Stacy Kevitch and Michael A. Kevitch

By agreement, this motion was bifurcated so that the issues of dismissal and1
conversion would be determined before the lift-stay request. See Pretrial Order dated February 2,
2005.
UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 13
MICHAEL KEVITCH
STACY KEVITCH 	:
Debtors 	: 	Bankruptcy No. 04-32127F
.................................................
MEMORANDUM
.................................................
Lou’s of Wilmington, Inc., (hereinafter “Lou’s”) a creditor of the chapter
13 debtors in this case, has pending before this court a motion seeking to dismiss or
convert this bankruptcy case, and/or relief from the automatic stay. 	In connection with1
that motion, Lou’s has asserted that the debtors are ineligible for chapter 13 relief because
their debts exceed the ceiling established by 11 U.S.C. § 109(e).
Subsection 109(e) contains the provisions applicable to chapter 13
eligibility, which in pertinent part stated at the time of the debtors’ bankruptcy filing:
Only an individual with regular income that owes, on the date
of the filing of the petition, noncontingent, liquidated,
unsecured debts of less than $307,675 and noncontingent,
liquidated, secured debts of less than $922,975, or an
individual with regular income and such individual's spouse,
except a stockbroker or a commodity broker, that owe, on the
date of the filing of the petition, noncontingent, liquidated,
unsecured debts that aggregate less than $307,675 and
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 1 of 32

The secured and unsecured debt ceilings are adjusted every three years pursuant2
to 11 U.S.C. § 104(b)(1). The figures noted in the text went into effect on April 1, 2004. This
bankruptcy case was filed in December 2004.
In this claim, Lou’s notes that certain other damage claims it may assert are3
“[l]ess easily quantifiable.”
2
noncontingent, liquidated, secured debts of less than $922,975
may be a debtor under chapter 13 of this title. 2
Prior to the debtors’ bankruptcy filing, Lou’s had commenced a lawsuit in
district court against both debtors (and other defendants), docketed at C.A. No. 03-CV-
6748, asserting claims for conversion, breach of fiduciary duty, fraud, copyright
infringement, violation of the Digital Millennium Copyright Act, and civil conspiracy. In
its motion for partial summary judgment, however, Lou’s acknowledges that the only
remaining claims in the district court against Mrs. Kevitch involve counts I (conversion)
and VI (civil conspiracy). All of the remaining counts against her, including the two
copyright claims, were withdrawn.
The damages sought in the amended complaint for each claim was “in
excess of Seventy Five Thousand ($75,000.00) Dollars.” Based upon the claims asserted
in this civil action, Lou’s filed an unsecured proof of claim in this bankruptcy case, dated
March 3, 2005, asserting that it is owed by both debtors “at least $430,692.60.” The
claim is calculated as follows: $162,725.66 in cash and $75,000 in inventory allegedly
stolen from Lou’s by Mr. Kevitch; $17,966.94 in false credit card charges paid by Lou’s
to Mr. Kevitch; and “between $750 and $150,000" for copyright infringement and
“between $2,500 and $25,000" for the purported violations of the Digital Millenium
Copyright Act. 3
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 2 of 32

Debtors who successfully reorganize under chapter 13, in cases commenced prior4
to October 17, 2005, receive a discharge under section 1328 that is greater in scope than a
chapter 7 discharge. The chapter 13 discharge is sometimes referred to as a “superdischarge,”
see In re Stern, 266 B.R. 322, 325 (Bankr. D. Md. 2001), as it will discharge debts arising from
fraud and willful misconduct. See, e.g., Matter of Gregory, 705 F.2d 1118, 1120 n.2 (9th Cir.
1983) (“If all payments under the plan are made, § 1328(a) clearly authorizes the discharge of all
debts provided for in the plan, including fraud-related debts that are not dischargeable in Chapter
7 or 11 proceedings [.]”).
3
Lou’s has now sought partial summary judgment on the issue of the
debtors’ chapter 13 eligibility. This creditor contends that there are no material facts in
dispute and that it is entitled to a determination that these debtors are ineligible for
chapter 13 relief because their unsecured claims exceed the statutory debt ceiling. The
debtors counter that the movant has not demonstrated an absence of material facts in
dispute; nor has it established its entitlement to relief as a matter of law.
As will be seen, the debtors maintain that there are disputed facts
concerning the eligibility issue based, in part, upon the husband/debtor’s denial that he
was responsible for the purported misappropriation of Lou’s assets, as well as other
improper conduct that Lou’s asserts occurred prepetition.
This eligibility issue is significant to the parties, given the nature of the
claims raised by Lou’s against these debtors. If Lou’s is found to hold valid claims for
fraud, conversion, breach of fiduciary duty and willful misconduct, such claims may be
dischargeable in chapter 13, but not in a chapter 7 case. 	Furthermore, if the debtors are4
eligible for chapter 13 relief, Lou’s may be forced to litigate its claims in this bankruptcy
forum, foregoing its demand for a trial by jury made in the district court since it has filed
a proof of claim. See Langenkamp v. Culp, 498 U.S. 42 (1990); Travellers Int’l AG. v.
Robinson, 982 F.2d 96, 99 (3d Cir. 1992), cert. denied, 507 U.S. 1051 (1993).
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 3 of 32

4
The debtors have argued that the record made in connection with this
motion does not demonstrate their ineligibility for chapter 13 relief for two reasons. First
they maintain that Lou’s has failed to comply with the requirements of Rule 56, thereby
precluding any consideration of summary judgment on this point. Second they contend
that even if Lou’s had complied with the requirements of Rule 56, it has not demonstrated
an absence of material facts on the issue of a “liquidated claim.”
I turn first to the debtors’ pleading contention, as it may be dispositive of
this motion.
I.
A.
Lou’s underlying dismissal motion constitutes a contested matter under Fed.
R. Bankr. P. 9014. 	Rule 9014(c) provides that Fed. R. Bankr. P. 7056 is applicable in
contested matters. And Rule 7056 incorporates the summary judgment rule, Fed. R. Civ.
P. 56. Thus, one can obtain summary judgment in a bankruptcy contested matter. See
generally In re FV Steel and Wire Co., 2005 WL 2401636, at *2 (Bankr. E.D. Wis. 2005).
Indeed, in appropriate circumstances, it is possible for a creditor to obtain summary
judgment on the issue of chapter 13 eligibility. See In re Reader, 274 B.R. 893, 895
(Bankr. D. Colo. 2002).
Summary judgment is only appropriate when “the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 4 of 32

