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ADMINISTRATIVE ORDERS

In re Murray, (05-48017, July 28, 2006) - Debtors filed a Motion to Abrogate the Administrative Order of January 3, 2005, which set forth the procedure for payment of debtors’ attorneys fees in Chapter 13 cases. After consideration of Debtors’ evidence of the increased burden on debtors’ counsel under the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), the Court held that the Administrative Order should not be abrogated, but should be amended to allow the payment of $2,500 to debtors’ counsel in Chapter 13 cases without separate application or hearing (i.e., “no-look” fee). The Court is convinced that its modification of the Administrative Order will strike a much-needed balance between debtors’ interests in proposing and completing a successful Chapter 13 plan, secured creditors’ interests in recoupment despite oftentimes rapidly depreciating collateral, and bankruptcy attorneys’ interests in being fairly compensated for the vital service they provide to debtors. Along with an increase in the no-look fee, the Court amended the Administrative Order to increase the amount of the initial disbursement, the monthly payments, and the fee due in dismissed cases. Individuals should reference the Amended Administrative Order for specifics.

AVOIDANCE

In re Smith, (05-60736, May 16, 2006) -  Debtors filed motion to avoid judicial lien under 11 U.S.C. § 522(f)(1), which attached to Debtors’ real property. The judicial lien creditor objected to avoidance of her lien. The real property of Debtors was encumbered by the following liens, in order of stipulated priority: (1) a first mortgage in the scheduled amount of $35,000.00; (2) the judicial lien in the scheduled amount of $27,394.36; and (3) a second mortgage in the scheduled amount of $155,521.85. The claimed current market value of Debtors’ interest in the property without deductions for secured claims or exemptions was $187,455.00. Debtors had claimed no exemption in their real property by the time this opinion was issued. The Court assumes that Debtors reasoned no exemption should be claimed being as there was no equity in the property.

Literally applying the arithmetic formula set forth in 11 U.S.C. § 522(f)(2)(A), the Court concluded that the judicial lien in question would in fact impair an exemption claimed by Debtors if an exemption should be claimed in the future and allowed. As such, should said exemption be claimed, then the judicial lien shall be avoided in its entirety in accordance with 11 U.S.C. § 522(f)(1). Further, should an exemption be claimed and the judicial lien avoided, then the priority position of the judicial lien shall be preserved for the benefit of Debtors’ exemption in accordance with 11 U.S.C. § 522(i).

BANKRUPTCY ESTATE

In re Bracewell, (02-60546, May 20, 2004) - On the Chapter 7 Trustee’s Motion to Determine Whether Crop Disaster Payment is Property of the Estate, the Court held that the crop disaster payment was property of the estate under 11 U.S.C. § 541(a)(1) because the right to the payment arose pre-petition when the disaster occurred.

In re Byrd, (00-41817, June 2, 2003) - In the adversary proceeding regarding the complaint filed by Douglas McArthur Byrd ("Debtor") to recover property of the estate, Atlanta Casualty Company ("Defendant") made a Motion for Summary Judgment. After ruling on several evidentiary issues, the Court held in favor of Defendant stating that Debtor’s material misrepresentation that he did not know whether his vehicle had been found, when he had been told by the police six days earlier that the vehicle had been recovered, violated the Cooperation and Fraud & Misrepresentation clauses of Defendant’s automobile insurance policy. Therefore, as a matter of law, Defendant was not required to pay Debtor for his alleged loss.

In re Jackson, (01-40268, July 2001) - Under Alabama law, the court held that Debtor was allowed to exempt the earned income credit and non-earned income credit portions of her federal income tax refund. Relying on established Eleventh Circuit precedent, the court held that a mere delay in notifying the trustee of a tax refund until the first meeting of creditors did not demonstrate bad faith or prejudice. Therefore, the court overruled Trustee’s objection to Debtor’s claim of exemptions.

In re Rozier, (02-41915, September 2002) - Answering the question whether a debtor’s car that had been repossessed just prior to the debtor filing Chapter 13 bankruptcy was property of the bankruptcy estate, the court analyzed a new 11^th Circuit Court of Appeals case, Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir 2002), regarding Florida law. Upon reconsidering its opinion in American Honda Finance Corp. v. Littleton (In re Littleton), 220 B.R. 710 (Bankr. M.D. Ga. 1998), the court held that Georgia case law provides direction on this issue. Thus, In re Kalter is not controlling as applied to Georgia law and the repossessed car is property of the bankruptcy estate.

In re Suwannee Swifty Stores, Inc., (96-60807, May 2001) - Granting Defendant’s motion for summary judgment and denying Plaintiff’s motion for summary judgment in an adversary proceeding to recover post-petition transfers under §§ 549 and 550, the court held that plaintiff would not be allowed to recover post-petition transfers. In a case of first impression, the court held that lottery funds collected by a lottery retailer under the Georgia Lottery for Education Act constitute trust property and therefore, are excluded from property of the bankruptcy estate.

CASE ADMINISTRATION

In re Cobb, (02-40475, June 17, 2002) - Debtors proposed to cure over six months its prepetition arrearage in an automobile lease. The court held that Debtors’ six-month cure proposal did not constitute a "prompt" cure under § 365(b)(1) of the Bankruptcy Code. Also, the court found that Debtors did not exercise the option under the lease agreement to purchase the vehicle. Even if Debtors had timely exercised their option to purchase, the court held that Debtors’ plan proposal to pay the residual value over the life of the plan is contrary to law. Therefore, the court granted relief from stay to the movant.

In re Desai, (02-10238, July 25, 2002) - The court denied the motion of Southwest Georgia Bank ("SWGA") for relief from the automatic stay and SWGA’s motion to dismiss the case. In a prior Chapter 11 case, Debtor consented to a plan provision whereby he would not oppose relief from stay in any subsequent case that he might file within five years. The court held that such waivers of the automatic stay are enforceable, however, they not per se enforceable and must be evaluated on a case-by-case basis. In this case, the court found that others factors outweighed Debtor’s waiver. Therefore, the court denied SWGA’s motion for relief conditioned on Debtor’s strict compliance to payments to SWGA. As to SWGA’s motion to dismiss the case, the court found no evidence of bad faith and therefore, denied that motion.

