In re Norris, Bankruptcy No. 95BK-30087-A7.
| Citation | 183 BR 437 |
| Decision Date | 15 June 1995 |
| Docket Number | Bankruptcy No. 95BK-30087-A7. |
| Parties | In re James A. NORRIS, Jr., Debtor. |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Western District of Louisiana |
COPYRIGHT MATERIAL OMITTED
John C. Anderson, Baton Rouge, LA, for debtor.
Bernard S. Johnson, Shreveport, LA, for petitioning creditors.
Stephen Katz, Bastrop, LA, for Trustee Billy Vining.
REASONS FOR DECISION
These matters came on for trial on May 11, 1995, on the: 1) Involuntary Petition filed by the law firm of Johnson & Placke, Don H. Johnson, and Allan L. Placke, and 2) the Trustee's Motion for Turnover. This is a Core Proceeding pursuant to 28 U.S.C. § 157(b)(2). This Court has jurisdiction pursuant to 28 U.S.C. § 1334 and by virtue of the reference by the District Court pursuant to Local District Court Rule 22.01 incorporated into Local Bankruptcy Rule 1.2. No party at interest has sought to withdraw the reference to this Court, nor has the District Court done so on its own motion. This Court makes the following findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. Pursuant to these reasons, an Order for Relief will be entered on the Involuntary Petition pursuant to 11 U.S.C. § 303 and Federal Rule of Bankruptcy Procedure 1013. Further, the Trustee's Motion for Turnover will be granted pursuant to 11 U.S.C. § 542.
James A. Norris, Jr., is an attorney practicing in West Monroe, Louisiana. Formerly, he served as the District Attorney for Ouachita and Morehouse Parishes. Norris was also a member of the law firm Norris, Johnson, Placke & Foley in West Monroe, Louisiana. Foley withdrew from the firm on December 31, 1986. On June 16, 1989, without prior notification to his partners, Norris apparently withdrew $525,977.81 of the partnership funds on deposit at various banking institutions. Shortly afterwards, Johnson and Placke filed a lawsuit for an accounting, restoration of funds unilaterally paid on partnership debts, depleting the firm's capital, and for damages. This suit was filed in the Fourth Judicial District Court, Ouachita Parish, Louisiana. Norris subsequently filed an answer and reconventional demand. Norris also sought dismissal of the plaintiffs' demands and partition of immovables allegedly owned by the individual partners and their wives. Plaintiffs filed a motion for summary judgment and sought dismissal of the partition demand and cancellation of a notice of lis pendens filed by Norris.
The trial court granted the motion. On appeal, the summary judgment was affirmed. Johnson & Placke v. James A. Norris, Jr., 571 So.2d 702 (La.App.2d Cir.1990), writ denied, 573 So.2d 1142 (La.1991). Ultimately, the matter proceeded to trial in the state court. On September 30, 1994, written reasons for decision were filed whereby the plaintiffs obtained a judgment against Norris for $525,977.81 together with the legal rate of interest from June 16, 1989, until paid. The judgment was subject to a credit in the amount of $144,462.33, together with interest thereon from July 1, 1989.
Judgment was further rendered in favor of Johnson & Placke for $57,923.40 plus interest at the legal rate from August 31, 1989. In addition, judgment was rendered in favor of Don H. Johnson and Allan L. Placke each for $30,000.00 plus legal interest from August 31, 1989. The court also assessed Norris with the costs, including expert witness fees. The judgment was signed on October 6, 1995. In its rendition, the state court stated that "the actions and maneuvers undertaken by Norris to maximize his financial position to the exclusion of his law partners, were clearly deliberate and clandestine." Written Reasons for Judgment, p. 24, September 30, 1994. A devolutive appeal followed to the Second Circuit Court of Appeal, but Norris did not suspensively appeal the judgment. Thus, it became final for purposes of execution.
The successful plaintiffs filed this involuntary petition on January 31, 1995. The United States Trustee was directed to appoint an interim trustee by order of this Court dated February 8, 1995. Mr. Billy Vining was appointed on that date. On February 22, 1995, Norris filed a "Motion to Dismiss and/or Abstain." Alternatively, Norris requested this Court to suspend further proceedings until the appellate process was concluded. Norris further sought to have a bond posted to indemnify him should this petition be dismissed.
A hearing was held on the Motion to Dismiss on April 5, 1995, whereby the motion was denied. All other relief sought by Norris was deferred to the trial on the involuntary petition. The Court sua sponte lifted the automatic stay to permit the prosecution of the appeal, including the answer to the appeal filed by the petitioning creditors. However, the Court prohibited the enforcement of the judgment pending further orders. On April 24, 1995, Norris filed an answer to the involuntary petition.
