In this opinion, Judge Barry denied the creditor’s complaint under § 523(a)(2) and (a)(6). Under (a)(2), the court found that subsequent exchanges of collateral that occurred between the debtor and creditor did not induce the creditor to either loan money or provide for the extension, renewal, or refinancing of the obligation. Under (a)(6), although the court found the potential for injury, it could not identify a specific “willful” injury or any resultant harm from the injury. The court also was not able to find that the debtor’s conduct was targeted at the creditor such that the conduct was “malicious” as required under (a)(6).
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Opinions
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Judge Ben T. Barry
In this case, the court found that two mortgages that were filed for record and contained only the street address of the subject property provided the requisite “key” to identify the property and that the mortgages constituted constructive notice to the trustee under Arkansas law. Because the mortgages contained constructively noticed facts, the court found that constructive inquiry notice (as opposed to actual inquiry notice) was applicable in this instance and the trustee had a duty to investigate “everything to which the inquiry might lead.” Based on the evidence presented at trial, that inquiry would have identified specifically the legal description of the property subject to the creditor’s interest. Accordingly, the court denied the trustee’s motion to avoid the creditor’s liens under 11 U.S.C. § 544(a)(3).
The court revoked the debtor’s discharge under § 727(d) because she failed to turn over life insurance proceeds she received within 180 days of filing her chapter 7 petition in accordance with § 541(a)(5). Instead, the debtor placed the proceeds in an overseas account, moved out of state, and bought a house out of state. The debtor turned over the balance of the proceeds (the house) only after the trustee filed an adversary proceeding.
Audrey R. Evans
Relief from stay to proceed with litigation against the Chapter 11 Debtor in State Court denied. Due to the Chapter 11 Trustee's current efforts to find a buyer for the Debtor and establish its value, the Court found that the estate faced greater harm if relief from stay were granted than the moving creditor would face if relief from stay were denied. Forcing the Debtor to defend State Court litigation would impede the sale process and result in increased and possibly wholly unnecessary administrative fees. In re Living Hope Se., LLC, 505 B.R. 237 (Bankr. E.D. Ark. 2014). On appeal to the Eastern District of Arkansas.
In a noncore proceeding, the Court entered a proposed order for the District Court’s review granting the Plaintiff’s application for attorney fees and costs pursuant to the Fair Debt Collection Practices Act (“FDCPA”). The District Court adopted the proposed order. Humes v. LVNV Funding, L.C.C. (In re Humes), 505 B.R. 851 (Bankr. E.D. Ark. 2013), adopted, No. 3:13–CV–00179–SWW, 2014 WL 310451 (E.D. Ark. Jan. 28, 2014).
The Court denied the defendants’ motion to bifurcate the issue of the Plaintiff’s standing to bring various claims from a trial on her claims. The Court found that although the standing issues were distinct from the issue of whether the claims were meritorious, bifurcation would not result in judicial economy because resolution of the standing issues would not necessarily eliminate the need for a trial on the claims. Speed v. U.S. Bank (In re Speed), No. 3:09–BK–17860, 2013 WL 7710285 (Bankr. E.D. Ark. Dec. 7, 2013).
The Court granted the Plaintiff’s motions to remand and abstain from hearing a removed foreclosure action. The Court rejected the Defendant’s assertion that the Debtor’s interest in an LLC that owned the property subject to foreclosure gave the Court jurisdiction to adjudicate the dispute. Although the Debtor may have held a leasehold interest in the property, without more, the Court determined that mandatory or alternatively, discretionary abstention applied. Additionally, the Court equitably remanded the foreclosure action. Farmers Bank & Trust Co. v. Chickasaw Props. (In re Burrow), 505 B.R. 838 (Bankr. E.D. Ark. 2013).
James G. Mixon
The Debtor's motion to avoid the lien created by the recording of a $44,575.99 judgment was granted. The Court found the judgment did not constitute a domestic support obligation because the debt did not fit into the definition of section 101(14A)(A) or the Kline exception and it was not in the nature of support.
The Court dismissed the Plaintiffs' complaint to except from discharge those obligations owed to them by the Debtor, who was their financial advisor; the Court ruled that the Plaintiffs did not carry their burden of proof with regard to their allegations of fraud, breach of fiduciary duty, willful and malicious injury, and securities violations.
Judge Richard D. Taylor
Attorney suspended for Rule 9011 violations and making misrepresentations to the court.