Case Summaries

(creditor's motion for relief from automatic stay in Chapter 12 case granted; while debtor claimed agister's lien in cattle owned by debtor's company and asserted that lien was interest in cattle that were property of bankruptcy estate, court determined that no lien in cattle existed because debtor not primarily engaged in boarding, feeding and caring for livestock of others for compensation as required by agister lien statute; even if debtor had lien position in cattle, court determined that stay should be modified due to lack of adequate protection). 

(creditor filed motion for relief from automatic stay; farm divided between debtors pursuant to settlement agreement and husband executed QCD to wife of all right, title and interest in the farm; creditor argued that debtor (husband) had no interest in farm as of petition date and farm was not property of the bankruptcy estate and stay should be lifted as to the farm; motion granted to lift stay). 

(Chapter 12 debtors filed adversary proceeding against defendants on claim that defendants did not fully pay for ag products purchased on credit from debtors; nature of business relationship between parties in dispute; defendants entitled to judgment because debtors failed to discharge their burden of proving terms of contract and any alleged contractual breach; no meeting of minds on pricing present). 

(trustee brings adversary complaint to avoid claim of alleged secured creditor asserting claim under financing statement that did not comply with Neb. Rev. Stat. Sec.9-502; trustee's motion for summary judgment granted; financing statement did not properly identify collateral in which security interest claimed and amended financing statement constituted preferential transfer; creditor's claims arose from two farm leases and creditor had been granted administrative priority claim of $181,275.80 for rent payments that came due post-petition; financing statements did not specify that creditor was placing lien on crops grown on the real estate to secure cash rent owed to creditor).

(on certified questions from federal district court concerning issues associated with water from drainage project (installation of underground stormwater drainage associated with road project) that damaged hotel, state Supreme Court holds that under "all-risk Commercial Property Policy" of insurance, water discharged from pipe not properly characterized as surface water or flood water because such terms not defined in policy; such non-surface water cannot reacquire its classification as surface water upon exit from the stormwater collection system; under policy, "flood water" does not encompass water discharged from a stormwater collection system in concentrated form, pooled, and that thereafter enters a building). 

(creditor’s motion to dismiss bankruptcy case on grounds that debtor failed to propose feasible reorganization plan denied and debtor’s plan confirmed; interest rate recalculated based on contract rate).

(unemployment compensation received by debtor pre-petition is property of the bankruptcy estate and not exempt; I.R.C. Sec. 6334 inapplicable).

(failure to participate in income contingent repayment plan which would have eliminated student loan payments, did not bar discharge of loans because participation in program would trigger large tax liability). 

(defendant granted summary judgment on plaintiff's claims for compensation for storm-water damage as a result of changed water flows due to public-improvement drainage project).  

(bankruptcy appeal dismissed as moot; trustee had been authorized to assume executory contract for sale of feed yard and associated farmland that was auctioned off pre-petition as a single tract and consummate the sale).

(case involves construction of homestead exemption in bankruptcy; consolidated case involving debtors from Arizona and Washington and debtors argued that value of home locked-in at time of filing Chapter 7 petition and full value of equity claimed as exempt under state law; trustee made no objection to exemption but case remained open and trustee later sought sale of property for benefit of creditors after fair market value had increased beyond sum of encumbrances against the home and debtor's exemption; trustee allowed to sell the property because debtor who claims homestead exemption at specific dollar amount holds only exempt interest in amount claimed exempt and not the entire property - any additional value in the property remains the property of the bankruptcy estate, regardless of whether the extra value was present at time of filing or whether property increased in value after filing; result is that Chapter 7 debtor will never know the exact status of homestead property until the bankruptcy case is closed or the trustee abandons the property; court cited In re Reilly, 130 S. Ct. 2652 (2010) for its holding). 

(automatic stay not imposed; debtor had previously filed two other Chapter 12 cases within prior two years which were dismissed; case not filed in good faith). 

(current monthly income of both spouses must be used to calculate the applicable commitment period; bankruptcy court's order confirming debtors' chapter 13 plan is affirmed). 

(court denied creditor’s motion to convert debtor’s Chapter 12 case to Chapter 7 case; after filing bankruptcy petition, debtor properly formed LLC and transferred assets to it for estate planning purposes). 

(appellant appropriates and stores surface water for the benefit of public users lacks standing to bring judicial review proceeding under the Administrative Procedure Act to challenge a defendant's ground water appropriation). 

(parties entered into settlement agreement resolving class action case involving customers who suffered losses or damages from failed businesses that acted as qualified intermediaries for like-kind exchanges; case dismissed).

(“feed bill” encompasses all purchases made on single account). 

(court upholds bankruptcy court's method of allocating as pre-petition asset a portion of debtor's post-petition tax refund; debtor failed to prove that bankruptcy court's approach should be set aside). 

(lump-sum Social Security payment was properly excluded from Chapter 7 bankruptcy estate by virtue of 42 U.S.C. §407). 

