The Court converted Debtor’s Chapter 13 case to Chapter 7 after concluding the Debtor filed both his bankruptcy petition and his Chapter 13 plan in bad faith. Specifically, the Court found the Debtor’s actions in filing bankruptcy two days before a scheduled contempt hearing in State Court initiated by his former spouse to collect the divorce judgment owed her, and in proposing a fee-only plan that paid his creditors virtually nothing, evidenced a lack of good faith. The Court further found that conversion of Debtor’s case to Chapter 7 was in the best interests of creditors because there are potentially fraudulent or preferential transfers that a Chapter 7 trustee should investigate and possibly pursue for the benefit of the Debtor’s creditors. Finally, because Debtor filed this case solely to avoid the State Court contempt action without any legitimate need for bankruptcy relief, the Court found cause to lift the automatic stay to allow the State Court divorce proceedings and related contempt action to proceed. In re Hopper, 474 B.R. 872 (Bankr. E.D. Ark. 2012).
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Audrey R. Evans
The Court dismissed cause of action as failing to state a claim for relief for violation of the automatic stay where bank allegedly seized $10,000 in funds from a business account owned by the individual debtor's wholly owned corporation. The Court concluded the corporation's property is not property of the Debtors’ bankruptcy estate subject to the automatic stay. Dugan v. U.S. Bank (In re Dugan), No. 4:11–BK–13039, 2012 WL 6825328 (Bankr. E.D. Ark. June 20, 2012).
Defendant moved to set aside Default Judgment awarding $25,000 to Plaintiffs based on violations of the discharge injunction. Defendant argued that the service of process in the case was invalid because the person served was not the “officer” of the depository institution, as is required by Fed. R. Bankr. 7004(h). Following a hearing, the Court found that Plaintiffs met the requirement for service on an officer by specifically addressing the mailing to the position of the CEO, even though the specific CEO named in the mailing no longer held that position. With regard to the Defendant’s other arguments, the Court found the evidence insufficient to warrant setting aside the Default Judgment. In re Gambill, 477 B.R. 753 (Bankr. E.D. Ark. 2012).
The Court held that the Defendant was not personally liable to the Plaintiffs for fraud, and that any debt the Defendant owed the Plaintiffs was not excepted from discharge by 11 U.S.C. § 523(a)(2)(A). The Plaintiffs asserted that the Defendant was liable to them for fraud because of an alleged breach of a contract between the Plaintiffs and the Defendant’s limited liability company. The Court determined that the Defendant lacked an intent to deceive the Plaintiffs, which was a necessary requirement for a finding of fraud, and for any resulting debt to be excepted from discharge under 11 U.S.C. § 523(a)(2)(A). Myers v. Dewese (In re Dewese), 469 B.R. 314 (Bankr. E.D. Ark. 2012).
The Court entered judgment in favor of the Trustee pursuant to 11 U.S.C. § 549, finding that a race car owned by the Debtor was purposefully taken apart and then sold by the Debtor and his brother during the administration of the Debtor's bankruptcy case (despite a prior finding by the Court that the Debtor held an interest in the race car). The parties' testimony regarding ownership of the race car was contradictory and could not be credited; accordingly, insufficient evidence was provided to show any specific percentage in the race car was owned by anyone other than the Debtor. Because the Debtor and his brother Brian disassembled the race car, destroyed its value, and then sold its frame, the Court entered a joint and several judgment against the Debtor and his brother for $30,000 (the value of the race car) together with attorneys' fees and costs pursuant to 11 U.S.C. § 105(a) as damages for violation of the automatic stay. Cox v. Andrews (In re Andrews), 467 B.R. 173 (Bankr. E.D. Ark. 2011).
In denying summary judgment, the Court addressed the requirements necessary to prove each of the alleged causes of action, which included breach of contract, fraud, and multiple violations under the Fair Debt Collection Practices Act (FDCPA), Arkansas Fair Debt Collection Practices Act (AFDCPA), and Arkansas Deceptive Trade Practices Act (ADTPA), and explained the genuine issues of material fact which precluded entry of summary judgment. Humes v. LVNV Funding, L.L.C. et al (In re Humes), 468 B.R. 346 (Bankr. E.D. Ark. 2011).
Court held that a Chapter 13 debtor's social security income is included in determining the debtor's projected disposable income for purposes of plan confirmation, and that this below-median-income debtor's $2,800 housing expense was both unreasonable and unnecessary. In re Nicholas, 458 B.R. 516 (Bankr. E.D. Ark. 2011).
Court held that bank was not qualified to conduct non-judicial foreclosures in Arkansas because it failed to comply with the authorized-to-do-business requirement found in Ark. Code Ann. § 18-50-117. Court rejected bank’s argument that it had qualified to use the non-judicial foreclosure process by employing an attorney-in-fact under Ark. Code Ann. § 18-50-102. Court also rejected bank’s arguments that Ark. Code Ann. § 18-50-117 was superseded by Arkansas’ Wingo Act, or preempted by the National Banking Act. As a result, the debtors did not owe the foreclosure fees and costs incurred by the bank. In re Johnson, 460 B.R. 234 (Bankr. E.D. Ark. 2011). rev’d sub nom. JPMorgan Chase Bank, N.A. v. Johnson, 470 B.R. 829 (E.D. Ark. 2012) aff’d, 719 F.3d 1010 (8th Cir. 2013).
Court granted summary judgment on plaintiff's preferential transfer complaint finding that the Debtors had a contractual right to certain payments transferred to a creditor on their behalf within the preference period. The Court further found that the payments enabled the creditor to receive more than it would receive under a hypothetical Chapter 7 case.In re Frankum, 453 B.R. 352 (Bankr. E.D. Ark. 2011).
Court previously entered an Order suspending an attorney from practicing before the Arkansas Bankruptcy Courts while allowing the attorney 14 days to make arrangements for the continued protection of his clients’ interests (In re Burnett). Five days after entry of the suspension Order, the attorney filed a new bankruptcy case. After a hearing on an Order to Show Cause, the Court rejected the attorney's contention that he filed the new case for the protection of the clients' interests and found that the duties and responsibilities an attorney owes to a bankruptcy client extend beyond the mere preparation and filing of the case. As a result, the Court held attorney in contempt and entered sanctions.In re Burnett, 455 B.R. 187 (Bankr. E.D. Ark. 2011).