In re Alagna
| Decision Date | 06 October 1989 |
| Docket Number | Bankruptcy No. 88-B-12669-A. |
| Parties | In re Jasper John ALAGNA, Debtor. |
| Court | U.S. Bankruptcy Court — District of Colorado |
Ross J. Wabeke, Loveland, Colo., for trustee.
Theodore Z. Gelt, Denver, Colo., for debtor.
THIS MATTER is before the Court on the Trustee's Objection to Debtor's Claim of Exempt Property ("Objection"), Trustee's Amended Objection to Debtor's Claim of Exempt Property ("Amended Objection"), and Debtor's Response to Objection to Claim of Exemption ("Response") filed by Jasper John Alagna ("Debtor"). A hearing on the matter was held before this Court on March 23, 1989.
This case involves the Debtor's four different savings plans, which amount in the aggregate to approximately $473,000.00. The Debtor maintains that the plans' funds are either (1) not property of the bankruptcy estate or, (2) if property of the estate, are wholly or partially exempt pursuant to state or federal law. The funds in which the Debtor claims an interest are a veritable cornucopia of diverse savings, profit sharing, and pension plans. The Trustee maintains each of the various plans is property of the estate, not exempt under state or federal law, and thus available for creditor claims.
The following findings of fact are taken from stipulated facts, other proposed findings of fact tendered by the parties, and the record before the Court including the transcript of the March 23, 1989 hearing.1 They are as follows:
1. On September 20, 1988, Debtor filed an individual Voluntary Petition pursuant to Chapter 7 of the Bankruptcy Code. Debtor's wife, Nanciann Alagna, is not a co-debtor and has not otherwise filed for bankruptcy.
2. The Debtor was a principal in J & J Construction Co., Inc. ("J & J"). J & J was a Colorado corporation authorized to do business under the laws of the State of Colorado. It ceased operation and was no longer a going concern as of December 31, 1979.
3. Alagna Construction Company ("ACC"), the successor company to J & J, was a Colorado corporation authorized to do business under the laws of the State of Colorado. The Debtor was also a principal in ACC, which commenced business in January, 1981. ACC apparently ceased formal operations in 1987, however, it was essentially "inactive," "not operating," and no longer a going concern after 1982-1983.2 (Transcript, p. 38-39.)
4. On the Debtor's Schedules B-3 and B-4, Debtor identified, verbatim, the following property and claimed it as exempt pursuant to 11 U.S.C. § 522 and applicable state law, C.R.S. § 13-54-104:
Pension for Retirement Benefits:
5. Most, if not all, contributions to the J & J Profit Sharing Plan were evidently made prior to 1980, although Debtor was unable to produce specific information. Most, if not all, contributions to the ACC Defined Pension Plan and the ACC Pension Trust were made during 1982-1985. Consequently, it appears that much, if not most, of the money contributed was paid into the Pension Plans during the termination of or after each respective corporation ceased operation and was no longer a going concern.3
6. When the bankruptcy Petition was filed, Debtor was employed in a company identified as owned by his wife. As previously stated, Debtor's wife is not in bankruptcy.4 Virtually all family assets, including Debtor's residence, are evidently owned by Debtor's wife. Debtor is "nominee and registered owner" of his 1986 Nissan, which is "equitably owned" by his eighteen year-old son, Adam J. Alagna. Other than the Savings Plans, Debtor has virtually no assets in his name.
7. The Debtor has a beneficial interest in the J & J Profit Sharing Plan in the amount of $105,747.00.6
8. The Debtor and his wife each own 50% of the stock of J & J. Together, at all times pertinent, they constituted J & J's only Officers and members of the Board of Directors. The Debtor was President of J & J.7
9. J & J established the J & J Profit Sharing Plan July 21, 1978. The purported First Amendment to this Profit Sharing Plan was not signed. The Third and Fourth Amendments were signed by Debtor, alone, as President of J & J and Debtor as Plan Trustee. Debtor's wife did not sign either of these two documents.
10. As of the date of the filing of the Petition in bankruptcy, it appears Debtor and his wife were the exclusive Plan Trustees, Plan Administrators, Investment Managers, and the sole participants and beneficiaries of the J & J Profit Sharing Plan.
