Annas v. Allard
| Decision Date | 15 February 2002 |
| Docket Number | Bankruptcy No. 99-74903-SWR.,No. 01-71417.,01-71417. |
| Citation | 272 B.R. 633 |
| Parties | Steven ANNAS, Peter Deangelo and Douglas Carreri, Appellants, v. David W. ALLARD, Trustee, Appellee. |
| Court | U.S. District Court — Eastern District of Michigan |
Thomas J. Budzynski, Clinton Township, MI, for Peter Ackhoff.
Stuart A. Gold, Gold & Lange, Tracy M. Clark, Gold, Lange, Southfield, MI, for Steven Annas, Peter de Angelo, and Douglas Carreri.
Rodney M. Glusac, Allard & Fish, Detroit, MI, for David W. Allard.
This bankruptcy matter is before the Court on Defendants' Steven Annas, Peter DeAngelo and Douglas Carreri ("Appellants") appeal from the Bankruptcy Court's order granting Trustee's motion for summary judgment and denying Debtor's and Appellants' motions for summary judgment. Trustee filed a complaint against the Debtor, Peter Ackhoff ("Debtor") and those who are the Appellants here, seeking to avoid the post-petition transfer of a Cadillac Escalade and to recover either the automobile, as property of the estate, or the proceeds from the unauthorized sale. The Trustee filed a summary judgment motion which the Bankruptcy Court granted. The effect was to (1) avoid the post-petition transfer of the automobile, (2) direct defendant-Annas to turn over the automobile and its title to the Trustee for sale, and (3) hold Debtor and Defendants jointly and severally liable to the Trustee for the difference between the value of the automobile at the time of the sale and the amount received therefrom, plus interest and costs.
This Court finds as a matter of law that Appellants did not have a property interest in the automobile and that they had no more than a contractual claim against Debtor for their one-quarter interests in the Cadillac. Thus, the Bankruptcy Court correctly held that, at most, Appellants had unsecured claims against the bankruptcy estate. The Court, therefore, affirms the decision of the Bankruptcy Court granting Trustee's motion for summary judgment.
On September 3, 1999, Debtor participated in a golf tournament located at Chandler Park Golf Course and sponsored by "The Grind," a bar located in Detroit, Michigan. Appellants were the other members of Debtor's foursome at the tournament. Prior to commencing play, Debtor and Appellants orally agreed that if any one of them made a hole-in-one and won a prize they would equally divide the value of the prize. On the 8th hole Debtor had a hole-in-one. The prize for a hole-in-one on the 8th hole was a new 2000 Cadillac Escalade ("Cadillac"). Debtor executed a Verification Affidavit of Hole-in-One Winner that was required by the insurance company which paid for the Cadillac.
On September 22, 1999, Debtor filed a voluntary petition under Chapter 7 of the U.S. Bankruptcy Code. David W. Allard ("Trustee") was appointed as the Chapter 7 Trustee of the Debtor's estate. As of the petition date, Debtor had not yet received the Cadillac; an investigation was pending by the insurance company retained by the tournament and liable under a policy to purchase the Cadillac from Don Massey Cadillac if a participant made a hole-in-one on the 8th hole. On his Schedule B, Debtor listed a "possible hole-in-one contest prize" as property of his estate, which he valued in the amount of $3,000. On his Schedule C, Debtor claimed the "possible hole-in-one contest prize" as exempt in the amount of $2,500 under Section 522(d)(5) of the Bankruptcy Code. At his first meeting of creditors (the "341 Meeting") on October 20, 1999, Debtor testified under oath that the "Possible hole-in-one contest prize" listed in Schedule B consisted of part of an interest in a car that he won by making a hole-in-one at the tournament. Debtor did not disclose the car's value at this meeting, or the fact that it was a Cadillac, despite the fact that he had been aware in April or May, 1999, that the prize was a Cadillac, when he had first seen a poster advertising the tournament. Debtor's counsel was made aware of the Cadillac at their initial meeting to prepare his bankruptcy schedules. At the 341 Meeting Debtor testified that the reason he listed the prize as "possible" on Schedules B and C was that there was some question as to whether the tournament's sponsor correctly followed procedures for insurance purposes. Debtor also testified that he believed he would only receive a 1/4 interest in the prize based on the oral agreement made by the members of the foursome. At the conclusion of the 341 Meeting Trustee advised Debtor that he would be investigating the asset due to its potential benefit to the estate.