In re Nivens v. Loans for Military, (00-42992, July 2001) - The court denied Debtors’ motion for contempt to compel Respondent to pay Debtor’s attorney’s fees. Explaining that the court’s prior order awarding Debtors attorney’s fees was a money judgment, the court held that a money judgment is not enforcement by contempt. Therefore, the court concluded that Debtors’ counsel recourse was filing a fi. fa rather than obtaining a contempt order.

In re Sheppard, (99-41085, January 6, 2000) - Creditor (Piggly Wiggly) is held in contempt for willfully violating the automatic stay based on its having issued a warrant postpetition for Debtor's arrest based on a worthless check written prepetition. Debtor carried her burden and satisfied both prongs of the test established in Barnette v. Evans, 673 F.2d 1250 (11th Cir. 1982), so that having the criminal warrant issued was stayed by the bankruptcy filing.

In re Jackie G. and Patricia A. Williams; In re Circle B Enterprises, Inc. (03-70974;  03-71461, December 8, 2003) - The Court held a hearing on two Motions of Samuel P. Scott ("Movant") for Relief from the Automatic Stay to pursue an action against Jackie G. and Patricia A. Willliams and Circle B Enterprises, Inc. ("Respondents") in state court. Under the test articulated in In re South Oakes Furniture, Inc., 167 B.R. 307 (Bankr. M.D. Ga. 1994)(J. Walker), Movant was entitled to relief from the stay because the hardship to Movant to start over in Bankruptcy Court outweighed any hardship to Respondents if the case proceeded in state court where it had been pending for almost two years. Under the final prong of the test, the Court held that Movant had established a probability of prevailing on the merits.

CHAPTER 13 PLANS

In re Dasher, (00-60397, October 2000) - Movant sold a parcel of land to Debtors through an owner financing agreement which involved a final balloon payment at the end of the one year term. After the balloon payment became due but before payment was made, Debtors filed their Chapter 13 petition. Although Debtors proposed to pay Movant in full over the life of the plan, Movant objected to confirmation. Overruling Movant’s objection, the court held that § 1322(c)(2) allows for the payment of a prepetition matured balloon over the life of the plan.

In re Dupree, (02-41586, November 7, 2002) - Two judgment creditors made objections to Debtor’s proposed Chapter 13 plan. The court ruled that Debtor bears the burden to prove that his Chapter 13 plan is in conformity with the statutory requirements for confirmation. Debtor had to overcome both objections or he would be required to modify his Chapter 13 plan. In failing to provide court with proper evidence and case law to overcome the creditors’ objections, the objections were sustained and Debtor was ordered to modify his Chapter 13 plan to give the creditors’ claim proper treatment.

In re Paschen, (99-42771, August 2000) - Section 1322(c)(2) allows certain short-term mortgages, which would otherwise be covered by the section 1322(b)(2) prohibition of modification, to be crammed down to value and paid at a market rate of interest.

CLAIMS

In re Hampton, (99-60376, January 2001) - Sustaining the Chapter 12 Trustee’s objection to the secured status of a claim, the court held that no valid UCC-1 existed at the time Debtor filed his petition. Therefore, Creditor’s security interest was unperfected. Although Trustee arguably requested the court the determine validity of a lien, which requires an adversary proceeding, the court held that the claim objection process was proper in this case.

In re R-P Packaging, Inc. dba Columbus Packaging; Plicon Corp, (99-42537, March 2002) - In two related chapter 11 cases in which a single estate was created, the court granted, in part, Debtors’ motion for determination of their tax liability to the Muscogee County Board of Tax Assessors. The motion sought a determination of the value of Debtors’ personal property for the 1996 through 2000 tax years. The court determined the value of Debtors’ personal property for the 1997 through 2000 tax years and ordered the Muscogee County Board of Tax Assessors to recalculate Debtors’ tax liability in accordance with the court determined values. However, Debtors’ tax liability for the 1996 tax year had been adjudicated by an administrative tribunal prior to the filing of Debtors’ bankruptcy cases. Therefore, pursuant to § 505(a)(2)(A), the court was without jurisdiction to determine Debtors’ tax liability for the 1996 tax year.

DEBTORS' AND CREDITORS' RIGHTS

In re Ayers Aviation Holdings, Inc., (00-11881, July 25, 2002) - As to the issue of which law should apply to the validity and priority of liens on the property central to the adversary proceeding, the court held that the law of the Czech Republic is the controlling law. Pursuant to the Convention on the International Recognition of Rights in Aircraft, 4 U.S.T. 1830, the law of the country where the aircraft is registered is the law which governs property rights in aircraft. No party disputes that the subject aircraft is registered in the Czech Republic.

In re Ayers Aviation Holdings, Inc., (00-11881, August 21, 2002) - In a trial to determine the validity, priority and extent of liens between competing parties, the court had previously ruled that the law of the Czech Republic was to govern the issues in this trial. Because the party which had the burden to prove foreign law under Rule 44.1 of the Federal Rules of Civil Procedure failed to meet its burden, the court held that party had no interest in the subject property.

In re Ayers Aviation Holdings, Inc., (00-11881, November 4, 2002) - Zlatava Davidova, Trustee of LET, a.s. ("Movant") asked the court to reconsider its August 21, 2002 Memorandum Opinion and Order regarding the validity, priority, and extent of liens or competing interests in an aircraft and its two engines. Upon reconsideration, the court found that Movant did meet its burden to prove Czech Republic law. Thus, the court applied the facts to the applicable Czech Republic law. Accordingly, the court found that the purported transfer of the L610-301 aircraft from LET, a.s. to Ayres Aviation Holdings ("Debtor") was not effective pursuant to the Czech Civil Aviation Act. However, the court found that the purported transfer of the 002 engine from LET a.s. to Debtor was valid and First National Bank of South Georgia does have a valid perfected security interest in the 002 engine. The court did not change its holding that the 998 engine belonged to General Electric. Nor did the court change its holding denying relief from the stay as to GATX Capital Corporation.

