Opinions

The NCMB offers a database of opinions for the years 2000 onward, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.

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.

 

Property of the Estate, Published No

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.

Automatic Stay, Published No

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.

Discharge Requirements, Published No

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. 

Reopenings, Published No

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.

Claims, Published No

Benjamin A. Kahn

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.

Preferences, Published No

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.  

Preferences, Published Yes

The debtor filed a complaint seeking equitable review of a foreclosure sale conducted against the debtor's residence on the grounds that the foreclosure was inadequate and contained a material irregulairty.  The foreclosure sale resulted in a coveyance of  the debtor's residence to Bayview by credit bid.  The debtor alleged that the foreclosure, initiated and completed by a trustee on behalf of Bayview when Bayview was the holder of the note and deed of trust, was improper because the trustee did not obtain an order from the state court finding that Bayview was the property holder of the note and deed of trust.  Instead, the trustee relied upon a previous order issued to approve of the foreclosure at a time when Bayview's assignor was the holder of the note and deed of trust. The Court found that nothing in N.C. Gen. Stat. 45-21.1 et seq. prevented the assignment of the mortgage post-foreclosure hearing or requires the trustee or new holder of the note and deed of trust to re-initiate the foreclosure hearing upon receipt of the note. The debtor had notice of the original foreclosure initiated by the same trustee throughout the netire process, and the debtor's right to notice of foreclosure was not harmed by the subsequent transfer of the mortgage after the foreclosure hearing and before the foreclosure sale.  The proposed amendment to the complaint was denied as it was futile.

UCC & other State Law Issues, Published No

Claimants in this matter were employees of the Debtor working as salemen.  During the course of the bankruptcy, debtor had sold substantially all of its assets to a purchaser in exchange for a lump payment.  After the closing of the sale, the claimants each filed a proof of claim asserting claims for commissions based on sales made to customers that were in varying levels of completion, but that had not been collected upon by the debtor.  Afterward, claimants filed a joint motion for allowance of administrative expense claims pursuant to 11 U.S.C. § 503(b)(1)(A), 503(b)(1)(A)(i) and 507(b)(2).  This motion alleged that claimants were entitled to an administrative claim for the work they had done and, alternatively, if they were not contractually entitled to this, that they should be compensated under a theory of quantum meruit.  The creditors’ committee and debtor both moved to dismiss this claim.  The Court held that (1) Claimants’ express contracts provided that commissions would be paid when the debtor collected on the sales, debtor did not collect on the sales and so the claimants were not entitled to payment for them; and (2) claimants could not collect on a theory of quantum meruit because there was an express contract that governed the relationship.

Claims, Published No
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