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United States Courts Opinions

United States Courts Opinions (USCOURTS) collection is a collaborative effort between the U.S. Government Publishing Office (GPO) and the Administrative Office of the United States Courts (AOUSC) to provide public access to opinions from selected United States appellate, district, and bankruptcy courts.

The District of Nebraska offers a database of opinions for the years 1997 to current, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.

The debtor’s family limited partnership filed an adversary proceeding seeking to except from discharge a $2.865 million judgment it obtained against the debtor. The partners include the debtor, two of his sisters, and a brother-in-law. In response, the debtor filed a counterclaim and third-party complaint regarding his late mother’s trust, alleging causes of action for breach of fiduciary duty, tortious interference with a business expectancy, and conspiracy. The defendants are the sisters, brother-in-law, and the trustee of the mother’s trust. The debtor asserts the defendants have wrongly withheld from him the distribution of funds from his mother’s trust, and that his plan of reorganization is to use those funds to pay the judgment debt.

In granting the third-party defendants’ motion to dismiss, the bankruptcy court found the debtor lacked standing because the claims he asserts belong to the Chapter 11 trustee appointed in this case unless the trustee abandons them.

The bankruptcy court further ruled that the third-party defendants were improperly impleaded. The debtor may bring a permissive counterclaim under Federal Rule of Civil Procedure 13 and implead additional parties liable on the counterclaim under Rule 20. However, joinder requires a valid counterclaim, which is missing in this case. The adversary plaintiff is the family partnership, but the third-party complaint seeks relief against individual members of the partnership, not the partnership itself, which is the real party in interest. “Because the partnership is not a counterclaimant, the counterclaim fails. As the counterclaim falls, so falls the third-party complaint.”

The court dismissed the counterclaim and third-party complaint as not properly before the court. Even if they were properly before the court, the bankruptcy court would abstain from hearing them because the matters concerning the mother’s trust are presently before the probate court.

The bankruptcy court avoided a judgment creditor’s lien that impaired the debtor’s homestead exemption. The creditor focused on two main arguments: (1) that the debtor had abandoned the home when he moved out after a marital separation, and (2) that even though the debtor moved back in after his wife and children moved out, he could not reestablish it as his homestead because he did not reside there with his family at that time.

The court found that although the debtor lived in other locations after his marital separation, he did not abandon or intend to abandon his homestead rights in the family home:

Abandonment must be “total, without any occupancy under claim of homestead.” Dennis v. Omaha Nat’l Bank, 28 N.W. 512, 514–15 (Neb. 1886) (emphasis added). The debtor or [his wife] always resided in their family home. They remained married at the time the bankruptcy was filed. The debtor’s absence from the home beginning in 2023 was due to a marital dispute and divorce filing, it being agreed as in the best interest of the debtor’s children, who also resided there. Even if he spent nights or resided at his girlfriend’s apartment, the debtor returned to his home after [his wife] moved out. Although the debtor and [his wife] agreed to sell the house and obtained a court order to list it for sale, the house is not sold. The debtor’s rental of a house with his girlfriend was temporary, regardless of whether he remains liable on the lease. The debtor’s personal property has always been at his home. And [his wife] did not testify she intended to abandon the home or her homestead rights.

In response to the creditor’s second argument, the court pointed out the Nebraska homestead exemption statute no longer focuses on protecting the family home. Rather, recent amendments to Neb. Rev. Stat. § 40-101 allow any natural person to claim a $120,000 exemption in their home. “The debtor is a natural person. He lives in his home. He claimed it as exempt. As a result of the amendment, it is not necessary the debtor’s wife or children live with the debtor after March 2025.”

Because the total amount of the judicial lien and consensual liens on the property plus the homestead exemption, less the value of the debtor’s one-half interest in the property, impair the debtor’s claimed exemption, the judicial lien is avoided in full.

The bankruptcy court granted the bank’s motion for attorney fees, provided for in the loan documents, under §506(b). However, the earlier settlement between the debtor and the bank that determined the amount of the bank’s allowed secured claim essentially rendered this fee decision “a hollow undertaking” because the fees were effectively disallowed by the settlement as not chargeable to the debtor or any collateral owned by the debtor, so this decision “will not affect the bankruptcy case in the slightest.” The court noted that if it disallowed the $295,000 in fees as unreasonable, those fees might still be allowed as an unsecured claim, and a disallowance under federal law may not be preclusive under state law. Accordingly, the court held: “Regarding the fees and costs, considering the unique circumstances of the case, specifically including the fact the fees will not be paid, the fees are ‘reasonable’ under federal law solely for purposes of a Chapter 12 plan under 11 U.S.C. § 506(b). The court makes no determination as to whether the fees are reasonable under state law[.] . . . The debtors are not personally obligated to pay more than th[e] recourse obligation amount [in the settlement agreement] and the bank is not entitled to any distribution as an unsecured creditor.”

