2011 Judge Kaplan - Opinions

Judge Michael B. Kaplan -- Opinions signed in 2011

In re: Jackus, Case 09-28290 1/14/2011

PROCEDURAL POSTURE: The Chapter 7 Trustee filed a motion for an order approving the sale of an annuity pursuant to the New Jersey Structured Settlement Protection Act, N.J.S.A. 2A:16-63, et seq. Debtors objected to the sale of the annuity.

OVERVIEW: The Trustee sought to sell the Debtors' interest in the future payments of an annuity for the benefit of the Debtors' creditors. The Debtor/wife was the beneficiary of the annuity arising out of a personal injury action. The court found that the Bankruptcy Court has jurisdiction to determine whether the annuity, as property of the bankruptcy estate may be sold by the Trustee. 28 U.S.C. § 1334(e); 11 U.S.C. § 541(a). The court further found that the sale satisfied the N.J.S.A. 2A:16-66 requirements in that: (1) the transfer was in the "best interests" of both the Trustee and the debtor, the original payee; (2) the buyer had advised the Trustee to seek independent advice regarding the transfer; and, (3) the transfer did not contravene any applicable statute or the order of any court or other government authority.

OUTCOME: The court granted the Trustee's motion for an order approving the sale of the annuity.

In re: Route 70 & Massachusetts, L.L.C., Case 09-14771, 5/17/2011
PROCEDURAL POSTURE: The Chapter 11 Debtor-in-Possession, a real estate holding company, filed an adversary complaint against the Defendant Bank to avoid, as a fraudulent conveyance, a mortgage granted to the Bank to secure a loan. The Plaintiff filed a motion for summary judgment and the Defendant cross moved to dismiss the complaint.

OVERVIEW: The issue before the court was whether the mortgaging of debtor's property constituted a fraudulent conveyance where the debtor paid one of its founding members from the proceeds of the mortgage loan. The successful avoidance of the mortgage under state law depended on the applicability of the equitable doctrine of "collapsing", whereby a court undertaking a fraudulent conveyance analysis may collapse multiple transactions - the mortgage loan and a subsequent unsecured loan of the proceeds - into an integrated whole. The court held that there was no equitable basis for collapsing the mortgage loan and subsequent loan of the proceeds because Plaintiff failed to establish the elements of a fraudulent conveyance claim.

OUTCOME: The court denied the motion for summary judgment and granted the cross-motion.

In re: Nancy Lynn McGowan, Case 10-12944, 6/15/2011

PROCEDURAL POSTURE: Debtor's former spouse filed a motion for relief from the automatic stay to return to state court and request modification of a Qualified Domestic Relations Order ("QDRO") on the ground that "changed circumstances" existed as a result of the anticipated discharge of Debtor's equitable distribution obligation in the pending bankruptcy. Debtor filed opposition to the relief requested. A hearing on the motion was held on May 10, 2011.

OVERVIEW: Movant and Debtor were divorced in 2002. Pursuant to a final judgment of divorce, Debtor executed a mortgage and note totaling $42,573.50, plus 5% interest in favor of Movant. In exchange, Debtor received a 50% interest in Movant's pension. Thereafter, Debtor filed for bankruptcy. Debtor's Chapter 13 plan provided for discharge of Movant's claim as it interfered with Debtor's claimed exemption (provided Debtor completed plan payments). Movant sought to modify the QDRO as a result of the pending discharge. The Court held that state court modification of a prepetition equitable distribution obligation violates both the automatic stay and the discharge injunction. 11 U.S.C. § 362; 11 U.S.C. § 524(a)(2). Moreover, as a matter of state law, the Court found that modification of divorce judgments as a result of "changed circumstances" is only generally permitted with respect to domestic support obligations - not equitable distribution obligations. As such, even if stay relief were granted, Movant would have little chance of success on the merits.

OUTCOME: The Court denied Movant's motion for relief from the automatic stay.

In re: Straffi v. Gilco, Case 09-28689, 10/24/2011


Straffi v. Gilco World Wide Markets (In re Bamboo Abbott, Inc. d/b/a Prestige Window Fashions), Adv. Proc. No. 11-02042 (MBK)

Case Summary:   The Chapter 7 Trustee ("Trustee") filed a preference action against Defendant Gilco World Wide Markets, Inc. (“Gilco”).  Before the Court was Gilco's motion to dismiss the Trustee's adversary complaint for lack of proper venue.  The principal issues were: (i) whether 28 U.S.C. § 1409(b) applies to preference actions and, consequently, the allegations contained in the Trustee’s adversary complaint, and (ii) whether, if § 1409(b) were deemed applicable, the Trustee had exceeded the applicable monetary limitation.  The Court denied Gilco's motion, holding that: (i) § 1409(b) does not in fact apply to preference actions, and (ii) even if § 1409(b) were to apply to the Trustee’s adversary complaint, the Trustee had satisfied the monetary threshold contained in § 1409(b).









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