The Chapter 13 debtors filed an adversary proceeding seeking damages against the IRS, alleging that the IRS had attempted to collect certain taxes in violation of their Chapter 13 discharge. The court dismissed the complaint and held that pursuant to 26 U.S.C. § 7433, a plaintiff is required to exhaust its administrative remedies before it can bring a complaint for damages under section 7433.
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Chief Judge James P. Smith
The Chapter 7 debtor contended that the creditor-bank’s claim had been settled, satisfied and discharged pursuant to a compromise and release agreement entered into by the bank and an insurance company. The court disagreed and held that the settlement agreement did not release the bank’s claim against the debtor, and that neither accord and satisfaction, judicial estoppel, promissory estoppel nor dismissal with prejudice barred the banks’ claim against the debtor.
The debtor sought to recover as a preferential transfer certain funds from a judgment creditor which also held a default judgment against the debtor’s employer-garnishee. The creditor argued that once it obtained the default judgment, that the garnishment action was closed and that the garnishee was paying its own default judgment from its own funds rather than paying on the debtor’s debt pursuant to the garnishment. The employer, however, had continued to withhold funds from the debtor’s paychecks and send those exact amounts to the creditor which then applied the funds on the debtor’s debt as shown by its Account Detail History for the debtor. The court held that the debtor could recover the funds from the creditor as preferential transfers.
The court held that, if the trustee or an unsecured creditor objects to confirmation, a Chapter 13 debtor must pay interest to unsecured creditors in order to comply with § 1325(b)(1)(A) when the debtor is not paying all of his projected disposable income to unsecured creditors pursuant to § 1325(b)(1)(B).
The debtor made a large estimated tax payment to the IRS and the Georgia Department of Revenue just prior to filing bankruptcy. The Chapter 7 trustee demanded, pursuant to 11 U.S.C. § 542(a), that the debtor turn over the federal and state tax credits arising from the estimated tax payments. The trustee alternatively asked for turn over of a portion of the tax returns based upon the percentage of tax payments made prepetition and postpetition. The court held that the estimated tax credits were not subject to turn over because the only interest which the debtor had in the payments was the right to request a refund after filing her tax returns. The court also held that tax refunds should, except in exceptional cases, be prorated based upon the number of calendar days before and after the petition date.
Judge John T. Laney, III
The Court granted the Trustee’s Motion for Summary Judgment to set aside certain fraudulent transfers under O.C.G.A. § 18-2-70, et seq., as made applicable to bankruptcy cases pursuant to 11 U.S.C. § 544. The Court held that the doctrine of judicial estoppel barred the Debtor and the Defendant from claiming the transfers were merely returning the property to the Defendant, and that the Defendant had always been the rightful owner of the property. The Court also found that the Trustee established all the elements of a fraudulent transfer by showing that the Debtor did not receive a reasonably equivalent value in exchange for the transfers and the Debtor was insolvent or became insolvent as a result of the transfers.
This matter came before the Court on Debtor, FMB Bancshares, Inc.’s, Motion to Dismiss the Involuntary Chapter 7 Petition filed by Trapeza CDO XII, LTD. FMB sought to have the Involuntary Petition dismissed pursuant to 11 U.S.C. § 303 and 11 U.S.C. § 305. FMB argued that Tapeza was not a proper creditor under § 303 because FMB’s liability to Trapeza was “contingent,” and that Trapeza did not have standing under the contractual documents to file an involuntary bankruptcy petition. Additionally, FMB argued that the court should exercise discretionary abstention pursuant to § 305 because bankruptcy was not in the best interest of the debtor and creditors. The Court did not agree. The Court held that: (1) Trapeza had standing under the contractual documents to file the involuntary petition; (2) Trapeza was a proper creditor under § 303 because it is the holder of a claim that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount; and (3) Abstention under § 305 was not proper. Accordingly, the Court denied the Motion to Dismiss.
The matter came before the Court on Motions for Summary Judgment (the “Motion”) filed by defendants McCalla Raymer, LLC (“McCalla”), SunTrust Bank and SunTrust Mortgage, Inc. (collectively “SunTrust”). The Complaint sought recovery for damages stemming from a botched 2010 foreclosure sale. After hearing oral argument on the motions the Court decided to grant the Defendants’ Motions as to: Count 3 – Judicial Estoppel; Count 4 – Equitable Subordination; Count 6 – Violation of Automatic Stay; Count 7(A)(3) – Fraud; Count 7(B) – Violation of Fair Debt Collections Practices Act; and Count 8 – Conversion. The Court denied Defendants’ Motions as to: Count 7(A)(1) – Wrongful foreclosure; Count 7(A)(2) – Tortious interference with property rights; and Count 9 – State law attorney fees under O.C.G.A. § 13-6-11.
Judge Austin E. Carter
Repossession of vehicle purchased by Chapter 13 debtor after confirmation of her plan violated automatic stay because property obtained by debtor after confirmation of plan, but before the case is closed, dismissed, or converted, is property of the estate pursuant to Waldron v. Brown (In re Waldron), 536 F.3d 1239 (11th Cir. 2008).
Wages garnished from Debtor held in custody of garnishment court at time of Debtor's filing case were property of estate because, where no judgment against garnishee has been entered, Georgia garnishment law cannot be read to extinguish garnishment defendant's ownership interests prior to distribution of such wages from garnishment court.