Opinions

The Middle District of Georgia offers opinions in PDF format, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.

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

In re Murray (05-48017) 2006-08-24

On June 16, 2006, Debtors’ filed a Motion to Reconsider the Memorandum Opinion issued by the Court on June 6, 2006 (see above). Debtors made four arguments in favor of their motion: (1) The language of § 1325(a)(*) does not prohibit “the stripping down of the lien or cram-down or bifurcation of the creditor’s claim”; (2) The Court’s reliance on In re Johnson, 337 B.R. 269 (Bankr. M.D.N.C. 2006), for the proposition that despite the purchase of items other than the vehicle, Nuvell still held a purchase money security interest in the vehicle, was improper being that the court in Johnson did not make that finding and that such an argument was not made; (3) The court did not consider the argument raised by Debtors at the April 4, 2006 hearing that the secured claim of Nuvell could still be bifurcated under the authority of § 1322, which states that a Chapter 13 plan may modify the rights of a secured creditor; and (4) Claims qualifying under § 1325(a)(*) are not entitled to the present value protection provided for in § 1325(a)(5)(B)(ii), such protection provided in the form of a “prime plus risk factor” interest rate as set forth by the United States Supreme Court in the case of Till v. SCS Credit Corp., 541 U.S. 465 (2004).

The Court held a hearing on Debtors’ motion to reconsider on July 18, 2006, and orally granted the motion, agreeing to reconsider a portion of the June 6 memorandum opinion. The Court revisited its discussion of whether Nuvell held a purchase money security interest. Considering many cases on O.C.G.A. § 11-9-103 (2002) and the statute itself, which defines “purchase money security interest” in Georgia, the Court confirmed that Nuvell does, in fact, hold a purchase money security interest in Debtors’ vehicle. The Court found no authority for the proposition that the purchase of an extended service contract, payment of a documentary fee, and payment of a governmental title fee, at the same time the collateral was purchased, disqualifies the creditor from holding a purchase money security interest in the collateral itself. The court held that the “transformation” rule, which is applicable in the Eleventh Circuit to situations involving refinancing or consolidation of past and present loans, was not applicable in the situation before the Court. The Court held that the extended service contract and the other fees were so inextricably related to the collateral itself, that the purchase of these items contemporaneous with the purchase of the collateral, could only mean that the cost of these items should be considered part of the purchase “price” of the collateral for purposes of applying O.C.G.A. § 11-9-103. The order issued with the June 6 Memorandum Opinion was, therefore, left unchanged.

In re Murray (05-48017) 2006-07-28

Debtors filed a Motion to Abrogate the Administrative Order of January 3, 2005, which set forth the procedure for payment of debtors’ attorneys fees in Chapter 13 cases. After consideration of Debtors’ evidence of the increased burden on debtors’ counsel under the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), the Court held that the Administrative Order should not be abrogated, but should be amended to allow the payment of $2,500 to debtors’ counsel in Chapter 13 cases without separate application or hearing (i.e., “no-look” fee). The Court is convinced that its modification of the Administrative Order will strike a much-needed balance between debtors’ interests in proposing and completing a successful Chapter 13 plan, secured creditors’ interests in recoupment despite oftentimes rapidly depreciating collateral, and bankruptcy attorneys’ interests in being fairly compensated for the vital service they provide to debtors. Along with an increase in the no-look fee, the Court amended the Administrative Order to increase the amount of the initial disbursement, the monthly payments, and the fee due in dismissed cases. Individuals should reference the Amended Administrative Order for specifics.

In re Murray (05-48017) 2006-06-06

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.

In re Smith (05-60736) 2006-05-16

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).

In re Ayers Aviation Holdings, Inc. (00-11881, Adv. No. 01-01003) 2006-03-13

The case was remanded to this Court from the District Court for the Middle District of Georgia, The Honorable W. Louis Sands, Chief Judge, for the sole purpose of determining the following two issues:  (1) Whether Ayres Aviation Holdings, Inc. (“Debtor”) properly raised the legal issue of whether it was a “buyer in ordinary course of business”; and (2) Whether Ayres Aviation Holdings, Inc. was in fact a “buyer in ordinary course of business” of General Electric engine 998.

The Court first held that Debtor properly raised the issue of whether Ayres Aviation Holdings, Inc. was a “buyer in ordinary course of business. The Court relied on the admission of General Electric that Debtor had properly raised the issue and upon the record of the hearing to reach its conclusion.

The Court next held that Debtor was not a “buyer in ordinary course of business,” as defined in O.C.G.A. § 11-1-201(9), of General Electric engine 998 so as to extinguish the ownership rights of General Electric in the engine. The Court looked to the last sentence of the O.C.G.A. § 11/1/201(9) definition and to the interpretation of that Section by the Eleventh Circuit Court of Appeals in Sterling National Bank & Trust Co. of New York v. Southwire Co., 713 F.2d 684 (11th Cir. 1983). These authorities were considered with the testimony of former principal of Debtor, Fred P. Ayres, that Debtor took the L610 aircraft and its two General Electric engines (including engine 998) in exchange for the forgiveness of a money debt arising from the transfer of avionics from Debtor to LET, a.s.

