In re Lufkin

• Citation: 393 B.R. 585
• Decision Date: 17 July 2008
• Docket Number: Adversary No. 01-3059.,Bankruptcy No. 00-32361.
• Parties: In re David A. LUFKIN a/k/a David A. Lufkin, Attorney, Debtor. William T. Hendon, Trustee, Plaintiff, v. David A. Lufkin, Defendant.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee

393 B.R. 585

In re David A. LUFKIN a/k/a David A. Lufkin, Attorney, Debtor.

William T. Hendon, Trustee, Plaintiff, v. David A. Lufkin, Defendant.

Bankruptcy No. 00-32361.

Adversary No. 01-3059.

United States Bankruptcy Court, E.D. Tennessee.

July 17, 2008.

Order Denying Reconsideration August 18, 2008.

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Little & Milligan, PLLC, F. Scott Milligan, Knoxville, TN, for Plaintiff/Trustee.

Law Offices of Mayer & Newton, John P. Newton, Jr., Richard M. Mayer, Knoxville, TN, for Defendant/Debtor.

MEMORANDUM ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

RICHARD STAIR, JR., Bankruptcy Judge.

This adversary proceeding is before the court upon the Complaint filed by the Plaintiff, William T. Hendon, Chapter 7 Trustee, on April 27, 2001, as amended on June 29, 2001, objecting to the Defendant's/Debtor's discharge under 11 U.S.C.A. § 727(a)(2)(A), (3), (4)(D), and/or (5) (West 2004). Due to state court criminal proceedings pending against the Defendant, these proceedings were stayed pursuant to an Agreed Order entered on September 5, 2001, and fourteen subsequent orders extending the deadline for the Defendant to file an answer. Finally, on September 6, 2007, the court held a scheduling conference which resulted in the issuance of a Pretrial Order setting a trial date for April 28, 2008, and directing, inter alia, that the Defendant file his answer by September 21, 2007, and that dispositive motions be filed by February 7, 2008. Through various orders modifying the Pretrial Order, the trial has been rescheduled for September 29, 2008, the Defendant's answer date was extended through October 1, 2007, and the deadline for filing dispositive motions was extended through March 20, 2008. On November 5, 2007, the Defendant filed the Defendants [sic] Answer to Amended Complaint (Answer), primarily asserting his Fifth Amendment rights.

On March 14, 2008, the Plaintiff filed the Plaintiff's Motion for Partial Summary Judgment (Motion for Partial Summary Judgment), a Memorandum in Support of Plaintiff's Motion for Partial Summary Judgment, and the Plaintiff's Statement of Undisputed Material Facts (Statement of Undisputed Material Facts), as required by E.D. Tenn. LBR 7056-1. The following exhibits are incorporated into and made a part of the Statement of Undisputed Material Facts: (1) the Amended Complaint; (2) the Answer; (3) the February 6, 2008 Affidavit of Mary Katherine Trowbridge; (4) a Transcript of Proceedings dated December 7, 1999, in Case No. 27339(L), styled Assetcare, Inc. v. Lufkin, et al., pending in the Chancery Court for Sullivan County, Tennessee; (5) the February 20, 2008 Affidavit of Brent Semple; (6) the March 4, 2008 Affidavit of Suzanne Mechlem; (7) the February 12, 2008 Affidavit of William T. Hendon, Trustee; (8) the Defendant's Statement of Financial Affairs, Summary of Schedules, Schedule B—Personal Property, and Declaration Concerning Debtor's Schedules filed on August 11, 2000; (9) a transcript of the Deposition of David A. Lufkin, Sr., taken on January 11, 2008; and (10) a Stipulation Regarding Testimony of Lori Lufkin dated February 4, 2008, signed by Plaintiff's counsel and counsel for Lori Lufkin.

On May 9, 2008, the Defendant filed the Defendant's Response to Motion for Partial Summary Judgment (Response to Motion for Partial Summary Judgment), incorporating therein the Defendant's Statement of Undisputed Facts, setting forth eight additional material facts he contends are undisputed.¹ He also filed on the same date, the Defendant's Response to Plaintiff's Statement of Undisputed Material Facts (Response to Statement of Undisputed Material Facts),² incorporating two excerpts from the Deposition of Mary Trowbridge.

This is a core proceeding. 28 U.S.C. § 157(b)(2)(J) (2005).

I

An Involuntary Petition was filed against the Defendant under Chapter 7 on June 14, 2000, and the court entered the Order for Relief on July 13, 2000.³ STMT. OF MAT. UNDISP. FACTS ¶ 1. The Plaintiff was appointed Chapter 7 Trustee at that time and continues to serve in that capacity. STMT. OF MAT. UNDISP. FACTS ¶ 1.