5
show that there is no genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). To the extent that a party
relies upon affidavits, Rule 56(e) requires that supporting and opposing affidavits “be
made on personal knowledge,” that these affidavits “set forth such facts as would be
admissible in evidence” and that they “show affirmatively that the affiant is competent to
testify to the matters stated therein.” See, e.g., In re UFG International, Inc., 225 B.R. 51,
55 (S.D.N.Y. 1998). Furthermore, if an affidavit refers to documents, then “sworn or
certified copies” must be attached to the affidavits. Fed. R. Civ. P. 56(e).
The requirements of Rule 56(e) have been summarized as follows:
(1) the affidavit must be made on the personal knowledge of
the affiant; (2) the affidavit must set forth facts which would
be admissible at trial; (3) the affidavit must show
affirmatively that the affiant is competent to testify to the
matters therein; and (4) if the affiant refers to written
documents within the affidavit, sworn or certified copies of
the documents must be attached to the affidavit or served
therewith.
In re Chapman, 265 B.R. 796, 811 (Bankr. N.D. Ill. 2001).
The purpose of summary judgment is to avoid the expense and delay of an
unnecessary trial when no material facts are in dispute and one of the parties is entitled to
prevail on the merits. See, e.g., Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d
Cir. 1976), cert. denied, 429 U.S. 1038 (1977).
As explained by the Third Circuit Court of Appeals:
Summary judgment is appropriate when the moving party is
entitled to judgment as a matter of law and there is no genuine
dispute of material fact. Gottshall v. Consolidated Rail Corp.,
56 F.3d 530, 533 (3d Cir. 1995) (citing Fed. R. Civ. P. 56(c)).
In order to defeat “a properly supported summary judgment
motion, the party opposing it must present sufficient evidence
for a reasonable jury to find in its favor.” Groman v.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 5 of 32

6
Township of Manalapan, 47 F.3d 628, 633 (3d Cir. 1995)
(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
250-52, 106 S. Ct. 2505, 2511-12, 91 L. Ed. 2d 202 (1986)).
In essence, the non-moving party must demonstrate a dispute
over facts that might affect the outcome of the suit. Id.
Moreover, in reviewing the record, we must give the
non-moving party the benefit of all reasonable inferences.
Josey v. John R. Hollingsworth Corp., 996 F.2d 632, 637 (3d
Cir. 1993).
Hampton v. Borough of Tinton Falls Police Dep’t, 98 F.3d 107, 112 (3d Cir. 1996); see In
re Saler, 205 B.R. 737, 741 (Bankr. E.D. Pa. 1997).
“[The court must] view the underlying facts and all reasonable inferences
therefrom in the light most favorable to the party opposing the motion.” Pennsylvania
Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995); see also Helen L. v. DiDario, 46
F.3d 325, 329 (3d Cir.), cert. denied sub nom. Pennsylvania Secretary of Public Welfare
v. Idell S., 516 U.S. 813 (1995); Valhal Corp. v. Sullivan Associates, Inc., 44 F.3d 195,
200 (3d Cir. 1995); Goodman v. Mead Johnson, 534 F.2d at 573.
The moving party bears the burden of proving that no genuine issue of
material fact is in dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586 n. 10 (1986). Once the movant has carried its initial burden, the nonmoving
party “must come forward with ‘specific facts showing that there is a genuine issue for
trial.’” Id., at 587 (quoting Fed. R. Civ. P. 56(e)).
Accordingly, Rule 56 places constraints upon the type of attachments a
party seeking summary judgment may utilize to demonstrate an absence of material facts.
In general, “[a] trial court can only consider admissible evidence in ruling on a motion for
summary judgment.” Orr v. Bank of America, NT & SA, 285 F.3d 764, 773 (9th Cir.
2002). Therefore,
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 6 of 32

7
[t]he first task for the court in considering a motion for
summary judgment is to determine which evidence it may
consider in deciding whether a material factual dispute exists.
The court generally must consider evidence set forth in five
enumerated categories of materials, namely, “pleadings,
depositions, answers to interrogatories, and admissions on
file, together with affidavits, if any.” Fed. R. Civ. P. 56(c).
Evidence that can be considered by a court under Rule 56 is
normally of the same quality of evidence that the fact finder
may consider at trial. Thus, for a statement to be admissible, it
must be made under oath and on personal knowledge, it must
set forth facts which would be admissible in evidence, and it
must show that the affiant is competent to testify to the
matters stated therein. See Fed.R.Civ.P. 56(e).
Fioriglio v. City of Atlantic City, 996 F. Supp. 379, 384-85 (D.N.J. 1998).
Thus, transcripts of out-of-court statements, where these statements are
unsworn or not given under oath, cannot be considered for purposes of summary
judgment. Id. at 385. An expert’s report that is attached to an affidavit signed only by
movant’s counsel cannot support summary judgment. Fowle v. C & C Cola, 868 F.2d 59,
67 (3d Cir. 1989); see also Northwestern National Insurance Co. v. Baltes, 15 F.3d 660,
662 (7th Cir. 1994). Nor will medical reports be considered if unaccompanied by sworn
affidavits from those preparing the reports. Kitzhoffer v. Brantley, 2001 WL 767571, at
*2 n.6 (E.D. Pa. 2001). Similarly, “[a]n ordinary or unverified complaint” will not
support summary judgment; nor will a verified pleading not made upon personal
knowledge. 	Coquellette, et al. 11 Moore’s Federal Practice 3d, § 56.14[1] (1999).
In sum, documents that would be inadmissible hearsay if offered at trial
cannot be used to grant or deny a party summary judgment. See Eisenstadt v. Centel
Corp., 113 F.3d 738 (7th Cir. 1997):
[H]earsay is inadmissible in summary judgment proceedings
to the same extent that it is inadmissible in a trial . . . , except
that affidavits and depositions, which (especially affidavits)
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 7 of 32

The motion contains two paragraphs numbered 8.5
8
are not generally admissible at trial, are admissible in
summary judgment proceedings to establish the truth of what
is attested or deposed, . . . provided, of course, that the
affiant’s or deponent's testimony would be admissible if he
were testifying live.
Id., at 742.
B.
In support of its motion for partial summary judgment, Lou’s initially relied
upon the following: the docket entries of its district court litigation against the debtors
(Motion, ¶ 1); the allegations found in its unverified amended complaint filed in the
district court (Motion, ¶¶ 2, 5, 6, 8, 8, 9, 10); Lou’s answer to an interrogatory5
propounded by the debtors, without any information concerning who answered the
question and whether that person had first hand knowledge (Motion, ¶¶ 7, 36); a copy of a
spreadsheet purportedly from Lou’s dated March 2003, which document was not attached
to any affidavit (Motion, ¶ 7); business records purportedly from a corporation known as
Goldstar Cash, LLC, which documents were not attached to any affidavit (Motion, ¶ 12);
copies of two web pages—one from Delaware Fast Funds and the other from
GoldStarCash.com (Motion, ¶¶ 18-19); a copy of web pages involving
“fastfundsnow.com” and “goldstarcash.com” purporting to show their similarity and
when each website was modified between 1996 and 2005 (Motion, ¶ 22); and a copy of
the debtors’ amended bankruptcy schedules E and F (Motion, ¶ 32).
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 8 of 32

