Subscribe to All Opinions08bk10095
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.
Opinions
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Judge Timothy A. Barnes
June 10, 2021
March 26, 2021
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.
March 5, 2021
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.
Judge David D. Cleary
18 B 35437, 19 A 1009
Creditor sought denial of Debtor/Defendant’s discharge under 11 U.S.C. §§ 727(a)(2), (a)(3) and (a)(4). Following trial, court found Debtor intended to defraud his creditors when he gave proceeds from a workers’ compensation claim to his brother, who then returned the money in cash payments. Judgment entered for the creditor under § 727(a)(2). However, Debtor’s lack of extensive financial records was justified under all the circumstances of the case, and he did not make false oaths with intent to defraud. Judgment entered for the Debtor under §§ 727(a)(3) and (a)(4).
March 16, 2021
14 B 34232, 16 A 691
Defendants asked the court to compel Plaintiff to produce documents identified as privileged, asserting that Plaintiff placed the documents “at issue” and waived privilege. Held: under federal law, at-issue waiver occurs when a party affirmatively puts at issue the specific communication to which the privilege attaches. Since Plaintiff did not assert a claim or defense that put any specific communications at issue, he did not waive the privilege.
Judge Janet S. Baer
15 B 27967, 16 A 00489
Plaintiff PNC Bank, N.A. (“PNC”) filed an adversary complaint against Paul L. Leongas (the “Debtor”), seeking a denial of the Debtor’s discharge pursuant to 11 U.S.C. §§ 727(a)(2), (a)(3), (a)(4)(A), (a)(4)(D), and (a)(6). PNC argued that the Debtor was not entitled to a discharge because he engaged in a continuing course of actions in which he intentionally concealed his income and assets in order to defraud his creditors, failed to produce required financial information, and knowingly and fraudulently made false oaths and accounts in connection with his financial situation. After conducting an evidentiary hearing, the Court found, given the documentary evidence and testimony at trial, that the contributions made by businesses owned and operated by the Debtor’s family members to pay his living expenses were not loans and should have been disclosed on the Debtor’s schedule I as income; that his continued use of his residence—despite its transfer first to a childhood friend and later to others—constituted a concealment under the doctrine of continuing concealment; and that virtually all badges of fraud required for a determination that the Debtor intended to hinder, delay, and defraud his creditors had been established. As such, the Court concluded that the Debtor was not entitled to a discharge under § 727(a)(2). The Court also found that the Debtor failed to produce adequate records from which his financial situation and business transactions could be ascertained with any kind of accuracy; that he made “false oath[s] or account[s]” by filing bankruptcy documents with numerous misstatements and omissions, most of which were made with an intent to deceive; and that he knowingly and fraudulently failed to provide the chapter 7 trustee with all relevant documents and papers to which the trustee was entitled. Accordingly, the Court concluded that the Debtor was also not entitled to a discharge under §§ 727(a)(3), (a)(4)(A), and (a)(4)(D). The Court rejected the Debtor’s argument that he relied on the advice of his attorney—thereby negating any fraudulent intent—because the Debtor was not able to establish either that he provided all of the necessary financial disclosures to his lawyer or that his reliance on the lawyer’s advice was reasonable. The Court dismissed Count IV, under which PNC objected to discharge under § 727(a)(6)(A), for lack of prosecution.
Chief Judge A. Benjamin Goldgar
May 17, 2021
18 B 35295, 20 A 00406
Judge Deborah L. Thorne
Judge Jacqueline P. Cox
April 9, 2021
09 B 05868, 20 A 00399
This adversary proceeding is Debtor Richard Sharif’s latest attempt to undo a default judgment he caused to be entered in 2010 denying him a discharge and declaring a trust to be his alter ego, making it property of the bankruptcy estate.
He alleges that the Chapter 7 Trustee Horace Fox Jr., his attorneys, a child representative in his divorce case, his estranged wife and her former attorney are civilly liable to him for violating the Racketeer Influenced and Corrupt Organizations Act, conspiracy, breach of fiduciary duty and negligence for taking his trust and other property even though the interests in issue were declared to be property of the bankruptcy estate pursuant to a default judgment entered as a sanction for his failure to comply with his discovery obligations.
The case was filed in the District Court; it was transferred to this court.
The Amended Complaint has been dismissed with prejudice.
March 29, 2021
16 B 32994
The Debtor’s attorney has been ordered to submit an accounting of $8,300 received in settlement of a Motion for Sanctions. A creditor refused to release title/lien on a vehicle where the underlying debt had been discharged in a completed chapter 13 case. Because the Debtor’s attorney (or his firm) had entered into the Court-Approved Retention Agreement to represent the Debtor for a flat $4,000 fee, the attorney is not entitled to receive additional legal fees absent an application to the court for such. No one has sought additional fees.