(creditor provided debtor with farm supplies for debtor's farming operation on credit based on debtor's provision of financial statement indicating that operation was financially sound, but creditor not aware that debtor used proceeds of operating loan to pay prior debt to creditor resulting in debtor having no finances to operate farming operation; creditor brought an adversary proceeding against bankrupt debtor seeking determination that debt to creditor was nondischargeable under 11 U.S.C.S. § 523 and that the debtor should be denied a discharge under 11 U.S.C.S. § 727 based on the debtor's false pretenses, misrepresentations, and willful and malicious injury; court agreed and also held that transfers of farm assets were made with intent to conceal assets from creditor and that creditor made false oaths and accounts on bankruptcy schedules).

(when a bankruptcy court calculates a debtor’s projected disposable income, the court may account for changes in the debtor’s income or expenses that are known or virtually certain at the time of confirmation; mechanical approach can be rebutted by evidence of substantial change in debtor's circumstances; dissent by Scalia). 

(debtor's placement of crop sale proceeds in personal bank account and used to pay living expenses and farm labor costs constituted willful and/or malicious injury to creditor who had prior perfected security interest in crop and crop proceeds; result was that debt non-dischargeable under 11 U.S.C. Sec. 523(a)(6); debtor knew that he owed money to creditor and knew that crops served as security for the debt and that he was to use crop sale proceeds to repay loan from creditor). 

(debtor need not turn over entire joint tax refund to bankruptcy estate; refund did not result only as a result of taxes withheld from taxpayer's income; thus, court had to calculate amounts allocable to estate and to non-debtor spouse). 

(Chapter 12 bankruptcy case involving professional fee application under 11 U.S.C. Sec. 330(a)(1)(A) and (a)(3); fee application for paralegals that worked on case not approved, and attorney fees beyond retainer amount denied because legal services of no-to-little value). 

(debtor filed Chapter 12 and had several "open accounts" with creditor, an input supplier for debtor's farming operation; accounts went unpaid and creditor filed claim in bankruptcy estate for over $1 million and court determined that debtor and wife personally responsible for debt, but that farming operation not liable). 

(11 U.S.C. Sec. 526(a)(4) which prohibits debt relief agencies from advising clients to incur additional debt in contemplation of bankruptcy is constitutional in light of U.S. Supreme Court's decision in Milavetz ; trial court's judgment holding the provision unconstitutional reversed). 

(debtor ineligible for Chapter 13 because of excess noncontingent, liquidated, unsecured debts; amount owed to creditor for seed potatoes was calculable and was noncontingent and liquidated). 

(11 U.S.C. Sec. 1222(a)(2)(A) applies to taxes generated by post-petition sale of farm assets; debtor's calf inventory constituted a "farm asset" used in the debtor's farming operation for purposes of 11 U.S.C. Sec. 1222(a)(2)(A); debtor's "marginal method" of computing the amount of tax to be treated as a non-priority claim under 11 U.S.C. Sec. 122(a)(2)(A) is correct).

(debtor, in attempt to perform debtor's confirmed Chapter 12 plan, asks court to determine priority of liens in livestock sale proceeds; creditors are bank and feed supply business; feed supply business claimed priority under ag supply dealer's lien statute (Iowa Code Ch. 570A); court holds that bank's interest is prior and superior to interest of feed supply business). 

(debtor cannot retain debtor's portion of federal tax refund attributable to child tax credit; amount belongs to bankruptcy estate; immaterial whether credit is refundable or non-refundable and is not held by parents in trust for their children).

(for cases filed after 10/17/05, 11 U.S.C. Sec. 362(b)(26) permits IRS to setoff a pre-petition income tax overpayment against a pre-petition income tax liability without seeking relief from the automatic stay; bankruptcy court opinion (389 B.R. 105) reversed).

(debtor, as vice president of company, was responsible for payment of company's withholding taxes; debtor willfully failed to pay over tax and IRS objection to bankruptcy plan sustained).

(farm debtor borrowed money from co-op to finance crop input costs with co-op taking security interest in crops to be grown; debt excepted from discharge under 11 U.S.C. Sec. 523(a)(2)(B) because debtor submitted materially false documents to co-op for purpose of causing co-op to grant him financing; debtor also failed to tell co-op that he was feeding co-op's collateral to debtor's cattle; co-op justifiably relied on debtor's misrepresentations and suffered loss as a result). 

(debtor filed Chapter 12 petition and reorganization plan, but did not move to have plan confirmed; debtor did file documents trying to remove trustee and sent counterfeit money order to trustee so that trustee could pay claims; case dismissed and converted to Chapter 7 due to attempt to defraud creditors).

(debtor's acquired their residence (homestead) within BAPCPA's 1,215-day look-back period which limits the homestead exemption to $136,875 per debtor (11 U.S.C. Sec. 522(p)); court need not determine case based on either the "title" theory or "equity" theory of Sec. 522(p) - under either rationale, exemption would be limited to $273,750).

