13 B 25078, 13 A 01332
In the three counts that remain at issue in the adversary complaint filed by plaintiff John H. Sammarco in the bankruptcy case of debtor-defendant David L. Dini, Sammarco sought a determination that Dini is not entitled to a discharge pursuant to various provisions of 11 U.S.C. § 727(a). In Count I, Sammarco alleged that Dini’s discharge should be denied under § 727(a)(2) because Dini transferred two vehicles less than one year prior to filing his bankruptcy petition with the intent to hinder or delay Sammarco. In Count V, Sammarco objected to Dini’s discharge pursuant to § 727(a)(7), arguing that Dini knowingly made fraudulent statements in the bankruptcy schedules of his former company National Telerep Marketing Systems, Ltd. ("NTMS") while his individual bankruptcy case was pending. Finally, in Count VII, Sammarco alleged that Dini is not entitled to his discharge under § 727(a)(4), because Dini knowingly and with fraudulent intent made false statements in connection with the debt that he owes to his friend Keith Creel (the "Creel debt"). The Court found that Sammarco failed to meet his burden to establish the elements required under the applicable provisions of § 727(a). Specifically, the Court found that the evidence did not establish that Dini intended to hinder or delay Sammarco by transferring his interest in the vehicles. The Court further found that the issue of whether Dini knowingly and with fraudulent intent made false statements in NTMS’s bankruptcy schedules was previously litigated and that Sammarco is, thus, precluded from litigating that issue again. As for the allegation in connection with the Creel debt, the Court concluded that the record did not support a finding that Dini’s statements regarding that debt were false for purposes of § 727(a)(4). Accordingly, the Court held that Dini’s discharge will not be denied.

15 B 19829, 15 A 00550
The Plaintiff filed an adversary complaint against the Debtor seeking a determination that the debt owed to the Plaintiff by the Debtor in connection with an unsecured loan is not dischargeable pursuant to §§ 523(a)(2)(A) and (a)(2)(B).  The Plaintiff argued that the loan was procured by false pretenses with respect to the purpose of the loan and through actual fraud because the Debtor had not intended to repay the loan.  The Plaintiff also argued that the Debtor misrepresented her financial condition by failing to disclose a new mortgage obligation when the loan was made.  The Court found that the Plaintiff failed to meet its burden to demonstrate fraud under any of its arguments.  Accordingly, the Court held that the debt at issue is not excepted from discharge under §§ 523(a)(2)(A) or (a)(2)(B).

13 B 43900, 15 A 00140
The chapter 7 trustee (the “Trustee”) filed a six-count adversary complaint against American Express Centurion Bank, Inc. (“American Express”), seeking to avoid and recover from American Express an allegedly preferential or fraudulent transfer made by Katina Callas, the Debtor’s non-filing spouse (“Katina”), to American Express pursuant to 11 U.S.C. §§ 547(b), 548(a)(1), and 550(a).  American Express did not challenge the avoidability of the transfer; rather, it sought summary judgment only on Counts II and V, the recovery claims of the complaint.  Asserting an affirmative defense under § 550(b)(1), American Express contended that the Trustee could not recover the transfer from American Express as an immediate or subsequent transferee of Katina.  The Court concluded that there were no genuine issues of material fact in dispute and that the uncontested facts demonstrated that American Express took the transfer for value, in good faith, and without knowledge of the voidability of the transfer.  Accordingly, the Court found that American Express established a valid affirmative defense to liability under § 550(b)(1).  As such, the Court granted American Express’s motion for partial summary judgment and entered judgment on Counts II and V of the complaint in favor of American Express.

15 B 05304, 15 A 00812
The Plaintiff filed an adversary complaint in the bankruptcy case of the Debtor, seeking a determination that a debt owed to the Plaintiff by the Debtor in connection with her car is not dischargeable and that the Debtor is not entitled to a discharge.  The car in question was impounded by the City of Chicago three times, the third time post-petition.  Experiencing financial difficulties and having no money to either repair and recover the car or get it towed from the impound lot, the Debtor filed an amended chapter 13 plan which provided for surrender of the car to the Plaintiff in full satisfaction of its claim.  The Plaintiff filed an objection to confirmation, arguing that surrender was not possible because the Debtor was not in possession of the car.  While the objection was pending, the title to the car was transferred from the Debtor’s name to a company in Illinois and then, later, two more times to other entities.  Subsequently, the Debtor converted her case to a case under chapter 7.  In its complaint, the Plaintiff argued that the debt is nondischargeable under § 523(a)(6) because the Debtor abandoned the car, knowing that it would be disposed of, and that her lack of action was willful and malicious in that it caused a total loss to the Plaintiff. The Plaintiff argued, similarly, that the Debtor is not entitled to a discharge under § 727(a)(2) because she intended to hinder, delay, and defraud the Plaintiff by “refusing” to retrieve the car from the impound lot.  The Court found that the Plaintiff failed to meet its burden to demonstrate that the Debtor’s actions were either willful or malicious as required by § 523(a)(6).  The Court further found that the Plaintiff did not prove that the Debtor intended to hinder, delay, or defraud the Plaintiff for purposes of § 727(a)(2).  Accordingly, the Court held that the debt at issue is not excepted from discharge under § 523(a)(6) and that the Debtor is entitled to her discharge.

15 B 35358, 15 A 00876
The Debtor filed an adversary complaint against Walsh Construction Company and the Clerk of the Circuit Court of Cook County, seeking:  (1) a determination that certain funds deposited with the Clerk pursuant to a judgment order entered by the Circuit Court are property of the bankruptcy estate, and (2) turnover of those funds to the Debtor.  Walsh filed a 12(b)(6) motion to dismiss the complaint.  The judgment order awarded Walsh $27,500,000 on its breach of contract claim against the Debtor, awarded the Debtor a total of about $8,300,000 on its breach of contract claim against Walsh and an interpleader claim filed by the Debtor’s subcontractor, and provided that the amounts awarded to the Debtor be set off against the amount awarded to Walsh.  The Court found that the Rooker-Feldman doctrine did not bar its jurisdiction over the adversary proceeding because the Court did not need to overturn the Circuit Court’s decision to determine the interests of the parties.  As to the substantive issue, the Court found that, based on applicable law and the language in the judgment order, the setoff was accomplished pre-petition, through and at the time of the entry of the order; the setoff therefore effectuated a transfer; the deposited funds were thus not property of the Debtor’s bankruptcy estate; and, as a result, the funds could not be turned over to the Debtor.  Accordingly, the Court held that the Debtor failed to state a claim upon which relief can be granted and, in fact, could not assert any set of facts establishing its entitlement to the relief it sought.  Therefore, the Court granted Walsh’s motion to dismiss the complaint, and the complaint was dismissed with prejudice.