11. At all times relevant herein, the J & J Profit Sharing Plan was a qualified plan under ERISA and Section 401 of the Internal Revenue Code.
12. As of September 20, 1988, the Debtor's interest in the J & J Profit Sharing Plan consisted solely of contributions made by J & J and the income earned from the Plan Trustees' investment of such contributions.
13. Pursuant to Section 13.05 of the J & J Profit Sharing Plan, the primary responsibility of the Plan Administrators is to administer the J & J Profit Sharing Plan for the exclusive benefit of the participants and their beneficiaries.
14. The Debtor has a beneficial interest in the ACC Defined Pension Plan in the amount of $346,298.00.8 Among other assets, this Plan owns 100% of the common stock of JANA Ventures, Inc.9
15. The Debtor and a friend and business partner of the Debtor, David M. Ickovic ("Ickovic"), each owned 50% of the outstanding capital stock of ACC and together they constituted ACC's only Officers and Board of Directors. Ickovic, an accountant, serves as the accountant for Debtor and his wife. Debtor was one of the incorporators and was President of ACC.
16. ACC claims to have established the ACC Defined Pension Plan effective January 1, 1981.10 At all times relevant to this proceeding, the ACC Defined Pension Plan was a qualified plan under ERISA and Section 401 of the Internal Revenue Code.
17. At all times and as of the date of the filing of the Petition in bankruptcy, Debtor and Ickovic were the Plan Trustees, Plan Administrators, Investment Managers, and the Plan participants and beneficiaries of the ACC Defined Pension Plan.
18. The ACC First Restated Defined Pension Plan was executed on October 29, 1985 by Debtor as President of ACC, and by Debtor and Ickovic as Plan Trustees.
19. The First Amendment to the ACC Defined Pension Plan was executed on August 8, 1986 by Debtor as President of ACC, and by Debtor and Ickovic as Plan Trustees. The Second and Third Amendments were executed on dates unknown, by Debtor only, as President of ACC and as Plan Trustee. Ickovic did not sign either of these amendments.
20. Pursuant to Section 16.06 of the ACC Defined Pension Plan, the primary responsibility of the Plan Administrators is to administer the ACC Defined Pension Plan for the exclusive benefit of the participants and their beneficiaries.
21. As of September 20, 1988, the Debtor's interest in the ACC Defined Pension Plan consisted solely of contributions made by ACC prior to May 8, 1986, and the income earned from the Plan Trustees' investment of such contributions.
22. The Debtor has a beneficial interest in the ACC Pension Trust in the amount of $4,420.00.11
23. At all times relevant to this proceeding, the ACC Pension Trust was a qualified plan under ERISA and Section 401 of the Internal Revenue Code.
24. As of the date of the filing of the Petition in bankruptcy, Debtor and Ickovic were the Plan Trustees, the Plan Administrators, and the sole beneficiaries of the ACC Pension Trust.
25. There were three amendments to the ACC Pension Trust. The ACC First Restated Pension Trust agreement and First Amendment were executed on October 29, 1985 and August 8, 1986, respectively, by Debtor as President of ACC and by Debtor and Ickovic as Plan Trustees. The Second and Third Amendments to the ACC Pension Trust were executed on dates unknown, by Debtor alone, as President of ACC and Plan Trustee. Ickovic did not sign either of these amendments.
26. The ACC Pension Trust provides in Section 14.04 that the primary responsibility of the Plan Administrators is to administer the ACC Pension Trust for the exclusive benefit of the participants and their beneficiaries.
27. As of September 20, 1988, the Debtor's interest in the ACC Pension Trust consisted solely of contributions made by ACC, prior to May 8, 1986, and the income earned from the Plan Trustees' investment of such contributions.
28. The plan administrators of each of the three respective Pension Plans appear to be the same persons who constitute the shareholders, directors, and officers of the respective employers. Each employer established its plan and each retained final authority over its respective plan including, for example, the power of removing and replacing the plan administrators and designating successor plan administrators.
29. The plan administrators for each of the three Pension Plans are identical to those persons who are the participants and beneficiaries of the three Pension Plans.
30. Numerous loans of substantial sums of money were made by the Pension Plans to their respective administrators, trustees, participants, and...
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