In re Burzee, 6:04-bk-06902-ABB.

• Decision Date: 30 January 2008
• Docket Number: No. 6:04-bk-06902-ABB.,No. 6:05-ap-00323-ABB.,6:04-bk-06902-ABB.,6:05-ap-00323-ABB.
• Citation: 402 B.R. 8
• Parties: In re Janemarie BURZEE, Debtor. Park Avenue Insurance Agency, Inc., Plaintiff, v. Janemarie Burzee, Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Florida

402 B.R. 8

In re Janemarie BURZEE, Debtor.

Park Avenue Insurance Agency, Inc., Plaintiff, v. Janemarie Burzee, Defendant.

Bankruptcy No. 6:04-bk-06902-ABB.

Adversary No. 6:05-ap-00323-ABB.

United States Bankruptcy Court, M.D. Florida, Orlando Division.

January 30, 2008.

COPYRIGHT MATERIAL OMITTED

David R. McFarlin, Wolff, Hill, McFarlin & Herron, P.A. Orlando, FL, for Plaintiff.

Raymond J. Rotella, Kosto & Rotella PA, Orlando, FL, for Defendant.

MEMORANDUM OPINION

ARTHUR B. BRISKMAN, Bankruptcy Judge.

This matter came before the Court on the Adversary Proceeding Complaint (Doc. No. 1) ("Complaint") filed by Park Avenue Insurance Agency, Inc., the Plaintiff herein, against Janemarie Burzee, the Defendant and Debtor herein ("Debtor"). The Plaintiff seeks a denial of the Debtor's discharge pursuant to 11 U.S.C. Sections 727(a)(2) and 727(a)(4).¹ A final evidentiary hearing on the Complaint was held on October 31, 2007 at which the Debtor, counsel for the Debtor, a representative of the Plaintiff, and Plaintiff's counsel appeared. The Court makes the following Findings of Fact and Conclusions of Law after reviewing the pleadings and evidence, hearing live testimony and argument and being otherwise fully advised in the premises.

FINDINGS OF FACT

Background

The Debtor filed an individual Chapter 13 case on June 15, 2004 ("Petition Date"), which she voluntarily converted to Chapter 7 on September 13, 2005. Scott R. Fransen is the Chapter 7 Trustee ("Trustee"). The Debtor has cooperated with the Trustee throughout her Chapter 7 proceedings. The Trustee has completed the administration of the Debtor's estate and submitted his Final Report. The Plaintiff has been actively involved in the Debtor's bankruptcy case since its inception. The sole remaining matters are the Plaintiff's objections to the Debtor's exemptions and this adversary proceeding.

The Plaintiff is an insurance agency located in Orlando, Florida specializing in employer benefits and was the Debtor's employer from November 1998 through October 2002. Her duties included servicing existing client accounts and cultivating new business. The Debtor, after the Plaintiff terminated her employment, joined Hugh Cotton Insurance, Inc., a competitor of the Plaintiff. She is a high school graduate and completed some community college coursework.

The Plaintiff holds a general unsecured claim of $199,760.47 (Claim No. 4-2) emanating from a series of judgments entered by the Circuit Court of the Ninth Judicial Circuit, in and for Orange County, Florida against the Debtor for violating the non-compete covenant of her employment agreement after she left the Plaintiff's employ.²

The Debtor has a daughter, age fourteen, whose father is Richard Zika ("Zika"). The Debtor is the daughter's custodian and caregiver. She and her daughter have lived with Zika from time to time and he provides support sporadically for the daughter. Zika and the Debtor have known each other since 1982 and have never married. The Debtor and her daughter moved into a condominium in 2002 located at 1100 East Caroline Street, Unit 214C, Tavares, Florida 32778, which is the Debtor's exempt homestead and is owned jointly with Zika.

Zika and the Debtor for several years dabbled in real estate, purchasing residential properties and renting them to tenants. The Debtor developed a close relationship with a colleague at the Plaintiff's office and shared information with the colleague relating to her and Zika's financial matters. The colleague was the Plaintiff's primary witness.

Nancy Street Property

The Debtor and Zika obtained title to a single family residence located at 2901 East Nancy Street, Orlando, Florida ("Nancy Street Property") as "joint tenants with rights of survivorship and not as tenants in common" pursuant to a Warranty Deed executed by Zika as the grantor on March 30, 2001.³ The property had been Zika's childhood home. The Debtor understood she was placed on the title for the benefit of their daughter. Zika explained he titled the property jointly in their names for the benefit of their daughter. Zika and the Debtor rented the Nancy Street Property to tenants while it was jointly owned. The Debtor has never lived at the property.

Zika and the Debtor executed a Mortgage on February 19, 2004 to secure a loan of $87,000.00 with the Nancy Street Property as collateral.⁴

The Debtor executed a Quit-Claim Deed on March 18, 2004 quitclaiming her interest in the Nancy Street Property to Zika.⁵ Zika paid no consideration for the transfer. The Debtor explained she did not expect payment for the transfer because "she didn't feel it was hers to begin with."

