In re Price
| Decision Date | 22 July 2004 |
| Docket Number | Adversary No. 4:03-ap-1258.,Bankruptcy No. 4:03-bk-13601M. |
| Citation | 313 B.R. 805 |
| Parties | In re Roy A. PRICE and Lavonda S. Price. Structured Investments Co., LLC, Plaintiff, v. Roy A. Price, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Arkansas |
Laura Grimes, Knollmeyer Law Office, Jacksonville, AR, for Debtors.
Charles T. Coleman, Kimberly W. Tucker, Wright, Lindsey & Jennings, Little Rock, AR, for Plaintiff.
Michael J. Knollmeyer, Knollmeyer Law Office, Jacksonville, AR, for Defendant.
On March 25, 2003, the Debtors, Roy and Lavonda Price, filed a voluntary petition for relief under the provisions of Chapter 7 of the United States Bankruptcy Code.
On August 28, 2003, Structured Investments Co., L.L.C. ("Structured") filed a complaint against Roy Price ("Price") to determine a debt owed to Structured to be nondischargeable under the provisions of subsections 523(a)(2)(A)-(B) and (a)(6) of the Bankruptcy Code. The complaint also seeks to impose a constructive trust. Price filed a timely answer denying the allegations of the complaint.
On March 10, 2004, Structure filed a motion for summary judgment accompanied by answers to requests for admission, pleadings, an affidavit, and a brief in support of the motion. The motion seeks summary judgment pursuant to Bankruptcy Code subsections 523(a)(4)(fraud by a fiduciary, embezzlement, larceny) and (a)(6) (willful and malicious injury) but not pursuant to subsection 523(a)(2) ().
Price filed a response opposing the motion for summary judgment, together with pleadings and an affidavit. The motion was set for hearing in Little Rock, Arkansas, on April 2, 2004, and at the parties' request, the matter was submitted to the Court for its consideration without oral argument.
The proceeding before the Court is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I) (2000), and the Court has jurisdiction in this case. The following shall constitute the Court's findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.
Summary judgment should be granted only where it appears that there is no genuine dispute as to material facts and the moving party is entitled to judgment as a matter of law. Fed.R.Bankr.P. 7056 () (directing the court to enter summary judgment if pleadings, affidavits and other papers on file show no genuine issue of material fact and the moving party is entitled to judgment as a matter of law); Fields v. Gander, 734 F.2d 1313, 1314 (8th Cir.1984) (citing Buller v. Buechler, 706 F.2d 844, 846 (8th Cir.1983)); Schieffler v. Pulaski Bank & Trust Co. (In re Molitor), 183 B.R. 547, 549-550 (Bankr.E.D.Ark.1995) (citations omitted); Toshiba America Inc. v. Video King of Ill., Inc. (In re Video King of Ill., Inc.), 100 B.R. 1008, 1012 (Bankr.N.D.Ill.1989) (citations omitted).
In determining whether a genuine issue of material fact exists, the court must view the facts in the light most favorable to the party opposing the motion for summary judgment and must give that party the benefit of all reasonable inferences drawn from the underlying facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir.1987) (citing Economy Housing Co. v. Continental Forest Products, Inc., 757 F.2d 200, 203 (8th Cir.1985) (citing Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076, 1077 (8th Cir.1980))). To be material, the fact in dispute must affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
A party opposing a motion for summary judgment may not rely upon the mere allegations of its pleadings but must instead set forth, by affidavit or otherwise, specific facts showing that a genuine issue exists for trial. Fed.R.Civ.P. 7056 (); Chauffeurs, Teamsters & Helpers, Local Union 238 v. C.R.S.T., Inc., 795 F.2d 1400, 1402-03 (8th Cir.1986) (citing Fed.R.Civ.P. 56(e); Buford v. Tremayne, 747 F.2d 445, 447 (8th Cir.1984); Bouta v. Am. Fed'n of State, County & Mun. Employees, 746 F.2d 453, 454 (8th Cir.1984)); Harrison Properties Ltd. v. Spears (In re Swaffar), 222 B.R. 330, 332 (Bankr.E.D.Ark.1998) (citations omitted).
Price served 22 years of active duty as an enlisted man in the Air Force and is now retired. He is entitled to a monthly United States military pension of $1140.00, although the record is silent as to whether any income tax is withheld by the government. On April 1, 2002, Price entered into an agreement with Structured called an "Annuity Utilization Agreement." (Aff. of Steven P. Covey, hereinafter "Covey Aff.," March 10, 2004.) Pursuant to the agreement, Structured paid to Price the cash sum of $20,365.00 on a date not shown in the record.
