Murphy v. O'Donnell (In re Murphy)

Murphy v. O'Donnell (In re Murphy)

Opinion

 [*145]  HAMILTON, Senior Circuit Judge:

The two cases before the court involve instances in which the Chapter 13 trustee sought to modify a confirmed Chapter 13 plan to increase the amount to be paid to the unsecured creditors. ¹ In the first case, that of Stanley and Doris Goralski, the Chapter 13 trustee sought to modify the confirmed Chapter 13 plan after the bankruptcy court granted the Goralskis permission to refinance the mortgage on their residence. In the refinancing, the Goralskis received some of the equity in their residence [**2]  in cash in exchange for a corresponding amount of debt, and the Chapter 13 trustee sought a portion of this money for the further benefit of the unsecured creditors. The Goralskis sought to refinance their mortgage primarily because Stanley Goralski's earned income was cut approximately in half, making it difficult for the Goralskis to make their plan payments and, at the same time, pay their ordinary and necessary living expenses. In the second case, that of James Owen Murphy, Jr., the Chapter 13 trustee sought to modify the confirmed Chapter 13 plan after the bankruptcy court granted Murphy permission to sell his condominium. The Chapter 13 trustee sought a  [*146]  portion of the sale proceeds for the further benefit of the unsecured creditors because, without a modification, Murphy stood to pocket in excess of $ 80,000, as his condominium had dramatically increased in value post-confirmation. The bankruptcy court granted the motion to modify in Murphy's case, but denied it in the Goralskis' case. See In re Murphy, 327 B.R. 760 (Bankr. E.D. Va. 2005). The district court affirmed the bankruptcy court's decisions. Murphy appeals the decision in his case, as does the Chapter [**3]  13 trustee in the Goralskis' case. For the reasons stated below, we affirm.

The facts and procedural history in these two cases are not in dispute and are set forth separately for the reader's convenience.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.