October 25, 2011

ON 10/25/2011 AT 8:45 LIVE RADIO “ ITS NO JOKE BEING BROKE! [radio phone 239-5733] hosted by Flint Bankruptcy Attorney Terry Bankert 810-235-1970 .

 Downtown Flint Office. Contact us today or a free appointment.

I talk to many people who say “ I need help now. This phone has to stop ringing. I work two jobs,
have kids, no place to turn when unpaid bills face me at the end of the month. How do I get out of this debt?

CHAPTER SEVEN BANKRUPTCY is a way. The process is you have to income qualify. You disclose all your assets, income and your debt. In your Bankruptcy papers all your financial activities for the past several years are disclosed.Three months later you receive a discharge (cancellation) of most types of debts and emerge with all or most of your property except things like luxury items and real estate investments.

Are you suffering from loss of income, garnishment, creditor harassment, repossession, foreclosure, lawsuit, medical bills or loss of governmental support ? Following is how you stop creditors from harassing you on the phone.

Once you file a bankruptcy which takes usually a week or more after our first meeting you have a powerful protection its called an automatic stay. This stay stops any efforts by your creditors to collect debts from you. When they call just give them your bankruptcy filing number, the name of the court, and the date of filing. They will back off . If they do not they are violating Federal Law.

Everything aimed at you, except taxes, student loans , child support and spousal support, will stop. This includes garnishment of wages, repossess cars and foreclosure of your home will stop.

It is our logo but It’s no joke being broke. We know it. This is Michigan in a depression in the beginning of an era that will later be called the de-industrialization of America. Our government is bailing out Wall Street, big business and Big Banks. A personal bankruptcy will bailout you out.

You qualify for a Chapter 7 Bankruptcy if you make less than $42,562 in a one person household, $50,738 in a two person household.

Most pensions and retirements are exempt from bankruptcy. The rest of your property becomes part of your Bankruptcy estate and is under the control of a bankruptcy trustee.

Problems may arise if you have unloaded property at less than market value in the previous two years. All of your property is included even marital property. The trustee will look at all your property, its value and the categorical exemptions to see if there is property to sell and give the proceeds to creditors after keeping 8% for the trustee.

The trustee will have no interest in your property that is protected by exemptions ( dollar amounts of vale) or that will not have a net profit after sale and payment of liens and trustee costs. Most people in bankruptcy keep their personal belongings. If you owe more on your house than what it is worth the trustee in bankruptcy will have no interest in it.


Yes in the following circumstances .

You have to be current on your mortgage and car note. You have no significant non exempt value in your house or car. Exempt values, $21,000 plus change in your house and $3,400 plus change in your car. Example. You car is paid off and if you sold it today you could get $3,000 for it. You get to keep your car. Make a no fee appointment with me and I will explain the exemptions to you.

You cannot repair your credit by paying your bills slowly. It is your right to get rid of your bills and have a fresh start. The Bankruptcy Laws will allow you to keep most of your personal possessions.

ITS NO JOKE BEING BROKE! hosted by Flint Bankruptcy Attorney Terry Bankert 810-235-1970 .

 Downtown Flint Office. Contact for a free appointment.


October 16, 2011


In all Chapter 7 cases, the U.S. trustee appoints a trustee to administer the estate created by the filing of the debtor’s bankruptcy. 11 USC 701. The trustee is typically a member of a private panel of individuals appointed by the Office of the U.S. Trustee, although certain circumstances, such as a conflict of interest affecting all of the private panel trustees, may necessitate the appointment of an individual who is not a member of the standing panel. See 11 USC 702 (allowing for election of trustee).

In his or her capacity as trustee, the trustee is required to investigate, collect, and liquidate the debtor’s nonexempt property and distribute the proceeds to creditors according to the priorities established in the Bankruptcy Code. 11 USC 704(a). The trustee is charged with performing other duties as well, including, where appropriate, opposing an individual debtor’s right to receive a discharge. 11 USC 705. In a large number of Chapter 7 cases, trustees retain counsel to assist them in administering the estate. If you are requested to represent a trustee in a Chapter 7 case, you should first make certain that the bankruptcy court administering the case enters an order appointing you as counsel. 11 USC 327(a). Typically, court approval of the trustee’s employment of professionals is obtained on an ex parte basis; however, the process requires the concurrence of the U.S. trustee.

In the Eastern District of Michigan, LBR 2014-1 (ED Mich) governs the procedure for applications for the retention of professionals, including the attorney for a Chapter 7 trustee. In general, the application must be accompanied by a statement from the attorney that he or she is a disinterested person and holds no interest adverse to the estate. Bankruptcy Rule 2014; LBR 2014-1(a) (ED Mich); see also 11 USC 327(a). This statement must also disclose all connections of the attorney with the “debtor, creditors or any other party in interest, and their respective attorneys and accountants” as required by Bankruptcy Rule 2014. LBR 2014-1 (ED Mich); see also LBR 2014 (WD Mich). This application must be filed with the bankruptcy court, and a copy of the application, along with a proposed order of retention, must be served on the U.S. trustee. LBR 2014-1(b) (ED Mich). If the U.S. trustee concurs in the application, he or she will sign the proposed order. If the U.S. trustee fails to sign the order within seven days, the applicant must serve on the U.S. trustee a notice of a hearing for the entry of the retention order. Once the retention order is entered, it is deemed effective as of the date the application was filed, “unless the Court orders otherwise.” Id.


October 9, 2011

History of Bankruptcy Law

Flint Bankrutpcy Lawyer  posts here this overview of Flint Bankruptcy. See cite at the bottom.

§1.1 Laws that provide for the distribution of a debtor’s property among creditors have been a part of civil jurisprudence since ancient times. Under the Code of Hammurabi, an insolvent debtor was often sold into slavery. In Celtic Ireland, a creditor would often “fast on” a debtor by placing himself or herself before the debtor’s doorway until the debt was paid. See generally Louis Edward Levinthal, The Early History of Bankruptcy Law, 66 U Pa L Rev 223 (1918).

For help-Flint Genesee MI Attorney / Lawyer practicing in Family Law, Divorce, Bankruptcy. 810-235-1970


The 2005 amendments changed over 100 years of bankruptcy law. Some of the important changes made by BAPCPA include the following:
requiring consumer debtors to undergo financial counseling before filing for bankruptcy, 11 USC 109(h), 521(b), and before discharge, 11 USC 727(a)(11), 1328(g)(1)
means testing for consumer debtors seeking to discharge debts under Chapter 7, 11 USC 707(b)
bars against repetitive filing through limitation of the automatic stay, 11 USC 362(c)(3)
elimination of the debtor’s ability to retain secured collateral without redemption or reaffirmation, 11 USC 521(a)(6)

For help-Michigan, Flint Genesee, Lawyer / Attorney , Bankruptcy, 810-235-1970, Divorce and Family Law


II. Sources of Bankruptcy Law: The Bankruptcy Code and Rules

A. Structure of the Bankruptcy Code

§1.2 Most of the operative provisions of the Bankruptcy Code are located in Title 11 of the United States Code. This title is divided into nine chapters—1, 3, 5, 7, 9, 11, 12, 13, and 15. Some of them offer separate forms of relief to financially distressed debtors. Chapter 7 provides for the automatic appointment of a trustee who will liquidate all of the debtor’s nonexempt property and distribute the proceeds to creditors. Chapter 9 permits troubled municipalities to reorganize their affairs under the protection of the bankruptcy court. Chapter 11 allows for the reorganization of distressed debtors; this form of relief is often selected by troubled businesses that need some time to restructure their financial affairs. Chapter 12 permits family farmers to reorganize their farming operations under the protection of the bankruptcy court. Chapter 13 provides for the adjustment of debts of persons with “regular income.” This chapter expands the scope of the old wage-earner provisions contained in Chapter XIII of the Bankruptcy Act of 1898. Finally, Chapter 15 deals with ancillary and cross-border cases.

