In re Fonner
| Decision Date | 22 May 2001 |
| Docket Number | Bankruptcy No. 95-23976-BM. Motion No. 01-0952M,01-0993M. |
| Citation | 262 BR 350 |
| Parties | In re Robert L. FONNER and Sharon L. Fonner, Debtors. Robert L. Fonner and Sharon L. Fonner, Movants, v. David H. Overdorf, Administrator Of The Estate Of Kristen Overdorf, Deceased, Edward J. Balzarini, Jr., and Balzarini & Watson, Respondents. David H. Overdorf, Administrator Of The Estate Of Kristen Overdorf, Deceased, Movant, v. Robert L. Fonner and Sharon L. Fonner, Respondents. |
| Court | U.S. Bankruptcy Court — Western District of Pennsylvania |
Jeffrey R. Lalama, Feldstein Grinberg Stein & McKee, Pittsburgh, PA, for Debtors.
Michael Balzarini, Balzarini & Watson, Pittsburgh, PA, for David H. Overdorf.
Debtors Robert Fonner and Sharon Fonner have brought a motion to reopen their closed bankruptcy case. They seek to reopen to obtain an injunction prohibiting the administrator of the decedent's estate of one Kristen Overdorf from taking any action against the assets of debtor Sharon Fonner to satisfy a judgment against her or from transferring the judgment to another jurisdiction.
Overdorf's administrator, who concurs in the request to reopen, opposes debtors' request for an injunction as being unnecessary. He instead requests modification of the discharge order of debtor Sharon Fonner to provide that she has assigned to him her rights against certain excess liability insurers so that he may proceed against them to collect the judgment against her.
We will reopen debtor's case but will deny their request for an injunction against Overdorf's administrator. The previous order of discharge contained such a prohibition and Overdorf's administrator now acknowledges his inability to take any legal steps against the debtor personally. The language of the previously modified discharge order was sufficiently broad to encompass the relief now sought by Overdorf's administrator. We therefore will modify the discharge order once again to make explicit what was implicit.
— FACTS —
Kristen Overdorf was killed while riding a bicycle on a public street in April of 1991 when she was struck by an automobile driven by debtor Sharon Fonner. Joint debtor Robert Fonner, debtor's husband, had rented the vehicle from Tomsic Motor Company.1
Debtors had personal automobile liability insurance with Travelers Insurance Company with a liability limit of $50,000.00. Excess liability insurance also was available through Tomsic's liability insurers from Allstate Insurance Company ($15,000.00) and from Motorists Mutual Insurance Company ($1,000,000.00).
Debtors' personal liability insurance provided by Travelers was primary to Tomsic's liability insurance provided by All-state and Motorists Mutual.
After the fatal accident Allstate indicated a willingness to pay the limits of its excess liability coverage once Travelers primary coverage was paid. Motorists Mutual, however, denied that debtor Sharon Fonner was covered at all by its policy because only her husband had signed the rental agreement for the vehicle which struck and killed Kristen Overdorf.
Travelers asserted in writing in November of 1991 that it would pay its policy limit to Kristen Overdorf's estate, but only "in exchange for a complete release of . . . debtor Sharon Fonner". The administrator of Overdorf's estate rejected this offer and instead commenced a wrongful death action in the Court of Common Pleas of Washington County, Pennsylvania, on March 11, 1993, against both debtors and Tomsic Motors, among others.
On August 5, 1993, Travelers indicated in a letter to counsel to Overdorf's administrator that its "offer of policy limits, in the amount of $50,000.00 , remains in effect on behalf of our policyholder". On October 19, 1994, Travelers expressed its willingness to draft a joint tortfeasors release that would release Travelers and debtor Sharon Fonner "for any potential personal liability".
On October 10, 1995, during the pendency of the wrongful death action, debtors filed a voluntary joint chapter 7 petition, thereby staying the action as it pertained to them. For reasons that are at best curious, neither the schedules nor the statement of financial affairs accompanying the bankruptcy petition referred to the above pending lawsuit. As a consequence, Overdorf's administrator was not listed on the creditors' matrix and did not receive notice of the bankruptcy filing at that time.
Overdorf's administrator was not added to the matrix of creditors until December 19, 1995. When Overdorf's administrator received formal notice of the bankruptcy case is not apparent from the record. Counsel to Overdorf's administrator entered his appearance and requested copies of all notices pertaining to debtors' chapter 7 case on January 12, 1996.
