Chesley v. Woodard (In re Chesley)
| Decision Date | 17 March 2014 |
| Docket Number | Bankr. No. 8:11–bk–13785–KRM,Case No. 8:13–cv–3238–T–33 |
| Citation | 526 B.R. 888 |
| Parties | In re: Thomas Allen Chesley, Debtor, Thomas Allen Chesley, Appellant, v. Susan K. Woodard, Chapter 7 Trustee, and Timothy Beahan, Appellees. |
| Court | U.S. District Court — Middle District of Florida |
Robert Walter Bauer, Timothy C. Youngblood, The Law Office of Robert W. Bauer PA, Gainesville, FL, for Appellant.
Herbert R. Donica, Donica Law Firm PA, Benjamin E. Lambers, Tampa, FL, for Appellees.
This matter comes before the Court on appeal from the Bankruptcy Court's Order granting Chapter 13 Trustee's Motion for Summary Judgment on Amended Trustee's Objection to Debtor's Property Claimed as Exempt on Amended Schedule C and Creditor Timothy Beahan's Joinder in Trustee's Motion for Summary Judgment, filed on September 23, 2013. (Doc. # 1–2). For the reasons stated below, the Court affirms the Bankruptcy Court's Order.
Appellant Thomas Allen Chesley filed a Chapter 13 bankruptcy petition with the United States Bankruptcy Court for the Middle District of Florida on July 21, 2011. (Case No. 8:11–bk–13785–KRM1 , Doc. # 1). Prior to filing for bankruptcy, however, Chesley was involved in a personal injury action against Parts Depot, Inc., which arose out of a motor vehicle accident. (Doc. # 1–16 at ¶ 2, Doc. # 12 at 11). Chesley negotiated a settlement of the personal injury action with Parts Depot, Inc. in the amount of $1,200,000.00 in exchange for a general release of all claims. (Doc. # 1–16 at ¶ 3, Doc. # 1–19, Doc. # 12 at 11). According to Chesley, the $1,200,000.00 was compensation for Chesley's “injuries sustained from the collision, as lost earning capacity, past medical expenses, future medical expenses and past lost wages or earning capacity.” (Doc. # 12 at 11). However, the general release provided no specific allocation regarding the settlement proceeds nor any representation characterizing the settlement proceeds, except to state that the proceeds represented consideration for the release. (Doc. # 1–16 at ¶ 16).
In May of 2011, Chesley received a lump sum payment of $336,643.56 from the settlement proceeds. (Id. at ¶ 4). According to Chesley's testimony at the 341 meetings of creditors, Chesley spent a portion of the settlement proceeds to pay off his home mortgage, purchase a 2011 Ford F–450 truck, repair his home and pay friends and family members. (Id. at ¶ 7).
“The remaining net proceeds ... from the personal injury settlement were held by [Chesley's] personal injury attorney, Phil Chanfrau, and another attorney, John Mangelli, he had retained to resolve the claims of parties who were asserting liens against the proceeds.” (Id. at ¶ 5). “Three parties who asserted a lien against the proceeds, which was transferred from Attorneys Chanfrau and Mangelli to [Chesley's] bankruptcy attorney, have been settled and the approximate $175,000 left of the remaining proceeds are being held in [Chesley's] bankruptcy counsel's trust account.” (Id. at ¶ 8).
In the bankruptcy case, Chesley asserted claims of exemptions and filed an Amended Schedule C, which listed among the exemptions:
Suntrust Account No. 2193 ($32,399.64); 2011 Ford F[—] 450 SD ($45,000.00); [Chesley's counsel's] trust account ($340,000.00); proceeds from personal injury lawsuit “identified as lost wages” ($695,000.00); proceeds from personal injury lawsuit “identified as past medical expenses” ($80,000.00); proceeds from personal injury lawsuit “identified as future medical expenses” ($420,000.00); proceeds from personal injury lawsuit “identified as past lost wages or earning ability” ($130,000.00).
(Doc. # 1–2, Doc. # 1–15, Doc. # 12 at 11–12). According to Chesley, the “monetary assets” were exempt from creditors' claims as “disability income benefits” pursuant to Fla. Stat. §§ 222.14, 222.18, 222.201, and the liquid assets were exempt under 11 U.S.C. § 522(d)(10). (Doc. # 12 at 8). With regard to the 2011 Ford F–450 truck, Chesley contended that it was exempt under Fla. Stat. § 222.25(1) and In re Harrelson, 311 B.R. 618 (Bankr.M.D.Fla.2004). (Id. ). The Chapter 13 Trustee and Timothy Beahan, a creditor, objected to Chesley's claimed exemptions. (Doc. # # 1–10, 1–11, 1–13, 1–14).