On October 25, 1999, Debtor's counsel sent a letter to the Trustee providing a vague explanation of the circumstances surrounding the prize, but it did not reveal any new information concerning the make of the car, the status of the prize, or the nature of the oral agreement. Between November 15, 1999 and December 20, 1999, Trustee's counsel sent three letters to the Debtor's counsel demanding information about the prize. Debtor's counsel did not respond until December 22, 1999, revealing for the first time that the Debtor had taken possession of the Cadillac on November 24, 1999, that it had a M.S.R.P. ("Manufacturer's Suggested Retail Price") of $43,000, and that despite Trustee's many demands for information, it had been sold without notice to the Trustee, to Annas for $36,000 on the same day Debtor took possession.1 Debtors sale of the Cadillac to Annas was not authorized by the Code or by order of the bankruptcy court.
Annas received a credit for his 1/4 share of the purchase price equal to $9,000 and gave Debtor a check for $28,000 which Debtor cashed at Annas' credit union.2 On November 29, 1999, Debtor transferred $9,000 cash each to Carreri and DeAngelo. This transfer was not authorized by the Bankruptcy Code or the Bankruptcy Court. Debtor kept the remaining $10,000 and alleges that he immediately used a portion of it to purchase office equipment and machinery for his new business and spent a portion on living expenses. As of March 30, 2000, Debtor stated that only $3,000 of his share of the purchase price remained. For the purposes of summary judgment only, the parties stipulated that the value of the Cadillac at the time of its transfer to Annas was $36,000.
On February 10, 2000, Trustee filed a complaint against Debtor and Appellants requesting relief under 11 U.S.C. § 549 to avoid the post-petition transfer of the Cadillac and under 11 U.S.C. § 542 to recover an amount equal to the Cadillac's M.S.R.P of $43,000. Appellants filed an answer to Trustee's complaint and a demand for a trial by jury, accompanied by a brief in support. Trustee objected to Appellants' request for a jury trial and on August 7, 2000, the Bankruptcy Court entered an order denying the request. The parties conducted discovery, entered stipulations of fact, then filed cross-motions for summary judgment. On February 22, 2001, the Bankruptcy Court issued an opinion granting Trustee's Motion and denying Debtor's and Defendants' Motions.
On March 29, 2001, the Bankruptcy Court entered a Judgment (1) avoiding the postpetition transfer of the Cadillac by the debtor to Annas pursuant to § 549(a); (2) directing Annas to turn over the Cadillac and its title to the Trustee for sale; and (3) holding the Debtor and Defendants jointly and severally liable to the Trustee for an amount equal to the difference between the stipulated value of the Cadillac, $36,000, and the amount received from its sale, with interests and costs.
Trustee's claims against the Debtor have been settled for $8, 500 payable over a 12 month period. The claims consisted of Trustee's objections to Debtor's exemption of interest in the Cadillac, Trustee's Complaint Requesting Revocation of Debtor's Discharge based on Debtor's alleged concealment of the Cadillac, and the March 29, 2001 Judgment avoiding the transfer of the Cadillac as it relates to Debtor.
On April 9, 2001, Appellants filed a Notice of Appeal.
The issue on this appeal is whether the Bankruptcy Court erred as a matter of law in concluding that Trustee met his burden of establishing that the Cadillac was property of the Debtor's estate as is required in order to recover estate property pursuant to § 549 of the Bankruptcy Code.3
FRBP Rule 8013. Thus, in a bankruptcy proceeding, the bankruptcy court is the finder of fact. In re Isaacman, 26 F.3d 629, 631 (6th Cir.1994)(citing In re Caldwell, 851 F.2d 852, 857 (6th Cir.1988)). Findings of fact are clearly erroneous in bankruptcy proceedings, as in other civil proceedings, when the reviewing court is "left with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, North Carolina, 470 U.S. 564, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). On appeal the district court reviews de novo the bankruptcy court's conclusions of law. In re Isaacman, 26 F.3d 629, 631 (6th Cir.1994)(citing In re Zick, 931 F.2d 1124, 1126 (6th Cir.1991)).
Under F.R.Civ.P 56(c), summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." Copeland v....
To continue reading
Request your trial