In re Boyer

• Decision Date: 19 October 2006
• Docket Number: No. 01-32712 (LMW).,01-32712 (LMW).
• Citation: 354 B.R. 14
• Parties: In re George K. BOYER, Debtor.
• Court: U.S. Bankruptcy Court — District of Connecticut

354 B.R. 14

In re George K. BOYER, Debtor.

No. 01-32712 (LMW).

United States Bankruptcy Court, D. Connecticut.

October 19, 2006.

As Amended November 20, 2006.

COPYRIGHT MATERIAL OMITTED

Ronald I. Chorches, Esq., Law Offices of Ronald I. Chorches, LLC, Wethersfield, CT, Chapter 7 Trustee.

Douglas M. Evans, Esq., Kroll, McNamara, Evans & Delehanty, LLP, West Hartford, CT, for Republic Credit Corporation I.

Gregory Arcaro, Esq., Brown, Paindiris & Scott, LLP, Glastonbury, CT, for the Debtor.

Patrick W. Boatman, Esq., Law Offices of Patrick W. Boatman, LLC, East Hartford, CT, for Mary C. Boyer.

MEMORANDUM AND ORDER GRANTING TRUSTEE'S MOTION FOR AUTHORITY TO COMPROMISE CLAIMS

LORRAINE MURPHY WEIL, Bankruptcy Judge.

The matters before the court are (a) that certain Motion for Authority To Compromise Claims (Case Doc. I.D. No. 96, the "Motion To Compromise")¹ filed by the chapter 7 trustee (the "Trustee") and (b) that certain Objection of Republic Credit Corporation I to Trustee's Motion for Authority To Compromise Claims (Case Doc. I.D. No. 96, the "Objection") filed by Republic Credit Corporation I ("Republic"), an unsecured creditor in this case. This court has jurisdiction over this matter as a core proceeding pursuant to 28 U.S.C. §§ 157 and 1334, 11 U.S.C. §§ 105 and/or 363,² Rule 9019 of the Federal Rules of Bankruptcy Procedure and that certain Order dated September 21, 1984 of the District Court (Daly, C. J.).³

This memorandum constitutes the findings of fact and conclusions of law required by Rule 7052 of the Federal Rules of Bankruptcy Procedure (made applicable here by Rule 9014 of those rules).

I PROCEDURAL BACKGROUND IN CHAPTER 7 CASE THROUGH JUNE 16, 2005

The above-referenced debtor (the "Debtor") commenced this chapter 7 case by a petition filed on May 24, 2001. (See Case Doc. I.D. No. 1.) Ronald I. Chorches was appointed the Trustee the same day. The Debtor's bankruptcy schedules (the "Schedules") disclose the following relevant statements: as of the petition date (a) the Debtor owned real property (a "[b]uilding lot" in East Lyme, Connecticut, the "Building Lot") with a stated value of $25,000.00 (subject to a secured claim in the amount of $7,780.33) (see Case Doc. I.D. No. 4 ((Amended) Schedule A — Real Property)); (b) the Debtor owned personal property with a stated value of $8,152.00 (see Case Doc. I.D. No. 73 ((Amended) Schedule B — Personal Property));⁴ (c) there were undisputed secured claims against the Debtor's property in the amount of $7,780.33 (a real estate tax lien against the Building Lot) (see Case Doc. I.D. No. 4 ((Amended) Schedule D — Creditors Holding Secured Claims)); (d) there were undisputed unsecured priority claims against the Debtor in the aggregate amount of $1,442,367.84 (see Case Doc. I.D. No. 73 ((Amended) Schedule E — Creditors Holding Unsecured Priority Claims));⁵ (e) there were undisputed unsecured nonpriority claims against the Debtor in the aggregate amount of $11,463,287.53 (see Case Doc. I.D. No. 73 ((Amended) Schedule F — Creditors Holding Unsecured Nonpriority Claims));⁶ (f) the Debtor earned $2,600.00 per month in take-home pay from his occupation (in "Real Estate — Part Time") and social security⁷ (see Case Doc. I.D. No. 1 (Schedule I — Current Income of Individual Debtor(s))) and (g) the Debtor had current monthly expenses of $1,983.00 (See id (Schedule J — Current Expenditures of Individual Debtor(s))).

The Debtor also filed a Statement of Financial Affairs. (See Case Doc. I.D. No. 73 ((Amended) Statement of Financial Affairs) (the "SOFA").) Item a of the SOFA ("Income from employment or operation of business") states in relevant part as follows:

                AMOUNT       SOURCE (if more than one)
                $14,446.20   2001 YTD 1-1-01 to 5-23-01
                             1099 Misc. income ReMax Shoreline $600.00
                             1099 Misc. income Birchwood Cheshire Apt
                               Ltd
                             $10,000.00 W-2 Boyer Realty Management
                                $3846.20
                $27,059.68    2000
                              1099 Misc. income from ReMax Shoreline
                                $11,675.00
                              1099 Misc. income from Birchwood
                              Cheshire Apt. Ltd $10,000.00
                              W-2 from Boyer Realty Management
                              $5384.68
                $23,900.00    1999
                              1099 Misc. income from ReMax Shoreline
                                 $11,700.00
                              1099 Misc. income from Boyer Realty
                                 Management $12,200.00
                

(Id.) Item 4 of the SOFA ("Suits, executions, garnishments and attachments") lists five lawsuits in the Connecticut Superior Court in Norwich in various stages of prosecution. (See id.)

