Bernhard v. Kull (In re Bernhard)
Decision Date | 22 February 2022 |
Docket Number | Bky. No. 11-15799 ELF,Adv. No. 19-167 |
Parties | IN RE Gary BERNHARD, Debtor Gary Bernhard, Plaintiff v. Brian Kull, Theresa Kull, Paul Bucco, et al., Defendants |
Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Anthony A. Frigo, The Law Offices of Anthony A. Frigo, Mark S. Pearlstein, Law Office of Mark S. Pearlstein, Wayne, PA, for Plaintiff.
Paul A. Bucco, Davis, Bucco & Ardizzi, Conshohocken, PA, Daniel S. Siedman, Albert A. Ciardi, III, Ciardi Ciardi & Astin, Philadelphia, PA, for Defendant John J. Dorsey.
Paul A. Bucco, John J. Dorsey, Davis, Bucco & Ardizzi, Conshohocken, PA, for Defendants Brian Kull, Theresa B. Kull.
Albert A. Ciardi, III, Daniel S. Siedman, Ciardi Ciardi & Astin, Philadelphia, PA, for Defendants Davis, Bucco, & Ardizzi, David S. Makara, Nathaniel J. Flandreau, Paul A. Bucco.
In this adversary proceeding, Gary Bernhard ("the Debtor") seeks a determination that Defendants Brian Kull ("Mr. Kull") and his wife, Theresa B. Kull (collectively, "the Kulls"), along with the Kulls’ attorneys ("the Bucco Defendants"),1 are in contempt of the discharge order ("Discharge Order") entered in this chapter 7 bankruptcy case on December 15, 2011. As remedies, the Debtor seeks the entry of an order requiring the Defendants to cease all collection activity, and attorney's fees.2
There is no question that the Defendants attempted to collect a prepetition debt after the entry of the discharge. But the back story is far more complicated because the Debtor failed to list the Kulls as creditors in his bankruptcy schedules and made numerous payments to the Kulls on the debt after the entry of his discharge order.
The Defendants also maintain that this underlying prepetition debt was the product of the Debtor's fraud. Consequently, based on the discharge exception found in 11 U.S.C. § 523(a)(3)(B), the Defendants seek to justify their post-discharge collection actions on the ground that the discharge order entered in the Debtor's bankruptcy case did not discharge the subject debt.
The Debtor disputes the applicability of § 523(a)(3). He asserts that even though the Kulls were not scheduled as creditors and received no notice of the filing from the court, he told Mr. Kull of his bankruptcy filing in time for the Kulls to file a nondischargeability claim and therefore, § 523(a)(3) is inapplicable.
Finally, the Defendants argue that even if their conduct violated the Debtor's bankruptcy discharge order, they lacked the necessary scienter to hold them in contempt under the standard stated by the U.S. Supreme Court in Taggart v. Lorenzen, ––– U.S. ––––, 139 S. Ct. 1795, 1801, 204 L.Ed.2d 129 (2019).
For the reasons explained below, I conclude the following:
The Debtor filed a chapter 7 bankruptcy case on July 24, 2011. He received his bankruptcy discharge on December 15, 2011. The court closed his case the same day.
On April 27, 2016, on the Debtor's motion, the court reopened the case to permit the Debtor to seek to avoid a judicial lien pursuant to 11 U.S.C. § 522(f). It appears that court did not re-close the case after the entry of the lien avoidance order.3
On August 23, 2019, the Debtor commenced this adversary proceeding by filing an adversary complaint. The Kulls filed an answer to the complaint on September 25, 2019, and, with leave of court (over the Debtor's objection), an amended answer on December 23, 2019. The Bucco Defendants filed an answer to the complaint on October 10, 2019, and an amended answer on October 30, 2019.
On February 19, 2020, the Debtor filed a motion for summary judgment. All Defendants contested the motion. The last summary judgment submission was filed on April 5, 2020. On June 10, 2020, by oral bench opinion and accompanying order, I denied the Debtor's motion for summary judgment.
On August 20, 2020, the court held and concluded the trial. The parties presented testimony from three (3) witnesses: the Debtor, Mr. Kull, and Defendant Paul Bucco. The parties offered thirty-three (33) exhibits into evidence.
After the conclusion of the trial, the Debtor and the Bucco Defendants filed proposed findings of fact, conclusions of law, memoranda, and reply memoranda, the last of which was filed on November 20, 2020.4
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