In re Iredia
| Decision Date | 16 September 2016 |
| Docket Number | Case No. 15-18450AMC |
| Parties | In re Ocholi Ochala Iredia, Debtor |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Ocholi Ochala Iredia, Conshohocken, PA, pro se.
Ashely M. Chan
The United States Trustee has filed a motion under § 707(a) to dismiss this case for bad faith and to bar the Debtor from refiling another bankruptcy for two years based upon the Debtor's repeated refusal to answer the Chapter 7 Trustee's questions at numerous meetings of creditors, the Debtor's refusal to produce documents requested by the Chapter 7 Trustee and to comply with the Court's subsequent order to provide such documents to the Chapter 7 Trustee, the Debtor's misrepresentation of his ownership interest in a Minuteman Press franchise and membership interest in a related entity, and the Debtor's filing of false and contradictory schedules with the Court and refusal to cooperate with the Chapter 7 Trustee's efforts to resolve these inconsistencies. After reviewing the purpose of § 707(a), the Court has concluded that it will dismiss the Debtor's case with a two-year bar to refiling.
On October 19, 2012, Baystone Group LLC (“Baystone”) filed a voluntary chapter 7 petition which was signed and filed by the Debtor as president of Baystone. The petition listed the Debtor as the 100% owner of Baystone.
Terry P. Dershaw (“Dershaw”) was appointed as the Chapter 7 Trustee in the case and he scheduled an initial meeting of creditors pursuant to § 341 of the Bankruptcy Code
for December 12, 2012. At the meeting of creditors, the Debtor testified that he personally owned a Minuteman Press franchise (“MP Franchise”) as evidenced by a Bill of Sale entered into between Charles McAnally and Loretta McAnally (“McAnallys”) as seller and the Debtor as buyer (“Debtor Bill of Sale”) on November 26, 2008. Mot. to Extend Time Within Which Trustee May Assume, Assign or Reject Franchise Agreement (“Mot. to Extend Time”) ¶¶ 11-12, ECF No. 25. The Debtor specifically testified that Baystone never owned the MP Franchise. Id. ¶ 11. He also testified that an entity named Minuteman Press Conshohocken LLC (“MPC”) was created in October 2012 because “Baystone's bank accounts were being garnished by a creditor.” Id. ¶ 13.
Based upon the foregoing, Dershaw concluded that the Debtor, not Baystone, owned the MP Franchise. Accordingly, the case was closed and no assets were administered. Id. ¶ 15.
On October 14, 2014, approximately two (2) years after Baystone's bankruptcy filing, the Debtor filed a voluntary Chapter 7 bankruptcy petition pro se, Bankruptcy No. 14–18353 (“2014 Bankruptcy”). Christine C. Shubert was appointed as the Chapter 7 Trustee in that case (“Trustee”). On January 16, 2015, the Debtor attended the initial meeting of creditors (“Initial Meeting”) and the Trustee gave the Debtor a list of documents to bring to the next meeting of creditors. Pro Se Mot. to Reinstate Case, Bankr. No. 14–18353, ECF No. 40. The Debtor failed to attend the next two meetings of creditors scheduled by the Trustee. As a result, the Court dismissed the Debtor's 2014 Bankruptcy on May 19, 2015.
On July 6, 2015, the Debtor filed a motion to reopen his 2014 Bankruptcy based upon his representation that he had most of the documents previously requested by the Trustee at the Initial Meeting. On July 27, 2015, the Court granted the Debtor's motion to reopen the 2014 Bankruptcy.
The Trustee scheduled a fourth meeting of creditors (“Fourth Meeting”) for September 1, 2015. At the Fourth Meeting, the Debtor failed to provide valid social security identification, bank statements, and tax returns, so the Trustee continued the meeting of creditors until September 30, 2015 (“Fifth Meeting”).
On September 14, 2015, the Debtor filed a letter with the Court (“Debtor's Letter”) requesting a status conference to address the Debtor's concerns with the documents requested by the Trustee and accusing the Trustee of holding up the Debtor's “discharge illegally.” Pro Se Letter Requesting Debtor/Trustee Conference, Bankr. No. 15-18450, ECF No. 52. The Court scheduled a status conference in connection with the Debtor's Letter for October 5, 2015. In the meantime, the Debtor failed to attend the Fifth Meeting and the Trustee continued the meeting of creditors again until October 14, 2015 (“Sixth Meeting”).
On October 4, 2015, the Court held a status conference in connection with the Debtor's Letter and attempted to resolve the Debtor's concerns with the Trustee's document requests by reviewing the role of the Trustee in the Debtor's case and confirming that the Trustee was entitled to request the documents that she sought from the Debtor.
