Adamovic v. Lazarevic (In re Lazarevic), 11-10585
| Decision Date | 27 September 2012 |
| Docket Number | No. 11-10585,Adversary Proceeding No. 11-1048,11-10585 |
| Parties | In re: DRAGAN NMN LAZAREVIC, Debtor; ZIVORAD ADAMOVIC, as next friend and as natural parent of ALEX ADAMOVIC and FILLIP ADAMOVIC, minors, Plaintiff v DRAGAN LAZAREVIC, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Tennessee |
______________________
Shelley D. Rucker
UNITED STATES BANKRUPTCY JUDGE
MEMORANDUMThe plaintiff Zivorad Adamovic, as next friend and as natural parent of Alex Adamovic and Fillip Adamovic, minors ("Minors") has filed a complaint in this adversary proceeding. [Doc. No. 1, Complaint].1 The Complaint objects to the discharge of the defendant debtor, Dragan NMN Lazarevic ("Debtor" or "Defendant"), pursuant to 11 U.S.C. § 727 and objects to dischargeability of certain debts pursuant to 11 U.S.C. § 523. It also seeks relief from the automatic stay to continue an action filed in the Circuit Court of Hamilton County, Tennessee ("Tennessee State Case").2 The trial is currently scheduled for November 6, 2012. [Doc. No. 55]. The Defendant has filed a motion for summary judgment. [Doc. No. 59]. The Plaintiff has filed a response to the motion for summary judgment. [Doc. No. 68].
The court has reviewed the motion, the briefing of the parties, the record, and the applicable law and now makes the following findings of fact and conclusions of law in accordance with Fed. R. Bankr. P. 7052. For the reasons explained infra, the court determines that the Defendant's motion for summary judgment will be GRANTED in part and DENIED in part. The court finds that genuine issues of material fact exist, including whether the Debtor is entitled to a discharge or whether the Debtor's sister created a trust which imposed on the Debtor a fiduciary duty to the Minors represented by the Plaintiff.
The Debtor asserts that the material facts in this adversary proceeding are undisputed. The Plaintiff disagrees. The court has reviewed the record and finds that the parties agree on very few of the pertinent facts of this proceeding. However, the court will attempt to summarize the undisputed facts and will note where the parties disagree on the relevant issues.
In their statements of undisputed facts, the parties agree that Slobodanka Lazarevic ("Danka") was the Debtor's sister and the Minors' mother. Danka was married to the Plaintiff, Mr. Adamovic. See [Doc. Nos. 64, 66, Debtor's Statement of Alleged Undisputed Facts and Plaintiff's Responses]. Grozdana Lazarevic ("Donna") is the Debtor's sister. The parties further agree that Danka and the Plaintiff had two children together, the Minors, and that the couple divorced in November of 2003. Id. They both agree that Danka loved her sons more than anything in the world. [Doc. No. 77, Defendant's Reply to Plaintiff's Statement of Undisputed Facts].
They agree that in 2006 Danka suffered a reoccurrence of cancer and that "[o]n the morning of June 22, 2006 Danka, Donna and Dragan went to see Dr. Arrowsmith [Danka's physician] for the last time as there was nothing else for him to do for Danka." [Doc. Nos. 64, 66, Debtor's Statement of Alleged Undisputed Facts No. 7 and Plaintiff's Response]. Following the appointment with Dr. Arrowsmith, the three siblings went to Warranty Title. Id., Statement Nos. 8, 9 and Responses.
The Debtor filed his Chapter 7 voluntary bankruptcy petition on February 4, 2011. [Bankr. Case No. 11-10585, Doc. No. 1]. The Plaintiff, representing the Minors, filed this adversary proceeding on April 27, 2011. [Doc. No. 1, Complaint]. At the time of the filing of his bankruptcypetition, the Debtor was a defendant in the Tennessee State Case filed by the Plaintiff in Hamilton County Circuit Court alleging fraud, conspiracy, deceit, undue influence, breach of fiduciary duty and breach of trust. The Complaint alleges that the Debtor wrongfully acquired and converted most of the assets and personal property belonging to Danka. The parties agree that Danka was terminally ill during the spring and summer of 2006. She owned her home subject to a mortgage, the furnishings in that home, a car, an IRA containing approximately $8000, a bank account with $600, and jewelry and personal items. The parties agree that the Minors received only some of the furnishings. With respect to the other assets, it appears that the Debtor, her brother, received most of the other assets or their proceeds. The parties dispute most of the remaining facts.