For Help-Bankruptcy, 810-235-1970, Flint, Bay CIty, Saginaw, Owosso, and Burton. Genesee Flint Lawyer / Attorney also Family Law and Divorce


B. Rules Governing Bankruptcy Procedure: National and Local

§1.3 In 1983, the U.S. Supreme Court, acting pursuant to 28 USC 2075, adopted the Federal Rules of Bankruptcy Procedure (Bankruptcy Rules). These rules were drafted to conform with the provisions of the Code and govern procedure in all federal bankruptcy courts; they may not abridge, enlarge, or modify the substantive rights granted under the Code. 28 USC 2075. Recent revisions to the Bankruptcy Rules were made in 2003, 2008, 2009, and 2010 (effective December 1).

For help-Flint Michigan, Terry Bankert 810-235-1970 Flint Lawyer Attorney practicing in Family Law and Bankruptcy


B. Core and Related Proceedings

1. The Significant Distinction

§1.6 When litigating in the bankruptcy court, the practitioner must be keenly aware of the distinction made in the jurisdictional provisions of the Bankruptcy Code between core and noncore (or related) proceedings. This distinction is important primarily because in related proceedings, bankruptcy judges may not enter final orders and judgments without the consent of the litigants.

2. Core Proceedings

§1.7 What’s New in this Section Bankruptcy judges may hear and decide all core proceedings and may enter orders and judgments in those proceedings subject to appellate review. 28 USC 157(b)(1). Examples of core proceedings are listed in 28 USC 157(b)(2) and include (1) motions to lift the automatic stay, (2) actions to recover fraudulent conveyances and preferences, and (3) determinations whether certain debts are dischargeable. Also included on the list are “other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship.” 28 USC 157(b)(2)(O). For decisions construing the scope of core proceedings, see In re Pioneer Inv Servs Co, 946 F2d 445 (6th Cir 1991); Bliss Techs, Inc v HMI Indus (In re Bliss Techs, Inc), 307 BR 598 (ED Mich 2004); and In re Marshall, 118 BR 954 (WD Mich 1990).

For help-Flint DIvorce Family Law Attorney / Lawyer 810-235-1970


E. Venue of Bankruptcy Cases and Proceedings
§1.17 In general, a debtor who seeks bankruptcy relief may file a bankruptcy petition in the court for the district in which the debtor’s domicile, residence, principal place of business, or principal assets have been located for 180 days before the date of filing. 28 USC 1408. In the Eastern District of Michigan, LBR 1071-1(a) (ED Mich) establishes three administrative units (Detroit, Flint, and Bay City) for cases filed in that district. If a case is filed in the wrong administrative unit—for example, if a corporation headquartered in Bay City files its petition in Detroit—the bankruptcy judge may transfer that case to the proper administrative unit. LBR 1071-1(c)(1) (ED Mich); see, e.g., In re Romzek, 50 BR 720 (Bankr ED Mich 1985). The Bankruptcy Court for the Western District of Michigan has adopted a similar local rule. See LBR 1014 (WD Mich).

For help-Divorce Lawyer in Flint Genesee MI 810-235-1970


H. Electronic Filing of Cases and Pleadings
§1.20 On February 3, 2004, the U.S. Bankruptcy Court for the Western District of Michigan adopted Administrative Order No 2004-02, which provides for the electronic filing, signing, verification, and service of documents. This order provides that the electronic filing of a document in accordance with the Administrative Procedures “constitutes the filing of the document for all purposes.” On July 14, 2004, this court followed with Administrative Order No 2004-06, which requires “all petitions, pleadings and other papers filed in all cases and proceedings, whether pending or new,” to be filed electronically beginning on January 1, 2005. The Administrative Order was incorporated into and was superseded by the February 1, 2007, comprehensive revisions to the Western District Local Rules. Similarly, the Eastern District implemented electronic filing on a mandatory basis on January 1, 2006, and electronic filing is covered in the Eastern District’s local rules.

For Help-Bankruptcy Lawyer Flint, Owosso , Bay CIty, Saginaw Terry Bankert 810-235-1970


IV. Parties in Interest in Bankruptcy Cases
A. In General
§1.21 In every bankruptcy case, there are certain persons, called parties in interest, who perform their statutory duties and attempt to enforce their rights and privileges. They are the debtor, the trustee, the U.S. trustee, secured creditors, unsecured creditors, and, in certain cases, creditors’ committees and equity security holders.

For help-Michigan Divorce Mediator Terry Bankert 810-235-1970


B. Debtors
1. Chapter 7 Cases
§1.22 In Chapter 7 cases, a debtor may be an individual, a partnership, a corporation, or some other artificial person. However, only an individual may receive a discharge of debts in Chapter 7 cases; other entities may not. The 2005 amendments require that a debtor receive an individual or group briefing that outlines the opportunities available for credit counseling. The briefing must have been received within the 180-day period preceding the filing of the bankruptcy case. 11 USC 109(h)(1). This requirement is commonly referred to as the requirement for prefiling credit counseling.
Chapter 7 debtors must file certain documents with the bankruptcy court; must appear for questioning by creditors, the bankruptcy administrator, and the trustee at the meeting of creditors; and must perform other duties specified in the Code and the Bankruptcy Rules. If the individual debtor performs these duties and is not guilty of any bad acts as defined in the Code, the debtor will be granted a general discharge of prepetition debts and will retain exempt property to be able to make a fresh start in life.
After the debtor meets the duties specifically required under the Code, the debtor is required to complete an instructional course concerning personal financial management to obtain a discharge. 11 USC 727(a)(1). This is another requirement added by BAPCPA.

For Help-Flint Family Law ( Divorce) and Bankruptcy Lawyer


2. Chapter 11 Cases
§1.23 Individuals, partnerships, and corporations all qualify for relief under Chapter 11 of the Code. A Chapter 11 debtor is normally retained as debtor-in-possession at the outset of the case and, as such, continues to operate its business as a fiduciary for all creditors within the guidelines prescribed by the bankruptcy court. The debtor, if not displaced by a trustee, then negotiates with its secured and unsecured creditors the terms of a plan calling for either the reorganization or the liquidation of the debtor’s assets and the adjustment of the rights of creditors and stockholders. This plan is sent to all creditors for a vote, and, after the votes are tallied, the plan may be confirmed and given effect by the bankruptcy court. Special rules apply for small businesses. See chapter 6.
In 2005, BAPCPA enacted comprehensive revisions to 11 USC 1112 and 1104, addressing conversion or dismissal and appointment of trustees. As amended, 11 USC 1112 provides that the courts “shall” rather than “may” convert or dismiss a case if it is in the best interests of creditors and if the movant establishes cause. Comprehensive examples of cause are set forth in the provision, and, in the event that the court decides that there is a basis or cause to dismiss or convert, the court has the alternative of appointing a Chapter 11 trustee or examiner.

