Tag: automatic stay

Bankr. E.D.N.C.: In re Taylor- Private Citizens Enforcing Federal Statutes Not Exempt from the Automatic Stay as Governmental Units

Summary:

In a case involving a hog farm and related claims of environmental pollution, Sound Rivers, Inc.’s and Waterkeeper Alliance, Inc. sought an order confirming that the automatic stay does not apply or, in the alternative, for relief from the automatic stay in order to continue their lawsuit filed in the federal district Court. The Movants contended that the automatic stay does not apply with respect to the district court lawsuit under the governmental regulatory exclusion to the stay at § 362(b)(4), which provides that the automatic stay does not preclude the continuation of an action “by a governmental unit…to enforce such governmental unit’s … police and regulatory power….” While admittedly not “governmental units in the most narrow and traditional definition,” the Movants argue that private citizens bringing compliance suits pursuant to a government unit’s “police power” may constitute “governmental units” for purposes of §362(b)(4) if the law giving rise to the action are for the “public safety and welfare,” See Universal Life Church, Inc. Read More

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E.D.N.C. and Bankr. E.D.N.C: Jones v. Jones – Characterization and Relief from Stay regarding Equitable Distribution

Summary:

Bankruptcy Court Characterization of Equitable Distribution Awards

Cheryl Jones brought motions against the Debtor, her ex-husband, Sean Jones, seeking relief from the stay and for determination of Domestic Support Obligation, with the primary question being whether the family court’s Equitable Distribution Order award of $116,182 from the debtor’s 401(k) plan and $63,736 from the debtor’s retirement account were in the nature of a domestic support obligation, pursuant to §§ 101(14A) and 523(a)(5), or, as argued by the debtor, were property distributions within the scope of §523(a)(15). If the former, the obligation would be nondischargeable, but the latter would be discharged in a Chapter 13 case, pursuant to § 1328(a).… Read More

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4th Circuit: RDLG, L.L.C. v. Leonard- Default Judgment as Sanction

Summary:

RDLG filed suit against Leonard alleging a pattern of fraudulent activity. Attorneys Lankford and Neyhart entered appearances for Leonard and were still attorneys-of-record when the district court set a pre-trial conference for October 3, 2012. On September 30, 2012, Lankford and Neyhart filed a motion seeking to both continue the October 3rd hearing and also to withdraw as counsel, due to both a lack of communication and payment from Leonard. Lankford had waited to file such motion because Leonard had indicated that he intended to file bankruptcy on September 28th, which would have precluded the October 3rd hearing. Lankford also indicated that she would be in Puerto Rico on October 3rd.… Read More

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4th Circuit: BB&T v. Construction Supervision Services- Subcontractor Lien on Funds

Summary:

Construction Supervision Services (“CSS”) filed a Chapter 11 bankruptcy in January 2012, after which several subcontractors, which had previously provided stone, concrete, and fuel to CSS on an open account, sought to serve notice of liens on funds owed by others to CSS, thereby perfecting such liens. BB&T, which had lent CSS money, objected to the Subcontractors’ post-petition notice and perfection, arguing that such actions violated 11 U.S.C. § 362(a)(4).

The Court of Appeals, affirming the bankruptcy and district courts in the instant case, but reversing In re Mammoth Grading, Inc., No. 09-01286-8-ATS (Bankr. E.D.N.C. July 31, 2009), In re Harrelson Utilities, Inc., No.… Read More

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Bankr. E.D.N.C.: In re Amerson- Violation of the Automatic Stay; Termination of Automatic Stay in an Individual Chapter 11

Summary:

Despite having received notice of the bankruptcy filing and notice of the proof of claims deadline well before the expiration of the deadline and approximately thirteen months prior to confirmation of the Amerson’s Second Amended Plan, Flanders, who was represented by counsel during much toe the Chapter 11 proceeding, did not take any action in the bankruptcy proceeding to request relief from the automatic stay or to file a proof of claim. Despite that knowledge, Flanders made direct, post-petition threats to Amerson, including asserting multiple causes of action against Amerson.

