Case Summaries

(bankruptcy court order directing plaintiff to sign a prepared, sworn statement is not final appealable order for purposes of appellate review by district court).

(case involves trustee's action to recover preferential transfers; debtor was in business of buying seed corn and seed beans from farmers). 

(Chapter 12 plan denied confirmation based on feasibility).

(debtors' Chapter 13 plan confirmed over creditor's argument that plan not feasible because debtors' projected income from cattle sales speculative due to condition of cattle herd; creditor failed to identify any objective fact clearly establishing that bankruptcy court erred in determining that plan was feasible based on debtors' projections; plan permissibly modified creditor's default remedies and plan does not "bifurcate" the claim into secured and unsecured portions).

(debtors' Chapter 13 plan confirmed; plan satisfied requirements of 11 U.S.C. Sec. 1325(b) and court could not redefine "disposable income" simply because amount of actual secured installment payments appeared to be disproportionate to debtors' reasonable needs).

(debtors demonstrated establishment of homestead and had intent to return to the homestead; trustee failed to carry burden to show that debtors had permanently left the homestead and that they did not intend to return to it; court overruled trustee's objection to confirmation, trustee's objection to exemption of the homestead and motion to dismiss).

(debtor's patent infringement (saving patented soybean seeds) debt excepted from discharge under 11 U.S.C. Sec. 523(a)(6)). 

(IRS recommends treating cooperative associations as C corporations for purposes of small partnership exception of I.R.C. Sec. 6231(a)(1)(B)).

(debtor was member of joint venture that purchased cattle via loan from creditor, until creditor called note upon learning that there were insufficient cattle for collateral; proceeds of cattle sales did not pay-off note; court determined that creditor failed to proved that debt non-dischargeable and debtor’s alleged misrepresentation of number of cattle occurred after not extended, thus no justifiable reliance on alleged misrepresentation). 

(debtor attempted to avoid judgment liens on grounds that they impaired his homestead exemption, but creditor claimed that its judgment arose before debtor acquired the homestead and, therefore debtor could not claim a homestead exemption against pre-acquisition debt; court agreed with creditor – debtor did not intend to permanently reside at farm until after parties’ agreement entered into).

(no abuse of discretion by bankruptcy court in dismissing debtors' case for failure to file required credit counseling certificate; debtors failed to establish exigent circumstances meriting a waiver of the requirement).

(debtor filed amended Chapter 12 plan proposing to pay former spouse’s claim in full on installment basis; plan confirmation denied because proposal to pay spouse’s claim over 30 years with 10-year balloon; debtor had significant equity in farm but did not propose to sell any assets to pay former spouse). 

(debtor’s initial Chapter 12 case dismissed when debtor defaulted on post-confirmation obligation owed to bank; one day before foreclosure sale debtor again filed bankruptcy; even though second case filed within 180 days of first case, bankruptcy filing allowed because initial filing not dismissed voluntarily or for willful failure to follow court’s orders; bank not entitled to relief from automatic stay because bank adequately protected). 

(water right had issued water permit to plaintiff’s predecessor in interest for construction of fish pond on condition that equal amount of water be returned to stream as was being diverted; state issued notice of revocation of water right for alleged violations of permit condition; summary judgment for defendant upheld – uncontradicted evidence revealed that amount of water returned to stream not same as amount of water being diverted).

(plaintiff claimed that purchase price of farm should be reformed so that the amount paid to bank was reduced; plaintiff claim that farm was represented as irrigable, but water rights had been cancelled before purchase; no reformation allowed because both plaintiff and bank knew of water rights issue before purchase).

(creditor failed to prove that claim against debtor (husband of couple engaged in farming) should  be excepted from discharge; creditor failed to prove that debtor made fraudulent financial representations).

(taxpayer not given extension of time to make mark-to-market election under I.R.C. Sec. 475(f); request for relief filed late and lateness gave taxpayer benefit of several months of hindsight to review and consider whether results of securities trading transactions would benefit from the election).

(while debts arising from willful and malicious injury by the debtor are not dischargeable, debtor did not damage plaintiff's interests as fellow heirs because debtor's father had deeded oil and gas interests to debtor during his lifetime).

(buyer of farm property failed to carry burden of proof to show lawful and beneficial use of water, or due and sufficient cause for non-use; substantial evidence existed that prior owner had failed to use without cause for statutorily required five-year period).

