2008 Judge Lyons - Opinions

Judge Raymond T. Lyons -- Opinions signed in 2008

Theresa Ann Boyd 12-09-08 Case 08-14279

Secured Creditor moved to amend claim to include post-petition, preconfirmation attorney’s fees. Debtor and Trustee objected. The court ruled that because the Debtor’s chapter 13 plan proposed to cure her mortgage arrears under 11 U.S.C. §1322(e), the cure amounts would be based upon the underlying agreement and non-bankruptcy law. The agreement contained a fee-shifting provision and New Jersey law does not prohibit such a provision, thus the fee-shifting was allowed.



Lori Buccolo 11-25-08 Case 05-30789

The Debtor sought reconversion from chapter 7 to chapter 13, under 11 U.S.C. §706(a), in order to save her and the non-debtor spouse’s house. The court denied the reconversion for lack of good faith and lack of feasibility; the plan relied heavily on substantial monthly contributions from the non-debtor spouse who had proven unreliable in the past. Debtor would also have devoted her entire monthly income to Plan, leaving nothing for family expenses or contingencies.

397 B.R. 527 (Bankr. D.N.J. 2008)


Jack L. Chodnicki 1-24-08 Case 02-59210

Unscheduled fraud claim under 11 U.S.C. § 523(a)(3)(B), not eligible for discharge without notice of the case. Debt discharged under 11 U.S.C. § 523(c)(1) because creditor had actual knowledge of bankruptcy case prior to bar date, which was sufficient to trigger creditor’s duty to inform herself. Therefore, technical compliance with Fed. R. Bankr. P. 4007(c) notice requirement was not necessary.

2008 Bankr. LEXIS 250 (Bankr. D.N.J. Jan. 24, 2008)
2008 WL 216318 (Bankr. D.N.J. Jan. 24, 2008)


Diversified Aerospace Services, LLC, et. al. v. IFC Credit Corp., et. al. (In re NorVergence, Inc.) 4-25-08 Case 04-32079 04-2862

Adversary proceeding between two non-Debtor parties was dismissed. Bankruptcy court lacked jurisdiction under 28 U.S.C. § 1334(b), because the case was not arising under, arising in, or related to the Debtor’s Chapter 11 case. Debtor’s estate was unable to pay any unsecured claims, including those that might result from the litigation, thus it was irrelevant to the bankruptcy estate.

2008 Bankr. LEXIS 1389 (Bankr. D.N.J. Apr. 25, 2008)
2008 WL 1901114 (Bankr. D.N.J. Apr. 25, 2008)


Syed M. Hussain 12-05-08 Case 99-62058

Debtor sought a determination that the settlement proceeds from a malpractice action against prior bankruptcy counsel were not part of the bankruptcy estate. In re O’Dowd (233 F.3d 197) applied, “only where the debtor is injured while the estate is concomitantly not affected, is it appropriate to assign the malpractice to the debtor.” Inclusion was proper under 11 U.S.C. § 541(a); the malpractice action was sufficiently rooted in pre-bankruptcy events and ripened at the moment the bankruptcy case commenced. The Debtor was further estopped from asserting that the malpractice proceeds were outside the estate, as it was contrary to a position he took earlier in the bankruptcy case in order to save his house. The court ruled that the proceeds were part of the estate.

397 B.R. 730 (Bankr. D.N.J. 2008)


RANDS, LLC v. Steven and Barbara Young 2-14-08 Case 07-16194 07-2009

Defendants’ motion for summary judgment denied because allegations of the misappropriation of funds by a member of the LLC are not barred by the three-year statute of limitations governing “distributions.” N.J.S.A. 42:2B-42(c). Non-dischargeability of such misappropriations may be pursued as embezzlement under 11 U.S.C. 523(a)(4). Genuine dispute as to material facts existed, Summary Judgment denied.

