The Chapter 7 trustee moved to reopen a closed case to administer settlement proceeds as property of the estate. The settlement was on account of a injury caused by prepetition by prescription medication, but the debtor did not know the cause of the injury until after the bankruptcy case was closed. Georgia's discovery rule states that a cause of action does not accrue until a plaintiff knows what caused the injury. Inconsistent Eleventh Circuit authority put the Court in a difficult position, but the Court denied the trustee's Motion to Reopen. The debtor's product liability lawsuit did not accrue under Georgia law until he knew the cause of his injury. Because the lawsuit did not accrue prepetition, the settlement proceeds were not property of the estate.
Opinions
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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
The plaintiffs in this adversary proceeding moved to amend its complaint after the time to amend as a matter of right had passed. The plaintiffs wanted to add facts they were aware of but forgot to tell their attorney. The defendants objected to the amendment as an attempt to delay, as creating further expenses, and as untimely. The Court found that the defendants had not put forth any facts or legal arguments demonstrating any prejudicial delay or undue expenses. The Court further concluded that the amendments can be read such that they do not add a new claim and thus need not relate back to the original complaint, and even if the amendments added a new claim, the new claim would arise out of the same conduct, transaction, or occurrence set out in the original complaint, and thus the amendments would relate back.
The Chapter 7 trustee sought information and documents from the former law firm of several entities, including the debtor, owned and operated by nondebtor individuals, including information regarding related entities the law firm never represented. The law firm alleged attorney-client privilege, alleged work-product immunity, alleged that nondebtor entities were not proper targets of Rule 2004 examinations and for subpoenas demanding the production of documents. The Court denied the debtor's former law firm's motion to quash the Chapter 7 trustee's Supboena for Production of Documentary Evidence Under Bankruptcy Rules 2004(c) and 9016, and overruled the law firm's objection to the trustee's Motion for Bankruptcy Rule 2004 Examination and for Production of Documents Pursuant to Bankruptcy Rule 2004 and Bankruptcy Rule 9016. The owner-operators of the entities executed a broad waiver disclaiming any attorney-client privilege and granting the trustee the right to assert or deny and privilege. In holding that the work-product immunity had been waived, the Court adopted the reasoning in In re ANR Advance Transportation Company, Inc., 320 B.R. 607 (E.D. Wis. 2003). The Court further ordered that the examination and production of documents take place at the law firm's place of business and that the trustee pay for the costs of copying documents.
The debtor objected to the claim of creditor SN Servicing Corporation, the current mortgage holder on the debtor's residence, claiming the mortgage was made current in the co-signor's earlier bankruptcy case and claiming that all subsequent payments were made on time. The creditor argued that the mortgage at issue was a simple interest mortgage, a mortgage in which interest accrues daily and failure to pay on time results in an increase in interest rather than late charges. Thus, the co-signor's cure did not reinstate the original amortization schedule because the late payments leading up to that prior bankruptcy resulted in a higher principle. The Court agreed with the creditor and overruled the debtor's objection.
In an adversary proceeding seeking to determine nondischargeability of a debt, the Court granted in part and denied in part the wife-defendant's motion to dismiss complaint and granted the plaintiffs' motion to amend complaint. The Court granted the motion to dismiss the fraud allegation because the allegation did not meet the particularity requirement of Federal Rule of Civil Procedure 9 (made applicable to adversary proceedings through Bankruptcy Rule 7009); the Court denied the motion to dismiss the embezzlement, larceny, and willful and malicious injury allegations because taking the allegations at face value and construing all reasonable inferences in favor of the plaintiffs, the complaint properly alleged all three. The Court granted the plaintiffs' motion to amend because the plaintiffs had not done anything justifying denial, and refusing to grant leave to amend without reason is an abuse of discretion.
In a lengthy opinion, the Court examined law of propely filed proofs of claim after several debtors objected to the claims filed by eCAST Settlement Corporation in each case. The Court limited the reach of its prior opinion, In re Stephens, 443 B.R. 225 (Bankr. M.D. Ga. 2010). The Court discussed compliance with Bankrupty Rule 3001 and Official Form 10 (on how a creditor can achieve prima facie validity for its proof of claim), the effects of noncompliance with Bankruptcy Rule 3001, and the proper procedures and allocation of burdens in deciding objections to claim. The Court ultimately sustained all three objections to claim.
A postpetition fire destroyed the debtors' house, resulting in insurance proceeds totaling $107,000.00, which the creditor bank held. The debtors filed a motion to use this cash collateral. Both parties agreed that the creditor bank was entitled to keep an amount equaling the payoff of the house note, but the parties did not agree on how the house note's dragnet clause (and subsequent credit transactions between the parties) affected the reach of the lien to further proceeds. The Court granted the debtors motion in part and denied it in part, allowing the debtors to keep the amount over the balance of the house plus the amount owed on a vehicle in which the creditor held a security interest. The car debt was treated in a confirmed Chapter 13 plan, and the creditor was bound by the terms of that plan.
A Chapter 7 Debtor had a 1/5 interest in a vested remainder in real estate, and the Trustee moved the Court to close the case while still retaining jurisdiction over the remainder interest so that the Trustee could administer the asset when the interest became a fee simple. Assuming without deciding that the Court indeed has the power to close a case and retain jurisdiction over a remainder interest, the Court held that the Trustee did not meet its burden in showing that the benefits in retaining jurisdiction over this particular asset overcame the burdens.
The Court granted the Debtor's three objections to discharge against the same creditor when the creditor could not establish a chain of assignment for its claims. The Court discussed the basic federal rule that in bankruptcy, state law governs the substance of claims; the Court also examined Georgia state law cases illustrating the proper way to assign a claim.
The Court granted the Debtors' motion to voluntarily dismiss their Chapter 7 case after the Court determined the Debtors had not satisfied a two-pronged test: (1) Whether the Debtor can show cause to dismiss and (2) If the Debtor does show cause, whether the dismissal would prejudice creditors. The second prong was examined under a factors test.