As this was a Chapter 11 filed by individuals, the discharge was not entered at the time of confirmation, and Amerson did not request an early discharge.… Read More

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Bankr. E.D.N.C.: In re Black- UDTPA Claims not Pre-empted by 11 U.S.C. § 362

Summary:

Black’s Chapter 13 plan provided for the mortgage to Chase to be paid as a conduit, through the Trustee. The Motion for Confirmation filed by the Trustee, however, inadvertently provided for direct payment of the mortgage by Black, without reduction of the plan payment. This disconnect lead to the completion of the Chapter 13 plan on November 29, 2012, only four months after confirmation. (As this case was confirmed prior to the Pliler decision from the 4th Circuit, it completed upon payment of all allowed secured claims, of which there were none, and administrative expenses.) Two days prior, a lien holder filed a claim secured by Black’s motorcycle.… Read More

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Bankr. E.D.N.C.: In re Coopersmith- Violation of Automatic Stay for Collection Attempts Related to Corporate Guarantor

Summary:

The Male Debtor, the owner of IPS Construction, personally guaranteed a loan to M.G. Brown, a division of Foreman’s Inc. After IPS failed to pay its debt, M.G. Brown commenced a small claims lawsuit in 2010. After the magistrate entered a judgment in favor of M.G. Brown on January 12, 2011, the Male Debtor appealed and the matter was referred to arbitration. Neither Debtor attended the arbitration and subsequently, on June 1, 2011, the Debtors filed Chapter 13 bankruptcy, listing as a creditor, among others, M.G. Brown. On June 30, 2011, M.G. Brown sent IPS a copy of the arbitration award, with a hand written note implying that the Debtor was attempting to delay payment.… Read More

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Bankr. E.D.N.C.: In re Construction Supervision Services – Statutory Claim of Lien on Funds Are Excepted from the Automatic Stay under 11 U.S.C. § 362 (b)(3)

Summary:

In In re Mammoth Grading, Inc., No. 09-01286-8-ATS (Bankr. E.D.N.C. July 31, 2009), the bankruptcy court stated “[a]fter a thorough analysis of the legal arguments set forth by the parties in both this case and in Harrelson Utilities, the court in an order entered in the Harrelson case on July 30, 2009, held that serving a notice of claim of lien on funds due to the debtor postpetition violates the automatic stay under § 362(a)(4) of the Bankruptcy Code.” Both the Harrelson Utilities and Mammoth Grading cases were appealed, but Harrelson Utilities settled and was dismissed and Mammoth Grading was then dismissed as moot.… Read More

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Bankr. E.D.N.C.: In re TP, Inc.- Modification of Consent Order Terminating the Automatic Stay

Summary:

The Court had previously entered a Consent Order that allowed Bank of America to proceed with foreclosure against some of the property of the estate and also appointed a Chapter 11 Trustee. TP subsequently filed a Motion to Set Aside or Modify the Consent Order allowing foreclosure. Shortly after his appointment, the Trustee also sought to amend the Consent Order on the basis that an adversary proceeding initiated by TP against BOA had merit and would be pursued by him; that if BOA were permitted to foreclose on property of the estate, it would be unjustly enriched and profit from illegal conduct; and that a discrepancy in platting for a certain property subject to the Consent Order would, if not resolved prior to sale, cause the property to be sold at a deflated price.… Read More

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E.D.N.C.: Ferguson v. Mammoth Grading, Inc.- Whether Post-Petition Claim of Liens Violated § 362

Summary:

In two opinions,  In re Harrelson Utilities, Inc. , No. 09-0281S-8-ATS (E.D.N.C. Bankr. July 3D, 2009) and  In re Mammoth Grading, Inc., No. 0901286-8-ATS (E.D.N.C. Bankr. Aug. 24, 2009),  bankruptcy court  held that a subcontractor’s lien rights did not constitute “an interest in property” under the  exception in 11 U.S.C. § 362(b) (3)  and that post-petition claims of liens and notices of claims of liens were invalid and unenforceable.  These decisions “turned the construction industry1s standard operating procedure on its head.”

Verging on an advisory opinion, the District Court questioned whether the bankruptcy court erred in determining that such liens did not arise until the filing of a notice of claim of lien by the subcontractor. … Read More

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