In re Fink
| Decision Date | 05 September 2006 |
| Docket Number | Bankruptcy No. 05 B 42371.,Adversary No. 06 A 00903. |
| Citation | 351 B.R. 511 |
| Parties | In re Robert James FINK, Debtor. Baccala Realty, Inc., Plaintiff, v. Robert James Fink, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Richard F. Doerr, Steven H. Mevorah and Associates, Bloomingdale, IL, for debtor.
David R. Brown, Esq., Springer, Brown, Covey, Gaertner & Davis, Wheaton, IL, for trustee.
This matter comes before the Court on the motion of Baccala Realty, Inc. (the "Creditor") for judgment on the pleadings pursuant to Federal Rule of Bankruptcy Procedure 7012 and Federal Rule of Civil Procedure 12(c). For the reasons set forth herein, the Court grants the motion with respect to Counts I and III of the complaint objecting to the discharge of Robert James Fink (the "Debtor"), and denies his discharge pursuant to 11 U.S.C. §§ 727(a)(3) and 727(a)(4)(A). A status hearing on Count II of the complaint is set for September 29, 2006 at 10:00 a.m.
The Court has jurisdiction to entertain this matter pursuant to 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. It is a core proceeding under 28 U.S.C. § 157(b)(2)(J).
The Debtor filed a Chapter 7 bankruptcy petition on September 30, 2005.1 The Debtor is an orthopaedic surgeon. The Creditor is listed on the Debtor's Schedule D as holding a non-contingent, liquidated, and undisputed general secured claim in the sum of $4,900,000.00 against the Debtor arising from a guaranty of a business loan with respect to an outpatient surgical facility. (Complaint ¶ Answer ¶ 3.)
The Debtor admitted several pertinent facts in his answer to the complaint. In particular, the Debtor admitted that his statement of Financial Affairs lists his income for the year 2003 as $37,851.00, but that his W-2 form for 2003 from Ashland Physicians Center ("Ashland"), an entity that the Debtor has owned, operated, or worked for in the past, lists his income for that year as $55,350.00. (Complaint ¶ 10; Answer ¶ 6.) In addition, the Debtor admitted that the Statement of Financial Affairs lists his income for the year 2004 as $36,000.00, but that the 1099 statement from Ashland reflects income for that same year as $48,000.00. (Complaint ¶ 11; Answer ¶ 6.)
Further, the Debtor acknowledged that in paragraph eighteen of his Statement of Financial Affairs, he did not list any ownership interests in any business entities in the six years preceding this bankruptcy filing. (Complaint ¶ 12; Answer ¶ 6.) In particular, the Debtor admitted that he failed to disclose his ownership interest in Ashland in his Statement of Financial Affairs or in his Schedules. (Complaint ¶ 14; Answer ¶ 8.) Additionally, the Debtor owns a one hundred percent interest in Lake Physicians Center, LLC ("Lake"), a medical group in which the Debtor practiced. (Complaint ¶ 15; Answer ¶ 8.) Lake is a member of Lakeview Ambulatory Center, LLC ("Lakeview"), an Indiana limited liability company that operated an outpatient surgery center in Hammond, Indiana until January 2005. (Id.)2 The Debtor admitted that he has received a percentage of certain receivables from Lakeview since the filing of his bankruptcy case. (Complaint ¶ 18; Answer ¶ 12.) The Debtor also acknowledged that he failed to disclose any ownership interest in Lake in his Statement of Financial Affairs or Schedules. (Complaint ¶ 19; Answer ¶ 12.)
Moreover, the Debtor admitted that he formerly' owned one hundred percent of the stock of Robert Fink M.D. S.C. (Complaint ¶ 20; Answer ¶ 12.) Nevertheless, the Debtor failed to disclose any ownership interest in Robert Fink M.D. S.C. in his Statement of Financial Affairs or in his Schedules even though as of the end of the 2002 tax year, that entity had assets totaling approximately $200,000.30 based on that entity's 2002 income tax return. (Complaint ¶ 21; Answer ¶ 12.) The Debtor also admitted that he failed to disclose that he was the trustee and sole beneficiary of the Robert Fink 1997 revocable trust until March 27, 2002. (Complaint ¶ 22; Answer ¶ 12.) That trust owned a condominium in Palm Beach, Florida, which was transferred for little or no consideration on March 27, 2002, to an entity controlled by the Debtor's father, Dr. Victor Fink. (Id.)
