In Re Wisotzke 392 B.R. 39 (Bky.W.D.N.Y. 2008) (Chapter 13 bk 08-21178; Judge Ninfo; decision August 14, 2008) The debtor filed a chapter 13 petition the day that Ontario County, NY, was selling his residence in a tax foreclosure sale. The County argued that the debtor no longer had any interest in the property (or, as a bankruptcy attorney would put it, that the real estate was no longer "property of the bankruptcy estate" under 11 USC Sect. 541).
In re Zunner Bk 08-10862 (Decision November 5, 2008; Judge Bucki, Buffalo). In Chapter 13 case where the mortgage bank filed a proof of claim for the bank's expense in obtaining a title report and a broker's price opinion, even though the mortgage was current at the time the petition was filed. The mortgage allows the bank to charge the borrower "any amount that the lender expends under this mortgage to protect the value of the property and lender's rights in the property." Judge Bucki ruled that the $100 titled report was a justifiable expense, as the mortgage was in default at the time the report was prepared. The $100 broker's price opinion was not a justifiable expense, as it did not protect the value of the property.
In re Latimer (Bk 08-21242; Decision October 28, 2008; Judge Ninfo): Chapter 13 case: the debtors had a second mortgage where the final payment was due within the five year time period of the plan. Following the 11th Circuit Court of Appeals (in re Paschen, 296 F3d 1203) and the 6th Circuit Bankruptcy Appeals Panel (In re Eubanks , 219 BR 468), and not following the 4th Circuit in In re Witt (113 F. 3d 508), Judge Ninfo stated the mortgage could beneficiary modified in the Chapter 13 plan. Mortgages that are against the debtor's house and where the repayment period extends beyond the end of the plan cannot be modified in Chapter 13, but here, where the repayment period was within the plan period, the debtor could bifurcate, or divide, the mortgage into a secured and unsecured portion and pay off the unsecured part as an unsecured claim.
In re: Graci (Bk 05-18224; Decision September 23, 2008; Judge Bucki, Buffalo). When this debtor filed bankruptcy, she was litigating a claim under Americans with Disabilities Act (42 USC Sect. 12101 et sec.). In New York, a debtor can exempt (that is, keep free and clear from creditors) up to $7,500.00 of a claim for a personal injury. Judge Bucki ruled that an ADA claim is not exempt as a personal injury claim.
In re Kjoller (07-23133) (Decision November 10, 2008; Judge Ninfo): Bankruptcy Code section 1304 and Section 363(c)(2) and (4) makes a Chapter 13 business debtor a trustee of an explicit statutory trust covering cash collateral. These sections require a business debtor to get the consent of any cash collateral secured party or Court order allowing the debtor to use any cash collateral, including receivables or sale revenue, or to put the cash collateral in a separate account and account for it to the secured creditor. Court expects in future chapter 13 cases the debtor and the trustee will address any possible tax collateral issue at the earliest opportunity. In this case, the bank filed a motion to dismiss the case for the debtor's alleged "embezzlement" or "defalcation" of cash collateral. The court dismissed the embezzlement complaint, and allowed the defalcation claim to continue. The case also includes extensive notes about motions to dismiss complaints and amendments to complaints.
In re Donald L. Wright (Bk 04-17680; AP 08-1075; decision July 21, 2008; Judge Kaplan in Buffalo.) Debtor injured another person in a bar fight, and the other person sued in bankruptcy court to have the claim for injuries from the fight excepted from discharge. A claim for "willful and malicious injuries" can be excepted from the discharge received by a debtor in bankruptcy under 11 USC Sect. 523(a)(6). Here, the debtor apparently admitted to hurting the other person in a deposition, and that was enough for the Bankruptcy Court to grant summary judgment to the injured party and except the claim from discharge.
In re Daniel & Wendy Alguire; Bk 08-10691; decision June 24, 2008; Judge Kaplan in Buffalo.) Remember the "economic stimulus" rebate checks received earlier in 2008? What was the status of those checks in a New York bankruptcy? Judge Kaplan took this case and fourteen others and issued a general decision on the question. He ruled that the economic stimulus checks were tax refunds on the debtor's 2007 tax returns. The fact that they were retroactive tax refunds was irrelevant. In New York, debtors who do not own real estate, or have no equity in their residence, can exempt $2,500 in cash, bank accounts and tax refunds owed but not received. Therefore, Judge Kaplan determined, for any case filed after the statute authorizing the stimulus package was enacted but before the checks actually were received, they could be treated as tax refunds and exempted as cash for those debtors eligible for cash exemptions. This case may be an important guideline in the event Congress issues any additional stimulus packages in the future.
In re Borowiec Bk 07-04258 (Decision November 5, 2008; Judge Bucki, Buffalo). Debtor's property tax payment check cleared the bank four hours after the bankruptcy was filed. The trustee brought a turnover motion against the debtor. The court ruled that the actual property could not be turned over, as it had already been transferred, in good faith, to the tax collector, but that the debtor enjoyed "unjust enrichment" and granted a judgment in favor of the trustee.
In re Gross (Bk 99-16587; Decision October 7, 2008; Judge Bucki): Debtor's original case was filed 12/1/99 and she claimed the cash exemption. Less than a month prior (11/19/99), a creditor filed a judgment lien on her house. The debtor was unaware of the lien until the case was reopened in 2008. The debtor did not amend her exemptions to switch from cash to homestead; rather she moved to avoid the judgment as a preferential transfer. Debtors can avoid involuntary preferential transfers (and other transfers) under 522(h) if a trustee can, but does not avoid the transfer, if the debtor "could have exempted" the transferred asset. The debtor argued, unsuccessfully, that she "could have" exempted the equity in the homestead, even though she didn't. Judge Bucki ruled that the debtor must actually claim the exemption to avoid the transfer and/or avoid the lien. The Judge also stated that any action to avoid a preferential transfer must be by AP and not by motion.
In re Brenda Dufoe (Bk 08-20468; decision August 27, 2008) (Judge Ninfo). New York Vehicle and Traffic Law Section 2108 says that the owner listed on the title certificate of a motor vehicle is presumed to be the owner of that vehicle. In this case, the debtor and another were co-owners in a business which included buying and selling high-end cars. The debtor's name was on the title certificate, but the business partner claimed to be the sole "beneficial" or "equitable" owner of the vehicle. Judge Ninfo decided that the V&T Sect. 2018 presumption of ownership can be rebutted in the right circumstances, but that the business partner did not rebut it in this case. However, the judge did indicate that it was possible that the other party might have a partial beneficial interest in the vehicle, and advised the parties to negotiate a settlement. This concept of a partial beneficial interest in a vehicle titled to another person may be the subject of future bankruptcy litigation in New York.