In re Eldridge

• Court: U.S. Bankruptcy Court — Northern District of Alabama
• Writing for the Court: Benjamin Cohen
• Citation: In re Eldridge, 348 B.R. 834 (Bankr. N.D. Ala. 2006)
• Decision Date: 30 August 2006
• Docket Number: Adversary No. 05-00190.,Bankruptcy No. 05-04991-BGC-7.
• Parties: In re Brenda C. ELDRIDGE, Debtor. Estate of Elbie Chism, Plaintiff, v. Brenda C. Eldridge, Defendant.

348 B.R. 834

In re Brenda C. ELDRIDGE, Debtor Estate of Elbie Chism, Plaintiff, v. Brenda C. Eldridge, Defendant.

Bankruptcy No. 05-04991-BGC-7.

Adversary No. 05-00190.

United States Bankruptcy Court, N.D. Alabama, Southern Division.

August 30, 2006.

COPYRIGHT MATERIAL OMITTED

J. Blair Shores, Legal Services Alabama, Inc., Birmingham, AL, for Debtor.

Memorandum Opinion

BENJAMIN COHEN, Bankruptcy Judge.

The matters before the Court are:

1. A Motion for Judgment on the Pleadings (Proceeding No. 13) filed on December 9, 2005, by the defendant-debtor;

2. A Motion for Summary Judgment (Proceeding No. 14) filed on December 12, 2005, by the plaintiff;

3. A Response to Debtor's Motion for Judgment on the Pleadings (Proceeding No. 17) filed on December 30, 2005, by the plaintiff;

4. A Response to Motion for Summary Judgment (Proceeding No. 18) filed on December 30, 2005, by the defendant-debtor;

5. An Objection to and Motion to Strike Affidavits of Darlene Winston, Patricia Semancheck, and Joyce Perkins Filed in Support of Plaintiff's Motion for Summary Judgment (Proceeding No. 19) filed on January 13, 2006, by the defendant-debtor;

6. A Motion to Strike (Proceeding No. 29) filed on July 5, 2006, by the plaintiff;

7. A Debtor's Objection to Plaintiff's Motion to Strike (Proceeding No. 30) filed on July 7, 2006, by the defendant-debtor.

A hearing on all matters, except items 6 and 7, was held on February 7, 2006. Mr. William C. Veal, the attorney for the plaintiff, and Mr. Ronald E. Boackle, the attorney for the defendant, appeared. The matters were submitted on the pleadings, affidavits, and other documents submitted by the parties, the record in this adversary proceeding, the record in Bankruptcy Case No. 05-04991-BGC-7, and the arguments and briefs of counsel. As explained below, this Court finds that the pending adversary proceeding is due to be dismissed.

I. Background

Neither of the parties believes that a trial is necessary to resolve the matters before the Court. Neither believes that the other is entitled to a trial. And each believes that it is entitled to a judgment in its favor, again without a trial. As discussed below, the Court agrees. A trial is not necessary, and all matters may be resolved without further hearings or arguments.

The question raised by the complaint is whether a debt the plaintiff contends is owed by the defendant is dischargeable through this bankruptcy case.¹

II. The Parties' Positions

A. The Plaintiff

The plaintiff's procedural position is contained in its Motion for Summary Judgment filed December 12, 2005. The plaintiff contends that it is entitled to summary judgment because: (1) the state probate court's judgment conclusively established that Mrs. Eldridge committed, "fraud or defalcation for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny," for purposes of 11 U.S.C. § 523(a)(4); and, (2) this Court is bound by that ruling because the doctrine of "collateral estoppel" precludes the debtor from relitigating that issue in this proceeding. The plaintiff concludes that because the requirements of section 523(a)(4) are met, the debt it contends it is owed by the debtor is a nondischargeable debt.²

The plaintiff concludes that the probate court has already ruled in its favor and as such there are no genuine issues of material fact, and that based on the probate court judgment, it is entitled to judgment here on the dischargeability question, as a matter of law.

B. The Defendant-debtor

The defendant-debtor's procedural position is contained in her Motion for Judgment on the Pleadings filed on. December 9, 2005.³ The debtor contends that the present proceeding must be dismissed because this plaintiff did not have the right to bring the pending complaint against the debtor. In legal terms, the debtor argues that the plaintiff did not have lawful "standing" to maintain the pending action.⁴ As Justice Lewis F. Powell, Jr. wrote for the U.S. Supreme Court in Warth v. Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), standing "is the threshold question in every federal case, determining the power of the court to entertain the suit." Id. at 499, 95 S.Ct. 2197.⁵

As the last sentence indicates, this Court must address the question of standing first. If the plaintiff does not have standing, there are no other issues to decide.

III. Issue

The threshold issue is: Did the plaintiff have standing to bring the pending complaint? As discussed below, the Court finds that the plaintiff did not have standing, therefore there are no remaining issues to be considered, and the pending action must be dismissed.