9
The debtors contend, correctly, that none of these exhibits are accompanied
by any affidavits. Save for the debtors’ amended bankruptcy schedules, wherein the
debtors admit liquidated, noncontingent, undisputed, unsecured claims in the amount of
$77,430 (they list Lou’s as a disputed, contingent, unliquidated claim owed $0), there is
no basis to determine that these attachments or references made in Lou’s motion for
summary judgment would be admissible at trial. A party cannot simply rely upon
unverified allegations made in a lawsuit pending in another forum (which allegations may
themselves be the subject of denial by the defendants in that litigation) to justify summary
judgment in this bankruptcy court. See Celotex Corp. v. Catrett, 477 U.S. 317, 324
(1986) (“Rule 56(e) permits a proper summary judgment motion to be opposed by any of
the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings
themselves [.]”) (emphasis added).
Accordingly, these attachments would not, by themselves support a grant of
summary judgment in Lou’s favor. See, e.g., Taylor v. Principi, 141 Fed. Appx. 705, 708
(10th Cir. 2005); see generally Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc.,
896 F.2d 1542, 1550-51 (9th Cir. 1989).
Lou’s has sought to correct these defects under Rule 56 through a
supplemental filing. See generally Hal Roach Studios, Inc. v. Richard Feiner and Co.,
Inc., 896 F.2d at 1551. This submission consists of verified statements submitted by
Messrs. Stanton Myerson and Lawren Nelson.
Mr. Nelson avers that he is married to debtor Stacy Kevitch’s sister and that
the two sisters are daughters of Stanton Myerson’s wife. Mr. Nelson stated that while
present at the debtors’ home he observed them hiding electronic appliances and jewelry
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 9 of 32

10
prior to the arrival of Stanton Myerson. He also swears that the debtors requested that he
not mention their conduct to Stanton Myerson.
Mr. Stanton Myerson, in his declaration, avers that he is the majority
shareholder of Lou’s of Wilmington, and that husband/debtor, Michael Kevitch, was a
corporate employee who served as the “sole onsite manager” of Lou’s Wilmington store.
One of the debtor’s responsibilities was to reconcile the cash on hand, securing these
funds and then reporting the amount of cash to the corporate comptroller.
On March 14, 2003, Mr. Kevitch’s employment was terminated. Moreover,
on that date Mr. Myerson met with Mr. Kevitch, among others. At this meeting, Mr.
Myserson swears that “Mr. Kevitch admitted” to him and the others present the
following:
a. he allowed and assisted his brother Todd Kevitch to copy
Lou’s Website for the benefit of GoldstarCash [sic] and that
he should not have allowed this copying;
b. he had used personal credit cards to pay for advertising for
Goldstar cash [sic] and submitted those expenses to Lou’s for
reimbursement which was payed [sic] by Lou’s;
c. he had a 10% ownership interest in Goldstar Cash;
d. he had bartered a 2 carat diamond ring owned by Lou’s in
exchange for personal landscaping services for his home; and
e. He had stolen cameras, television sets, jewelry and stereos
from Lou’s and given them to his wife without charging them
against his account at Lou’s[.]
Mr. Myerson also swears that Lou’s discovered a cash shortfall of
$22,808.87 in its Wilmington store on March 15, 2003. He participated in an
investigation into the corporate records, assisted by the corporate comptroller and
concluded that there were $145,329.36 in other improper cash withdrawals from that
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 10 of 32

11
location, and at least $17,996.94 in advertising expenses reimbursed to Mr. Kevitch by
Lou’s that were actually expenses of a competing entity (Goldstar), which entity was
created by the debtors and Todd Kevitch. He affirms that Mr. Kevitch is responsible for
all of these improper corporate losses.
Mr. Myerson further states that all the allegations in the district court
amended complaint are true and correct “to the best of his information, knowledge, and
belief.” Included in those allegations is that Mr. Kevitch, Mrs. Kevitch and/or Todd
Kevitch stole or converted approximately $75,000 in Lou’s inventory. (Amended
Complaint, ¶¶ 57-61). He asserts that the March 2003 spreadsheet involving cash receipts
is a business record of Lou’s of Wilmington. He swears that Lou’s traded as “Delaware
Fast Funds,” that its website was improperly copied by Goldstar Cash, and that the copy
of the Goldstar website and the site modification history included in the summary
judgment motion were obtained from an internet archive site. Finally, Mr. Myerson states
that he was assisted in the preparation of movant’s answers to interrogatories and believes
those answers to be true.
In response to Lou’s request for partial summary judgment, Mr. Kevitch
(but not Mrs. Kevitch) submitted a sworn declaration. In it, he acknowledges that he was
an employee of Lou’s of Wilmington from 1991 until March 14, 2003. During most of
his employment, he was manager of Lou’s store located at 712 Market Street,
Wilmington, Delaware. As of 1999, this store operated as a pawnshop, check-cashing
store, and “payday loan” business.
Mr. Kevitch expressly denies stealing $142,725.66 from Lou’s. He avers
that many employees had access to the cash and that Lou’s records include “human
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 11 of 32

12
errors.” He also denies misappropriating $22,808.87, alleged stolen just prior to his
termination from Lou’s on March 14, 2003, arguing that the records from March 13th, his
last full day of employment, fully account for all funds and he could not possibly have
taken cash the following day.
Mr. Kevitch also swears that he did not wrongfully take $75,000 in
inventory from Lou’s. He represents that Lou’s inventory records contained unreconciled
discrepancies for a number of years prior to his termination and do not account for
customer theft or computational error. In addition, he swears that Lou’s allegation that he
was improperly reimbursed for expenses in the amount of $17,966.94 is in error, and this
sum represents repayment of loans the debtor made to Lou’s, and which loans are
reflected on the corporation’s records.
Finally, insofar as the Goldstar Cash website is concerned, Mr. Kevitch
declares that his brother is the sole owner of the Goldstar corporation, and that the
document appended to Lou’s summary judgment motion reflects certain loans and
projected loan fees involving Goldstar, rather than actual income collected. This
document also does not include Goldstar expenses, and involves loan transactions made
independently from the challenged website. Moreover, he contends that Lou’s never
obtained a valid copyright on its website or the content of the site.
I note that, in his declaration, Mr. Kevitch does not deny that: he assisted
his brother in copying Lou’s website for the benefit of Goldstar; he bartered a 2 carat
diamond ring owned by Lou’s in exchange for personal landscaping services for his
home; and he misappropriated cameras, television sets, jewelry and stereos from Lou’s
and gave them to his wife.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 12 of 32

