French v. Peninsula Bank
| Decision Date | 21 February 2006 |
| Docket Number | Adversary No. 01-5201-JS.,Bankruptcy No. 01-5-6579-JS.,Civ. No. RDB05-376. |
| Citation | 338 B.R. 668 |
| Parties | Elwood Dean FRENCH, Appellant, v. PENINSULA BANK, Appellee. In re Elwood Dean French, Debtor. Peninsula Bank, Plaintiff, v. Elwood Dean French, Defendant. |
| Court | U.S. District Court — District of Maryland |
Stanton J. Levinson, Silver Springs, MD, for appellant.
John Bartholomew Robins, IV, Salisbury, MD, for appellee.
George W. Liebmann, Baltimore, MD, for trustee.
This case is before this Court on appeal from the Order of United States Bankruptcy Judge James F. Schneider granting the motion for summary judgment of the appellee Peninsula Bank ("Peninsula") and denying the appellant-debtor Elwood Dean French ("French") a discharge in bankruptcy. Judge Schneider found that French had failed to maintain financial records and that he was therefore not entitled to a discharge pursuant to Section 727(a)(3) of the Bankruptcy Code as a matter of law. Secondarily, Judge Schneider found that French had made a series of false oaths in connection with the bankruptcy proceedings and that as a result he was therefore not entitled to a discharge pursuant to Section 727(a)(4)(A). This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 158(a), as French's appeal arises from the final order entered by the United States Bankruptcy Court for the District of Maryland and is brought pursuant to Local Rule 403(a)(1). Oral argument is deemed unnecessary because the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument. Local Rule 105.6, D. Md. See Fed. R. Bankr.P. Rule 8012. For the reasons stated below, the Order of United States Bankruptcy Judge James F. Schneider is affirmed.
On October 10, 2000, the appellant-debtor Elwood Dean French filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101, et seq., in the United States Bankruptcy Court for the Middle District of Florida.1 In that proceeding French claimed the Florida "homestead exemption."2 The appellee Peninsula Bank, a creditor of French, filed an adversary proceeding in the Florida Bankruptcy Court objecting to appellant's bankruptcy discharge, alleging fraudulent transfer of property prior to the bankruptcy filing,3 destroying and failing to keep accurate financial records, and false oath in connection with the case. Other creditors also filed adversary complaints objecting to the proposed discharge.
A meeting of creditors was scheduled by the Florida Bankruptcy Court and held on December 20, 2000. At that meeting French gave sworn testimony to Diane Jensen, the Chapter 7 Trustee in Florida, that he had not kept important financial records. He further provided sworn testimony with respect to his schedule and statement of financial affairs. The appellee Peninsula Bank and other creditors filed motions to transfer venue of this matter to this Court. A hearing on these motions was held before United States Bankruptcy Judge Alexander L. Paskay of the United States Bankruptcy Court for the Middle District of Florida on February 15, 2001, Once again, French testified under oath that he had not maintained financial records. Furthermore, while seeking to assert Florida residency, French acknowledged that in February of 2000 he had provided sworn testimony as to Maryland residency. In addition, French testified that a particular attorney had not previously represented him. In particular, at the hearing on the motion to transfer venue before Judge Paskay, French testified with respect to the notarization of certain documents in Maryland and provided testimony as to his travel to and from Maryland and Florida. On April 25, 2001, Judge Paskay granted the transfer motion of the creditors and the bankruptcy case and the adversary proceeding were transferred to this Court. See In re French, 261 B.R. 763 (Bankr.M.D.Fla. 2001).4
Upon the transfer of this matter to this District, a meeting of creditors was held before the Interim Chapter 7 Trustee James R. Wooton in Salisbury, Maryland, on June 20, 2001. Once more under oath, French testified that he did not have complete financial records for 1998 and 1999 and was uncertain of their location.
The case then proceeded into a discovery This discovery included interrogatories and a deposition. At his deposition in January of 2002, French contradicted his testimony before Trustee Wooton with respect to his accountant having all of his financial records. He specifically acknowledged that his accountant did not have complete financial records.