(debtors (married couple) opened Section 529 Education Savings Plan for daughter and deposited $14,500 into account; daughter's grandmother later added $40,000 to account with debtors filing Chapter 7 bankruptcy two weeks later; debtors did not list the account in Schedule B or on their exemptions; debtors held to have a legal interest in account as of petition date and account was property of bankruptcy estate and not excluded under 11 U.S.C. Sec. 541(c)(2) because that exception concerns restrictions on transfer "of a beneficial interest of the debtor in a trust" and there was inadequate proof of a qualifying trust interest of debtors; even if debtors had a contingent interest in the account due to potentially becoming a beneficiary, account does not contain requisite anti-alienation and anti-assignment provisions required under non-bankruptcy law that is recognized by 11 U.S.C. Sec. 541(c)(2); account also not excluded under 11 U.S.C. Sec. 541(b)(6); because that provision only excludes Sec. 529 accounts on a sliding scale - contributions made more than 720 days before filing are excluded and contributions made between 365 and 720 days before filing are excluded to extent below $5,475, and any amounts contributed within one year are not excluded; $40,000 contributed by daughter's mother also estate property - exclusion from estate for certain Sec. 529 funds based on timing of contribution rather than source of contribution). 

(non-refundable child tax credit is not exempt property under Colorado law; debtor's claimed exemption for child tax credit disallowed and debtor ordered to turn over prepetition portion of 2008 income tax refund to bankruptcy estate).

(a corn silage and manure supplier, as an unsecured creditor, brought an adversary complaint against a  secured creditor seeking a declaratory judgment that the unsecured creditor’s claims were executory in nature which debtor must accept or reject, and to establish unsecured creditor’s  right to an administrative claim and secured creditor moved to dismiss claim court determined that contracts were not executor because unsecured creditor had performed its part of the contracts, and only the payment by the debtor remained to be performed; unsecured creditor did not hold administrative claim because interval of time significantly greater than 20 days had passed between the unsecured creditor's performance and the debtor's petition date; unsecured creditor needed to bring adversary proceeding to avoid secured party’s interest in the property). 

(even though Chapter 12 does not create a bankruptcy estate separate from the debtor, Chapter 12 debtor may treat postpetition income taxes triggered during pendency of case as administrative expense under 11 U.S.C. Sec. 503; debtors' pre-petition sale of slaughter hogs constitute sale of a "farm asset" that is "used in the debtor's farming operation under 11 U.S.C. Sec. 1222(a)(2)(A) - dissenting opinion on this point based on plain language of the statute and that 11 U.S.C. Sec. 1222(a)(2)(A) better analyzed by Internal Revenue Code capital gain provision than by Bankruptcy Code provision that operates in different context; marginal method is the correct method to determine the allocation of taxes between priority and non-priority claims under 11 U.S.C. Sec. 1222(a)(2)(A) - dissent on this point noted that U.S. Supreme Court has rejected the notion that the Bankruptcy Code is a "remedial statute" that should be construed liberally in favor of debtors).

(taxpayer's proposed disclaimer of right to receive trust distribution upon termination of trust is not subject to gift tax; disclaimer was qualified under I.R.C. Sec. 2518 and did not constitute an acceptance of benefits).

(plain language of 11 U.S.C. Sec. 707(b)(2)(A)(ii)(I) permits a debtor with above-median income to claim a vehicle-ownership expense for a vehicle that the debtor owns outright and without encumbrance; court joins Fifth and Seventh Circuits).

(plaintiff granted partial summary judgment in adversary proceeding against debtor for amount debtor charged on credit card to pay employment taxes and penalties owed by his business; debt incurred to pay a nondischargeable tax debt).

(plaintiff, Kansas bank, had banking relationship with a Kansas feedyard that went bankrupt; plaintiff alleged tort of conversion against two Nebraska cattle feeding operations who engaged in cattle transactions with Kansas feedyard; defendant moved to dismiss or transfer venue due to lack of personal jurisdiction; motion denied because defendants had minimum contacts with Kansas via continuing business relationship with Kansas feedyard).

(unsecured creditors' committee seeks to avoid, as a transfer made for less than reasonably equivalent value, an alleged disproportionate allocation of proceeds of the sale of the debtor's assets; motion denied because there was no transfer before petition date, but merely an agreement to transfer multiple properties owned by different entities and allocate purchase price).

(IRS tax claim for telecommunications excise tax under I.R.C. Sec. 4251, et seq., with respect to central office based remote access upheld; bankruptcy court reversed). 

(debtor's IRA not exempt asset and is reachable by creditors; debtor had previously (and many years in the past) engaged in prohibited transactions with the IRA (related to borrowing from the IRA and improper distributions and contributions).

(Sec. 706(a) of Bankruptcy Code does not give debtor an absolute right to convert a Chapter 7 to a Chapter 13 (or any other Chapter), but merely a right to file a motion for conversion; debtor's motion to convert denied because debtor will not be able to make all payments under the plan).

