In re Chapman
| Decision Date | 15 August 2001 |
| Docket Number | 00 A 00884,00 A 00886.,Bankruptcy No. 00 B 5538. Adversary No. 00 A 00358 |
| Parties | In the Matter of Lamar CHAPMAN III, Debtor. Lamar Chapman III, Plaintiff, v. Charles Schwab & Company, et al., Defendants, and Cross-Defendants, Lamar Chapman III, Plaintiff, v. Beverly C. Smith, Defendant, and Counter-Plaintiff and Cross-Plaintiff, Lamar Chapman III, Plaintiff, v. Robert E. Smith, Defendant, and Counter-Plaintiff and Cross-Plaintiff. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
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Lamar Chapman III, Matteson, IL, pro se.
Michael A. Kraft, Kane & Fisher, Peoria, IL, Ross Weisman, Weisman & Weisman, Chicago, IL, for defendant.
After filing his Chapter 13 bankruptcy case, debtor Lamar Chapman III ("Chapman") filed pro se1 three adversary complaints against Defendants Charles Schwab & Company and two of its employees Steven Murphy and Craig M. Louis (collectively "Schwab") and Robert Smith and Beverly Smith (collectively "Smiths"). These cases have been litigated over the past 18 months and were consolidated because of their factual relationship. This opinion explains the basis for the orders issued on July 24, 2001, (1) denying Chapman's motion to dismiss the Smiths' counterclaim, (2) denying Chapman's motion to strike affidavits submitted in support of Schwab's motion for summary judgment, (3) granting summary judgment for Schwab, and (4) denying Chapman's motion for turnover of funds. It also explains the basis for an order entered August 8th for continued assumption of jurisdiction despite dismissal of Mr. Chapman's Chapter 13 case on his motion as a matter of right on the eve of consolidated trial of these cases.
Mr. Chapman has litigated here for many months his claims against Schwab and the Smiths. But he submitted not one piece of evidence to oppose the Schwab motion for summary judgment, and not one witness or document was submitted in compliance with the Final Pretrial Order. Instead, he only moved to strike the Schwab affidavits supporting summary judgment, and to dismiss the Smiths' counterclaim and ultimately his own suit against them.
If Mr. Chapman has any evidence to support any part of his Adversary complaints against Schwab and the Smiths, he has been unwilling or unable to present it in the light of day, and is unwilling or unable to subject such evidence to the scrutiny of trial. Instead he has sought to abort the long and expensive litigation started and pursued by him here, once learning that Schwab would win summary judgment and that the Smiths' counterclaim would be tried, by dismissing his Chapter 13 bankruptcy case and using his failure to obtain stay modification in the Smiths' bankruptcy as a shield to prevent his own suit against the Smiths from being tried here.
This court has jurisdiction over this matter under 28 U.S.C. § 1334 and 28 U.S.C. § 157. This matter is referred here under District Court Internal Operating Procedure 15(a), and is a core proceeding under 28 U.S.C. 157(b)(2)(A) as to stay issues; (B) as to claims allowance and objections; (F) as to Chapman's preference claim; and (E) as to all of Chapman's requests for turnover of estate property pleaded under various theories. Venue lies in this district pursuant to 28 U.S.C. 1409(a).
The matters set forth in this section of the opinion are shown in the court files and pleadings of the parties, or were testified to by Chapman at a hearing in the Smiths' cases following entry of default orders against them (and before those orders were vacated).
Chapman opened an Asset Management Account (the "account") with Schwab in March of 1999. The account was funded with an initial deposit of a $40,378 check. In April 1999, Chapman deposited an additional $77,810 in the form of two checks, one check for $68,510 and the other for $9,350. As a part of his account relationship, Chapman received a Visa Debit Card and a brokerage account with check writing privileges. Chapman reduced his account balance over several months. However, Schwab restricted access to Chapman's account on October 29, 1999, after the three checks discussed above were returned. In November of that year Chapman made several attempts to withdraw the remaining funds from his account, but those requests were denied by Schwab which had placed all remaining funds in a so-called "safe keeping account." Despite Chapman's repeated attempts during the fall of 1999 to get Schwab to release the funds, Schwab always refused to release the monies. On February 18, 2000, Schwab reiterated in a letter that it would not allow Chapman to access the remaining funds.