In re Bozeman, (97-60549, January 2002) - The court granted the State of Florida’s motion to dismiss based on Eleventh Amendment immunity. The court rejected plaintiffs’ argument that the State of Florida constructively waived its sovereign immunity by participating in the Federal Income Tax Refund Offset program. The court acknowledged the case of College Savings Bank in which the Supreme Court overruled Parden and held that these Parden-type constructive waivers of sovereign immunity are unconstitutional.

In re Brown, (03-41647, Adv. No. 03-04069, January 30, 2004) - On a Motion to Dismiss, the Court held that statutes in derogation of common law must be strictly complied with, which follows an earlier ruling by the Court on a similar issue in a different case. The Court denied Speedee Cash of Georgia, Inc.’s ("Defendant") Motion to Dismiss, as to Count One of Clarence Chester Brown, Sr.’s ("Debtor") Complaint, because the title pawn contract gave only a ten-day grace period, instead of a thirty-day grace period as required by the Georgia Pawnshop Act. The Court did grant Defendant’s Motion to Dismiss, as to Count Two of Debtor’s Complaint, because the contract in dispute was for more than $3,000, therefore it did not fall under the Georgia Industrial Loan Act.

In re Caves, (03–41518, April 22, 2004) - Columbus Bank & Trust Co. ("Movant") filed a Motion for Relief from the Automatic Stay to pursue an action against Sammy A. Caves ("Respondent") in state court. Under the test articulated in In re South Oakes Furniture, Inc., 167 B.R. 307 (Bankr. M.D. Ga. 1994)(J. Walker), the Court found that Movant was not entitled to relief from the automatic stay because Respondent established that Movant did not have a probability of prevailing on the merits.

In re Cunningham, (01-71080, April 2002) - The court abstained from ruling in this adversary proceeding and dismissed Debtor’s complaint without prejudice. Although the Georgia Department of Revenue’s motion to dismiss was based on its Eleventh Amendment immunity, the court made no conclusion as to the immunity issue. Rather, the court held that no bankruptcy purpose would be served by making a determination of Debtor’s tax liability to the Georgia Department of Revenue in a no-asset case where Debtor had received her discharge.

In re Davis, (02-42744, Adv. No. 04-04003, July 8, 2004) - Georgia Power Co. ("Defendant") filed a Motion for Summary Judgment arguing that the post-petition, pre-conversion debt owed by Stephanie M. Davis ("Plaintiff") was collectable in addition to the deposit, as set out in 11 U.S.C. § 366, as an administrative expense under 11 U.S.C. § 503(b). In ruling against Defendant’s motion, the Court held that the effect of 11 U.S.C. § 348 was that the post-petition, pre-conversion debt was to be treated as if it had arisen just prior to the filing of the petition, unless it was determined to be an administrative expense under 11 U.S.C. § 503(b), which requires notice and a hearing. The Court held that Defendant was not automatically entitled to such priority. Therefore, Defendant was not entitled to judgment as a matter of law.

In re Johnson, (02-41260, December 6, 2002) - On a motion for summary judgment, the court held that statutes in derogation of common law must be strictly complied with. The court ruled against Speedee Cash of Columbus, Inc. ("Defendant") because the title pawn contract did not strictly comply with the Georgia Pawnshop Act. Since Defendant’s contract was not in strict compliance, it was not entitled to summary judgment as a matter of law.

In re Peterson, (03-40732, June 3, 2004) - After the United States Department of Treasury and the Internal Revenue Service ("U.S.A./I.R.S.") filed a Motion for Relief from the Automatic Stay to Exercise the Right of Setoff, Noah J. and Connie C. Peterson ("Debtors") filed a Motion for Contempt against U.S.A./I.R.S. Both motions were heard at the same time. The Court did not agree with Debtors that U.S.A./I.R.S. had waived its right to setoff because it did not assert the right to setoff in its proof of claim. Therefore, the Court held in favor of U.S.A./I.R.S., granted its Motion for Relief from the Automatic Stay to Exercise the Right of Setoff, and denied Debtors’ Motion for Contempt.

In re Pickle Logging, Inc., (02-10824, November 18, 2002) - The court was asked to reconsider an order dated September 3, 2002 in which the court ruled that Deere Credit, Inc. did not have a security interest in a 548G skidder that had been mislabeled on both the security agreement and the financing statement. Upon reconsideration, the court held that it was correct in the September 3, 2002 order and did not change its ruling. While the serial number and model number were both off by just one digit, the combination of both incorrect numbers did not raise a red flag to a third party. Therefore, the description of the collateral did not meet the requirements of O.C.G.A. § 11-9-108(a).

In re SGE Mortgage, (99-71191, November 2001) - In cross motions for partial summary, the court granted in part and denied in part the motions of several commercial bulk purchasers and denied the motion of the Creditors’ Committee. The court held that the transactions between the Debtor and several commercial bulk purchasers did not involve the creation of an interest in real estate. Therefore, the Georgia Uniform Commercial Code, not the Georgia real estate recording statutes, governed those transactions between SGE and the bulk purchasers of promissory notes. As to whether the commercial bulk purchasers were holders in due course of the promissory which they purchased from the Debtor, the court found that issues of material fact remained on the elements of good faith and notice. The court entered a separate Memorandum Opinion on the Debtor’s motion for summary judgment.

In re SGE Mortgage, (99-71191, December 2001) - The court granted the Debtor’s motion for summary judgment against the 544 individual investor defendants. Referencing its Memorandum Opinion entered on November 19, 2001, the court held that the Georgia Uniform Commercial Code, not the Georgia real estate recording statutes, applied to the transactions between the Debtor and the individual investor defendants. Therefore, because the evidence demonstrated that none of the individual investor defendants had possession of the original loan documents in which they claimed an interest, the court held that the individual investor defendants had an unperfected interest in the loans.

