In re Antonious

• Decision Date: 07 August 2007
• Docket Number: No. 05-18809BIF.,05-18809BIF.
• Citation: 373 B.R. 400
• Parties: In re Dennis Dryden ANTONIOUS and Peggy Ann Antonious, Debtors.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

373 B.R. 400

In re Dennis Dryden ANTONIOUS and Peggy Ann Antonious, Debtors.

No. 05-18809BIF.

United States Bankruptcy Court, E.D. Pennsylvania.

August 7, 2007.

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COPYRIGHT MATERIAL OMITTED

Mark Blank, Jr., Paoli, PA, for Debtors.

MEMORANDUM

BRUCE FOX, Bankruptcy Judge.

The former chapter 7 debtors, Dennis and Peggy Ann Antonious, have filed a motion to reopen their closed chapter 7 bankruptcy case, pursuant to 11 U.S.C. § 350(b), solely in order to "accord relief to the co-Debtor, Peggy Ann Antonious." See Motion, Introductory Paragraph. Mrs. Antonious contends that creditors Bryon and Mayolia Stevens have taken actions that violate the discharge injunction found in 11 U.S.C. § 524(a), by attempting to garnish a bank account titled in her name to satisfy a judgment obtained against her husband. The Stevenses oppose the motion to reopen, contending that they did not violate the discharge injunction. The United States trustee takes no position.

A hearing was held on the motion to reopen only, at which time the parties did not offer any evidence. However, from the exhibits attached to their submissions, and from the arguments of counsel, the following facts do not appear controverted.

I.

The debtors filed a voluntary petition under chapter 7 on June 27, 2005.¹ During the pendency of the debtors' bankruptcy case, the Stevenses commenced an adversary proceeding seeking a determination that their pending state court claims against both debtors were nondischargeable under 11 U.S.C. § 523(a)(2) and (a)(6). The Stevenses alleged that the debtors obtained substantial funds from them through fraud, misrepresentations, false pretenses, and willful and malicious conduct in connection with a home repair project. A prepetition state court civil action against the debtors, brought by the Stevenses in the Chester County Court of Common Pleas, had been stayed by the Antoniouses' bankruptcy filing, and could only continue if this court found the claims nondischargeable as to one or both of the debtors.

After trial, by memorandum and order dated November 27, 2006, I found the Stevenses' claims nondischargeable as to Mr. Antonious under section 523(a)(2)(A), but dischargeable as to Mrs. Antonious. See In re Antonious, 358 B.R. 172 (Bankr. E.D.Pa.2006). Among the factual findings then made Was the following:

22. Neither Mr. Antonious nor his fictitious entity have a bank account. Statement of Uncontested Facts, # 7. The Internal Revenue Service contends that Mr. Antonious owes back taxes and has made efforts to collect its debt. N.T. at 10:47. Fearing that the IRS would garnish his bank account, Mr. Antonious uses Mrs. Antonious' personal bank account for all of his business transactions and has done so for a number of years. Statement of Uncontested Facts, # 7. In order to use this account, Mr. Antonious, with his wife's consent, has access to a stamp reflecting a copy of Mrs. Antonious' signature. N.T. at 10:12-13. He uses this stamp to endorse checks made payable to him in connection with Your Small Job Specialists. N.T. 10:12-13.

Id., at 179.

Prior to the resolution of the Stevenses' adversary proceeding, the chapter 7 trustee had submitted a report stating that, after investigation, the trustee had located no non-exempt assets to administer for the benefit of creditors. See Docket entry dated January 31, 2006. As there had been no challenge to the entry of a chapter 7 discharge as to either debtor, on March 14, 2006 a discharge order in favor of both debtors was entered. After the dischargeability adversary proceeding had been adjudicated, the chapter 7 case was closed under 11 U.S.C. § 350(a) on December 27, 2006.

Upon the closing of the bankruptcy case the automatic stay terminated under 11 U.S.C. § 362(c)(2)(A), and the Stevenses' prepetition state court litigation resumed as to Mr. Antonious. On March 14, 2007, the Stevenses and Mr. Antonious entered into an agreement by which the Stevenses obtained a judgment against Mr. Antonious, by consent, in the amount of $45,000. Moreover, the Stevenses agreed to dismiss their state court claims against Mrs. Antonious, as those claims had been discharged. Motion, Ex. A.

On April 27, 2007, the Stevenses requested that the Prothonotary of the Court of Common Pleas of Chester County, Pennsylvania, issue a writ of garnishment to the Sheriff of Chester County to be served upon Citizens Bank, so as to attach all bank accounts "that exit [sic] under the name of Dennis Antonious and/or Peggy [Anton]ious, but not limited to, [sic] account number 64005* * *."² Motion, Motion, Ex. B. The Prothonotary issued such a writ and the sheriff duly served it. Id.