For help-Bankruptcy Attorney 810-235-1970 Terry Bankert


3. Chapter 12 Cases
§1.24 Only “a family farmer or family fisherman with regular annual income” may be the subject of a Chapter 12 case. 11 USC 109(f). The term family farmer includes individuals, partnerships, and corporations but does not encompass all entities that are engaged in farming operations. 11 USC 101(18). Family farmers who seek relief under Chapter 12 normally file their reorganization plans soon after their case has been commenced. Chapter 12 plans provide for payments to be made on secured and unsecured debt over a period that may last as long as five years. Confirmation of the plan does not result in the family farmer’s discharge; this is granted only when the debtor completes making payments under the plan or qualifies for a hardship discharge.
Although Congress retroactively extended Chapter 12 in 2004 ( Pub L No 108-369, 118 Stat 1749 (2004)), BAPCPA made Chapter 12 a permanent provision of the Code.

For help-Flint Divorce Lawyer Attorney *10-235-1970 Terry Bankert


4. Chapter 13 Cases
§1.25 Only “individuals with regular income” may file Chapter 13 petitions and propose plans providing for the composition and extension of debts. Relief under this chapter is not available to artificial persons, nor is it available to individuals who do not receive regular income or are carrying heavy debt loads. 11 USC 109. A Chapter 13 debtor normally files, along with a voluntary petition, a proposed Chapter 13 plan, in which the debtor proposes to pay all or a portion of the debts over time with regular income. Unlike the Chapter 7 debtor, the Chapter 13 debtor is not required to surrender nonexempt property to the trustee for liquidation; the plan may propose that the debtor keep this property while he or she pays the debts. Unlike the Chapter 11 debtor, the Chapter 13 debtor does not receive a discharge once the plan is confirmed; discharge is granted only when the debtor performs all the obligations under the plan or otherwise qualifies for a hardship discharge.
As of April 1, 2007, the eligibility requirements for Chapter 13 debtors have been increased. Only individuals with regular income who have, on the date of filing a Chapter 13 petition, noncontingent and liquidated secured debts in an amount less than $1,010,650 and noncontingent and liquidated unsecured debts in an amount less than $336,900 are eligible for Chapter 13 relief. 11 USC 109(e). The debt limits are adjusted every three years, 11 USC 104(a), and increased to $1,081,400 and $360,475 effective April 1, 2010. See generally In re Pisczek, 269 BR 641 (Bankr ED Mich 2001); In re Faulhaber, 269 BR 348 (Bankr WD Mich 2001).

For help-Flint Family Law Attorney Terry Bankert


C. Trustees
1. Chapter 7 Cases
§1.26 In Chapter 7 cases, the U.S. trustee appoints an interim trustee on the entry of an order for relief, which generally occurs when the bankruptcy petition is filed. The trustee is selected from the panel of trustees for the judicial district in which the Chapter 7 petition has been filed by or against the debtor. The U.S. trustee may serve as trustee in a Chapter 7 case if none of the panel trustees are able or willing to serve. At the meeting of creditors, the creditors may vote either to allow the interim trustee to continue as the permanent trustee or to replace that person with another from the panel. See generally In re Lindell Drop Forge Co, 111 BR 137 (Bankr WD Mich 1990). If no voting takes place, the interim trustee becomes the permanent trustee.
The trustee is a representative of the debtor’s estate and as such is required to investigate the debtor’s affairs and liquidate his or her nonexempt property for the benefit of creditors. The trustee may also seek to augment property of the estate by filing actions to recover preferences, fraudulent conveyances, and other voidable transfers made by the debtor to third parties. Once this property is collected and reduced to cash, the Chapter 7 trustee files a final report and account with the bankruptcy court in which the trustee proposes how these cash proceeds should be distributed. When the court approves this final report and account, the trustee distributes the cash to creditors and closes the Chapter 7 case. See chapter 5 for further discussion of the trustee’s role in Chapter 7 cases.

For help-Terry R.Bankert P.C. Bankruptcy Discussions


Handling Consumer and Small Business Bankruptcies in Michigan ch 1 (Richardo I. Kilpatrick et al eds, ICLE 2009), at

(last updated 09/30/2011


July 17, 2011


This post is by Flint Divorce and Bankruptcy  Attorney Terry Bankert. Divorce lawyer Terry Bankert  often is involved in child custody, child support, parenting time and grandparents rights.

Flint Matrimonial Lawyer Bankert’s articles on Family Law to include Divorce can be found at  Flint Bankruptcy Lawyer Bankert also writes about chapter 7 bankruptcy at

SOURCE- COURT-UNITED STATES BANKRUPTCY COURT,EASTERN DISTRICT OF MICHIGAN,SOUTHERN DIVISION,In re: Case No. 11-57645 ,QUIANA S. HUMPHREY, pro se, Chapter 7,Debtor. Judge Thomas J. Tucker. AND COMMENTS OF ATTORNEY BANKERT IN CAP’S OR [trb].This opinion has been modified for presentration


This case is before the Court on a motion filed by Debtor for an extension of time to file
the following documents, which were due to be filed no later than July 11 2011: Credit
Counseling Certificate; Declaration Concerning Debtor(s) Schedules-Official Form B6; Chapter 7 Statement of Current Monthly Income and Means Test Form 22A; Statistical Summary; Statement of Financial Affairs; Summary of Schedules; Schedule B; Schedule D; Schedule E; Schedule F; Schedule H; Schedule I; and Schedule J (Docket # 11, the “Motion”).

The Motion gives no specific reason why none of the missing documents was timely
filed, but rather generally alleges stress. Also, the Motion states, in relevant part, that Debtor has “borrowed monies to finish procedure Credit Counseling.”

This statement implies that Debtor did not obtain credit counseling on or before the date of filing the bankruptcy petition.


The Court will deny the Motion, and dismiss this case, because the Motion does not
demonstrate cause for an extension of time to file the missing documents, and because it appears that Debtor is not eligible to be a debtor in this bankruptcy case under 11 U.S.C. § 109(h)(1).

That provision provides in relevant part, that
an individual may not be a debtor under this title unless such
individual has, during the 180-day period ending on the date of
filing the petition by such individual, received from an approved
Nonprofit budget and credit counseling agency described in section
111(a) an individual or group briefing (including a briefing
conducted by telephone or on the Internet) that outlined the
opportunities for available credit counseling and assisted such
individual in performing a related budget analysis.
(italics added).

It appears that Debtor did not receive credit counseling as of the date of filing
the Motion (July 11, 2011), even though Debtor filed a voluntary petition for relief under
Chapter 7 on June 27, 2011. With exceptions not applicable here, 11 U.S.C. § 109(h)(1) requires a debtor to obtain credit counseling on or before the date of filing the bankruptcy petition.

1. The Motion (Docket # 11), is denied.
2. This bankruptcy case is dismissed.
Signed on July 15, 2011

Bankert is active in his community and presents information on a wide variety of topice through his blog at

You are invited to Join Bankert’s Face Book group “ Family Law and Bankruptcy Discussions” at

You can join Bankert on facebook at
Family Law attorney Bankert can be reached at
or 1-810-235-1970.

Drivers responsibility fines and bankruptcy discharge.

May 31, 2011
From Subject (Thread Messages) Date Size



Terry R. Bankert
1000 Beach St Flint Mi 48503

In Michigan Driver Responsibility penalties are found in MCL 257.732 (a) Public Act 165 of 2003 taking effect 10/01/2003 and amended  Public Act 52 of 2004 and Public Act 460 of 208.

