The Court denied the debtors' Motion for Summary Judgment in both cases, ruling that the creditors were not barred by res judicata from bringing dischargeability actions in bankruptcy court when fraud was not alleged in prior breach of contract actions in state court.
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Judge Ben T. Barry
The court overruled the chapter 7 trustee's objection to the debtor's third amendment to exemptions. Although the debtor was confused, the court did not believe the debtor acted in bad faith.
The Court granted the creditors' motion to dismiss an adversary proceeding because the debtors did not have a private right of action under § 524 for an alleged violation of the discharge injunction.
The Court granted the creditor's motion to compel arbitration as to the debtor's claim of an alleged violation of the automatic stay under section 362. The Court dismissed the debtor's remaining claims for lack of subject matter jurisdiction.
The plaintiff/creditor mis-identified real property on a mortgage and failed to correct its mistake after being advised of the mistake by the debtor. The Court found that the doctrine of equitable subrogation did not apply in this case because there was no intervening event between the debtors’ initial financing and their subsequent refinancing with the plaintiff/creditor such that an intervening creditor would have had a superior interest to the new plaintiff/creditor’s interest. The court also found that laches would be imputed on the plaintiff/creditor based on its inaction after being informed of the mistake.
In this chapter 7 case, under s.523(a)(15), the debtor's obligation to indemnify his ex-spouse in the event she is called upon to satisfy a third-party debt survives the debtor's bankruptcy.
Audrey R. Evans
The Court held that the Defendant was not personally liable to the Plaintiffs for fraud, and that any debt the Defendant owed the Plaintiffs was not excepted from discharge by 11 U.S.C. § 523(a)(2)(A). The Plaintiffs asserted that the Defendant was liable to them for fraud because of an alleged breach of a contract between the Plaintiffs and the Defendant’s limited liability company. The Court determined that the Defendant lacked an intent to deceive the Plaintiffs, which was a necessary requirement for a finding of fraud, and for any resulting debt to be excepted from discharge under 11 U.S.C. § 523(a)(2)(A). Myers v. Dewese (In re Dewese), 469 B.R. 314 (Bankr. E.D. Ark. 2012).
In denying summary judgment, the Court addressed the requirements necessary to prove each of the alleged causes of action, which included breach of contract, fraud, and multiple violations under the Fair Debt Collection Practices Act (FDCPA), Arkansas Fair Debt Collection Practices Act (AFDCPA), and Arkansas Deceptive Trade Practices Act (ADTPA), and explained the genuine issues of material fact which precluded entry of summary judgment. Humes v. LVNV Funding, L.L.C. et al (In re Humes), 468 B.R. 346 (Bankr. E.D. Ark. 2011).
The Court entered judgment in favor of the Trustee pursuant to 11 U.S.C. § 549, finding that a race car owned by the Debtor was purposefully taken apart and then sold by the Debtor and his brother during the administration of the Debtor's bankruptcy case (despite a prior finding by the Court that the Debtor held an interest in the race car). The parties' testimony regarding ownership of the race car was contradictory and could not be credited; accordingly, insufficient evidence was provided to show any specific percentage in the race car was owned by anyone other than the Debtor. Because the Debtor and his brother Brian disassembled the race car, destroyed its value, and then sold its frame, the Court entered a joint and several judgment against the Debtor and his brother for $30,000 (the value of the race car) together with attorneys' fees and costs pursuant to 11 U.S.C. § 105(a) as damages for violation of the automatic stay. Cox v. Andrews (In re Andrews), 467 B.R. 173 (Bankr. E.D. Ark. 2011).
James G. Mixon
The Court held that the defective description did not provide a bona fide purchaser with notice pursuant to 11 U.S.C..§ 544 because extrinsic evidence would have been required to identify the mortgaged land. In Arkansas, inquiry notice derives from actual facts and a purchaser is not subject to it for purposes of 11 U.S.C..§ 544 analysis. Accordingly, the debtor-in-possession was allowed to avoid the mortgage lien. The Court ruled that reformation and attorney's fees were inappropriate.