Apostolakis v. King (In re Wiggins)
| Decision Date | 14 July 2021 |
| Docket Number | Case No. 18-13607-BFK,Adversary Proceeding No. 20-01068-BFK |
| Court | U.S. Bankruptcy Court — Eastern District of Virginia |
| Parties | In re: PAMELA H. WIGGINS, Debtor. RONALD APOSTOLAKIS Plaintiff, v. DONALD F. KING, IN HIS CAPACITY AS CHAPTER 7 TRUSTEE, Defendant. |
This matter came before the Court for a trial on the merits on May 7, 2021. At the conclusion of the trial, the Court requested that the parties file post-trial Memoranda of Law. The parties have filed their Memoranda, which the Court has reviewed. Docket Nos. 18, 19. For the reasons stated below, the Court finds for the Defendant, Donald F. King, Trustee ("the Trustee"). A separate Order will be entered granting Judgment for the Trustee.
The Court, having heard the evidence, makes the following findings of fact.
1. The Debtor in this bankruptcy case, Pamela H. Wiggins, is a resident of Fairfax, Virginia.
2. Her brother, Ronald Apostolakis, resides in Florida.
3. Their mother, Genevieve Apostolakis, passed away on November 1, 2016.1
4. In March 2015, Mr. Apostolakis and his mother decided to move to Pompano Beach, Florida. They purchased a home at 963 SE 9th Ave., Pompano Beach, FL 33064 ("the Property").
5. Mr. Apostolakis borrowed $80,000.00 from a friend, and personally supplied some additional funds, for the down payment. Pl. Ex. 10.2
6. Because of credit problems that Mr. Apostolakis was experiencing at the time, Mr. Apostolakis and his mother decided that they would take title to the Property solely in Genevieve's name. Pl. Ex. 1.
7. Mr. Apostolakis and his mother both resided in the Property.
8. The mortgage was solely in Genevieve's name. Pl. Ex. 8.
9. Although title was solely in Genevieve's name, Mr. Apostolakis made the mortgage payments and paid for the maintenance of the Property.
10. All five of the siblings - Pamela Wiggins, Florence Reigle, Emmanuel Apostolakis, Ted Apostolakis, and Ronald Apostolakis - testified that they understood from the outset that the Property was Mr. Apostolakis' property. The Debtor, Ms. Wiggins, testified that it was her brother's house "from Day 1." Ted Apostolakis testified that "my brother bought a house," and "my mother lived there."
11. In June 2015, Mr. Apostolakis was concerned that title to the Property was in Genevieve's name and not in his name. He and his mother went to see Ted Dipuzzio, an attorney in Florida, about a will for Genevieve. Mr. Dipuzzio advised them that they should re-title the Property in Mr. Apostolakis' name, but no action was ever taken to do so.
12. Mr. Apostolakis still resides in the Property.
13. Genevieve passed away intestate, that is, without a known, original will.3
14. Mr. Apostolakis was appointed as the Personal Representative of her estate by the Broward County Circuit Court. Florida Probate Case No. PRC-18-1931.
15. At the time she died, Genevieve had five heirs, including the Debtor, Ms. Wiggins, and the Plaintiff, Mr. Apostolakis.
16. The Probate Estate consists of approximately $70,000.00 in assets: $60,0000.00 in annuities and $10,000.00 in Wells Fargo Stock.
17. Mr. Dipuzzio testified that, although the Property is listed on an Inventory filed with the Broward County Circuit Court, he does not believe it to be property of the Probate Estate, owing to Mr. Apostolakis' equitable claims to title.
18. No determination has been made by the Broward County Circuit Court due to Ms. Wiggins' bankruptcy filing and the automatic stay.
19. Ms. Wiggins filed a Voluntary Petition under Chapter 7 with this Court on October 25, 2018. Mr. King was appointed as the Chapter 7 Trustee.
20. Mr. Apostolakis filed an unsecured Proof of Claim in the amount of $180,000.00 for "money loaned." Proof of Claim 11-1.
