In re Bidwell, BKY 98-46322.
| Decision Date | 09 June 2005 |
| Docket Number | ADV. No. 04-4199.,No. BKY 98-46322.,BKY 98-46322. |
| Citation | 326 B.R. 759 |
| Parties | In re: Wayne H. BIDWELL, Debtor. Terri A. Georgen-Running, in her capacity as a Chapter 7 Trustee of the bankruptcy estate of Wayne H. Bidwell, Plaintiff, v. Wayne H. Bidwell; Meri Lynn Bidwell; Daniel J. Lee; Title & Closing, Inc., a Minnesota corporation; and Bank of America, N.A., a National Banking Association, Defendants. |
| Court | U.S. Bankruptcy Court — District of Minnesota |
John R Koch, St Cloud, MN, for Debtor.
The plaintiff's motion for summary judgment was heard on May 4, 2004. Patrick B. Hennessey appeared for the plaintiff and John R. Koch appeared for defendants Wayne H. Bidwell and Daniel J. Lee. This court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 157(b)(1) and 1334, and Local Rule 1070-1. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)
On March 7, 1996 Florence E. Bidwell, the debtor's mother, signed a quitclaim deed to her home, naming her children Colleen A. McFarlane and Wayne E. Bidwell as cotenants, each with a one half remainder interest in the property.1 Prior to signing the deed, Florence Bidwell consulted with her lawyer, Fredrick R. Kopplin, about transferring a remainder interest to her children. In a letter dated November 17, 1995, Kopplin laid out the implications as well as the benefits and detriments to her of transferring a remainder interest and maintaining a life estate in her property. In the letter, Kopplin warned Florence Bidwell that transferring a remainder interest to her children would result in a loss of complete control over the property, and that financial problems by one of the co-owners, including a bankruptcy, would affect the property.
Florence Bidwell signed the deed, and on March 19, 1996 Kopplin filed it with the Hennepin County Recorder. After filing the deed, Kopplin returned it to Florence Bidwell and she kept it in her possession. Neither McFarlane nor the debtor knew about the execution or filing of the deed. The debtor filed his petition for Chapter 7 bankruptcy on October 1, 1998. The debtor did not list his one half remainder interest in the property in his schedules and as a result, the trustee did not administer the property prior to the closing of the case on December 28, 1999.
In 2001 Florence Bidwell moved out of the home and leased it to her grandson, Daniel Lee. In the fall of 2002, Florence Bidwell decided to sell her home to Lee. In October 2002, as part of the sale process to Lee, the debtor became aware of his one half remainder interest in Florence Bidwell's property. The debtor consulted with Kopplin to determine the most advantageous way to handle the sale to Lee. Kopplin laid out the debtor's options in a letter dated October 21, 2002. The first option involved transferring the property back to his mother and then Florence Bidwell transferring the property to Lee. The second option involved the transfer of the debtor's interest directly to Lee. At no time after becoming aware of his interest in the property, did the debtor express an interest in disclaiming or make efforts to disclaim the gift.
On December 30, 2002, the debtor and his wife executed a quit claim deed for the property transferring their remainder interest in the property back to Florence Bidwell. On that same day, Florence Bidwell conveyed the property to Lee for $153,500.00. After expenses the sale netted $148,700.00. As part of the closing, Florence Bidwell and the debtor entered into an escrow agreement with Title and Closing, Inc. d/b/a/ National Real Estate Information Services. Under the terms of the agreement $35,000.00 of the proceeds of the sale of the property from Florence Bidwell to Lee was placed in an escrow account. This amount represented the amount Title thought may be subject to a claim by the trustee. Lee granted the Bank of America, N.A. a mortgage on the property. On Dec. 30, 2002 Florence Bidwell wrote two $10,000.00 checks from the proceeds of the sale of the home payable to the debtor and his wife, Meri Lynn Bidwell. She wrote two more checks payable to the debtor and Meri Lynn Bidwell for the same amounts dated January 2, 2003. On March 21, 2003 Florence Bidwell died. On October 17, 2003 the debtor filed an application to reopen his bankruptcy case. The case was reopened on October 20, 2003 and the plaintiff was appointed trustee.
The trustee filed this adversary proceeding on July 14, 2004 seeking to avoid the transfer of the real estate interest from the debtor to Florence Bidwell pursuant to 11 U.S.C. § 549 and recover the property or its equivalent value from one or more of the defendants under 11 U.S.C. § 550.
