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Case Number Opinion Summary ( date sorted)
Michelle M. Harner
L.K. Comstock & Company, Inc. v. Reibie et al Adv. Pro. No. 19-00199 Lead Case: RailWorks Corporation Lead Case No. 01-64463
Mar 02, 2020

The Plaintiff in this adversary proceeding successfully reorganized its business under chapter 11. Years after the confirmation of the Plaintiff’s plan, the Defendants filed state court litigation against the Plaintiff for injuries allegedly sustained from exposure to asbestos prior to the filing of the Plaintiff’s bankruptcy case. The question before the Court is whether the Defendants’ claims are barred by the discharge in the Plaintiff’s chapter 11 case under sections 524(a) and 1141(d) of the Bankruptcy Code and its confirmed plan of reorganization.

Based on the undisputed material facts, the Court concludes that the Defendants’ alleged claims against the Plaintiff were prepetition “claims” under section 101. The Court further determines that, despite the Plaintiff’s reasonable due diligence during its claims identification process, the Defendants were unknown creditors at the time of the Plaintiff’s chapter 11 case. Consequently, the publication notice of the claims bar date in the Plaintiff’s chapter 11 case, which was approved by the Court, satisfied the notice and due process requirements of the Bankruptcy Code, the U.S. Constitution, and the Supreme Court’s decision in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950). The Court underscores that this result is supported by the Plaintiff’s actions in its bankruptcy case, what was reasonable and practicable for the Plaintiff to undertake at that time, and the delicate balancing tests underlying both the Bankruptcy Code and the Supreme Court’s approach to notice and due process in Mullane. The Court thus will grant the Plaintiff’s Motion for Summary Judgment as to the remaining Defendants’ claims.

Michelle M. Harner
State of Maryland Department of Labor v. Thomas E. Sulser Adv. Pro. No. 19-00355 Lead Case: Thomas E. Sulser Lead Case No. 19-18710
Feb 19, 2020

The matter before the Court is a Motion to Dismiss the Plaintiff’s Complaint, which seeks to hold debt relating to unemployment benefits nondischargeable under section 523(a)(2)(A). In support of the Motion to Dismiss, the Defendant argues that his under- and overreporting of income in connection with his request for unemployment benefits was, among other things, a statement respecting his financial condition. The Defendant further argues that, under the U.S. Supreme Court’s holding in Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752 (2018), his income is an asset and that statements concerning even a single asset fall within the scope of section 523(a)(2)(B). The Plaintiff disagrees with the Defendant’s position, relying primarily on dicta in Appling that certain debts, such as those arising from fraud in the context of social security benefits, remain subject to the lower standard of section 523(a)(2)(A).

The Defendant’s act of providing information to the Plaintiff constitutes a “statement” according to common usage and the Appling decision. The Court further acknowledges that, under Appling, a debtor’s statement about a single asset may implicate the debtor’s “financial condition” for purposes of section 523(a)(2). Based on the record before the Court, and at this early stage of the litigation, however, the Court cannot conclude that the Defendant’s alleged reporting of his wages was in the context of providing information regarding his overall financial condition. The Defendant may offer evidence during this proceeding that supports such a determination, but it is not evident from the current record. The Complaint thus states a plausible claim for nondischargeability under section 523(a)(2)(A) that withstands challenge under Federal Rule of Civil Procedure 12(b)(6). The Court will deny the Motion on that basis.

Michelle M. Harner
In re: Wood, 18-11415 Memorandum Opinion
Sep 25, 2018

The matter before the Court involves the scope of the automatic stay—specifically, whether any aspect of section 362(a) remains applicable to this chapter 13 case. The question arises because the above-captioned Debtor had two chapter 13 cases pending in the past year, and section 362(c)(3) limits the application of the stay in such circumstances. Neither the parties in this matter nor bankruptcy courts agree on exactly what that limitation entails. Based on the Court’s reading of the statute, and its understanding of the rules of statutory interpretation, the Court finds no significant reason to deviate from the majority approach, which was previously adopted by Judge Gordon in this district. The Court thus adopts the reasoning and holding of In re Tubman, 364 B.R. 574 (Bankr. D. Md. 2007). Accordingly, the automatic stay of section 362(a) terminated under section 362(c)(3) only as to the Debtor and property of the Debtor. The automatic stay remains in place in this case with respect to property of the estate pending resolution of the Lender’s Stay Motion.

Michelle M. Harner
Bankruptcy Case of Byung Mook Cho, Case No. 17-22057-MMH; Jointly Administered with The New Belvedere Cleaners, Inc., Case No. 17-22058
Mar 13, 2018

Bankruptcy Case of Byung Mook Cho, Case No. 17-22057-MMH; Jointly Administered with The New Belvedere Cleaners, Inc., Case No. 17-22058

Whether a contract is executory depends on the facts of the particular matter, the language of the subject agreement, and the consequences under applicable nonbankruptcy law of either party ceasing to perform any ongoing or remaining obligations under the contract. Here, the core purpose of the settlement agreement was to resolve the pending legal disputes between the parties, providing certainty and finality to each affected party. In exchange for the transfer of a certain business and a cash payment, the parties agreed to dismiss the litigation between them; the non-debtor parties agreed to dismiss, and to take certain other action in, related litigation involving a third party; and the parties agreed to refrain from disparaging each other and their respective businesses. Considering the totality of the circumstances and the core purpose of the settlement agreement, the Court determines that the settlement agreement is an executory contract and subject to rejection in the Debtors’ chapter 11 cases.

