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 spirit 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...

08bk10095
Upon the vacation, in part, and remand by the District Court of this court’s order granting a motion seeking enforcement of this court’s confirmation order and damages arising from the alleged violation committed by the debtors’ prepetition surety, filed by successor to the purchaser of assets in the above-captioned bankruptcy cases, the District Court having confirmed that this court’s determination that the surety violated the injunction and release set forth in the court’s confirmation order and the debtors’ plan, but remanding for a determination of whether damages are appropriate under the standard set forth by the Supreme Court in the since determined Taggart v. Lorenzen, 139 S. Ct. 1795 (2019), held: The evidence presented by the parties and undisturbed on appeal demonstrates that the surety’s actions were “persistent violations” and “persistent contumacy” of this court’s orders, shifting the burden to the surety to demonstrate that the surety’s belief that its pursuit of the purchaser was lawful is objectively reasonable. The surety has failed to demonstrate such. A finding of civil contempt is appropriate under Taggart and that the previously awarded actual damages for reduced property value, legal costs, consulting costs and project management costs remain supported. The motion remains GRANTED and this decision concludes the issues on remand.

19bk31162, 20ap00074
Upon the debtor’s motion to dismiss a single-count adversary complaint brought under 11 U.S.C. § 523(a)(2)(A) for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), held:  As is required, the court draws all reasonable inferences in the favor of the plaintiff.  As a result, the complaint states a claim for relief, though only just.  Were it not for the liberal pleading standards for intent set forth in Federal Rule of Civil Procedure 9(b), the complaint would fail to rise above mere speculation.  But for the plaintiff’s speculation as to the debtor’s intent, the plaintiff pleads a case that is merely breach of contract, not false pretenses, false representation, or actual fraud.  Given the sophistication of the plaintiff and the plaintiff’s extensive experience bringing matters such as this to this court, the court would otherwise expect more so as to demonstrate that the complaint is not being brought for improper purposes.  As it stands, however, despite the narrowness of this ruling, the motion to dismiss must be denied.

18bk24763
On the chapter 7 trustee’s objection to the secured status and amount of a claim for fees and costs of counsel for the plaintiff in a prepetition action against the debtor, held: The claim for attorney’s fees and costs is unsecured as the order awarding such fees and costs in the underlying prepetition action was not recorded and the amount of such claim is limited to amount of fees awarded in the prepetition lawsuit. The trustee’s objection is, therefore, SUSTAINED.

07bk12776
Upon the motion for relief from the automatic stay brought by certain asbestos claimants, alleging cause exists for relief from the automatic stay to pursue only available insurance coverage, held: The movants have met the cause requirement under 11 U.S.C. § 362(d)(1). Though the Seventh Circuit’s Fernstrom factors are not clearly applicable, they are instructive nonetheless. All three factors thereunder weigh in favor of the claimants. The movants have also established that the debtor lacks equity in the subject property under 11 U.S.C. § 362(d)(2), the sole showing required for such relief in a chapter 7 case. The motion is, therefore, GRANTED as set forth in the attached Memorandum Decision.

14bk41230, 16ap00465
On the defendant’s motion for summary judgment, seeking judgment in its favor on its good faith transferee for value defense under 11 U.S.C. § 548(c) to the trustee’s fraudulent transfer claims, held:  The defendant has established grounds for summary judgment under Federal Rule of Civil Procedure 56 as to the first element of its defense, that the transfers were received in good faith, but has failed establish grounds for summary judgment as to the second element of its defense, that the debtor received value in exchange for the transfers.  The defendant’s motion is, therefore, GRANTED IN PART and DENIED IN PART.

18bk04521, 18ap00185
On a plaintiff-debtor’s adversary complaint, seeking a discharge of presumptively nondischargeable student loan debt pursuant to 11 U.S.C. § 523(a)(8)(A), held: the plaintiff-debtor has failed to show by a preponderance of the evidence that he would suffer an undue hardship if forced to repay his student loans.  As a result, the plaintiff-debtor’s request to include such debt in his discharge fails.  Judgment will be entered in favor of the answering defendants.

18bk34548
On a motion for relief from the order approving the sale of the debtor’s real property, including a church, filed by the parishioners of the church, held:  The court concludes that the movants have failed to establish the requirements to vacate the sale order under Federal Rule of Civil Procedure 60.  While the movants have limited standing to challenge the debtor’s lack of authority, such challenge rests on ecclesiastical and not secular rules.  Such a challenge must be brought in the appropriate, church forum.  As the movants have suffered no harm cognizable under secular law and have failed to show that the entry of the sale order was in error in any other way, for the reasons set forth in the Memorandum Decision, the motion must be denied.