The bankruptcy court enjoined a deed of trust sale that was based on a pre-petition default under loan documents that were restructured by the terms of the debtor’s confirmed Chapter 11 plan.

The debtor’s debts to the bank are secured by deeds of trust against multiple parcels of real estate. Pre-petition, the borrower defaulted on her loan payments and the bank filed and served notices under the Nebraska Trust Deeds Act. The debtor then filed a Chapter 11 petition and her plan was confirmed. Provisions in the plan modified, superseded, and replaced the debtor’s original obligations to the bank. 

The debtor subsequently failed to timely pay real estate taxes, which was a default under the plan. The bank notified the debtor of the default and the cure period. The debtor paid the real estate taxes in June 2025 shortly after the cure period expired. Nevertheless, the bank moved ahead with the deed of trust sale process that it had initiated pre-petition and published notice of sale with a sale date in August 2025. The debtor then moved for a temporary restraining order and injunction to stop the sale.

While the bank argued that the plan simply stayed enforcement of the pre-petition deed of trust foreclosure as long as the debtor continued to meet all plan obligations to the bank, the court pointed out that a confirmed plan modifies a debtor’s obligations and a creditor’s lien rights. A reorganized debtor is free of pre-confirmation obligations except to the extent they are provided for in the confirmed plan, and the confirmed plan is a new enforceable contract between the parties.

Accordingly, the bank could not enforce the pre-petition payment default nor rely on the pre-petition notice of default under the Trust Deeds Act. Instead, the bank was required to file a new notice of default identifying the debtor’s breach of her modified obligations to the bank under the plan – the failure to timely pay real estate taxes. Because the debtor has cured the default by paying the taxes, the bank is precluded from foreclosing.

After a trial, the bankruptcy court dismissed the debtor’s Chapter 13 case, finding that the debtor does not have “sufficiently stable and regular” income with which to make plan payments. The debtor’s monthly income is negative, and his largest monthly expense is his alimony and child support obligations. He is unable to fund his plan without financial contributions from his family, but there was no evidence that these gratuitous payments are stable or regular, as required by the Bankruptcy Code. The debtor’s father testified he would help the debtor as necessary by paying the debtor’s alimony and child support, but he would not commit to making those payments for the duration of the plan. In addition, there was no evidence of the father’s ability to make payments for the life of the plan. Because the debtor is unable to show that he has sufficient income exceeding his expenses from which he could maintain a payment schedule, he does not meet the § 109(e) eligibility requirements to be a Chapter 13 debtor.

The bankruptcy court approved a settlement between the debtors and their lender to resolve the lender’s objection to the debtors’ Chapter 12 plan. It also settles the lender’s motion for relief from stay in which it seeks to recover and foreclose its liens against collateral still owned by the debtors. Under the settlement, the parties stipulated the total amount owed to the bank, which includes unpaid principal, accrued interest, and attorneys’ fees and costs. The debtors are required to execute a “modified” note pursuant to the settlement which will add the accrued interest and the fees and costs to the principal balance of the note and reduce the interest rate. Of the total modified debt, only one-half is recourse against the debtors, the debtors’ estates, and collateral still owned by the debtors. The other half is recourse only against collateral sold out of trust pre-petition. The bank also retains any claims it has against any parties who converted its collateral.

Parties against whom the bank seeks to recover collateral to satisfy the other half of the modified debt objected to the settlement. They assert the settlement seeks approval of attorney’s fees and costs without disclosure or a finding of reasonableness under 11 U.S.C. § 506(b), is usurious under Neb. Rev. Stat. § 45-109, is unfair and inequitable to the objectors, and allows post-petition attorney fees to be collected against the objectors.

The bankruptcy court ruled that the settlement met the required standard of being fair and equitable and in the best interests of the estate. The court found the settlement resolves significant and protracted litigation between the debtors and the bank and requires the bank to make significant concessions.

The court overruled the objection as to the reasonableness of the attorneys’ fees, stating that the court needn’t determine the reasonableness of the fees because the settlement reduces the bank’s secured claim to an amount less than it is entitled to. “On whole, the Bank is not seeking to supplement its proof of claim for payment through the bankruptcy plan [which would implicate §506(b)]. As to the bankruptcy estate, the Bank is voluntarily reducing its claim.”

Likewise, §506(b) does not require the interest rate to be reasonable. It permits interest “provided for under the agreement or State statute under which such claim arose” and the loan agreement in this case provided for a 45% default interest rate.

The objecting parties argued the default interest rate is usurious under Nebraska law, which “forbids contracts for the payment of money to satisfy a debt where the debtor’s payment does not actually discharge the debt.” They took the position that the settlement agreement is usurious because if the debtors pay their half, the indebtedness is not discharged. The court disagreed with this argument, noting that under the terms of the settlement, “[t]he debt is discharged if the contracted amount is paid, plus interest, in an amount less than the usury rate. Making half non-recourse to the debtor simply does not constitute usury.”

