2012 Judge Lyons - Opinions
Judge Raymond T. Lyons -- Opinions signed in 2012
The Debtors owned 2000 valuable points in Disney Vacation Club. About two months before filing bankruptcy, they transferred 1,250 points to their son and daughter-in-law. The Debtors did not disclose the prepetition transfer of points anywhere on their bankruptcy petition, schedules or statement of financial affairs.
The Chapter 7 Trustee did not discover the prepetition transfer of points until after the Debtors had been granted a discharge. The Trustee has sued under 11 U.S.C. § 727(d)(1) to have the discharge revoked as having been obtained by fraud.
Because Mr. Lawrence consciously decided not to disclose the transfer of points, his discharge will be revoked. Ms. Lawrence was not aware of her husband’s concealment. Judgment will be entered finding no cause to revoke her discharge.
The Movant in this case moved to convert the Debtor’s Chapter 13 case to Chapter 7 on the grounds that the Debtor was not making plan payments, had not paid her an agreed upon $8,000, and had not marketed or sold a piece of real estate within the time frame prescribed in the confirmed plan.
Because the court has recently extended the date for sale of the real property, the Debtor has cured his arrears to the Trustee, a motion for stay relief by the mortgagee remains unresolved, and because the Movant has a state court remedy as to the other issues, the motion to convert is denied.
Further, the Debtor’s cross-motion for sanctions is also denied because the Debtor failed to observe the safe harbor rule provided for in Bankruptcy Rule 9011(c)(1)(A) and because the Movant had standing and a valid argument that the Debtor had defaulted on his payments to the secured creditor under his confirmed plan.
The Debtors propose to strip off the condominium association’s lien claim which is purportedly secured solely by equity in the Debtors’ principal residence. Additionally the Debtors propose to cramdown the claim to zero because there is no equity in the property above the first mortgage.
Because the New Jersey Super Lien Law grants the association a lien with priority over the mortgage for up to six months of delinquent assessments and because the association filed a Notice of Assessment Lien pursuant to the same statute, the association’s claim is secured. Therefore, the secured claim cannot be modified by a Chapter 13 plan.
Defendant moved for summary judgment against Plaintiffs who sued him for violations of the New Jersey Consumer Fraud Act and common law fraud. Defendant was employed as a mortgage solicitor for a mortgage broker. Plaintiffs alleged that Defendant: (1) improperly advised them to refinance both mortgages on their home resulting in a larger brokerage fee; (2) engaged in predatory lending by arranging a loan they clearly could not afford since the monthly payments exceeded their gross income; and (3) failed to disclose that they could have qualified for a reverse mortgage. Defendant countered that a third party lender made the disclosures regarding the loan terms and that he breached no duty to the Plaintiffs. He also argued that Plaintiffs did not qualify for a reverse mortgage.
The court found that there were genuine issues of material facts. Advising borrowers to apply for a mortgage that was inappropriate because they clearly could not afford the payments or refinancing the first mortgage when that was not necessary just to charge a larger brokerage fee could constitute an unconscionable commercial practice under the CFA. Failure to disclose that Plaintiffs could have accomplished their goals with a larger line of credit or a reverse mortgage, likewise, could support a finding of common law fraud. Plaintiffs were entitled to have these factual issues determined at trial. Defendant’s motion for summary judgment was denied.
Plaintiffs sought a redetermination of their Federal income tax liability. The IRS moved for summary judgment arguing that the Plaintiffs did not have any evidence that could support the deductibility of the contested expenses.
Chapter 7 trustee objected to Debtor’s exemption in a variable annuity under section 522(d)(10)(E). The trustee’s objection is overruled and the variable annuity may be properly exempted under section 522(d)(10)(E).
Plaintiff sought a judgment denying the Debtor a discharge under 11 U.S.C. § 727(a)(2) – (6) primarily because the Debtor’s schedules confused the assets, liabilities, income and expenses of her wholly owned corporation with her personal financial information. The court found that any errors on the Debtor’s schedules and statement of financial affairs were not intentional and that her testimony was been truthful and entered a judgment of no cause to deny discharge.
The Debtor sought an order requiring the trustee to satisfy the balance due on a student loan and trustee cross-moved to bar the Debtor from filing any further pleadings. The Debtor’s motion was denied and the trustee’s cross-motion was granted.