In re Lane
| Decision Date | 27 January 1993 |
| Docket Number | Bankruptcy No. 191-17010-260,Adv. No. 192-1025. |
| Citation | 149 BR 760 |
| Parties | In re: Fred LANE, Jr., Debtor. Stuart M. BERNSTEIN, Chapter 7 Trustee of the Estate of Fred Lane, Jr., Plaintiff, v. GREENPOINT SAVINGS BANK, Manufacturers Hanover Trust Company and Glen Head First National Bank, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
Kensington & Ressler, P.C., by Wendy Kaufman Goidel, New York City, for trustee.
Cullen & Dykman by John P. McEntee, Brooklyn, NY, for Greenpoint Sav. Bank and Glen Head First Nat. Bank.
Harold Monyak, Brooklyn, NY, for debtor.
DECISION
This is an adversary proceeding in which Stuart M. Bernstein, Esq., the Chapter 7 Trustee of the estate of Fred Lane, Jr. (the "Trustee"), is the Plaintiff seeking a turnover of funds on deposit in the Greenpoint Savings Bank (Greenpoint), Manufacturers Hanover Trust (MHT), and Glen Head First National Bank (First National), the defendants herein.
This matter came before the Court on the Trustee's motion for summary judgment pursuant to Fed.R.Civ.P. 56, made applicable to bankruptcy proceedings pursuant to Fed.R.Bankr.P. 7056. For the reasons stated below, the Trustee's motion for summary judgment is granted.
On October 25, 1991, Fred Lane, Jr., the debtor, ("Lane" or the "Debtor") a self-employed dentist, filed a petition for relief under Chapter 7 of the Bankruptcy Code. Listed in the schedules of property accompanying his petition are an Individual Retirement Account ("IRA") maintained by him at Greenpoint, a checking account maintained by him at MHT, and two Keogh plan accounts maintained by him, one at Greenpoint (the "Greenpoint Plan") and the other at First National (the "First National Plan"). Initially, the Debtor did not claim the funds on deposit in these accounts as exempt property.
By establishing the Keogh plans, the Debtor agreed that the plans would be bound by the terms of certain documents titled "The First National Bank of Long Island Retirement Plan (For Self Employed Individuals, Partners and Corporations)" and Greenpoint's "Prototype Defined Contribution Plan and Trust for Self-Employeds and Corporations."
Pursuant to both the Greenpoint Plan and the First National Plan, the Debtor's employees are required to receive a contribution for each plan year based on a percentage of their compensation. The Debtor's tax returns for the years 1989, 1990 and 1991 reflect that he paid wages to his employees in the amounts of $34,100, $37,995 and $35,000, respectively. However, the account statements provided by Greenpoint and First National show that the Debtor failed to make any contributions on behalf of his employees during those years. In addition, during a Fed.R.Bankr.P. 2004 examination, the Debtor conceded that he had not made any contributions to the Greenpoint account on behalf of the employees. (Tr. of examination of Fred Lane, Jr. on March 18, 1992 at 27-28). Contributions to the Greenpoint and First National Plans were made solely on his own behalf. Id.
As of December 31, 1991, the amount in the Greenpoint Plan was $110,383.97, and the amount in the First National Plan was $267,242.12. Additionally, the amount in the Greenpoint IRA was $27,556.27.
On January 23, 1992, the Trustee commenced an adversary proceeding against Greenpoint, MHT and First National, alleging that the funds on deposit in the IRA, Keogh and checking accounts constitute property of the Debtor's estate and should be turned over to the Trustee pursuant to § 541 of the Code. Shortly thereafter, MHT turned over the monies on deposit in the Debtor's checking account and the Trustee discontinued the action against it.
On May 19, 1992, the Trustee filed the present motion for summary judgment. On September 14, 1992, this Court granted the Trustee's motion to the extent that the funds on deposit in the Debtor's IRA at Greenpoint constitute property of the estate. Greenpoint was directed to immediately turn over and surrender to the Trustee all of the assets and property of the estate in its possession regarding the IRA. The Court reserved decision on the portion of the Trustee's motion seeking a turnover of funds in the Debtor's purported Keogh plans.