Although the exhibits do not so reveal, from the arguments of counsel, it is likely that upon service of the garnishment writ Citizen's Bank froze a bank account titled in the name of Peggy Ann Antonious only. At the hearing in this court on the motion to reopen, counsel stated that there was $43 in that account. After notice of the attachment, Mrs. Antonious filed a claim with the Sheriff of Chester County, asserting that all funds in that account belonged to her and were exempt from attachment or garnishment based upon a judgment against her husband only.

An emergency hearing was held before Hon. Phyllis R. Streitel of the Court of Common Pleas, Chester County, on May 16, 2007. At that hearing, the Stevenses "acknowledge[d] that they are not entitled to execute and levy upon the assets of Peggy Antonious. However, they argue[d] that the funds in Peggy Antonious' account are actually those of Dennis Antonious deposited into the account as part of a fraudulent scheme." Memorandum Opinion of Judge Streitel, dated June 15, 2007 (Response, Ex. A, at 3). Judge Streitel held that, "[w]hile at first blush it appears that there could be some merit to [the Stevenses'] claim," under Pennsylvania law garnishment proceedings could not be used to determine whether a fraudulent transfer had occurred, and that the Stevenses were required to "commence a separate, equitable action under the Fraudulent Conveyances Act." Id., at 3. Insofar as it was conceded that the property sought to be garnished was in the name of Mrs. Antonious only, the state court quashed the garnishment as to Mrs. Antonious's accounts. Id., at 4-5.³

Prior to the state court's adjudication on June 15, 2007, the former debtors filed the instant motion to reopen their bankruptcy case on. June 1, 2007, amended on June 6th. As of the date of the hearing on the motion to reopen, no litigation was pending against Mrs. Antonious brought by the Stevenses.

II.

Pursuant to section 350(b), "a [closed bankruptcy] case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor or for other cause." Whether to reopen a closed bankruptcy case is committed to the discretion of the bankruptcy court. See, e.g., Donaldson v. Bernstein, 104 F.3d 547, 551 (3d Cir.1997); Judd v. Wolfe, 78 F.3d 110, 116 (3d Cir.1996); Matter of Case, 937 F.2d 1014, 1018 (5th Cir.1991) ("This discretion depends upon the circumstances of the individual case and accords with the equitable nature of all bankruptcy court proceedings."); Hawkins v. Landmark Finance Co., 727 F.2d 324 (4th Cir.1984); Matter of Becker's Motor Transportation, Inc., 632 F.2d 242, 245 (3d Cir.1980); Urbanco, Inc. v. Urban Systems Streetscape, Inc., 111 B.R. 134 (W.D.Mich.1990). The burden of demonstrating circumstances sufficient to justify the reopening is placed upon the moving party. See In re Cloninger, 209 B.R. 125, 126 (Bankr.E.D.Ark.1997); In re Nelson, 100 B.R. 905 (Bankr.N.D.Ohio 1989).

In general, when a former debtor seeks to reopen a closed bankruptcy case,⁴ the court should consider a variety of nonexclusive factors including: the length of time that the case has been closed, see Matter of Case, 937 F.2d at 1018; whether a non-bankruptcy forum, such as state court, has the ability to determine the dispute to be posed by the debtor were the case reopened, see, e.g. In re Tinsley, 98 B.R. 791 (Bankr.S.D.Ohio 1989); In re E.A. Adams, Inc., 29 B.R. 227 (Bankr. D.R.I.1983); In re Hepburn, 27 B.R. 135 (Bankr.E.D.N.Y.1983); whether prior litigation in bankruptcy court implicitly determined that the state court would be the appropriate forum to determine the rights, post-bankruptcy, of the parties; whether any parties would be prejudiced were the case reopened or not reopened; the extent of the benefit which the debtor seeks to achieve by reopening; and whether it is clear at the outset that the debtor would not be entitled to any relief if the case were reopened. See generally Arleaux v. Arleaux, 210 B.R. 148, 149 (8th Cir. BAP 1997); In re Carberry, 186 B.R. 401, 402 (Bankr.E.D.Va.1995) (a bankruptcy court "should not reopen a bankruptcy case where it appears that to do so would be futile and a waste of judicial resources"); In re Nelson, 100 B.R. 905, 907 (Bankr. N.D.Ohio 1989):

[T]he court will not grant a motion to reopen when no clear benefit is shown to creditors.... Because no benefit will inure to Debtors' estate or their creditors, Debtors' motion should be denied.

In this contested matter, the debtors seek to reopen this case solely to obtain a bankruptcy forum to adjudicate a civil contempt claim by Mrs. Antonious against the Stevenses for allegedly violating the provisions of 11 U.S.C. § 524(a)(2) enjoining creditors from attempting to collect or recover a discharged debt. See generally Kuhl, v. U.S., 467 F.3d 145, 147 (2d Cir.2006) ("A discharge in bankruptcy operates as an injunction against collection of any discharged debts."). However, section 524(a)(2) expressly states that the injunction against creditor post-discharge collection activity is limited to the "personal liability of the debtor[.]" See, e.g., Matter of Paeplow, 972 F.2d 730, 733 (7th Cir.1992) ("§ 524 provides that discharge enjoins any former creditors from...