19bk06272, 19ap00587
On a motion for a preliminary injunction by the plaintiff, a former franchisor of a business owned and operated by the debtor-defendant, to prohibit the debtor-defendant from operating such business in alleged violation of a covenant not to compete entered into in connection with the now-terminated franchise, where the covenant not to compete provides for liquidated damages designed to fully compensate the plaintiff as an alternative remedy to injunctive relief, held:  The plaintiff’s rights under the covenant not to compete, including to injunctive relief, constitute a “claim” within the meaning of 11 U.S.C. § 101(5), which claim will be treated in accordance with bankruptcy law.  The plaintiff is therefore unlikely to succeed on the merits of its claims for a permanent injunction, the only relief sought in the adversary proceeding, and the preliminary injunction motion is therefore not well taken.

13bk49315
Upon the chapter 7 debtor’s motion to dismiss its bankruptcy case, which was remanded to this court for further findings that would permit dismissal or further proceedings in the case following an uncontested appeal by a creditor opposing dismissal, the court having entered an order to show cause calling for all interested parties to appear and be heard with respect to whether any cause to dismiss the case under 11 U.S.C. § 707 currently existed, held:  In light of the compelling observations of the United States Trustee and the failure of the debtor to prosecute the motion following the district court’s remand, there exists a limited bankruptcy purpose to allowing the debtor’s case to continue provided that proper safeguards and limitations are maintained.  The debtor’s motion is, therefore, DENIED without prejudice.

17bk18780
On a chapter 13 debtor’s claim objection seeking a determination from the court of the nature, validity and amount of a tax purchaser’s claim in a chapter 13 case where the deadline to redeem the property taxes in question expired prepetition but no tax deed has been issued or recorded and also upon the tax purchaser’s objection to the confirmation of the debtor’s chapter 13 plan, held:
 
The tax purchaser has a perfected in rem claim for the statutory redemption amount that exists irrespective of whether the redemption period has passed.  That claim is allowed as a secured claim in the amount asserted by the tax purchaser.  The tax purchaser also has a contingent, unperfected in rem claim for the fair market value of the property in question that exists irrespective of whether the redemption period has passed.  The court estimates for the purpose of allowance that this unperfected in rem claim is in the amount asserted by the tax purchaser, the property’s full fair market value as of the petition date, less that amount of perfected in rem claim for the redemption amount.  Such unperfected in rem interest is, however, unsecured, by operation of 11 U.S.C. § 506(a) and because it is subject to the trustee’s avoidance power as a hypothetical lien creditor.  The resulting allowed unsecured claim must be treated in the debtor’s plan.  The debtor’s objection is, therefore, SUSTAINED IN PART AND OVERRULED IN PART.
 
The confirmation objection fails in its attempt to have this court change its prior published legal conclusions regarding the treatment of tax purchaser claims after the passing of the redemption period but before the issuance of a tax deed.  However, as the tax purchaser’s claim as determined and allowed by the court is not fully addressed in the debtor’s plan, the confirmation objection is SUSTAINED in that limited respect only.

19bk00432
Upon the motion to dismiss brought by a creditor, alleging that the debtor filed a second petition for bankruptcy in violation of a court order that dismissed the debtor’s first bankruptcy case with prejudice, held: The dismissal of the debtor’s first case under bad faith grounds precluded the debtor from filing for relief at the time it filed its second petition. The motion is, therefore, GRANTED.

08bk10095
Upon a motion seeking enforcement of this court’s confirmation order and damages arising from the alleged violation by the debtors’ prepetition surety, filed by successor to the purchaser of assets in the above-captioned bankruptcy cases, the court having previously determined that the surety violated the injunction and release set forth in the court’s confirmation order and the debtors’ plan, and after a trial to determine damages, held: The movant has established that it is entitled to damages stemming from the surety’s repeated pursuit of claims against the movant in the state court.  The court, therefore, awards actual damages for reduced property value, legal costs, consulting costs and project management costs.  The court declines to award punitive damages.  The motion remains GRANTED and this decision concludes the motion.

08bk10095
Upon the Motion for Entry of an Order (I) Enforcing Confirmation Order; (II) Awarding Damages; and (III) Granting Related Relief, brought by assignee of personal property administered by the liquidating trust in the above-captioned bankruptcy cases, held: The movant has established that it is a party protected by the release in the confirmation order entered in the case and that the claims brought in the state court actions are attempts by the surety to recapture losses stemming from the debtors’ released liability.  The motion is, therefore, GRANTED in part, as set forth in the attached Memorandum Decision.  A separate hearing on damages will follow.