Dymarkowski v. McConegly (In re Martin)

• Decision Date: 12 January 2021
• Docket Number: Case No. 19-30310,Adv. Pro. No. 19-03046
• Parties: In Re: Christopher M. Martin, Debtor. Douglas Dymarkowski, Trustee, Plaintiff. v. Kathleen E. McConegly, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

In Re: Christopher M. Martin, Debtor.Douglas Dymarkowski, Trustee, Plaintiff. v. Kathleen E. McConegly, Defendant.

Case No. 19-30310

Adv. Pro. No. 19-03046

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO WESTERN DIVISION

January 12, 2021

The court incorporates by reference in this paragraph and adopts as the findings and analysis of this court the document set forth below. This document has been entered electronically in the record of the United States Bankruptcy Court for the Northern District of Ohio.

Chapter 7

Judge John P. Gustafson

MEMORANDUM OF DECISION AND ORDER REGARDING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

INTRODUCTION

This cause is before the court on Plaintiff-Trustee Douglas Dymarkowski's ("Plaintiff" or "Trustee") Motion for Summary Judgment. Plaintiff-Trustee is the duly appointed Chapter 7 Trustee of the bankruptcy estate of Debtor Christopher M. Martin ("Debtor"). Plaintiff-Trustee filed a Complaint to Avoid Fraudulent Transfer and Recover Property against Defendant Kathleen E. McConegly ("Defendant"), who received a transfer of $21,000.00 from the Debtor in September 2018 ("Transfer").

JURISDICTION AND VENUE

The court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §1334(b) as a civil proceeding arising in or related to a case under Title 11. The Chapter 7 case and all proceedings in it arising under Title 11, including this adversary proceeding, have been referred to this court for decision. 28 U.S.C. §157(a); General Order 2012-7 of the United States District Court for the Northern District of Ohio. This is a core matter pursuant to 28 U.S.C. §157(b)(2)(H). Venue is proper pursuant to 28 U.S.C. §1409(a).

FACTUAL BACKGROUND

On summary judgment the types of evidence the court may consider are governed, in part, by Federal Rule of Civil Procedure 56(c)(1)(A)-(B),¹ which states:

(1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:

(A) citing to particular parts of the materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers or other materials; or

(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Federal Rule of Civil Procedure 56(c)(3) further provides that: "The court need consider only the cited materials, but it may consider other materials in the record."

Plaintiff submitted the following in support of their motion:

1. Debtor's Huntington Bank checking account statement showing a deposit of $21,466.67 on September 6, 2018 and a payment of $21,000.00 on September 10, 2018 attached as Exhibit A. [Adv. Doc. #28, p. 19].

2. A copy of a check made out to Defendant in the sum of $21,000.00 attached as Exhibit B. [Adv. Doc. #28, p. 20].

3. Defendant's PNC bank account statement indicating a deposit of $21,000.00 on September 10, 2018 attached as Exhibit C. [Adv. Doc. #28, p. 21].

4. An unsigned document titled "Final Borrower's Statement" attached as Exhibit D. [Adv. Doc. #28, pp. 22-24].

5. Plaintiff's First Set of Requests for Admission, Interrogatories and Requests for Production of Documents attached as Exhibit E. [Adv. Doc. #28, pp. 25-41].

6. A Property Record Card attached as Exhibit F. [Adv. Doc. #28, pp. 42-43].

7. The United States Trustee's Complaint to Deny Discharge of Christopher M. Martin or to Dismiss for Abuse. [Adv. Doc. #33-1].²

8. Debtor's Answer to an amended complaint filed by the United States Trustee in a separate Adversary Case No. 19-03016, this exhibit is attached as Exhibit H.³ [Adv. Doc. #28, pp. 51-57].

9. A Memorandum of Opinion by the Honorable Russ Kendig, United States Bankruptcy Judge for the Northern District of Ohio, Eastern Division, attached as Exhibit I. [Adv. Doc. #28, pp. 58-66].

Defendant submitted the following in support of their Objection to Summary Judgment:

1. Declaration of Kathleen E. McConegly. [Adv. Doc. #32, pp. 9-11].

2. Declaration of Christopher Martin. [Adv. Doc. #32, pp. 12-13].

3. Debtor's Edward Jones Traditional Individual Retirement Account - Select statement, including information to complete a 2018 Form 1099-R, attached as Exhibit A. [Adv. Doc. #32, pp. 14-21].

Neither party objected to the exhibits offered by the opposing party under Federal Rule of Civil Procedure 56(c)(2). See generally, In re LTC Holdings, Inc., 596 B.R. 797, 802 n. 14 (Bankr. D. Del. 2019)(discussing the 2010 amendments to Rule 56 streamlining the summary judgment process).

It should be noted that statements made in briefs are not facts that the court can consider in deciding a motion for summary judgment.⁴ Accordingly, statements from the briefs that lack record support do not appear in the "Factual Background" section because they are not evidence the court can properly consider as supporting the Motion for Summary Judgment and Objection to Summary Judgment.