A claim is defined in section 101(5) as a right to payment whether or not6
disputed, liquidated, matured, or contingent. In an involuntary bankruptcy case, petitioning
creditors cannot hold claims “contingent as to liability or the subject of a bona fide dispute.” 11
U.S.C. § 303(b)(1).
13
III.
In its instant motion for partial summary judgment, Lou’s contends that
there are no material facts in dispute that the debtors’ have unsecured claims exceeding
the chapter 13 debt ceiling. The specific language used by section 109(e) refers to
unsecured debts owed as of the date of the bankruptcy filing and which were
“noncontingent” and “liquidated” as of that date.
The precise language of section 109(e), when compared with other Code
provisions such as sections 101(5) and 303(b)(1), has led courts to conclude that the6
terms “contingent” and “unliquidated” differ from the term “disputed.” 	Because section
109(e) does not exclude disputed claims, such claims are included when determining
eligibility for chapter 13 relief. 	See, e.g., Matter of Knight, 55 F.3d at 234-35 (7th Cir.
1995); In re Sylvester, 19 B.R. 671 (B.A.P. 9th Cir. 1982); Gould v. Gregg, Hart, Farris &
Rutledge, 137 B.R. 761 (W.D. Ark. 1992); In re Lamar, 111 B.R. 327 (D. Nev. 1990).
Clearly, the debtors dispute their liability to Lou’s based upon the
husband/debtor’s alleged misconduct and the allegations of a civil conspiracy. Moreover,
there are material facts in dispute concerning their liability. But if Lou’s claims were not
contingent nor unliquidated, those claims, which are admittedly unsecured, would be
considered in determining the debtors’ eligibility for chapter 13 relief.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 13 of 32

14
The debtors do not contest that Lou’s claims against them are not
contingent. The Third Circuit has referred favorably to a long standing definition of a
“contingent claim” in Matter of M. Frenville Co., 744 F.2d 332, 336 n.7 (3d Cir. 1984),
cert. denied sub nom. M. Frenville Co. v. Avellino & Bienes, 469 U.S. 1160 (1985):
Bankruptcy judges have defined a contingent claim as a claim
which becomes due only on the occurrence of a future event. .
. . One frequently cited definition of contingent is that
“claims are contingent as to liability if the debt is one which
the debtor will be called upon to pay only upon the occurrence
or happening of an extrinsic event.” In re All Media
Properties, Inc., 5 B.R. 126, 133 (Bankr. S.D. Tex. 1980),
aff'd, 646 F.2d 193 (5th Cir. (Unit A) 1981) (per curiam).
Accord, e.g., In re Albano, 55 B.R. 363, 366 (N.D. Ill. 1985); In re Pennypacker, 115
at 507.
In the context of an involuntary bankruptcy petition, which can be filed
only by a petitioning creditor holding a claim that is “not contingent as to liability,” see
11 U.S.C. § 303(b)(1), the Fifth Circuit Court of Appeals provided this summary, also
utilized in construing section 109(e) of the Code:
It thus appears that the words ‘fixed (or ‘not contingent’) as
to liability,’ as used in Sec. 59(b), were certainly not intended
to be restricted to the sense of ‘fixed liability, as evidenced by
a judgment or an instrument in writing’ -- as that term is used
in Sec. 63a(1). In other words, the term ‘not contingent as to
liability’, as used in Sec. 59(b), is different from and broader
than claims based on instruments in writing or judgments. It
follows that Sec. 59(b) contemplates that creditors, whose
claims are not based on instruments in writing or upon
judgments, may petition in involuntary bankruptcy, e.g.,
creditors whose claims are based upon unwritten agreements
or other transactions not yet reduced to judgment -- provided
only that the claims be ‘not contingent as to liability’ in some
other sense of that term.
Examination of all the authorities clearly indicates that the
theory on which claims have been held insufficient is that
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 14 of 32

15
they were open, unliquidated claims (e.g., tort or quantum
meruit claims requiring proof as to liability, reasonable value,
damages, etc.), which by their very nature are not fixed unless
and until juridical award [is entered] to fix liability and
amount.
Denham v. Shellman Grain Elevator, Inc., 444 F.2d 1376, 1380 (5th Cir. 1971)
(interpreting the former Bankruptcy Act); see In re Furey, 31 B.R. 495, 497 (Bankr. E.D.
Pa. 1983).
Thus, in general, a debt is contingent if the debtor's legal duty to pay, i.e.,
his or her liability, does not exist until triggered by the occurrence of a future event that
was reasonably within the presumed contemplation of the parties at the time the original
relationship between the parties was created. See 2 Collier on Bankruptcy, ¶ 109.06[2][b]
(15th ed. rev. 2004).
If Lou’s holds valid claims against the debtors, such claims arose from
actions that occurred prior to March 15, 2003. As of the date of the debtors’ bankruptcy
filing on September 9, 2004, this debt was not contingent. See, e.g., In re Loya, 123 B.R.
338, 340 (B.A.P. 9th Cir. 1991) (“A tort claim ordinarily is not contingent as to liability;
the events that give rise to the tort claim usually have occurred and liability is not
dependent on some future event that may never happen.”); 5 Norton Bankr. L. & Prac. 2d
§ 115:5, at 115-31 (2005) (“The better reasoned cases hold that tort claims that arise from
prepetition conduct by the debtor are noncontingent debts for eligibility purposes.”).
The issue upon which the parties differ in this motion for summary
judgment—beyond their dispute over the debtors’ underlying liability—is whether there
are undisputed facts demonstrating that Lou’s substantial claims against them are
“liquidated.” See generally In re Huelbig, 299 B.R. 721, 723 (Bankr. D.R.I. 2003)
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 15 of 32

16
(“[T]he issue . . . boils down to the single question--Is Allstate's claim liquidated for
purposes of Chapter 13 eligibility?”).
In general, a claim is classified as “liquidated if the amount due can be
determined with sufficient precision.” In re Pennypacker, 115 B.R. at 505. Thus, a debt is
liquidated:
if its amount is readily and precisely determinable, as where
the claim is determinable by reference to an agreement or by
simple computation.
2 Collier on Bankruptcy, ¶ 109.06[2][c] at 109-44 (15th ed. rev. 2004); accord, e.g.,
Matter of Knight, 55 F.3d at 235 (holding that a penalty debt owed to State of Indiana
was liquidated because the amount of liability, albeit disputed, was easily determined).
From this definition, one may fairly generalize that contract claims are
usually liquidated claims, since the amount of any damages is readily determined from
the agreement itself, while tort claims, which may require a court to fix damages,
including pain and suffering, may not be liquidated. See, e.g., Matter of Belt, 106 B.R.
553, 558-559 (Bankr. N.D. Ind. 1989):
“Liquidation” is the result of a finding that the amount of a
claim can be easily determined. . . . It refers to certainty as to
the money value of a claim. . . . Courts generally recognize
that debts based on tort and quantum meruit claims are
unliquidated until resolved by judgment decree or otherwise
because the claimant's damages are not fixed.
See also United States v. Verdunn, 89 F.3d 799, 802 (11th Cir. 1996).
Courts, however, have recognized that there are exceptions to the
generalization that tort claims are unliquidated claims under the Bankruptcy Code. As
one court explained:
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 16 of 32

