In re Herman

• Decision Date: 09 March 2004
• Docket Number: Bankruptcy No. 02-64085.,Adversary No. 03-6029.
• Parties: In re Verna Kay HERMAN, Debtor. Verna Kay Herman, Plaintiff v. Johnny Milen Neely, Trustee and Gary Dean Jackson, Defendants.
• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Eastern District of Texas

315 B.R. 381

In re Verna Kay HERMAN, Debtor Verna Kay Herman, Plaintiff v. Johnny Milen Neely, Trustee and Gary Dean Jackson, Defendants.

Bankruptcy No. 02-64085. Adversary No. 03-6029.

United States Bankruptcy Court, E.D. Texas, Tyler Division.

March 9, 2004.

COPYRIGHT MATERIAL OMITTED

Donald W. Cothern, Tyler, TX, for Plaintiff, Verna Kay Herman.

William Sheehy, Wilson, Sheehy, Knowles, Robertson & Cornelius, P.C., Tyler, TX, for Defendant, John Milen Neely, Trustee.

Gary D. Jackson, Jackson Law Offices, P.C., Lindale, TX, for Defendants, Gary Dean Jackson.

MEMORANDUM OF DECISION

BILL G. PARKER, Chief Judge.

Now before the Court in the abovereferenced adversary proceeding is the "Defendants' Motion For Summary Judgment" filed jointly by Johnny Milen Neely as Trustee and Gary Dean Jackson (collectively, "Defendants") on July 2, 2003, as well as the "Plaintiffs Response In Opposition To Defendants' Motion For Summary Judgment" filed by the Plaintiff, Verna Kay Herman ("Debtor" or "Plaintiff) on September 12, 2003. In addition, the Court also heard, in conjunction with the Defendants' summary judgment motion, the "Motion of Johnny Milen Neely, Trustee, For Relief From the Automatic Stay," filed on April 23, 2003, including the Supplement thereto filed on June 2, 2003. A hearing was held on these matters at which the Court entertained oral argument from the parties. The Court, after reviewing the pleadings and considering the summary judgment evidence, including the oral argument presented, finds that the Defendants' Motion for Summary Judgment should be granted in part and denied in part, and that Defendant Neely's Motion for Relief from Stay should be denied. In addition, the Court concludes that the Motion to Avoid Judgment Lien filed by the Plaintiff-Debtor, which is inextricably tied to the same issues, shall be denied.¹

Factual Background

Prior to the petition date, the Debtor-Plaintiff was married to William John Chappell. The Debtor had three children, Kenneth Jeff Brown, II ("Jeff Brown"), Natalie Sherie Brown, and Wendy Kay Melton, none of which were the children of Mr. Chappell. On February 28, 1988, three agreements were executed whereby the three children agreed to loan money to their mother (the Debtor) and step-father (Mr. Chappell) to assist in the purchase of two tracts of land totaling 81.8 acres in Lindale, Texas, and the construction of a home thereon.² These three agreements provided for 9% interest on the loan, and Mr. Chappell promised to sell his land in Elkhart, Texas, and his house in Palestine, Texas, to repay the debt to the children.

Prior to any repayment of the loans made by the three children, the Debtor filed a petition for divorce against Mr. Chappell in the 321st District Court of Smith County, Texas. The Debtor was represented in the divorce by Defendant Gary Jackson. In the course of the divorce proceedings, Jeff Brown, individually, and Jeff Brown and Debtor as next friends of the minor children, Natalie Sherie Brown and Wendy Kay Melton, intervened to assert on behalf of the children certain interests in the marital property. The Divorce Decree and Judgment (the "Divorce Decree"), entered by the 321st District Court of Smith County, Texas, on July 1, 1994,³ awarded the 81.8 acre community homestead property to the Debtor, simultaneously divesting Mr. Chappell of his interest in such properties.⁴ The Divorce Decree further stated as follows:

The two tracts awarded to the Plaintiff are further impressed with a resulting trust for consideration paid for said property from the social security payments of Jeff Brown in the sum of $32,815.02 ... and Natalie Sherie Brown in the sum of $33,270.77 ... and child support payments of Wendy Kay Melton in the sum of $28,169.00 ..., said trust being secured by the imposition of an equitable lien in the stated sums for the benefit of Intervenor Kenneth Jeff Brown II, Individually, and as Next Friend of Natalie Sherie Brown and Wendy Kay Melton.⁵

