Gold v. Harper (In re Ambrose-Burbank)

Decision Date25 January 2017
Docket NumberCase No. 15–54057–tjt,Adv. Pro. No. 15–05446–tjt
Citation563 B.R. 820
Parties IN RE: Rumia Tanyalete AMBROSE–BURBANK, Debtor. Stuart A. Gold, Trustee, Plaintiff, v. Novyce Harper, Defendant.
CourtU.S. Bankruptcy Court — Eastern District of Michigan

Elias T. Majoros, Southfield, MI, for Plaintiff.

Edward J. Gudeman, Brian Ashley Rookard, Gudeman & Associates, P.C., Royal Oak, MI, for Defendant.


Thomas J. Tucker, United States Bankruptcy Judge

I. Introduction and background

This adversary proceeding presents competing claims to ownership of a vehicle titled in Michigan, a 2010 Dodge Charger (the "Vehicle"). The sole owner of the Vehicle, according to the certificate of title, is the Chapter 7 bankruptcy debtor, Rumia Tanyalete Ambrose–Burbank (the "Debtor"). The Debtor has not claimed any exemption for the Vehicle. Based on these facts, the Plaintiff Chapter 7 Trustee claims that the Vehicle is the exclusive property of the bankruptcy estate.

But the Defendant, Novyce Harper (the "Defendant"), who is the Debtor's cousin, claims to be the sole "equitable" owner of the Vehicle, so that the bankruptcy estate owns only the "bare legal title" to the Vehicle. Defendant claims, and the Debtor agrees, that although the Debtor bought the Vehicle from a dealer, and financed the purchase, solely in the Debtor's own name, this was actually done only to help Defendant buy the Vehicle. And it is undisputed that the Debtor gave Defendant sole possession of the Vehicle shortly after the Debtor bought it, and that Defendant made 100% of the payments for the Vehicle (the down payment and all loan payments).

The Trustee filed a three-count complaint against Defendant. Count I seeks a declaratory judgment that the Vehicle is property of the bankruptcy estate, subject to immediate turnover to the Trustee. Count II seeks avoidance of any transfer of the Vehicle from the Debtor to Defendant under 11 U.S.C. §§ 544(a)(1), 544(a)(2), 544(a)(3) and 550(a). Count III seeks avoidance of any transfer of the Vehicle from the Debtor to Defendant as a fraudulent transfer, under 11 U.S.C. §§ 544(b), 548 and 550(a).

The Trustee and Defendant each moved for summary judgment. In his motion, the Trustee seeks summary judgment on Counts I and II of his complaint. The Trustee has abandoned Count III, and seeks to voluntarily dismiss that count.1 Defendant seeks summary judgment on the Trustee's remaining counts. The Court held a hearing on the motions, and took them under advisement.

For the reasons stated below, the Court concludes, based on the undisputed facts, that the sole owner of the Vehicle is the Debtor's bankruptcy estate. Defendant has no ownership interest—legal or equitable—in the Vehicle. The Court will grant summary judgment for the Trustee, and deny Defendant's summary judgment motion.

II. Facts

The following facts are not in dispute.

On March 31, 2010, the Debtor purchased the Vehicle for $25,026, from a dealer named Sterling Heights Dodge, Inc.2 The Debtor applied for and obtained a loan in her own name to finance the purchase. The Debtor made a loan agreement by entering a Retail Installment Sale Contract with Ally Bank a/k/a GMAC.3 But it was Defendant who paid to the dealer an initial $100 deposit on March 11, 2010.4 And Defendant supplied the money for the Debtor to pay the dealer an additional $1,000 deposit on April 2, 2010.5

The Dealer and the Debtor applied for title to the Vehicle in Debtor's name, alone, on March 31, 2010. On the application form, there were two boxes where the applicant was to list "Complete Names and Addresses of All Owners or Lessees." One box listed the Debtor's name and address, alone. The other box was left blank, indicating that there were no owners other than the Debtor.6 The Michigan Secretary of State then issued a certificate of title, listing only the Debtor as owner of the Vehicle.7 The Debtor initially insured the Vehicle listing herself and her husband as drivers.8 But almost immediately, the Debtor discontinued her insurance and Defendant began insuring the Vehicle through her insurance.9 Also immediately after purchasing the Vehicle, the Debtor gave possession of the Vehicle to Defendant.10 Defendant made every monthly payment due on the Vehicle loan through the last payment on March 2, 2015, when the Vehicle loan was paid off.11 And Defendant says that she has "maintained all repairs for the [Vehicle] and paid for all the work done on the [Vehicle]." This statement is rather vague, however; Defendant does not specify what repairs or work have been done on the Vehicle or how much she has paid.12

Defendant asserts that her intention and the Debtor's intention was for the Debtor to purchase the Vehicle for Defendant, and that the Debtor was only involved to help Defendant, who could not obtain credit to purchase the Vehicle on her own.13 But no one—not the dealer, the Debtor, or Defendant—ever took any of the actions required to transfer an ownership interest in the Vehicle to Defendant. Neither the dealer nor the Debtor ever assigned or delivered the certificate of title to Defendant. Nor did the dealer or the Debtor, or Defendant, ever apply to the Michigan Secretary of State to issue a certificate of title listing Defendant as the owner (or as a co-owner with Debtor) of the Vehicle. And at all relevant times, the Debtor has been the only owner listed on the title.

