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Summarizing by Amir Shachmurove

Fina v. Fina (In re Fina)

Fina v. Fina (In re Fina), No. 12-2526, 2014 WL 46166 (4th Cir. Jan. 7, 2014).
The Fourth Circuit affirmed the district court’s order upholding the decision of the bankruptcy court to impose contempt sanctions against the appellants for violation of the discharge injunction.
Procedural context:
The bankruptcy court imposed sanctions against the appellants for violating the discharge injunction. The appellants appealed. The district court affirmed. The appellants appealed again. The Fourth Circuit affirmed.
The appellants were homeowners whose home had been badly constructed by the debtor contractor who filed for chapter 7 bankruptcy protection and received a chapter 7 discharge. The Minnesota Contractors Recovery Fund (the "MCRF") provides up to $50,000 to homeowners who have been damaged by a licensed contractor's failure to complete a construction project. To take advantage of the MCRF, homeowners must first obtain a judgment against each licensed member of the contracting company. After the debtor contractor had received his discharge, the homeowner appellants filed suit against the debtor contractor so that they could obtain a judgment against the debtor contractor and recover under the MCRF. Paragraph 6 of the complaint stated that: "[t]his lawsuit is being filed solely for purposes of collecting from the [MCRF] pursuant to Minnesota § 326B.89.” The debtor contractor then petitioned the bankruptcy court to reopen his chapter 7 case and impose sanctions on the homeowner appellants for filing suit against him in violation of the discharge injunction. The bankruptcy court agreed with the debtor contractor. The district court affirmed. The Fourth Circuit affirmed. The homeowner appellants should have sought leave of the bankruptcy court before pursuing a judgment against the debtor.
Before GREGORY, SHEDD, and KEENAN, Circuit Judges.

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