384 B.R. 94 (Bankr. D.N.J. 2008)
2008 Bankr. LEXIS 771 (Bankr. D.N.J. Feb. 14, 2008)
2008 WL 76897 (Bankr. D.N.J. Feb. 14, 2008)


Charles M. Forman v. Russell B. Reaves 1-16-08 Case 04-22316 05-1016

Trustee’s motion for turnover of property pursuant to 11 U.S.C. § 541. Motion denied because Defendant met requirements to exercise setoff under 11 U.S.C. § 553. Parties were held to be in a creditor/debtor relationship and thus in the same capacity; in a fiduciary relationship set-offs are generally disallowed. If a fiduciary relationship had been found, relief was available through equitable doctrine of recoupment because the funds related to a single integrated transaction.

2008 WL 182219 (Bankr. D.N.J. Jan. 16, 2008)


Edie Britman Sauro 5-30-08 Case 05-40202

Motion for relief by non-debtor spouse granted because his one-half interest in proceeds from sale of the marital home by Trustee was not property of the estate. 11 U.S.C. § 363(j). These proceeds belong to the non-debtor spouse despite pending divorce and potential for equitable distribution in the future.

2008 WL 2237036 (Bankr. D.N.J. May 30, 2008)


Isaacson v. Stefanneli (In re La Russo) 6-20-08 Case 05-2731

Trustee entitled to recover balance due on note from Defendant. Defendant failed to prove defense of fraud asserted. While Defendant presented evidence that a material misrepresentation occurred, Defendant failed to establish damages because she did not present any evidence or method for the court to quantify damages due to her. Recission was not an appropriate remedy either where the chiropractic practice could not be returned to Debtor.

2008 WL 2557500 (Bankr. D.N.J. June 20, 2008).


Theodore Liscinski, Jr. v. Cambridge Management Group (In re Trimble) 1-17-08 Case 06-22616 07-2115

Trustee’s 11 U.S.C. § 547 preference action not subject to arbitration pursuant to clause in contract between Debtor and Defendant. Preference action belongs to the trustee not the debtor, so trustee was not a party to the contract and cannot be bound by it.

2008 WL 782581 (Bankr. D.N.J. March 18, 2008)
2008 Bankr. LEXIS 835 (Bankr. D.N.J. March 18, 2008)


Theodore Liscinski, Jr. v. Cambridge Management Group (In re Trimble) 3-18-08 Case 06-22616 07-2115

Defendant’s motion to stay proceedings pending appeal is granted. 28 U.S.C. § 158(a) provides the authority for district courts to hear bankruptcy appeals. Defendant failed to obtain necessary leave of district court to file the interlocutory appeal; therefore, this court retained jurisdiction over the matter. However, policy warranted staying the proceedings until the district court determined whether to grant leave to appeal.

2008 Bankr. LEXIS 835 (Bankr. D.N.J. Mar. 18, 2008)
2008 WL 782581 (Bankr. D.N.J. Mar. 18, 2008)


New Falls v. Faiella 4-18-08 Case 05-50986 07-1470

Motion for reimbursement of costs to a non-party witness denied pursuant to Fed. R. Civ. P. 45(c)(1). Non-party witness’s objection to award of costs also overruled. Document log was created at court’s discretion to address dilatory and obstructionary tactics. Appropriate sanction of a nonparty under Fed. R. Civ. P. 45(e) for contempt - failure to comply with subpoena.

2008 Bankr. LEXIS 1452 (Bankr. D.N.J. Apr. 18, 2008)
2008 WL 1790410 (Bankr. D.N.J. Apr. 18, 2008)


Lori Buccolo (not for publication) 9-30-08 Case 05-30789

Debtor’s attorney filed a fee application and the Debtor objected pro se. Trustee objected under 11 U.S.C. §507 to fees incurred after Chapter 7 conversion being characterized as administrative. 11 U.S.C. §329 gives the court to monitor all fees, regardless of administrative status. The court found that the services were helpful to the Debtor, and thus granted the fee application, but docked some of the fee for poor communication and lack of itemization of the billing.

2008 WL 4527408 (Bankr. D.N.J. October 1, 2008)