In re McCutcheon (Ch. 13 Case No. 16-70733, Adv. Case No. 17-07025)

This opinion arises from an adversary proceeding seeking to revoke the confirmation order in a Chapter 13 case pursuant to 11 U.S.C. § 1330. The defendant moved for summary judgment on the grounds that the plaintiff could not overcome his defenses as a matter of law. First, the defendant asserted res judicata and collateral estoppel defenses, as the plaintiff did not raise his allegations of fraud prior to confirmation.  The court held that § 1330 did not require that a party seeking revocation discover the fraud after the court’s entry of the confirmation order.

Secondly, the defendant argued that, because the claimant did not hold an allowed claim, he was not a party in interest and accordingly, lacked standing to assert the action. The court, however, determined that a party does not need to hold an allowed claim to seek revocation of a confirmation order and dismissal of Chapter 13 case.

The defendant also claimed that the plaintiff should be judicially estopped from making certain allegations because he had made prior inconsistent statements in a prior proceeding.  The court noted that the plaintiff had offered sufficient evidence for a reasonable fact finder to determine that the statements were not made to make a mockery of the judicial system.

Lastly, the defendant claimed that the complaint failed to state a claim for relief because it was based on the plaintiff’s belief that the defendant made fraudulent statements. Although the court determined that the plaintiff must meet the heightened pleading standard under Rule 9, the court found sufficient allegations in the complaint to support that burden.

Therefore, the court denied the defendant’s motion for summary judgment.

Friday, March 15, 2019