Beaubouef, Matter of
| Decision Date | 16 July 1992 |
| Docket Number | No. 92-3114,92-3114 |
| Citation | 966 F.2d 174 |
| Parties | , Bankr. L. Rep. P 74,758 In the Matter of Ronald B. BEAUBOUEF and Dinah C. Beaubouef, Debtors. Ronald B. BEAUBOUEF and Dinah C. Beaubouef, Appellants, v. Alvin R. BEAUBOUEF, Sr. and Carol Beaubouef, Appellees. Summary Calendar. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Ronald J. Hof, Landwehr & Hof, New Orleans, La., for appellants.
Robin Bryan Cheatham, Patricia B. McMurray, Adams & Reese, New Orleans, La., for appellees.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before JOLLY, DAVIS, and SMITH, Circuit Judges.
Ronald Beaubouef appeals from the district court's judgment affirming the bankruptcy court's denial of his discharge pursuant to 11 U.S.C. §§ 727(a)(2)(A), (4)(A), and (5). We AFFIRM.
Ronald and Alvin Beaubouef are brothers who have had a "strained" relationship since 1984 because of a dispute over money allegedly owed as the result of a business transaction. In 1989, Ronald and his wife, Dinah, filed a petition under Chapter 7 of the Bankruptcy Code. In their schedules, they listed Alvin and his wife, Carol, as creditors with a debt in excess of $350,000. Alvin and Carol ("the plaintiffs") filed a complaint objecting to the discharge of Ronald and Dinah.
After a two-day trial, the bankruptcy court entered a judgment granting Dinah's discharge, but denying Ronald's discharge pursuant to 11 U.S.C. §§ 727(a)(2)(A), (4)(A), and (5). It did so based, in substantial part, on evidence relating to Ronald's undisclosed involvement and ownership of American Container & Chassis Repair, Inc. ("American Container"). The district court affirmed the judgment of the bankruptcy court, and Ronald appealed.
Ronald contends that the bankruptcy court erred in admitting and considering evidence concerning his ownership in American Container, because such evidence went beyond the allegations of the complaint, as amended, and was not disclosed in the plaintiffs' discovery responses.
At trial, over the objection of Ronald and Dinah, the plaintiffs were allowed to introduce this evidence. The Articles of Incorporation for American Container, filed on March 25, 1988, listed Ronald and Dinah as shareholders, each owning 350 shares of stock; Ronald was listed as president and secretary/treasurer, and Dinah was listed as vice-president. Ronald testified that his stock in American Container was not listed on his schedules, because he sold it for $70,000 on June 10, 1988, prior to the filing of the Chapter 7 petition. 1 However, the plaintiffs were permitted to introduce Ronald's December 19, 1988 deposition given in another proceeding, in which he testified that he owned one-third of the stock in American Container. The bankruptcy court also admitted into evidence a credit application signed by Ronald on November 28, 1988, listing him as an equal partner in American Container, as well as a November 1989 insurance application that listed him as an owner of fifty percent of American Container.
Ronald contends that the admission of this evidence is reversible error, because he was "surprised" by it, and had no opportunity to respond. According to Ronald, if he had known prior to trial that the transfer of American Container would be at issue, it would have been "very easy" for him to present evidence regarding the transfer. Ronald bases his claim of surprise on the fact that the complaint and amended complaint included no allegations regarding concealment of an interest in American Container. He further alleges that the plaintiffs, in response to interrogatories, did not include the disputed exhibits in the list of exhibits they intended to introduce at trial, and did not include American Container in the list of property they contended that the debtors had failed to disclose. Neither the interrogatories nor the relevant answers thereto are included in the record. A pre-trial order was not entered.
In their complaint and amended complaint, the plaintiffs alleged that Ronald and Dinah should be denied a discharge pursuant to 11 U.S.C. §§ 523 and 727(a)(2), (3), (4), and (5), because they failed to include in their schedules any reference to an interest in BBBF-Express Intermodal, and failed to list certain household effects and personal items. The plaintiffs further alleged that Ronald and Dinah had denied the existence of an interest in BBBF at the § 341 meeting of creditors and at the Rule 2004 examination of Ronald. The complaint does not include any references to American Container.
