Month: October 2012

Bankr. E.D.N.C.: In re Johnson- Fraudulent use of Power of Attorney for Filing Bankruptcy

Summary:

Melba Johnson granted a Power of Attorney to her daughter, Janet Johnson, which included both authority to obtain credit and to file bankruptcy. After obtaining and using credit cards in Melba Johnson’s name, allegedly without Melba’s knowledge, Janet (with the assistance of Melba’s other daughter Tammy) filed a Chapter 7 bankruptcy on behalf of Melba. Subsequently, Melba discovered the bankruptcy and, expressing that she knew about, needed nor wanted the bankruptcy, requested that the case be dismissed. The attorney for the debtor also sought to withdraw from representing Melba Johnson, as it was now apparent that she did not consent to her daughter’s exercise of the Power of Attorney.… Read More

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N.C. Court of Appeals: John Conner Construction v. Grandfather Holding Company- No Materialman’s Lien when Debtor did not own the property at commencement of construction

Summary:

John Conner Construction (“JCC”) and the other plaintiffs, provided labor and materials for the improvement of a parcel of land owned by Grandfather Holding Company (“GHC”), which had obtained financing for the purchase and improvement of the parcel from Mountain Community Bank (“MCB”). The construction was commenced prior to GHC actually purchasing the property. On completion of the construction, JCC presented a bill for $1,377,774.02, but GHC only had $262,000 remaining from the financing. This amount was paidl, leaving a substantial balance. Subsequently, GHC defaulted on the loan and the bank foreclosed, with MCB purchasing the property at the foreclosure sale for $4 million.… Read More

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Bankr. M.D.N.C.: Ivey v. Buchanan- Filing of Proof of Claim subjects creditors to Final Judgment from the Bankruptcy Court for Fraudulent Transfer Claims

Summary:

Under the test formulated by the Supreme Court in Stern v. Marshall the court may enter final judgment in a core proceeding where “the action at issue stems from the bankruptcy itself or would
necessarily be resolved in the claims allowance process.” Stern, 131 S. Ct. at 2618. Where a defendant has filed a proof of claim, a fraudulent transfer action brought under either section 548 or
section 544 becomes a part of the process of allowance and disallowance of claims. See Langenkamp v. Culp, 498 U.S. 42, 44 (1990).

For a copy of the opinion, please see:

Ivey v. Read More

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Bankr. E.D.N.C.: In re Harrelson Utilities- Motion to Reopen for Clarification of Settlement as Rule 60 Reconsideration

Summary:

Ferguson Enterprises and People’s United Equipment Finance Corp. (formerly Financial Federal Credit Inc.) filed a joint motion to reopen the Debtor’s Chapter 11 case, seeking clarification and enforcement of a settlement agreement. In response, Blue Ridge Site Development asserted that the accounting in that settlement agreement was erroneous and Ferguson and People’s had been overpaid in the amount of $28,287.90. Ferguson and People’s then withdrew their motion to reopen and Blue Ridge itself then sought to reopen the case, seeking to have the accounting reviewed, partly on the basis of alleged lack of service of the original settlement.

The bankruptcy court found that Blue Ridge admitted it had received several bankruptcy notices during the case and was unpersuaded that the notices in question were not similarly received.… Read More

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Bankr. E.D.N.C.: In re Green- § 707(b) and Inaccurate Marital Adjustment

Summary:

The Debtor excluded $3,913.02 as a marital adjustment to the means test, providing only the phrase “Husband’s Expenses” as the basis for the deduction and failing to include any amounts on Schedule I. At the request of the Bankruptcy Administrator, the Debtor itemized this amount as follows:

Mortgage $1,344.02
Electricity $237.00
Cable/Internet/Telephone $220.00
Trash Pick-up $71.00
Home Maintenance $300.00
Household Cleaning Supplies $75.00
Total $2,247.02

The Bankruptcy Administrator contended that these were not separate expenses of the non-filing spouse, but instead were for the benefit of the debtor and could be included within the marital adjustment. The bankruptcy court agreed, further finding that the original marital adjustment was inflated by several thousand dollars.… Read More

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Book Review: Various Authors- Strategies for Consumer Bankruptcy Trustees

Summary:

This is another in the serious of the Inside the Minds books from Aspatore Books, here attempting to provide perspective from experienced Chapter 7 and Chapter 13 Trustees on how to administer consumer bankruptcy cases. It consists of five articles or essays about the duties and responsibilities of a Trustee, with some additional generic advice about how to run a Trustee’s office of practice.