The Acts purpose is to act as a deterrent to bad driving and to fund the marginal cost to society. Violations for drunk driving or not having proper insurance trigger the fees.

Several states have these types of fines.

In Michigan the act makes drivers who reach certain points against their driving record, do not have proof of insurance, or ticketed for drunk driving and other acts to pay an extra $100-500 annual fee to maintain their license in addition to other costs.[nc 2005]

In most cases failure to pay the yearly assessment on time results in license suspension. The license re instatement will cost another $125.00.[nc 2005]

Driver responsibility programs mean big money for the states who have tried them.[nc 2005]

Several of the  Michigan Fees are;
$100 per year for as long as the license has 7 points,
$1,000 for 2 years for DUI,
$200 for 2 years for expired insurance,
$150 for 2 years for having an expired license.

These fines are not dischargable in Bankruptcy.
The United States Bankruptcy Code identifies governmental fine,  penalties and forfitures as non dischargable in bankruptcy. 11 USC 523  ( a) (7), 727 1141 a, 1228 b, 1328 b.

In a Texas Bankruptcy Court the drivers responsibility surcharge was found to no be dischargable.  In  a CHapter 7 the debtor had scheduled the penalties as an unsecured creditor not a priority.

In Texas a surcharge is imposed on persons convicted of traffic violations. Sec. 708.102 and 708.13. The debtor pled that the $5,960 surcharge was dischargable and the State had violated the automatic stay.

The Bankrutcyu court relied on    11 USC 523 ( a) (7) and  that Drivers Responsibility  surcharges have been identified by previous decisions as fines and penalties.
see Celotex Corp v Catrell 477 US 317, 1986, and US v Kolstad ( In re Kolstad 101 BR 492, 493, Bankr SD Texas 1989.

Terry R. Bankert
1000 Beach St Flint Mi 48503


May 6, 2011














April 29, 2011



WHAT IS THE COST OF FLINT BANKRUPTCY CHAPTER SEVEN? $750 Plus costs , $100 down 30 day payment plan. We will make the paperwork easy for you. We understand how you feel and will take the time to listen. You will not be given the fast shuffle and pawned off on staff Attorney Bankert ,  ,will be there for you at appointments and in court. Our fees are like putting a bankruptcy on layaway. Chapter 13 a few more fees during plan, not much. What can I keep in a chapter 7 (seven) ? What can I get rid of in a Chapter 7? QUESTIONS? Bankruptcy Lawyer Terry R. Bankert will answer all your questions at a free initial meeting. File now if you have a garnishment, house foreclosure or repossession. See also  We are a debt relief law firm/agency that helps you file bankruptcy. Families in Bankruptcy also have other problems. See
Want to work out all issues together then go on your way. Attorney Bankert is a family law mediator you and your spouse can use Attorney Bankert to see through your joint bankruptcy then mediate a fair divorce judgment. Call 810-235-1970


April 23, 2011

United States Bankruptcy Court
Eastern District of Michigan
Southern Division
In re:
Axxxxx, Case No. 08-57865-R
Debtor. Chapter 7
Opinion and Order Granting Stay
The debtor filed for chapter 7 relief on July 24, 2008. He was represented by Edward J.Gudeman of Weik and Assoc., P.C. On December 2, 2010, the debtor filed a motion to remove Gudeman as his attorney. The motion was granted by order dated January 31, 2011.
On March 22, 2011, the debtor, through his new attorney, Jay Kalish, filed a motion,
pursuant to § 329 and Rule 2017, for a determination of the propriety of his fee agreement with Gudeman and for disgorgement of fees. The debtor also filed a motion seeking to remove a state court action that Gudeman had filed against the debtor for collection of fees for the bankruptcy case.
The Court conducted a hearing on the motions on April 11, 2011. The Court denied the debtor’s motion for removal as untimely and requested briefs from the parties on the issue of whether the Court’s jurisdiction under § 329 is exclusive.
Federal district courts, and their bankruptcy courts by delegation, have exclusive jurisdiction “of all cases under title 11.” 28 U.S.C. § 1334(a). Pursuant to § 1334(e), the district courts also have exclusive jurisdiction over property of the debtor, property of the estate, and all claims and causes of action relating to § 327. In all other cases “arising under title 11, or arising in or related  to cases under title 11,” the district courts “shall have original but not exclusive jurisdiction[.]” 28 U.S.C. § 1334(b).
An exception to the general rule of concurrent jurisdiction is found in § 523(c)(1), which grants bankruptcy courts exclusive jurisdiction to determine the dischargeability of debts described in § 523(a)(2), (4) and (6) of the Code. See 11 U.S.C. § 523(c); Dollar Corp. v. Zebedee (In re Dollar Corp.), 25 F.3d 1320, 1325 (6th Cir. 1994) (“Congress intended ‘to take the determinations governed by 11 U.S.C. § 523(c) away from state courts and grant exclusive jurisdiction in the
bankruptcy courts.’”) (quoting Spilman v. Harley, 656 F.2d 224, 226 (6th Cir.1981)).

“[T]he operative language ‘unless the court determines such debt to be excepted from discharge,’ which was carried forward from a 1970 amendment to the prior Bankruptcy Act, is understood to deprive nonbankruptcy courts of jurisdiction.” Moncur v. Agricredit Acceptance Co. (In re Moncur), 328 B.R. 183, 189 (B.A.P. 9th Cir. 2005).
Likewise, § 329 contains the same restrictive language. That section provides, in pertinent part, that an attorney representing a debtor must file with the court a statement of compensation paid or agreed to be paid and that “if such compensation exceeds the reasonable value of any such services, the court may cancel any such agreement, or order the return of any such payment, to the
extent excessive[.]” 11 U.S.C. § 329(b) (emphasis added).
Section 329 “was enacted because ‘payments to a debtor’s attorney provide serious potential for evasion of creditor protection provisions of the bankruptcy laws, and serious potential for overreaching by the debtor’s attorney, and should be subject to careful scrutiny.’” In re Campbell, 259 B.R. 615, 625 (Bankr. N.D. Ohio 2001) (quoting H.R .Rep. No. 95–595, at 329 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6285). It enables courts to carefully scrutinize compensation paid to
debtors’ attorneys, providing protection to debtors and creditors and preventing overreaching by attorneys. Jensen v. United States Trustee (In re Smitty’s Truck Stop, Inc.), 210 B.R. 844, 848 (B.A.P. 10th Cir. 1997). See also In re Busy Beaver Bldg. Ctrs., Inc., 19 F.3d 833, 844 (3rd Cir. 1994) (“Disagreeable as the chore may be, the bankruptcy court must protect the estate, lest overreaching attorneys or other professionals drain it of wealth which by right should inure to the
benefit of unsecured creditors.”).
The court in In re Williams, 2003 WL 22722841 (Bankr. D. Vt. 2003), explained:
Ensuring that the relationship between a debtor and his or her
attorney is fair is one of the primary duties the bankruptcy courts
must perform in their capacity as guardians of the integrity of the
bankruptcy system. Clients seeking bankruptcy advice are frequently
in particularly vulnerable situations, where they have both a desperate
need for immediate financial relief and very little understanding of
the complexities of bankruptcy law. Therefore, court review of
transactions between debtors and their attorneys require sensitivity to
these vulnerability factors, acknowledgment of the very different
bargaining position of each party in the professional relationship, and
a heightened level of scrutiny.
Id. at *3.

