In re De Pasquale

Decision Date28 April 1994
Docket NumberBankruptcy No. 91 B 15011. No. 93 C 4488. Adv. No. 92 A 00855.
Citation166 BR 663
PartiesIn re Frederick DE PASQUALE, Debtor. BANCFLORIDA, Plaintiff, v. Frederick DE PASQUALE, Defendant.
CourtU.S. Bankruptcy Court — Northern District of Illinois

COPYRIGHT MATERIAL OMITTED

David J. Kramer, Yorkville, IL, for debtor/defendant Frederick De Pasquale.

Philip V. Martino, Stephen B. Jackson, Rudnick & Wolfe, Chicago, IL for plaintiff BancFlorida.

MEMORANDUM OPINION

JOHN H. SQUIRES, Bankruptcy Judge.

This matter comes before the Court on BancFlorida's motion for summary judgment on Count III of its complaint against Frederick De Pasquale (the "Debtor") pursuant to Federal Rule of Civil Procedure 56, incorporated by reference in Federal Rule of Bankruptcy Procedure 7056. For the reasons set forth herein, the Court having considered the pleadings, exhibits and affidavits filed, hereby grants the motion for summary judgment on Count III of the complaint.

I. JURISDICTION AND PROCEDURE

The Court has jurisdiction to entertain this motion pursuant to 28 U.S.C. § 1334 and Local General Rule 2.33(A) of the United States District Court for the Northern District of Illinois. This matter constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(I).

II. FACTS AND BACKGROUND

Many of the facts in this matter are not in dispute and are set forth in the Court's prior Memorandum Opinion. See BancFlorida v. De Pasquale, 1993 WL 78219 (Bankr.N.D.Ill. March 1, 1993). In November, 1990, the Debtor purchased a thirty-three foot 1990 Fountain Lighting twin engine boat from the Fort Meyers Beach Marina for the price of $114,370.05. See BancFlorida's General Rule 12(M) Statement, Exhibit B. The Debtor entered into an installment contract and security agreement assigned to BancFlorida to finance the purchase of the boat and engines, borrowed $112,759.16 from BancFlorida, and granted BancFlorida a security interest in the boat and engines. See BancFlorida's General Rule 12(M) Statement, Exhibits C, D and E. In connection with the purchase, the Debtor submitted a personal financial statement to Fort Meyers Beach Marina on September 28, 1990. See BancFlorida's General Rule 12(M) Statement, Exhibit F. Although the Debtor prepared and signed the financial statement in September, 1990, the financial statement listed the Debtor's assets and liabilities as of June 1, 1990. Id. This financial statement was then submitted to BancFlorida by Fort Meyers Beach Marina.

Pursuant to the financial statement, the Debtor represented he had a total net worth of $2,249,640. Id. The assets listed by the Debtor on the financial statement included: (1) IRA accounts valued at $25,000; (2) a living trust valued at $150,000; (3) life insurance valued at $100,000; (4) a home with a market value of $425,000; (5) a Florida lot with a market value of $115,000; (6) furniture and appliances valued at $65,000; (7) a 1989 Cadillac valued at $21,500; (8) a 1989 Corvette valued at $29,350; (9) clothing valued at $5,000; (10) jewelry and tableware valued at $48,000; (11) computer equipment valued at $2,750; (12) guns valued at $3,500; (13) miscellaneous valued at $4,000; (14) 30 acres farmland valued at $988,268; and (15) 76 acres land zoned commercial valued at $869,022. The financial statement also listed the Debtor's total current annual income at $148,700. This total included $118,800 from "wages"; $24,500 from "income"; and $5,400 from "rental income." Id.

The Debtor filed a Chapter 13 case on July 17, 1991. See BancFlorida's General Rule 12(M) Statement, Exhibit G. Thereafter, on February 12, 1992, the case was converted to Chapter 7. The Debtor's petition and schedules list the Debtor as having assets of $370,650 and total liabilities of $436,737. Id. Many of the assets listed on the 1990 financial statement were not scheduled by the Debtor.

On December 10, 1991, the Debtor appeared for a deposition by BancFlorida. BancFlorida had previously requested that the Debtor produce all books, records and documents relating to the Debtor's financial affairs. See BancFlorida's General Rule 12(M) Statement, Exhibit H. At the deposition, the Debtor stated that he had no documentation of cash assets, real estate, durable assets held, transferred or owned by himself or his wife; he had no documentation of his or his wife's liabilities incurred or disposed of within the past two years independent of the Chapter 13 petition and schedules; the Debtor had no records reflecting the current disposition of his or his wife's assets or liabilities; and the Debtor had no documents pertaining to his personal income from wages, salaries, or investments or his wife's personal income from wage, salaries or investments. See BancFlorida's General Rule 12(M) Statement, Exhibit A, pp. 10-12. In response to the notice of deposition, the Debtor admitted that no documents were withheld on the basis of any privilege or on the basis of relevance. Id. at pp. 13-14.

