Cini v. Viscomi (In re Cini)

Citation492 B.R. 291
Decision Date03 May 2013
Docket NumberAdversary No. 11–00007.,Bankruptcy No. 10–62715–11.
CourtUnited States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana
PartiesIn re Robin Jean Lyon CINI, Debtor. Robin Jean Lyon Cini, Plaintiff v. Viscomi & Gersh, PLLP, Peter F. Carroll, Blue Cross and Blue Shield of Montana, Inc., Robin Jean Lyon Cini, Personal Representative of the Estate of Hanna Cini, and Robin Jean Lyon Cini, Conservator for Bayden Cini, Defendants.

OPINION TEXT STARTS HERE

James H. Cossitt, Mary K. DeNevi, James H. Cossitt, PC, Jeffrey Keith Greenwell, Kalispell, MT, for Debtor and Plaintiff.

Michael A. Viscomi, Viscomi & Gersh, PLLP, Brian Michael Joos, Ryan D. Purdy, Morrison & Frampton, PLLP, Whitefish, Peter F. Carroll, Kalispell, MT, for Defendants.

MEMORANDUM OF DECISION

RALPH B. KIRSCHER, Bankruptcy Judge.

Trial of the remaining claims in this adversary proceeding was held at Missoula on March 14 and 15, 2013, along with the hearing on the Debtor/Plaintiff's motion for approval of compromise settlement filed in the above-captioned Chapter 11 case.1 Plaintiff Robin Jean Lyon 2 (Robin) appeared and testified, represented by attorneys James H. Cossitt (“Cossitt”) and Mary DeNevi of James H. Cossitt, PC, of Kalispell, Montana. Defendant Peter F. Carroll (“Carroll”), an attorney, of Kalispell filed an objection to the proposed compromise settlement, and appeared pro se and testified. Exhibits (“Ex.”) 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, A, B, C, D, E, F, G, H, I, J, K, L, Q, U, V, W, Z, AA, BB, CC, DD, EE, FF, and GG, all were admitted into evidence. 3 Witnesses David Sandler, Michael Viscomi, Jeff Weyh, and Christopher Yerkes also testified. At the conclusion of the parties' cases-in-chief the Court granted the parties 15 days to file post-trial memoranda, which have been filed and reviewed by the Court together with the evidence and applicable law. This matter is ready for decision.

This Court has jurisdiction of this adversary proceeding under 28 U.S.C. § 1334(a) & (b). The remaining claims to determine the validity and priority of liens and interests, seeking a judgment of contempt against Carroll for violation of the automatic stay, and approval of compromise settlement, are core proceedings under 28 U.S.C. § 157(b)(2). This Memorandum of Decision includes the Court's findings of fact and conclusions of law under F.R.B.P. 7052 (applying Rule 52, Fed.R.Civ.P. in adversary proceedings).

FACTS & PROCEDURAL HISTORY

This case arises from an automobile accident which injured Robin and her minor son, and caused the death of her daughter Hanna. Robin's marriage to Nigel Cini (“Nigel”) subsequently was dissolved. Carroll was Nigel's attorney for part of the marital dissolution.

Plaintiff's counsel and Carroll each signed a Final Pretrial Order (“PTO”) (Dkt. 179), which the Court approved on March 8, 2013. The following facts are agreed upon in the approved PTO and require no proof:

a. On April 16, 2009, Robin was in an automobile accident, in which she sustained injuries, her son BC (“BC”) sustained injuries, and her daughter Hanna Cini (“Hanna”) passed away.

b. Robin was appointed personal representative (“PR”) of the Probate Estate of Hanna Cini (the “Estate”) on April 23, 2009, in Case No. DP–09–67(A), Montana Eleventh Judicial District Court, Flathead Court.

c. On or about July 29, 2009, Robin and her ex-husband Nigel Cini (“Nigel”) entered into an Agreement (the 7/29/09 Agreement”) relating to division of “any monies previously or hereinafter obtained on the wrongful death or survivor claims for Hanna Cini as a result of the automobile accident,” in which they agreed that “the net settlement or judgment proceeds (after all applicable attorney fees, costs, or estate expenses are deducted), shall be equitably divided” as follows: 42.5% of the proceeds to Robin, 42.5% to Nigel and 15% to BC. Nigel assigned to Robin the first $50,000 in net proceeds payable to him.

d. On August 11, 2009, the district court entered an order in Case No. DP–09–67(A) which, among other things, approved the division set out in the 7/29/09 Agreement.

e. On November 25, 2009, Robin filed a complaint in three capacities (individually, as Conservator of BC, and as PR), asserting damage claims on behalf of the Estate (the “damages case”), docketed as Case No. DV–09–1488(A) and # DP–09–67(A) in the Montana Eleventh Judicial District Court, Flathead County.

f. Robin filed a petition for relief under Chapter 13 of the Bankruptcy Code on November 19, 2010. The case subsequently was converted to Chapter 11.

g. [Left blank in original.]

