This case came before the court on cross motions for summary judgment. Plaintiff, the Chapter 7 Trustee appointed to Debtor’s bankruptcy case, filed a Complaint against the Defendant seeking to avoid a payment made by the Debtor to the Defendant as a preference pursuant to 11 U.S.C. § 547(b). The payment was for work performed by the Defendant pursuant to a sub-contract agreement between Debtor, as general contractor, and Defendant, as subcontractor. Defendant defended against the preference action by asserting that the Debtor’s estate lost no value as a result of the payment because if the Debtor had not made the disputed payment, the bonding company, which furnished a payment bond for the project, would have been required to make the payment and would have therefore acquired a secured claim against the Debtor’s estate in the amount of the disputed payment. Finding the existence of genuine disputes of material facts, the court denied both motions for summary judgment.

OPINION FOR PUBLICATION
Honorable Duncan W. Keir

Counsel for Plaintiffs: Alvin I. Frederick
Irving Edward Walker

Counsel for Defendants: Jeanett Palacios Henry
Donald M. Temple

Before the court were motions for summary judgment filed by the Plaintiffs in two-related adversary proceedings. The complaints for which Plaintiffs sought summary judgment requested a declaratory judgment by this court determining that the Defendants, Shirley Blair, individually, and Blair Temporaries and Staffing, Inc. (hereinafter “Blair Temps”), are precluded by the doctrines of res judicata and judicial estoppel from bringing any malpractice claims against the Plaintiffs for services rendered by the Plaintiffs as special counsel to the Chapter 11 Trustee in the bankruptcy case of Blair Temps. The court found that the elements of res judicata were met and that equity prevented the Defendants from pursuing allegations of malpractice against the Plaintiffs in another court. Alternatively, the court determined that the doctrine of judicial estoppel precluded Defendants from pursuing such claims.

Chapter 13 Trustee filed a motion to disallow claim of secured creditor and permit the funds to be redisbursed to other creditors entitled to disbursement under the confirmed chapter 13 plan. Court denied motion because case was converted to case under chapter 7. Upon a motion to reconsider by the Chapter 13 Trustee, the Bankruptcy Court, Duncan W. Keir, J., held that: (1) the Chapter 13 Trustee retained standing to allow winding up of the chapter 13 affairs; and (2) post-petition wages paid by the Debtor to the Chapter 13 Trustee for disbursement under the confirmed plan and held by the Chapter 13 Trustee at the time of conversion to chapter 7 should be distributed in accordance with the terms of the confirmed plan.

The United States Trustee filed a motion to disgorge attorney’s fees paid to the former attorney for debtor in this chapter 13 case. The Bankruptcy Court, Duncan W. Keir, Judge, denied the motion for disgorgement and also the United States Trustee’s subsequent motion for reconsideration. The Bankruptcy Court found that a debtor’s attorney in a chapter 13 case is not required to file a proof of claim for the unpaid balance of the attorney’s fees, however, an application for allowance of fees is required pursuant to Federal Rule of Bankruptcy Procedure 2016(a) in a chapter 13 case for any post-petition fee sought, other than a flat fee fully disclosed in the Rule 2016(b) statement filed at the outset of the case.

Order denying motion for payment of breakout fee

Debtor objected to a proof of claim asserting that a three-year statute of limitation barred recovery of an unsecured claim resulting from the deficiency balance after sale of a vehicle. The Bankruptcy Court, Duncan W. Keir, Chief J., held that by Maryland statute, a four year statute of limitations applies to purchase installment contracts. However, the court further held that the period of limitation begins to run when the right to sue for payment accrues under the terms of the contract. The Court found that the record on the pleadings stated only the later date of disposition of the collateral and was insufficient for determination of the expiration of the statute of limitations. An evidentiary hearing on the objection to claim would be held.

Debtor: Rhea K. Simms
Counsel for Debtor: Jeffrey M. Sirody
Chapter 13 Trustee: Ellen Cosby

The Chapter 13 Trustee filed an objection to confirmation of the debtor’s chapter 13 plan on the grounds that the debtor had not committed all her projected disposable income for the applicable commitment period to the plan as required. The Bankruptcy Court, Duncan W. Keir, Chief J., denied confirmation with leave to amend because the debtor’s plan was funded significantly below the disposable income shown on the B22C form, which form did not list a marital adjustment for the non-debtor’s spouse’s arguably unavailable income. Debtor’s argument that her non-filing spouse refused to contribute his income to the plan was not the type of change to anticipated funding that would lead the court to deviate from using the B22C calculation as the required level of funding. The Court granted the debtor leave to amend the plan or the marital adjustment taken on the B22C statement, but cautioned that the court must carefully scrutinize issues of good faith in confirming a plan or an amended B22C statement under stated circumstances.

