In re Konidaris
| Decision Date | 20 June 1988 |
| Docket Number | Bankruptcy No. 82-05844S. |
| Citation | 87 BR 846 |
| Parties | In re Athanassios KONIDARIS, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
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Richard M. Tiger, Philadelphia, Pa., for claimant.
Lawrence J. Tabas, Philadelphia, Pa., for trustee.
John Snavely, Drexel Hill, Pa., for debtor.
This long-standing dispute over a Proof of Claim filed by one Deborah Mintert (hereinafter referred to as "the Claimant") against the estate of the instant Chapter 7 Debtor raises several provocative issues of both bankruptcy law and state law in a unusual factual setting. We conclude that the Claimant is entitled to claims for wages earned while working in a corporate restaurant of which the Debtor was the principal in the amount of $3,861.12 under 11 U.S.C. §§ 507(a)(1), 503(b)(1)(A) (administrative claim); $2,000.00 under 11 U.S.C. § 507(a)(3) (pre-petition wage claim); and $3,313.04 as an unsecured claim. We also hold that she is entitled to an unsecured claim of $1,000.00 for a loan made to the restaurant evidenced by a note signed by the Debtor.
This bankruptcy case was filed under Chapter 11 of the Bankruptcy Code on December 6, 1982. At the time of the filing, the Debtor was operating a business known as the Onassis Greek Restaurant (hereinafter referred to as "the Onassis") at 1735 Sansom Street, Philadelphia, Pennsylvania. This business was a fictitious name of a corporation formed by the Debtor named, picturesquely for a corporation operating a Greek restaurant, Famous England Pizza and Deli, Inc. (referred to hereinafter as "the Corporation"). The business apparently limped along in Chapter 11 until July, 1983, when it closed its doors. On May 24, 1983, the Commonwealth of Pennsylvania moved for the appointment of a trustee or conversion of the case to Chapter 7. The motion was joined by another creditor, Bank Leumi Le-Israel, on July 12, 1983, about the date of the closing of the business. The Clerk of this court thereafter filed a separate motion to convert the case to Chapter 7 when the Debtor failed to file monthly operating statements. On November 4, 1983, after a hearing at which there was no appearance, the case was converted to Chapter 7, and Harry B. Altenberg was appointed as trustee.
The Debtor was ultimately discharged on August 19, 1986, shortly before our appointment to the bench. However, assets of about $70,000.00 remained in the estate. The trustee thereafter launched several Objections to Proofs of Claims. One claim to which the trustee did not object was that filed by the instant Claimant, pro se, on July 6, 1983, in the amount of $10,000.00 for wages allegedly earned between July, 1981, and July 6, 1983. On July 30, 1987, the Debtor therefore proceeded to file an Objection to this claim, contending that the true sole obligor of the claims in issue was the Corporation and not the individual Debtor.
On October 1, 1987, this matter came before us for a hearing. After about two hours of testimony from the Debtor, the Claimant, and two witnesses on behalf of the latter, we engaged counsel for the opposing parties and the trustee in a discussion regarding the status of administration of the estate. We believed that the status of the assets and claims against the estate could possibly render the significance of classification of the Claimant's claims moot. After this colloquy, we entered an Order of October 2, 1987, directing the trustee to file and serve a status report on or before October 13, 1987, and the parties to thereafter file and serve briefs in support of their respective positions simultaneously on November 2, 1987.
Our hopes for a swift, comprehensive resolution of this matter and administration of this case were not realized. Preparation of the trustee's report was delayed and then, when it was initially filed, its contents were disputed by the Debtor. The final report was not filed until December 1, 1987. It included a statement by the trustee that he intended to file additional Objections to other Proofs of Claim. On December 8, 1987, we ordered that these be filed by December 31, 1987, and heard on February 3, 1988, at which time a briefing schedule to resolve the instant claim would be established.
As it developed, however, due to continuances of the hearings on several of the latter Objections, most notably those of several Commonwealth agencies, they were not all resolved until April 18, 1988. Since it developed that the resolution of these matters did not moot the significance of resolution of the instant claim, we issued a further Order of April 18, 1988, directing the Debtor and the Claimant to file briefs on May 9, 1988, and May 23, 1988, respectively. Unfortunately, the Debtor's counsel claimed to have never received that Order, requiring us to push the briefing process back once again. Finally, as of June 10, 1988, we had in hand briefs of both parties. We do note that many of the numerous pertinent issues are covered superficially or not at all by either of these briefs, despite their lengthy gestation period.