The trustee entered into a settlement agreement with the defendants. In that agreement the parties agreed that the value of the debtor's life estate interest in the property was $72,920.00. The parties further agreed that the debtor and Meri Lynne Bidwell would deposit $38,000.00 and that Title would deposit $35,000.00 in the trustee's trust account for a total of $73,000.00. All parties agreed that those deposits, which they term the "recovery fund", will be the complete source of payment for any award or judgment in favor of the trustee and against Lee or the debtor.
Defendants Meri Lynn Bidwell, Bank of America, N.A., and Title & Closing, Inc. were dismissed as defendants upon establishment of the recovery fund and approval of the settlement agreement.
Federal Rule of Bankruptcy Procedure 7056 provides that Federal Rule of Civil Procedure 56 applies when a party moves for summary judgment in an adversary proceeding. Rule 56(c) states "The judgment shall be rendered forthwith if the pleadings ... show 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." Celotex Corp. v. Catrett, 477 U.S. 317, 322-326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); ("If, assuming all reasonable inferences favorable to the non-moving party, there is no genuine issue as to any material fact, the moving party is entitled to summary judgment as a matter of law") Tudor Oaks Limited P'ship v. Cochrane, 124 F.3d 978, 981 (8th Cir.1997), cert. denied, 522 U.S. 1112, 118 S.Ct. 1044, 140 L.Ed.2d 109 (1998).
To defend against a motion for summary judgment, the non moving party must produce some evidence that there are specific facts showing there is a genuine issue of material fact. Fed.R.Civ.P. 56(e); Celotex, 477 at 324, 106 S.Ct. 2548. The inquiry performed is a threshold one to determine whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Inquiries into materiality and genuineness must be done to determine the sufficiency of the evidence.
As for materiality, the substantive law identifies which facts are material. Only disputes over facts that might affect the outcome of the suit will properly defend against entry of summary judgment. Id. at 247, 106 S.Ct. 2505. In other words, factual disputes that are irrelevant or unnecessary are not included. Id.
A fact is a genuine issue if it is such that a reasonable fact finder could find for the nonmoving party. First Nat'l Bank of Arizona v. Cities Services Co., 391 U.S. 253, 288-289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) (emphasis added). The key inquiry is whether the evidence offered is probative to the fact to which it is intended to prove. Id. at 290, 88 S.Ct. 1575. Hearsay evidence cannot defeat a motion for summary judgment. Johnson v. Baptist Med. Center, 97 F.3d 1070, 1073 (8th Cir.1996).
The debtor presents an affidavit from himself and one from McFarlane as evidence to defeat the trustee's motion for summary judgment. Virtually all of the evidence submitted by the debtor is either hearsay, lacks foundation or runs afoul of the parol evidence rule.
Hearsay is an out of court statement, either oral or written, made by someone other than the declarant, offered in evidence to prove the truth of the matter asserted. Fed.R.Evid. 801. Hearsay is not admissible as evidence unless it falls within one of the exceptions to the rule. Fed.R.Evid. 802. The Supreme Court has relied on the definition provided in McCormick on Evidence as "testimony in court, or written evidence, of a statement made out of court, the statement being offered as an assertion to show the truth of matters asserted therein, and thus resting for its value upon the credibility of the out-of-court asserter." Lee v. Illinois, 476 U.S. 530, 543 fn. 4, 106 S.Ct. 2056, 90 L.Ed.2d 514 (1986) (quoting E. Cleary, McCormick on Evidence § 246, P. 584 (2d ed.1972)).
To the extent that the debtor and McFarlane make statements in their affidavits reporting statements made by their mother or others, they are inadmissible as hearsay.
When a party intends to introduce testimony or a document into evidence, the offering party must lay a foundation to convince the judge that it satisfies applicable evidentiary requirements. A party may not testify about a subject unless sufficient evidence is introduced to show the witness has personal knowledge of the matter. Fed.R.Evid. 602. The debtor's affidavit contains multiple attempts to introduce evidence that lacks foundation. In one instance he describes a meeting where his mother was offered different estate planning options. He gives no indication of his personal knowledge of this meeting, or the circumstances surrounding his knowledge. The debtor also attached a copy of his mother's will to his affidavit, with no foundation regarding his knowledge of its authenticity.
The parol evidence rule "prohibits the admission of extrinsic evidence of prior, contemporaneous oral...
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Bruess v. Dietz (In re Bruess)
...deed and all the surrounding circumstances.” Vessey v. Dwyer, 116 Minn. 245, 133 N.W. 613, 614 (1911).Georgen–Running v. Bidwell (In re Bidwell), 326 B.R. 759, 764–65 (Bankr.D.Minn.2005) (footnote omitted). Thus, the fact question for the bankruptcy court was whether Donn Bruess intended to......