Wojcik v. Gold (In re Daher)

Summarized by J. Debbeler , Bricker Graydon LLP
11 years 3 months ago

Citation:

Sixth Circuit Court of Appeals Bankruptcy Appellate Panel No. 14-8028, File No. 14b0006n.06

Tag(s):

Ruling:

Insurance proceeds in which the Debtor had an interest at the time of filing of the bankruptcy case are property of the bankruptcy estate. Even though debtor has a pre-petition insurance policy on property where mortgagee is loss payee, debtor retains an interest in those proceeds when loss occurs pre-petition. Closed Chapter 7 case can be reopened to address distribution of insurance proceeds as debtor's interest in those proceeds in sufficiently rooted in debtor's pre-bankruptcy past even though the determination of the rights in the proceeds had not occurred pre-petition.

Procedural context:

Owner of real estate executed two notes and mortgages in 2004 which were delinquent and subject of a foreclosure in 2006. Post judgment but pre-sheriff's sale the property suffered damage and owner submitted insurance claim. Owner filed and dismissed a Chapter 13 and then filed a Chapter 7 case. There was no mention of the insurance claim in the Chapter 7 case. Post Chapter 7 case closing Debtor filed state court suit to collect insurance proceeds. Bankruptcy case was reopened to allow Trustee to take part in state court case. Trustee filed adversary in bankruptcy case for turnover of insurance proceeds.

Facts:

During a foreclosure case the property suffered damage and the owner received an insurance check from an insurance claim. Owner signed check and sent it to mortgagee. Property was then sold at sheriff's sale to mortgagee. Debtor filed a Chapter 7 case and did not mention the insurance claim. After Chapter 7 closed Debtor filed state court case against mortgagee to recover the insurance proceeds as the check had never been cashed. Debtor reopened Chapter 7 for the limited purpose of allowing Chapter 7 trustee to represent the estate in the state court case. Debtor won state court case and trustee filed an adversary to get insurance proceeds. Debtor claimed Chapter 7 estate had no interest in the insurance proceeds as they had been payable to the mortgagee as loss payee.

Judge(s):

Emerson, Humphrey and Preston (BAP)

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