DEBTOR'S MOTION TO SUBSTITUTE COLLATERAL

DISCHARGE

In re Barber, (03-71139 Adv. No. 03-07062, August 17, 2004) - The Court held a final pre-trial conference in an adversary proceeding to determine the dischargeability of a debt arising from a state court default judgment in favor of William Bass, Carolyn Burgess, and Haven Hills Estates ("Plaintiffs") against Wayne Barber ("Defendant"). To determine whether collateral estoppel applies, the Court must apply the law of the state in which the judgment was entered. Under Georgia law three elements must be present for collateral estoppel to apply; 1) the issue must be identical to the issue resolved in state court; 2) the issued was "actually and necessarily" litigated in the state court case; 3) the resolution of the issue was essential to the state court case. The Court determined that the Defendant’s liability, which was determined by default, was not "actually and necessarily" litigated in the state court, therefore collateral estoppel was not applicable.

In re Baxter, (02-40232, May 29, 2003) - The Court held a trial to determine the dischargeability of debt created by losses that International Fidelity Insurance Company ("Plaintiff") suffered after Raymond Jerry Baxter’s ("Debtor") company went out business and Debtor filed for bankruptcy. After stating that Plaintiff did not meet its burden required by 11 U.S.C. § 523(a)(2)(B), the Court held in favor of Debtor, stating that Plaintiff only proved its own company policy, not the industry norm. However, the Court held in favor of Plaintiff on the 11 U.S.C. § 523(a)(4) allegation, as to jobs performed in New York state, if Plaintiff can prove during the damages stage that Debtor or his company misappropriated funds from the project owner(s). The issue of damages was reserved for a later trial after all job(s) are completed and an accurate accounting of losses can be done.

In re Cromer Farms, Inc., (99-10321, July 18, 2000) - In this chapter 12 case, the court ruled that the creditor did not carry its burden of proof to establish nondischargeability under § 523(a)(2)(A), (4), or (6) of the Code. The court also ruled that language in a consent order, which allowed Debtor's late-filed answer to the counterclaim, did not entitle the creditor to a default judgment, and that collateral estoppel did not apply to bar Debtor from contesting the nondischargeability complaint.

In re Cruz, (94-40692, October 2000) - During Debtor’s Chapter 13 case, a educational loan creditor’s claim was disallowed to which the creditor did not object. Upon completion of the plan, Debtor received a general discharge. Creditor subsequently intercepted Debtor’s tax refund in payment of the school loan debt. Debtor filed a motion for contempt against the educational loan creditor alleging violation of the discharge injunction. The court held the disallowance of a claim does not necessarily discharge that claim. This is especially true given that educational loans are presumptively nondischargeable under § 523(a)(8) and the discharge order specifically excepted school loans from the discharge.

In re Douglas, (05-70649, Adv. Nos. 05-07021 and 05-07022, March 14, 2007) - The discharge of student loans is reserved for those most extreme instances of financial destitution. It is the Court’s finding that this debtor finds herself in such a situation. The Court holds that Debtor has carried her burden of proving, under the standard set forth in In re Brunner and adopted by the Eleventh Circuit Court of Appeals in In re Cox, that excepting Debtor’s student loan debt from discharge would impose an undue hardship on Debtor and her dependent son. As such, the student loan debt at issue, representing loans made by ECMC and the DOE, is held to be dischargeable.

  In re Geeslin, (02-42227, July 17, 2003) - The Court held a hearing on the Motion of Arthur Geeslin, Jr. ("Debtor") for Contempt against Meriwether County District Attorney Peter Skandalakis ("Respondent") for violations of the automatic stay and the discharge injunction. The Court held that it had the inherent power to determine violations of the automatic stay and the discharge injunction, despite Respondent’s sovereign immunity argument. Further, the Court ruled: 1) the exception to the automatic stay under 11 U.S.C. § 362(b)(4) did not apply to the actions taken by Respondent; 2) the debt was discharged, despite the language of 11 U.S.C. § 523(a)(7); and 3) because damages were not proven, the issue of sovereign immunity would not be reached. The Court reserved judgment on issuing an injunction because an adversary proceeding had not been filed.

In re McGinnis, (02-70055, December 20, 2002) - Ruling on Pennsylvania Higher Education Assistance Agency’s ("Defendant") Motion for Summary Judgment, the Court stated that Education Credit Management Corp. v. Carter (In re Carter), 279 B.R. 872 (M.D. Ga. 2002), set a very high standard for undue hardship. However, the Court could not make such a determination as a matter of law because there were genuine issues of material fact which remained in dispute. The Court denied Defendant’s Motion for Summary Judgment.

In re McGinnis, (02-70055, February 14, 2003) - The Court held trial on Sarah P. McGinnis’ ("Plaintiff") Complaint to Determine Dischargeability of Student Loan Debt against Pennsylvania Higher Education Assistance Agency ("Defendant"). The Court, analyzing "undue hardship" under the Brunner test in view of Education Credit Management Corp. v. Carter (In re Carter), 279 B.R. 872 (M.D. Ga. 2002), held Plaintiff’s debt to be dischargeable as an undue hardship. The Court cited Plaintiff’s short-term and long-term financial difficulties due to "a total foreclosure of job prospects in her area of training," as well as her good faith effort towards repayment, as reasons for holding that Plaintiff would be subject to an undue hardship if she were forced to repay her student loans.

