In re Curry, Case No. 08-13408 (Bankr. N.D. Ohio 2/24/2009)
| Decision Date | 24 February 2009 |
| Docket Number | Adversary Proceeding No. 08-1225.,Case No. 08-13408. |
| Parties | In re: GREGORY E. CURRY, Chapter 7, Debtor. LAUREN A. HELBLING, TRUSTEE, Plaintiff, v. GREGORY CURRY, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
Plaintiff Lauren Helbling, chapter 7 trustee for the bankruptcy estate of Gregory Curry, moves for summary judgment under 11 U.S.C. § 548 and Ohio Revised Code § 1336.05(A) to avoid the allegedly fraudulent transfer of real property from the debtor to his parents, James and Evelyn Curry. For the reasons stated below, the trustee's motion for summary judgment is granted in part and denied in part.
Jurisdiction exists under 28 U.S.C. § 1334 and General Order No. 84 entered by the United States District Court for the Northern District of Ohio. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (H), (K), (N), and (O).
The chapter 7 trustee filed a complaint to avoid the transfer of real property from the debtor to his parents, James and Evelyn Curry (sometimes, the Currys), which the trustee amended on August 29, 2008.2 The Currys and the debtor filed separate answers.3 The IRS was dismissed and the Cuyahoga County treasurer's claim was resolved by agreed order.4 The remaining parties filed a joint pretrial statement, stipulating to certain facts.5 The trustee now moves for summary judgment, the debtor and the Currys oppose the motion, and the trustee filed a reply.6
These are the relevant facts at this point in the proceedings:
1. James and Evelyn Curry are the parents of the debtor, Gregory Curry.
2. From 1987 to December 8, 2005, James and Evelyn Curry owned real property located at 5915 Sweet Birch Drive, Bedford Heights, Ohio (the property).
3. By affidavit, the debtor states that his parents told him in 2005 that they were going to put the property in his name "because they had been informed that should they be required to go into a nursing home, they could lose their home."
4. On December 8, 2005, James and Evelyn Curry transferred the property to their son, without consideration. By affidavit, the debtor states that his understanding was that the property was to be in his name for his parent's benefit depending on what happened as it related to their going into a nursing home. He did not consider it a gift.
5. By affidavit, the debtor states that James and Evelyn Curry continued to maintain the property and pay the taxes. They did not pay rent to the debtor and he did not schedule the property on any tax forms.
6. By affidavit, the debtor states that he found himself in financial difficulty in early 2008. He advised his parents that "if their home was still in [his] name, it should be transferred back [to them as he] may have to file a bankruptcy sometime in the future."
7. On February 26, 2008, the debtor transferred his ownership in the property to James and Evelyn Curry, without consideration.
8. At the time of the February 2008 transfer, the debtor's liabilities exceeded his assets.
9. The debtor filed his chapter 7 case on May 7, 2008.
The trustee asserts that because the debtor transferred the property to the Currys within three months before the petition date for no consideration, at a time when the debtor was insolvent, the transfer is an avoidable fraudulent transfer under 11 U.S.C. § 548 and Ohio Revised Code § 1336.05. These facts are not disputed and, the trustee states, support summary judgment in her favor as a matter of law.
The defendants, however, challenge the nature of the debtor's interest in the property. They all contend that the debtor held only bare legal title for the Currys' benefit at the time of transfer, based on the Currys having paid all expenses related to the property. Beyond that, they raise slightly different arguments. The Currys argue that the debtor's bare legal title has no economic value. They contend further that the debtor obtained that title through a fiduciary relationship (child to parent), which the court should now acknowledge by imposing a constructive or resulting trust on the interest held by the debtor.8 The debtor posits that either a constructive trust or a resulting trust existed prepetition, based on the Currys having paid all of the expenses associated with the property and their intention that the debtor hold it in trust for them. Because this gave the Currys an equitable interest in the property, the debtor argues, his creditors would be unjustly enriched if the transfer were undone and the property sold to benefit those creditors. The debtor also refers to mistake as a ground for imposing a trust, but without elaborating on that position.
