Lavenhar v. First American Title Insurance

This appeal arose out of a Chapter 7 bankruptcy petition filed by Jeffrey Lavenhar. Jeffrey’s ex-wife, Laurie Lavenhar, filed a proof of claim in Jeffrey’s bankruptcy proceeding for $347,400, claiming this amount was owed to her as a domestic support obligation, and it was entitled to priority under 11 U.S.C. 507(a)(1). First American Title Insurance Company, one of Jeffrey's creditors, filed an objection to Laurie’s proof of claim, asserting that the entirety of the domestic support obligation underlying Laurie’s proof of claim was obtained as a result of collusion between Jeffrey and Laurie in state-court divorce proceedings. First American also sought relief from the automatic stay so it could seek a state-court declaration that the judgment upon which Laurie’s claim was based was obtained by fraud on the court. In an order designed to prevent the state-court proceedings from intruding on the prerogatives of the Chapter 7 Trustee, the bankruptcy court granted First American’s motion to lift the stay. The district court affirmed that order on appeal. Laurie appealed, arguing the bankruptcy court erred in granting First American’s motion to lift the stay. According to Laurie, First American lacked standing to litigate the validity of any component of the state-court judgment because the power to control property of the bankruptcy estate belonged solely to the Trustee. After review, the Tenth Circuit found no reversible error in the bankruptcy court's judgment, and affirmed the narrowly tailored order lifting the stay. View "Lavenhar v. First American Title Insurance" on Justia Law

Posted in: Bankruptcy

Comments are closed.