Month: October 2012

Bankr. E.D.N.C.: Oliver v. Bateman, et al.- Iqbal/Twombley and Fraudulent Transfer Pleadings

Summary:

On September 26, 2008, Luther Bateman transferred, subject to retention of a life estate, property located at 106 Sanderline Road, Shawboro, North Carolina to his children, Carol Bateman Cooper, Timothy Ross Bateman, Louis Eugene Bateman, and Robert Charles Bateman (“the Defendants”). On August 4, 2010, Mr. Bateman filed Chapter 7 and valued his life estate in the Property to be approximately $186,000.00, subject to a mortgage in the amount of $15,395.99. The Trustee then sought to avoid and recover the transfer of the Property to as fraudulent transfers, pursuant to 11 U.S.C. §§ 548; N.C. Gen. Stat. § 39-23.4; and 11 U.S.C.… Read More

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , ,

Bankr. E.D.N.C.: New Bern Riverfront Development v. Weaver Cooke Construction et al.- Mandatory and Permissive Abstention

Summary:

New Bern Riverfront Development filed suit in state court against nine defendants, but, after New Bern Riverfront Development filed Chapter 11, the state court action was remanded to the bankruptcy court. One of the nine defendants, Davis Architects, filed a third party complaint against McKim, who (after its motions to dismiss were denied) sought to have the bankruptcy court abstain or remand the proceeding to state court.

Pursuant to 28 U.S.C. § 1334(c)(2)l, abstention is mandatory when all of following the elements are present:
(1) a timely motion to abstain is filed,
(2) the removed proceeding is based on a state law claim or state law cause of action,
(3) the removed proceeding is “related to” a bankruptcy case, but does not “arise under” Title 11 or “arise in” a case under Title 11,
(4) the action could not have been commenced in a United States court absent jurisdiction under 28
U.S.C.… Read More

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with:

Bankr. M.D.N.C.: In re NCOAT- Application for Fees as Special Counsel

Summary:

Previously, the bankruptcy court granted the Debtor’s Motion to Employ Jones and DJP (the “Special Counsel Motion”) for the “limited purposes” of representing the Debtor “with respect to such corporate and securities matters as may be requested.” The Special Counsel Motion disclosed the fact that DJP was prepetition counsel to the Debtor and was owed a prepetition debt, but did not state the amount owed, which was in excess of $500,000. The Debtor asserted in the Special Counsel Motion that since special counsel employed under Section 327(e) of the Bankruptcy Code are not subject to the same strict disinterestedness standards as general bankruptcy counsel employed under Section 327(a), the existence of such a relationship and a prepetition debt did not disqualify DJP from representing the Debtor as special counsel.… Read More

Posted in Middle District, North Carolina Bankruptcy Cases Tagged with: ,

Bankr. E.D.N.C.: In re Meek- Hardship Discharge under 11 U.S.C. § 1328

Summary:

The Male Debtor, who was the sole provider for the family, secured new employment in Colorado, and soon thereafter, the debtors and their children relocated accordingly. Subsequently, the Debtors sought a hardship discharge under 11 U.S.C. § 1328(b).

The Bankruptcy Court held that § 1328(b)(1) requires that the debtors’ inability to continue making plan payments must due to circumstances “beyond the debtors’ control.” The Debtor’s decision to relocate, particularly with increased income and job security, were not circumstances that justified a hardship discharge.

Commentary:

While there are some reasons for seeking a hardship discharge, such as where a junior mortgage was stripped off, it would usually seem that conversion to Chapter 7 seems a far better option, as the “bad faith” or “abuse” standards of U.S.C.… Read More

Posted in Eastern District Tagged with:

4th Circuit: McLean v. Ray- Bona Fide Error Defense under FDCPA for Debt Collection Attorney allows reliance on Creditor’s Statement of Amount Owed

Summary:

Ms. McLean was first admitted to ManorCare, a nursing home, in July 2006, signing a contract (through her son, James McLean, who held her Power of Attorney) agreeing to all costs, including attorneys’ fees, for collection of unpaid amounts. The contract provided that it would remain in effect if she was discharged but re-admitted within 15 days. In 2007, following her discharged from the nursing home, Mr. Ray sued Ms. McLean on behalf of ManorCare, with the matter being resolved by the parties.