17
In In re Sylvester, 19 Bankr. 671, 673 (9th Cir. BAP 1982) the
court made the observation in dicta that “contract debts (even
though disputed) are considered liquidated and tort claims are
not.” That statement is generally correct, but must be taken in
its proper context. As the Sylvester court more specifically
explained:
The concept of liquidation has been variously
expressed. The common thread . . . has been
ready determination and precision in
computation of the amount due. . . . Some cases
have stated the test as to whether the amount
due is capable of ascertainment by reference to
an agreement or by simple computation. . . .
Therefore, whether a debt is liquidated or not
for purposes of 11 U.S.C. § 109(e) does not
depend strictly on whether the claim sounds in
tort or in contract, but whether it is capable of
ready computation. For the same reason,
whether a debt is liquidated does not depend on
whether it is disputed. Thus, a disputed debt
which is capable of ready determination is
liquidated.
In re Loya, 123 B.R. at 340 (footnote omitted).
In other words, while many prepetition tort claims will be unliquidated,
since the fixing of the precise amount due is not readily determinable by a bankruptcy
court, there will be situations when that generalization will not apply. For example, a
malpractice claim against a debtor/tax advisor has been held to be a liquidated debt under
limited circumstances, even though no litigation against the debtor was concluded. Id.
Moreover, there are other reported decisions in which courts have held that tort claims
were liquidated although no judgments had been entered, because the amount of the claim
was readily determinable. E.g., In re Jordan, 166 B.R. 201 (Bankr. D. Me. 1994)
(debtor/employee who embezzled funds from employer deemed to have a liquidated debt
since the amount of the embezzlement could be easily calculated); In re Sitarz, 150 B.R.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 17 of 32

18
710, 725 (Bankr. D. Minn. 1993) (same); Matter of McGovern, 122 B.R. 712, 717
(Bankr. N.D. Ind. 1989) (claim against debtor for misappropriating funds from a non-
profit agency was liquidated, since the amount of such funds was readily determinable);
In re Furey, 31 B.R. at 497 (debtor misappropriated checks from his employer in an
amount already fixed by an insurance company).
The Second Circuit Court of Appeals determined that a contested claim,
involving whether a debtor was a “responsible person” and thus liable for a corporation’s
failure to remit employee withholding taxes, was indeed liquidated, utilizing an analysis
that distinguished a disputed claim from one that is unliquidated:
The terms “liquidated” and “unliquidated” generally refer to a
claim's value (and the size of the corresponding debt) and the
ease with which that value can be ascertained. . . . “The
concept of liquidation for purposes of section 109(e) relates
only to the amount of liability not the existence of liability,”
United States v. Verdunn, 89 F.3d at 802 n. 10. If “the value
of the claim is easily ascertainable,” it is generally viewed as
liquidated. In re Knight, 55 F.3d at 235. If that value depends
instead on “a future exercise of discretion, not restricted by
specific criteria, the claim is unliquidated.” United States v.
Verdunn, 89 F.3d at 802.
Thus, the “courts have generally held that a debt is
‘liquidated’ . . . where the claim is determinable by reference
to an agreement or by a simple computation.” 2 L. King,
Collier on Bankruptcy ¶ 109.06[2][c] (15th ed. rev. 1997);
see, e.g., In re Knight, 55 F.3d at 235 (debt is liquidated if its
value “has been ascertained or can readily be calculated”); In
re Fostvedt, 823 F.2d at 306 (debt is liquidated if it is “subject
to ready determination and precision in computation of the
amount due” (internal quotation marks omitted)); In re
Nicholes, 184 B.R. at 89 (“The test for ‘ready determination’
is whether the amount due is fixed or certain or otherwise
ascertainable by reference to an agreement or by a simple
computation.”). A claim plainly is liquidated if its amount is
made certain “by operation of law.” United States v. Verdunn,
89 F.3d at 802.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 18 of 32

19
A few courts have held that the existence of a dispute, without
more, is sufficient to render a claim unliquidated. . . . The
“overwhelming body of precedent,” however, is to the
contrary. United States v. Verdunn, 89 F.3d at 802 n. 9
(“Most courts have concluded ... that disputed debts are
included in the calculation of the amount of debt for [Chapter
13] eligibility purposes.... [T]he vast majority of courts have
held that the existence of a dispute over either the underlying
liability or the amount of a debt does not automatically render
the debt either contingent or unliquidated." (internal quotation
marks omitted)). We agree with the majority position. The
Code uses both "unliquidated" and "disputed" in its definition
of "claim"; to rule that a claim (and hence the debt with which
it is coextensive) is unliquidated whenever it is disputed
would be to render the term "unliquidated" mere surplusage.
Such an interpretation would also allow a debtor, simply by
characterizing certain claims as disputed, to ensure his
eligibility to proceed under Chapter 13 in circumstances that
Congress plainly intended to exclude from that chapter. We
conclude that effect must be given to both terms, and we
agree with the Eleventh Circuit that "the concept of a
liquidated debt relates to the amount of liability, not the
existence of liability." United States v. Verdunn, 89 F.3d at
802.
In re Mazzeo, 131 F.3d 295, 304-05 (2d Cir. 1997); see, e.g., In re Slack, 187 F.3d 1070,
1075 (9th Cir. 1999) (“We hold that a debt is liquidated if the amount is readily
ascertainable, notwithstanding the fact that the question of liability has not been finally
decided.”).
IV.
Utilizing this definition of liquidation, a number of courts have found in
certain circumstances that creditor claims for fraud, embezzlement, theft or
misappropriation were liquidated, even though the chapter 13 debtor contested the claim.
See, e.g., In re Huelbig, 313 B.R. 540 (D.R.I. 2004) (fraud); In re Reader, 274 B.R. 893,
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 19 of 32

