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The plaintiff commenced an adversary proceeding against the defendant, requesting that the Court determine that the debt owed by the defendant to the plaintiff is nondischargeable under § 523(a)(2)(A).  After the Court dismissed the defendant’s underlying chapter 13 bankruptcy case and barred the defendant from refiling a petition under any chapter of title 11 for 180 days, the Court considered sua sponte whether it retained subject matter jurisdiction over the adversary proceeding.  The Court determined that the dischargeability action was no longer ripe for adjudication, given the dismissal of the defendant’s underlying bankruptcy case and the 180-day bar to refiling.  Therefore, the Court dismissed the adversary proceeding without prejudice.

Discharge/Dischargeability, Published Yes

Plaintiff, Chapter 7 Trustee, brought this adversary proceeding to avoid prepetition transfers to Defendant pursuant to 11 U.S.C. § 547(b) and seeking a monetary judgment against Defendant pursuant to 11 U.S.C. § 550(a) in the amount of the preferential transfers. Defendant moved to dismiss the complaint under Fed. R. Civ. P. 12(b)(3) due to improper venue under 28 U.S.C. § 1409(b), as the Plaintiff sought a recovery of less than the $25,000 monetary threshold set forth in § 1409(b). The Court denied the motion to dismiss as preference actions under 11 U.S.C. § 547(b) are not subject to the venue limitations provided for in 28 U.S.C. § 1409(b).

Preferences, Published No

The Court reconsidered the decision in this case sustaining the Objections of the Debtor to claims 6 and 7 of Carolina Farm Credit ("CFC"), entered February 6, 2018 ("Claim Objection Order"). The Claim Objection Order did not award attorney fees of 15% of the principal and interest balance of the indebtedness owed CFC on the petition date, rejecting CFC's contention that a mandated 15% of the indebtedness owed should be the allowed attorney fees pursuant to N.C. Gen. Stat. § 6-21.2(2). Instead, the court ordered CFC to file its application for attorney fees within 14 days. CFC appealed the Claim Objection Order, and in June 2019 the District Court dismissed CFC's appeal, finding the order was interlocutory and not a final order under 28 U.S.C. § 158(a)(1).
CFC requested reconsideration of the Claim Objection Order following the recent decision of the Fourth Circuit Court of Appeals in SummitBridge National Investments III, LLC v. Faison, 915 F.3d 288 (4th Cir. 2019). The Court found narrow reconsideration of the Claim Objection Order was appropriate due to the impact of SummitBridge and the changed circumstances of the bankruptcy case. Upon reconsideration, the Court approved the Fee Application of Counsel for CFC in the amount of $181,682.51, or 15% of the principal and interest balance of the indebtedness owed CFC on the petition date. While the Court does not agree with CFC's reading of N.C. Gen. Stat. § 6-21.2(2) as a mandate of 15% of the indebtedness as attorney fees, the Court finds that CFC has submitted sufficient documentation, when combined with the additional pleadings and the subsequent activity within the bankruptcy case, for the $181,682.51 that CFC requests in attorneys' fees to be reasonable under both North Carolina law and 11 U.S.C. § 506(b).

Fees/Compensation, Published No

Plaintiff, law firm Biesecker, Tripp, Sink, & Fritts, LLP, brought this adversary proceeding seeking to determine the non-dischargeability of a debt pursuant to 11 U.S.C. § 523(a)(2)(A). Defendant filed a motion to dismiss the complaint pursuant to 12(b)(6), which was granted by the Court and Plaintiff was granted leave to amend their complaint. Following the amendment of the complaint, Defendant again moved to dismiss pursuant to 12(b)(6), which was again granted by the Court.

Discharge/Dischargeability, Published No

The Debtor sought to modify the financial reporting requirements of Federal Rule of Bankruptcy Procedure 2015.3 in three ways.  The Debtor contended that the financial reporting should not be required because the Debtor's interests in the entities are not "substantial or controlling" for purposes of Rule 2015.3.  The Debtor requested that even if the reporting requirements are not waived, the Court should modify the Rule 2015.3 requirement to provide that all reports are to be filed under seal and accessible only to those creditors willing to sign a confidentiality agreement. The Debtor also requested an enlargement of time in which to file his first Rule 2015.3 report, with each subsequent report to be filed at six-month intervals.
The Court found that the Debtor failed to rebut the presumption that he has a substantial or controlling interest in six of the seven entities listed in his schedules. With regard to the request for reports to be filed under seal, the Court found that the Debtor did not meet his burden of proving that the information should be protected under 11 U.S.C. § 107(b), noting that the Debtor's statement regarding his desire for confidentiality to protect other investors is not a basis to seal records from public view. The Court granted the Debtor's request to extend the deadline to file his initial Rule 2015.3 report, with subsequent reports due every six months.

Property of the Estate, Published No

Pursuant to 11 U.S.C. § 1183(b)(2) the Court ordered the appointed subchapter V trustee to perform expanded duties specified in §§ 1106(a)(3) and (a)(4), limited in this case to investigating potential intercompany claims.

Subchapter V, Published No

Order overruling Bankruptcy Administrator's objection to Debtor's small business designation under Rule 1020.

Chapter 11 Plans, Published Yes

Order denying motion for stay pending appeal and to suspend proceedings.

Appeals, Published No

Debtor filed a complaint against Creditor for willfully violating the automatic stay by repossessing Debtor’s vehicle post-petition, refusing to return it, and demanding payment of the pre-petition obligation, all after having been notified of the pending bankruptcy and the automatic stay.  The Court determined that Creditor willfully violated the automatic stay, and ordered Creditor to pay Debtor actual damages, including attorneys’ fees and costs, in the total amount of $3,963.90.  The Court determined that Creditor's actions further justified the imposition of punitive damages.  After considering the Supreme Court's guideposts for courts to consider when assessing punitive damages, the Court awarded total punitive damages of $15,000, allocating the total amount among the various violations.

Automatic Stay, Published Yes

Defendants CitiFinancial and Carrington Mortgage Services, two former holders/servicers of the Plaintiffs' mortgage, requested dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, for three separate causes of action. The Plaintiffs alleged that the two Defendants violated § 524(i) with misapplication of payments and an inflated account payoff balance. The Court determined that the Plaintiffs' allegations that CitiFinancial and Carrington both transferred Plaintiffs' mortgage account with an inflated balance due to misapplied payments is sufficient to constitute an act to collect for the purposes of withdtanding a motion to dismiss under Rule 12(b)(6).  Also, the Court found that the Plaintiffs plausibly pleaded the elements required under § 362(k) for violation of the automatic stay. The Plaintiffs' alleged violation of the FDCPA against Carrington is not related to the bankruptcy case and the Court lacks subject matter jurisdiction over that count of the complaint.

Dismissal, Published Yes
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