In re Falk

• Court: U.S. Bankruptcy Court — District of Minnesota
• Writing for the Court: ROBERT J. KRESSEL
• Citation: In re Falk, 88 B.R. 957 (Bankr. Minn. 1988)
• Decision Date: 27 July 1988
• Docket Number: Bankruptcy No. 4-87-3115,Adv. No. 4-87-228.
• Parties: In re Walter R. FALK, Debtor. Walter R. FALK, Plaintiff, v. Elaine S. HECKER, Defendant.

88 B.R. 957 (1988)

In re Walter R. FALK, Debtor Walter R. FALK, Plaintiff, v. Elaine S. HECKER, Defendant.

Bankruptcy No. 4-87-3115, Adv. No. 4-87-228.

United States Bankruptcy Court, D. Minnesota.

July 27, 1988.

William I. Kampf, Fredrikson & Byron, Minneapolis, Minn., for plaintiff.

Scott A. Johnson, Robins, Kaplan, Miller & Ciresa, Minneapolis, Minn., for defendant.

MEMORANDUM ORDER

ROBERT J. KRESSEL, Chief Judge.

This proceeding came on for hearing on the defendant's motion for summary judgment. William I. Kampf appeared for the plaintiff, Walter R. Falk. Scott A. Johnson appeared for the defendant, Elaine S. Hecker. Based on the affidavits, memoranda of counsel, and the file of this proceeding, I make the following:

MEMORANDUM ORDER

Walter R. Falk is the debtor-in-possession in a chapter 11 case filed on September 14, 1987. Falk also filed this adversary proceeding on September 14, 1987, alleging that certain payments made to Elaine S. Hecker as part of a state court dissolution judgment and decree are avoidable fraudulent transfers pursuant to 11 U.S.C. § 548(a)(2). Hecker now moves for summary judgment. This court has jurisdiction under 28 U.S.C. §§ 157 and 1334, and Local Rule 103(b). This is a core proceeding under 28 U.S.C. § 157(b)(2)(H).

I.

Hecker¹ and Falk were married on April 28, 1963. They had one child during their marriage, Wade C. Falk born January 25, 1974. In June of 1985, Elaine petitioned the Hennepin County District Court for dissolution of their marriage.

After over one year of arms-length negotiations, the parties reached a settlement regarding the division of marital assets, support, maintenance, and other related matters. On September 30, 1986, the district court entered its Findings of Fact, Conclusions of Law, Order for Judgment, and Judgment and Decree. Paragraphs 9 and 10 of the Conclusions of Law distributed the marital property as follows:

9. Property Settlement to Petitioner. Petitioner is awarded as her full interest and share in the property of the parties hereto, free and clear of any interest therein on the part of respondent, and as a full and final property settlement, the exclusive title to and ownership of the following described personal property:

9.1 Cash Settlement. The sum of $1,300,000.00 in cash to be paid by respondent to petitioner in the following manner: $750,000 upon entry of this Decree and $550,000 on or before December 31, 1986. The latter sum will be secured by an irrevocable letter of credit.

9.2 Automobile. A certain Cadillac automobile currently in the possession of petitioner.

9.3 Additional Cash Settlement. The sum of $20,000 to be paid by respondent to petitioner at the time of the entry of this Decree.

9.4 Household Goods and Furnishings. All of the household goods and furnishings in her possession.

9.5 Other Personal Property. All of petitioner\'s separate bank accounts, insurance policies, cash, and any and all other personal property owned by and/or in the possession or under the control of petitioner, regardless of whether such property is specifically referred to hereinabove.

10. Property Settlement to Respondent. Respondent is awarded as his full interest and share in the property of the parties hereto, free and clear of any interest therein on the part of petitioner, and as a full and final property settlement, the exclusive title to and ownership of the following described real and personal property:

10.1 Homestead. All right, title and interest in and to the homestead of the parties located at 16860 Creek Ridge Trail, Minnetonka, Henne (sic) County, Minnesota 55345, legally described as:

Lots 15 and 16, Block 1, Creek Ridge, according to the map or plat thereof on file and of record in the office of the County Recorder in and for Hennepin County, Minnesota,

subject to all encumbrances thereon which he shall be responsible for and pay.