Prior to the scheduled trial date in April of 2002, Peninsula requested leave of court, pursuant to Bankruptcy Rule 7015(d) and Rule 15(d) of the Federal Rules of Civil Procedure, to supplement its complaint. This supplement included specific contentions of false allegations by the appellant-debtor French and contained more specific allegations of fraud. French objected on the basis that an action to deny a discharge pursuant to 11 U.S.C. § 727(a)(4)(A) is essentially an allegation of fraud which must be pleaded with particularity. His objection was denied and the Court in the exercise of its discretion permitted the complaint of Peninsula to be supplemented.
As a result of a death in Judge Schneider's family, the trial in April of 2002 was postponed. In light of the delay, Peninsula Bank filed an amended motion for summary judgment in May of 2002. A hearing was held on that motion by Judge Schneider on September 25, 2002. While appellant French argues in his brief that Judge Schneider announced his intention to grant Peninsula's motion for summary judgment and deny his discharge in bankruptcy, this case was officially held sub curia pending Judge Schneider's final ruling.
During the pendency of Judge Schneider's final ruling on Peninsula's motion for summary judgment, the issue of French's claim of entitlement to Florida exemptions proceeded to a separate trial on December 1, 2003. This trial was held before United States Bankruptcy Judge Russell E. Eisenberg sitting by special designation. At the conclusion of this trial, Judge Eisenberg sustained the objections to French's claim of Florida exemptions and specifically found that French's testimony was not credible.
Finally, on January 7, 2005, Judge Schneider issued his written opinion which is the subject of this appeal. In a review of the complete record of this case, Judge Schneider held that summary judgment was proper under both 11 U.S.C. § 727(a)(3) () and § 727(a)(4)(A) (false oaths.)5
This appeal is brought pursuant to Rule 8001 of the Federal Rules of Bankruptcy Procedure. On appeal from the Bankruptcy Court, this Court acts as an appellate court and reviews the Bankruptcy Court's findings of fact for clear error and conclusions of law de novo. In re Merry-Go-Round Enterprises, Inc., 400 F.3d 219, 224 (4th Cir.2005). In re Kielisch, 258 F.3d 315, 319 (4th Cir.2001). A factual finding is clearly erroneous "when although there is evidence to support it, the reviewing court on the entire evidence is left with a firm and definite conviction that a mistake has been committed." United States v. United States Gypsum, 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948). Accordingly, a district court will not reverse a bankruptcy court's findings of fact "simply because it is convinced that it would have decided the case differently." Matter of Broyles, 55 F.3d 980, 983 (4th Cir.1995) (quoting Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985)). With respect to the precise allegation of error in permitting the complaint to be supplemented, appellate review is not de novo but is under an abuse of discretion standard.
This Court reviews the grant of summary judgment de novo applying the standards of Rule 56 of the Federal Rules of Civil Procedure. In re National Gypsum Co., 208 F.3d 498 (5th Cir.2000). Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." Fed. R.Civ.P. 56(c) (emphasis added). In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), the Supreme Court explained that only "facts that might affect the outcome of the suit under the governing law" are material. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. In that context, a court must consider the facts and all reasonable inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). However, "[w]hen the moving party has met its responsibility of identifying the basis for its motion, the nonmoving party must come forward with `specific facts showing that there is a genuine issue for trial.'" White v. Rockingham Radiologists, Ltd., 820 F.2d 98, 101 (4th Cir.1987) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Fed.R.Civ.P. 56(e)).
French first argues that Judge Schneider erred in April of 2002 in granting Peninsula leave to supplement its complaint objecting to this discharge in bankruptcy. This request was appropriately presented to the Bankruptcy Court pursuant to Rule 15(d) of the Federal Rules of Civil Procedure and Bankruptcy Rule 7015(d). This Court's review of Judge Schneider's exercise of his discretion on this matter is limited to an abuse of discretion standard. See In re Dominguez, 51 F.3d 1502, 1509 (9th Cir.1995).
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...(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Fed.R.Civ.P. 56(e)). French v. Peninsula Bank, 338 B.R. 668, 673 (D.Md.2006). For the reasons stated, the defendants' motion for summary judgment will be GRANTED, the complaint will be DISMISSED, an......
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