The debtor was the guardian of his minor son who was injured in an automobile accident. The debtor, as guardian, received settlement proceeds of $15,500 and obtained a surety bond from the plaintiff. The probate court determined that the debtor had made numerous unauthorized expenditures and encroached upon the corpus of the settlement proceeds without leave of the court. The plaintiff, as surety, was called upon to pay the missing corpus to the successor guardian. The bankruptcy court determined that collateral estoppel applied to the probate court's determination and that the debtor's obligation to the plaintiff, as surety, was nondischargeable as a defalcation while acting in a fiduciary capacity under § 523(a)(4).
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Robert F. Hershner, Jr. (Retired)
The debtor filed an amended Schedule C to claim as exempt a personal injury action. The trustee objected because the debtors had failed to disclose the personal injury action on their bankruptcy schedules and at the § 341 meeting. The court determined that the debtors had intentionally and fraudulently attempted to conceal the personal injury action and were barred from claiming an exemption in it.
Judge James D. Walker Jr. (Retired)
For purposes of the hanging paragraph in § 1325(a), a car is acquired for the ."ersonal use of the debtor,."when it is acquired for non-business purposes and for the primary use of the debtor as determined by the totality of the circumstances.
Court imposed sanctions on a bankruptcy petition preparer for violations of § 110, including failure to provide complete social security number and unauthorized practice of law.
When a judgment lien creditor fails to prove the invalidity of the debtor's exemptions, his lien will be avoided to the extent it impairs any exemptions.
Creditor failed to state a claim for willful and malicious injury under § 523(a)(6), when the facts asserted in various legal proceedings, if taken as true, amount to nothing more than negligence.
Debtor who sold collateral and failed to remit proceeds to secured creditor did not cause a willful and malicious injury pursuant to 11 U.S.C. § 523(a)(6) because he used the proceeds in a manner intended to benefit the creditor.
Chief Judge James P. Smith
The plaintiff contended that the debtor's obligation arising from a state court judgement for breach of fiduciary duty was nondischargeable under 11 U.S.C. § 523(c)(4) and (6). The bankruptcy court held that collateral estoppel applied to the state court judgment and found that the debtor's intentional breach of fiduciary duty was nondischargeable under § 523(a)(6). The bankruptcy court also found that the state court judgment for breach of fiduciary duty did not satisfy the requirement for nondischargeability for fraud or defalcation while acting in a fiduciary capacity under § 534(a)(4).
The Chapter 13 trustee objected to confirmation of the debtors' proposed plan contending that the plan was not proposed in good faith because the debtors wanted to keep a home with a large mortgage payment in which they had no equity while paying a low dividend to unsecured creditors. The court applied the Kitchen factors and considered the totality of the circumstances and found that the debtors' plan was proposed in good faith.
Judge John T. Laney, III
The court held that a creditor can seek relief from the discharge injunction to pursue a judgment of liability against the debtor for the sake of recovering against the debtor.s insurer. The court also relied upon 11 U.S.C. §524(e) for the proposition that a creditor may seek relief from the permanent injunction in order to establish liability of the debtor to recover from a third party.