10.2 Vero Beach Lots. Any and all interest of the parties in and to two undeveloped lots commonly known as the Moorings in Vero Beach, Indian River County, Florida, legally described as:

Lot 41, The Moorings, Unit No. 5 according to the Plat thereof recorded in the office of the clerk of the Circuit Court of Indian River County, Florida, in Plat Book O Pages 98, 98A, 98B, 98C and 98D, Public Records of Indian River County

and

Lot 42, The Moorings, Unit No. 5 according to the Plat thereof recorded in the office of the clerk of the Circuit Court of Indian River County, Florida, in Plat Book 0 Pages 98, 98A, 98B, 98C and 98D, Public Records of Indian River County.

10.3 Vero Beach Condominium No. 103. Any and all interest of the parties in and to a condominium located at Vero Beach, Indian River County, Florida, legally described as follows:

A Condominium Parcel described as Apartment No. # 103 of the RIOMAR SANDS, a Condominium, according to the Declaration of Condominium dated July 7, 1981 and recorded in Official Record Book 626, pages 466 through 527, inclusive, of the Public Records of Indian River County, Florida, TOGETHER with all of the appurtenances thereto all according to said Declaration of Condominium and Exhibits attached thereto, TOGETHER with the use of Parking Spaces Nos. 22 and 53 and Storage Space No. 2, as located on the land described in Exhibit "A" of said Declaration of Condominium.

10.4 Vero Beach Condominium No. 105. Any and all interest of the parties in and to a condominium located at Vero Beach, Indian River County, Florida, legally described as follows:

A Condominium Parcel described as Apartment No. #105 of RIOMAR SANDS, a Condominium, according to the Declaration of Condominium dated July 7, 1981 and recorded in Official Record Book 626, pages 466 through 527, inclusive, of the Public Records of Indian River County, Florida, TOGETHER with all of the appurtenances thereto, all according to said Declaration of Condominium and Exhibits attached thereto; TOGETHER with the use of Parking Space No. 48 and Storage Space No. 3 as located on the land described in Exhibit "A" of said Declaration of Condominium.

10.5 Warehouse. Any and all interest of the parties in and to a certain warehouse located at Vero Beach, Indian River County, Florida, legally described as follows:

The East one-half of the following described property: The South Five Acres of the North one-half of the Southwest one-quarter of the Northeast one-quarter less the East 700 feet and less rights of ways for U.S. Highway No. 1, Old Dixie Highway and Florida East Coast Railroad, Section 10, Township 32 South, Range 39 East, said land lying and being in Indian River County, Florida.

10.6 Contents of Condominiums. All of the household goods, furniture, furnishings, dishes, linens, appliances and all other tangible household and personal property located in and about the condominiums referred to in paragraphs 10.3 and 10.4 hereinabove.

10.7 Essex Incorporated. Any and all interest of the parties in and to a corporation known as Essex Incorporated.

10.8 Norlight Promotions and Norlight Services. Any and all interest of the parties in and to companies known as Norlight Promotions and Norlight Services.

10.9 German Shepard Dogs. Any and all interest of the parties in and to all of the German Shepard dogs owned by them. In this connection, petitioner shall sign appropriate documents to transfer her interest in each of said dogs to the respondent.

10.10 Other Personal Property. All of respondent\'s separate bank accounts, insurance policies, cash, and any and all other personal property owned by and/or in the possession or under the control of respondent, regardless of whether such property is specifically referred to hereinabove.

10.11 Membership in Moorings Club, Vero Beach, Florida. Upon entry of this Decree, petitioner agrees that the membership of the parties in the Moorings Club of Vero Beach, Florida will belong solely to the respondent.

10.12 Pontiac and GMC Suburban Automobiles. Certain Pontiac and GMC Suburban automobiles currently in the possession of respondent.

September 30, 1986, Order of the District Court, pages 5-8. The Conclusions of Law also provided that custody of Wade Falk shall be shared equally, with each party paying the expenses of the minor child when he is in their custody. With respect to maintenance, the order provided that "neither party shall receive spousal maintenance from the other now or in the future." Order of the District Court, page 4.

Following entry of the Judgment and Decree, which incorporated the court's conclusions of law, the transfers of property were executed. On September 14, 1987, Walter Falk filed his chapter 11 petition. He brought this adversary proceeding on the same day alleging that the transfers of property pursuant to the state court Dissolution Judgment and Decree are avoidable under 11 U.S.C. § 548(a)(2).

II.

Section 548(a) of the Bankruptcy Code allows a trustee or debtor-in-possession² to avoid certain transfers of property made by the debtor within one year of filing for bankruptcy.

(a) The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily —

(1) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or

(2)(A) received less than a reasonably equivalent value in exchange for such transfer or obligation; and

(B)(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;

(ii) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital; or

(iii) intended to incur, or

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