(debtor, in previous case, converted from Chapter 12 case to Chapter 7; same factors showing debtor’s fraudulent conduct warranted granting bankruptcy trustee summary judgment resulting in debtor being denied a discharge).   

(debtors not eligible for Chapter 12 bankruptcy; part of debtors' business involving raising of horses constitutes "farming operation" but portion of business involving horse boarding/training services does not constitute "farming operation"; income from horse raising activity only constituted approximately 12 percent of debtors' gross income during applicable timeframe). 

(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; 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).

(debtor failed to meet undue hardship test of 11 U.S.C. Sec. 523(a)(8) to have student loan indebtedness discharged; debtor had sufficient income to maintain a minimal standard of living and pay the student loan debt).

(defendant's interpretation of its surface water regulation which contains agricultural exemption partially upheld; but portion of regulation abrogating exemption for agricultural drainage activities that are "predominant" where "predominant" defined as "more than incidental" invalidated).

(debts owed to creditor not discharged merely because creditor issued account statements indicating zero balances on loans which were charged off and issued tax forms (1099-Cs) to report the cancellation of indebtedness; issuance of account statements indicating zero balance not legal equivalent of discharging liability on the debt, and issuance of tax forms did not discharge the debts, but just an informational filing that didn't, by themselves, satisfy state law for discharging debt).

(debtors acted in bad faith upon failing to disclose in bankruptcy filings their borrowing of $17,000 from 401K account and depositing the sum in their checking account; fact that debtors could have exempted the funds if they had accurately reported the loan does not change the conclusion that they acted in bad faith and bankruptcy court did not abuse discretion in disallowing debtors' attempt to amend their exemptions because of the bad faith).

(debtor's bankruptcy case dismissed; debtor failed to obtain credit counseling, failed to file schedules or a plan, and failed to show that any plan could be proposed or confirmed and had only sporadic income from occasional sales of farm animals).

(landowners not holding rights to appurtenant water have standing to object to a temporary easement on their property, but do not have standing to object to condemnation of water rights which they do not possess; question of whether defendant can condemn water rights over plaintiff's property not ripe for decision because plaintiff does not hold water rights and current eminent domain proceeding does not seek a permanent easement for point of diversion).

(plaintiff had right, under state drainage code, to enter onto defendant's property to replace underground drainage tile and repair covered drain tile system already in place; no extension of existing drainage tile involved).  

(lender's perfected security interest in debtor's grain "inventory, accounts and proceeds thereof" took priority over ownership claims of grain purchaser who had prepaid for certain quantity of grain; no documents of title showing purchaser's ownership of grain and any course of dealing ineffective to alter terms of delivery contract for future goods; no showing that debtor had sufficient grain at time of prepayment to satisfy contract requirements and lender's security interest attached to grain when grain acquired by debtor and before delivery to purchaser).   

(debtors who exempted a motor vehicle under state (Iowa) exemption statute are entitled to prove that vehicle is tool of the trade under 11 U.S.C. §522(f)(1)(B)(ii) in attempt to avoid nonpurchase-money security interest in the vehicle; bankruptcy court's determination that debtors could not exempt truck as tool of trade under state law and could not avoid lien under Bankruptcy Code lien avoidance provisions in error).

(plaintiff's nonuse of water right not excused and right properly forfeited for nonuse). 

(bankruptcy court did not err in concluding that debt in question had been incurred as a result of actual fraud and, therefore, was not dischargeable under 11 U.S.C. Sec. 523(a)(2)(A); 11 U.S.C. Sec. 523 (a)(2)(A) does not require the creditor to prove that its reliance on debtor's misrepresentation was reasonable, but only that such reliance was justifiable - which does not require an investigation on the creditor's part). 

(thermal oxidizer provided to debtor under an "Agreement"; "Agreement" determined to be true lease that bankruptcy trustee could assume or reject under 11 U.S.C. Sec. 365). 

(type of debts defined in 11 U.S.C. Sec. 523(a) excludible in Chapter 12 proceeding regardless of whether debtor a corporation or individual; even though Sec. 523(a) could not be harmonized with Sec. 1228, Sec. 1228 controlling because it was more specific, applicable only in Chapter 12, than Sec. 523(a) which applies regardless of chapter). 

(bankruptcy court did not err in ordering debtor to turn over to bankruptcy trustee commissions earned in connection with farm real estate sale contracts that were entered into pre-petition; commissions earned post-petition and became property of bankruptcy estate).

(language in subdivision covenant requires unanimous approval among tracts for transfer of water rights to a neighboring city).

(11 U.S.C. Sec. 1222(a)(2)(A) applies to post-petition tax claims, and such claims can be treated as an administrative expense in the bankruptcy estate).