Given the plain language of § 329 and the important role of the bankruptcy court in
monitoring the relationship between debtors and professionals, the Court concludes that it is within the sole province of the bankruptcy court to determine the propriety of a debtor’s fee agreement with his or her attorney.
Further support for this conclusion is found in Elias v. United States Trustee (In re Elias), 188 F.3d 1160, 1165 (9th Cir. 1999), wherein the court explained:
[B]ankruptcy courts have recognized that fee issues, and control of
the parties and their representatives, can be central to the proper
conduct of bankruptcy proceedings. We expressed a similar view in
a different context when we pointed out that regulation of the
activities of parties before the bankruptcy court should be in the
hands of that court alone. See MSR Exploration, Ltd. v. Meridian
Oil, Inc., 74 F.3d 910, 915 (9th Cir.1996). Bankruptcy courts surely
have the most expertise and interest in controlling their own
proceedings and in regulating the behavior of professionals who seek
to appear before them or work on cases under their tutelage. It is
those courts that help prevent distressed debtors, and their creditors,
from becoming cheerless carrion for voracious vultures, who would
pick the estate clean. In my opinion, there is a need for exclusivity
and I would require it . . . .
Id. at 1165. See also In re Williams, 2003 WL 22722841, *2 (Bankr. D. Vt. 2003) (“Bankruptcy courts, through the United States district courts, have exclusive jurisdiction over the matter of
 attorney’s fees in a bankruptcy proceeding.” citing Edgewater Sun Spot, Inc. v. Pennington & Haben
P.A. (In re Edgewater Sun Spot, Inc.), 183 B.R. 938, 943 (N.D. Fla.1995), aff’d, 84 F.3d 438 (11th Cir.1996)).
Accordingly, the Court concludes that it has exclusive jurisdiction over the debtor’s claim under 11 U.S.C. § 329, and that therefore the state court matter of Gudeman & Associates, P.C. vs.Axxxxx, Oakland County Circuit Court Case No. 2010-110550-CK, shall be stayed pending this Court’s resolution of that claim.
For Publication
Signed on April 22, 2011

BANKRUPTCY FLINT, BAY CITY, OWOSSO, LAPEER (810) 235-1970.Question cost of bankruptcy ? Call out Sam for chapter seven bankruptcy protection. Plea to Lee for Free consultation about bankruptcy evaluation. Stop repossession, stop foreclosure, stop garnishment because its

April 19, 2011

BANKRUPTCY FLINT, BAY CITY, OWOSSO, LAPEER (810) 235-1970.Question cost of bankruptcy ? Call out Sam for chapter seven bankruptcy protection. Plea to Lee for Free consultation about bankruptcy evaluation. Stop repossession, stop foreclosure, stop garnishment because its

The BANKRUPTCY plaintiff in this adversary proceeding is the Chapter 7 trustee. The BANKRUPTCY trustee filed this adversary proceeding seeking a declaratory judgment that the defendant insurance company is required to provide coverage for certain claims asserted against the Chapter 7 debtor. The defendant filed a motion for summary judgment based upon its contention that the insurance policy at issue does not provide coverage for the claims identified by the trustee. For the reasons explained in this opinion, the Court grants the defendant’s motion for summary judgment.

Source-UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION (DETROIT) ,In re: Chapter 7 ,Romeo Montessori School Association, Inc., Case No. 09-63398 ,Debtor. Hon. Phillip J. Shefferly,Stuart A. Gold, Trustee, Adversary Proceeding No. 10-04884-PJS,Plaintiff, v.Consolidated Insurance Company, Defendant.OPINION GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT- Presented for consumer education by Flint Bankrutpcy lawyer Terry Bankert. Bankruptcy attorney Bankert contribution CAPS or cite [trb] see


This is a non-core proceeding related to a bankruptcy case over which the Court has
jurisdiction under 28 U.S.C. §§ 1334(b) and 157(c)(1). The parties consent to have the Bankruptcy Court enter orders and judgment under 28 U.S.C. § 157(c)(2) and Local District Rule 83.50(a)(3)(A) (E.D. Mich.).

The following facts are not in dispute. Romeo Montessori School Association, Inc.
(“Debtor”) is a corporation that operated a preschool through elementary private educational facility.
On July 28, 2009, the Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. The Debtor ceased operating the educational facility at that time. Stuart A. Gold (“Trustee”) was appointed as the Chapter 7 trustee. After the case was filed, many of the parents and families (collectively referred to as “Parents”) whose children attended the school filed proofs of claims with the Bankruptcy Court indicating that they held claims against the Debtor because they had prepaid
tuition or for other educational services for the 2009-2010 school year. Although other proofs of claims have also been filed by other creditors in this bankruptcy case, a review of the claims register in the Debtor’s case indicates a total of 48 proofs of claims filed by Parents who prepaid tuition or other payments for the 2009-2010 school year in an aggregate amount of $178,458.69.


After his appointment, the Trustee discovered in the Debtor’s books and records various insurance policies issued by the defendant, Consolidated Insurance Company (“Consolidated”). One of the policies issued by Consolidated provided “school leaders errors and omissions liability and employee benefits liability coverage” for the period beginning October 1, 2008 and ending October 1, 2009 (“School Leaders Policy”).


After reviewing the Parents’ proofs of claims and the terms of the School Leaders Policy, the Trustee demanded in writing that Consolidated provide coverage under the School Leaders Policy for the claims filed by the Parents. On November 30, 2009, Consolidated wrote to the Trustee to inform him that it did not believe that the School Leaders Policy provided coverage for the claims identified by the Trustee based upon the proofs of claims filed by the Parents in the Debtor’s bankruptcy case.


The letter explained specific reasons why Consolidated denied that there was coverage for those claims under the School Leaders Policy, but
also stated that by identifying specific reasons why there was no coverage, Consolidated was not waiving its right to raise other insurance policy language or other issues in determining coverage, and expressly reserved for Consolidated the right to raise additional policy language and issues.

On March 15, 2010, the Trustee filed this adversary proceeding against Consolidated.
The complaint contains one count, and alleges that Consolidated breached the terms of the School Leaders Policy by failing and refusing to provide coverage for the loss of the prepaid tuition and other amounts set forth in the proofs of claims filed by the Parents. On April 29, 2010, Consolidated filed an answer and affirmative defenses. On May 19, 2010, Consolidated filed amended affirmative

In addition to the reasons set forth in its November 30, 2009 letter denying coverage, Consolidated set forth in its affirmative defenses a number of other reasons why it does not believe that the Parents’ claims are entitled to coverage under the School Leaders Policy.
On December 28, 2010, Consolidated moved for summary judgment (docket entry no. 20).

The motion is based on one specific defense. The motion alleges that the Parents’ claims are in substance breach of contract claims and, therefore, are within an exclusion to coverage set forth in section I, C.7. of the School Leaders Policy. That provision of the School Leaders Policy excludes from coverage “any ‘claim’ alleging breach of contract.” The Trustee makes two arguments in response.

First, the Trustee argues that Consolidated has either waived, or is estopped from relying on, the contractual liability exclusion in the School Leaders Policy because Consolidated failed to raise that exclusion in its November 30, 2009 letter that denied the Trustee’s demand for coverage.

Second, the Trustee argues that even if Consolidated has not waived and is not estopped from relying on the contractual liability exclusion, Consolidated is still not entitled to summary judgment because the Parents’ proofs of claims do not expressly allege breach of contract but may be based upon theories of liability other than breach of contract. Therefore, the Trustee argues, the contractual liability exclusion contained in the School Leaders Policy does not apply.

