Successful state court action did not satisfactorily translate, on the basis of collateral estoppel, to a denial of discharge or determination of dischargeability. The elements of each discharge-related cause of action were not proven. The underlying judgment related to misappropriation of assets and did not mirror the required elements.
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Opinions
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Judge Richard D. Taylor
Debtors may not involuntarily include a post-petition section 1305 creditor by filing a proof of claim on its behalf. Further, the res judicata effect espoused in Espinosa must be viewed in the context of the plan, confirmation order, and relevant code provisions.
Judge Ben T. Barry
The debtor's sons objected to the chapter 7 trustee's motion to sell property, arguing that the property was held in a resulting trust for the benefit of one of the sons and, therefore, the subject property was not property of the estate. The Court found that while a resulting trust had been established, it was later terminated. Accordingly, the Court found that the subject property was property of the estate and granted the trustee's motion to sell.
Payment of rent from an account that was closed six months earlier amounted to a false representation made with the intent to deceive the creditor/landlord. The court found the debt for unpaid rent to be nondischargeable under § 523(a)(2).
The court denied the creditor/defendant’s motion to dismiss for failure to state a claim finding that the debtor had stated a plausible cause of action. The court also declined the parties request to use additional agreed stipulations to decide the motion to dismiss.
The court found that a second claim filed by a creditor after liquidation of the collateral securing the debt was an amended claim that related back to the date of the original filing.
James G. Mixon
When a Chapter 13 plan has not been confirmed and the case is then dismissed, the court held that the Chapter 13 Trustee is subject to a properly issued writ of garnishment or levy by a judgment creditor or taxing entity. Therefore, the Chapter 13 Trustee's objection to the garnishment was overruled and the Chapter 13 Trustee was ordered to turn over all the sums in his possession to the Plaintiff that were not needed for administrative expenses.
After the Debtors' case was dismissed without plan confirmation, the Court found that the Chapter 13 Trustee was subject to a properly issued writ of garnishment.
The Court ruled that pursuant to the dictates of § 523(a)(4) the state court judgment for damage to Clear Sky property is nondischargeable; however, the state court award for breach of fiduciary duty regarding past and future lost revenue and the award to Deere for breach of fiduciary duty is dischargeable because there is no definable res, a requirement of a statutory trust for purposes of § 523(a)(4). Pursuant to § 523(a)(6), the punitive damage award is dischargeable because the Plaintiffs did not prove the state court award was a result of both willful and malicious injury. The attorneys fees and costs are dischargeable because they were based on breach of contract.
Audrey R. Evans
Court denied Debtor’s discharge pursuant to 11 U.S.C. § 727(a)(5) for failing to explain the loss of an asset. The uncontroverted evidence was that the Debtor sold and received payment for a house prior to filing. At the hearing, the Debtor failed to provide a reliable explanation to convince the Court that he had not hidden or improperly shielded the proceeds from that sale. Bailey v. Whitehead (In re Whitehead), 483 B.R. 902 (Bankr. E.D. Ark. 2012).