The objectors also argued the settlement is unfair and inequitable because it “purports to place them on the hook for at least $277,798.71, plus 9.5% interest” when the debtors have assets available to pay the bank. The court disagreed, noting that the objecting parties’ liability, if any, already exists, and arises both inside and outside of bankruptcy under U.C.C. Article 9. “The objecting parties might prefer the secured party completely recover from the debtors and their bankruptcy estates. But any recovery from the objecting parties is authorized by state law and is not unfair or inequitable. The Bank has multiple avenues of recovery from which it can elect. It is free to avail itself against the objectors, with or without the settlement. The objectors are free to raise any defenses they have.”

The court limited its approval of the settlement to the bankruptcy realm only, giving the settlement agreement no preclusive effect outside of the bankruptcy case or in any litigation between the bank and third parties.

The bankruptcy court granted the U.S. Trustee’s motion to appoint a Chapter 11 trustee for cause in this case. The court gave preclusive effect to a pre-petition state district court order finding the debtor had repeatedly breached fiduciary duties owed to his partners in a family trust. The bankruptcy court also noted the debtor’s post-petition failure to accurately account for assets of the bankruptcy estate, file accurate operating reports, keep separate the funds of the bankruptcy estate, and obtain court authorization before making payments.

While recognizing that appointment of a Chapter 11 trustee is an extraordinary remedy, the bankruptcy court ruled that such an appointment is mandated in this case. The debtor’s pre-petition failure to fulfill fiduciary duties, material misconduct, self-dealing, and squandering of partnership assets, combined with his post-petition unauthorized payments, commingling of funds, failure to account for estate assets and expenses, and unwillingness to comply with the duties of a debtor in possession demonstrate cause under §1104 to appoint a trustee.

After a trial, the bankruptcy court denied the U.S. Trustee’s complaint objecting to discharge under §§ 727(a)(2)(A), (a)(4)(A), and (a)(5). The debtor failed to list a business entity he had formed to replace a failing enterprise. As he liquidated the first company, he occasionally used the second company’s bank accounts for deposits and payments. Nevertheless, the evidence showed that the proceeds from the asset sales for the first business, even if funneled through other accounts, were used to pay creditors of the first business. The debtor testified that he simply forgot to list the second business because it never really got off the ground, but he amended his schedules and complied with the U.S. Trustee’s discovery requests. The court found no intent to hinder, delay, or defraud; no knowing and fraudulent false oath; and no unexplained loss of assets.

The debtor in this case formerly owned an assisted living facility in Missouri. The State closed the facility due to structural issues, and the building sustained damage on a number of occasions while vacant. The debtor subsequently was authorized by the bankruptcy court to sell the property. The building’s insurer filed this adversary proceeding seeking to interplead the amount of the insurance proceeds for the initial damage claim.  In the meantime, the debtor confirmed a Chapter 11 plan and filed a state court lawsuit in Missouri against the insurer and the buyer for damages under the insurance policies.

The insurance company filed a motion to amend its complaint to remove the interpleader claim and seek only declaratory relief, and to add a party who may claim an interest in the insurance proceeds. The debtor filed a motion for this court to abstain and let the state court decide the case.

The bankruptcy court dismissed the interpleader claim and granted the motion to abstain. The court ruled the plaintiff had not established grounds for interpleading the funds, in part because the plaintiff instead seemed to be attempting to limit the loss to the amount of the initial claim, instead of the total $5 million that the debtor is seeking in the state court lawsuit. “Interpleader being a remedy solely for the protection of the stakeholder, it may not be used by the stakeholder as a weapon to defeat recovery from funds other than the one before the court.”

The bankruptcy court found that abstention was appropriate because state law issues predominate over bankruptcy issues, there are no bankruptcy claims to resolve, this court’s ability to adjudicate the rights of non-debtor parties against each other is not certain, and the adversary complaint seeks only to limit the insurer’s liability rather than determine the debtor’s actual damages. Accordingly, the adversary proceeding was stayed pending the outcome of the Missouri lawsuit.

The court granted judgment on the pleadings in the debtor’s favor in this adversary proceeding by the debtor’s former wife seeking to except a property settlement debt from discharge under 11 U.S.C. §§ 523(a)(4) and (15).

The debtor-defendant moved for summary judgment but filed no evidence, so the court treated the motion as one for judgment on the pleadings under Rule 12(c). The court held, first, there is no claim to adjudicate under §523(a)(15) because if the debtor completes all payments under his Chapter 13 plan and obtains a discharge under § 1328(a), any debt under § 523(a)(15) is expressly discharged. If the debtor does not complete all plan payments or obtains a hardship discharge under § 1328(b), a claim under § 523(a)(15) is expressly not discharged. An adversary proceeding cannot change the application of the statute.

The court also found that the plaintiff had not stated a claim for fraud or defalcation while acting in a fiduciary capacity under § 523(a)(4) because no express or technical trust exists as required by the statute. The debt held by the plaintiff is a simple money judgment entered to equalize the division of marital property and does not create a fiduciary relationship or trust.

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