Judge Timothy A. Barnes - Opinions

Judge Timothy A. Barnes

In re Jewel Carter
March 30, 2022

17bk03367
On the competing motions of the chapter 13 trustee to dismiss a debtor’s case for failure to make plan payments and the debtor’s motion to modify his plan to allow it to complete without further payment, held:  Both the debtor’s defense to the trustee’s motion and the debtor’s motion addresses the understandable confusion that arises when a chapter 13 trustee neglects over an extended period of time to act in a way consistent with a debtor’s plan obligations.  While the debtor correctly contends that the trustee should be estopped from enforcing conditions that the trustee has neglected, that contention ignores the fact that the underlying default to the plan remains even with the motion to dismiss denied.  The debtor is in an unfortunate position—a plan that cannot be extended and obligations that cannot be met by an elderly debtor on fixed retirement income within the time of the plan—through actions not entirely of his own making.  Though it is unlikely Congress anticipated these exact circumstances, this is the type of conundrum that Congress and the United States Supreme Court have empowered the court to resolve when the former granted the court broad-sweeping authority under 11 U.S.C. § 105(a) and the latter empowered the court to address the equitable enforcement of its orders under Rule 60(b)(5) of the Federal Rules of Civil Procedure.  As a result, the court exercises that authority to determine that the debtor has fulfilled all the conditions of the plan that he might reasonably be required to perform under the circumstances and vacates the debtor’s confirmation order as to any remaining unfulfilled condition in it.  The debtor’s plan is therefore complete.  As a result, the trustee’s motion is DENIED and the debtor’s motion is GRANTED, insofar as it is necessary to effectuate that relief.

In re Marshall Spiegel
March 11, 2022

20bk21625
On a debtor’s objection to the claim of the issuing bank which holds a letter of credit to back the debtor’s appeal of litigation sanctions against, held: The debtor argues that the terms of the letter of credit should be strictly enforced against the issuing bank, while not challenging that the overall circumstances regarding the draw on the appellate bond had been met. As the debtor believes the bank’s honoring of the letter of credit was inappropriate, the debtor presumes that such strict enforcement results in the denial of the bank’s claim. The debtor, however, has failed at the most basic level to show how the letter of credit’s own language favors the debtor’s interpretation, which the court finds to be unreasonable. The letter of credit is not ambiguous, it is imprecise. Further, the debtor has failed to account for application of relevant Illinois statutes, the state whose law governs the letter of credit. Taken together with the terms of the letter of credit, that law permits the bank to honor letter of credit draws that appear valid, which is what the bank did here. Accordingly, even if the debtor were successful with its strict compliance argument, the debtor has failed to carry its burden to rebut the presumed allowance of the filed claim.  As a result, the objection to the claim is OVERRULED.

In re Bruce K. Propst
March 4, 2022

15bk12654
Following the debtor’s reopening of a discharged, no asset chapter 7 case nearly six years after the case’s first closure and on the debtor’s motion seeking avoidance of a previously unavoided judgment lien, held:  While the avoidance of a lien might be considered ordinary under other circumstances of another case, under the circumstances of this case, the relief is both extraordinary and problematic.  The debtor previously reopened the case and sought avoidance of the same lien four years after the case first closed.  Though that motion went through a complicated procedure in part due to the debtor’s previous counsel’s errors, it was ultimately heard on its merits and denied.  No reconsideration was sought or appeal taken.  It is now nearly two years later and too late under Fed. R. Civ. P. 60(c)(1) to seek relief under Fed. R. Civ. P. 60(b)(1), which rule appears to otherwise apply.  Because Fed. R. Civ. P. 60(b)(1) applies, relief under Fed. R. Civ. P. 60(b)(6) is also unavailable.  While the court might be able to entertain the request as an independent action under Fed. R. Civ. P. 60(d)(1), the debtor has failed to demonstrate that the court should ignore the law of this case to do so.  As a result, the motion to avoid the lien is DENIED.

19bk06255, 19ap00684
Upon the motion to dismiss the plaintiffs’ complaint, brought by the defendant for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6), held:  the motion to dismiss is largely predicated on the belief that the Supreme Court’s ruling in City of Chicago v. Fulton, — U.S. —, 141 S. Ct. 585 (2020), forecloses the plaintiffs’ claims for violation of the automatic stay under sections 362(a)(4), (6) and (7) of the Bankruptcy Code.  Fultonwas, however, expressly limited to section 362(a)(3) of the Bankruptcy Code.  As a result, Fulton does not directly foreclose claims under sections 362(a)(4), (6) and (7) and the court declines to extend Fulton as requested by the defendant.

As to the sufficiency of the counts pled, the plaintiffs have sufficiently alleged violation of sections 362(a)(4), (6) and 542(a), but have failed to do so with respect to section 362(a)(7).  As a result, the plaintiffs’ claim under section 362(a)(7) will be dismissed as insufficiently pled but without prejudice and with leave to amend, while claims under sections 362(a)(4), (6) and 542(a) survive the motion.

The motion to dismiss also raises the propriety of imposing punitive damages against a municipality.  In this regard, the motion is well taken and the plaintiffs’ request for punitive damages is dismissed.  Section 106(a)(3) of the Bankruptcy Code governs, and the abrogation of sovereign immunity contained therein expressly omits immunity from punitive damages.  The motion to dismiss will be granted in this respect.

