Allen v. Scott (In re Scott)

Decision Date27 September 2012
Docket NumberAdversary No. 06–00011.,Bankruptcy No. 05–10595–BGC–7.
Citation481 B.R. 119
PartiesIn re LaShari W. SCOTT, Debtor. Mary Nell Allen, Plaintiff, v. LaShari W. Scott, Defendant.
CourtU.S. Bankruptcy Court — Northern District of Alabama

481 B.R. 119

In re LaShari W. SCOTT, Debtor.
Mary Nell Allen, Plaintiff,
v.
LaShari W. Scott, Defendant.

Bankruptcy No. 05–10595–BGC–7.
Adversary No. 06–00011.

United States Bankruptcy Court,
N.D. Alabama,
Southern Division.

Sept. 27, 2012.


[481 B.R. 126]


Brian C. Bugge, Birmingham, AL, for Plaintiff.

Debra Bennett Winston, Birmingham, AL, for Defendant.


MEMORANDUM OPINION

BENJAMIN COHEN, Bankruptcy Judge.

The matters before the Court are:

1. The plaintiff's Complaint for nondischargeability filed in this Court on January 7, 2006, A.P. Docket No. 1, incorporating the state court Complaint the plaintiff filed in the Circuit Court of Jefferson County, Alabama, Bessemer Division on December 22, 2005; and

2. The plaintiff's First Amended Complaint for nondischargeability and revocation of discharge filed in this Court on June 8, 2006. A.P. Docket No. 11.

A trial on the merits was held on May 10, 2007, May 11, 2007, and July 18, 2007. Appearing were: the plaintiff, Mary Nell Allen and her attorney Brian Bugge, and the defendant LaShari Woods Scott and her attorney Debra Winston. Six witnesses testified. Fifty-seven exhibits were admitted.

I. SUMMARY OF THE BACKGROUND FACTS AND THE PARTIES' CONTENTIONS

Maddie Jenkins Woods, the parties' common relative, died on May 31, 2003. The plaintiff is the executrix of her estate. The debtor-defendant held a power of attorney from Mrs. Woods and was her guardian and conservator before Mrs. Woods died. Each party is related to her by marriage.1

[481 B.R. 127]

A. THE PARTIES' RELATIONSHIPS TO MADDIE WOODS
1. The Debtor–Defendant's Relationship to Maddie Woods

Maddie Jenkins Woods' mother and father were Albert and Viola Jenkins. 2 Maddie married Eddie Woods.3 Eddie Woods had five siblings. Those were: Josephine Woods; Hez Woods; Betty Woods (Greer); Mary Lou Woods (Hibbler); and Tom Woods (the defendant's father). Tom Woods married Mattie Woods.4 Tom and Mattie Woods had seven children. Those were: Michael Woods; Earl Woods; Tommy Woods; William Woods; Robert Woods; Larry Woods; and the defendant LaShari Woods (Scott). LaShari married the Reverend Frederick Scott. LaShari and Fredrick Scott had two children. Therefore, the defendant's direct relationship with Maddie Woods is as the daughter of Maddie Woods' brother-in-law Tom Woods—or as a “niece-in-law.”

2. The Plaintiff's Relationship to Maddie Woods

Maddie Jenkins Woods' mother Viola Jenkins married again to a Mr. Hunt. 5 They had a daughter Betty Hunt. Betty Hunt married Louis Allen. They had two sons, both deceased at the time of trial. They were: Johnnie C. Allen and Melvin Allen. The plaintiff Mary Nell Allen married Johnnie C. Allen. They had three children. Those were: Betty Allen; Melvin Allen (nicknamed “Coot”); and Ethel Allen (nicknamed “Moonie”). Therefore, the plaintiff's direct relationship to Maddie Woods is as the daughter-in-law of Maddie Woods' half-sister—or as a “niece-in-law.”

B. THE PARTIES' STATE COURT RELATIONSHIP

Maddie Woods gave the defendant power of attorney on October 16, 2000. Def. Substitute Ex. 5.6 The defendant maintained that agency until Mrs. Woods died. In addition, the Probate Court of Jefferson County Alabama, Bessemer Division appointed the defendant guardian and conservator for Maddie Woods on March 14, 2002. Order Appointing Guardian and Conservator upon Posting Bond. Def. Ex. 4; Pla. Ex. 4.

After Maddie Woods died on May 31, 2003, a will was offered for probate. It named the plaintiff, Mary Nell Allen, as executrix. Pla. Exs. 28 & 29. Letters Testamentary were issued by the probate court to the plaintiff on January 30, 2004. Pla. Ex. 25.7

The plaintiff filed a complaint against the defendant in the state Circuit Court of Jefferson County, Alabama, Bessemer

[481 B.R. 128]

Division on December 22, 2004.8 Exhibit A to A.P. Docket No. 1 and Pla. Ex. 19. The plaintiff alleged conversion, undue influence, wantonness, felonious injury, and unjust enrichment in that complaint.