In re SGE Mortgage Funding Corp., (99-71191, Adv. No. 01-07047, August 7, 2003) - The Court held a hearing on cross-motions to enforce a settlement agreement. SGE Mortgage Funding Corp. ("Plaintiff") and Accent Mortgage Services, Inc. ("Defendant") filed the motions after a dispute arose over the terms of the settlement agreement. The Court held in favor of Plaintiff, stating that Defendant’s CEO was "sophisticated in business matters" and Defendant’s counsel present when the CEO signed an amendment to the settlement agreement which confirmed Defendant’s liabilities under the settlement agreement. Therefore, Defendant was liable for the amount remaining due to Plaintiff under the settlement agreement, plus ad valorem taxes paid by Plaintiff at a real estate closing.

In re Sutton, (06-60373, Adv. No. 07-06006, October 2, 2008) - Plaintiff Omega Cotton Company brought two claims against Debtor Loyd Bill Sutton. The first claim was based on a district court judgment in the amount of $308,430.25. The second claim was based on alleged fraud by the Debtor, resulting in a claimed loss of $4,523,400.00. Omega sought to have both claims exempted from discharge. On the first claim, the court determined that res judicata did not preclude a finding that the debt was dischargeable under 11 U.S.C. § 523(a)(4), because of the narrow definitions of fraud and defalcation as applied to the bankruptcy code. The court held that debt dischargeable. The court found that the second claim was precluded by res judicata, because Omega had a full and fair opportunity to litigate those claims in the previous district court case. Summary judgment was entered for the debtor.

In re Wren, (93-10368, November 21, 2002) - The court was asked to consider whether, under Banks v. Sallie Mae Servicing Corporation (In re Banks), 299 F.3d 296 (4^th Cir. 2002), Debtors’ adversary proceeding should be dismissed for failure to state a claim upon which relief can be granted. Reserving judgment on whether Banks was applicable and should be followed, the court ruled that the record and admitted pleadings did not provide grounds to dismiss the adversary proceeding.

ENTRY OF DEFAULT / MOTION TO OPEN DEFAULT

In re Justice, (Case No. 04-12768, A.P. No. 05-01010, August 4, 2005) - The Plaintiff’s filed a complaint against the Debtor/Defendant alleging the conversion of property used as collateral for a security agreement. The Debtor/Defendant failed to answer the complaint due to a clerical mistake. A clerk’s entry of default was entered in accordance with Fed. R. Bankr. P. 7055(a). Less than a week later, the Debtor/Defendant filed a motion to open the default, as well as a late filed answer to the complaint. The "good cause" standard of Fed. R. Civ. P. 55(c) governs whether a clerk’s entry of default should be set aside. The four factor test is (1) whether the defaulting party took prompt action to vacate the default; (2) whether the defaulting party provides a plausible excuse for the default; (3) whether the defaulting party presents a meritorious defense; and (4) whether the party not in default will be prejudiced if the default is set aside. Turner Broadcasting Systems, Inc. v. Sanyo Electric, Inc., 33 B.R. 996, 1001 (N.D. Ga. 1983), aff’d, 742 F.2d 1465 (11th Cir. 1984). In this case, the Debtor/Defendant failed to show a meritorious defense. Therefore, the entry of default was granted as to liability.

EXEMPTIONS

In re Holt, (05-71016, December 22, 2006) - Chapter 7 Trustee filed an objection to the claimed exemptions by Debtors in a singlewide mobile home (“Singlewide”) and in real property on which a block house was constructed. Debtors claimed the exemption under O.C.G.A. § 44-13-100(a)(1), Georgia’s opt-out homestead exemption statute. Debtors argued that their equity interest in the Singlewide could be exempted under O.C.G.A. § 44-13-100(a)(1) since their 22 year-old daughter and minor grandson occupied the Singlewide at the time Debtors’ bankruptcy petition was filed. Debtors claimed that their daughter and grandson were “dependent” for purposes of the homestead exemption statute. The evidence at the hearing revealed that Debtors had claimed their daughter and grandson as “dependents” on their 2005 income tax returns and that the daughter and grandson did, in fact, occupy the Singlewide at the time Debtors’ petition was filed. With regard to the Singlewide, the Court found that the Trustee did not present evidence sufficient to prove that Debtors’ daughter and grandson were not dependents of Debtors for purposes of O.C.G.A. § 44-13-100(a)(1). Therefore, the claim of exemption in the Singlewide was proper since the Singlewide was the residence of Debtors or their dependents. As to the block house property, however, the Court found that there was no legal basis for exempting the equity interest in a rental property owned by a debtor just because that property was located contiguous to the homestead or residence of the debtors. The Court, therefore, sustained the objection of the Trustee as to the claim of exemption in the block house property.

Former Chapter 7 Trustee’s Motion to Reconsider Order Overruling Objection to Plan

In re Barber, (03-60335, December 27, 2004) - The former Chapter 7 Trustee ("Trustee") asked the court to reconsider the August 25, 2004 decision overruling the Trustee’s objection to confirmation of the Debtors’ Chapter 13 plan. The Trustee alleged that the Barbers were insolvent and that the transfer of property from Mr. Barber to his son was fraudulent. After arguments and evidence were presented, the court determined that the Barbers were solvent and overruled the objection. The Trustee then brought a motion to reconsider because at the hearing he failed to argue that after the transfer of the property the mortgage remained in Mr. Barber’s name for 64 days, although the son had assumed the payments as required under the security deed. The Trustee argued in his reconsideration motion that this made the Barbers insolvent. The court denied the motion to reconsider because under Rule 59(e) a motion to reconsider should only be used in extraordinary circumstances. Because there was no previously unavailable evidence, change in the law, or a clear error of law, the court declined to reconsider.

GEORGIA COMMERCIAL CODE

The Court first held that Debtor properly raised the issue of whether Ayres Aviation Holdings, Inc. was a “buyer in ordinary course of business. The Court relied on the admission of General Electric that Debtor had properly raised the issue and upon the record of the hearing to reach its conclusion.