On April 4,  2011, the Court heard Consolidated’s motion for summary judgment and, at the conclusion of the hearing, took the motion under advisement.
Standard for Summary Judgment Under Rule 56(c) Fed. R. Civ. P. 56 for summary judgment is incorporated into Fed. R. Bankr. P. 7056.
Summary judgment is only appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Id. at 247-48. A “genuine” issue is present “‘if the evidence
is such that a reasonable jury could return a verdict for the nonmoving party.’” Berryman v. Rieger, 150 F.3d 561, 566 (6th Cir. 1998) (quoting Anderson, 477 U.S. at 248).
“The initial burden is on the moving party to demonstrate that an essential element of the non-moving party’s case is lacking.” Kalamazoo River Study Group v. Rockwell International Corp., 171 F.3d 1065, 1068 (6th Cir. 1999) (citation omitted). “The burden then shifts to the non- moving party to come forward with specific facts, supported by evidence in the record, upon which a reasonable jury could return a verdict for the non-moving party.” Id. (citing Anderson, 477 U.S.
at 248). “The non-moving party, however, must provide more than mere allegations or denials . . . without giving any significant probative evidence to support” its position. Berryman v. Rieger, 150 F.3d at 566 (citing Anderson, 477 U.S. at 256).

Applicable Law

Insurance contracts are interpreted by reference to state substantive law. Policy provisions often identify the state from which governing law derives. The School Leaders Policy contains no such provision. Nevertheless, Consolidated points out that Michigan law should govern, and the Trustee apparently agrees by relying upon the state’s case law and statutes to argue his case.
Therefore, the School Leaders Policy shall be interpreted in accordance with Michigan law. See Irons Home Builders, Inc. v. Auto-Owners Ins. Co., 839 F. Supp. 1260, 1264 (E.D. Mich. 1993) (“In cases involving the construction of an insurance contract, Michigan law requires the court to apply the law of the state where the insurance policy was issued.”).
Has Consolidated Waived or is it Estopped From Relying on
the Contractual Liability Exclusion in the School Leaders Policy?

Generally, in Michigan, “once an insurance company has denied coverage to an insured and stated its defenses,” the insurance company may be found to have waived or be estopped from raising new reasons to deny liability. Kirschner v. Process Design Assocs., Inc., 592 N.W.2d 707, 709 (Mich. 1999) (citations omitted); see also Mich. Comp. Laws Ann. § 500.2122(1) (2011) (“An insurer or agent, upon making a declination of insurance, shall inform the applicant of each specific
reason for the declination.”). However, application of the doctrines of waiver and estoppel is limited in Michigan, and ordinarily “the doctrines will not be applied to broaden the coverage of a policy to protect an insured against risks that were not included in the policy or that were expressly excluded from the policy.” Kirschner v. Process Design, 592 N.W.2d at 709-10 (citations omitted).

In Lee v. Evergreen Regency Co-Op Management Systems, Inc., 390 N.W.2d 183, 186 (Mich. Ct. App. 1986), the Michigan Court of Appeals identified two exceptions to the rule that coverage cannot be created by application of the doctrines of waiver and estoppel. The first exception is where an insurer has denied coverage and declined to defend an insured in underlying litigation. The second exception is where equity favors making an insurer provide coverage because the insurer misrepresented the terms of the policy to the insured, or defended the insured without
a reservation of rights. The two exceptions noted in Lee v. Evergreen Regency Co-Op were subsequently recognized by the Michigan Supreme Court in Kirschner v. Process Design, 592 N.W.2d at 709-10. Michigan law is well settled that except in these two limited circumstances, the doctrines of waiver and estoppel may not be applied to extend the scope of a policy to protect an insured against a risk that was not provided for in the policy, or to force an insurance company
to pay a loss for which it charged no premium.
The Trustee does not contend that either of the exceptions articulated in Lee v. Evergreen Regency Co-Op and Kirschner v. Process Design is applicable in this case. Therefore, the fact that Consolidated did not identify the contractual liability exclusion when it denied the Trustee’s demand for coverage in its November 30, 2009 letter does not mean that the Trustee can now prevail on its
complaint if coverage is not otherwise provided by the School Leaders Policy. In short, under Michigan law, Consolidated’s failure to identify the contractual liability exclusion in the November 30, 2009 letter is not fatal to Consolidated’s defense to the Trustee’s complaint, and Consolidated has neither waived nor is it now estopped from raising the contractual exclusion defense.

There are additional reasons why the doctrines of waiver and estoppel are not applicable in this case. First, Consolidated’s November 30, 2009 letter plainly stated that [b]y raising any policy provisions or issue [sic] in this letter Consolidated Insurance Company is not waiving the right to raise other policy language or issues in
determining coverage. Consolidated Insurance Company expressly reserves the right
to raise additional policy language and issues.
Although it may have been preferable for Consolidated to identify each and every defense to the Trustee’s demand in its November 30, 2009 letter, it is clear that Consolidated expressly reserved the right to raise additional defenses not specifically identified in the letter. That express reservation independently compels the Court to reject the Trustee’s arguments for application of the doctrines of waiver and estoppel.
Finally, Consolidated did expressly raise the contractual liability exclusion as a defense in its answer and affirmative defenses that it filed in this adversary proceeding on April 29, 2010.

Consolidated raised this defense in its first responsive pleading in this adversary proceeding, nearly a year ago. There was no unreasonable delay in asserting the defense in this adversary proceeding, and there certainly is no evidence that the Trustee has suffered any prejudice by reason of the fact that Consolidated did not specifically identify the contractual liability exclusion defense in its
November 30, 2009 letter. In sum, the Court rejects the Trustee’s arguments that Consolidated has either waived or is now estopped from asserting the contractual liability exclusion contained in the school Leaders Policy.

Are the Parents’ Claims Against the Debtor Within the
Contractual Liability Exclusion of the School Leaders Policy?

Section I, A.1. of the School Leaders Policy is titled “Coverage.” It provides that
Consolidated “will pay those sums that the insured becomes legally obligated to pay because of ‘loss’ arising from a ‘wrongful act’ to which this insurance applies.”

