13 B 10864, 16 A 00552
Chapter 7 trustee and plaintiff Brenda P. Helms filed an adversary complaint against Metropolitan Life Insurance Company, debtor Michael K. O’Malley, his spouse Tracy Zellmer, and Zellmer’s company TAMO, LLC, seeking: a declaratory judgment that O’Malley’s interest in an excess benefit retirement plan was non-exempt property of the estate (Count I), turnover of the proceeds of the retirement plan (Count II), avoidance and recovery of certain post-petition transfers related to the retirement plan (Counts III and IV), an award of damages for willful violations of the automatic stay (Count V), and disallowance of any claims filed by Zellmer or TAMO (Count VI).  Helms subsequently filed a motion for summary judgment on Counts I–V, and O’Malley filed a cross-motion for summary judgment on all six counts of the complaint.  At the outset, O’Malley argued that the complaint was barred because the Trustee failed to file a timely objection to the exemption of the retirement plan and that the Trustee was judicially estopped from challenging the validity of the exemption.  The Court found that the Trustee had no obligation to file an objection because O’Malley failed to properly claim the exemption in the plan in the first instance.  The Court further found that the Trustee was not judicially estopped from bringing the adversary proceeding because pursuit of the action would not give the Trustee an unfair advantage or impose on O’Malley an unfair detriment and applying judicial estoppel would adversely affect O’Malley’s creditors.  As for the cross-motions for summary judgment, the Court found that there were no genuine issues of material fact in dispute, that the Trustee was entitled to judgment as a matter of law on Counts I–IV, and that O’Malley was entitled to judgment as a matter of law on Count V.  Regarding Counts I–IV, the Court found that: the retirement plan was non-exempt, and the plan and related proceeds constituted property of the estate (Count I); O’Malley’s unauthorized payment election under the plan was an avoidable post-petition transfer which restored the payment election right to the estate (Count III); the Trustee was entitled to both avoidance and recovery post-petition transfers made under the plan (Count IV); and the Trustee was entitled to turnover of those proceeds (Count II).  As to Count V, the Court found as a matter of law that a trustee cannot recover damages under § 362(k) and that the circumstances of the case did not warrant the exercise of the Court’s civil contempt power under § 105(a).  Because neither Zellmer nor TAMO filed any proofs of claim, Count VI was dismissed by the Court sua sponte.

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.