The Court next held that Debtor was not a “buyer in ordinary course of business,” as defined in O.C.G.A. § 11-1-201(9), of General Electric engine 998 so as to extinguish the ownership rights of General Electric in the engine. The Court looked to the last sentence of the O.C.G.A. § 11/1/201(9) definition and to the interpretation of that Section by the Eleventh Circuit Court of Appeals in Sterling National Bank & Trust Co. of New York v. Southwire Co., 713 F.2d 684 (11th Cir. 1983). These authorities were considered with the testimony of former principal of Debtor, Fred P. Ayres, that Debtor took the L610 aircraft and its two General Electric engines (including engine 998) in exchange for the forgiveness of a money debt arising from the transfer of avionics from Debtor to LET, a.s.

MOTION TO REOPEN A CHAPTER 13 CASE

In re Farmer, (98-71322, April 18, 2005) - The Court held a hearing on the Movants’ Motion to Reopen the case in order to contest the prior re-opening and move to strike the amended schedules. The Farmers had completed payments on their plan when they were involved in an automobile accident. They did not immediately amend their schedules to reflect the potential cause of action. After the case was closed, the Farmers reopened the case and added the lawsuit to their schedules. The Movants, the defendants in the personal injury lawsuit, asserted judicially estoppel. The Court found that judicial estoppel did not apply because the Farmers never asserted inconsistent positions and because the Farmers’ plan was complete at the time of the injury. In addition, the cause of action was not property of the estate under Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. 2000) and 11 U.S.C. §1329(a), because cause of action arose after the confirmation and completion of the plan.

MOTION TO SET ASIDE DEFAULT JUDGMENT

In re Diaz, (04-40564, August 30, 2005) - Plaintiffs filed an Adversary Proceeding against Ms. Mock. Ms. Mock had hired National Child Support to collect back child support owed on a judgment. National Child Support hired an attorney to represent Ms. Mock, but there was a miscommunication as to whom the attorney represented. As a result, the attorney filed a response in the name of National Child support only. A default judgment was entered against Ms. Mock. Ms. Mock filed a motion to set aside the default judgment. The "excusable neglect" standard of Fed. R. Civ. P. 60(b) governs whether a default judgment should be set aside. In this case, the misunderstanding of the attorney for Ms. Mock falls within the parameters of "excusable neglect." Therefore, the default judgment was set aside.

NUNC PRO TUNC CLOSING

In re Wren, (93-10368, October 8, 2004) - The Court held a telephonic hearing to determine whether to close David and Vicki Wrens’("Debtors") case nunc pro tunc. The Wrens reopened the case to address an adversary proceeding, but failed to pay Trustee fees or file monthly operating reports in accordance with 28 U.S.C. § 1930 (a)(6). The Court determined that the Debtors did not meet the burden of extraordinary circumstances required for the granting of retroactive relief.

OBJECTION to CONFIRMATION

In re Beasley, (07-40280, October 2007) - Creditor objected to confirmation of Debtor's Chapter 13 Plan, where Debtor proposed to bifurcate the Creditor's claim on a vehicle driven and used exclusively by his wife. Overruling Creditor's objection, the court held that the hanging paragraph of 1325(a)(*) does not prevent bifurcation of a purchase money security interest on a 910 day vehicle where the vehicle was not purchased for the personal use of the Debtor.

In re Cersey, In re Ledford, (03-72005 and 04-70311, November 15, 2004) - Creditor, Farmers Furniture, objected to the confirmation hearing in the Cersey and Ledford cases because the Debtors’ plans did not include all of the collateral securing the notes executed between the Debtors and Farmers Furniture. The Debtors claimed that the purchase money security interest ("PMSI") in the collateral was lost under the Transformation Rule when subsequent contracts with cross-security clauses were executed. However, the case law regarding this issue holds that if the contract contain a method for allocation, the PMSI will be enforceable. Because the contracts at issue contained an adequate allocation method, the PMSIs are enforceable.

In re Graupner, (06-40237, December 21, 2006) - Creditor Nuvell Credit Corp. (“Nuvell”) filed an objection to the confirmation of Debtor’s Chapter 13 Plan. In his plan, Debtor proposed to bifurcate and cramdown Nuvell’s undersecured claim using § 506 of the Code as was common practice prior to the enactment of certain provisions of BAPCPA. The “hanging paragraph” of § 1325(a), which was added by BAPCPA and became effective on October 17, 2005, prohibits bifurcation and cramdown where (1) the creditor has a purchase money security interest; (2) the debt was incurred within 910 days preceding the filing of the bankruptcy case; (3) the collateral for the debt is a motor vehicle; and (4) the motor vehicle was acquired for the personal use of the debtor. The Court SUSTAINED Nuvell’s objection holding that in the context of the retail installment sale of a motor vehicle in Georgia, “price,” for purposes of Georgia’s purchase money security interest statute, can include negative equity in a trade-in vehicle.

In re Jordan, (04-60215, March 25, 2005) - Creditor, Wells Fargo Bank N.A., objected to the confirmation hearing in the Jordan case because the Debtor was modifying the value of property in the plan. Wells Fargo argued that the property at issue was the Debtor’s principal residence and thus could not be modified under 11 U.S.C. § 1322(b)(2), and that the Debtor’s plan was not filed in good faith. The court held that the date for deciding whether a creditor qualifies for section 1322(b)(2) protection is at the time of filing, not when the obligation arose. Because the Debtor had moved at the time of filing, the property was not his principal residence. However, the court denied confirmation because the plan was not filed in good faith. The property which the Debtor was attempting to cram down was not necessary for his maintenance or support. Rather, the Debtor’s son, who was neither a debtor nor a dependant, was living on the property and made the Trustee payments.

In re Murray, (05-48017, June 06, 2006) - Creditor Nuvell Financial Services Corp. (hereinafter, “Nuvell”) filed an objection to the confirmation of Debtors’ Chapter 13 Plan on the basis that the treatment of Nuvell in the plan did not comport with the requirements of the “hanging paragraph” of 11 U.S.C. § 1325(a) (hereinafter, “§ 1325(a)(*)”). Debtors purchased a motor vehicle within 910 days of filing their Chapter 13 bankruptcy petition. The vehicle was purchased for the personal use of Debtors. At the time the vehicle was purchased, Debtors also purchased an extended service contract and were assessed a documentary fee by the seller. Debtors argued that the purchase of the extended warranty and the payment of the documentary fee with monies meant for the purchase of the vehicle alone, prevented Nuvell from holding a purchase-money security interest.

