The Court ruled that pursuant to the dictates of § 523(a)(4) the state court judgment for damage to Clear Sky property is nondischargeable; however, the state court award for breach of fiduciary duty regarding past and future lost revenue and the award to Deere for breach of fiduciary duty is dischargeable because there is no definable res, a requirement of a statutory trust for purposes of § 523(a)(4). Pursuant to § 523(a)(6), the punitive damage award is dischargeable because the Plaintiffs did not prove the state court award was a result of both willful and malicious injury. The attorneys fees and costs are dischargeable because they were based on breach of contract.
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Opinions
Notice: Not all of the Judges Opinions will be made available on this site. Individual Judges have the option of specifying that all, some or none of their opinions be posted.
James G. Mixon
The two liens in the Chapter 13 Debtor's Toyota automobile were unperfected upon the filing of the bankruptcy petition, with the first lien to attach having priority over the second lien to attach. The Debtor was not allowed to avoid either lien using the trustee avoidance powers as set out in Section 544 of the Bankruptcy Code. Neither creditor was entitled to equitable relief.
Judge Richard D. Taylor
Debtors may not involuntarily include a post-petition section 1305 creditor by filing a proof of claim on its behalf. Further, the res judicata effect espoused in Espinosa must be viewed in the context of the plan, confirmation order, and relevant code provisions.
A confirmation order is not necessarily res judicata as to post-petition and post-confirmation debt. Also, inconsistent arguments may be sufficient bad faith to deny confirmation of a plan.
Judge Ben T. Barry
The court denied the creditor/defendant’s motion to dismiss for failure to state a claim finding that the debtor had stated a plausible cause of action. The court also declined the parties request to use additional agreed stipulations to decide the motion to dismiss.
The court found that a second claim filed by a creditor after liquidation of the collateral securing the debt was an amended claim that related back to the date of the original filing.
The court combined five objections to claims in three different cases in this opinion and explains burden of proof for claims litigation, the application of judicial estoppel, and the three step process required to determine the rights of creditors holding secured claims.
The debtor entered into an agreement to lease a portable storage building from the creditor approximately four months prior to filing his chapter 13 voluntary petition. The debtor's plan proposed to classify the creditor's claim as a secured claim rather than as a lease, to which the creditor objected, arguing that the agreement was a true lease that the debtor had to assume or reject in his plan. Applying Oklahoma law, the court held that the agreement was a true lease and sustained the creditor's objection to confirmation of the debtor's plan.
Audrey R. Evans
Court denied Debtor’s discharge pursuant to 11 U.S.C. § 727(a)(5) for failing to explain the loss of an asset. The uncontroverted evidence was that the Debtor sold and received payment for a house prior to filing. At the hearing, the Debtor failed to provide a reliable explanation to convince the Court that he had not hidden or improperly shielded the proceeds from that sale. Bailey v. Whitehead (In re Whitehead), 483 B.R. 902 (Bankr. E.D. Ark. 2012).
Order Approving Application to Employ Attorney. Court approved employment of Chapter 11 Debtor-in-possession's proposed counsel James E. Smith and Smith Akins, P.A. pursuant to 11 U.S.C. § 327(a) finding that Smith was disinterested and did not hold or represent an adverse interest to the Debtor-in-possession's estate. Court found that Smith did not represent an adverse interest based on his prepetition representation of the Debtor while certain transfers took place because Smith had valid reasons to counsel Debtor to make the transfers and Smith did not represent those insiders receiving the transfers, even if their interests were adverse to the Debtor. Court also found that Smith's employment was in the best interests of the estate due to his knowledge of the Debtor, its operations, and the extensive litigation involving the Debtor both before and since filing bankruptcy. In re Living Hope Se., LLC, 495 B.R. 866 (Bankr. E.D. Ark. 2012).