Court held debtor’s objection to claim is sustained in part and overruled in part, finding that parts of the claim, which primarily arose from judgments entered against the debtor in favor of his ex-wife for attorney’s fees and costs awarded in the former spouses’ state court domestic relations case, are in the nature of support and as such are nondischargeable domestic support obligations entitled to priority treatment pursuant to 11 U.S.C. § 507(a)(1)(A). Court found other parts of the claim were not proven to be in the nature of support and as a result are not domestic support obligations entitled to priority status.
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Chief Judge Phyllis M. Jones
Court held “abandonment” of a claim is not a proper basis for disallowing an otherwise allowed claim. If disbursement checks remain unpaid, the Trustee should treat the funds as unclaimed funds under Section 347(a) of the Bankruptcy Code.
Chapter 7 Debtor’s actions in his prior Chapter 11 case did not support an objection to discharge under Section 727(a)(7) as the Debtor cannot be an insider of himself. U.S. Trustee’s objection to the Debtor’s discharge under Section 727(a)(2), (a)(3), (a)(4), and (a)(7) was denied.
Doctrine of recoupment applied to claims of the Debtor and the Centers for Medicare & Medicaid Services (“CMS”). Court found CMS may recoup overpayments previously made to the Debtor against $1.2 million in Medicare reimbursements held by CMS in a “Strumpf freeze.” The claims arose out of a single integrated transaction. CMS’s exercise of its right of recoupment is not barred by the automatic stay.
Court denied Debtor’s discharge under Sections 727(a)(4)(A) and 727(a)(6)(A) after finding Debtor made several false oaths both during Court proceedings and in his schedules, and repeatedly failed to obey lawful orders issued by the Court. Plaintiff’s request for Court to recommend Debtor to USAO for bankruptcy fraud was denied for lack of standing. Plaintiff’s request for attorney’s fees and costs was denied.
Court found FCS failed to meet its burden under Section 523(a)(6) of showing the Debtors acted maliciously when collateral was sold without FCS’s consent to help maintain Debtors’ farming operation. The Court also found the Debtors provided a satisfactory explanation as to the loss of assets and, thus, that FCS failed to prove that the Debtors’ discharges should be denied pursuant to Section 727(a)(5).
Bank failed to prove debt owed to it should be nondischargeable under Section 523(a)(2) based on statements made in balance sheet regarding the Debtors’ cattle and equipment. Bank also failed to prove there were “unaccounted for” cattle or “converted” checks from the sales of cattle, or that the Debtors acted with malice, and thus failed to meet its burden under Section 523(a)(6). Finally, Bank failed to prove the Debtors did not maintain adequate records under Section 727(a)(3). Judgment entered in favor of Debtors.
Judge Richard D. Taylor
Plaintiff, the beneficiary of a state court judgment based on breach of contract, did not prove any further damages or the judgment balance nondischargeable based on evidence of additional conduct sufficient to meet the standard of a willful and malicious injury.
Judge Bianca M. Rucker
In this case, the debtor claimed a rural homestead exemption in his 1.1-acre property under the Arkansas Constitution. The chapter 7 trustee objected, asserting that the debtor’s exemption should be limited to one-quarter of an acre because, according to the trustee, the debtor’s property was urban. Although the property was located within city limits and displayed certain urban characteristics, the Court found that more evidence weighed in favor of a determination that the property was rural, including that the city had zoned the property for agricultural use and the debtor had consistently engaged in agricultural activity on the property to help support his family. Therefore, the Court overruled the trustee’s objection.
In this adversary proceeding, the Court granted the chapter 7 trustee’s motion for summary judgment, finding that the debtor’s pre-petition transfers of three parcels of real property to his ex-wife constituted avoidable fraudulent transfers under 11 U.S.C. § 548(a)(1)(A) based on uncontroverted, direct evidence that the debtor transferred the parcels with the actual intent to hinder, delay, or defraud his creditors. The Court ordered turnover of the parcels pursuant to § 542 and § 550, conditioned upon the trustee filing a motion for relief from stay in the defendant’s own chapter 7 bankruptcy case.