(bankruptcy trustee brought adversary action to sell 80 acres of farmland in which debtor was a joint tenant with his brother and their father; father's funds were used to buy the land and sons' names put on deed as surviving joint tenants merely for estate planning purposes; trial court held that debtor's bankruptcy estate has no interest in the land for purposes of 11 U.S.C. Sec. 363(h) and that 11 U.S.C. Sec. 541(d) limits estate's interest to debtor's bare legal title; strong-arm powers of 11 U.S.C. Sec. 544(a)(3) are limited to recovery of transfers made by a debtor and do not include recovery of an equitable interest in real property held by debtor's father as joint tenant; even assuming 11 U.S.C. Sec. 544(a) would allow the avoidance of equitable interests, trustee has notice of father's equitable interest and is not a bona fide purchaser for value who could purchase debtor's interest in the land free of the father's interest - thus, trustee could not sell property under 11 U.S.C. Sec. 363(h); case reversed on appeal - Sec. 544(a)(3) does not limit trustee's powers to avoiding transfers that debtor makes, and trustee has all rights and powers of a bona fide purchaser, and trustee had no constructive or implied notice that debtor held his undivided one-third interest in property for benefit of another person).

(IRS entitled to summary judgment; tax liens against debtor for unpaid income taxes, employment taxes and penalties determined to be valid; liens attached to proceeds held by bankruptcy trustee and had priority over other claim). 

(plaintiff, wholesale generator of electricity, challenged award of summary judgment to defendant; trial court determined that defendant owned three riverbeds and was, thus, entitled to damages for plaintiff's use of riverbeds from 2000-2007 at hydroelectric power sites; on appeal, court affirmed on basis that rivers at issue were navigable when defendant became state in 1889 under navigability for title test).  

(debtor objects to proof of claim filed by creditor on basis that certain items were not covered by Ag Supply Dealer's lien which must be filed within 120 days after ag supplies are furnished and provide the lien was effective from date supplies were furnished; hay and straw are items covered by the lien; claim allowed in part and denied in part). 

(debtor was incarcerated at time of Chapter 12 filing and was determined to be ineligible for Chapter 12 because debtor did not own or operate a farm or receive income from farming at time of filing; farm had been ordered to be sold in a divorce proceeding; debtor claimed that he would include challenge to divorce proceedings as part of bankruptcy case; court held that even if debtor's attempt successful, he still would not have farm income due to his incarceration). 

(case involves creditor's motion for relief from automatic stay to recover over 3,000 tons of corn silage from debtor over lender's objection that lender has priority via blanket lien; creditor did not take steps to become a buyer in the ordinary course; motion for relief denied).

(attorneys who provide bankruptcy assistance are "debt relief agencies" under BAPCPA (11 U.S.C. Sec. 101(12A)).

(inherited IRA, unlike traditional IRA, is not an exempt asset in bankruptcy because account funds not “retirement funds” in hands of person who inherits the funds and because funds not exempt from tax under I.R.C. Sec. 408; likely that inherited plan assets would be treated likewise and court’s opinion follows Robertson v. Deeb and RBC Wealth Management, 16 So. 3d 936 (Fla. Ct. App. 2009)(state law exemption for IRA account funds inapplicable to inherited IRAs), but is contrary to In re Nessa, No. BKY 09-60081, 2010 Bankr. LEXIS 40 (Bankr. D. Min. Jan. 11, 2010)(inherited IRA protected from debtor’s creditors under federal exempt property scheme) – Note:  the easy way to avoid the uncertainty surrounding the differing outcomes on this issue is to name a trust as beneficiary of the proceeds with spendthrift language limiting the owner’s power over the trust assets). 

(court grants creditor's motine in limine prohibiting testimony at trial or presenting evidence concerning whether creditor's action in terminating coal supply agreement with debtor was "commercially reasonable"; debtor was insolvent and unable to pay debts as they became due, as such proposed testimony concerning good faith termination or commercial reasonableness not relevant). 

(attorney violated both automatic stay and confirmed reorganization plan by recording memorandum of judgment in an attempt to collect fees from debtor).

(creditor brought adversary proceeding seeking to enforce agister's lien for care and feeding of cattle against sales proceeds of debtor's cattle; issue involved amount of lien and creditor's motion for partial summary judgment denied because factual issues remained).

(defendant's claim to water from rural upstate Nevada rejected; state water engineer's office did not file application in timely manner). 

(debtor owned 99 percent interest in limited partnership at time of bankruptcy filing and case revolved around what rights the bankruptcy trustee had with respect to the debtor's partnership interest; while limited partnership created as estate planning tool for debtor's father, partnership business of owning, managing and developing undeveloped land still ongoing, general partner did not act improperly, and judicial dissolution of partnership not allowed; however, trustee's withdrawal notice and buy/sell offer were valid and enforceable under partnership agreement). 

(various procedural claims filed in Chapter 12 case).

(Chapter 12 case converted to Chapter 11; debtor was raising hogs under production contract and question arose as to whether voluntary and unilateral termination of contract released debtor from arbitration clauses; arbitration properly refused).