The first meeting of creditors and the Trustee's examination of the Debtor under oath required by Bankruptcy Code § 341 was held on June 26, 2001 and November 8, 2001. (See Case Docket.) The last date for filing complaints objecting to discharge originally was set for August 27, 2001. (See Case Doc. La No. 2.) However, from time to time that date was extended on the separate motions of the Trustee, Republic and Standard Sprinkler. (See Case Docket.) Republic appears to have conducted an examination under oath (a "Rule 2004 Examination") of the Debtor pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. (See Case Doc. I.D. No. 21.) Republic also appears to have conducted Rule 2004 Examinations of Kenneth Boyer (the Debtor's son) and Mary Boyer (the Debtor's second and current wife). (See Case Doc. I.D. Nos. 61, 62.) On July 18, 2003, Republic filed a complaint objecting to the Debtor's discharge under Bankruptcy Code § 727 which complaint commenced the Adversary Proceeding. (See A.P. Doc. I.D. No. 1, the "Complaint.") That was the only such complaint filed in this case. (See Case Docket.)

On March 31, 2004, the Trustee filed that certain Application by Trustee To Employ Douglas M. Evans, Esq. and Kroll, McNamara, Evans & Delehanty, LLP as Attorneys for the Trustee. (See Case Doc. I.D. No. 81, the "Special Counsel Application"). The Special Counsel Application sought approval of the Trustee's proposed employment of counsel for Republic as special counsel for the Trustee (based upon such counsel's familiarity with this case) on a contingent fee basis for the following purposes:

a. To prosecute a constructive trust claim relating to the transfer of related buildings located at 455 Stonington Road, Stonington, Connecticut and/or to prosecute a constructive trust claim relating to the debtor's alleged transfer of his personal property, including but not limited to, artwork, jewelry, furniture and antiques; and

b. To prosecute a Motion For Turnover of Property of the estate pursuant to 11 U.S.C. Sec. 542 relating to, but not limited to, certain artwork, jewelry, furniture and antiques.

(Case Doc. I.D. No. 81 at 1.) The Special Counsel Application was granted by order dated April 6, 2004. (See Case Doc. I.D. No. 82.) "Subsequently, Mr. Evans determined that representing both Republic and the Trustee at the same time created an appearance of a conflict and withdrew as [special] counsel to the Trustee." (Case Doc. I.D. No. 119 (Republic's brief) at 3 ¶ 6.)

On February 8, 2005, the Trustee filed a report of assets with the Clerk's Office (See Case Doc. I.D. No. 94) and the Clerk's Office issued to creditors a Notice of Need To File Proof of Claim Due to Recovery of Assets setting May 9, 2005 as the last date to file proofs of claim in this case. (See Case Doc. I.D. No. 95.) Seven proofs of claim were filed before the claims filing deadline. (See Case No. 01-32712 Claims Register (the "Claims Register")) Among those proofs of claim are: (a) a proof of claim filed by the Internal Revenue Service asserting (among other claims) an unsecured priority claim (the "IRS Priority Claim") in the amount of $96,710.19 (See Claims Register (Claim No. 4)) and (b) a proof of claim filed by Republic asserting a general unsecured claim in the amount of $10,727,946.00 (See Claims Register (Claim No. 7)).⁸

The Trustee filed the Motion To Compromise on March 4, 2005. (See Case Doc. I.D. No. 96.) The Motion To Compromise covered substantially the same causes of action that were the subject of the Special Counsel Application. (Compare Motion To Compromise with Special Counsel Application.) Republic filed the Objection on March 21, 2005. (See Case Doc. I.D. No. 99.) On April 28, 2005, the Trustee filed that certain Trustee's Notice of Intent To Sell Property at Private Sale and Opportunity To Make Better and Higher Offer with respect to the same causes of action which were the subject of the Motion To Compromise (plus additional fraudulent transfer claim(s)). (See Case Doc. I.D. No. 101, the "Sale Notice.") The Debtor, Mary Boyer and Kenneth Boyer (and the Kenneth Boyer Entities (as defined below)) filed objections to the Sale Notice. (See Case Doc. I.D. Nos. 103, 106, 108, the "Sale Objections.") The initial hearing (the "Initial Hearing") on the Motion To Compromise, the Objection, the Sale Notice and the Sale Objections was held on June 16, 2005.⁹

II. THE ADVERSARY PROCEEDING

As noted above, Republic filed the Complaint on July 18, 2003. The Complaint articulates claims for denial of the Debtor's discharge under Bankruptcy Code § 727(a)¹⁰ in four counts. (See A.P. Doc I.D. No. 1.) The Debtor fad his Amended Answer and Affirmative Defenses on September 29, 2003 contesting certain key elements of the Complaint. (See A.P. Doc. I.D. No. 11, the "Amended Answer.") Trial (the "A.P. Trial") on the Complaint began on August 1, 2005 and continued over numerous (nonconsecutive) days to Much 21, 2006 when it was completed. (See A.P. Docket.) The matter has been taken under advisement subject to post-trial briefing which is not yet complete.

The Complaint alleges in relevant part as follows:

FIRST COUNT

1. The Defendant [i.e., the Debtor] is an individual residing at 455 Stonington Road, Stonington, Connecticut.

. . .

5. Mary C. Boyer is an individual residing at 455 Stonington Read, Stanington,...