In re Goldberg
| Decision Date | 29 September 1998 |
| Docket Number | Bankruptcy No. 97-35293-BKC-PGH,Adversary No. 98-3100-BKC-PGH-A. |
| Citation | 229 BR 877 |
| Parties | In re Harvey GOLDBERG, Debtor. Daniel L. Bakst, Trustee, Plaintiff, v. Linda Levenson, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
COPYRIGHT MATERIAL OMITTED
C. Craig Eller, Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., West Palm Beach, FL.
David A. Carter, Boca Raton, FL, for Debtor.
Daniel Bakst, Bakst, Cloyd & Bakst, P.A., West Palm Beach, FL, Trustee.
FINDINGS OF FACT AND CONCLUSIONS OF LAW ON TRUSTEE'S AMENDED COMPLAINT TO SET ASIDE FRAUDULENT TRANSFERS, TO REQUIRE ACCOUNTING AND FOR TURNOVER PURSUANT TO 11 U.S.C. §§ 544, 547, 548 AND FLORIDA STATUTES CHAPTER 726
THIS MATTER came before the Court for trial on August 7, 1998. Daniel L. Bakst, Trustee filed an amended adversary complaint which seeks to avoid and recover fraudulent conveyances pursuant to 11 U.S.C. §§ 544, 548 and Florida Statutes §§ 726.101, 726.105(1)(a), 726.105(1)(b), 726.106(1), and alternatively, to avoid and recover a preferential transfer pursuant to 11 U.S.C. § 547. This Court, having observed the demeanor of the witnesses, reviewed the exhibits and testimony presented, considered the argument of counsel, and being otherwise fully advised in the premises, enters the following findings of fact and conclusions of law.
On October 23, 1997, Harvey Goldberg (the "Debtor") filed a Voluntary Petition under Chapter 7 of the Bankruptcy Code. Daniel Bakst (the "Trustee") was appointed as Chapter 7 Trustee in the Debtor's bankruptcy case. The Trustee filed a complaint against Linda Levenson ("Levenson"), the Debtor's fiancee, on April 22, 1998. That complaint was later amended on July 8, 1998 to assert causes of action based upon fraudulent transfers under Section 548 of the Bankruptcy Code, upon a preferential transfer under Section 547 of the Bankruptcy Code, and upon fraudulent transfers under Florida Statutes §§ 727.105(1)(a) and (1)(b), and 726.106(1). See Fla.Stat. §§ 727.105(1)(a) and (1)(b) and 726.106(1) (1997).
The Trustee's Amended Complaint alleges that the following three transfers between Levenson and the Debtor should be avoided:
(1) A payment of $80,000 to Levenson on August 8, 1994;
(2) A payment of $50,000 to Levenson on April 21, 1995; and
(3) Transfer of a standard equity membership (the "Membership") in Woodfield Country Club ("Woodfield") on March 21, 1996.
Levenson and the Trustee have stipulated that these transfers occurred and that the Debtor was insolvent at the time the transfers took place.
The Debtor purchased his home at 3005 Hampton Circle, Boca Raton, Florida (the "Real Property") on January 31, 1994. The Real Property is located within Woodfield. It is undisputed that the Real Property was the Debtor's homestead and was exempt at all times relevant to the allegations contained in the Amended Complaint.
The Debtor testified that in the summer of 1994, he was planning on buying a business in South Florida known as the Deli Place. In June 1994, a Florida corporation named IBF Foods, Inc. ("IBF") was formed to purchase and operate the Deli Place. Irene Goldberg, the Debtor's mother, is IBF's president and the registered owner of 100% of IBF's stock. Levenson and the Debtor are IBF's vice presidents. Although Ms. Goldberg is the registered owner of the stock of IBF, she testified at trial that the Debtor owned IBF.
Prior to the purchase of the Deli Place, the Debtor had enough assets in an investment account to pay the $120,000 required as the down payment for the business. The Debtor testified that during his trip to South Florida to attend the closing of the purchase of the business, his stock portfolio lost value to such an extent that he was unable to close on the business. Levenson offered to lend the Debtor enough money to close on the business so that he would not lose the business opportunity. At the Debtor's request, Levenson transferred $120,000 directly from her bank account into IBF's account on July 29, 1994. On the same date, the Debtor executed a promissory note (the "Promissory Note") for $120,000 to Levenson on behalf of IBF and himself, personally. The $120,000 was then used to purchase the business. The Promissory Note provided that Levenson would be repaid by the Debtor's refinancing of the mortgage on the Real Property on or before August 15, 1994. Levenson and the Debtor presented substantial evidence at the trial concerning various other loans Levenson had made to the Debtor from March 1994 to the present. This evidence consisted of promissory notes executed by the Debtor, canceled checks, wire transfer receipts, and the testimony of Levenson. The evidence indicated that: (1) between March, 1994 and May, 1994, Levenson loaned the Debtor $10,000; (2) in February, 1995, Levenson loaned the Debtor $6,000 in cash; (3) in March, 1995, Levenson loaned the Debtor $3,000 in cash; and (4) in April, 1995, Levenson loaned the Debtor $2,000.