The Trustee argues that, due to the Debtor's failure to make contributions on behalf of his employees, neither the Greenpoint Plan nor the First National Plan constitute qualified trusts as required by § 401 of the United States Internal Revenue Code ("IRC"). Accordingly, the Trustee alleges that the Greenpoint and First National accounts are mere bank accounts masquerading under the name "Keogh" and therefore, the funds on deposit therein must be turned over to the Trustee for distribution to creditors.
A motion for summary judgment is governed by Fed.R.Civ.P. 56, made applicable to bankruptcy proceedings pursuant to Fed.R.Bankr.P. 7056, which provides in pertinent part:
The judgment sought 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 a judgment as a matter of law.
Fed.R.Civ.P. 56. In ruling on a motion for summary judgment, the court's function is to determine whether a genuine issue as to any material fact exists, not to resolve any factual issues. Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 2556, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-52, 106 S.Ct. 2505, 2509-11, 91 L.Ed.2d 202 (1986); Eastman Machine Co. v. United States, 841 F.2d 469 (2d Cir.1988); In re Kenston Management Co., 137 B.R. 100, 108 (Bankr.E.D.N.Y.1992); In re Sapru, 127 B.R. 306, 319 (Bankr.E.D.N.Y.1991). The court must deny summary judgment where there is a genuine issue as to any material fact, and grant summary judgment where there is no such issue and the movant is entitled to judgment as a matter of substantive law. Anderson, 477 U.S. at 247-52, 106 S.Ct. at 2506-11; Hamilton v. Smith, 773 F.2d 461, 466 (2d Cir.1985); In re Katz, 146 B.R. 617, 619 (Bankr.E.D.N.Y. 1992); In re American Motor Club, Inc., 143 B.R. 590, 596 (Bankr.E.D.N.Y.1992).
The movant bears the burden of proving the absence of any genuine issue as to all material facts which entitle him to summary judgment. Sapru, 127 B.R. at 319; In re F & L Plumbing & Heating Co., 114 B.R. 370, 374 (E.D.N.Y.1990). Once this initial burden is met, the opposing party must set forth specific facts showing not only that there is a genuine issue for trial, but also that the disputed fact is material. In re General American Communications Corp., 130 B.R. 136, 152 (S.D.N.Y.1991); F & L Plumbing, 114 B.R. at 374. Therefore, the opposing party may not merely rely upon the contentions of its pleadings, but must produce significant evidence to support its position. General American Communications, 130 B.R. at 152. See also First Nat. Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968), reh. denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968); United States v. Pent-R-Books, Inc., 538 F.2d 519 (2d Cir.1976), cert. denied, 430 U.S. 906, 97 S.Ct. 1175, 51 L.Ed.2d 582 (1977).
In addition, when determining whether there is a genuine issue of material fact, the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), cert. denied, 481 U.S. 1029, 107 S.Ct. 1955, 95 L.Ed.2d 527 (1987). As the Supreme Court in Anderson v. Liberty Lobby, Inc. stated:
The judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other, but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. The mere existence of a scintilla of evidence in support of the plaintiff\'s position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. The judge\'s inquiry, therefore, unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict — "whether there is evidence upon which a jury can properly proceed to find a verdict for the party producing it. . . ." Improvement Co. v. Munson, 14 Wall. 442, 228 20 L.Ed. 867 (1872).
Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. From the pleadings and supporting memoranda filed in this proceeding, it is this Court's conclusion that there is no genuine issue of material fact.
The filing of a petition in bankruptcy creates an estate consisting of "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). The legislative history of § 541 indicates that this provision was intended to be interpreted in broad scope. United States v. Whiting Pools, Inc., 462 U.S. 198, 204-05, 103 S.Ct. 2309, 2313, 76 L.Ed.2d 515 (1983) (), U.S.Code Cong. and Admin.News 1978, pp. 5787-5868, 6323-24. A debtor's interest in a pension plan constitutes property of the estate unless the interest is excluded or exempted from the estate pursuant to § 541(c)(2) or § 522(b)(1) of the Bankruptcy Code.
Section 541(c)(2) contains an exception for property that is subject to an enforceable restriction on transfer:
A restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable nonbankruptcy law is enforceable in a case under this title....
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