286 F.3d 359 (6th Cir. 2002), 00-4325, In re Troutman Enterprises, Inc.

Docket Nº:00-4325
Citation:286 F.3d 359
Party Name:In re Troutman Enterprises, Inc.
Case Date:March 15, 2002
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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286 F.3d 359 (6th Cir. 2002)


Donald F. Harker III, Trustee, Plaintiff-Appellant,


Rufus Troutman, Terry Troutman, and Lester Troutman, Defendants-Appellees.

No. 00-4325.

United States Court of Appeals, Sixth Circuit

March 15, 2002

Argued Feb. 1, 2002.

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[Copyrighted Material Omitted]

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Donald J. Rafferty, Cohen, Todd, Kite & Stanford, Cincinnati, OH, John Paul Rieser, Rieser & Marx, Dayton, OH, for debtor Troutman Enterprises, Inc.

Ira Rubin (argued and briefed), Goldman, Rubin & Shapiro, Dayton, OH, for Appellant.

Tim J. Robinson (argued and briefed), Bradley K. Johnston (briefed), Dinsmore & Shohl, Cincinnati, OH, for Appellees.

Before MARTIN, Chief Circuit Judge; GILMAN, Circuit Judge; EDMUNDS, District Judge. [*]


BOYCE F. MARTIN, JR., Chief Circuit Judge.

Plaintiff Donald F. Harker, Trustee of Troutman Enterprises, Inc., appeals the decision of the bankruptcy appellate panel awarding life insurance proceeds to the intervenors Rufus Troutman, Terry Troutman and Lester Troutman, shareholders of the rn thanized Troutman Enterprises, Inc. Because we find that the Shareholders lacked standing to appeal the decision of

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the bankruptcy court, we vacate the decision of the bankruptcy appellate panel and affirm the judgment of the bankruptcy court. We deny the motion of the reorganized Troutman Enterprises to intervene as untimely.


On July 11, 1986, Troutman Enterprises, Inc. purchased a $500,000 life insurance policy on Larry Troutman, a shareholder and officer of Troutman Enterprises. The policy named Troutman Enterprises as owner and beneficiary.

Troutman Enterprises filed for bankruptcy protection on April 23, 1992 and the bankruptcy court confirmed its amended joint plan of reorganization on September 1, 1993. Troutman Enterprises did not disclose the insurance policy in its initial disclosure schedules, the amended plan of reorganization, or at any time during Chapter 11 proceedings.

On October 30, 1995, the Internal Revenue Service moved to convert Troutman Enterprises' Chapter 11 case to a Chapter 7 case pursuant to 11 U.S.C. § 1112(b). None of Troutman Enterprises' creditors objected to this motion, and on January 4, 1996, the case was converted and Donald Harker was appointed Trustee of Troutman Enterprises. Shortly thereafter, the reorganized Troutman Enterprises, without notifying the Trustee, purported to transfer ownership of the policy. Troutman Enterprises remained the sole beneficiary of the policy.

Approximately three weeks after Larry Troutman's death in 1999, the reorganized Troutman Enterprises filed an amended schedule disclosing its interest in the life insurance policy. Following this disclosure, the Trustee instituted an adversary proceeding against Nationwide Life Insurance Company, the issuer of the policy, seeking turnover of the life insurance proceeds. After Nationwide interpleaded the proceeds and was dismissed from the case, the Shareholders moved to intervene as third-party defendants. In an agreed order, dated July 26, 1999, the Trustee consented to the Shareholders's intervention application.

The Shareholders asserted entitlement to the insurance proceeds and moved for dismissal of the Trustee's complaint for failure to state a claim, or in the alternative, for summary judgment. In response to the Shareholders' motion, the Trustee (1) contested the Shareholders' standing; (2) argued the insurance policy never vested in the reorganized Troutman Enterprises; and (3) asserted that judicial estoppel barred their claim to the insurance proceeds. The bankruptcy court granted the Trustee's complaint for turnover, reasoning that Troutman Enterprises' failure to disclose the insurance policy during Chapter 11 proceedings estopped its Shareholders' claim to the insurance proceeds. Harker v. Troutman (In re Troutman Enters., Inc.), 244 B.R. 761, 769 (Bankr.S.D.Ohio 2000).

Addressing the standing issue, the bankruptcy appellate panel concluded the...

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