Court found that mortgage servicer's attachment of note indorsed in blank to its proof of claim was not fraudulent based on its prior presentation of an unindorsed note in state court foreclosure action. Court also found that Debtors lacked standing to raise speculation about the proper assignment of the note, particularly where they allege no injury resulting from the note's assignment. Finally, the Court found that the fees listed on servicer's proof of claim were not fraudulently incurred, that Debtors did not show any fees were unreasonable, and that the fees were provided for in the note and mortgage.
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Audrey R. Evans
In this Chapter 7 case, the Debtors formed a joint venture to conduct their farming operations; the Court previously held that the joint venture was not a separate legal entity. On competing motions for summary judgment, the Court held that the joint venture could grant legally enforceable security interests in property owned by the Debtors individually and that the creditors had perfected security interests in the Debtors' rice and farming equipment with the exception of certain vehicles for which the creditors' names were not listed on the certificates of title. Specifically, the Court found that financing statements filed in the name of the joint venture were not seriously misleading and the creditors filed financing statements in the appropriate location. The Court also determined that a portion of the Debtors' rice crop designated as the "landlord's share" under a lease agreement was subject to a landlord's lien and therefore belonged to the Trustee, as the successor-in-interest to the landlord. The Court further found a post-petition transfer of funds to a creditor was avoidable under 11 U.S.C. § 549, but that the Court must decide a factual issue to determine whether the creditor had a security interest in those funds and to calculate the amount of the Bank's secured claim under 11 U.S.C. §§ 502(h) and 506(a). The Court also denied summary judgment on other issues which required additional findings of fact, including: surcharge, preferential transfers, disallowance of claims, equitable subordination, and violation of the automatic stay. Bank of England v. Rice et al. (In re Webb), 2014 WL 5472568 (Bankr. E.D. Ark. Oct. 23, 2014).
The Court granted the Debtors’ motion to disgorge the standing Chapter 13 trustee’s percentage fee when the Debtors’ case had been dismissed prior to the confirmation of a plan. The Court found that 28 U.S.C. § 586(e) does not unambiguously provide for the retention of percentage fees in such cases. Section 586(e) specifies how the percentage fee is to be collected and it must be read in conjunction with 11 U.S.C. § 1326(a), the provision governing the circumstances under which the percentage fee must be returned to the debtor. In re Dickens, 513 B.R. 906 (Bankr. E.D. Ark. 2014).
Pursuant to 28 U.S.C. § 1334(c)(1), the Court exercised its discretion and entered an order abstaining from hearing the adversary proceeding commenced by the Plaintiffs. The Court found the protracted process associated with obtaining a final judgment in this noncore proceeding outweighed any other consideration. The Court granted the Plaintiffs relief from the stay to proceed in another forum with their litigation. Weaver v. Everhome Mortgage Co. (In re Weaver), 2014 WL 1872096 (Bankr. E.D. Ark. Apr. 23, 2014).
The Court granted creditor’s motion for administrative expenses pursuant to 11 U.S.C. § 503(b)(3)(D) and (b)(4) with respect to those expenses associated with the creditor’s efforts to have a Chapter 11 Trustee appointed because the Court found those expenses were actual and necessary and provided a substantial contribution to the Debtor’s estate. The Court found that other claimed expenses did not provide a substantial contribution in this case because they were incurred in furtherance of the creditor’s own interests and did not benefit the estate. In re Living Hope Se., LLC, 509 B.R. 649 (Bankr. E.D. Ark. 2014).
Fee application of Debtor-in-possession’s counsel approved pursuant to 11 U.S.C. § 330(a). The Court overruled objections raised by the Debtor’s 99% member and a creditor questioning whether counsel’s services were beneficial to the estate. The Court further found that the Debtor’s principals did not have the unfettered right to terminate the Chapter 11 Debtor’s counsel without court approval, particularly when such actions were taken for the principals’ benefit and not for the benefit of the estate. In re Living Hope Se., LLC, 509 B.R. 629 (Bankr. E.D. Ark. 2014).
Relief from stay to proceed with litigation against the Chapter 11 Debtor in State Court denied. Due to the Chapter 11 Trustee's current efforts to find a buyer for the Debtor and establish its value, the Court found that the estate faced greater harm if relief from stay were granted than the moving creditor would face if relief from stay were denied. Forcing the Debtor to defend State Court litigation would impede the sale process and result in increased and possibly wholly unnecessary administrative fees. In re Living Hope Se., LLC, 505 B.R. 237 (Bankr. E.D. Ark. 2014). On appeal to the Eastern District of Arkansas.
In a noncore proceeding, the Court entered a proposed order for the District Court’s review granting the Plaintiff’s application for attorney fees and costs pursuant to the Fair Debt Collection Practices Act (“FDCPA”). The District Court adopted the proposed order. Humes v. LVNV Funding, L.C.C. (In re Humes), 505 B.R. 851 (Bankr. E.D. Ark. 2013), adopted, No. 3:13–CV–00179–SWW, 2014 WL 310451 (E.D. Ark. Jan. 28, 2014).
The Court denied the defendants’ motion to bifurcate the issue of the Plaintiff’s standing to bring various claims from a trial on her claims. The Court found that although the standing issues were distinct from the issue of whether the claims were meritorious, bifurcation would not result in judicial economy because resolution of the standing issues would not necessarily eliminate the need for a trial on the claims. Speed v. U.S. Bank (In re Speed), No. 3:09–BK–17860, 2013 WL 7710285 (Bankr. E.D. Ark. Dec. 7, 2013).
The Court granted the Plaintiff’s motions to remand and abstain from hearing a removed foreclosure action. The Court rejected the Defendant’s assertion that the Debtor’s interest in an LLC that owned the property subject to foreclosure gave the Court jurisdiction to adjudicate the dispute. Although the Debtor may have held a leasehold interest in the property, without more, the Court determined that mandatory or alternatively, discretionary abstention applied. Additionally, the Court equitably remanded the foreclosure action. Farmers Bank & Trust Co. v. Chickasaw Props. (In re Burrow), 505 B.R. 838 (Bankr. E.D. Ark. 2013).