In re Jackson, 16-12666-j7
| Decision Date | 10 May 2019 |
| Docket Number | No. 16-12666-j7,16-12666-j7 |
| Parties | In re: DAVID WAYNE JACKSON, Debtor. |
| Court | U.S. Bankruptcy Court — District of New Mexico |
THIS MATTER is before the Court on the Chapter 7 Trustee's Application for Compensation ("Fee Application"). See Docket No. 112. Debtor, David Wayne Jackson, pro se,1 (hereinafter, Mr. Jackson) objected to the Fee Application, asserting that the Chapter 7 Trustee should not be awarded any compensation because of his alleged mishandling of the estate. See Docket No. 115. The Court held a final, evidentiary hearing on the Fee Application on March 18, 2019 and took the matter under advisement. After careful consideration of the Fee Application and the evidence presented at the final hearing, and being otherwise sufficiently informed, the Court finds that the Fee Application should be granted.
Mr. Jackson is a 73 year old black man. He will tun 74 this year. He is a four-year veteran of the armed forces and served in Vietnam. While in the Air Force, Mr. Jackson served as a weapons and nuclear weapons loader, with a top secret security clearance. Since 1984, Mr. Jackson has lived in Clovis. He attended Eastern New Mexico University in Portales, New Mexico. In 1997, he earned a master's degree in psychology and counseling. Mr. Jackson opened a group home called New Vision Group Home and Shelter in 2003 and served as its clinical director and as a therapist until the home was closed in March of 2017. New Vision GroupHome, a New Mexico General Partnership a/k/a New Vision Group Home and Shelter ("New Vision") filed a Chapter 11 bankruptcy case on September 13, 2016 as Case No. 16-12286-j11.3 New Vision did not pay all required gross receipts taxes. At the time, Mr. Jackson believed his partner in New Vision had been paying the gross receipts taxes. Mr. Jackson is personally liable for the unpaid gross receipts taxes.
Mr. Jackson filed a voluntary petition under Chapter 7 of the Bankruptcy Code on October 28, 2016. See Docket No. 1. Mr. Jackson was then represented by bankruptcy counsel. Id. Clarke C. Coll ("Chapter 7 Trustee") was appointed Chapter 7 trustee. See Docket No. 6. Mr. Jackson was granted a discharge on February 21, 2017. See Docket No. 20.
Mr. Jackson scheduled the following real property in his bankruptcy schedules:
2831 Gerry Place, Las Vegas, Nevada (the "Las Vegas Property");4
3209 Mandell Circle, Clovis, New Mexico ("Residence");
3205 Mandell, Clovis, New Mexico ("Rental Property A");
3204 Mandell, Clovis, New Mexico ("Rental Property B"); and
See Docket No. 11. The value of the Las Vegas Property in Schedule A/B is listed as $120,000. Id. Mr. Jackson testified that he really did not think much about the value of the Las Vegas Property disclosed in his bankruptcy schedules because he did not think he would lose the Las Vegas Property as a result of his bankruptcy. As of the petition date, Mr. Jackson's daughterlived in the Las Vegas Property; she did not pay rent. Mr. Jackson scheduled a debt to the State of New Mexico Taxation and Revenue Department ("NMTRD") for unpaid gross receipts taxes in the amount of $734,889.55. Id.
Mr. Jackson attended the meeting of creditors conducted in his bankruptcy case in Roswell, New Mexico. Mr. Jackson testified at the hearing on the Fee Application that he felt that the Chapter 7 Trustee was disrespectful to him in the way he asked Mr. Jackson questions at the meeting of creditors. An audio recording of the meeting of creditors was played into the record at the final hearing on the Fee Application. At the meeting of creditors, the Chapter 7 Trustee questioned Mr. Jackson about his assets listed on his schedules. When Mr. Jackson testified at the meeting of creditors that he gambled and has had gambling losses, the Chapter 7 Trustee commented that if Mr. Jackson stopped gambling he might be able to pay some debts back. The audio recording of the meeting of creditors does not support Mr. Jackson's contention that the Chapter 7 Trustee was disrespectful toward Mr. Jackson, or treated Mr. Jackson differently from other debtors because of his race.
The Chapter 7 Trustee has been on the panel of chapter 7 trustees since 2003 and has served as trustee in thousands of bankruptcy cases since that time. Chapter 7 panel trustees work under the umbrella of the United States Trustee's Office. The Chapter 7 Trustee treated Mr. Jackson fairly and with the same care and consideration he gives to all debtors whose bankruptcy estates he is appointed to administer. Chapter 7 trustees routinely question debtors about possible gambling and gambling losses, and if there is a concern about some issue relating to gambling the United States Trustee may investigate further. There is no evidence that would support afinding that the Chapter 7 Trustee mistreated Mr. Jackson or otherwise discriminated against Mr. Jackson because of his race.