Despite repeated requests by BancFlorida of the Debtor, the Debtor has failed to produce to BancFlorida any documents or records responsive to its requests. See BancFlorida's General Rule 12(M) Statement, Exhibit I, Affidavit of Stephen B. Jackson, Jr. The Debtor stated that in his 1990 move to Florida, several boxes were misplaced and he has been unable to locate them. See BancFlorida's General Rule 12(M) Statement, Exhibit A, p. 7. The Debtor admitted at his deposition that as of June 1, 1990, the information contained on the financial statement was correct, but the statement was not complete. Id. at p. 51.

Regarding the Debtor's current financial position, he no longer has the IRA accounts listed at $25,000 on the financial statement because he withdrew that money in 1991. Id. at pp. 51-52. There are no records or documents evidencing his cashing in the IRA account. Id. at p. 77. The Debtor received a cashier's check which he cashed and paid bills with the proceeds. Id. With respect to the living trust listed on the financial statement, the Debtor admitted it was not his, but was owned by his wife. Id. at pp. 52-54.

The life insurance "valued" at $100,000 actually referred to the face value of the insurance rather than any cash surrender value. Id. at p. 54. The Debtor did not have any knowledge of the cash surrender value as of June 1, 1990, nor has he provided any documentation regarding the life insurance policy. Id.

The home valued at $425,000 on the September 1990 financial statement had actually been sold in June 1990 for $378,000. Id. at pp. 54-55. Thus, the property had already sold for about $45,000 less than the stated value on the financial statement. Id. at pp. 55-56. In addition, the Debtor provided no documentation regarding the home or the sale thereof. Although the financial statement implies that he held ownership interest in the home, the home was actually owned by a land trust in which his wife was the beneficiary. Id. at pp. 60-61.

The Debtor stated he did not know what he was referring to when he listed furniture and appliances with a value of $65,000 on the financial statement. Id. at pp. 57-59. Additionally, the Debtor stated at his deposition that he gave away or sold most of the furniture and appliances at a garage sale sometime in June 1990 before he moved to Florida. Id. at pp. 58-59. The Debtor could not recall the prices received for the furniture and provided no documentation regarding the furniture or appliances. Id. at pp. 58-59.

The 1989 Cadillac automobile reflected on the financial statement as having a value of $21,500 was encumbered by a loan of at least $13,500. Id. at pp. 61-64. The Debtor traded this Cadillac for a leased car in November 1990. Id. He has no documentation regarding the purchase or the trade in of the 1989 Cadillac. Id. In addition, the 1989 Corvette which is reflected on the financial statement as being owned by the Debtor alone and as having a value of $29,350, was actually owned jointly by the Debtor and his wife. Id. at p. 64. Moreover, the Corvette was encumbered by a loan of approximately $21,000. Id. at pp. 64. Moreover, the Corvette was encumbered by a loan of approximately $21,000. Id. at pp. 64-65. The Debtor again provided no documentation regarding this asset or the corresponding debt.

The Debtor further stated at his deposition that the clothing valued at $5,000 was sold or thrown out. Id. at p. 65. He provided no documentation regarding same. In addition, the Debtor noted that even though he listed the jewelry and tableware as being worth $48,000, those items were actually owned by his wife. Id. at pp. 65-66. The Debtor indicated that he owned very little jewelry, and as of November 1991, he did not know whether all of the jewelry that was listed on the financial statement still existed. Id. at pp. 65-66, 68. The Debtor provided no documentation with respect to the jewelry. The Debtor further stated that the tableware was silverware his father had left to the Debtor's wife when his father died. Id. at p. 66. The Debtor testified that his father had a will which left all of his personal property to the Debtor, but the Debtor's father told him to give the silverware to the Debtor's wife. Id. at pp. 66-67. The Debtor, although he was the executor of his father's estate, does not have a copy of the will.

As for the guns which are valued at $3,500 on the financial statement, the Debtor testified that at the end of 1990, he sold his guns for cash at a gun show. Id. at p. 69. The Debtor asserted that in late 1990 he sold the guns for approximately $1,000 in cash. Id. at pp. 70-71. He further stated that he paid bills with this money and he does not have receipts or documentation indicating that he received the $1,000 from the guns. Id. Furthermore, the Debtor could not recall what he meant by the category listed on the financial statement as "miscellaneous" with a guess value of $4,000. Id. at p. 71.

Finally, the financial statement listed...

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