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Objection to secured claim of second mortgage creditor overruled.  The second mortgage creditor obtained a pre-petition state court judgment against the Debtor.  The note evidencing the indebtedness owed to such creditor merged into the judgment.  However, under North Carolina law the deed of trust securing the indebtedness remains in place.

Claims, Published No

Trustee brought this adversary proceeding against other parties to a trust agreement seeking to recover damages allegedly caused by the defalcation of funds after the trustee failed to take custodial possession of the trust funds.  The claims were for breach of contract against both Dealers Assurance Company (“Dealers”) and The Fidelity Bank (“Fidelity”), as well as numerous tort claims solely against Fidelity.  Dealers asserted counterclaims against the estate for breach of contract. Dealers moved for summary judgment on Trustee’s breach of contract claim, as well as its two counterclaims against the estate under the same contracts. In support of its motion for summary judgment on Trustee’s breach of contract claim, Dealers asserted that Trustee’s claim is barred by the statute of limitations, there is no evidence it breached the contracts or caused Debtor any damages, and the knowledge of Debtor’s agent, combined with Dealers’ lack of knowledge of the transfer of the trust funds out of trust, defeat any claim of equitable estoppel. Fidelity moved for summary judgment on all of Trustee’s claims against it. Fidelity raised several defenses, including the actions and knowledge of Debtor’s agent, and that Debtor, as grantor of the trust, could not have suffered any damages because the trust funds that Fidelity represented it originally received were misappropriated long before Fidelity became trustee. Fidelity further argued that any claims in tort are barred by North Carolina’s economic loss rule. The Court denied the motions for summary judgment.

Summary Judgment, Published No

Defendant repossessed Plaintiffs' vehicle postpetition and failed to return it despite numerous requests.  Plaintiffs are entitled to actual damages, attorney's fees, and punitive damages from the Defendant.

Automatic Stay, Published No

Court granted motion to dismiss complaint with prejudice in light of confirmed chapter 11 plan.

Chapter 11 Plans, Published No

The Bankruptcy Administrator filed a motion to dismiss the Debtors' case pursuant to Bankruptcy Code section 1307(c) based on a lack of good faith in light of the misrepresentations and omissions in their schedules.  In their case the Debtors provided timely responses to the auditor, provided creditble explanations for their omissions and misstatements, and promptly amended their schedules.  Considering the totality of the circumstances in this case , a dismissal on the basis of bad faith is not warranted.

Dismissal, Published No

Motion for sanctions for violation of the automatic stay denied. There was no violation of the automatic stay as the property at issue was not §541 property of the bankruptcy estate.

Property of the Estate, Published No

Bankruptcy case transferred pursuant to 28 U.S.C. § 1406 due to improper venue.

Venue, Published No
Hof, et al. v. Caswell 07/02/2018
(Judge Benjamin A. Kahn)

Plaintiffs, in their individual capacities, brought this adversary proceeding to determine whether a debt owed pursuant to an Oregon state court judgment is non-dischargeable under 11 U.S.C. § 523. Defendants moved to dismiss the original complaint pursuant to Rule 12(b)(6) contending that the individual Plaintiffs were not the proper parties in interest to maintain the dischargeability action. Plaintiffs and Frederich Hof, as Trustee for the Trust, subsequently filed an Amended Complaint. The Defendants then moved to dismiss the Amended Complaint as untimely. The Court held that Frederich Hof, as Trustee, is the appropriate party to enforce any right to payment under the judgments, and granted Defendants’ motion to dismiss with respect to Plaintiffs in their individual capacities. The Court further held that the Amended Complaint relates back to the original Complaint, and denied Defendants’ motion to dismiss as to Frederich Hof, as Trustee.

Dismissal, Published No

Based on the totality of the circumstances in this case, the first mortgage lender's amended claim, filed 50 months after the Trustee first began disbursing monthly mortgage payments to the lender under the Debtors' plan, is disallowed

Claims, Published No

The court granted in rem relief to the creditor pursuant to its motion for relief from stay under 11 U.S.C. § 362(d)(4), whereby a third party, not the debtor, engaged in a scheme to delay or hinder the creditor's foreclosure proceedings in certain real property with multiple purported transfers of title.

Automatic Stay, Published No


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