Thereafter, pursuant to a transfer and assignment dated November 8, 2002, the interests awarded to Jeff Brown and Natalie Sherie Brown in the Divorce Decree, as well as their rights under the February 1988 agreements, were transferred to Defendant Neely. A second assignment was executed on November 19, 2002, wherein Wendy Kay Melton transferred 80% of the interest awarded to her in the Divorce Decree and her rights under the February 1988 agreement to Defendant Neely and the remaining 20% to Defendant Jackson.

On December 3, 2002, the Plaintiff-Debtor filed for relief under Chapter 13 of the Bankruptcy Code. The Debtor filed the current adversary complaint on June 2, 2003, seeking a determination of the validity, priority, and extent of the liens or other interests allegedly held by the Defendants in the two tracts of land. The Defendants answered by asserting that pursuant to the two assignments received in November 2002, they hold an interest in the real property itself arising from a resulting trust, or alternatively, that they hold an equitable lien on the subject property.

Discussion

Standards for Summary Judgment

The Defendants bring their Motion for Summary Judgment in the adversary proceeding pursuant to Federal Rule of Bankruptcy Procedure 7056. That rule incorporates Federal Rule of Civil Procedure 56, which provides that summary judgment shall be rendered "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIVP. 56(C). "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.' " Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). "The inquiry to be performed is the threshold inquiry of determining whether there is the need for a trial— whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

The party seeking summary judgment always bears the initial responsibility of informing the court of the basis for its motion, identifying those portions of the "pleadings, depositions, answers to interrogatories, and affidavits, if any," which it believes demonstrates the absence of a genuine issue of material fact. Celotex, 411 U.S. at 323, 106 S.Ct. at 2553. "If a moving party fails to carry its initial burden of production, the non-moving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion." Hunter v. Caliber System, Inc., 220 F.3d 702, 726 (6th Cir.2000) (citing Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir.2000)). As more particularly described by Judge William Wayne Justice in Marshall Independent School Dist. v. U.S. Gypsum Co., 790 F.Supp. 1291 (E.D.Tex.1992):

Even where the non-moving party has the burden of persuasion on an issue, the summary judgment movant still has the initial burden of showing the absence of a genuine issue of material fact. It is not enough to move for summary judgment without supporting the motion in any way or with a conclusory assertion that the plaintiff has no evidence to prove its case. If there is literally no evidence in the record, the moving party may demonstrate this by reviewing for the court the admissions, interrogatories, and other exchanges between the parties that are in the record. If the moving party has not fully discharged this initial burden of production, its motion for summary judgment must be denied, and the court need not consider either any evidence submitted by the non-moving party or whether the moving party has met its ultimate burden of persuasion that summary judgment should be granted in its favor.

Id. at 1299-1300.

The manner in which this showing can be made depends upon which party will bear the burden of persuasion at trial. If, as in this case, the burden of persuasion at trial must be borne by the non-moving party, the party moving for summary judgment may satisfy the burden of production under Rule 56 by either submitting affirmative evidence that negates an essential element of the non-moving party's claim, or by demonstrating that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim. See 10A WRIGHT, MILLER, & KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL 3d § 2727 at pp. 471-472 (1998); see also Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326, 329-30 (3d Cir.1995); Cannon v. Cherry Hill Toyota, Inc., 161 F.Supp.2d 362, 366 (D.N.J. 2001).

Once the motion is supported by a prima facie showing that the moving party is entitled to judgment as a matter of law, a party opposing the motion may not rest upon the mere allegations or denials in its pleadings, but rather must demonstrate in specific responsive pleadings the existence of specific facts constituting a genuine issue of material fact for which a trial is necessary. Anderson, 477 U.S. at 248-49, 106 S.Ct. at 2510 (citing FED.R.CIV.P. 56(e)). The substantive law will identify which facts are material. Id.

Thus, if a non-movant fails to set forth specific facts that present a triable issue, its claims should not survive summary judgment. Giles v. General Elec. Co., 245 F.3d 474, 494 (5th Cir.2001). As the Supreme Court has stated,

In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the

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