New Cases For the Week of
March 26, 2001 - March 30, 2001
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March 29,
2001
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Case
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Court
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Holding
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In
re Meyer
(DBN Subscription Required) |
4th Cir. |
A
debtor's voluntary prepetition prepayment of mortgages securing
properties held by the debtor and his wife as tenants by the entireties
was not a fraudulent transfer under 11 USC 544(b), since, in return for
the transfer, the debtor received consideration deemed valuable in law. |
In
re Elkins Welding & Construction, Inc.
(Adobe Acrobat Reader plug-in required to view)
(unpublished) |
10th Cir. BAP |
In
the absence of a written security agreement between a debtor and a
putative secured creditor, were notation of a lien on a motor vehicle
certificate of title is not effective to establish priority of the lien
as against a later judgment creditor |
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March 28,
2001
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Case
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Court
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Holding
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In
re Genesys Data Technologies, Inc.
(DBN Subscription Required) |
4th Circuit |
The
Circuit Court asked the Hawaii Supreme Court to answer the certified
question:
Under Rule 54(c) of the Hawaii Rules of Civil
Procedure, is Pacific's default judgment for $1,262,067.24 void when
Data received notice of Pacific's complaint requesting "[g]eneral,
special, treble, and punitive damages in an amount to be determined at
trial" before the entry of any default, and Data received notice of
the specific amount requested and itemization of damages claimed after
the entry of the default but before the entry of judgment?
Because the Court answered the question in the
negative, the creditor's default judgment is entitled to full faith and
credit and the claim objection is denied. |
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March 27,
2001
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Case
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Court
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Holding
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In
re Mercer
(DBN Subscription Required) |
5th Cir. |
For
nondischargeability purposes, there is no statutory basis for
distinguishing between cards obtained at the debtor's initiative and
those obtained in response to a solicitation (pre-approved).
Each use of a credit card by a debtor is a
representation of an intent to pay the charges. The appropriate focus
with respect to a debtor's intent is whether she acted in bad faith by
knowingly making a false representation. The card-use representation of
intent to pay is false if there is use without that intent.
Courts have listed various factors to consider in
determining whether the card-user's representation was made with the
requisite scienter; the time between card-use and the bankruptcy filing;
whether, prior to card-use, an attorney was consulted about bankruptcy;
the number of charges; their amount; the debtor's financial condition at
card-use; whether the limit was exceeded; whether multiple charges were
made on the same day; whether the debtor was employed; her employment
prospects; her financial sophistication; whether her buying habits
changed suddenly; and whether luxuries or necessities were purchased.
But these factors are nonexclusive; none is dispositive, nor must a
debtor's conduct satisfy a minimum number" to constitute fraudulent
intent. The debtor's financial condition at card-use is only one
of many factors to consider, and should not be the sole basis for
finding fraudulent intent. Hopeless insolvency alone cannot form
the basis for fraudulent intent. To the extent the Circuit's prior
opinion in Boydston could be interpreted as requiring a bankruptcy court
to infer fraudulent intent solely on the basis of "hopeless
insolvency" at card-use, it would be inconsistent with the
Restatement. It requires, instead, that the inquiry focus on the
debtor's subjective intent, with such "hopeless insolvency"
simply being "evidence from which his lack of honest belief may be
inferred". Accordingly, "hopeless insolvency", or
inability to pay, at card-use may support finding the debtor did not
intend to pay, but only if she was aware of her financial condition and
knew she could not (and therefore did not intend to) make even the
minimum monthly payment to the issuer. In the case at bar
(involving a debtor with a gambling problem), one relevant inquiry is
what the debtor intended to do with any winnings. Did she intend to use
them to pay her card-debt, or to finance more gambling?
As for the element of actual reliance, a credit card
issuer usually will be able to establish actual reliance by showing it
would not have approved the loan in the absence of debtor's promise to
pay (through card-use). |
In
re Midland Marina, Inc.
(Adobe Acrobat Reader plug-in required to view) |
8th Cir. BAP |
Despite
opposition to dismissal from the debtor's lessor, the bankruptcy court
did not abuse its discretion in dismissing the debtor's Chapter 11 case
(rather than converting the case to Chapter 7) following the debtor's
deemed rejection of its lease pursuant to 11 USC 365(d)(4). |
In
re Bagwell
(DBN Subscription Required) |
9th Cir. |
ERISA
plan fiduciaries are also fiduciaries within the meaning of 11 USC
523(a)(4) |
Kaiser
v. Teledyne
(DBN Subscription Required) |
11th Cir. |
Since
a dispute between (i) a party entitled to certain stock in an entity
formed to receive the assets of a reorganized debtor and (ii) another
party claiming that it was entitled to some of the first party's stock,
did not arise from the same nucleus of operative facts at issue in the
debtor's plan confirmation, the second party was not barred by res
judicata from pursuing its claims against the first party. |
| US
v. Fretz |
11th Cir. |
A
debtor's intentional failure to file tax returns and to pay taxes owed
to the Internal Revenue Service is sufficient, even without any
supporting affirmative conduct, to show that he "willfully
attempted in any manner to evade or defeat [a] tax," within the
meaning of the non-discharge provision contained in 11 U.S.C. §
523(a)(1)(C). |
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March 26,
2001
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Case
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Court
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Holding
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In
re Smith
(DBN Subscription Required) |
8th Cir. BAP |
Although
a Housing Authority was precluded by 11 USC 525 from denying
consideration of a Chapter 7 debtor's applications for government
housing subsidies when the debtor had failed to repay the Authority for
discharged imputed rent, the Housing Authority was not precluded by
section 525 from evicting the debtor and terminating the debtor's
current entitlement to housing benefits. |
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