The Court held that Nuvell in fact held a purchase-money security interest and that the other requirements of § 1325(a)(*) were met so as to qualify Nuvell’s claim for treatment under that section. Further, the Court held that § 1325(a)(*) does not prevent a claim qualifying under that section from being an “allowed secured claim” for purposes of § 1325(a)(5) and its present interest requirement. Section 1325(a)(*) serves to prevent the bifurcation of an under-secured claim into a secured and unsecured portion under § 506. This holding is consistent with the vast majority of cases considering the meaning of § 1325(a)(*). The Court’s interpretation is also consistent with the plain meaning of the statute and with the legislative history on the section.

The Court also considered the issue of post-petition interest rates to be paid in accordance with § 1325(a)(5) on secured claims that qualify for treatment under § 1325(a)(*). The Court concluded that the United States Supreme Court case of Till v. SCS Credit Corp., 541 U.S. 465 (2004), was applicable to claims falling under § 1325(a)(*). The Supreme Court held in Till that § 1325(a)(5) required that interest on allowed secured claims should be paid at a current rate determined by an adjustment from the prime rate based upon the risk of nonpayment. Being as the Court concluded that a claim qualifying under § 1325(a)(*) is an “allowed secured claim” for purposes of § 1325(a)(5), the interest rate set forth in Till is appropriate.

In re Murray, (05-48017, August 24, 2006) - On June 16, 2006, Debtors’ filed a Motion to Reconsider the Memorandum Opinion issued by the Court on June 6, 2006 (see above). Debtors made four arguments in favor of their motion: (1) The language of § 1325(a)(*) does not prohibit “the stripping down of the lien or cram-down or bifurcation of the creditor’s claim”; (2) The Court’s reliance on In re Johnson, 337 B.R. 269 (Bankr. M.D.N.C. 2006), for the proposition that despite the purchase of items other than the vehicle, Nuvell still held a purchase money security interest in the vehicle, was improper being that the court in Johnson did not make that finding and that such an argument was not made; (3) The court did not consider the argument raised by Debtors at the April 4, 2006 hearing that the secured claim of Nuvell could still be bifurcated under the authority of § 1322, which states that a Chapter 13 plan may modify the rights of a secured creditor; and (4) Claims qualifying under § 1325(a)(*) are not entitled to the present value protection provided for in § 1325(a)(5)(B)(ii), such protection provided in the form of a “prime plus risk factor” interest rate as set forth by the United States Supreme Court in the case of Till v. SCS Credit Corp., 541 U.S. 465 (2004).

The Court held a hearing on Debtors’ motion to reconsider on July 18, 2006, and orally granted the motion, agreeing to reconsider a portion of the June 6 memorandum opinion. The Court revisited its discussion of whether Nuvell held a purchase money security interest. Considering many cases on O.C.G.A. § 11-9-103 (2002) and the statute itself, which defines “purchase money security interest” in Georgia, the Court confirmed that Nuvell does, in fact, hold a purchase money security interest in Debtors’ vehicle. The Court found no authority for the proposition that the purchase of an extended service contract, payment of a documentary fee, and payment of a governmental title fee, at the same time the collateral was purchased, disqualifies the creditor from holding a purchase money security interest in the collateral itself. The court held that the “transformation” rule, which is applicable in the Eleventh Circuit to situations involving refinancing or consolidation of past and present loans, was not applicable in the situation before the Court. The Court held that the extended service contract and the other fees were so inextricably related to the collateral itself, that the purchase of these items contemporaneous with the purchase of the collateral, could only mean that the cost of these items should be considered part of the purchase “price” of the collateral for purposes of applying O.C.G.A. § 11-9-103. The order issued with the June 6 Memorandum Opinion was, therefore, left unchanged. 

In re Spratling Corp. , (06-40614, October 19, 2007) - Creditor Wells Fargo Corp. (Fargo) filed an objection to the confirmation of Debtor's Chapter 13 plan. In his plan, Debtor proposed to bifurcate and cramdown Fargo's undersecured claim using § 506 of the Code as was common practice prior to the enactment of certain provisions of BAPCPA. The "hanging paragraph" of § 1325(a), which was added by BAPCPA and became effective on October 17, 2005, prohibits bifurcation and cramdown where (1) the creditor has a purchase money security interest; (2) the debt was incurred within 910 days preceding the filing of the bankruptcy case; (3) the collateral for the debt is a motor vehicle; and (4) the motor vehicle was acquired for the personal use of the debtor.The Court SUSTAINED Fargo's objection holding that in the context of the retail installment sale of a motor vehicle in Georgia, "price," for purposes of Georgia's purchase money security interest statute, can include monies paid for an extended service contract and gap insurance.

PROCEDURE

In re Ayers Corp. , (00-11882, August 2001) - Debtor obtained an order from the Bankruptcy Court for the Middle District of Georgia to conduct an examination of a nondebtor party pursuant to Bankruptcy Rule 2004. The nondebtor party moved to quash the subpoena asserting that the proper court to issue the subpoena was the court for the district in which the Rule 2004 examination was to take place. Denying the motion, the court held that the proper court to issue such subpoena was the court for the district in which the case is pending.

In re Cody's of Lowndes County, Inc., (92-70064, March 31, 2000) - The court grants Trustee relief from his stipulation, and from an order incorporating that stipulation, under Rule 60(b)(5) and under Eleventh Circuit case law. It would work an injustice if Trustee were held to his stipulation now that the order upon which the stipulation was based has been reversed.