20
895 (Bankr. D. Colo. 2002) (misappropriation); In re Visser, 232 B.R. 362, 363 (Bankr.
N.D. Tex. 1999) (misappropriation); In re Jordan, 166 B.R. 201 (Bankr. D. Me. 1994)
(embezzlement); In re Sitarz, 150 B.R. 710 (Bankr. D. Minn. 1993) (embezzlement); In re
McGovern, 122 B.R. 712 (Bankr. N.D. Ind. 1990) (misappropriation); In re Clark, 91
B.R. 570 (Bankr. D. Colo. 1988) (deception of employer); In re Furey, 31 B.R. 495
(Bankr. E.D. Pa. 1983).
The debtors, however, believe a better analysis of the term “liquidated” is
found in In re Baird, 228 B.R. 324 (Bankr. M.D. Fla. 1999), which held that “for a debt to
be easily ascertainable [and thus liquidated] it must be capable of ready determination
from a simple hearing, rather than an extensive and contested evidentiary hearing in
which substantial amounts of evidence may be necessary to establish amounts or
liability.” Id. at 331; see also In re Chang, 2004 WL 2370641, at *5 (Bankr. D. Haw.
2004). To do otherwise, the debtors contend, would be to permit any creditor to deprive
an individual of eligibility for chapter 13 relief by simply asserting a large claim, no
matter how frivolous that claim may be.
The debtors’ argument is similar to the issue posed by the preclusive effect,
if any, of the debtor’s bankruptcy schedules for purposes of section 109(e) eligibility.
Courts have been reluctant to treat such schedules as conclusive on the questions of
amount, classification, contingency or liquidation of claims, for to do so would cede to
the debtor control over the issue of eligibility.
Thus, in this judicial district, Judge Twardowski concluded that
determination of eligibility for chapter 13 should not rely completely upon the debtor’s
classification of his debts on his bankruptcy schedules. “We reject these approaches
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 20 of 32

21
because we find that to the extent that they require total reliance by the court upon the
debtor’s characterization of the debts in his schedules, we do not believe that the debtor
should be given unbridled authority to determine his eligibility for chapter 13 relief.” In
re Pennypacker, 115 B.R. 504, 506 (Bankr. E.D. Pa. 1990).
Other courts agree:
The rule proposed by Debtors is intriguing in its simplicity,
but the Court believes such deference to the numbers and
designations found on a debtor's schedules is unwarranted.
While agreeing that a faithful reading of section 109(e) calls
for a snapshot of indebtedness at the time a debtor files his
petition, the Court will cannot [sic] go so far as to find that
the image captured on the debtor's schedules is always in
perfect focus.
Recognizing that a debtor's schedules are a potentially
imperfect measure of the debtor's debts, the Court concludes a
more appropriate approach is to use the debtor's schedules as
a starting point in the section 109(e) inquiry, but also to
consider postpetition events and developments to the extent
(and only to the extent) they shed light on the amount of
secured and unsecured debt actually owed by the debtor at the
time of the filing of the petition. For example, in a situation
such as Debtors’, where a secured debt is mistakenly
scheduled as an unsecured obligation, it would exalt form
over substance to refuse to consider a postpetition amendment
to the schedules that properly classifies the indebtedness.
Similarly, if it were to become evident postpetition that the
conditions giving rise to a contingent liability all occurred
prepetition, common sense requires recognition of the reality
that the debtor was liable for the debt on the petition date.
In re Hatzenbuehler, 282 B.R. 828, 833 (Bankr. N.D. Tex. 2002) (footnotes omitted).
I concur with the debtors here that a creditor’s claim should also not be
conclusive on the issue of chapter 13 eligibility. However, as with a debtor’s schedules,
such a claim must be considered as relevant to the issue. Courts have held persuasively
that the appropriate standard is whether the claim that undermines eligibility has been
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 21 of 32

22
asserted in good faith. The issue of good faith is resolved without first holding a trial on
the merits of the claim:
Rather than making final determinations on disputed
liabilities, it is appropriate for a court considering eligibility to
rely primarily upon a debtor's schedules and proofs of claim,
checking only to see if these documents were filed in good
faith. . . . In so doing, however, the court should neither place
total reliance upon a debtor’s characterization of a debt nor
rely unquestionably on a creditor's proof of claim, for to do so
would place eligibility in control of either the debtor or the
creditor. . . . At a hearing on eligibility, the court should thus,
canvass and review the debtor's schedules and proofs of
claim, as well as other evidence offered by a debtor or the
creditor to decide only whether the good faith, facial amount
of the debtor's liquidated and non-contingent debts exceed
statutory limits.
In re Barcal, 213 B.R. 1008 (B.A.P. 8th Cir. 1997); see, e.g., In re Reader, 274 B.R. at
899.
Indeed, upon reviewing decisions finding misappropriation and
embezzlement claims to be liquidated, one finds references to indicia of good faith
supporting the creditor’s claim. For example, in Furey the husband/debtor had admitted
to misappropriation of assets. Id., 31 B.R. at 497. In Clark the debtor had admitted to
“deceiving” his employer. Id. 91 B.R. at 572. In Sitarz the debtor had been found guilty
in a criminal trial and ordered to make restitution. Id., 150 B.R. at 716. In Visser the
debtor had also acknowledged some improper conduct. Id., 232 B.R. at 363. In Reader a
state court special master had issued a report suggesting the debtor’s misappropriation of
funds. Id., 274 B.R. at 895. In Huelbig there had been a nolo contendere plea in state
criminal court. Id., 299 B.R. at 722.
Some courts have relied upon indicia of less strength to determine that a
creditor’s claim should be included as liquidated for purposes of chapter 13 eligibility.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 22 of 32

23
Thus, in McGovern the bankruptcy court refers to an internal audit and payment by an
insurance company. Id. 122 B.R. at 713-14. In Knight there is also a reference to an
audit. Id., 55 F.3d at 232. In Jordan, the court mentions an investigation by the debtor’s
employer of alleged misappropriations, a resignation from employment by the debtor and
a civil lawsuit brought prepetition. In Baird, where there was no finding that the debt was
liquidated, the court only refers to a pending state court lawsuit as of the date of the
debtor’s chapter 13 bankruptcy filing.
In this instance, upon review of the undisputed evidence, I conclude that the
substantial misappropriation claims asserted by Lou’s against Mr. Kevitch were made in
good faith. Lou’s has demonstrated more than that it simply filed a pending civil lawsuit
against the debtor. It has offered evidence of an internal investigation of its own records,
which business records have been produced, and which reflect substantial losses of cash
and inventory. It has also presented evidence that Mr. Kevitch was in charge of the store
from which these losses occurred. In addition, Lou’s has provided evidence that a
website it used was essentially copied by a competing company, which competitor
certainly involves the debtor’s brother and possibly the debtor. Lou’s offered verified
statements that Mr. Kevitch hid personal property from Mr. Myerson, suggesting that
property came from Lou’s inventory. Moreover, there is sworn testimony that Mr.
Kevitch admitted to Mr. Myerson, in the presence of others, that he had been involved in
certain improper conduct while employed at Lou’s.
While I recognize that this undisputed evidence does not conclusively
establish Mr. Kevitch’s liability to Lou’s in any particular amount, and that the debtor
could present evidence at trial on these claims eliminating or reducing his liability, the
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 23 of 32