In March of 2017, the Chapter 7 Trustee determined that there were bankruptcy estate assets to be administered in Mr. Jackson's Chapter 7 case. See Trustee's Report of Assets - docket entry on March 29, 2017. He performed tax lien searches to determine whether any of the real property listed in Mr. Jackson's Schedule A/B was encumbered. He determined that the Las Vegas Property was the estate's primary, unencumbered asset. Mr. Jackson's other significant assets were his Residence, Rental Property A, and Rental Property B (together, the "Mandell Properties"). Each of those properties has approximately $10,000 to $12,000 in equity, but because tax liens encumbered those properties, the Chapter 7 Trustee ultimately determined that the sale of those assets would not yield a sufficient benefit to creditors to justify selling the properties.
The Chapter 7 Trustee retained counsel to represent him in the bankruptcy case on May 30, 2017. See Docket No. 27. Mr. Jackson has only spoken to the Chapter 7 Trustee two times: at the meeting of creditors and at the final hearing on the Fee Application. Communications with Mr. Jackson during the administration of the bankruptcy estate were conducted through the Chapter 7 Trustee's counsel.
It took some time for the Chapter 7 Trustee to determine whether to sell the Mandell Properties. The Chapter 7 Trustee filed an application to employ Town & Country Real Estate, Inc. to market and sell the Mandell Properties in June of 2017. See Docket No. 34. Issues arose concerning the accounting of the rents received from Rental Property B. Coordinating a time for the broker to view the interior of the Mandell Properties also took some effort. In addition, theChapter 7 Trustee attempted to negotiate a carve out agreement with the Internal Revenue Service with respect to the tax liens on Rental Property B that would provide a benefit to creditors other than the taxing authorities.
In July of 2017, the Chapter 7 Trustee filed a motion to compel Mr. Jackson to turnover or surrender the Las Vegas Property and the Mandell Properties, and to turnover rental proceeds. See Chapter 7 Trustee's Motion to Compel Turnover or Surrender of Real Properties and Rental Proceeds ("Motion for Turnover") - Docket No. 32. The Motion for Turnover did not get resolved until December of 2017. See Stipulation Resolving Trustee's Motion for Turnover or Surrender of Real Properties and Rental Proceeds ("Stipulation") - Docket No. 72. Ultimately Mr. Jackson turned over $750 in pre-petition rental proceeds from Rental Property A and/or Property B to the estate. The Chapter 7 Trustee agreed not to seek turnover of the Residence and did not sell the Residence, and determined not to sell Rental Property A or Rental Property B because the value of the properties did not justify the expense of administering those assets.
The Chapter 7 Trustee filed two adversary proceedings in connection with Mr. Jackson's bankruptcy case: 1) Complaint seeking turnover of the Las Vegas Property - Adversary Proceeding No. 17-1049 J ("Adversary Proceeding No. 1") filed June 28, 2017; and 2) Chapter 7 Trustee's Complaint for Revocation of Discharge - Adversary Proceeding No. 17-1063 J ("Adversary Proceeding No. 2") filed August 8, 2017. Adversary No. 1 resulted in the entry of a default judgment on August 15, 2017 against Trentina Jackson, Mr. Jackson's daughter who resided in the Las Vegas Property. See Adversary No. 1 - Docket No. 15. The Default Judgment ordered Trentina Jackson to turnover the Las Vegas Property to the Chapter 7 Trustee within ten days of the date of entry of the Default Judgment. Id.
In Adversary Proceeding No. 2, the Trustee sought to revoke Mr. Jackson's discharge based on his failure to turnover rental proceeds from the Rental Property A and Rental Property B, and based on an allegation that Mr. Jackson failed to schedule real property located at 3501 Corlington, Clovis, New Mexico (the "Corlington Property") on his schedules. See Adversary Proceeding No. 2 - Docket No. 1. The Corlington Property was identified in the Certification/Statement Regarding Marital Status as the address of Opal Jackson, Mr. Jackson's non-filing spouse. See Docket No. 7. In addition, the Chapter 7 Trustee learned from a search of the Curry County Assessor's records that the Corlington Property was owned by a person named David Jackson.
Counsel for the Chapter 7 Trustee contacted Mr. Jackson's bankruptcy counsel to inquire about the Corlington Property and requested that Mr. Jackson amend his schedules to list the Corlington Property. See Exhibit 11. There is no evidence that any explanation of the ownership of the Corlington Property was provided to counsel for the Chapter 7 Trustee before the Chapter 7 Trustee filed Adversary Proceeding No. 2. Ultimately, upon further investigation, the Chapter 7 Trustee confirmed that Mr. Jackson does not own the Corlington...
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