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Opinions

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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.

The Court found that equitable subrogation is not a legally sufficient affirmative defense to a preference action brought under 11 U.S.C. § 547(b) and, pursuant to Federal Rule of Civil Procedure 12(f), the Court granted the chapter 7 trustee’s motion to strike the affirmative defense of equitable subrogation from the defendants’ answer.

Chief Judge Phyllis M. Jones

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.

State court judgment for past-due child support was a prepetition domestic support obligation, notwithstanding language in the judgment allowing payment over a term of years.  OCSE’s proof of claim was allowed. 

The terms of the debtor’s confirmed plan, when reviewed as a whole, required payment of the full amount of the claim over the life of the plan.  A second proof of claim filed by OCSE for postpetition child support payments, however, was disallowed.

Summary judgment granted in part and denied in part on Trustee’s fraudulent transfer claims.  Summary judgment granted in favor of the Trustee as to whether the Debtors had an interest in the Property, whether the Debtors voluntarily transferred their interest, and whether the Transfer occurred within two years of the petition date.  Summary judgment denied as to whether the Debtors received less than reasonably equivalent value for the Transfer, whether the Debtors were insolvent at the relevant time, and whether the Debtors made the Transfer with actual intent to hinder, delay, or defraud any creditor.

Judge Richard D. Taylor

While res judicata may not be appropriate in dischargeability actions premised on prior judgments, the application of collateral estoppel may be sufficient to compel a finding of non-dischargeability.

A pro se litigant personally as well as his attorney who promotes and advocates a pleading unwarranted by existing law and without evidentiary support may be held liable for sanctions under Rule 9011.

Proximity to urban amenities, while a factor, is not sufficient by itself to adequately distinguish between urban versus rural property for purposes of the Arkansas homestead exemption.

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