Finally, the defendant seeks to dismiss the plaintiffs’ request for class certification.  Class certification is a matter of consideration in a separate motion and not properly the subject of a motion to dismiss.  The defendant’s motion to dismiss is thus denied in this respect.  The court will set a separate deadline for a motion to certify the class and any opposition thereto.

The defendant’s motion to dismiss is, therefore, GRANTED IN PART AND DENIED IN PART.

20bk17679, 20ap00426
Upon the complaint, brought by plaintiff/trustee, objecting to the defendant/debtor’s discharge under 11 U.S.C. § 727(a)(5) based on the debtor’s failure to satisfactorily explain the dissipation of $70,159.22 in the year prior to filing for bankruptcy, following trial, held:  The plaintiff has made a prima facie showing that, prior to the commencement of the debtor’s chapter 7 case, the debtor had funds sufficient to satisfy the $51,617.00 in unsecured claims that he now seeks to discharge and that the debtor has, despite his claims of gambling losses, failed to sufficiently explain the dissipation of the funds.  Judgment is, therefore, entered in favor of the plaintiff.

18bk19801, 18ap00837
Upon the judgment creditor’s complaint for determination of nondischargeability of debt pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (a)(4) based on the Debtor’s alleged fraud with respect to creation and execution of a power of attorney for her father while he was in a rest home, followed by producing said power of attorney to withdraw funds held in a joint back account for Debtor’s father and his wife, held:  The plaintiff has satisfied the elements of section 523(a)(2)(A) by proving that the debt due to the plaintiff was procured by actual fraud and is, therefore, nondischargeable.  Judgment is entered in favor of the plaintiff on count I of the complaint.  The plaintiff, however, failed to establish that the debt due to her was procured through larceny and judgment is entered in favor of the Debtor on count II of the complaint.

08bk10095
After a decision of this court confirming, on remand from an appeal of an earlier decision of this court and in light of the issues raised by the District Court, its earlier finding of violations of the release and injunction set forth in the debtor’s confirmed plan of reorganization and awarding actual damages in relation thereto, and after a motion seeking an augmented award of damages in relation to ongoing violations, held:  While the request goes beyond the mandate from the District Court, the court nonetheless has jurisdiction to hear it.  The request is, however, improvident in light of the pending, second appeal and uncertain application of the court’s earlier stay pending appeal and related bond.  The movant has failed to convince the court that an award of supplemental damages is appropriate at this time.  The motion for supplemental damages is, therefore, DENIED without prejudice.  The underlying motion remains granted according to its terms and the court’s decision on remand, pending the outcome of the presently pending second appeal.

20bk18167
Upon the Foreign Representatives’ Motion for Order Granting Full Force and Effect to German Confirmation Order Pursuant to 11 U.S.C. §§ 105(a), 1521(a), 1525(a), and 1527 and Granting Related Relief and upon the pro se objection raised by a creditor of the debtor in this chapter 15 case, held: The relief requested by the foreign representatives is both common and authorized by chapter 15 of the Bankruptcy Code. The relief is necessary to effectuate the purpose of chapter 15 and to protect the assets of the debtor or the interests of the creditors, is consistent with the principles of comity and will reasonably assure the protections afforded by 11 U.S.C. § 1507(b), is in the spirit of cooperation with the Frankfurt am Main County Court, Insolvency Court and is an appropriate means of cooperation regarding the administration and supervision of the debtor’s assets and affairs. The relief is also within the power of the court under 11 U.S.C. § 105(a) to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. While the recoveries to United States creditors under the debtor’s foreign plan are low, that is not the measure of determining the appropriateness of the request. The court is satisfied that United States prepetition creditors were afforded treatment no different than that afforded prepetition creditors of the debtor as a whole, that creditors had a reasonable opportunity to be heard in the foreign proceeding and that the German insolvency proceeding has been otherwise conducted in a manner consistent with the spirt and goals of chapter 15 of the Bankruptcy Code. As a result, the motion will be GRANTED.

19bk31162, 20ap00074
Upon the debtor-defendant’s default in this nondischargeability adversary proceeding, held: the plaintiff has established by a preponderance of the evidence that the debtor made certain misrepresentations. While those misrepresentations are generally not actionable as mere broken promises to pay, on default, the well pled allegations of liability are taken as true and the plaintiff has therefore shown that the debtor made a specific representation knowing it was false or with reckless disregard for the truth. The plaintiff has only shown, however, that he justifiably relied on the debtor’s false representations until December 1, 2016, when by his own admission to the debtor further work on the matter was ill-advised; his reliance after that date was not justified. Accordingly, the reasonable fees and expenses charged by the plaintiff prior to December 1, 2016, not to exceed $15,759.97, are nondischargeable under section 523(a)(2)(A). The remaining balance billed to the debtor by the plaintiff is dischargeable.

18bk32437, 20ap00010
Upon the crossing motions for summary judgment brought by the Internal Revenue Service and the Illinois Department of Revenue to determine priority of liens under section 506, the IRS and IDOR each assert that no genuine issue of material fact exists necessitating a trial on the complaint. The trustee, as plaintiff in the matter, concurs and, but for the existence of an undetermined motion to vacate a previous court order upon which this issue turns, the court agrees...

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