2014 Judge Altenburg - Opinions

Judge Andrew B. Altenburg -- Opinions signed in 2014

 

In re: Avolio, Case 13-11282, 6/14/2014

The debtor/defendant filed a motion to dismiss the adversary proceeding and the plaintiff filed a cross-motion for sanctions. The pro se debtor alleged that the plaintiff failed to respond to interrogatories by the date set by the court with a sanction of dismissal with prejudice for noncompliance. Alternatively, he sought dismissal arguing that the plaintiff's responses were deficient and as such should be treated as a failure to respond. The plaintiff opposed this relief and cross-moved for sanctions pursuant to Rule 9011 for bringing a frivolous motion and for the debtor's failure to comply with the safe harbor provisions of Civil Rule 37.

The court held that the interrogatory responses, which were delivered to UPS on the day of the court's deadline (a Friday) but not received by the debtor until three days later (Monday), were timely provided. The court reasoned that the order giving the deadline, issued by a prior judge, was not clear on whether interrogatory responses had to be sent by that day, or received by then. In addition, given this circuit's unsettled law as to the propriety of private delivery services over United States Postal Service under Rule 37, the court would decline to dismiss the adversary proceeding on that ground, in part as too harsh a sanction. The court also denied the debtor's alternative request, as the debtor did not list his specific objections to the answers provided.

Finally, the court denied the plaintiff's sanctions brought under Bankruptcy Rule 9011 and Civil Rule 37. The court held that the debtor had a reasonable basis for believing that dismissal would follow if he did not receive the interrogatory responses by the date set by the court. As for the debtor not complying with Civil Rule 37's safe harbor provision, the court noted that the plaintiff did not comply with Rule 9011's safe harbor provision. Moreover, the plaintiff misconstrued the debtor's motion as a motion for more definite answers rather than his request for dismissal for failure to respond.


 

In re: Marino, Case 14-01345, 8/19/2014

The debtor filed a motion to dismiss the adversary proceeding filed by his mother seeking to hold her claim nondischargeable pursuant to section 523(a)(2)(A). Mrs. Marino had loaned her son money from the sale of her house, to be repaid upon the sale of his house the following year. But when Mr. Marino's house sold and he offered to repay her, she told him to hold the money, alleging that she intended that he would then give her money as she needed it. She contended then that the debtor made false statements to her from 2005 to 2010 about always taking care of her, upon which she justifiably relied to her injury as he had no intent of repaying the money. However, the court found that Mrs. Marino's fact allegations contradicted her legal allegations, as she stated that it was her idea to have her son hold the money, that it was her trust in him rather than any false representation that he made that lead her to leave the funds with him, and that he gave her money several times when she asked for it which showed that he did not have an intent to never repay the money. Accordingly, the court granted the motion to dismiss and dismissed the proceeding.


 

In re: Doble, Case 13-22909, 10/2/2014

The debtor filed a motion for sanctions against the debtor's lender, contending that it acted in bad faith by participating in the court's Loss Mitigation Program even though it knew that the debtor, due to his pending bankruptcy case, was ineligible for the type of loss mitigation he desired. The lender countered that while the debtor's particular type of loan could not be modified as desired by the debtor, other loss mitigation options were available to him.

The court denied the sanctions motion, reasoning that the lender was responsive during the loss mitigation process, and used the documents it requested to investigate non-loan modification loss mitigation alternatives such as a short-term repayment or forbearance agreement and liquidation options such as a deed in lieu of foreclosure or a short sale.  Rather than acting in bad faith, this conduct suggested that the lender worked to find a viable loss mitigation solution for the debtor.

 


 

In re: Osorio Beck, Case 13-36671, 12/8/2014

The court considered the chapter 13 trustee's objections to plans in two separate cases that proposed to municipal court claims in full with no dividend to other unsecured creditors. The debtors argued that discrimination in favor of these creditors was fair because they faced incarceration if the fines were not paid. The court weighed the relative interests of the debtors and their creditors, and held that the plans unfairly discriminated, as the possibility of incarceration was remote, and in any event, the unsecured creditors should not pay for the debtors' criminal sanctions. As below median debtors, required only to pay their projected disposable income to creditors over 36 months, they could discriminate in favor of the municipalities in years four and five of their plans as long as they had a reasonable basis for doing so.


 

In re: "Crest By The Sea", Case 14-31681, 12/23/2014

    This matter was before the court on two motions:  the Motion of the Debtor Crest By The Sea, LLC (the “Debtor”) to Enforce the Automatic Stay as to the Debtor’s Individual Members and the Motion of Crest by the Sea Condominium Association, Inc. and numerous condominium unit owners (collectively, the “Association”) to Dismiss. The Debtor alleged that the Chapter 7 estate would be best served by extending the stay to its individual members claiming its bankruptcy case had a reorganizational purpose while the Association countered that there were no grounds to extend the stay. As for the motion to dismiss, the Association alleged that the Debtor did not achieve a sufficient vote to authorize its bankruptcy filing and that the bankruptcy case was filed in bad faith in order to delay or hinder a trial-ready state court matter. The Association asked the court to either dismiss the case or lift the stay to allow it to proceed with that state court action. The Debtor countered that the bankruptcy filing was authorized and that the petition was not filed in bad faith.

The court found that while the bankruptcy filing met the authorization requirements of both the Debtor’s Operating Agreement and New Jersey’s Revised Uniform Limited Liability Company Act, the fact that the Debtor relied exclusively on the advice of counsel and rubberstamped documents filed with this court under penalty of perjury without reading them or considering their content meant that the Debtor abused the provisions, purpose and spirit of bankruptcy law in filing its bankruptcy petition. The court therefore dismissed the Debtor’s bankruptcy petition for cause under Section 707(a) of the Bankruptcy Code. The court did not address the Motion to Enforce the Automatic Stay in light of its decision to dismiss the Debtor’s case.


 

In re InnovaSystems, Inc., Case 11-36228, 11/3/2014

The court considered the debtor’s objection to a claim and the creditor’s response and request for temporary allowance of the claim pursuant to Federal Rule of Bankruptcy 3018, both filed in response to the court’s query of whether the creditor’s claim had been finally liquidated in the Massachusetts District Court, or needed to be allowed or disallowed in the Bankruptcy Court.

The court decided that the claim had not been finally liquidated outside of this court, as the appeal process had not been exhausted. But as currently the outside courts had denied the creditor’s claim, that claim would be estimated at $0 in the Bankruptcy Court for purposes of plan voting.