Before the purchase of the residential property located at 110 Columbus Ave, Huron, Ohio ("Property"), Defendant asserts that she owned a home and was the co-signer on her daughter's college loans and could not obtain financing for the Property on her own. [Adv. Doc. #28, Ex. E, p. 35, Q. #13]. About two weeks before the September 24, 2018 closing of the Property, Defendant's bank denied her a bridge loan that Defendant planned on using to finance the purchase of the Property. [Id.; Adv. Doc. #32, pp. 9, 12, Declaration of Kathleen E. McConegly, ¶¶2-3, Declaration of Christopher Martin, ¶4]. Defendant asserts she was unsure she would qualify for another loan. [Adv. Doc. #28, Ex. E, p. 35, Q. #13; Adv. Doc. #32, p. 9, Declaration of Kathleen E. McConegly, ¶3].

Debtor decided to help Defendant with the down payment for the Property. [Adv. Doc. #28, Ex. E, p. 35, Q. #14; Adv. Doc. #32, pp. 9-10, 13, Declaration of Kathleen E. McConegly, ¶¶4-5, Declaration of Christopher Martin, ¶6]. On or about September 6, 2018, Debtor withdrew $23,946.69⁵ from his Individual Retirement Account ("IRA"). [Adv. Doc. #28, Ex. E, p. 35, Q. #14; Adv. Doc. #28, Ex. A, p. 19; Adv. Doc. #32, pp. 9, 13, Declaration of Kathleen E. McConegly, ¶7, Declaration of Christopher Martin, ¶7; Adv. Doc. #32, Ex. A, p. 16]. On September 6, 2018, Debtor drew a check made payable to Defendant for $21,000.00. [Adv. Doc. #28, Ex. B, p. 20,]. That same day, Defendant presented the check from Debtor at Defendant's bank. [Adv. Doc. #28, Ex. C, p. 21; Adv. Doc. #32, p. 10, Declaration of Kathleen E. McConegly, ¶7]. On September 24, 2018, Defendant purchased the Property. [Adv. Doc. #28, Ex. E, p. 35, Q. #14; Adv. Doc. #28, Ex. D, p. 22; Adv. Doc. #32, p. 9, Declaration of Kathleen E. McConegly, ¶2].

Defendant and Debtor now claim that at the time of the Transfer Debtor intended to move in with Defendant and get married,⁶ claiming that they both planned and expected to get married after Defendant purchased the Property and as Defendant's son progressed further through college. [Adv. Doc. #28, Ex. E, pp. 35-36, Q. #15; Adv. Doc. #32, pp. 10, 13, Declaration of Kathleen E. McConegly, ¶10, Declaration of Christopher Martin, ¶9]. Debtor and Defendant's basis for the Transfer was their marriage in the near future. [Adv. Doc. #28, Ex. E, pp. 35-36, Q. #15; Adv. Doc. #32, pp. 9, 13, Declaration of Kathleen E. McConegly, ¶5, Declaration of Christopher Martin,¶5].

Defendant is the sole title owner of the Property. [Adv. Doc. #32, p. 9, Declaration of Kathleen E. McConegly, ¶6]. The Declarations of both Defendant and Debtor⁷ aver that they began living together at the Property in January 2019. [Adv. Doc. #32, pp. 10, 12, Declaration of Kathleen E. McConegly, ¶12, Declaration of Christopher Martin, ¶11]. Defendant also states that she believed Debtor would have an ownership interest in the Property because Debtor's funds allowed Defendant to complete the purchase of the Property. [Adv. Doc. #28, Ex. E, p. 35-36, Q. #15; Adv. Doc. #32, p. 10, Declaration of Kathleen E. McConegly, ¶9]. Additionally, Debtor's contribution to the expenses related to the Property, such as the monthly rent and upkeep related to the home, furthered Defendant's belief that Debtor had some type of interest in the Property. [Adv. Doc. #32, p. 10, Declaration of Kathleen E. McConegly, ¶9].

The Debtor filed for relief under Chapter 7 of Title 11 of the United States Code on or about February 7, 2019. [19-30310, Doc. #1;⁸ Adv. Doc. #32, p. 13, Declaration of Christopher Martin, ¶8]. At the time of filing, the Debtor did not disclose an interest in any retirement or pension account. [Adv. Doc. #32, p. 13, Declaration of Christopher Martin, ¶8]. Nor did Debtor disclose⁹ the Transfer, nor did he disclose either the existence of the IRA, which appears to havebeen held in an Edward Jones account.¹⁰ [Adv. Doc. #28, pp. 35-36, Q. ##13, 18, & 20; Adv. Doc. #21, pp. 14-21].

Debtor owes approximately $4,400.00 in taxes based on Debtor's IRA withdrawal, which Defendant states she had verbally committed to pay. [Adv. Doc. #28, Ex. E, p. 35, Q. #13; Adv. Doc. #32, pp. 10, 13, Declaration of Kathleen E. McConegly, ¶8, Declaration of Christopher Martin, ¶12].

Since moving into the Property, Debtor and Defendant assert that Debtor has saved on monthly expenses: "as a result of moving in, the utilities, insurance, internet, cable, and 'rent' are reduced below what he was paying before he moved into" the Property. [Adv. Doc. #28, Ex. E, p. 36-37, Q. #19; Adv. Doc. #32, p. 10, 13, Declaration of Kathleen E. McConegly, ¶12, Declaration of Christopher Martin, ¶¶10, 11]. The Debtor and Defendant assert that Debtor canceled a storage rental agreement of $100.00 a month¹¹ since he can now use the garage at the Property. [Id.]. Living at the Property has also allowed Debtor to save thirty miles a day in his commute to work. [Id.]. Addi...