The Sixth Circuit affirms the bankruptcy court’s interpretation of the creditor’s settlement agreement with the debtor. The agreement provided that the creditor released his claims against the city and the individual officers. The plan only provided for a small percentage to be paid on the claim, but stated claims against individual officers were not discharged by the plan. The creditor argued the settlement agreement should not be held to have released claims against the individual officers, but the court finds the plain language of the agreement makes clear such claims were released.

(7th Cir. July 18, 2017)

The Seventh Circuit affirms the bankruptcy court’s order sustaining the trustee’s objection to the debtors’ $30,000 exemption in trust assets. The debtors argued the spendthrift provisions in the trust prevented the interest from becoming property of the estate. The court holds that the trust interest fully vested before the debtors filed bankruptcy. An exemption was inappropriate and the interest was property of the estate. Opinion below.

Judge: Sykes

Attorney for Debtors: Julia D. Mannix

Attorney for Trustee: Zane Zielinski

(Bankr. W.D. Ky. May 12, 2017)

The bankruptcy court enters summary judgment against the debtor holding the debt nondischargeable pursuant to 11 U.S.C. § 523(a)(4). The plaintiffs inherited a judgment against the debtor that was based on the debtor’s theft of the decedent’s property. The plaintiffs were the proper parties to bring the claim, as the decedent’s estate assigned the judgment to them, and the requirements of § 523(a)(4) were satisfied. Opinion below.

Judge: Lloyd

Attorneys for Plaintiffs: Crain – Schuette Attorneys, Amanda Lisenby Blakeman

The bankruptcy court denies the defendants’ motion to dismiss, with the exception of one claim for equitable subordination against one of the defendants. The complaint filed by the trustee asserted counts for veil piercing, fraud and fraudulent transfer, preference avoidance, breach of fiduciary duty, and a demand for accounting and turnover. Opinion below.

Judge: Moberly

Attorney for Trustee: Mark A. Warsco

Attorneys for Defendants: Alerding Castor Hewitt LLP, Michael J. Alerding, Julia E. Dimick, Mitchell Alan Greene, Anthony Frederick Roach; Abraham Murphy

(Bankr. W.D. Ky. Feb. 1, 2017)

The bankruptcy court denies the creditor’s request for default rate interest on the secured claim. The value of the real property securing the claim was in excess of the claim amount. Case law establishes that there is a presumption in favor of the contractual rate of interest, but it is subject to rebuttal when evidence establishes the default rate is significantly higher without justification. Here, the default rate doubled the non-default rate and the court finds there was no justification under the evidence presented. Opinion below.

(6th Cir. B.A.P. Nov. 29, 2016)

(Bankr. S.D. Ind. Oct. 6, 2016)

(E.D. Ky. July 8, 2016)

The district court affirms the bankruptcy court’s decision finding the debt dischargeable. The debtor sold a television to the plaintiffs, claiming it was a “high definition” television.The plaintiffs disputed that characterization and obtained a judgment in state court for the purchase price plus punitive damages. However, the court finds that the plaintiffs failed to meet their burden of proof in showing the requisite elements of § 523(a)(2)(A). Opinion below.

Judge: Schaaf

(Bankr. W.D. Ky. May 17, 2016)

(6th Cir. B.A.P. Mar. 28, 2016)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s order dismissing the plaintiffs’ nondischargeability complaint. The plaintiffs had suffered a loss when they purchased a condominium unit and hired a builder to complete its construction. The builder accepted funds but failed to complete the work. Each of the plaintiffs’ claims under 11 U.S.C. § 523 were properly dismissed, principally because they failed to establish that the builder was the debtors’ agent. Opinion below.

Judge: Harrison