Debtor filed an adversary proceeding seeking to recover real property sold at foreclosure prior to the petition date pursuant to § 548, and the Trustee was added as a co-plaintiff. Defendant purchaser moved to dismiss the case, claiming (a) that Plaintiffs failed to state a claim and that the Court's prior ruling on a Motion for Preliminary Injunction evidenced as much; (b) that Defendant's status as a good faith, third party purchaser protected Defendant pursuant to state law; and (c) that the Rooker Feldman doctrine, res judicata, and collateral estoppel preclude the Plaintiffs from bringing their claim. The Court ruled that Plaintiffs did sufficiently plead pursuant to Iqbal and Twombley, and that the standard used in adjudicating a Motion to Dismiss is distinct from an injunction analysis. Further, the Court dismissed Defendant's assertion that it was protected under state law as a good faith, third party purchaser as irrelevant pursuant to § 550. Finally, the Court found that the Rooker Feldman doctrine, res judicat, and collateral estoppel did not apply in this proceeding. Motion Denied.
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Lena M. James
Chapter 13 Trustee and creditor who failed to properly perfect a vehicle covered under the hanging paragraph of 1325(a) reached a settlement with the Debtor on the Trustee's 549 avoidance action. The Consent Order found the value of the avoidance was equal to the creditor's fully secured claim, and the order further directed that the equity be preserved for unsecured general claims. The Trustee brought a Motion to Modify Plan to incorporate that requirement into the Plan, and the Debtor objected, arguing that only the collateral's value need be paid into the Plan, as in addition to the claim being voidable under 549, it was also void ab initio. In ruling for the Trustee, the Court declined to answer whether the claim was void, as the Consent Order already established the lien's status as avoidable.
Prior to filing, a Debtor's residence was foreclosed upon by his homeowners association and sold via a non-judicial sale. The real property was purchased, a foreclosure deed was delivered, an order for eviction was obtained, and a Sheriff's eviction was scheduled. Prior to eviction, the Debtor filed for bankruptcy. The purchaser moved to lift the automatic stay pursuant to § 362(d)(1)-(2) to continue with eviction under state law, and the Debtor opposed the motion, arguing that as he had filed an adversary proceeding under § 548 that went to the heart of the purchaser's claimed ownership, that relief from stay should be denied. The Court found that legal title to the property had passed to the purchaser under North Carolina law, and that cause existed to modify the stay under subsection (d)(1). Further, the Court found that, as legal title had passed, the Debtor had no equity in the property, and that the Debtor made no argument as to the property's necessity for an effective reorganization such that the stay could be modified under subsection (d)(2). The Court also found that the pendency of the Debtor's adversary proceeding was no impediment to granting the purchaser's requested relief.
Court granted motion for waiver of financial management course requirement under section 727(a)(11) for a Chapter 7 who died prior to taking the course.
Decedent Chapter 7 Debtor's wife filed a motion, acting as personal representative of the probate estate, to avoid two judicial liens against the Debtor's real property that were not avoided during the bankruptcy. While courts have allowed lien avoidance nunc pro tunc by personal representatives, here the Debtor transferred the real property to entireties property prior to his death and discharge. Here, the property is now, and has always been, outside the probate estate. Thus, the wife lacks standing to reopen the case, as the property is not within the probate estate, and the judgment creditor has no claim against an asset of the estate or the estate itself.
The Chapter 13 Trustee filed a motion to distribute funds held in reserve to a first mortgage holder. The Trustee had been holding funds due to a mistaken satisfaction of the first mortgage lien. The motion was denied without prejudice.
Benjamin A. Kahn
Trustee brought this adversary proceeding against other parties to a trust agreement seeking to recover damages for funds that had been absconded with from the trust. The claims were for breach of contract against both Dealers Assurance Company and The Fidelity Bank, as well as numerous tort claims solely against Fidelity Bank. Dealers Assurance moved to dismiss pursuant to Rule 12(b)(6) based on the statute of limitations. This motion to dismiss was denied because the Court found that the facts were sufficient to raise the possibility of equitable estoppel, barring Dealers Assurance from arguing the statute of limitations, and therefore would not dismiss at this early stage of the proceeding. Fidelity Bank filed a separate motion to dismiss all claims against it. The Court denied this motion to dismiss as well due to an earlier stipulation from both the Trustee and Fidelity Bank that these defenses under Rule 12(b)(6) would be raised at the summary judgment stage of the proceeding.
Trustee moved the Court to reconsider its Order Granting Summary Judgment in Part and Denying in Part. The Trustee sought reconsideration that the reflection of solvency in the Debtor's schedules was sufficient to rebut the presumption of solvency under 11 U.S.C. § 547(f). The Court denied the motion, finding the Trustee had not put forth a proper basis for the Court to reconsider its partial summary judgment.
The Court granted summary judgment in favor of Plaintiff, Trustee, bringing a 547(b) action against the Defendant, on cross motions for summary judgment. The Court found that two payments made from the Debtor to the Defendant five days before the petition date were preferential. The Debtor made two payments from an account created as the result of a contract between Debtor and Defendant, which set up a relationship whereby the Defendant sold warranties and the Debtor administered the warranties, paying claims and insuring the warranties through its relationship with a third party. In dispute was the interest of the Debtor in the account, whether the Defendant was a creator, and whether the court should impose a constructive trust over the funds in the account to the benefit of the Defendant.
Trustee moved for summary judgment on a preference action. Defendant argued against summary judgment for three main reasons: (1) the Trustee had failed to prove that the Debtor was insolvent at the time of the alleged payments as required by 11 U.S.C. §547(b)(3); (2) the payments were made in the ordinary course of business and could not be avoided pursuant to 11 U.S.C. §547(c)(2); and (3) the loans made by the Defendant during the preference period constituted "new value" which barred any preference recovery pursuant to 11 U.S.C. §547(c)(4). The Court entered partial summary judgment for the Plaintiff ruling that: (1) the Trustee had failed to provide evidence proving that the Debtor was insolvent at the time of the transfers; (2) the payments were not in the ordinary course of business and the ordinary course of business defense could not be met; and (3) the loans made by the Defendant during the preference period to the Debtor constituted new value which would be a partial defense, reducing any preference amounts by the amounts loaned.