Both debtors were granted a general discharge and were "released from all dischargeable debts" on February 23, 1996. The order of discharge was a "generic" administrative order. A final decree closing the case was issued on February 28, 1996.
On March 1, 1996, Overdorf's administrator brought a motion to reopen debtors' chapter 7 case to permit him to seek a modification of debtors' discharge order. Overdorf's administrator also filed a petition that same day at Adversary No. 96-2097-BM to modify the discharge order as it pertained to debtor Sharon Fonner.
Debtors objected neither to the motion to reopen nor to the petition to modify debtor Sharon Fonner's discharge. To the contrary, debtor Sharon Fonner appeared amenable to the entry of any order which enabled her to receive a discharge while agreeing to any procedure which allowed Overdorf's estate to pursue applicable insurance coverage.
After conducting a hearing on April 1, 1996, we entered a modified consent order reopening debtors' case to permit consideration of the petition by Overdorf's administrator to modify the February 23, 1996, order granting debtor Sharon Fonner a discharge.
On April 3, 1996, debtors requested leave to amend Schedule F to finally list Overdorf's estate as having an unsecured nonpriority claim arising out of the motor vehicle accident that took the life of Kristen Overdorf.
We entered an order on May 14, 1996, modifying the previous discharge order pertaining to debtor Sharon Fonner.
Paragraph 1 of the modified order provided that the discharge granted to debtor Sharon Fonner "shall not operate to bar, limit, nullify or otherwise discharge in any manner liability of the debtor, Sharon L. Fonner" in connection with the fatal accident "to the extent there exists any applicable policy of liability insurance".
Paragraph 2 of the modified order provided that the discharge granted to debtor Sharon Fonner "shall not operate to enjoin the institution and/or continuation of any action and/or proceeding to determine the liability of the debtor Sharon L. Fonner" with respect to the fatal accident. Overdorf's administrator would not be enjoined from instituting or continuing any action of legal proceeding "to collect upon any judgment obtained against debtor" arising out of the fatal accident, "to the extent there exists any applicable policy of liability insurance".
Debtors were granted leave on June 10, 1996, to amend Schedule F to list Overdorf's estate as a creditor.
A final decree closing debtors' case once again was issued on June 27, 1996.
Following a trial in the Court of Common Pleas of Washington County, a jury arrived at a verdict in favor of Overdorf's estate and against debtor Sharon Fonner in the amount of $862,5000.00. Pursuant to a petition for delay damages and after a hearing, the trial judge found on May 9, 1999, that Travelers' offer to pay its policy limits if Overdorf's administrator would execute a joint tortfeasors release "did not constitute a tender of the entire policy limits as contemplated by Rule 238". The trial court denied debtor Sharon Fonner's motion for reconsideration on June 21, 1999, finding that she
Judgment in the amount of $862.500.00 based on the jury verdict and in the additional amount of $377,140.59 in delay damages, with interest accruing from the date of the jury verdict, subsequently was entered on July 6, 1999. The total amount of the judgment was $1,239,640.59.
The portion of the judgment awarding delay damages eventually was affirmed on appeal. Overdorf v. Fonner, 748 A.2d 682, appeal denied, 764 A.2d 1071 (2000). No appeal apparently was taken of that portion of the judgment which was based on the jury verdict.
When debtor Sharon Fonner refused to assign her rights against Travelers and Motorists Mutual to Overdorf's administrator, the latter commenced a proceeding against Motorists Mutual in state court to recover the proceeds of the $1,000,000.00 excess liability policy of insurance issued to Tomsic Motors.
On February 23, 2001, debtors brought a motion to reopen their bankruptcy case and for a preliminary injunction prohibiting Overdorf's estate and its counsel from executing on, levying against, or otherwise seizing the personal assets of debtor Sharon Fonner and from transferring the judgment against her to Florida, where she presently resides. Respondents, debtors averred, had threatened to execute on, levy against, or to otherwise seize her personal assets and had threatened to transfer the judgment to Florida.
Overdorf's administrator responded by bringing a motion on February 26, 2001, to again modify the previously modified discharge order of debtor Sharon Fonner. Debtor Sharon Fonner's refusal to assign her rights against Travelers and Motorists Mutual, Overdorf's administrator maintains, violates the modified discharge order of May 14, 1996. In exchange for receiving a discharge, Overdorf's administrator maintains, debtor Sharon Overdorf authorized Overdorf's administrator to initiate or continue any proceedings required to...
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