In re Huff (04-40055) 2005-10-05

Chapter 13 debtor filed Motion to Substitute Collateral following the post-confirmation, total destruction of his 1998 Grand Prix automobile. The destroyed automobile was jointly titled in the names of Debtor and his wife. Debtor’s wife, not the Debtor, was named as “insured” on the insurance policy covering the automobile. AmeriCredit Financial, holder of the priority security interest in the destroyed automobile, was named as “loss payee” in the insurance policy covering the automobile. Debtor, via his motion, requested that he be permitted to use the proceeds from the insurance policy to purchase a replacement vehicle and to have that vehicle substituted for the destroyed collateral of AmeriCredit. AmeriCredit objected, arguing that as “loss payee,” it was entitled to the insurance proceeds. The Court denied Debtor’s motion and held that AmeriCredit was entitled to the insurance proceeds to the extent of the balance owed by Debtor on AmeriCredit’s confirmed Chapter 13 claim. The insurance proceeds, in fact, did not exceed the balance owed on AmeriCredit’s confirmed Chapter 13 claim. The Court’s holding follows the Eleventh Circuit Court of Appeals decision in Ford Motor Credit Co. v. Stevens (In re Stevens), 130 F.3d 1027 (11th Cir. 1997). This Court cautioned in its opinion that its holding is limited to the facts of this case and that the outcome could differ in cases where the collateral at issue has not revested in the debtor (either because of pre-confirmation destruction or because of a provision in the Chapter 13 Plan) by the time the collateral is destroyed.

In re Diaz (04-40564) 2005-08-30

Plaintiffs filed an Adversary Proceeding against Ms. Mock. Ms. Mock had hired National Child Support to collect back child support owed on a judgment. National Child Support hired an attorney to represent Ms. Mock, but there was a miscommunication as to whom the attorney represented. As a result, the attorney filed a response in the name of National Child support only. A default judgment was entered against Ms. Mock. Ms. Mock filed a motion to set aside the default judgment. The "excusable neglect" standard of Fed. R. Civ. P. 60(b) governs whether a default judgment should be set aside. In this case, the misunderstanding of the attorney for Ms. Mock falls within the parameters of "excusable neglect." Therefore, the default judgment was set aside.

In re Justice (Case No. 04-12768, A.P. No. 05-01010) 2005-08-04

The Plaintiff’s filed a complaint against the Debtor/Defendant alleging the conversion of property used as collateral for a security agreement. The Debtor/Defendant failed to answer the complaint due to a clerical mistake. A clerk’s entry of default was entered in accordance with Fed. R. Bankr. P. 7055(a). Less than a week later, the Debtor/Defendant filed a motion to open the default, as well as a late filed answer to the complaint. The "good cause" standard of Fed. R. Civ. P. 55(c) governs whether a clerk’s entry of default should be set aside. The four factor test is (1) whether the defaulting party took prompt action to vacate the default; (2) whether the defaulting party provides a plausible excuse for the default; (3) whether the defaulting party presents a meritorious defense; and (4) whether the party not in default will be prejudiced if the default is set aside. Turner Broadcasting Systems, Inc. v. Sanyo Electric, Inc., 33 B.R. 996, 1001 (N.D. Ga. 1983), aff’d, 742 F.2d 1465 (11th Cir. 1984). In this case, the Debtor/Defendant failed to show a meritorious defense. Therefore, the entry of default was granted as to liability.

In re Pickett (04-42768) 2005-07-15

(Also: Bruce, Case No. 04-42805; McRae, Case No. 04-42887; Cook, Case No. 04-42810; LaGrand, Case No. 04-42787; Cooper, Case No. 04-42754; Burrell, Case No. 04-42793; Gilboy, Case No. 04-42888; Skinner, Case No. 04-43011; Kirkland, Case No. 05-40241; Voss, Case No. 05-40018; Cochran, Case No. 05-40483; Carr, Case No. 05-40559 - July 15, 2005) - The United States Trustee brought this motion because the Debtors are residents of Alabama. The Debtors opposed the motion and argued that the U.S. Trustee’s motions were untimely. The court did not adopt a bright-line rule that motions brought sixty days after filing are untimely. To determine whether a motion is timely, the court must look to the facts and circumstances of each case. The court found that the motions in the majority of the cases were untimely under the Advisory Committee Notes, Fed. R. Bankr. P. 1014(a) because too much had transpired when the motions were brought. The court found two of the motions were timely because "the first major motion[s] were not yet decided before the motion[s] were filed." In re 1606 New Hampshire Avenue Associates., 85 B.R. 298, 305 (Bankr. E.D. Pa. 1988).

In re Miles (04-42238) 2005-06-24

The United States Trustee brought this motion because the Debtors are residents of Alabama. The Debtors opposed the motion and argued that the U.S. Trustee program is unconstitutional because it does not apply in all fifty states and is therefore not a uniform law respecting bankruptcy. The Federal Courts Improvement Act allowed Alabama and North Carolina to opt out of the U.S. Trustee Program. The court determined that the debtors did not meet the heavy burden to invalidate the Act. Further, the Debtors did not show they would be harmed by having their case administered under the Bankruptcy Administrator Program rather than the U.S. Trustee Program, and therefore lacked standing to challenge the Act.

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