24
admissible and unrefuted evidence presented with the instant motion for summary
judgment does demonstrate that Lou’s claims of improper taking of corporate property,
filed against Mr. Kevitch in this chapter 13 case, was made in good faith. See In re Clark,
91 B.R. at 575:
Absent a full trial on the merits, which might demonstrate the
claim is not allowable, this Court is persuaded the Travelers'
claim is supported by not insubstantial evidence. The
quantum of evidence thus far produced by Alpine
demonstrates that the Travelers claim appears bona fide and
that Travelers has, at least, a threshold right to payment. It
may indeed be subject to counterclaims, setoff, affirmative
defenses, or mitigating circumstances, all of which could
perhaps be proved at a trial, but that does not obviate the basic
claim or negate the fundamental right to payment on the
claim.
(emphasis added) (footnotes omitted).
Since the amount of the claims involving missing cash ($162,725.66),
inventory ($75,000), and improper expense reimbursement ($17,966.94) are simple to
compute upon a determination of liability, these claims are indeed liquidated.
Furthermore, they aggregate to $255,692.60.
The same ease of computation cannot be said for Lou’s claims against Mr.
Kevitch (as it withdrew such claims in the District Court against Mrs. Kevitch) for
purported copyright infringement and the Digital Millennium Copyright Act.
Turning first to the copyright claim, I note that Lou’s asserts damages under
17 U.S.C. § 504. This statutory provision permits an award against a copyright infringer
based either upon actual damages or statutory damages. 17 U.S.C. § 504(a). The
statutory damage award is “in a sum of not less than $750 or more than $30,000 as the
court considers just,” 11 U.S.C. § 504(c)(1), and if the infringement was willful, “the
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 24 of 32

25
court in its discretion may increase the award of statutory damages to a sum of not more
than $150,000.” 17 U.S.C. § 504(c)(2). Clearly then, statutory damages for copyright
violations involve the exercise of discretion based upon the particular facts and are not
liquidated until the award is made. See generally Schiffer Publishing, Ltd. v. Chronicle
Books, LLC, 2005 WL 67077 (E.D. Pa. 2005) (computing statutory damages for
copyright infringement).
Actual damages under section 504(b) are determined by “the actual
damages suffered by him or her as a result of the infringement, and any profits of the
infringer that are attributable to the infringement and are not taken into account in
computing the actual damages.” The legislative history explains that calculation of even
actual damages is a complex undertaking and not a simple computational task:
A cornerstone of the remedies sections and of the bill as a
whole is section 504, the provision dealing with recovery of
actual damages, profits, and statutory damages. The two basic
aims of this section are reciprocal and correlative: (1) to give
the courts specific unambiguous directions concerning
monetary awards, thus avoiding the confusion and uncertainty
that have marked the present law on the subject, and, at the
same time, (2) to provide the courts with reasonable latitude
to adjust recovery to the circumstances of the case, thus
avoiding some of the artificial or overly technical awards
resulting from the language of the existing statute.
***
In allowing the plaintiff to recover ‘the actual damages
suffered by him or her as a result of the infringement,’ plus
any of the infringer's profits ‘that are attributable to the
infringement and are not taken into account in computing the
actual damages,’ section 504(b) recognizes the different
purposes served by awards of damages and profits. Damages
are awarded to compensate the copyright owner for losses
from the infringement, and profits are awarded to prevent the
infringer from unfairly benefiting from a wrongful act. Where
the defendant's profits are nothing more than a measure of the
damages suffered by the copyright owner, it would be
inappropriate to award damages and profits cumulatively,
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 25 of 32

26
since in effect they amount to the same thing. However, in
cases where the copyright owner has suffered damages not
reflected in the infringer's profits, or where there have been
profits attributable to the copyrighted work but not used as a
measure of damages, subsection (b) authorizes the award of
both.
The language of the subsection makes clear that only those
profits ‘attributable to the infringement’ are recoverable;
where some of the defendant's profits result from the
infringement and other profits are caused by different factors,
it will be necessary for the court to make an apportionment.
However, the burden of proof is on the defendant in these
cases; in establishing profits the plaintiff need prove only ‘the
infringer's gross revenue,’ and the defendant must prove not
only ‘his or her deductible expenses’ but also ‘the element of
profit attributable to factors other than the copyrighted work.’
H.R. Rep. 94-1476 at 161 (Sept. 3, 1976).
Moreover, “the term ‘gross revenue’ under the statute means gross revenue
reasonably related to the infringement, not unrelated revenues.” On Davis v. The Gap,
Inc., 246 F.3d 152, 160 (2d Cir. 2001); Barrera v. Brooklyn Music, Ltd., 346 F. Supp. 2d
400, 411 (S.D.N.Y. 2004). This can involve complex analyses of revenue streams and
apportionment issues, see generally Bucklew v. Hawkins, Ash, Baptie & Co., LLP, 329
F.3d 923, 933 (7th Cir. 2003), and would not be calculated by simply determining the
gross profits of Goldstar Cash.
As noted earlier, the concept of a liquidated claim is one that is “ readily
and precisely determinable as where the claim is determinable by reference to an
agreement or by simple computation.” 2 Collier on Bankruptcy, ¶ 109.06[2][c] at 109-44
(15th ed. rev. 2004). As this standard does not apply to claims of copyright infringement,
that portion of Lou’s claim against Mr. Kevitch is not liquidated. Cf. Corbis Corp. v.
Amazon.com, Inc., 351 F. Supp. 2d 1090, 1115 (W.D. Wash. 2004) (actual damages for
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 26 of 32

27
copyright infringement could not be resolved by summary judgment); Whelan Associates,
Inc. v. Jaslow Dental Laboratory, Inc., 609 F. Supp. 1325, 1327-28 (E.D. Pa. 1985) (in
general, there is no prejudgment interest awarded in a copyright infringement case, absent
bad faith, because the damages are unliquidated, relying upon the principle of Duplate
Corp. v. Triplex Safety Glass Co., 298 U.S. 448 (1936)).
A similar conclusion applies to Lou’s claim under the Digital Millennium
Copyright Act, 17 U.S.C. §§ 1201, et seq. “The DMCA was enacted in 1998 to
implement the World Intellectual Property Organization Copyright Treaty (‘WIPO
Treaty’), which requires contracting parties to ‘provide adequate legal protection and
effective legal remedies against the circumvention of effective technological measures
that are used by authors in connection with the exercise of their rights under this Treaty or
the Berne Convention and that restrict acts, in respect of their works, which are not
authorized by the authors concerned or permitted by law.’” Universal City Studios, Inc.
v. Corley, 273 F.3d 429, 440 (2d Cir. 2001) (quoting WIPO Treaty, Apr. 12, 1997, art. 11,
S. Treaty Doc. No. 105-17 (1997)).
The damage provision of this statute, 17 U.S.C. § 1203(c), is patterned after
section 504 of the aforementioned copyright statute. If I assume arguendo that Lou’s has
stated a claim against Mr. Kevitch in district court under this statutory provision (the
creditor withdrew this claim as to Mrs. Kevitch), the amount of statutory damages under
section 1203(c)(3)(B)—referred to by Lou’s in its supporting memorandum, at
17—expressly falls within the discretion of the court. And the fixing of any actual
damages would be determined by the complex matrix of apportionment, damages and
profits discussed earlier.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 27 of 32