This book is very slight- In total it has only 133 pages, of which 56 pages are forms, which are likely only of local and, also not being electronic, little practical use.

And while the description of the book discusses how a Trustee should “act as the neutral ombudsman in the debtor versus creditor debate”, the articles are overwhelmingly skewed in the direction discovering Debtor fraud or undisclosed assets.… Read More

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N.C. S.Ct.: In re Johnson- Homeowner Association Assessments must be Uniform and Pro Rata

Summary:

The Starboard Association administers a condominium consisting of 33 separate buildings. Its by-laws authorized assessments against members to pay costs, providing that “ [a]ll assessments levied against the Unit Owners and their Condominium Units shall be uniform” and “shall bear the same ratio to the total assessment made against all Unit Owners and their Condominium Units as the undivided interest in Common Property appurtenant to each Condominium.”

In October 2005, the Association approved renovations to all of the building, except Building 33, assessing the costs against all owners, except owners of Building 33. Subsequently, in November 2007, the Association renovated Building 33, assessing those costs only to the owners of Building 33.… Read More

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4th Circuit: Marachich v. Spears- Use of DMV Information for Solicitation of Potential Clients

Summary:

Through requests submitted to the South Carolina Department of Motor Vehicles (DMV) under the state Freedom of Information Act, S.C. Code Ann. §§ 30-4-10 to -165 (FOIA), Michael E. Spears, Esq., Gedney M. Howe, III, Esq., Richard A. Harpootlian, Esq., and A. Camden Lewis, Esq. (“the Lawyers”) obtained “personal information”, viz., the names, addresses, telephone numbers, and car purchase information of thousands of car buyers, from which they identified potential named plaintiffs in the Dealers Act group action, mailing more than 21,000 solicitations to potential clients for participation in lawsuits pending against numerous South Carolina car dealerships. The personal information obtained is protected by the Driver’s Privacy Protection Act of 1994 (DPPA), 18 U.S.C.… Read More

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Iredell County District Court- Global Acceptance Credit v. Dayton- Amendment of Complaint to Conform with N.C.G.S. § 58-70-150

Summary:

Global Acceptance Credit, a debt collector and debt buyer, sued Dayton for a debt. Global did not attach a copy of the contract or other writing signed by Dayton evidencing the debt, in violation of N.C.G.S. § 58-70-150. Dayton moved to dismiss, but the trial court allowed amendment of the complaint to include such documents, finding that no new causes of action were asserted, no undue delay or undue prejudice would result. The trial court did, however, note that the attorney for Global “should have paid better attention to N.C.G.S. § 58-70-150 when drafting the original Complaint and attaching documents thereto.”

Commentary:

This case can be used to show a pattern and practice of insufficient pleadings in the future.… Read More

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Bankr. E.D.N.C.: In re Gilman- Dismissal for Bad Faith Under 11 U.S.C. § 707(a)

Summary:

Chapter 7 Debtors had primarily non-consumer debt and the Bankruptcy Administrator sought dismissal under 11 U.S.C. § 707(a), which states that a court may dismiss a chapter 7 case “after notice and a hearing only for cause,” without expressly defining “cause.” However, “cause for dismissal under § 707(a) has been held to include a lack of good faith in filing the petition.” In re Marino, 388 B.R. 679, 682 (Bankr. E.D.N.C. 2008). In assessing bad faith under this section, the court relied on a non-exclusive fourteen factor totality of the circumstances test, including:
1. The debtor reduces creditors to a single creditor in the months prior to the filing of the petition;
2.… Read More

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