Michelle M. Harner
Bankruptcy Case of Jacqueline Chorba, Case No. 17-16032-MMH
Mar 08, 2018

Bankruptcy Case of Jacqueline Chorba, Case No. 17-16032-MMH
Adversary: Jacqueline Chorba v. MOMA Funding, LLC, Adversary Case No. 17-00380-MMH

A creditor holding a right to payment under applicable nonbankruptcy law generally may file a proof claim in a debtor’s bankruptcy case under section 501 of the U.S. Bankruptcy Code. In the chapter 13 case underlying this adversary proceeding, the Defendants filed proofs of claim based on defaulted debt purchased from another entity. The Plaintiff (Debtor) then filed a complaint against the Defendants that, as amended, objected to the Defendants’ proofs of claim and asserted two separate causes of action against the Defendants for alleged violations of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act. The Court had to consider the effect of plan confirmation and preemption on the Plaintiff’s complaint, as well as several of the principles articulated by the U.S. Supreme Court in Midland Funding, LLC v. Johnson, 137 S.Ct. 1407, 1412 (2017). The Court ultimately determined that (i) confirmation of the chapter 13 plan was not an adjudication of the claims on the merits; (ii) under Midland Funding, the Defendants’ proofs of claim, based on their right to payment on the purchased debt, could stand, subject to objections raised through the claims allowance process; and (iii) the Plaintiff’s claims that the Defendants’ act of filing the proofs of claim violated Maryland law were preempted by the Bankruptcy Code.

Michelle M. Harner
In re: Forest Capital, LLC, 16-13850
Jan 24, 2018

In re: Forest Capital, LLC, 16-13850
Adversary Case: Forest Capital, LLC. v. Fischer Porter & Thomas, P.C., et al., 16-00337
Counsel for Debtor: Jeremy S. Friedberg
Counsel for Fischer Porter & Thomas, P.C. et al.: Andrew L. Cole

This adversary proceeding requires the Court to evaluate both the avoidance of an alleged postpetition transfer and the transferee’s liability for the same if the transferee asserts a valid and perfected lien in the transferred property. Specifically, the Defendant made a postpetition transfer of property in the amount of $25,000.00 to itself in payment of certain prepetition legal fees. The Plaintiff asserts that the postpetition transfer constitutes an avoidable transfer under section 549 of the Bankruptcy Code and is moving for partial summary judgment on that basis. The Defendant’s opposition to that motion turns largely on section 550 of the Bankruptcy Code and the reasoning of In re C.W. Min. Co., 477 B.R. 176 (B.A.P. 10th Cir. 2012). The Bankruptcy Court, Michelle M. Harner, Judge, held that, based on the existing record, the Defendant had not established a valid and enforceable attorney’s lien under applicable state law. The Court further determined that the Defendant received the postpetition transfer in violation of section 549 of the Bankruptcy Code. The Court did not, however, direct repayment of the postpetition transfer, as the Plaintiff’s motion did not seek such relief and the Court found genuine issues of material fact relating to that issue.

Michelle M. Harner
Yolande E. Essangui, Case No. 16-12984-MMH Yolande E. Essangui v. SLF V-2015 Trust, et al., Adversary No. 16-00201-MMH
Oct 02, 2017

Yolande E. Essangui v. SLF V-2015 Trust, et al., Adversary No.16-00201,
Main case 16-12984

The issue before the Court is whether a private loan extended for educational purposes is dischargeable in a debtor’s chapter 7 case. Section 523(a)(8) includes three subsections addressing educational debt that is excepted from discharge. The parties do not argue that either section 523(a)(8)(A)(i) or 523(a)(8)(B) is applicable to this case. Rather, the defendant asserts that its debt is covered by section 523(a)(8)(A)(ii), as “an obligation to repay funds received as an educational benefit, scholarship, or stipend.” 11 U.S.C. § 523(a)(8)(A)(ii). Based on the facts of this case, the Court holds that the private student loan at issue is not an educational benefit under section 523(a)(8)(A)(ii) and, therefore, is dischargeable in the debtor’s chapter 7 case. To hold otherwise would ignore the plain language of the statute and render subsections (A)(i) and (B) largely meaningless. Indeed, if subsection (A)(ii) covers any loan for educational purposes, much of the language in the remainder of the section is superfluous. The Court accordingly entered an Order granting the debtor’s motion for summary judgment and denying the defendant’s motion for summary judgment.