In consideration for the payment of $20,365.00, Price directed the government to directly deposit his military pension payments of $1140.00 a month to Price's deposit account. Structured then withdrew that amount via direct deposit to Structured's account at Provident Bank. These monthly payments began April 1, 2002, and were to continue for a period of 96 months as provided in the agreement. After each payment to Structured's account, Structured was to withdraw $555.00 and remit the balance, less a management fee of $28.00, via a direct deposit to Price's personal bank account.
Price performed as agreed until March 2003 when he directed the government to cease making the payments to the deposit account and caused the payments to be made directly to his personal account. He apparently made no further payments to Structured under the contract and filed for relief under the provisions of Chapter 7 on March 25, 2003.
The annuity utilization agreement is lengthy, and the pertinent provisions may be summarized. The agreement recites that it is "a program ... through which persons who are entitled to receive periodic payments over a period of time can receive a lump sum payment in exchange for their agreement to remit a specified number of periodic payments to [Structured] immediately upon receipt thereon." (Covey Aff., Ex. 1 at 2.) The contract specifically states that it is not a loan.
The payment of $555.00 and the $28.00 management fee are to be made each month for 96 months commencing April 1, 2002, and if there is any "disruption, interruption or decrease in those payments caused by the participant, the number of payments due ... is automatically ... increased to 120 and the last pay date is extended to ... 03/1/2012." (Covey Aff., Ex. 1 at 3.)1
As part of the agreement, a collateral assignment of life insurance of not less than $40,000.00 is required. In the event of Price's death, the policy purchased will pay Structured the balance owed under the agreement, which is calculated by multiplying the stated monthly payment by the number of months remaining under the contract. This is apparently the only scenario under which the agreement may be terminated earlier than 96 months. The agreement requires an automatic debit of $49.00 from Price's account as payment for insurance premiums.
Any reduction of the anticipated payments to Structured constitutes a breach that causes all of the remaining and outstanding payments to be immediately due and payable. The contract also provides that Price is to grant to Structured "a perfected, first priority security interest in the Deposit Account...." (Covey Aff., Ex. 1 at 6.) The participant agrees that he has not otherwise disposed of his right to receive payments and that any violation of this covenant will result in the perpetration of a fraud on Structured. The contract also provides that the obligation under the agreement and the security interest granted will be excluded from the participant's bankruptcy estate should the participant file bankruptcy.
The contract requires the participant to acknowledge that an intentional violation of his obligations under the agreement "could, under certain circumstances, constitute criminal conduct, punishable by criminal fines or imprisonment." (Covey Aff., Ex. 1 at 11.)
The agreement contained the following paragraph regarding federal pensions:
[Structured] and participant acknowledge and agree that under applicable federal law, participant may not (a) assign the underlying benefits with respect to which the periodic payments are being made to another person; (b) alienate such benefits in any way, or (c) sell transfer, pledge or otherwise use such benefits to obtain credit in any form. Participant and [Structured] have structured the transactions contemplated by this agreement in a manner which they believe does not, and which they do not intend to, constitute an assignment, sale, transfer, pledge or other alienation of participant's benefits or to otherwise cause participant to violate any provision of law relating to such benefits. As an inducement to [Structured] to enter into this transaction at participant's request and for participant's benefit, participant hereby covenants and agrees not to raise as a defense to any lawsuit brought by [Structured] to enforce its rights hereunder or under any related agreement any argument that this agreement is void, voidable or otherwise unenforceable in whole or in part under any theory. This agreement not to assert any such defense is intended to be a separately negotiated agreement intended to ensure that [Structured] will not be required to expend time and money in litigating novel and complex issues of law and fact.
The agreement also states that California law governs any dispute and that the participant agrees to venue in Orange County, California, to hear any dispute provided, however, that Structured has the right to bring suit in any other jurisdiction of its choosing and the participant waives any...
To continue reading
Request your trial
-
In re Dunlap
...decision by Judge Mixon of the United States Bankruptcy Court for the Eastern District of Arkansas in Structured Investments Co. v. Price (In re Price), 313 B.R. 805 (Bankr.E.D.Ark.2004), greatly aids the Court's analysis. The Agreement and the agreement in Price are strikingly similar. The......
-
Structured Invs. Co. v. Dunlap (In re Dunlap)
...by Judge Mixon of the United States Bankruptcy Court for the Eastern District of Arkansas in Structured Investments Co. v. Price (In re Price), 313 B.R. 805 (Bankr. E.D. Ark. 2004), greatly aids the Court's analysis. The Agreement and the agreement in Price are strikingly similar. The agree......
- In re Pierson
- In re Checking Account Overdraft Litig.