In connection with their divorce, Plaintiff Heather McDonald and Debtor/Defendant Stephen McDonald entered into a marriage settlement agreement (“MSA)” in which Debtor agreed to assume certain debts (the “Debts”). Debtor thereafter filed Bankruptcy Case No. 20-10755 and ultimately the Court granted Debtor a discharge under 11 U.S.C. § 727. When Debtor did not pay the Debts, Plaintiff filed an adversary complaint seeking a determination that the Debts are non-dischargeable under 11 U.S.C. § 523(a)(15). The Court held that, although Debtor’s obligations to the creditors were discharged under § 727, his obligations to Plaintiff under the MSA were not, and that, pursuant to the MSA, Plaintiff is entitled to reimbursement of the amounts paid on Debtor’s behalf. The Court also granted in part Plaintiff’s request for costs and ordered Debtor to pay a portion of the filing fee for the adversary proceeding.

Chapter 7 trustee sought to recover approximately $1.2 million transfers taken as shareholder distributions by defendants who were the owners of Debtor—a consumer lending and retail furniture business—on the theory that the business was insolvent in the two-year prepetition period during which the distributions were made.  Finding no evidence that business was on its “deathbed” during the transfer period, the Court rejected the trustee’s argument that the fair value of Debtor’s assets was their liquidation value as opposed to their going concern value.  Holding that the trustee failed to carry the burden of proving Debtor’s insolvency during the transfer period, the Court entered judgment in favor of the defendants   

Creditor moved for allowance to file a late proof of claim after the claims bar date had run. Considering that issues beyond the creditor’s control prevented it from receiving notice of the Debtors’ bankruptcy until after the claims bar date, and that the creditor took quick, appropriate action upon learning of the bankruptcy, the creditor successfully rebutted the mailbox presumption and showed that the motion should be granted for cause and because creditor’s neglect was excusable.

The Court granted summary judgment in favor of defendant, a title insurance company, on plaintiff’s breach of contract claim.  The claim was based on a policy of title insurance that excluded from coverage any loss caused by an encumbrance created, suffered, assumed or agreed to by the insured claimant.  The undisputed material facts show that the plaintiff, by knowledge imputed through its agent, suffered or assumed the encumbrance that allegedly caused the loss claimed by plaintiff. Plaintiff also failed to produce evidence of actual damages—an essential element of a breach of contract claim.