In re McCoy
| Decision Date | 23 October 1991 |
| Docket Number | Bankruptcy No. 2-90-08313. |
| Citation | 139 BR 430 |
| Parties | In re Glenda Sue McCOY, Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
Samuel L. Calig, Columbus, Ohio, for debtor.
Robert M. Storey, Columbus, Ohio, Chapter 7 Trustee.
Charles M. Caldwell, Office of the U.S. Trustee, Columbus, Ohio.
This matter is before the Court on a motion filed by Robert M. Storey ("Trustee") seeking to reopen this bankruptcy case.
The Court has jurisdiction in this matter under 28 U.S.C. § 1334(b) and the General Order of Reference entered in this district. This is a core proceeding which this bankruptcy judge may hear and determine under 28 U.S.C. § 157(b)(2)(A).
Debtor Glenda Sue McCoy filed a petition under Chapter 7 of the Bankruptcy Code on December 12, 1990. With that petition she submitted the schedules of assets and liabilities required by 11 U.S.C. § 521(1), but failed to include in those schedules her entitlement to a tax refund for 1990. At the meeting of creditors held January 19, 1991 the Trustee questioned the debtor concerning her potential entitlement to a tax refund. At that time the debtor indicated that she would be entitled to a refund of less than $500.
On January 29, 1991, the Trustee filed a no asset report with the Clerk of the Bankruptcy Court. Before that report was approved and the case closed, however, H & R Block notified the debtor that she was entitled to a tax refund in the amount of $2,090. On April 3, 1991, the debtor, unsolicited, sent a copy of her tax return to the Trustee. The Trustee then called the debtor's attorney and requested a turnover of the tax refund, minus exemptions allowable to the debtor under state law. Before that turnover occurred, and unaware of the existence of the refund, on April 26, 1991 the Court routinely approved the Trustee's no asset report and closed the case. Upon that closing, the debtor believed her refund was no longer property of the estate and had been abandoned by the Trustee.
The Trustee now has filed a motion seeking to reopen the case to collect and administer the tax refund. The debtor has objected to that process and argues that she gave no misleading statements to the Court or to her creditors in the petition or at the creditors' meeting, that she fully cooperated with the Trustee, and that under prevailing case law, it would be inappropriate for this case now to be reopened.
The issue for decision is whether the closing of this case acts as an abandonment by the Trustee of the estate's interest in the debtor's tax refund pursuant to 11 U.S.C. § 554.
Section 350(b) of the Bankruptcy Code allows a case to be reopened to permit a trustee to administer assets. However, the case will not be reopened for that purpose if the asset has been previously abandoned. Although 11 U.S.C. § 554(c) deems an asset to be abandoned upon the closing of a case, there are certain statutory and case law exceptions to that rule.
11 U.S.C. § 554 provides in pertinent part:
The language of subsection (c) deems abandoned to the debtor any scheduled asset of the estate that remains unadministered at the close of the case. Any asset concealed from the trustee or not scheduled by the debtor, however, will not be deemed to have been abandoned. In re Sutton, 10 B.R. 737 (Bankr.E.D.Va.1981). The word "scheduled" in § 554(c) has a specific meaning and refers only to assets listed in a debtor's schedule of assets and liabilities. In re Fossey, 119 B.R. 268 (Bankr.D.Utah 1990).
The circumstances in the present case suggest that the tax refund was not deemed abandoned under § 554(c) upon the closing of the case. The debtor failed to include the tax refund in her schedule of assets. Even more significant in this regard is the fact that she did not include the tax refund when she amended her schedules. Even though she clearly brought the asset to the Trustee's attention, case law consistently holds that assets must be explicitly identified in the schedule before a deemed abandonment can occur. See, In re Harris, 32 B.R. 125 (Bankr.S.D.Fla. 1983); In re Bryson, 53 B.R. 3 (Bankr. M.D.Tenn.1985); In re Schmid, 54 B.R. 78 (Bankr.D.Or.1985). Since the potential tax refund was not listed in the debtor's schedules, no deemed abandonment of that refund has occurred. The refund remains as an unadministered asset which is property of the estate under 11 U.S.C. § 554(d). In re Medley, 29 B.R. 84 (Bankr.M.D.Tenn. 1983). Accordingly, this case will be opened to allow the Trustee to administer the tax refund.
It is uncontested that the Trustee knew of the tax refund before the case was closed. The debtor argues that such knowledge relieves her from having to meet the scheduling requirement. The language of § 554(c) is plain and unambiguous, however, and...
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