In re Goldston
| Decision Date | 15 April 2021 |
| Docket Number | C/A No. 09-06305-JW |
| Citation | 627 B.R. 841 |
| Court | U.S. Bankruptcy Court — District of South Carolina |
| Parties | IN RE: David Burns GOLDSTON, III, Debtor(s). |
Elizabeth M. Atkins, N. Charleston, SC, for Debtor.
Joy S. Goodwin, Columbia, SC, pro se.
Pamela Simmons-Beasley, Columbia, SC, pro se.
This matter comes before the Court on the Motion for Hardship Discharge ("Motion") filed by David Burns Goldston, III ("Debtor") on March 5, 2021. The Chapter 13 Trustee and two of Debtor's creditors, Dana Rabon Goldston and Dale P. Johnson, filed objections to the Motion. The Motion was set for a hearing but will be rescheduled.1 On that same date, with notice to the parties in interest, the Court will also consider whether dismissal of the case is appropriate. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334, and this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (J), and (O). Based upon the present record of this case and the applicable law, the Court makes the following findings of fact and conclusions of law:2
FINDINGS OF FACT
1. On August 26, 2009, Debtor filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code.
2. On September 10, 2009, Debtor filed a chapter 13 plan, which was subsequently amended on January 11, 2010, February 23, 2010, March 2, 2010, and March 8, 2010. The chapter 13 plan filed on March 8, 2010 was confirmed on March 10, 2010 ("Original Confirmed Plan"). The Original Confirmed Plan provided for Debtor's monthly payment to the Trustee of $1,650 for 6 months, followed by $2,125 for 51 months, for a total period of 57 months. The Original Confirmed Plan did not propose to pay 100% of general unsecured claims. The first payment under the Original Confirmed Plan was due April 2010.
3. On January 12, 2011, Debtor filed a motion for moratorium, requesting a three-month moratorium on his Trustee payments, with payments to recommence in March 2011. An Order Granting the Motion for Moratorium was entered on February 9, 2011. As a result of the three-month moratorium, the plan period was extended to 60 months.
4. On April 19, 2012, Debtor filed an amended chapter 13 plan, which reduced payments by providing for payments to the Trustee of $1,650 for 6 months, followed by $2,125 for 25 months, followed by $1,400 for 26 months for a total period of 57 months (60 months with the three-month moratorium). The amended plan did not propose to pay 100% of general unsecured claims.
5. The amended plan was confirmed on June 25, 2012.
6. Debtor's father, David B. Goldston, Jr., died in August of 2012, leaving an inheritance to Debtor. A probate estate was opened in the General Court of Justice, Superior Court Division, Columbus County, NC, Case No. 2013-7-999. Debtor is one of two beneficiaries of the probate estate and served as executor of the estate. According to Debtor's counsel, she advised the Trustee on September 12, 2012 that Debtor was an heir of his father's estate and that assets would be available for distribution at some point in the future.
7. On March 3, 2014, the Trustee moved to modify the confirmed plan to provide for payment in full to general unsecured creditors on account of Debtor's anticipated inheritance from his father's estate. In her Motion, the Trustee indicated that she learned that Debtor was a beneficiary of his father's estate "in the fall of 2013." In the motion to modify, she requested that the modified plan allow Debtor to continue to make his scheduled monthly payments but with a final lump sum payment of $182,125 to pay the unsecured creditors in full. Debtor timely objected to the motion and argued that payments under a chapter 13 plan could not be extended beyond 60 months.
8. While no completed form plan was filed or circulated to creditors, nor any confirmation hearing held, on April 21, 2014, the Court entered a Consent Order Modifying Previously Confirmed Plan ("2014 Modification Order"), presented by and consented to by Debtor's counsel and the Trustee, which only modified the April 12, 2012 plan as follows:
The 2014 Modification Order provided that the Trustee and Debtor anticipated a distribution from the probate estate within the next 90 days, and therefore the Trustee and Debtor expressly agreed that the issue of whether the term of the plan payments could be extended beyond five years did not need to be addressed at that time. The 2014 Modification Order did not establish the amount or timing of any payments to the Trustee and did not consider feasibility or the actual expenses of Debtor at that time. Among other provisions, the modified plan (hereinafter, the "Plan") retained the provisions of the April 12, 2012 plan requiring Debtor to submit his future earnings and other future income through monthly payments to the Trustee for 60 months as well as the vesting provision of the April 12, 2012 plan, which provided that property of the estate will remain property of the estate, but possession of property of the estate shall remain with Debtor. The 2014 Modification Order did not extend the term or applicable commitment period of the Plan. It provided that the parties agreed "that the Trustee shall not be prejudiced in raising issues pursuant to 11 U.S.C. § 1329(a)(2) [] in a subsequent pleading."
9. On January 7, 2015, the Trustee filed a Motion to Modify the Plan After Confirmation to Keep Bankruptcy Open Until Finalization of Inheritance and Payment of Proceeds to the Bankruptcy Estate. In the motion, the Trustee noted that no distribution from the father's estate had been made yet and requested to extend the time for the closing of the bankruptcy case to an indefinite date in the future to allow for an inheritance distribution to Debtor to be finalized. In that motion, the Trustee did not allege any misconduct or unreasonable delay by Debtor but merely that the law allowed the case to remain open for receipt of future payments. Debtor objected to the Motion, again arguing that an extension for plan payments could not extend beyond the 60 months (5 years) specified in 11 U.S.C. § 1329(c).3 A hearing was held on February 19, 2015. At the hearing, the Court relied upon the Trustee's citation of Fourth Circuit authority that the estate may remain open beyond the commitment period for the purpose of the Trustee receiving additional payments. However, while expressing concern regarding setting any precedent that would require a debtor to make payments under a plan longer than permitted by the Bankruptcy Code, the Court recognized some short agreed upon period may be considered. The matter was taken under advisement with the Trustee to submit a proposed order.
10. On March 13, 2015, the Trustee and Debtor presented and the Court entered a Consent Order to Hold Bankruptcy Case Open Pending Receipt of Funds from Debtor's Inheritance ("2015 Consent Order"), which findings included that The 2015 Consent Order did not extend the applicable commitment period or the term of the Plan but allowed the case to remain open.
11. In April of 2015, 60 months had elapsed since the first payment was due under the Original Confirmed Plan, therefore marking the end of the applicable commitment period.
12. Between March of 2015 and October of 2019, no motion regarding the modified Plan, case duration, Debtor's actions or inactions, or any other issue related to case administration was raised to the Bankruptcy Court by the Trustee, Debtor, or any creditor. The Court did not otherwise monitor the progress of the case. The bankruptcy case has remained pending for more than six years after the entry of the 2015 Consent Order without distribution of funds from the father's probate estate or payments therefrom to the Trustee.
13. According to probate documents presented by the Trustee, on August 4, 2017, Debtor was removed as executor of his father's probate estate by an order of the probate court. The probate court's order found that Debtor's removal was appropriate "based upon [Debtor's] bankruptcy proceedings and the failure of [Debtor] in effectively and efficiently administering and closing the probate estate [and that Debtor] has a private interest, which tends to hinder and be adverse to a fair and proper administration of the estate of [Debtor's father]." Noting the effect of his pending bankruptcy proceeding, the probate court in fact found that "[Debtor's] interests have been adverse to a fair and proper administration of the [probate] estate." In addition, the probate court noted that "no valid justification has been provided for the [probate] estate [of Debtor's father] remaining open for such a protracted time" and found "that no such justification exists" in considering Debtor's removal as Debtor's father had been deceased for five years and the probate proceedings had been pending for approximately four years at the time of his removal. The...
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