OpinionsKovacs entered into an offer in compromise (OIC) with the IRS resolving her income tax liabilities for the years 1990 to 1995. Kovacs subsequently defaulted in the terms of the IOC. The IRS terminated the OIC in 1999 and reinstated her liabilities for the tax years in question. On July 3, 2001, Kovacs filed a petition under Chapter 7 and listed the IRS as a creditor and obtained a discharge on October 10, 2001. After Kovacs received her discharge, the IRS mailed to her a series of notices of intent to levy on her assets with respect to these outstanding tax liabilities. The debtor filed an adversary proceeding. At the outset of the trial, the IRS conceded its mistake in determining the dischargeability of the tax liabilities for these years in question and acknowledged it had violated the discharge injunction under § 524 of the Bankruptcy Code. The court concluded that Kovacs was the prevailing party and that the IRS' breach of § 524(a) was a proximate cause of her damages. However, the court also found that Kovacs Attorneys' also were mistaken in the impact of her discharge on the tax liabilities, and, in addition, unreasonably protracted the court proceedings in the adversary proceeding. The court concluded that a fair portion of the total damages of $71,901.37 for which the IRS should be liable was $25,000 and stated that a cause of action for violation of the discharge injunction must not be utilized as a profit-making endeavor by the debtor's attorneys. *NOTE - currently on appeal. In re John & Jean Sundstrom, Case No. 05-41463, Emerging Vision, Inc. v. Sundstrom, Adversary No. 06-2286 Published: In re Sundstrom, 374 B.R. 663 (August 2007) -- Judge M.D. McGarity Creditor brought an adversary proceeding to deny the chapter 7 debtors a discharge based on the debtor-wife's alleged fraudulent prepetition transfer of assets. The court dismissed the complaint, finding the debtors' prepetition transfer of personal property into wholly-owned corporation did not evidence wrongful intent required for a denial of discharge under sec. 727(a)(2). In Re Kirsch 07-20338 (August 2007) -- Judge P. Pepper Contested Chapter 13 plan which was silent as to treatment of tax refunds in a case where below-median-income debtor listed the refund as income on Schedule I and utilized it for expenses on Schedule J could not be confirmed, because it violated the disposable income requirement of 11 U.S.C. 1325(b). In Re Kiedrowski 06-24318 (August 2007) -- Judge P. Pepper The district court's decision in In re Ross-Tousey effectively overrules this Court's decision in In re Sawdy, and therefore Chapter 13 debtors may deduct the vehicle ownership expense on their Form B22C only if they have a note or loan payment, and not if they own a vehicle outright. In re McPike, 2007 WL 2317420 (August 2007) -- Judge S.V. Kelley Trustee's Objection to Plan Modification based on disposable income was overruled. Debtor's modification was approved as having been filed in good faith. In re FV Steel & Wire Co., 372 B.R. 446 (July 2007) -- Judge S.V. Kelley Analyzing CERCLA's provisions for the cost of recovery and removal of environmental hazards at a contaminated site, there was no clear proof that the EPA viewed the site as an imminent threat, and the Court valued a claim filed by a co-debtor on behalf of the EPA in the amount of $75,000. In re Erma L. Averhart (July 2007) -- Judge J.E. Shapiro The court held that where a secured creditor files a proof of claim before confirmation, which is at odds with the debtor's plan as to rate of interest, and the secured creditor fails to object to confirmation, the interest rate in the confirmed plan is controlling. The court also decided that the secured creditor was not denied due process. The argument raised by the secured creditor that established past practice in the Eastern District of Wisconsin required finding that the confirmed plan must yield to the proof of claim was rejected. The court stated that the established past practice was not as firmly entrenched as secured creditor suggested. King, Trustee -v- Ernie von Schledorn, Inc. (In re McAlister) (July 2007) -- Judge J.E. Shapiro The court found that the refinancing lender did not perfect its security interest under Wis. Stat. § 342.19. The fact that the original certificate of title still had the lien of the fully paid original lender is no defense. The refinancing lender obtained a release from the original lender, and there was no assignment from the original lender to the refinancing lender. In re Vincent & Paquita Young, Case No. 03-31975 Published: In re Young, 370 B.R. 799 (July 2007) -- Judge M.D. McGarity Chapter 13 debtors sought to modify their confirmed plan, after experiencing significant medical expenses and a reduction in the debtor-husband's pay. The court sustained the trustee's objection to the modification, in part. The chapter 13 debtors were not allowed to retroactively modify their confirmed plan to retain one-half of their tax refunds previously committed to their creditors. Because the tax refunds were necessary for the maintenance and support of the debtors, they were allowed to prospectively retain their entire tax refunds. In re Lisa Perry, Case No. 06-26132 Published: In re Perry, 369 B.R. 402 (May 2007) -- Judge M.D. McGarity Chapter 13 debtor objected to her former landlord's proof of claim. The court sustained the objection, in part, finding the residential landlord's claim for prepetition and postpetition rent did not qualify as an administrative expense under sec. 503(b). |