On August 8, 1994, the Debtor refinanced his mortgage on the Real Property and transferred $80,000 of the loan proceeds from Great Western Bank directly to Levenson through the trust account of Samsi Caliendo. The $80,000 was not commingled with any of the Debtor's other funds. The Debtor also transferred $50,000 to Levenson on April 21, 1995 from the proceeds of a $100,000 loan from Joan Prince ("Prince") for which Prince was granted a second mortgage on the Real Property. Again, the $50,000 was transferred directly to Levenson from the closing agent and was not commingled with any of the Debtor's other funds.
On December 10, 1995, the Debtor executed a quit-claim deed transferring the Real Property from himself to Levenson and himself as joint tenants with the right of survivorship. Levenson and the Debtor testified that the transfer of the Real Property was based upon the advice of tax counsel relating to deduction of mortgage interest on the Real Property. Levenson also testified that she lent the Debtor substantial monies from October, 1995 until March, 1997 for real estate taxes, mortgage payments, utility bills, cable bills, phone bills and the Membership fees related to the Real Property. However, the Court finds that the monies given to the Debtor to pay expenses related to the Real Property, after the Debtor transferred a joint interest in the Real Property to Levenson, were not loans to the Debtor, but were either payments of expenses that benefitted Levenson as co-owner or payments of her own living expenses.
On March 16, 1996, the Debtor sent a letter to Woodfield requesting that the Membership be transferred to Levenson. The Debtor testified that he transferred the Membership to Levenson to repay her for loans she made to him. In exchange for the Membership, Levenson testified that she gave the Debtor $20,000 credit toward the funds she had previously lent to the Debtor. On March 21, 1996, Woodfield executed and delivered to Levenson a membership certificate issued in her name representing ownership of the Membership.
John Csapo ("Csapo"), the Project Manager for Development of Woodfield, testified that in order to be eligible for membership in Woodfield, a person must first own real property within the confines of Woodfield. Csapo testified that the transfer of the Membership to Levenson was appropriate because she was an owner of the Real Property in Woodfield.
On March 14, 1997, Levenson quit-claimed her interest in the Real Property back to the Debtor. The Debtor and Levenson testified that Levenson transferred the Real Property back to the Debtor in order to protect Levenson from becoming embroiled in the disputes between the Debtor and his creditors. During this period, although Levenson knew there were creditors making claims against the Debtor, the Debtor testified that he did not inform Levenson of specific details concerning these claims, except perhaps the Debtor's ex-wife's claim which was disputed. However, Levenson testified that she was aware of a garnishment instituted by Kobrin on January 30, 1997, and that she made additional loans to the Debtor in order to provide him support after the garnishment.
In the early part of 1996, Levenson requested that Woodfield sell the Membership. Upon Woodfield's sale of the Membership to a third party, Woodfield issued a check to Levenson on August 7, 1997 in the amount of $22,946.73 representing the proceeds of the sale of the Membership. On August 11, 1997, Levenson lent $22,946.73 to IBF.
Csapo testified that when Levenson quit-claimed the Real Property back to the Debtor, the Membership did not automatically revert back to the Debtor. Csapo also testified that regardless of whether property holders sell their real property within Woodfield or sells their membership in Woodfield, the effect is the same: the membership goes into a pool for resale and the proceeds of the sale are paid to the membership holder. Csapo further testified that under no circumstances would the proceeds of the sale of the Membership have been paid to the Debtor unless Levenson had instructed Woodfield to transfer the Membership back to him.
The Debtor was involved in two prior bankruptcy cases. The first involved Middle Atlantic Sports Co., Inc., a/k/a MASCO Sports ("Masco"). Masco filed a Chapter 11 bankruptcy in the late 1980's, through which Masco was sold. The second was his personal Chapter 7 bankruptcy case, filed in January of 1991, that the Debtor personally filed due, at least in part, to the failure of Masco. The Debtor did not list all of his creditors in his prior personal bankruptcy case. A year after the case was closed, the Debtor requested that his case be reopened in order to add creditors so as to discharge the debts. Several creditors fought this attempt and the bankruptcy court denied the Debtor's request. Thereafter, several creditors brought suit against the Debtor in 1993...
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