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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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.
Chief 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.