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Please note: These opinions are not a complete inventory of all judges' decisions and are not documents of record. Official court records are available at the clerk's office.

Judge John T. Laney, III

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).

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.

Trustee appointed when sole shareholder in Chapter 11 debtor continuously frustrated efforts to proceed with the case by interfering with the CRO’s efforts to manage the finances and operations of the company.

Allegations that debtor incurred debt through fraud offered no basis for dischargeability action against Chapter 13 debtor with pre-BAPCPA case.

Payments made by the debtor as guarantor for an employee’s debt may be recovered as a preference if the payments were made after a demand was made on the guarantee.

No summary judgment on discharge objection for the debtors’ failure to preserve records when the movant fails to set forth facts showing that the available records are insufficient to determine the debtors’ financial condition.

The debtor purchased a vehicle 197 days before filing for Chapter 13 relief. The court held that under 11 U.S.C.A. § 1325(a)(5) as amended by BAPCPA, the debtor could not bifurcate the creditor's claim. The court held that the creditor was entitled to receive periodic payments which equal the present value of the secured claim. The court also held that the applicable interest rate for present value purposes is the interest rate mandated by the United States Supreme Court in Till v. SCS Credit Corp., 541 U.S. 465 (2004).

The plaintiffs moved to amend their pleadings to include two issues raised at trial. The defendant contended that an amendment of the pleadings would be futile because the final pretrial order controlled the issues for trial. The court held that the pleadings may be amended under Rule 15(b) even though a final pretrial order had been entered under Rule 16(e). The court held that the defendant would suffer no prejudice by allowing the amendment.

The court held that e-mails sent by the Chapter 11 debtor's president, CEO and board members to an attorney on the debtor's board of directors were not protected by the attorney-client privilege or joint-defense privilege. The court noted that the e-mails were widely distributed to other parties. The court also noted that the substance of the e-mails concerned matters within the debtor's business affairs.

The debtor leased a used Cadillac. The debtor proposed to treat the lease as a disguised security agreement in his Chapter 13 plan. The court held that the lease was a true lease and not a disguised security agreement. The court looked to the terms of the lease and whether the debtor could purchase the vehicle at the end of the lease for a nominal amount.