21. Mr. Apostolakis also filed a Motion for Relief from the Automatic Stay "to file a petition in the Florida Probate Court, and/or initiate other litigation in Florida, to determine the interest of the heirs related to the subject property. . . ." Case No. 18-13607-BFK, Docket No. 29 at 3.
22. The Trustee opposed the Motion. Docket No. 32.
23. The Court denied the Relief from Stay Motion, finding that this Court had exclusive jurisdiction to determine whether the Debtor's one-fifth interest in the Property was property of the bankruptcy estate, and that the Trustee's interest in the Property, if any, could be prejudiced by any findings made by the Probate Court in Florida. Docket No. 43.
24. Mr. Apostolakis then filed this Adversary Proceeding to determine his interest in the Property. Case No. 20-01068-BFK, Docket No. 1.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the Order of Reference entered by the U.S. District Court for this District on August 15, 1984. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A) () and (O) (proceedings affecting the liquidation of assets of the estate).
The Court rejects the Plaintiff's argument that the probate exception to federal jurisdiction applies here. This is a core proceeding to determine property of the estate under Bankruptcy Code Section 541(a) and to determine the Trustee's rights under Section 544 of the Code. The Supreme Court has held that the probate exception is a narrow one, allowing state probate courts to undertake "the probate or annulment of a will[,] the administration of adecedent's estate[, and] precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court." Marshall v. Marshall, 547 U.S. 293, 311-12 (2006). However, the probate exception "does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction." Id. at 312. In Lee Graham Shopping Center, LLC v. Estate of Kirsh, 777 F.3d 678, 681 (4th Cir. 2015), the Fourth Circuit held that the probate exception only applies where the federal court is called upon "to probate a will, to annul a will, to administer a decedent's estate; or to dispose of property in the custody of a state probate court." In this case, the Court determines in Part I, below, that title to the Property was vested in the heirs, including the Debtor in this case, as of the filing of the bankruptcy case, not in the Probate Estate. The Court finds, therefore, that the probate exception does not apply.
Counts I, II, and III all seek essentially the same relief - a determination that the Property is not property of the bankruptcy estate. See Complaint, Count I ("Is the Real Property Part of the Bankruptcy Estate?"), Count II ("The Real Property Remains Titled in [the] Mother's Name"), and Count III ("The Real Property Belongs to Ronald Apostolakis"). The Court will address these Counts together.
When a bankruptcy case is filed an estate is created which includes "all legal or equitable interests of the debtor in property in property . . . wherever located and by whomever held. . . ." 11 U.S.C. § 541(a). The Court looks to applicable non-bankruptcy law, here that of the State of Florida, to determine the ownership interests of the parties in the Property. Butner v. United States, 440 U.S. 48, 55 (1979) ( ) This turns in part on whether title to the Property devolved to Genevieve's heirs upon her death, or whether legal title passed into theProbate Estate. This threshold inquiry is important for the resolution of the second question, below, regarding the Trustee's rights in the Property. If Ms. Wiggins had only an interest in the Probate Estate when she filed for bankruptcy, the Trustee's rights may not be as strong as they would be if she held title to the real property. Compare Wells Fargo Funding v. Gold (In re Taneja), 432 B.R. 216, 220-21 (E.D. Va. 2009) (), with Burke v. Salahi (In re Salahi), 2012 WL 3249550, at *6-7 (Bankr. E.D. Va. 2012) ().
Under Florida law, "[a]ny part of the estate of a decedent not effectively disposed of by will passes to the decedent's heirs. . . ." Fl. St. § 732.101(1). The case law is clear that title to real property vests in the heirs at the time of death. Slater v. Slater, 437 So.2d 1110 (Fla. 5th DCA 1983) (); Ray v. Rotella, 425 So.2d 94, 96 (Fla. 5th DCA 1982) (); Grobard v. Grobard, 382 So.2d 117, 118 (Fla. 3d DCA 1980). The court in Ray v. Rotella described the probate estate's interest in the property of a decedent as "limited rights to possession of, and power over the title to, the property of a decedent." 425 So.2d, at 96. The Court explained these limited powers as follows:
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