As reported by Robin Miller of CBAR, a Michigan Debt for statutory conversion was nondischargeable under Code § 523(a)(6): Based in part on facts established in the state court judgment, and in part on facts established in the trial of the creditor’s adversary proceeding, the court found that the debtor’s injury to the creditor was also “willful,” thereby establishing the remaining element of § 523(a)(6). The creditor paid the debtor $50,600 (of the total contract price of $59,000) to purchase a Chrysler 300 automobile and convert it to a limousine, and the debtor thereafter retained both the vehicle and the creditor’s $50,600. Treble damages and attorney’s fees awarded in state-court judgment for conversion were all nondischargeable under Code § 523(a)(6): The debtor’s judgment debt to…

Robin Miller of CBAR  posted the following: Default judgment is given effect under Michigan law of collateral estoppel, to wit:  Elements of collateral estoppel under Michigan law: Under Michigan law, the following requirements must be met in order for collateral estoppel to apply: (1) there is identity of parties across the proceedings; (2) there was a valid, final judgment in the first proceeding; (3) the same issue was actually litigated and necessarily determined in the first proceeding, and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the earlier proceeding. Default judgment is given effect under Michigan law of collateral estoppel: Agreeing with In re Kory, 2013 WL 1340215 (Bankr. E.D. Mich., March 28, 2013),…

As reported by Robin Miller of CBAR, a Michigan Creditor failed to show that debtor knew that misrepresentation was false and the creditors claim was ruled to be dischargeable: The judgment creditor failed to prove that the Chapter 7 debtor knew that his statement, that he was an authorized member of the limited liability company on whose behalf he signed a lease to open a restaurant in the creditor’s shopping center, was false when he made the statement, so that the creditor failed to establish that the debtor acted with the intention and purpose of deceiving the creditor, for the purpose of rendering the judgment debt nondischargeable under Code § 523(a)(2)(A). In re Rauf, 504 B.R. 838 (Bankr. E.D. Mich., Jan. 3, 2014) (case no. 2:12-bk-67060;…

Robin Miller of CBAR reports that a default judgment is given effect under Tennessee law of collateral estoppel. The elements of collateral estoppel under Tennessee law: Under Tennessee law, collateral estoppel bars relitigation of an issue if it was raised in an earlier case between the same parties, actually litigated, and necessary to the judgment of the earlier case. Default judgment is given effect under Tennessee law of collateral estoppel: A default judgment satisfies the “actually litigated” requirement of Tennessee law of collateral estoppel. In re Bursack, 65 F.3d 51 (6th Cir. 1995). In re Anderson, 2014 WL 98691 (Bankr. E.D. Ky., Jan. 10, 2014), appeal filed, Case No. 14-8007 (6th Cir. B.A.P., filed Jan. 30, 2014) (case no. 6:13-bk-60469; adv. proc. no. 6:13-ap-6021) (Bankruptcy Judge Gregory R. Schaaf)

Robin Miller of CBAR reports that a state court default judgment on a fraud claim was nondischargeable based on the following case law developments: Elements of nondischargeability under Code § 523(a)(2)(A): To except a debt from discharge under Code § 523(a)(2)(A), a creditor must prove each of the following elements by a preponderance of the evidence: (1) the debtor obtained money through a material misrepresentation that, at the time, the debtor knew was false or made with gross recklessness as to its truth; (2) the debtor intended to deceive the creditor; (3) the creditor justifiably relied on the false representation; and (4) the creditor’s reliance was the proximate cause of loss. Whether a debtor possessed an intent to defraud a creditor within the scope of…

As reported by the ABI: Detroit Emergency Manager Kevyn Orr laid out plans yesterday for changes to the city’s two retirement systems even as bankruptcy proceedings continue, Reuters reported yesterday. Orr, who was tapped by Michigan’s governor in March 2013 to run Detroit, said all current and new city workers will be subject to the changes effective July 1. The changes maintain a defined benefit system, but require new deductions from workers’ paychecks for pensions and matching contributions from the city. “The city and its labor partners have come up with what we think is the best option to strengthen employee pensions so we can continue to meet future obligations in a financially responsible and sustainable manner,” Orr said. Accrued benefits will be frozen as of June…

Robin Miller of CBAR reports: A debtor who alleges a violation of § 524(a)(2) must establish by clear and convincing evidence that the creditor (1) violated the discharge injunction and (2) did so with actual knowledge of the injunction. The standard does not require proof that the creditor deliberately violated the injunction. In re Campbell, 2014 WL 32161 (Bankr. E.D. Ky., Jan. 6, 2014)