On April 27, 1995, the Trustee filed a Motion for Turnover directing Norris to turnover "cash in the amount of $490,000 to $500,000 in one hundred dollar bills of the currency of the United States of America, as property of the bankruptcy estate. . . ." An expedited hearing was set for the same date as the trial on the involuntary petition. With the consent of the parties, the trial on the Involuntary Petition and the Trustee's Motion for Turnover were consolidated for evidentiary purposes. The trial was conducted on May 11, 1995.
Norris had apparently enjoyed some success in his private practice as well as his election to public office. In fact, he testified that he earned approximately $100,000.00 to $200,000.00 annually. Before the above-mentioned events transpired, Norris also possessed substantial immovables and movables with virtually no debt or encumbrances on such property. However, prior to the entry of the state court judgment, Norris began to borrow heavily from his relatives and one commercial lender thereby encumbering most, if not all, of his known assets.
More specifically, on January 25, 1994, Norris and his wife borrowed approximately $150,000.00 from a commercial lender. In exchange, Norris and his wife granted a mortgage on their home, which was previously unencumbered. Exhibit P-1. Although the documents exhibit that the mortgagee/lender was Louisiana Bank of Ouachita Parish, Louisiana, Norris testified that the mortgage was held by Deposit Guaranty. This note, which totals $150,000.00 plus interest, was due in monthly installments with the final payment due February 1, 2009.
Later, on January 31, 1994, Norris and his wife executed a collateral mortgage affecting various immovable property, timber, and mineral interests located in Lincoln, Union, Sabine, and Vernon Parishes, Louisiana, as security for a bearer note in the amount of $400,000.00. Exhibit P-2. This note was payable on demand with a stated interest rate of twelve (12) percent. On the same date, by a "Possessory Collateral Security Agreement," Norris and his wife executed a Collateral Mortgage Note in the amount of $200,000.00 and a Promissory Note in the amount of $60,000.00. The holder of both notes was Norris' cousin, John Graham Norris, Jr. Exhibits P-5, P-6, and P-7. The $60,000.00 note reflects "interest at a variable rate, beginning with four percent (4%) per annum and to change from time to time to be equal to the interest rate payable by Louisiana Bank of Ouachita Parish on 6 months certificates of deposit." Payments "shall be imputed first to payment of interest and thereafter to principal." No payment date was stated in the document. The Collateral Mortgage Note bears a twelve (12) percent interest rate.
On February 4, 1994, another collateral mortgage was executed by Norris and his wife affecting immovable property, farm products, and mineral interests in Ouachita Parish, Louisiana. Exhibit P-3. This mortgage secured another demand note in the amount of $350,000.00, at twelve (12) percent interest, made payable to bearer. On October 7, 1994, Norris and his wife executed yet another collateral mortgage to secure a demand note for $100,000.00, affecting the same property described in the February 4, 1994, collateral mortgage. See Exhibit P-3. This was also payable to bearer at twelve (12) percent interest. Exhibit P-4.1
In early 1994, Norris acknowledged borrowing $145,000.00 from Louisiana Bank/Deposit Guaranty, $300,000.00 from his mother, and $60,000.00 from his cousin, John Graham Norris, Jr. These loan proceeds were deposited into an account at Louisiana National Bank. Later, Norris withdrew the entirety of the funds, converted them into currency, and placed them in a safe-deposit box. Norris explained that he wanted to renovate his home. He also testified that he needed the funds available to post a cash bond if the pending state court lawsuit was decided adversely to him.2 From February to October 1994, the funds sat idle in the safe-deposit box at Louisiana National Bank earning no interest. The renovations were not commenced until the fall of 1994, after the trial court filed its reasons for decision. Norris maintained that approximately $5,000.00 to $10,000.00 of the currency was then "taken out" and expended on "different things." Norris described these expenditures as "living expenses." Norris explained that his wife normally maintained the checkbooks, but he carried and spent cash. However, he could not recall a specific purchase from these funds. Moreover, Norris produced no records regarding these transactions.
On or about October 1, 1994, after the state court reasons were filed, Norris testified he went to the bank around noon, removed all of the remaining currency in the safe-deposit box, and placed it in his briefcase. Norris recalled no other destinations that date. However, if he had stopped, it would have been at his "office or the grocery store." Aft...
To continue reading
Request your trial
-
MARIETTA RADIO PROP. v. Tschudy Communications Corp., Civ. A. No. 95-00052-H.
... ... Bankruptcy Court for the Western District of Virginia, Harrisonburg Division, Judge Ross H. Krumm, granting ... ...