Crampton v. Immediato (In re Persinger)
| Decision Date | 12 February 2016 |
| Docket Number | CASE NO. 13–06970–8–DMW,ADVERSARY PROCEEDING NO. 14–00119–8–DMW |
| Court | U.S. Bankruptcy Court — Eastern District of North Carolina |
| Parties | In re: John William Persinger, Debtor Gregory B. Crampton, Trustee, Plaintiff v. Geraldine R. Immediato, Defendant |
Gregory B. Crampton, Steven Craig Newton, II, Nicholls & Crampton, P.A., Raleigh, NC, for Plaintiff.
John G. Rhyne, John G. Rhyne, Attorney at Law, Wilson, NC, for Defendant.
David M. Warren
This matter comes before the court upon the Trustee's Motion for Summary Judgment ("Summary Judgment Motion") filed by Gregory B. Crampton, Trustee ("Plaintiff") on March 9, 2015 and the Response to Motion for Summary Judgment filed by Geraldine R. Immediato ("Defendant") on March 30, 2015. The court conducted hearings on May 26, 2015 and on November 9, 2015 in Raleigh, North Carolina. Steven C. Newton, Esq. and Gregory B. Crampton, Esq. appeared for the Plaintiff, and John G. Rhyne, Esq. appeared for the Defendant. Based upon the pleadings, memoranda, discovery evidence, and arguments of counsel, the court makes the following findings of fact and conclusions of law:
JURISDICTION
, and the court has jurisdiction pursuant to 28 U.S.C. §§ 151, 157, and 1334. SeeHutson v. M.J. Soffe Co. (In re National Gas Distributors, LLC), 412 B.R. 758, 760 (Bankr.E.D.N.C.2009)
().
3. John William Persinger ("Debtor") filed a voluntary petition ("Petition") for relief under Chapter 7 of the United States Bankruptcy Code on November 7, 2013 ("Petition Date"), and the court appointed the Plaintiff to administer the estate pursuant to 11 U.S.C. § 704
.
4. On July 24, 2014, the Plaintiff initiated this adversary proceeding by filing a Complaint against the Defendant. In the Complaint, the Plaintiff seeks to avoid as fraudulent pursuant to 11 U.S.C. § 548(a)(1)
a pre-petition transfer ("Transfer") from the Debtor to the Defendant of real property located at 936 Hawley Road, Kenley, North Carolina ("Property") and to recover the Property for the benefit of the Debtor's bankruptcy estate pursuant to 11 U.S.C. § 550.
5. On September 19, 2014, the Defendant filed an Answer to Complaint denying that the Transfer is avoidable under 11 U.S.C. § 548(a)
. Alternatively, the Defendant asserted a defense under 11 U.S.C. § 548(c), alleging that the Defendant is good faith transferee of the Property and thus entitled to a lien on the Property for alleged value given in exchange for the Transfer.
6. The court first conducted a hearing on the Summary Judgment Motion on May 26, 2015. At the time of this hearing, the Debtor's bankruptcy proceeding was designated as "no asset," so proofs of claim were not required to be filed in the case. The court determined that the amount of claims against the estate was a relevant factor in considering the Summary Judgment Motion; therefore, the court continued the hearing to allow creditors to file proofs of claim.
7. On May 27, 2015, the court issued a Notice of Need to File Proof of Claim Due to Recovery of Assets that instructed creditors who wish to share in any distribution of funds from the Debtor's estate to file a proof of claim by August 29, 2015 ("Bar Date"). Unsecured claims totaling $11,984.00 were filed prior to the Bar Date.1
8. The court conducted its final hearing ("Hearing") on the Summary Judgment motion on November 9, 2015.
9. The Defendant is the daughter of the Debtor and Geneva M. Persinger ("Geneva").
10. On or about June 24, 1988, the Debtor and Geneva acquired the Property pursuant to a Deed recorded in Book 1353, Page 288, Wilson County Register of Deeds.
11. Sometime between 1988 and 2000, Geneva died, making the Debtor the sole owner of the Property, and the Debtor subsequently married Mary Shamblin Persinger ("Mary").
12. On or about December 13, 2000, the Debtor and Mary executed a North Carolina General Warranty Deed, recorded in Book 1790, Page 748, Wilson County Register of Deeds, conveying the Property to themselves as tenants by the entirety.
13. The Property is encumbered by a Deed of Trust ("DOT"), recorded in Book 1918, Page 56, Wilson County Register of Deeds on November 22, 2002 in favor of Wells Fargo Bank, N.A. ("Wells Fargo"). The DOT secures a Promissory Note from Wells Fargo to the Debtor and/or Mary.2 The court will refer to the Promissory Note and the DOT as the "Mortgage Loan."