h. Robin filed a complaint commencing this adversary proceeding on January 24, 2011, to resolve competing claims to proceeds of the damages case and other monies that were or might become payable to the Estate (the “Trust Fund”). She filed a 1st Amended and Substituted Complaint on February 13, 2011.

i. Robin is named as a defendant in her representative capacities as PR of the Estate and BC's conservator. Viscomi & Gersh, PLLP (Viscomi), is named as a defendant because the firm is the custodian of the Trust Fund. Peter Carroll is named as a defendant because of interests he claims in the Trust Fund.

j. On June 9, 2012, this Court entered judgment dismissing all claims against Defendant Blue Cross and Blue Shield of Montana, Inc. (“BCBS”) and finding that BCBS has no claim or interest in the Fund (Dkt. 68).

k. By order dated January 30, 2012, the Court dismissed all claims against Defendants John Darren Cogar and Suzanne Cogar (the “Cogars”). (Dkt. 124) Separate judgment did not enter on that order.

l. On February 25, 2013, this Court entered judgment 4 against Defendant Nigel Cini, allowing Plaintiff's Third Motion for Summary Judgment (Against Nigel Cini) (Dkt. 161) and ruling that he “has no valid lien, claim or other interest in any and all claims, recoveries and proceeds arising out of Case# DV–09–1488(A) and # DP–09–67(A) in the Montana Eleventh Judicial District Court, Flathead County.”

m. Robin and Nigel obtained a dissolution of their marriage in Case No. DR–08–483(A), Eleventh Judicial District Court, Flathead County.

n. On October 15, 2010, Robin obtained a judgment against Nigel in Case No. DR—8–483(A) for failure to pay child support in the amount of $7,885.00. On November 29, 2010, the state court issued an order against Nigel for the payment of attorneys' fees in the amount of $25,271.40.

o. On various dates in late January 2011 and February 2011, Robin caused an execution to be levied on Nigel's interest in the Fund against Peg Allison, Clerk of Court (11th Judicial District, Flathead County), Nigel, Viscomi, and herself as PR of the Estate. Notice of the sheriff's sale pursuant to the writ of execution was posted and published according to statute in Flathead County, Montana.

p. On May 3, 2011, Robin purchased, at the sheriff's execution sale, all of Nigel's rights, title and interests in and to the Trust Fund. Following a dispute as to the validity of the sheriff's sale, the state district court affirmed its validity by order dated February 8, 2012.1

q. Defendant Carroll previously represented Nigel in the marriage dissolution action. Nigel became indebted to Defendant Carroll for attorney's fees and costs which remain unpaid.

r. In an action in state court, 11th Judicial District, Flathead County, captioned DV–10–694B (the Carroll Action), Defendant Carroll obtained a confession of judgment against Nigel in the amount of $10,960.85, plus interest at 10%, which included a “voluntary lien” on recovery in the Estate's damages case. The state district court issued a writ of execution (the “first writ”) on the judgment on or about November 19, 2010.

s. Michael A. Viscomi filed an affidavit in the Carroll Action on or about December 3, 2010, in which he detailed actual and potential competing claims against the Trust Fund.

t. Mr. Carroll had a levy officer serve the first writ on Viscomi personally on December 13, 2010.

u. On or about December 17, 2010, Carroll filed an Ex Parte Motion to Compel Delivery of Funds or in the Alternative for an Order to Show Cause and affidavit in support. On December 20, 2010, the state court issued an Order to Show Cause, requiring Viscomi to show cause why funds should not be delivered to Carroll.

v. On December 20, 2010, Robin filed in the Carroll Action a Notice of Lack of Subject Matter Jurisdiction and Applicability of Automatic Stay with Respect to any Determination of the Interests of Robin Cini.

w. On January 10, 2011, Carroll filed his Reply Brief in Support of Plaintiff's Lien.

x. The court issued a second writ of execution (the “second writ”) respecting Carroll's judgment on or about June 30, 2011, on the basis of an affidavit filed by Carroll. Carroll caused the second writ to be served on Viscomi on June 30, 2011.

Other facts are gleaned from the testimony and exhibits admitted at trial.

Ex. 1 is the 7/29/09 Agreement” between Robin and Nigel described in the above-listed fact “c.” Robin hired Michael Viscomi (Viscomi) to represent her in her capacities as PR of Hanna's estate and conservator of BC. Viscomi testified that he represented Robin in negotiating Ex. 1, and Nigel was represented by attorney Jeffrey Ellingson (“Ellingson”). Ex. 1 provides at paragraph 4 that Viscomi and Ellingson would work out how they would divide the work in pursuing the wrongful death claims. Viscomi testified that Ex. 1 has not been set aside and is still in effect.

Viscomi explained that Robin and BC each had individual claims, and Nigel had a derivative claim in the damages case. The claim with the most potential recovery was the survivorship claim of Hanna, which Viscomi testified was owned equally by Robin and Nigel, and they also had claims for loss of companionship/loss of consortiumwhich they agreed to treat pursuant to Ex. 1.

In Paragraph 3 of Ex. 1 Nigel agreed to assign the first $50,000 “of the net settlement of judgment proceeds...

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