Rule 15(b) of the Federal Rules of Civil Procedure, applicable to this adversary proceeding pursuant to Bankruptcy Rule 7015, states:
When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice the party in maintaining the party's action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.
Fed.R.Civ.P. 15(b) (emphasis added). "[A]n implied amendment of the pleadings will not be permitted where it results in substantial prejudice to a party, 'i.e., whether he had a fair opportunity to defend and whether he could offer any additional evidence if the case were to be retried on a different theory.' " International Harvester Credit Corp. v. East Coast Truck, 547 F.2d 888, 890 (5th Cir.1977) (quoting Monod v. Futura, Inc., 415 F.2d 1170, 1174 (10th Cir.1969)). See also Matter of Prescott, 805 F.2d 719, 725 (7th Cir.1986) (). Nevertheless, as is made clear by Rule 15(b), "[e]ven where there is no consent, and objection is made at trial that evidence is outside the scope of the pretrial order, amendment may still be allowed unless the objecting party satisfies the court that he would be prejudiced by the amendment." Hardin v. Manitowoc-Forsythe Corp., 691 F.2d 449, 457 (10th Cir.1982). "In the absence of a showing of prejudice, the objecting party's only remedy is a continuance to enable him to meet the new evidence." Id.
Ronald maintains that there was no implied consent, and thus no implied amendment of the pleadings, because he had no opportunity to present additional evidence to rebut the plaintiffs' evidence regarding his interest in American Container. Ronald seems to think that, once he objected, he could simply remain silent and wait for reversal on appeal. His argument reflects a fundamental misunderstanding of Rule 15(b) and his obligation to demonstrate prejudice, or request a continuance. The trial was conducted on two days; over Ronald's objection, testimony regarding American Container was admitted on the first day of the trial, April 30, 1991. Following the presentation of evidence on that day, the trial was recessed until May 22. Ronald's counsel did not ask the bankruptcy court for a continuance for any additional length of time in order to conduct discovery or call additional witnesses regarding American Container, and Ronald has failed to explain why he could not have presented such evidence when the trial was completed on May 22, more than three weeks after the subject of American Container was introduced.
The bankruptcy court did not abuse its discretion in admitting the evidence regarding Ronald's interest in American Container. Ronald's remedy for his alleged surprise as the result of the introduction of that evidence was to seek a continuance, which he did not do. Moreover, despite having over three weeks in which to prepare and submit rebuttal evidence on the second day of trial, Ronald chose to do nothing. That choice does not entitle him to a second trial.
Ronald further contends that the district court erred in denying his discharge. The bankruptcy court denied the discharge on three grounds: (1) continuing concealment of an asset with the intent to hinder, delay, or defraud creditors, 11 U.S.C. § 727(a)(2)(A); (2) making a false oath, 11 U.S.C. § 727(a)(4)(A); and (3) failure to satisfactorily explain the loss of assets, 11 U.S.C. § 727(a)(5). If any one of these grounds justifies the denial of discharge, we need not decide the propriety of the others. See Matter of Perez, 954 F.2d 1026, 1027 (5th Cir.1992). " 'This court reviews the bankruptcy court's findings of fact under the clearly erroneous standard, but the bankruptcy court's conclusions of law are subject to de novo review.' " Id. (quoting Matter of Consolidated Bancshares, Inc., 785 F.2d 1249, 1252 (5th Cir.1986)).
We find ample support for the denial of discharge pursuant to § 727(a)(4)(A), which provides that a debtor will not be granted a discharge if "the debtor knowingly and fraudulently, in or in connection with the case ... made a false oath or account." 11 U.S.C. § 727(a)(4)(a). The plaintiffs had the burden of proving that: (1) Ronald made a statement under oath; (2) the statement was false; (3) Ronald knew the statement was false; (4) Ronald made the statement with fraudulent intent; and (5) the statement related materially to the bankruptcy case. See, e.g., In re Sapru, 127 B.R. 306, 314...
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