The Court granted the creditor's motion to compel arbitration as to the debtor's claim of an alleged violation of the automatic stay under section 362. The Court dismissed the debtor's remaining claims for lack of subject matter jurisdiction.
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Opinions
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Judge Ben T. Barry
In this chapter 7 case, under s.523(a)(15), the debtor's obligation to indemnify his ex-spouse in the event she is called upon to satisfy a third-party debt survives the debtor's bankruptcy.
The court found that a prior order involving divorce-related obligations between the debtor and the debtor’s ex-spouse did not inure to the benefit of third-party creditor sufficient to deny the dischargeability of the debtor’s obligation to the creditor.
Audrey R. Evans
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).
James G. Mixon
The Court held that the defective description did not provide a bona fide purchaser with notice pursuant to 11 U.S.C..§ 544 because extrinsic evidence would have been required to identify the mortgaged land. In Arkansas, inquiry notice derives from actual facts and a purchaser is not subject to it for purposes of 11 U.S.C..§ 544 analysis. Accordingly, the debtor-in-possession was allowed to avoid the mortgage lien. The Court ruled that reformation and attorney's fees were inappropriate.
The Court ruled that the Bank's security interest in the Debtor's stock was unperfected because a shareholders' agreement forbid the pledge of the stock by the Debtors to the Bank, the Debtors were parties to the agreement, and the Bank knew about the restriction and failed to acquire requisite shareholder consent. Therefore, the Trustee was entitled to avoid the transfer of the security interest.
The Debtor's statutory exemptions in personal property were in excess of the amount allowed for in the Arkansas Constitution and were therefore disallowed. The Trustee's objection to the Debtor's homestead as being urban is overruled because the evidence was evenly balanced as between whether it was urban or rural. The Trustee is given 30 days to commence an adversary to set aside the deed of trust and then the Court will consider the objection to the claim of homestead pursuant to § 11 U.S.C. 522(g).