Section I, C. of the School Leaders Policy is titled “Exclusions.” It lists a number of specific exclusions to insurance coverage under the School Leaders Policy, including an exclusion in paragraph 7. titled “Contractual Liability.” Section I, C.7. provides that “[t]his insurance does not apply to . . . [a]ny ‘claim’ alleging
breach of contract.” Consolidated asserts that this exclusion applies to any loss that the Debtor may suffer in having to pay the Parents’ proofs of claim.
Consolidated argues that a review of the Parents’ proofs of claims reveals that all of those claims in substance allege a breach of contract. According to Consolidated, the Parents prepaid tuition and other payments in exchange for the Debtor’s agreement to provide educational services to their children. For support, Consolidated points to the documents that are attached to some of the Parents’ claims. First, Consolidated identifies an Enrollment Agreement pursuant to which the
Debtor agreed to provide educational and child-care services in exchange for payment (Exhibit D to Consolidated’s motion). Second, Consolidated identifies a Child Placement Contract (Exhibit E to Consolidated’s motion). Third, Consolidated identifies a School Summer Camp Registration Form (Exhibit F to Consolidated’s motion). Consolidated argues that these documents are, on their
face, contracts, because they memorialize an agreement of the Debtor to provide educational and child-care related services in exchange for payment of tuition by the Parents of the children enrolled in the educational facility. Therefore, these documents constitute contracts within the common,
everyday meaning of the term “contract.” Because the Parents’ claims filed in the bankruptcy case are all based upon the Parents prepaying tuition or other payments to the Debtor, Consolidated concludes that the claims of the Parents are necessarily claims for breach of contract, arising as a result of the Debtor’s failure to provide the agreed upon educational services when it closed its business and filed bankruptcy on July 28, 2009.
Although there are two express exceptions to the contractual liability exclusion in the School Leaders Policy, the Trustee does not argue that the Parents’ claims for which the Trustee seeks coverage are within either of these two express exceptions. Also, the Trustee does not dispute that the Enrollment Agreement, Child Placement Contract, and School Summer Camp Registration Form
are themselves contracts. Nor does the Trustee dispute that the Debtor’s failure to provide educational services after receiving the prepaid tuition is a breach of contract. Instead, the Trustee argues that the Parents’ proofs of claims filed in the bankruptcy case for the tuition and other amounts that they prepaid to the Debtor do not constitute a “claim alleging breach of contract.”
The Trustee focuses on the specific language in the School Leaders Policy that sets forth the contractual liability exclusion. Section I, C.7. of the School Leaders Policy describes the contractual liability exclusion as “[a]ny ‘claim’ alleging breach of contract.” The Trustee then makes two basic points in arguing that there is a genuine issue of material fact. First, even though the Trustee does not deny that the Parents that filed these proofs of claims had entered into contracts with the Debtor
to provide educational services to their children in exchange for payment, nowhere do the Parents’ proofs of claims explicitly say “breach of contract,” which the Trustee argues is required by the contractual liability exclusion. Second, the Trustee posits that it is “possible” that the Parents’  claims against the Debtor could also conceivably be grounded in a tort theory, such as conversion or breach of fiduciary duty, or a quasi-contractual theory such as unjust enrichment. Because these
possible, albeit unarticulated, alternate theories of recovery may exist in favor of the Parents, even though they have not been explicitly stated by the Parents, the Trustee asserts that the Parents’ claims are not within the contractual liability exclusion in the School Leaders Policy. To support his two arguments, the Trustee relies upon the Parents’ proofs of claims and upon his own affidavit.
Although the Trustee does not list in his complaint the specific claims that he considers to be the “Parents’ claims,” and for which he is demanding coverage, the Trustee attached copies of the first page of 48 proofs of claims to the Trustee’s brief in opposition to Consolidated’s motion for summary judgment. As noted earlier, the claims register in the Debtor’s bankruptcy case reveals
a total of 48 claims filed by Parents who describe the basis for their claims, in one way or another, as tuition that they paid to the Debtor for the 2009-2010 school year or for other educational services during that school year. To consider the Trustee’s argument that the Parents’ claims do not allege breach of contract, the Court examined each of these proofs of claims. They are very similar to one
another. For example, in proof of claim no. 1-1 filed by Kristy Slanec, the basis for claim is described as “monies provided in advance for school term 2009-2010 and camp.” There are no documents attached to that proof of claim. Proof of claim no. 2-1 filed by Joe and Ban Dindo describes the basis of their claim as “tuition paid for 2009-2010 school year.” There are documents attached to that proof of claim, including documents on the Debtor’s letterhead describing the
required amounts and payments for tuition for the 2009-2010 school year. Proof of claim no. 3-1
filed by Oscar and Alma Catarino describes the basis for claim as “2009-2010 tuition and summer camp,” and attaches a copy of an “Enrollment Agreement 2009-2010” on the Debtor’s letterhead
that explains the amounts and dates of the payments required for enrollment of a child in the Debtor’s educational facility. Proof of claim no. 5-1 filed by Kim and Chuck Rummier describes  the basis for claim as “Deposit + pre-payment for 2009-2010 school year tuition.” This proof of claim also has attached to it an agreement between the Parents and the Debtor with respect to the
amounts and timing of the payments required for tuition, as well as other documents. The Court has reviewed all 48 of the Parents’ proofs of claims. They do not all use the same precise verbiage in describing the basis for their claims, but it can fairly be said that all of the Parents’ proofs of claims
are based on the fact that the Parents paid the Debtor tuition or for other educational services for the 2009-2010 school year that the Debtor failed to provide to the Parents’ children once the Debtor closed the school.
Even though the Parents’ proofs of claims themselves may not contain the specific words “breach of contract,” it is obvious to the Court that the claims are squarely grounded in a breach of contract theory. The Parents claim that they prepaid tuition and other payments in exchange for the educational services for their children. They did not receive the bargained for educational services
because the Debtor closed the school. While the Parents’ proofs of claims may not expressly use the words “breach of contract,” and do not separately identify every possible legal theory of recovery in the same way that a complaint might, it is sophistry to argue that the Parents’ proofs of
claims do not allege a breach of contract by the Debtor. A review of the proofs of claims, with the asserted basis in all of them being prepaid tuition and other payments for educational services that
 they did not receive, demonstrates that, in substance, these proofs of claims do allege breach of contract. Therefore, the Court finds that they fall within the exception to coverage under section I.C.7. of the policy as “‘claim[s]’ alleging breach of contract.”
The Trustee’s second argument is that because the Parents may conceivably have other theories of recovery in addition to a breach of contract theory, the fact that the claims are found to  Consolidated misconstrues the Trustee’s second argument as somehow being based  upon a theory of dual or concurrent causation, where multiple acts or events are the proximate cause of an injury. As a result, Consolidated’s reply to the Trustee’s brief in opposition to Consolidated’s motion for summary judgment extensively discusses case law dealing with dual or concurrent causation. That case law is irrelevant to Consolidated’s motion for summary judgment since the Trustee does not argue that there may be more than one act or event that is
the cause of the Parents’ loss. Instead, the Trustee argues that there may be other legal theories of recovery, in addition to breach of contract, that the Parents might be able to assert against the Debtor that are based upon the same acts and events that give rise to the breach of contract: the advance payments for tuition and for other educational services that the Debtor failed to deliver.
be within the breach of contract exclusion set forth in the School Leaders Policy does not end the Court’s inquiry. In other words, even if the Parents’ claims do allege breach of contract, summary judgment is not appropriate because there may be other non-contractual theories of recovery that the Parents may be able to assert, for which there is no exclusion in coverage. The Trustee correctly
points out that unlike a complaint filed in a lawsuit, a proof of claim filed in a bankruptcy case is not required to describe specific theories of liability. Instead, official bankruptcy form B10 requires only that the claimant set forth in paragraph 2 of the official form the “basis for claim.”1 In support of this second argument, the Trustee relies primarily on Northland Insurance Co. v. Stewart Title Guaranty Co., 327 F.3d 448 (6th Cir. 2003). Applying Michigan insurance law, the Sixth Circuit Court of Appeals did not stop its analysis in that case when it found that a breach
of contract claim was excluded from the insurance policy at issue in that case. Instead, because the underlying complaint also alleged multiple tort claims such as conversion, embezzlement, and breach of fiduciary duty, the court examined each of those theories to determine whether coverage extended to the insured. The Trustee argues that summary judgment is premature in this case because similar theories of recovery may possibly be alleged by the Parents in this case.
There are two problems with the Trustee’s position. First, the Northland Insurance case is easily distinguishable. It addressed the extent of coverage for purposes of considering the insurer’s duty to defend. 327 F.3d at 455-58. The duty to defend is independent of and much broader than the duty to indemnify. Dochod v. Central Mutual Ins. Co., 264 N.W.2d 122, 123 (Mich. Ct. App. 1978) (citing City Poultry & Egg Co. v. Hawkeye Casualty Co., 298 N.W. 114 (Mich. 1941)).
“[T]he insurer must defend a lawsuit even if there are theories of liability that the policy does not cover, so long as there are theories of recovery that fall within the policy’s scope.” Employers Ins. of Wausau v. Petroleum Specialties, Inc., 69 F.3d 98, 102 (6th Cir. 1995) (citing Dochod v. Central Mutual, 264 N.W.2d at 123). An “insurer has a clear duty to defend the state court action suit until
all possible theories of recovery which could be covered by the policy are eliminated.” Northland Insurance, 327 F.3d at 457 (citations omitted). “When considering whether the insurer has a duty to defend the insured, it must be remembered that the duty to pay is severable from the duty to defend. The one is not dependent on the other.” Dochod v. Central Mutual, 264 N.W.2d at 123
(citing Zurich Ins. Co. v. Rombough, 180 N.W.3d 775 (Mich. 1979)).