The Debtor acknowledged that he issued several checks totaling $52,500.30 from Lake's checking account made payable to himself, and that he negotiated such checks over a period of eight months prior to filing this bankruptcy. (Complaint ¶ 25; Answer ¶ 14). The Debtor failed to list any of these payments in his Statement of Financial Affairs or Schedules. (Complaint ¶ 26; Answer ¶ 14.) in addition to these checks written to himself, the Debtor admitted that he issued checks from Lake's checking account made payable to (1) his wife for $30,030.00 in May 2005 for household expenses; (2) his father for $28,000.00 in June 2005; and (3) the Chicago Bears for $1,600.00 in April 2005 for 2005 season tickets. (Complaint ¶ 27; Answer ¶ 14.)
The Debtor also admitted that he currently owns an entity he described as the Michigan Street Venture, which apparently owns or invests in Marriott hotels. (Complaint ¶ 29; Answer ¶ 16.) The Debtor failed to list this entity in his Statement of Financial Affairs or in his Schedules. (Id.) The Debtor acknowledged that he earns $600.00 from this investment entity but was uncertain whether those earnings were monthly, semi-annually, or annually. (Complaint ¶ 30; Answer ¶ 16.) The Debtor failed to list any income from the Michigan Street Venture in his Statement of Financial Affairs or in his Schedules. (Id.)
On December 16, 2005, the Court entered an order that required the Debtor to provide documents in connection with a Federal Rule of Bankruptcy Procedure 2004 examination. (Complaint ¶ 45; Answer ¶ 26.) On February 1, 2006, the Debtor produced a partial response to that request. (Complaint ¶ 46; Answer ¶ 26.) At the Bankruptcy Rule 2004 examination, the Debtor testified that he no longer possesses the billing information for his work performed at Lake; that he no longer possesses the billing information for his work performed for Ashland; that he no longer possesses the documentation for the Robert Fink 1997 revocable trust for which he was the trustee and sole beneficiary; that he does not possess any documents with respect to the Michigan Street Venture, nor can he recall or document if he receives $600.00 monthly, semi-annually, or annually from this venture; that he was unable to produce bank records for accounts at LaSalle Bank for the periods after the bankruptcy petition date and for periods prior to the petition date; that he was unable to produce bank records or tax returns for Ashland; that he was unable to produce bank records for the Lake checking account prior to January 1, 2005, or any tax returns for Lake; that he was unable to produce tax returns for any year other than 2002 for Robert Fink M.D. S.C.; that he was unable to produce any of the corporate or organizational documents for Ashland, Lake, or Robert Fink M.D. S.C.; and that he was unable to produce any documents in connection with the transfer of his ownership interest in Ashland to his father. (Complaint ¶ 47b-47k; Answer ¶ 28.)
On April 3, 2006, the Creditor filed this adversary proceeding. The Creditor alleges in the three-count complaint that the Debtor's discharge should be denied pursuant to 11 U.S.C. §§ 727(a)(3), 727(a)(4)(A), and 727(a)(5) because he made false oaths, failed to maintain proper records, and failed to account for the loss of assets. On June 2, 2006, the Creditor filed the instant motion for judgment on the pleadings. The motion only seeks judgment pursuant to Counts I and III of the complaint which invoke §§ 727(a)(4)(A) and 727(a)(3) respectively. The Creditor contends that based on the allegations admitted by the Debtor in his answer to the complaint, the Court should grant judgment in favor of the Creditor and deny the Debtor's discharge. According to the Creditor, no material issues of fact exist and judgment on the pleadings is warranted by law. The Debtor, on the other hand, maintains that the Creditor has not met its burden to establish the relief sought; that there are material issues of disputed fact precluding the relief sought; and that the Debtor's failure to disclose certain assets and his failure to keep proper records was not the result of any intentional act on his part.
On June 8, 2006, several days after the Creditor filed the motion at bar, the Debtor filed an amended Schedule B that reflects an interest in the Michigan Street Venture entity. In addition, on that same date, the Debtor filed an amended Statement of Financial Affairs that shows his interests in Ashland, Lakeview, Robert Fink M.D. S.C., and Lake, and lists his income for 2003 as -$1,109.00.
Federal Rule of Civil Procedure 12(c), which is incorporated by reference in Federal Rule of Bankruptcy Procedure 7012, provides as follows:
After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
FED. R. CIV. P. 12(c). Rule 12(c) permits a party to move for judgment after the parties have filed the complaint and answer. N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d...
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