Ms. McLean was re-admitted approximately to the nursing home about 20 months later, without signing a new contract and payment disputes arose a second time, with Mr.… Read More

Posted in 4th Circuit Court of Appeals Tagged with: ,

Bankr. E.D.N.C.: In re Marshall (Deceased)- Hardship Discharge, Death and Taxes

Summary:

The Debtor died during her Chapter 13 case, still owing more that $165,000 in nondischargeable taxes to the IRS. Following the severance of her co-debtor/husband’s case, the Debtor’s attorney then filed a Motion for a Hardship Discharge pursuant to 11 U.S.C. § 1328(b). While stating that the death of a debtor can constitute a circumstance precluding completion of plan payments for which a debtor should not be held accountable. See In re Bond, 36 B.R. 49 (Bankr. E.D.N.C. 1984), the bankruptcy court here held that the evidence indicated the Debtor “deliberately avoided paying taxes on her income prior to filing the petition, an act of bad faith, which in the Court’s discretion, is undeserving of a hardship discharge.”

For a copy of the opinion, please see:

Marshall (Deceased)- Hardship Discharge, Death and Taxes.pdf Read More

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , ,

Bankr. M.D.N.C.: Livingstone College v. DeBerry- Failure to Specifically Cite Statutory Basis for Claim and Amendment of Complaint

Summary:

On remand from the district court, the issue was whether the complaint filed by Livingstone College, Inc. (“Livingstone”) properly states a claim for relief under 11 U.S.C. § 523 of the Bankruptcy Code for nondischargability of a debt owed by Joseph Maurice DeBerry (“DeBerry”) and Golden Student Housing, LLC (“GSH”) (together, the “Defendants”), and, if it does not, whether Livingstone’s complaint may be amended under the applicable rules.

The Complaint alleged that after Livingstone had entered into a lease, negotiated by DeBerry, with GSH, that DeBerry substituted pages from the executed lease before delivering it to GSH to sign. In the Complaint, Livingstone sought eight specific forms of relief, including a jury trial, a declaratory judgment, actual, punitive and treble damages, and “such other and further relief as to the Court may deem proper.” Livingstone did not, however, request that the debt be declared nondischargeable.… Read More

Posted in Middle District, North Carolina Bankruptcy Cases Tagged with: , ,

4th Circuit: Larrabee v. Bank of America- Iqbal/Twombley Pleading of Truth In Lending Rescission Action

Summary:

The Court of Appeals held that the Plaintiff had failed to state a plausible claim for relief under the TILA because her proposed reading of the notice disclosing the number and due dates of payments due under that transaction is not objectively reasonable. Further, because the disclosure to the Plaintiff of her right to cancel the 2007 credit transaction contained all of the information required by the TILA, 15 U.S.C.A. § 1635(a)-(b), and Regulation Z, 12 C.F.R. § 226.23(a)-(b), (d), the disclosure complied with the TILA.

The grant of summary judgment against the plaintiff she did not suggest that she was confused as to whether she could cancel the 2007 credit transaction without cost, nor did she put forth any evidence explaining how or suggesting that an average borrower faced with both the notice of right to cancel and the fee notice would be confused as to whether she could cancel the 2007 credit transaction without cost.… Read More

Posted in 4th Circuit Court of Appeals Tagged with: , , ,

Bankr. E.D.N.C.: In re Keel- Intention of Party is Irrelevant in Flawed Creation of Trust Account

Summary:

In 2007, the Female Debtor created two “payable on death” accounts on behalf of her children. In 2008, the Debtor opened two Certificates of Deposit, initially listing her husband as the beneficiary. In 2011, needing funds for home renovations, the Debtor contacted the bank and was advised to withdraw the funds from the 2007 “payable on death” trust accounts. After doing this, the Debtor then changed the beneficiaries of the Certificates of Deposit to be her children, but did not have those CDs converted into “payable on death” trust accounts. After filing bankruptcy, the Trustee sought turnover of those funds.… Read More

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with:

Bankr. E.D.N.C.: In re KAD- No Confirmation without Disclosure Statement or Adequate Information under § 1125(f)(1) included in the Plan

Summary:

Pursuant to 11 U.S.C. § 1129(e), in a small business case, a plan shall be confirmed not later than forty-five days after it is filed, unless the time for confirmation is extended. In a Chapter 11 case, a disclosure statement complying with 11 U.S.C. § 1125 shall be filed with the plan. In this case, a disclosure statement was neither filed with the Plan nor did the Plan contain adequate information under § 1125 to also serve as a disclosure statement as it did not include an accounting of funds
on hand, projections of income to be earned, and itemization of assets or even a description of the Debtor’s nature and history or any information regarding its books and records.… Read More

Posted in Eastern District, North Carolina Bankruptcy Cases Tagged with: , ,