Nor, as he apparently intended from a review of the pretrial statement, can he7
insist upon a liability trial in the context of determining his eligibility for chapter 13 relief.
28
V.
The result is that Lou’s has demonstrated, through undisputed evidence, a
good-faith, non-contingent, liquidated, unsecured claim against Mr. Kevitch in the
amount of $255,692.60. See generally In re Slack (portion of claim may be liquidated).
When added to the other non-contingent, liquidated, unsecured claims admitted on the
debtors schedules, which totaled $77,430, these unsecured claims aggregate to
$333,122.60: a sum that exceeds the section 109(e) debt ceiling. Therefore, for purposes
of summary judgment, Mr. Kevitch is ineligible for chapter 13 relief and cannot insist
upon a liability trial in this forum. 7
I do not reach the same conclusion as to Mrs. Kevitch.
The amended district court complaint asserted six claims against Mr.
Kevitch: conversion; fraud; breach of fiduciary duty; two copyright claims; and civil
conspiracy. Only two of those claims are presently asserted against Mrs. Kevitch: the
civil conspiracy claim and the conversion claim. As to the civil conspiracy, that aspect of
the complaint seems to focus upon the creation of Goldstar Cash. The conversion claim
focuses upon the misappropriation of Lou’s assets.
For purposes of summary judgment, Lou’s declarations and documentary
evidence are directed almost exclusively to the actions of Mr. Kevitch and Goldstar Cash;
not to Mrs. Kevitch. Other than a declaration that Mrs. Kevitch participated in hiding
certain personal property from Mr. Myerson, which may make her jointly liable for the
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 28 of 32

29
$75,000 inventory loss claim, there are no indicia to support, in the context of this motion,
the good faith of Lou’s claims against Mrs. Kevitch for her husband’s theft of cash from
his employer. Nor can one impute the debts of Mr. Kevitch to his spouse simply because
of their marriage. See In re Magpusao, 265 B.R. 492, 498 (Bankr. M.D. Fla. 2001)
(“Even knowledge of a spouse's misconduct is insufficient to confer liability. . . . Rather,
knowledge must be concurrent with participation in the use or enjoyment of the stolen
property in order for liability to attach.”) (citations omitted). Therefore, I cannot
conclude as a matter of summary judgment that Lou’s holds a liquidated claim against
Mrs. Kevitch in such an amount that would render her ineligible for chapter 13 relief.
This conclusion, however, does not end the analysis of this summary
judgment motion. The parties have not addressed the proper application of section 109(e)
when only one debtor in a jointly filed chapter 13 case is ineligible for relief. 	My
research has found but one reported decision that expressly considered this issue. See In
re Tabor, 232 B.R. 85, 91-92 (Bankr. N.D. Ohio 1999) (concluding that the case should
be dismissed only as to the ineligible spouse); but see In re Furey (dismissing, without
discussion, a joint chapter 13 case when only the claim against the husband/debtor
exceeded the debt limit).
The language of section 109(e) provides that the debt ceiling is not doubled
in a joint chapter 13 case filed by a husband and wife. See 2 Collier on Bankruptcy, ¶¶
109.06[4], 302.03[5] (15th ed. rev. 2005). Nonetheless, if the debts are not joint debts,
then one spouse may be eligible for relief and the other not by filing separate cases. See
id. (“[I]f few of the debts are joint, each spouse may be eligible to file a separate chapter
13 case.”). The Tabor decision yields the result that, where one spouse is ineligible, the
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 29 of 32

30
joint chapter 13 petition is treated as if it had been commenced as a single bankruptcy
case filed only by the eligible spouse. While that approach may be correct, one or both
parties may contend to the contrary.
Rather than hold what the parties intended as an extensive trial on the
eligibility of Mrs. Kevitch, and then be faced with the possible argument that the
ineligibility of her husband made the entire joint petition improper, I consider it more
appropriate to defer the scheduled trial for a short period and to schedule a pretrial
conference wherein this issue and any others flowing from this decision can be
considered.
An appropriate order shall be entered.
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 30 of 32

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 13
MICHAEL KEVITCH
STACY KEVITCH 	:
Debtors 	: 	Bankruptcy No. 04-32127F
.................................................
ORDER
.................................................
AND NOW, this 4th day of November 2005, for the reasons stated in the
accompanying memorandum, it is hereby ordered that Lou’s of Wilmington’s motion for
partial summary judgment is granted in part and denied in part. The husband/debtor,
Michael Kevitch, is ineligible for chapter 13 relief, pursuant to 11 U.S.C. § 109(e).
A pretrial conference shall take place on November 15, 2005 at 3:30 p.m. in
Bankruptcy Courtroom #2 to consider the effect of Mr. Kevitch’s ineligibility for chapter
13 relief, both as to further proceedings with regard to Lou’s motion to dismiss, and with
respect to this chapter 13 case in general.
The trial on this contested matter, previously scheduled for November 18,
2005, is postponed pending further order of this court.
____________________
BRUCE FOX
United States Bankruptcy Judge
copies to:
Mr. Michael Kevitch
Mrs. Stacy Kevitch
6 Balsam Place
Lafayette Hill, PA 19444
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 31 of 32

Eric L. Frank, Esq.
DiDonato & Winterhalter, PC
1818 Market Street
Suite 3520
Philadelphia, PA 19103
William J. Burnett, Esq.
Smith Giacometti & Chikowski, LLC
100 S. Broad Street, Suite 1200
Philadelphia, PA 19110
Derek E. Jokelson, Esq.
Neil E. Jokelson & Associates, P.C
230 South Broad Street, 18th Floor
Philadelphia, PA 19102
William C. Miller, Esq.
Chapter 13 Trustee
111 S. Independence Mall, Suite 583
Philadelphia, PA 19106
Barbara Townsend
Case 04-32127-bif Doc 87 Filed 11/04/05 Entered 11/07/05 09:51:30 Desc Main
Document Page 32 of 32