Prior to the filing of the Involuntary Petition and the surrender of his law license in December 1999, the Defendant engaged in the practice of law in the State of Tennessee, operating law practices under the names of David A. Lufkin, David A. Lufkin, Attorney, David A. Lufkin, P.C., and Lufkin, Henley & Conner, PLLC. Ex. 1 at ¶ 4; Ex. 2 at ¶ 4. On December 17, 1999, the Chancery Court for Knox County, Tennessee, named Larry Giordano, Esquire, as receiver for the Defendant. DEF.'S STMT. OF UNDISP. FACTS ¶ 2. Thereafter, on January 5, 2000, Robert M. Bailey, Esquire, was appointed as receiver for David A. Lufkin, David A. Lufkin, P.C., and Lufkin, Henley & Conner, PLLC. DEF.'S STMT. OF UNDISP. FACTS ¶ 2.

On August 11, 2000, the Defendant's statements and schedules were filed. COLL. EX. 8. The Defendant did not personally sign the statements and schedules; instead, the Statement of Financial Affairs and Declaration Concerning Debtor's Schedules were signed in the Debtor's name by the Debtor's wife, Lori A. Lufkin, under the authority of a power of attorney. Ex. 7 at ¶ 4; COLL. EX. 8. At the initial meeting of creditors held on September 19, 2000, and at the subsequent continuations, the Defendant asserted his Fifth Amendment rights against self-incrimination and did not testify or voluntarily provide to the Plaintiff any personal records regarding his financial information. Ex. 7 at ¶ 5.

The Plaintiff filed the Complaint initiating this adversary proceeding on April 27, 2001, which was superseded by an Amended Complaint filed on June 29, 2001, objecting to the Defendant's discharge on grounds that the Defendant: (1) intentionally and with the intent to defraud creditors transferred, concealed, removed, embezzled and/or dissipated client funds in his possession; (2) falsified and concealed information concerning his client accounts; (3) misappropriated and converted client funds in his possession; (4) improperly used business monies to pay personal expenses; (5) fraudulently transferred funds with the intent to hinder, delay, or defraud his creditors; and (6) failed to provide the Plaintiff with any personal or business records concerning real property, transfers of property, assets, tax information, and/or financial information.

The Defendant filed his Answer on November 7, 2007, admitting only the jurisdictional statement, his address for the purposes of service of process, that he was in bankruptcy due to the Involuntary Petition, that the Plaintiff was appointed as Trustee in his case, that he supplied information to the Plaintiff concerning life and/or disability insurance policies that are exempt under the Bankruptcy Code, and that he had engaged in the practice of law prior to giving up his law license in December 1999. He expressly denied that the Plaintiff had stated a cause of action against which relief could be granted pursuant to § 727(a)(2)(A), (3), (4)(D), and/or (5). With respect to the remaining allegations in the Amended Complaint, the Defendant asserted his Fifth Amendment rights.

In his Motion for Partial Summary Judgment filed on March 14, 2008, the Plaintiff asks the court to find that the Defendant should be denied his discharge under § 727(a)(3) and/or (5) and requests a summary judgment on those grounds. The Defendant, in his Response to Motion for Partial Summary Judgment filed on May 9, 2008, argues that there are genuine issues of material fact and that partial summary judgment is not appropriate.

II

Summary judgment is granted "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(c) (applicable in adversary proceedings pursuant to Rule 7056 of the Federal Rules of Bankruptcy Procedure). When deciding a motion for summary judgment, the court does not weigh the evidence to determine the truth of the matter asserted, but instead, simply determines whether a genuine issue for trial exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of proving that there are no genuine issues of material fact, thus entitling it to judgment as a matter of law. Owens Corning v. Nat'l Union Fire Ins. Co., 257 F.3d 484, 491 (6th Cir.2001). The burden then shifts to the nonmoving party to produce specific facts showing a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citing FED. R. CIV. P. 56(e)). The nonmoving party must cite specific evidence and may not merely rely upon allegations contained in the pleadings. Harris v. Gen. Motors Corp., 201 F.3d 800, 802 (6th Cir. 2000). The facts and all resulting inferences are viewed in a light most favorable to the non-moving party, Matsushita, 106 S.Ct. at 1356, and the court will decide whether "the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 106 S.Ct. at 2512. "[O]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 106 S.Ct. at 2510.

Having reviewed the Motion for Partial Summary Judgment, all documents filed in connection therewith, and the record as a whole, the court finds that genuine issues of material fact exist with respect to § 727(a)(3) and that the Plaintiff's Motion for Partial Summary Judgment on this ground must be denied. The Plaintiff is, however, entitled to summary judgment sustaining his objection to discharge grounded on § 727(a)...