Chapman filed this Chapter 13 bankruptcy petition on February 24, 2000. In March he filed a motion against Schwab under 11 U.S.C. § 547 claiming that Schwab had made a preferential transfer of funds within the 90-days prior to the bankruptcy petition being filed. The court advised Chapman that he had to file an adversary complaint under Rule 7001 Fed. R.Bankr.P. if he wished to pursue that money claim against Schwab, and Chapman did so. His Adversary proceeding here against the Schwab defendants seeks turnover of his Schwab account under various theories.
Schwab filed a proof of claim in Chapman's Chapter 13 case for $77,860 plus expenses and interest, which allegedly arose from an obligation to indemnify its depository which was being sued by the drawee for the two checks deposited into Chapman's account in April of 1999. Chapman objected to allowance of the Schwab claim, and that litigation was consolidated for trial with the Adversary proceedings. (That claim was recently stricken as moot after Chapman dismissed his Chapter 13 case). A Final Pretrial Order was entered February 12, 2001, setting the Schwab litigation to start trial August 1st. An Amended Consolidated Final Pretrial Order brought the Smiths' litigation into the procedures set with trial still to start August 1st. Under circumstances described below, that trial dates were stricken and new dates will be set.
Schwab moved for summary judgment against Chapman in its Adversary case on June 15, 2001, and produced several depositions and affidavits in support of that motion. Chapman was given until July 10, 2001, to file his answer and any supporting materials pursuant to Local Bankruptcy Rule 402(N). Chapman failed to file his answer by July 10th, and instead requested additional time to file his response and materials. He was granted an extension until July 16. Chapman filed no response or affidavits opposing summary judgment, but did file a motion to strike all Schwab's affidavits offered in support of the motion for summary judgment.
On July 23 Chapman filed a motion to dismiss his Chapter 13 case pursuant to § 1307(b) of the Bankruptcy Code, Title 11 U.S.C. However, prior to the hearing date set for that motion Chapman moved for an additional two-day extension to file his materials in answer to Schwab's summary judgment motion. In response to questions posed by the court, Chapman acknowledged that he was still unprepared that day to offer any material at all for filing in opposition to the Schwab motion. The court therefore denied Chapman's request for additional time and entered an order allowing Schwab's motion for summary judgment on all counts for reasons to be discussed in this Opinion. At a hearing on August 1st, Chapman's motion to dismiss his bankruptcy was granted. However, for reasons set forth below, the court will exercise its discretion to retain jurisdiction over remaining issues in the Adversary complaint both to enter the final summary judgment order and to complete litigation of the Smiths' case.
Chapman moved on August 1st for reconsideration of the court's decision to give summary judgment to Schwab and again requested an additional two days to reply to Schwab's motion. Although on July 23rd, Chapman had indicated that he only needed two days to file materials, on August 1st Chapman was again not prepared to tender at that time any materials whatsoever to controvert the summary judgment materials submitted by Schwab, as required under Local Bankruptcy Rule 402(N). Because he had nothing ready to file, this second request for a two-day extension was denied. Almost two weeks have passed since that ruling, but Chapman has not appeared with any further request to file materials before judgment be entered. Two months in all have passed since the motion was filed and Chapman has not filed any materials contradicting the facts and documents asserted. Accordingly, upon entry of this Opinion, the final summary judgment order in favor of Schwab defendants will be entered.
The Smiths were not included among Chapman's scheduled creditors. Notice was sent to scheduled creditors on May 5, 2000, and the claims bar date was fixed for August 28, 2000. On September 26, 2000, Chapman filed these adversary complaints against Robert and Beverly Smith, each alleging breach of contract (Count I), slander (Count 2), and invasion of privacy (Count III). Chapman averred that the Smiths owed him in excess of $36,000 for unpaid loans, expenses, and unpaid bills for consulting services. Counsel for the Smiths appeared on October 31, 2000, and was given 28 days to file an answer to Chapman's complaint. However, the Smiths did not file their answer by the due date. On November 28, 2000, the case was continued until December 13. But once again, the Smiths failed to file their answer. On January 5, 2001, Chapman moved for a default against the Smiths. Default orders against the Smiths were entered on January 29, 2001, and the cases were set for prove-up on February 9...
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