“That an insurer may ultimately be found not liable, therefore, is a matter separate and apart from its obligation to defend the insured.” Id.
In the case before the Court, unlike Northland Insurance, the Trustee’s complaint only asks for a declaration that Consolidated is required to provide coverage for the claims asserted by the Parents, not that Consolidated has a duty to defend those claims. In addition, the Trustee
 cknowledges that the Debtor is liable to the Parents for the pre-paid tuition. So not only is there no request to defend, but there is no question as to the liability of the insured. Accordingly, this Court need not undertake the close examination conducted by the court in Northland Insurance, in combing through the underlying complaint, in this case the Parents’ proofs of claims, for any facts on which any possible theory of recovery might be based.
Second, as the nonmoving party responding to a motion for summary judgment, the Trustee “must present affirmative evidence to defeat a properly supported motion for summary judgment.”
 Cox v. Kentucky Dept. of Transportation, 53 F.3d 146, 150 (6th Cir. 1995) (citations omitted). The Trustee “must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. (quotation marks and citation omitted). As noted, in response to Consolidated’s motion
for summary judgment, the Trustee provided only his own affidavit.
The Trustee’s affidavit swears to certain uncontested facts, such as the existence of policies; that the Parents pre-paid for tuition; that the school closed prior to the beginning of the school year;
that the Parents’s claims exceed $160,000; and that the Trustee made a demand on Consolidated to provide coverage, which Consolidated denied. In addition, the Trustee’s affidavit states, in conclusory terms, that the funds paid by the Parents “were to be held by the Debtor for the purpose of providing educational services during the 2009-2010 school year.” The Trustee’s affidavit goes
on to state that “on information and belief . . . the Debtor utilized [the funds] for purposes other than providing educational services . . . and therefore those funds are not available for refunding to the Parents.” Most of the Trustee’s affidavit simply parrots allegations from the complaint.
The Trustee’s affidavit does not contain any probative evidence to support any alternate theories of recovery for the Parents. The Trustee supplied no affidavits from the Parents providing any explanation for the basis of their claims. Nor did the Trustee provide any affidavits from anyone else. The Trustee’s affidavit does not state any factual basis either for the Trustee’s assertion that the funds were “to be held by the Debtor” for a specific purpose, or for his “belief” that the funds
were not used for that purpose. Although speculating that the Parents might be able to assert some theory of recovery against the Debtor other than breach of contract, the Trustee’s response to Consolidated’s motion for summary judgment does not point to a single fact in the record that supports an alternative theory of recovery. The Trustee does not identify a single document or a
single witness who could provide any evidence to support some alternative theory of recovery against the Debtor. The Trustee merely tosses out names of other types of causes of action such as conversion and breach of fiduciary duty, but offers no affidavits, documents or facts of any kind to support any of those causes of action or to make them anything more than unsupported metaphysical possibilities. Discovery in this adversary proceeding has closed. Summary judgment is the time “to
put up or shut up.” Cox v. Kentucky Dept. of Transp., 53 F.3d at 149. The Trustee cannot oppose Consolidated’s motion for summary judgment with bare allegations and speculation about other factual possibilities. In sum, the Trustee has not come forward with any probative evidence to support the Trustee’s assertion that the Parents may hold claims other than or in addition to their breach of contract claims.
Where the issue is one of insurance coverage and not one of a duty to defend, Consolidated
is correct that one exclusion from the obligation to pay for a loss under the policy ends the inquiry.
Although “[e]xclusionary clauses in insurance policies are strictly construed in favor of the
insured[,] . . . coverage under a policy is lost if any exclusion within the policy applies to an
insured’s particular claim.” Auto-Owners Ins. Co. v. Churchman, 489 N.W.2d 431, 434 (Mich.
1992) (citation omitted); see also Hayley v. Allstate Ins. Co., 686 N.W.2d 273, 275 (Mich. Ct. App.
2004) (finding that coverage requiring an insurer to pay a claim “is lost if any exclusion in the policy
applies to an insured’s particular claims . . . because an insurance company cannot be liable for a
risk it did not assume”) (quotation marks and citation omitted). The School Leaders Policy in this
case covers a loss arising from a wrongful act to which the insurance applies. But the insurance
policy expressly excludes coverage for a claim alleging a breach of contract.
The Court holds that the Parents’ proofs of claims upon which the Trustee bases his
complaint for declaratory relief against Consolidated do allege breach of contract by the Debtor.
It is irrelevant that they do not contain the label “breach of contract” since the substance of the
claims is clearly based upon breach of contract. The Parents’ claims against the Debtor, identified
in the Trustee’s complaint for declaratory relief against Consolidated, are all within the contractual
liability exclusion set forth in section I.C.7. of the School Leaders Policy. The Trustee’s bare
speculation that there may be facts to support other theories of recovery that could also form a basis
for the Parents’ claims against the Debtor is not only unsupported, but is irrelevant. The
section I.C.7. exclusion is dispositive. Auto-Owners Insurance v. Churchman, 489 N.W.2d at 434.
The Court finds that there are no genuine issues of material fact, and that Consolidated is entitled
to summary judgment as a matter of law. The Court will enter an order consistent with this opinion.
Signed on April 19, 2011


April 18, 2011

The filing fee for a Chapter 7 Bankruptcy is $299.00. If you cannot afford the fee you will have to file for a waiver. There are costs for a credit report and for your court required credit counseling (another est.) $100.00. There are a range of prices for a bankruptcy attorney on 4/8/2011 my  fee is $750.00.

To check out the rules for getting a waiver see

Our first meeting is free.

If you wish to proceed their will be a minimal ‘ serious money” deposit to cover costs of $200.00 and at the second meeting (that you set when ready) your questionaire will be reviewed. Another meeting may be necessary to bring back more material. Nest your  material is committed to preparation. Usuall another payment on the retainer and costs is made. Finally you come in for the signing of your bankruptcy petition. The retainer and all costs have to be paid before your petition is filed.

** GENESEE COUNTY BANKRUTPCY ATTORNEY or LAWYER 810-235-1970 , Terry Bankert, will answer JACKSON COUNTY Flint MI, Bay City, Owosso, Lapeer and Corunna questions from people in debt that just need some answers. The topics you can ask as as follows. Remember we know its  **

Contact me at (810) 235-1970 or through