The standards for granting summary judgment are found in federal rule of civil procedure 56 (). The Sixth Circuit has expressed the summary judgment standard as follows:
Summary judgment for [the movant] is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). However, [the movant] bears the burden of proving that there are no genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Nance v. Goodyear Tire & Rubber Co., 527 F.3d 539, 546-47 (6th Cir. 2008), cert. denied, ___ S.Ct. ___, 2009 WL 425106 (Feb. 23, 2009). Further:
In evaluating the evidence presented, a court must draw all inferences in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A genuine issue of material fact exists when there are "disputes over facts that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.
Savedoff v. Access Group, Inc., 524 F.3d 754, 762 (6th Cir. 2008). If the movant meets its burden of proof, the non-moving party has an affirmative duty to point to those portions of the record that create a genuine issue of material fact:
In responding to a proper motion for summary judgment, the nonmoving party "cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must `present affirmative evidence in order to defeat a properly supported motion for summary judgment.'" The nonmoving party must introduce more than a scintilla of evidence to overcome the summary judgment motion. It is also not sufficient for the nonmoving party merely to "show that there is some metaphysical doubt as to the material facts." Moreover, "[t]he trial court no longer has the duty to search the entire record to establish that it is bereft of a genuine issue of material fact."
Youngstown Osteopathic Hosp. Ass'n v. Pathways Ctr. for Geriatric Psychiatry, Inc. (In re Youngstown Osteopathic Hosp. Ass'n), 280 B.R. 400, 407 (Bankr. N.D. Ohio 2002) (citing Liberty Lobby, Matsushita, and Street v. J.C. Bradford & Co., 886 F.2d 1472 (6th Cir. 1989)) (emphasis added).
A cohesive reading of rule 56(a) and (d) demonstrates that partial summary judgment on a portion of a claim may be entered under appropriate circumstances. See McCord v. Jaspan Schlesinger Hoffman, LLP (In re Monahan Ford Corp. of Flushing), 390 B.R. 493, 501 (Bankr. E.D.N.Y. 2008); In re Monster Worldwide Litigation, Inc., 549 F.Supp.2d 578, 582 (S.D.N.Y. 2008); McDonnell v. Cardiothoracic & Vascular Surgical Associates, Inc., No. C2-03-0079, 2004 WL 1234138, at *2 (S.D. Ohio May 27, 2007); France Stone Co. v. Charter Twp. of Monroe, 790 F.Supp. 707, 710 (E.D. Mich. 1992). Partial summary judgment should not, however, be granted where such a motion seeks "the resolution of a merely evidentiary matter en route to summary judgment, or [ ] an adjudication of an issue of fact which would not be dispositive of an issue or even part of an issue." Id.
The trustee relies on this portion of bankruptcy code § 548:
§ 548. Fraudulent transfers and obligations
(a)(1) The trustee may avoid any transfer (including any transfer to or for the benefit of an insider under an employment contract) of an interest of the debtor in property . . . made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily —
* * *
(B)(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
(ii)(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation . . . .
11 U.S.C. § 548. Thus, the trustee must show that the following facts are not in dispute:
(1) the debtor had an interest in the property;
(2) the debtor transferred that interest to the Currys;
(3) the transfer occurred within the two years before the debtor filed his bankruptcy case;
(4) the debtor received less than reasonably equivalent value in exchange for the transfer of the property; and
(5) the debtor was insolvent when the transfer occurred.
See 11 U.S.C. § 548(a)(1)(B)(i), (ii)(I). Proof of these facts would also establish the trustee's entitlement to judgment as a matter of law.
The stipulated facts establish that the debtor executed a deed conveying the property to the Currys for no consideration, within two years before the petition date, at a time when the debtor's liabilities exceeded his...
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