C. THE PARTIES' BANKRUPTCY COURT RELATIONSHIP
1. The Defendant's Bankruptcy Filing

The defendant filed her Chapter 7 bankruptcy petition in this Court on October 8, 2005. Case Docket No. 1. A “suggestion of bankruptcy” was filed in the state court case on December 29, 2005. Based on the bankruptcy filing, the state court placed its case on its administrative docket on January 29, 2006. Pla. Ex. 19. The debtor's discharge was entered on February 6, 2006. Case Docket No. 23.

2. The Plaintiff's Bankruptcy Complaints

The plaintiff filed her original Complaint in this Court on January 6, 2007. A.P. Docket No. 1. She filed an Amended Complaint on June 8, 2006. A.P. Docket No. 11.

a. The Plaintiff's Contentions

The plaintiff's contentions conveniently divide into two groups. Those are: (1) state law causes of actions; and (2) bankruptcy law arguments.

(1) State Law Causes of Action

The plaintiff's “bankruptcy court” state law causes of action are the same as those she filed in the state court.9 They are: conversion, undue influence, wantonness, felonious injury, and unjust enrichment. See Complaint, A.P. Docket No. 1 at 6–11 (incorporating the state court complaint).

(2) Bankruptcy Law Arguments

The plaintiff's bankruptcy law arguments are included in the Amended Complaint she filed in this Court. See A.P. Docket No. 11. Three relate to dischargeability of debts. One relates to the debtor's discharge.

The three dischargeability arguments are: (a) any debt the defendant owes to the plaintiff is not dischargeable under section 523(a)(2) of the Bankruptcy Code because the defendant committed fraud during her care of Maddie Woods; (b) any debt the defendant owes to the plaintiff is not dischargeable under section 523(a)(2) of the Bankruptcy Code because the defendant obtained money by deceit during her care of Maddie Woods; and (c) any debt the defendant owes to the plaintiff is not dischargeable under section 523(a)(4) of the Bankruptcy Code because the defendant committed a defalcation of fiduciary duties during her care of Maddie Woods.

The discharge argument is that the defendant's discharge in this case should be revoked under section 727(d)(1) of the Bankruptcy Code because the defendant procured her discharge by fraud.

b. The Defendant's Contentions

In response, the defendant contends she acted at all times for the benefit of Maddie Woods and did not misappropriate any property. She concludes that she does not owe the plaintiff any debt, but if she does, it would be dischargeable in this case.

[481 B.R. 129]

II. THE THRESHOLD ISSUE

If this case were in Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, or Wyoming, there would be no threshold issue.10 But it is not. It is in Alabama. And because it is, this Court must ask: Did any of the causes of action the plaintiff alleges survive Maddie Woods' death? If they did not, there is little else to say.

A. LAW APPLICABLE TO THE THRESHOLD ISSUE

Sections 6–5–462 and 6–5–464 of the Code of Alabama, 1975 answer the Court's question.

1. Survival of Causes of Action
a. Section 6–5–462

Section 6–5–462, entitled “Survival—Claims by and against personal representative in proceedings not of an equitable nature” reads:

In all proceedings not of an equitable nature, all claims upon which an action has been filed and all claims upon which no action has been filed on a contract, express or implied, and all personal claims upon which an action has been filed, except for injuries to the reputation, survive in favor of and against personal representatives; and all personal claims upon which no action has been filed survive against the personal representative of a deceased tort-feasor.

Ala.Code 1975, § 6–5–462 (emphasis added).


b. Section 6–5–464

Section 6–5–464, entitled, “Survival—Claims equitable in nature” reads:

(a) All claims equitable in nature upon which an action has been filed shall survive in favor of and against the heirs, successors or personal representative of any deceased party to such an action.

(b) All claims equitable in nature upon which no action has been filed shall survive in favor of and against the personal representatives, heirs, or successors of deceased persons who, but for their death, could have enforced such claims or against whom such claims could have been enforced.

Ala.Code 1975, § 6–5–464.11


2. Summary of Alabama's Survival Statutes

In other words, unless a cause of action was filed before the claimant died, or is not an equitable one, one for breach of contract, or one for injuries to the reputation,

[481 B.R. 130]

it does not survive in favor of the claimant's personal representative.12

3. Two General Rules

In addition to the above, two “Black Letter Law” general rules apply in this situation. Those are:

General Rule No. 1—As a general rule, unfiled causes of action in tort do not survive in favor of the personal representative of the deceased. Continental Nat. Indem. Co. v. Fields, 926 So.2d 1033, 1037 (Ala.2005). 13 See also Bassie v. Obstetrics & Gynecology Associates of Northwest Alabama, 828 So.2d 280, 285 (Ala.2002) (Justice J. Gorman Houston Jr., concurring specially) (“a deceased's unfiled tort claims do not survive the death of the putative plaintiff.”)

This rule remains true as recently cited by the Court of Appeals for the Eleventh Circuit in Estate of Gilliam ex rel. Waldroup v. City of Prattville, 639 F.3d 1041 (11th Cir.2011). Writing for the Court, Senior Circuit Judge Emmett R. Cox explained:

The applicable Alabama survivorship law is Ala.Code § 6–5–462. Under that provision, “a deceased's unfiled tort claims do not...

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