This court finds no basis to depart from the holdings of In re Hurtz and In re Hernandez
based on the decision in Roseman and will not permit the debtor to have the windfalls in this
bankruptcy case that In re Hurtz and In re Hernandez correctly prevent.

Where a corporate debtor filed a voluntary Chapter 7 case and subsequently moved for an Order “confirming” that the automatic stay protected non-debtor officers, employees and shareholders, the court denied the motion. The court found that the uncontested facts failed to prove any of the bases for extending the automatic stay under the holdings of A.H. Robbins Company, Inc. v. Piccinin (In re A.H. Robbins Company, Inc.), 788 F.2d. 994 (4th Cir. 1986), and In re Johns-Manville Corp., 40 B.R. 219, 226 (S.D. N.Y. 1984). Furthermore, the court found that the automatic stay did not apply to Florida actions that had been commenced against the officers, employees and shareholders pursuant to 11 U.S.C. § 362(a)(3) as the actions did not seek to obtain possession of, or control assets of the bankruptcy estate.

Counsel for Plaintiff: James R. Schraf
Counsel for Defendant: Thomas C. Valkenet

Trustee sought preferential avoidance of deed of trust perfected within 90 days prior to bankruptcy petition date. The Bankruptcy Court, Duncan W. Keir, Chief J., held that the creditor was entitled to be equitably subrogated to the lien position held prior to the refinance transaction despite recording its new lien beyond ten days after the promissory note was signed on a date within the preference period and filing a certificate of satisfaction prior to recordation of its new lien.

Upon the trustee’s objection to confirmation of a chapter 13 plan which, with respect to three secured judgment creditors, did not provide value, as of the effective date of the plan equal to the allowed amount of claims, the court determined that (1) that the chapter 13 trustee has standing to be heard as to all issues relevant to confirmation of a chapter 13 plan; (2) under the specific facts of this case, due process was satisfied and the absence of an objection to confirmation by any of the judgment creditors would constitute acceptance of the terms of the plan so as to satisfy Section 1325(a)(5).

Motions for appointment of chapter 11 trustees or alternatively for conversion were filed by the purported largest secured creditor, alleging, inter alia, dishonesty, mismanagement and futility. Debtors, who were married, but in separate cases, opposed the motions and the court held a lengthy evidentiary trial. The Bankruptcy Court, Duncan W. Keir, Chief J., explaining the different analyses of the applicable Bankruptcy Code sections, held that cause existed under both 11 U.S.C. § 1104 and § 1112 for appointment of a trustee, dismissal or conversion. The court found that the appropriate remedy was the appointment of a chapter 11 Trustee who could further assess whether there was any means for a financial reorganization.

Chapter 13 trustee objected to confirmation of debtor’s proposed plan which committed all of the debtor’s “projected disposable income” as calculated under the applicable statute, but permitted debtor to continue making mortgage payments in excess of what the Chapter 13 trustee argued was a reasonable amount for a housing allowance under Debtor’s circumstances. The court, Duncan W. Keir, C.J., held that it would not redefine “disposable income” based on the argument that the secured installment payments appeared disproportionate to the needs of debtor. The court also determined that the plan was proposed in good faith under the facts of this case.

The court ruled that a creditor cannot continue to file motions for relief from stay asserting the same factual averments and legal arguments, but expect different results. Here, the creditor, First Niagara Leasing, Inc., filed two consecutive motions for relief from stay. The first motion for relief from stay was denied by the court because the creditor failed to prove a security interest in the collateral. Later, the same creditor filed a second motion for relief from stay asserting the same factual averments and attaching one additional document to prove a security interest in the collateral. The court denied the motion under the doctrines of res judicata, law of the case, and finality of judgment.