14. On or about September 1, 2008, the Debtor and Mary, as "sellers owners," and the Defendant entered into a Lease to Buy ("Lease") agreement pursuant to which the Debtor and Mary purported to sell the Property to the Defendant. The Lease specifically provides as follows:
The price is $135,000.00. Payment of $500.00 to begin September 1, 2008 and each month hereafter to pay the mortgage that the sellers have on this property, until Geraldine R. Immediato, widow can arrange financing.
15. After execution of the Lease, the Defendant began making the monthly payments due under the Mortgage Loan directly to Wells Fargo; however, the Defendant did not assume the Mortgage Loan. As of the Hearing, the Defendant still had not assumed the Mortgage Loan. In addition to the payments to Wells Fargo, the Defendant began paying property taxes and maintaining insurance coverage for the Property.
16. On October 23, 2009, the Defendant filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code, Case Number 09–09277–8–RDD ("2009 Bankruptcy"). In the 2009 Bankruptcy, the Defendant did not schedule the Property as an asset of her bankruptcy estate, did not claim any exemptions in the Property, and did not schedule Wells Fargo as a creditor. On her Schedule G—Executory Contracts and Unexpired Leases, the Defendant scheduled the Lease as a "residential lease with option to buy." The Schedule G indicated that the Defendant intended to assume the Lease; however, the trustee appointed in the case did not assume the Lease pursuant to 11 U.S.C. § 365
.
17. On or about February 2, 2010, the Defendant received a discharge in the 2009 Bankruptcy pursuant to 11 U.S.C. § 727
. After her discharge and the closing of the 2009 Bankruptcy, the Defendant continued making the Mortgage Loan payments to Wells Fargo and paying taxes and insurance on the Property.
18. On or about November 4, 2011, the Lease was recorded in Book 2464, Page 562, Wilson County Register of Deeds.
19. On or about December 23, 2012, Mary died, once again making the Debtor the sole owner of the Property.
20. On July 23, 2013 the Wilson County Superior Court entered a Default Judgment against the Debtor and in favor of Charles Hales and Pamela Hales ("Hales") for the amount of $31,020.18, File No. 13–CVS–1209.
21. On or about August 1, 2013, the Transfer occurred when the Debtor conveyed the Property to the Defendant pursuant to a North Carolina General Warranty Deed ("2013 Deed") recorded in Book 2542, Page 793, Wilson County Register of Deeds. The excise tax listed on the 2013 Deed is $0.00, indicating no consideration for the Transfer.
22. At the time of the Transfer, the tax value of the Property was $104,800.00, and the balance due Wells Fargo on the Mortgage Loan was $43,536.61.
23. The Debtor filed the Petition just over three (3) months after the Transfer. On his bankruptcy schedules, the Debtor listed assets totaling $108,410.75 and liabilities totaling $140,123.39. In addition, the Debtor claimed property exemptions totaling $55,500.83.
24. Since the execution of the Lease and through the present, the Defendant has resided at the Property and has made all Mortgage Loan payments to Wells Fargo. In addition, the Defendant has paid all property taxes and maintained insurance coverage for the Property. Beyond these payments of the Mortgage Loan, taxes, and insurance, the Defendant has not made any payments directly to the Debtor or Mary in connection with the Lease.
25. Rule 56 of the Federal Rules of Civil Procedure
, incorporated by Rule 7056 of the Federal Rules of Bankruptcy Procedure, provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). When considering a motion for summary judgment, "the court must consider whether a reasonable jury could find in favor of the non-moving party, taking all inferences to be drawn from the underlying facts in the light most favorable to the non-movant...." Humboldt Express, Inc. v. The Wise Co. (In re Apex Express Corp.), 190 F.3d 624 (4th Cir.1999) (citations omitted). Summary judgment is proper ‘if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, ... show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ " Bo u chat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 519 (4th Cir.2003) (quoting Fed.R.Civ.P. 56(c) (1963) (amended 2010)).
26. The United States Bankruptcy Code ("Code") allows a trustee to avoid certain transfers of an interest of a debtor in property incurred within two years prior to the bankruptcy petition. 11 U.S.C. § 548(a)(1)
. The avoidance of such transfers may be founded on actual fraud pursuant to 11 U.S.C. § 548(a)(1)(A) or constructive fraud pursuant to 11 U.S.C. § 548(a)(1)(B). Angell v. Ber Care, Inc. (In re Caremerica, Inc.), ...
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Crampton v. Immediato (In re Persinger)
...which granted plaintiff's motion for summary judgment, made pursuant to 11 U.S.C. § 548(a)(1)(B). Crampton v. Immediato (In re Persinger), 545 B.R. 896 (Bankr. E.D.N.C. 2016). The issues raised have been briefed fully and are ripe for ruling. For the reasons set out below, the court reverse......