherein the creditor sought to have the court allow its claim as a timely general unsecured claim when the claim was allegedly delivered directly to the office of the clerk of court rather than electronically filed and, despite being tendered to the clerk’s office prior to the claims deadline, not entered on the claims register until almost 4 years after the claims deadline, and where creditor sought to have the court enter an order amending the chapter 7 trustee’s previously approved final report, held:  Rule 9006 does not apply to the deadline to file claims in a chapter 7 case.  The claim was filed for purposes of Rule 3002 when the claim was entered on the claims register, almost 4 years after the claims deadline.  As a result, the claim is a tardily filed unsecured claim which would receive zero distribution even if the final report were to be amended and, thus, the creditor’s motion is denied.

13 B 30975,  13 A 01294
Upon the Defendant’s amended motion to dismiss the Plaintiff’s adversary complaint objecting to discharge of debt owed to A&H Caring Connections, Inc. (“A&H”) pursuant to 11 U.S.C. § 523(a)(2)(A) and (a)(6) and 11 U.S.C. § 727(a), the underlying interest having been assigned to the Plaintiff by A&H and the Defendant seeking dismissal of the complaint for failure to state a claim upon which relief can be granted on the grounds that the underlying assignment is void as a matter of public policy and in violation of Illinois law, held: For purposes of testing the sufficiency of the complaint under Federal Rule of Civil Procedure 12(b)(6), the Defendant has failed to satisfy his burden of showing the complaint is insufficient. The amended motion to dismiss is DENIED.

13 B 37655, 14 A 00100
Upon the creditor’s adversary complaint objecting to the Debtor’s discharge under 11 U.S.C. § 727(a)(7), wherein the creditor alleged that the Debtor violated 11 U.S.C. §§ 727(a)(2), (3) and (4)  in the bankruptcy case of the company of which the Debtor was sole member and president by permitting checks made out to the company to be deposited into the Debtor’s father’s account, by failing to secure the company’s books and records and by making false oaths for failing to list the same checks and other payments to the Debtor’s father on the company’s bankruptcy documents, held:
  The creditor failed to prove the Debtor’s requisite intent, elements of 11 U.S.C. §§ 727(a)(2) and (4), by a preponderance of the evidence.  The creditor also failed to prove that the disappearance of the Debtor’s business records due to a break-in caused the trustee in the company’s bankruptcy case to be unable to ascertain the company’s financial condition, or that the destruction was unjustified under the circumstances of the case, elements of 11 U.S.C. § 727(a)(3).  As a result, judgment is entered in favor of the Debtor.

 

11 B 41555, 13 A 01243
Upon certain defendants’ motions to dismiss the Trustee’s fraudulent conveyance adversary complaint on statute of limitations grounds, the Trustee argues that it may rely on such longer statute of limitations as may be applicable to the IRS as an actual prepetition creditor of the bankruptcy estate.
  In response, a limited number of the moving defendants jointly move for an order disallowing the IRS’s claim.
 
In considering the foregoing, held:  With respect to the motion to disallow the claim, adversary defendants qua adversary defendants lack standing to object to claims.  As such, the joint motion to disallow is DENIED.
 
With respect to the motions to dismiss, for the purposes of testing the sufficiency of the complaint under Federal Rule of Civil Procedure 12(b)(6), transfers occurring more than 2 years prior to the petition date are time-barred under section 548 of the Bankruptcy Code and the motions to dismiss will be GRANTED in this respect.  As to the remaining grounds, the court accepts the allegations in the complaint as true, wherein the Trustee has alleged that the IRS is a prepetition creditor of the bankruptcy estate.  That allegation is supported by the actual claim on file by the IRS at the commencement of the adversary.  As the trustee may act within the statute of limitations applicable to any creditor of the estate, including such longer statutes as apply to the IRS, and as the transfers sought to be avoided by the Trustee appear to fall within those longer periods, the court finds for these purposes that the Trustee’s actions are not conclusively time-barred.  The motions to dismiss are therefore DENIED in this respect.  The legal and factual predicates of the defendants’ statute of limitations affirmative defense, including, but not limited to, whether the IRS had an allowable claim against the estate on the petition date, remain issues to be determined on summary judgment or at trial, not in the limited scope of a motion to dismiss, and such arguments are preserved.
 

11 B 00701, 11 A 00966
Upon the Creditor’s commenced adversary complaint against Debtor seeking a determination that a debt allegedly owed by the Debtor to the Creditor is nondischargeable under 11 U.S.C. § 523(a)(2)(A) and (a)(6), wherein the Creditor alleged that the debtor obtained title insurance policies through false pretenses, false representation and/or actual fraud, and that the underlying loan from the bank, which debt was assigned to the Creditor, was also obtained through false pretenses, false representation and/or actual fraud, held: The Debtor is obligated on both debts to the Creditor, and the Creditor proved by a preponderance of the evidence that the debts were incurred by false pretenses, false representations and actual fraud. As a result, the debts are nondischargeable.

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