The transfer was made within one year of the Petition Date and one day after the Final Judgment on Plaintiff's Motion for Summary Judgment and Defendant's Motion for Summary Judgment was entered against the Debtor in the State Court litigation.⁶ The Debtor stated she "was not aware of any liability against me" when she executed the Quit-Claim Deed. She did not recall when or how the judgment was entered against her by the State Court. She testified she took no action in anticipation of the entry of a State Court judgment.

Rogel Transactions

The Debtor's grandmother Marie Rogel ("Rogel") quitclaimed her interest in two properties to the Debtor by Quit-Claim Deeds executed on January 9, 2004. The properties are located at 1150 Markham Woods Road, Longwood, Florida 32779 (Rogel's home) and 117 Wilmer Avenue, Orlando, Florida.⁷ Zika prepared the deeds. The Debtor paid no consideration for the transfers. It is unknown what events triggered the January 9, 2004 transfers.

Rogel instituted a suit against the Debtor on March 8, 2004 in the Seminole County, Florida State Court seeking to set aside the transfers and to quiet title.⁸ The Debtor quitclaimed the properties back to Rogel on April 21, 2004.⁹ Rogel paid no consideration for the re-transfer of the properties. The Debtor explained she transferred the properties due to Rogel's pending State Court suit.

The April 21, 2004 transfers returned the Debtor and her grandmother to their pre-January 9, 2004 positions with the grandmother holding title to both properties. No consideration was paid or passed to any party in the transfers.

Rogel executed a Durable Power of Attorney on November 29, 2004 appointing her son, James Toller, as her agent and attorney in fact.¹⁰

Plaintiff's Complaint

The Plaintiff contends the Debtor should be denied a discharge because she: (i) within one year of the Petition Date transferred, removed, and concealed property with the intent to hinder, delay or defraud her creditors; and (ii) knowingly and fraudulently made false oaths or accounts by omitting property from her schedules and statement of financial affairs. The Plaintiff alleges in its Complaint the Debtor:

(i) Removed her name from the deed of the Nancy Street Property on March 18, 2004, one day after a State Court Judgment was entered against her and such action "implies an intent to delay, hinder or defraud" the Plaintiff.

(ii) Failed to disclose as assets and income:

a. a mobile home valued at $10,000.00;

b. rental income of $450.000 per month;

c. a USAA brokerage account of $45,000.00;

d. a collection of antique jewelry valued at $50,000.00 and listed on her homeowner's insurance policy;

e. tax refunds of $4,600.00 per year;

f. a Power of Attorney for Rogel relating to real property valued at $450,000.00.

(iii) Failed to disclose payments to creditors made within ninety days of the Petition Date "which payments operated as transfers of liquid assets" including:

a. Satisfaction of a joint Navy Credit Union mortgage with Richard Zika on April 29, 2004 relating to real property located at 4907 sycamore Street; and

b. Satisfaction of a joint Navy Credit Union mortgage with Richard Zika on May 6, 2004 relating to the Nancy Street Property.

(iv) Failed to disclose transfers insiders:

a. Rogel's transfers on January 9, 2004 of 1150 Markham Woods Road and 117 Wilmer Avenue to the Debtor by quitclaim deed to secure a $130,000.00 line of credit for the Nancy Street Property;

b. The Debtor's quitclaim transfers of the Markham and Wilmer Properties back to Rogel on April 21, 2004; and

c. The Debtor's quitclaim transfer of the Nancy Street Property to Zika on March 18, 2004.

(v) The Debtor "engaged in various transactions and maneuvers prior to filing her initial petition that resulted in her non-exempt property, previously owned jointly with Richard Zika, appearing only in Zika's name...."

The Plaintiff is the only party who has challenged the Debtor's discharge. Its presentation at trial went beyond the specific allegations of the Complaint.¹¹

Debtor's Schedules and Statements

The Debtor filed her original Schedules on June 30, 2004.¹² She listed her homestead as the sole asset on Schedule A and listed as assets in Schedule B:

(i) a Central Florida Educators Credit Union savings and checking account # 34302 owned jointly with Zika valued at $10.00;

(ii) furnishings valued at $965.00;

(iii) books, pictures, clothing valued at $175.00;

(iv) "watch, bracelets, earrings and necklace" valued at $500.00; and (v) a 1996 Mercedes C280 valued at $6,000.00.

Each of these assets, except the car, was claimed as to exempt in Schedule C.¹³

The Debtor's Statement of Financial Affairs contains:

(i) "None" as payments to creditors in Questions 3a and b.

(ii) The disclosure in Question 4 of the Plaintiff's State Court litigation and State Court litigation captioned Marie R. Rogel v. Janemarie Burzee stating "Deeds conveyed back to Plaintiff but no judgment."

(iii) "None" for Questions 7 through 9 relating to gifts, losses, and payments to counsel.

(iv) A disclosure in Question 10 of the March 18, 2004 Nancy Street Property transfer to Zika for "No value received."

(v) "None" in answer to the remaining questions (Questions 11 through 25).

The Debtor's original counsel filed a Rule 2016(b)...