IV. Findings of Fact

Mrs. Elbie Chism was the debtor's mother. On November 12, 1996, Mrs. Eldridge, the debtor-defendant, was appointed as guardian for her mother and conservator of her mother's estates.⁶ At that time, Mrs. Chism was suffering from serious medical problems. Mrs. Chism died on June 13, 2002.

At the time of Mrs. Eldridge's appointment, Mrs. Chism was either residing with Mrs. Eldridge, or moved in with her, where she was cared for by Mrs. Eldridge and the members of Mrs. Eldridge's immediate family. That care was rendered around the clock for the next six years until Mrs. Chism died.⁷

Also at the time of Mrs. Eldridge's appoint, a bond in the amount of $10,000 was set by the probate court and posted by Mrs. Eldridge's surety company.

Shortly after her appointment, Mrs. Eldridge filed an inventory of Mrs. Chism's estate with the probate court on November 19, 1996.⁸ That document indicates that Mrs. Chism's estate consisted of her house, a $4,300 certificate of deposit at the First National Bank of Jasper, $730 a month in social security benefits, and $65 per month in pension benefits.

Around February 18, 1997, Mrs. Eldridge sought and obtained an order from the probate court permitting her to use $806.47 each month from Mrs. Chism's estate for her support and maintenance which, of course, represented all of the income that she was receiving from her pension and social security.⁹ At that same time, Mrs. Eldridge obtained an order from the probate court authorizing her to sell Mrs. Chism's home by private sale for $50,000.¹⁰

On September 13, 2001, the probate court entered an order that removed Mrs. Eldridge as conservator of Mrs. Chism's estate and directed her to file a final settlement within 30 days of that date.¹¹ That order stated it was entered in response to a "Motion to be Relieved on Bond" filed by Mrs. Eldridge's surety.

Mrs. Eldridge did not file a final settlement as directed by the probate court. Consequently, on May 9, 2002, the probate court directed Mrs. Eldridge's surety to file a final settlement within 30 days of that date.¹² As stated above, Mrs. Chism died on June 3, 2002.

On November 21, 2002, Mrs. Eldridge's surety filed a document entitled "Petition for Final Settlement by Surety." That document read in part:

Comes now the petitioner, TRINITY UNIVERSAL SURETY COMPANY, as surety on the bond of the Conservator in the estate of Elbie Chism, a protected person (by and through one of its attorneys of record) and pursuant to this Court's Order of May 9, 2002, copy attached as Exhibit A, respectfully submits to this Court the following report of the acts and doings, to the best of its knowledge and information, for the period from November, 1996 to August, 2002.

1. Brenda Eldridge was appointed Conservator by this Court on November 19, 1996; and said conservatorship is now pending in this Court. A copy of said Letters of Conservatorship are attached hereto as Exhibit B.

2. An Inventory was filed by said Conservator on or about November 19, 1996, a copy of which is attached hereto as Exhibit C.

3. A Petition to Sell Property of Ward for Reinvestment was filed by said Conservator on or about December 11, 1996 and was granted by this Court on February 18, 1997. A copy attached as Exhibit D.

4. A Petition for Maintenance and Support of a Protected Person was filed by the Conservator on or about December 11, 1996 and was granted by this Court on February 18, 1997. A copy attached as Exhibit E.

5. A copy of the Closing Statement related to sale of the property is attached hereto as Exhibit F.

6. It appears that the ward's only income was her Social Security check and a check for $65 a month from GATX Pension Fund.

7. As a result of petitioner's efforts to locate all of the assets belonging to the ward pursuant to the Inventory filed by the Conservator, the petitioner reports as follows:

a. House and Lot at 781 Main Street. This property was sold as stated in paragraphs 3 and 5 above. The proceeds from the sale of this property could not be accounted for in the conservatorship bank account. If the ward had another bank account or investment account, it has not been located by the petitioner, after a written inquiry to known financial institutions in the greater Birmingham area.

b. Certificate of Deposit in the amount of $4,300 at the First National Bank of Jasper. This CD is no longer at the First National Bank and its disposition can not be ascertained. According to bank officials, their records are destroyed after five or six years and no record could be found of this CD. The proceeds from this CD could not be accounted from in the conservatorship bank account.

8. For the period from November, 1996 to August, 2002, the Conservator made numerous deposits and wrote numerous checks on the bank account of the conservatorship. Attached hereto are copies of the those bank statements and checks, marked as Exhibit G. These statements were provided Regions Bank directly to the petitioner. None of the information came from the Conservator. As is shown on the enclosed statements the beginning balance was $130 and the present balance is $856.65.

9. There has been no accounting or partial settlement of this conservatorship by the Conservator.

10. The Conservator, Brenda Eldridge, was removed as...