On July 15, 2013, the Chapter 13 Trustee filed his motion for summary judgment on amended trustee's objection to Chesley's property claimed as exempt.See (Doc. # 1–16). At a hearing on August 20, 2013, the Bankruptcy Court granted the motion, thereby sustaining the objections to Chesley's claimed exemptions. (Case No. 8:11–bk–13785–KRM, Doc. # 442; Doc. # 1–26). The Order granting the Chapter 13 Trustee's motion for summary judgment was entered on September 23, 2013. See (Doc. # 1–2). Therein, the Bankruptcy Court held that: (1) the proceeds from Chesley's settlement of his personal injury suit with Parts Depot, Inc., including the remaining funds held in Chesley's attorney's trust account from the settlement, are not exempt; (2) the funds in Chesley's bank account as of the petition date are not exempt; and (3) Chesley's 2011 Ford F–450 is not exempt, except to the extent of $1,000.00 as permitted under Fla. Stat. § 222.25(1). (Doc. # 1–2 at ¶¶ 3–5). The Order further provided that:
[Chesley] shall have through October 4, 2013, within which to file a motion for reconsideration of this [O]rder on the condition that he provides with said motion a certified copy of an applicable insurance policy that includes a specific provision for a disability income benefit, and furnishes a copy of such policy to the Chapter 13 Trustee, the United States Trustee and counsel for Creditor, Timothy Beahan.
On October 7, 2013, Chesley filed an amended motion for reconsideration and rehearing along with a copy of the applicable insurance policy. (Doc. # 1–23). On October 28, 2013, the Bankruptcy Court conducted a hearing on Chesley's amended motion for reconsideration and rehearing. (Case No. 8:11–bk–13785–KRM, Doc. # 460; Doc. # 1–27). At the hearing, the Bankruptcy Court affirmed its prior ruling granting the Chapter 13 Trustee's motion for summary judgment. (Doc. # 1–27).
On November 4, 2013, Chesley filed a notice of appeal of the Bankruptcy Court's Order granting the Chapter 13 Trustee's motion for summary judgment. (Case No. 8:11–bk13785–KRM, Doc. # 469). Thereafter, on November 5, 2013, Chesley filed his motion for stay pending appeal with the Bankruptcy Court. (Id. at Doc. # 470).
On November 21, 2013, the Bankruptcy Court entered an Order converting the Chapter 13 bankruptcy action to Chapter 7 and setting a hearing on the disbursement of funds held by the Chapter 13 Trustee. (Id. at Doc. # 482). The Bankruptcy Court appointed Susan K. Woodard as the Chapter 7 Trustee on November 21, 2013. (Id. at Doc. # 484).
On December 16, 2013, the Bankruptcy Court entered an Order granting in part and denying in part Chesley's motion to stay pending appeal. (Id. at Doc. # 523). Therein, the Bankruptcy Court decided that the $175,000 in personal injury proceeds currently in the Trust Account of Chesley's former counsel should be placed in a Trust Account for the Chapter 7 Trustee, to be held in a non-IOTA interest-bearing account by the Trustee's counsel until further Order of the Bankruptcy Court. (Id. at Doc. # 523 at ¶ 1). However, the Bankruptcy Court declined to otherwise stay the bankruptcy case, which generally denied a stay as to the 2011 Ford F–450 truck. (Id. at Doc. # 523 at ¶ 2).
On December 30, 2013, the Bankruptcy Court entered a supplemental order granting in part and denying in part Chesley's motion for stay pending appeal. (Id. at Doc. # 533). In the supplemental order, the Bankruptcy Court added findings concerning its decision to deny the stay regarding Chesley's 2011 Ford F–450 truck. (Id. ).
(Id. ).
Now, before the Court is Chesley's appeal of the Bankruptcy Court's Order granting Chapter 13 Trustee's Motion for Summary Judgment on Amended Trustee's Objection to Debtor's Property Claimed as Exempt on Amended Schedule C and Creditor Timothy Beahan's Joinder in Trustee's Motion for Summary Judgment. (Doc. # 1–2). Chesley filed his Appellant brief on January 10, 2014. (Doc. # 12). Susan K Woodard—as the current Trustee2 —filed her Appellee brief on January 24, 2014. (Doc. # 18). Thereafter, Appellee–Creditor Timothy Beahan filed a notice indicating that he joins the brief of Susan K Woodard. (Doc. # 19). On February 7, 2014, Chesley filed a reply brief. (Doc. # 22). This Court has reviewed the parties' briefs and the record before the Court and is otherwise fully advised in the premises.
The United States District Court functions as an appellate court in reviewing decisions of the United States Bankruptcy Court. In re Colortex Indus., Inc., 19 F.3d 1371, 1374 (11th Cir.1994). Upon entry of a final order by the bankruptcy court, a party may appeal to the district court pursuant to 28...
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