Debtor caused a vehicular collision while driving under the influence, killing the victim. At the time of the accident, two insurance policies covered the Debtor, and neither policy was fully able to settle with the decedent's estate. A lawsuit resulted in a judgment in favor of the estate, upon which the estate was unable to collect. The estate and the decedent's wife then filed an involuntary petition, placing the Debtor into Chapter 7 bankruptcy. An order for relief was entered, and special counsel was appointed to pursue potential first party claims against the insurer relating to their conduct in representing the Debtor prepetition. One of the insurance carriers moved to dismiss the case, asserting that the case had been filed in bad faith as an attempt to bring third party claims against the carriers, which is not allowed under North Carolina law. The court determined that, as no adversary proceeding had yet been filed, and as the carrier was not otherwise parties in interest, it lacked standing to make a motion to dismiss. Further, even if the carrier had standing, the types of claims contemplated by the Trustee would have alone been insufficient for a finding of bad faith. Motion denied.
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(Judge Lena M. James)
(Judge Benjamin A. Kahn)
Debtor executed an agreement with a creditor to reaffirm a debt on a 2016 Chevrolet Equinox in the amount of $34,016.49. The vehicle had a retail value according to NADA of $20,550.00. The proposed monthly payments were to be approximately $600.00 of Debtor's combined monthly income of approximately $1,800.00. Debtor's schedules, including the proposed reaffirmation agreement, displayed a negative net monthly income of $337.20. Debtor provided no substantive explanation in support of reaffirmation regarding his ability to stay current on his obligations, aside from essentially "spending less." The requisite certification to be signed by counsel for debtors in support of reaffirmation agreements was signed in the name of counsel with whom Debtor testified he had never spoken. Having serious concerns about the affidavit signed by counsel, the Court ordered Debtor's counsel to appear and show cause as to why the declaration in support of the reaffirmation agreement should not be stricken, the reaffirmation agreement disapproved, and why sanctions should not be imposed for violation of Bankruptcy Rule 9011.