The Debtor subsequently attended the Sixth Meeting and the Trustee questioned the Debtor about the MP Franchise and MPC. Tr. of Hr'g Apr. 13, 2016, 49:23-50:16, ECF No. 85. The Trustee concluded that the Debtor owned the MP Franchise as well as a 33% membership interest in MPC based on: (1) certain royalty statements between MPC and Minuteman Press International, Inc. (“MPI”); and (2) the Debtor's testimony given to Dershaw during the Baystone meeting of creditors. Id. at 13:7-21. The Debtor, however, characterized the Trustee's questions as irrelevant; asserted that she was unauthorized to ask them; refused to answer her questions; and denied ownership of MPC. Id. at 51:1-8. The Trustee also requested that the Debtor identify other individuals associated with MPC, but the Debtor refused to do so. Tr. of Hr'g May 4, 2016, 50:15-17, ECF No. 86. He also refused to provide his father's and brother's addresses, individuals whom he previously indicated were associated with MPC. Id. at 50:21-24. The Debtor did testify, however, that he was MPC's agent and manager, paid its bills, and had access to its bank accounts. Tr. of Hr'g Apr. 13, 2016, 50:4-16.
During the meeting, the Trustee explained to the Debtor that he had the right to decline to answer questions under the Fifth Amendment and asked him if he wanted to exercise such rights. Tr. of Hr'g May 4, 2016, 89:9-16. The Debtor declined. Id. Instead, he directed the Trustee to contact his attorney, but refused to provide the name of his attorney to her. Tr. of Hr'g Apr. 13, 2016, 11:23-12:2.
Finally, the Debtor denied that he owned a vehicle, but refused to describe his primary means of transportation or how he had traveled to the Sixth Meeting. Id. at 56:25-57:4. After the Sixth Meeting, however, the Trustee observed the Debtor drive away in what appeared to be a Range Rover, which the Debtor later denied. Id. at 43:2-3, 57:5-8.
Based upon the foregoing, the Trustee adjourned the meeting of creditors again to November 19, 2015 (“Seventh Meeting”). He also requested that the Debtor bring the following documents to the Seventh Meeting:
a copy of the bill of sale from the sale of the Minuteman Press stock or Franchise, copy of deed to his real property, addresses of father and brother, name and contact number for attorney for Minuteman Press Conshohocken LLC, copy of Franchise agreement with Minuteman Press when the Franchise was purchased by the debtor or his entities, [ ]all tax returns from 2010 to date filed by the debtor or any entity owned by him, and any franchise agreement entered into with Minuteman Press LLC.
Continuance, Bankr. No. 14–18353, ECF No. 56.
On October 19, 2015, the United States Trustee (“UST”) filed a motion to dismiss the Debtor's 2014 Bankruptcy (“First Motion to Dismiss”), based upon the Debtor's failure to provide the documents requested by the Trustee and the Debtor's “evasive, obstructionist and unresponsive” testimony at the various meetings of creditors. Mot. to Dismiss Pursuant to 11 U.S.C. § 707(a)
¶¶ 12-13, Bankr. No. 14–18353, ECF No. 57. On November 9, 2015, the UST filed an Amended Motion to Dismiss (“Amended Motion”) and argued that, in addition to the reasons listed in the First Motion to Dismiss, the 2014 Bankruptcy should be dismissed because the Debtor failed to obtain credit counseling within the 180 days prior to the 2014 Bankruptcy as required under § 109(h)(1). Am. Mot. to Dismiss Pursuant to 11 U.S.C. § 707(a) ¶¶ 6–7, Bankr. No. 14–18353, ECF No. 71. The Court held a hearing on the Amended Motion on November 18, 2015, and ultimately entered an order dismissing the 2014 Bankruptcy because the Debtor failed to obtain timely credit counseling as required under § 109(h)(1).
The Debtor commenced this Chapter 7 bankruptcy case pro se on November 24, 2015 (“2015 Bankruptcy”). Christine C. Shubert was again appointed as the Trustee in the case. The Debtor attached to his bankruptcy petition a copy of the Debtor Bill of Sale, which he first mentioned to Dershaw at Baystone's meeting of creditors. The Debtor Bill of Sale purports to convey substantially all of the assets of a Minuteman Press Full Service Printing Center in Conshohocken and “[t]he name MINUTEMAN PRESS OF CONSHOHOCKEN and all variations thereof and trade names associated therewith” from the McAnallys to the Debtor in May 2009.1 Voluntary Petition Ex. 1, ECF No. 1.
The Debtor also attached to his bankruptcy petition another, almost identical bill of sale, dated December 29, 2009, which was never presented to Dershaw during the Baystone meeting of creditors. This bill of sale also purported to convey substantially all of the assets of a “marketing services and printing business” in Conshohocken and “[t]he name MINUTEMAN PRESS OF CONSHOHOCKEN and all variations thereof and trade names associated therewith,” from Baystone to MPC (“MPC Bill of Sale”). Id. Ex. 2. Based upon the MPC Bill of Sale, the Debtor now took the position that the MP Franchise was originally owned by Baystone, not the Debtor, and subsequently transferred to MPC. Mot. to Extend Time ¶ 8. As discussed above, this new position was completely inconsistent with the...
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In re Iredia, CIVIL ACTION NO. 16-5228
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