In re Leonard, (99-42577, March 31, 2002) - The court denied Plaintiffs’ motion for reconsideration of its April 3, 2001 order which denied Plaintiffs’ motion to open default. Because of the relief sought, the court construed Plaintiffs’ motion to open default as a motion to extend the time to file an amended complaint. Given Plaintiffs’ six month delay in moving for an extension without an explanation for the delay, the court found that the delay was not the result of excusable neglect.

In re Sandlin, (01-40209, February 2002) - In Defendant’s motion to set aside the entry of default, the court found that "good cause" under Rule 55(c) existed. Although the pro se Defendant’s excuse for failing to file a timely answer was questionable, the court held that the strength of Defendant’s meritorious defense outweighed the weakness of his excuse. Therefore, the court granted Defendant’s motion to set aside the entry of default.

In re Swinney, (03-41707, October 14, 2003) - Ruling on the United States Trustee’s Motion to Dismiss Case or to Transfer Venue, the Court held under Connecticut National Bank v. Germain, 503 U.S. 249 (1992), the Court has no discretion to retain a case which was filed in the wrong venue. Under 28 U.S.C. § 1406, in the interests of justice, the Court ordered the case transferred to the United States Bankruptcy Court for the Middle District of Alabama.

In re Tires and Terms of Columbus, (99-40719, October 2000) - Analyzing Defendant’s motion for reconsideration of a default judgment as a motion to set aside an entry of default, the court failed to find "good cause" under Rule 55(c) of the Federal Rules of Bankruptcy Procedure. Therefore, the court held that the entry of default would not be set aside. Because the court also failed to find "excusable neglect" under Rule 60(b), the court denied Defendant’s motion to set aside the default judgment.

In re Tri-State Outdoor Media Group, (02-70596, September 4, 2002) - Analyzing Debtor’s Motion to Compel deposition testimony of the Official Committee’s testifying expert and to produce certain documents that had been withheld from discovery, the court reasoned under Rule 26(a)(2)(B) that the attorney-client and work product doctrine protections are trumped by the Rule 26 discovery rules pertaining to testifying experts. The court granted the motion in part, to the extent that the Official Committee had waived attorney-client privilege and work product doctrine protections in communications with and information given to/from the testifying expert.

PROFESSIONAL

In re Yearwood, (04-60862, December 2, 2004) - The Court held a hearing on Washington Mutual Home Loans’ motion for Relief from the Stay. The security deed at issue was notarized, but not witnessed by an unofficial witness as required under O.C.G.A. § 44-14-61. The court found the security deed was unperfected because it did not meet the statutory requirements. However, the Trustee did not bring an action to avoid the nonperfected lien, so the issue of whether an unrecorded security deed has priority over a subsequent judgment lien was not before the court.

SUMMARY JUDGMENT

In re Stewart, (03-30277, Adv. No. 05-03089, March 30, 2007) -  The Court finds that there is no issue of material fact remaining to be determined and that MSDW has carried its burden of proving that § 546(e) is applicable to bar the Trustee from avoiding the transfers in question. As such, MSDW’s Motion for Summary Judgment is granted as to all counts of the Trustee’s Amended and Restated Complaint.

UNITED STATES TRUSTEE'S MOTION TO DISMISS OR TRANSFER VENUE

In re Miles, (04-42238, February 22, 2005) - The United States Trustee brought this motion because the Debtors are residents of Alabama. The Debtors opposed the motion under three arguments: (1) this court should reconsider its decision in In re Swinney, 300 B.R. 388 (Bankr. M.D. Ga. 2003); aff’d, Swinney v. Turner, 309 B.R. 638 (M.D. Ga. 2004); dismissed as a nonfinal order, Swinney v. U.S. Trustee, No. 04-12639-FF (11th Cir. Aug. 11, 2004); (2) the United States Trustee was not a party in interest with standing to file a motion to dismiss or transfer due to improper venue; (3) the United States trustee program is unconstitutional because it does not apply in all fifty states and is therefore not a uniform law respecting bankruptcy. The constitutional issue was reserved. The court adhered to its decision in Swinney. The court then determined that the United States Trustee did have standing to bring this motion under 11 U.S.C. § 307 and is able to bring such a motion under Fed. R. Bankr. P. 1014(a)(2).

In re Miles, (04-42238, June 24, 2005) - The United States Trustee brought this motion because the Debtors are residents of Alabama. The Debtors opposed the motion and argued that the U.S. Trustee program is unconstitutional because it does not apply in all fifty states and is therefore not a uniform law respecting bankruptcy. The Federal Courts Improvement Act allowed Alabama and North Carolina to opt out of the U.S. Trustee Program. The court determined that the debtors did not meet the heavy burden to invalidate the Act. Further, the Debtors did not show they would be harmed by having their case administered under the Bankruptcy Administrator Program rather than the U.S. Trustee Program, and therefore lacked standing to challenge the Act.

In re Pickett, (04-42768 - Also: Bruce, Case No. 04-42805; McRae, Case No. 04-42887; Cook, Case No. 04-42810; LaGrand, Case No. 04-42787; Cooper, Case No. 04-42754; Burrell, Case No. 04-42793; Gilboy, Case No. 04-42888; Skinner, Case No. 04-43011; Kirkland, Case No. 05-40241; Voss, Case No. 05-40018; Cochran, Case No. 05-40483; Carr, Case No. 05-40559 - July 15, 2005) - The United States Trustee brought this motion because the Debtors are residents of Alabama. The Debtors opposed the motion and argued that the U.S. Trustee’s motions were untimely. The court did not adopt a bright-line rule that motions brought sixty days after filing are untimely. To determine whether a motion is timely, the court must look to the facts and circumstances of each case. The court found that the motions in the majority of the cases were untimely under the Advisory Committee Notes, Fed. R. Bankr. P. 1014(a) because too much had transpired when the motions were brought. The court found two of the motions were timely because "the first major motion[s] were not yet decided before the motion[s] were filed." In re 1606 New Hampshire Avenue Associates., 85 B.R. 298, 305 (Bankr. E.D. Pa. 1988).