We know of no authority requiring us to follow the generally tedious procedural format of producing specific Findings of Fact and Conclusions of Law in deciding Objections to Proofs of Claims. Compare Bankruptcy Rule 7052 and Federal Rule of Civil Procedure 52(a) (); and In re Campfire Shop, 71 B.R. 521, 524-25 (Bankr.E.D.Pa.1987) (). We therefore are preparing our decision in narrative form.
We begin by making several general observations regarding relative credibility of the witnesses. We found the Debtor generally unreliable in his recitations. Most notably, he initially attempted to dispute the fact that the Claimant was owed any wages at all by either the Onasses, the Corporation, or him personally. His present Brief, conceding a $2,000.00 priority claim and a $6,892.00 unsecured claim, bespeaks to his own present perception of his initial inaccuracy. His explanations of his dealings with the Claimant during the trial were couched in generalities, either due to lack of recollection of the specifics or evasiveness. The Claimant, a college graduate who has been rather dramatically underemployed, was very specific and accurate in her recollections, which were supported by copious documentation, and was therefore generally far more credible than the Debtor. Frances Saunders, one of the Debtor's witnesses, was very clear in her recollections, totally disinterested, and hence entirely credible. The testimony of the Debtor's other witness, her boyfriend, Luciano Cetroni, was superfluous.
The Claimant began her employment at the Onassis as a waitress in January, 1979. The Debtor at all times during the parties' employment relationship and at the hearing identified himself as the owner of the Onassis. Actually, the Onassis was a fictitious name of the Corporation, and hence was owned by it. At one time the Debtor had apparently operated a business in the name of the Corporation in northeast Philadelphia and he continued to use that corporate name and its liquor license in operating the Onassis. In late 1979, Ms. Saunders was hired as the manager of the Onassis.
Although the relationship between the Debtor and the Claimant was apparently strictly one of business, there was a "family" type friendliness between them. Therefore, when the Debtor experienced financial problems in 1981, the Claimant was willing to make two interest-free loans of $1,000.00 each to the Onassis. These were memorialized by two notes, handwritten by Ms. Saunders, and dated June 19, 1981, and July 13, 1981, which read identically as follows:
Received from Miss Deborah Mintert the sum of $1,000.00 for business loan on 6/29/81 7/13/81 for Onassis Restaurant /s/ Athanassios Konidaris /s/ Frances Saunders Onassis /s/ Deborah Mintert
In addition, the loans were memorialized by the following note of July 13, 1981, on Onassis stationery:
To Whom It May Concern Miss Deborah Mintert has given the Onassis Greek Restaurant several loans, one of $1,000.00 dollars on the date of June 29th the second on the date of July 13th for the amount of $1,000.00 dollars. Also Miss Mintert has allowed the restaurant the use of her pay since 6/17/81. To this date she has received no pay. This transaction was strictly a business loan. To keep Onassis operating smoothly /s/ F.N.S. /s/ Athanassios Konidaris /s/ Deborah Mintert
Neither of the parties gave a clear recitation of the supplemental oral statements made by the Debtor to the Claimant at the time of execution of these documents. However, Ms. Saunders testified that the Debtor stated that "he would see to it that you get your money back" and that he "personally guaranteed that you will get your money." It is undisputed that only $1,000.00 has in fact ever been repaid.
Beginning with the week of March 21, 1982, the Claimant agreed to provide further financial assistance to the Onassis. She agreed that payment of her weekly salary of $100.00 gross and $77.84 net, after deductions including withholding taxes which the Onassis presumably paid, could be temporarily and indefinitely suspended. In addition, the Debtor agreed that the Claimant would be compensated an additional weekly sum of $100.00 cash, which would not be reported to the taxing authorities and from which no deductions would be taken, but concerning which payment was likewise suspended. The checks were drawn for the regular salary (that portion of wages from which the deductions were taken), but they were not cashed by the Claimant. The Claimant indicated that she agreed to this arrangement upon the Debtor's assurance that he owned the realty in which the Onassis was situated and that it could be sold at any time to make up the payments missed. The Claimant did, however, continue to...
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