Movants, Chapter 13 Debtors, pro se, sought to compel university to release academic transcripts and diploma earned by Debtors’ daughters during the 2005-2006 academic year. University opposed Debtors’ Motion maintaining that the university’s official policy of withholding transcripts and diplomas of students having delinquent accounts was properly enforced against Debtors’ daughters based upon the unpaid status of their student accounts. The Bankruptcy Court, Duncan W. Keir, Chief J. held that: Debtors’ daughters, and not Debtors, hold rights to the academic transcripts and diploma at issue. The Court found no violation of the automatic stay imposed by 11 U.S.C. §362(a)(3) or 11 U.S.C. §362(a)(6).

Upon objection to confirmation by creditor, the Bankruptcy Court, Duncan W. Keir, Chief J., held that: (1) when calculating disposable income on Form B22C, the debtors were entitled to deduct the Local Ownership Allowance for vehicles which were not encumbered by liens; and (2) “disposable income” as calculated on Form B22C is the presumptive “projected disposable
income” for application of Section 1325(b)(1)(B), but may be rebutted by evidence of a substantial change in circumstance.

Counsel for Debtor: Robert Greenwalt
Counsel for Finance Maryland, LLC: Anthony Cordwell
Prior to the petition date, Creditor obtained a judgment on a promissory note secured by Debtor’s vehicles. After the chapter 13 bankruptcy case was filed, Creditor moved to dismiss the case pursuant to 11 U.S.C. § 1307(c)(4) based upon Debtor’s failure to initiate payments allegedly due under 11 U.S.C. § 1326(a)(1)(C). The Bankruptcy Court, Duncan W. Keir, Chief J., held that while the Creditor retained its lien on the vehicles, Section 1326(a)(1)(C) was inapplicable because Creditor had obtained a judgment prepetition and therefore no portion of the objection, as intended by the statute, became due after the order for relief. Accordingly, Creditor had shown no cause for dismissal under Section 1307(c)(4

Per Curiam Opinion Regarding the Sufficiency of Certifications to Waive Credit Counseling Certificate

NOT FOR PUBLICATION. The court determined that it should not grant a creditor's motion to reopen a closed no asset Chapter 7 case to allow the filing of an adversary proceeding to determine non-dischargeability of an alleged debt under 11 U.S.C. § 523(a)(3). Under the circumstances of this case, Creditor can challenge in a filed state court action, the defense of discharge and obtain a ruling on its assertion of non-dischargeability in that action.

Amended solely to correct Citation in footnote 3.

Before the Court was Debtor’s Emergency Motion to Enforce the Automatic Stay. The Court held that a lease that is deemed rejected pursuant to 11 U.S.C. 365(d)(1) is not automatically abandoned. Therefore, a debtor’s interest in the unperformed agreement remains property of a debtor’s estate. A creditor must obtain relief from stay from the Bankruptcy Court before pursuing an action in state court to recover possession of the leased premises.

In 2004, this court (Derby, J) entered an order finding dischargeable collection fees and costs awarded by the state court on an otherwise nondischargeable debt owed to the State of Maryland. The State of Maryland appealed the decision and the United States District Court for the District of Maryland affirmed the bankruptcy court decision. The State of Maryland then filed an appeal with the United States Court of Appeals for the Fourth Circuit which reversed the lower courts’ decisions. Upon remand, the Bankruptcy Court, Duncan W. Keir, Chief J., vacated the prior order and ordered that all of the debt is nondischargeable , as required by the Court of Appeals’ unpublished opinion.
Judge Keir noted that the bankruptcy court has exclusive jurisdiction over nondischargeability actions set forth in 11 U.S.C. § 523(c) and concurrent jurisdiction as to the remaining subparts of 11 U.S.C. § 523(a). The court further noted the distinction between an action to determine dischargeability and one seeking to enforce the discharge injunction, the latter falling under the bankruptcy court’s exclusive jurisdiction regardless of the nature of the debt

The Chapter 7 Trustee, citing the recent United States Supreme Court decision in U.S. v. Craft, 535 U.S. 274 (2002), objected to the Debtor’s tenants by entireties exemption of real property in a case where only one spouse was a debtor in bankruptcy. The United States Bankruptcy Court, Duncan W. Keir, J., denied the Chapter 7 Trustee’s objection.