A little over six months after the Vehicle loan was paid off, on September 24, 2015, the Debtor filed a voluntary petition under Chapter 11 of the Bankruptcy Code. On November 24, 2015, the case was converted to chapter 7, and Stuart A. Gold was appointed the Chapter 7 Trustee.

On October 22, 2015, the Debtor filed her Schedules. On Schedule B, she listed only one vehicle, a Mercedes A–6 owned jointly with her husband.14 On December 17, 2015, the Debtor filed an amended Schedule A/B15 in which, for the first time, she listed the Vehicle.16 In answer to the question "Who has an interest in the property?" the Debtor checked the box for "Debtor 1 only." However, in the comments section, the Debtor stated: "Debtor holds bare legal title only. Debtor's cousin has made all payments and paid for all maintenance on the vehicle and is the true equitable owner of the vehicle."17 The Debtor did not amend her Schedule C to claim any exemption in the Vehicle.

III. Jurisdiction

This Court has subject matter jurisdiction over this adversary proceeding under 28 U.S.C. §§ 1334(b), 157(a) and 157(b)(1), and Local Rule 83.50(a) (E.D. Mich.). Plaintiff's claims in this adversary proceeding are core proceedings, under 28 U.S.C. §§ 157(b)(2)(A), 157(b)(2)(E), 157(b)(2)(H), and 157(b)(2)(O).

In addition, this proceeding falls within the definition of a proceeding "arising under title 11" and of a proceeding "arising in" a case under title 11, within the meaning of 28 U.S.C. § 1334(b). Matters falling within either of these categories in § 1334(b) are deemed to be core proceedings. See Allard v. Coenen (In re Trans–Industries, Inc. ), 419 B.R. 21, 27 (Bankr. E.D. Mich. 2009). This is a proceeding "arising under title 11" because it is "created or determined by a statutory provision of title 11," see id. namely Bankruptcy Code §§ 541, 542, 544, 548, and 550. And this is a proceeding "arising in" a case under title 11, because it is a proceeding that "by [its] very nature, could arise only in bankruptcy cases." See Allard v. Coenen , 419 B.R. at 27.

In their joint report under Fed. R. Civ. P. 26(f) filed early in this case, the parties agreed that this adversary proceeding is a core proceeding.18 And in addition, the parties have consented to the Bankruptcy Court entering a final judgment or final order in the adversary proceeding under 28 U.S.C. § 157(c)(2), to the extent any claims are non-core.19 See generally Wellness Int'l Nework, Ltd. v. Sharif , ––– U.S. ––––, 135 S.Ct. 1932, 1948–49, 191 L.Ed.2d 911 (2015).

IV. Discussion
A. Summary judgment standards

As this Court has stated previously, in McCallum v. Pixley (In re Pixley ), 456 B.R. 770, 774–75 (Bankr. E.D. Mich. 2011) :

Fed.R.Civ.P. 56(a), applicable to bankruptcy adversary proceedings under Fed.R.Bankr.P. 7056, provides that a motion for summary judgment "shall" be granted "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." In Cox v. Kentucky Dep't of Transp. , 53 F.3d 146, 149–50 (6th Cir. 1995), the court elaborated:
The moving party has the initial burden of proving that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. To meet this burden, the moving party may rely on any of the evidentiary sources listed in Rule 56(c) or may merely rely upon the failure of the nonmoving party to produce any evidence which would create a genuine dispute for the [trier of fact]. Essentially, a motion for summary judgment is a means by which to challenge the opposing party to ‘put up or shut up’ on a critical issue.
If the moving party satisfies its burden, then the burden of going forward shifts to the nonmoving party to produce evidence that results in a conflict of material fact to be resolved by [the trier of fact]. In arriving at a resolution, the court must afford all reasonable inferences, and construe the evidence in the light most favorable to the nonmoving party. However, if the evidence is insufficient to reasonably support a ... verdict in favor of the nonmoving party, the motion for summary judgment will be granted. Thus, the mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the [trier of fact] could reasonably find for the plaintiff.
Finally, the Sixth Circuit has concluded that, in the "new era" of summary judgments that has evolved from the teachings of the Supreme Court in Anderson [v. Liberty Lobby, Inc. , 477

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