The Complaint alleges:
While Danka was literally on her death bed, suffering from terminal cancer and heavily medicated, the Debtor drafted and persuaded Danka to sign documents which transferred virtually all Danka's assets to him, including: Her home at 1901 Payne Road valued at $299,000.00; her 401(k) valued at $12,000.00; and her car, jewelry and furniture valued at $41,500.00. It is alleged that Danka signed the quitclaim deed in reliance upon Debtor's promise—which he never intended to keep—to hold the properties and proceeds in trust for the benefit of her minor children and legal heirs, Alex and Fillip. On June 30, 2006—eight (8) days after she signed the quitclaim deed—Danka died intestate. Instead of using the property and proceeds for the benefits of the children, Debtor used the property and/or proceeds of the property for his personal use.
The Plaintiff asserts that the Tennessee State Case is not seeking to recover assets of the Debtor's bankruptcy estate, but rather seeks to recover assets of the Minors' mother's estate. Complaint, p. 3. The Plaintiff contends that therefore any judgment resulting from the Tennessee State Case is not subject to discharge as it would not be an asset of the bankruptcy estate. Id. TheComplaint asserts that in the alternative, the Debtor should be denied a discharge pursuant to 11 U.S.C. §§ 727(a)(2), (a)(3), (a)(4), (a)(5), (a)(6), and (a)(7). Id. at p. 3. The Complaint also asserts that any debt determined to be owed to the Minors should be nondischargeable pursuant to 11 U.S.C. § 523(a)(4). Id. at p. 4. The Plaintiff recently moved to amend his Complaint to add two claims pertaining to nondischargeability pursuant to 11 U.S.C. §§ 523(a)(2) and 523(a)(6). [Doc. No. 57]. The court has granted the Plaintiff's motion to amend. [Doc. No. 72].
The Debtor contends that his sister, Danka, deeded him her house as a gift in gratitude or in repayment of funds he had loaned her over the years. He further contends that there is no evidence that a trust was created or that he ever represented he would or did act in a fiduciary capacity on behalf of the Minors, his nephews. Therefore, he asserts, he never owed the Minors any money that he received from the sale of her home or any other asset. He further contends that Danka gave him or Donna her other assets, including her IRA account and her car. With respect to Danka's furnishings, the Debtor gave the Plaintiff and the Minors unrestricted access to Danka's home to retrieve whatever they wanted. Whatever furniture remains in his possession is still in her testamentary estate. The court will address the disputes separately.
The Debtor claims that in 2005 Danka had asked Warranty Title to have a quitclaim deed drafted pertaining to her house at 1901 Payne Road in Chattanooga, Tennessee. He asserts that Danka created the quitclaim deed to convey her home to Debtor, but that he had the deed destroyed because he did not want to "give up my sister's death," in other words "give up on her life." [Doc. No. 64, Statement No. 10]; [Doc. No. 65-1, Deposition of Dragan Lazarevic ("Dragan Dep."), pp. 24-25]. The Debtor further presents the affidavit of an employee of Warranty Title, SonyaCrawford, who asserts that:
[o]n or about March 17, 2005, Ms. Slobodanka Lazarevic and her sister, Ms. Donna Lazarevic came into my office. At that time, Ms. Slobodanka Lazarevic asked me to prepare a Quitclaim Deed to transfer her property from her sole name to her name and her brother's name, with right of survivorship. I prepared the document, witnessed and notarized her signature.
[Doc. No. 60, Affidavit of Sonya R. Crawford ("Crawford Aff."), ¶ 1].
The Plaintiff disagrees that Danka ever created a quitclaim deed conveying the property to the Debtor in 2005. In opposition to the motion for summary judgment, Plaintiff has provided an affidavit from the manager of Warranty Title Company. [Doc. No. 65-8, Affidavit of Patty Martin ("Martin Aff.")]. In her affidavit, the manager asserts that "Warranty Title has no file or record of a quit claim deed dated March 17, 2005, pertaining to the property at 1901 Payne Road." Martin Aff., ¶ 6. The Debtor admitted in his deposition that he has no copy of the 2005 quitclaim deed. Dragan Dep., p. 25.
The Debtor asserts that on June 22, 2006 Danka executed another quitclaim deed ("Quitclaim Deed") at Warranty Title that transferred ownership of her home at 1901 Payne Road from her to her and Debtor with right of survivorship. [Doc. No. 64, Statement No. 11]. The Plaintiff agrees that Danka signed the Quitclaim Deed at Warranty Title on June 22, 2006 that transferred ownership of her home from her to her and Debtor with right of survivorship. [Doc. No. 66, Response to Statement No. 11]; [Doc. No. 59-1, Quitclaim Deed]. However, the parties dispute how the Quitclaim Deed was prepared and who prepared it, whether Danka was competent to sign it, and whether it was in furtherance of creating a trust.
In his deposition the Debtor contends that Ms. Crawford or someone else at Warranty Title prepared the Quitclaim Deed. Dragan Dep., p. 32. The Plaintiff disputes this contention and notesthat the Quitclaim Deed itself indicates that is was prepared by "Dragan Lazarevic." [Doc. No. 59-1,...
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