This case came before the court upon the Debtors’ Objection to the Proof of Claim (the “Objection”) filed by the United States Internal Revenue Service (the “IRS”). In the Objection, the Debtors assert that the secured claim of the IRS should be allowed in the amount of $21,224.00, which represents the value of the Debtors’ real property after deducting the balance due upon debts secured by liens having priority above the IRS tax lien. The Debtors argued that the remainder of the IRS claim should be treated as an unsecured claim. The IRS, on the other hand, asserted that the Debtors’ interest in an ERISA-qualified pension plan should be included in the bankruptcy estate for the limited purpose of securing the IRS claim. The Court held that the IRS claim is not secured within the meaning of 11 U.S.C. § 506(a) by the Debtors’ interest in the subject pension plan. Accordingly, the court sustained the Debtors’ Objection to the Proof of Claim filed by the IRS.

Not for Publication: Order Determining Debtor's Right to Immediate Entry of Discharge

Chapter 13 debtor sold real property post-confirmation and sought to retain portion of net proceeds and reduce balance of chapter 13 plan by amount paid to mortgagee at settlement and outside of plan provisions. The court granted the debtor’s request for modification and the chapter 13 trustee sought reconsideration. The Court, Duncan W. Keir, Judge, granted the motion for reconsideration. The court found that the best interest test set forth in 11 U.S.C. § 1325(a)(4) should be recalculated at the time of modification and that debtor was not entitled to reduce the funding of the chapter 13 plan to yield a lower dividend to unsecured creditors than that which would be received in a case under chapter 7.

Creditor willfully violated the Automatic Stay by conducting a foreclosure sale of its interest in property of the debtor after learning that debtor initiated a new bankruptcy case a few days before the sale. Creditor subsequently filed an emergency motion to dismiss debtor's case nunc pro tunc, arguing that serial filings by debtor and his wife on the eve of previous foreclosure sales, and the fact that debtor had another open bankruptcy case, demonstrated that the instant filing was in bad faith. The United States Bankruptcy Court for the District of Maryland, Duncan W. Keir, J., (1) denied the motion to dismiss nunc pro tunc; (2) found the foreclosure sale to be void; (3) prohibited any assessment of costs by creditor on account of the unlawful foreclosure sale; (4) found that debtor filed his case in bad faith; and (5) consolidated debtor's newly filed case into debtor's previously filed case.

After debtor’s motion to avoid lien was granted (by default), creditor filed a motion to vacate. The property was owned by debtor and debtor’s non-filed spouse and the lien was a subordinate deed of trust. Lender argued that the deed of trust trustees were necessary parties to the motion to avoid lien, without whom the order should not have been entered.
The court determined that deed of trust trustees are not necessary parties to motions to avoid liens. However, because the co-tenant by the entirety (debtor’s spouse) was not a party, the court granted the motion to vacate and dismissed the motion to avoid lien, without prejudice.

This case came before the court upon Montgomery County, Maryland's (the "Movant") Motion for Allowance and Payment of Personal Property Taxes as an Administrative Expense (the "Motion"). Finding that the taxing authority held an unliquidated tax claim on the petition date, the Court concluded that the tax was not incurred post-petition and therefore cannot be allowed as an administrative expense.
Alternatively, the Motion states that to the extent that the claim is not allowable as an administrative expense, it should be entitled to priority as a tax claim under 11 U.S.C. § 507(a)(8). However, the Movant also asserts that pursuant to Section 14-804 of the Tax-Property Article of the Annotated Code of Maryland, the tax claim is secured by a statutory lien upon the personal property assessed for the tax. As 11 U.S.C. § 507(a)(8) only provides priority treatment to ”unsecured claims” of governmental units, if the tax claim is in fact a secured claim, then it is not entitled to an unsecured priority. Therefore, the alternative treatment under Section 507(a)(8) was denied.

Plaintiff/debtor filed an adversary complaint to avoid and recover money garnished by Allfirst Bank from debtor's employer. Both parties filed motions for summary judgment. In addition, Allfirst filed an objection to debtor's use of exemptions.
The United States Bankruptcy Court for the District of Maryland, Keir, J., found that, up to the extent of the debtor's limits on "cafeteria" exemptions not otherwise taken under 11 U.S.C. § 522, and Md. Code. Ann. Courts & Jud. Proc. § 11-504, that a debtor can utilize the trustee's avoidance powers 11 U.S.C. § 547 and § 550 to avoid garnishments made within 90 before the filing of debtor's petition in bankruptcy.

Debtor's motion for summary judgment granted. Objection of Allfirst Bank to debtor's use of exemptions denied.