In re Ramsurat

• Court: U.S. Bankruptcy Court — Middle District of Florida
• Writing for the Court: Karen S. Jennemann
• Citation: In re Ramsurat, 361 B.R. 246 (Bankr. M.D. Fla. 2006)
• Decision Date: 21 December 2006
• Docket Number: Bankruptcy No. 6:05-BK-17049-KSJ.,Adversary No. 6:06-AP-50.
• Parties: In re Thakurdial R. RAMSURAT, Debtor. Kenneth D. Herron, Jr., Trustee, Plaintiff, v. Bhoopmanie Singh, Defendant.

361 B.R. 246

In re Thakurdial R. RAMSURAT, Debtor Kenneth D. Herron, Jr., Trustee, Plaintiff, v. Bhoopmanie Singh, Defendant.

Bankruptcy No. 6:05-BK-17049-KSJ.

Adversary No. 6:06-AP-50.

United States Bankruptcy Court, M.D. Florida, Orlando Division.

December 21, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Mario A. Marcia, Mario A. Marcia PA, Orlando, FL, for Debtor.

MEMORANDUM OPINION

KAREN S. JENNEMANN, Bankruptcy Judge.

In this adversary proceeding, the plaintiff is the Chapter 7 Trustee, Kenneth D. Herron, Jr. He is seeking to avoid a transfer made by the debtor, Thakurdial R. Ramsurat, to his wife, the defendant, Bhoopmanie Singh. The contested transfer involves a residential home initially titled jointly in the name of the debtor and his wife and later transferred by the debtor to his wife in two deeds — one given on June 9, 2003, and the second deed executed on July 25, 2005. Due to financial problems with his business, the debtor filed this Chapter 7 bankruptcy case on October 16, 2005, shortly after the second deed was executed.

Very few facts are in dispute. On May 22, 1998, Newton Holtzclaw and Mary E. Holtzclaw, as husband and wife, executed and delivered a Warranty Deed (the "Original Warranty Deed") to "Ramsurat Thakurdial and Bhoopmanie Singh," conveying a single-family home located at 126 N. Observatory Drive, Orlando, FL 32835, and legally described as:

Lot 27 and the North One-Half of lot 28, block N, ORLO VISTA HEIGHTS ADDITION, according to the plat thereof recorded in plat book L, Page 75, of the public records of Orange County, Florida (the "Observatory Home") (Defendant's Ex. No. 7).

A few days later, on June 15, 1998, the debtor married Ms. Singh, the defendant. (Plaintiff's Ex. No. 2).

On June 19, 1998, soon after the debtor's wedding, a revised warranty deed transferring the Observatory Home was recorded in the Public Records of Orange County, Florida, at OR Book 5507, Page 4776 (the "1998 Revised Recorded Deed") (Plaintiff's Exh. No. 1). The 1998 Revised Recorded Deed contained two differences from the Original Warranty Deed. First, the 1998 Revised Recorded Deed listed the debtor and the defendant as "Husband and Wife." Second, the 1998 Revised Recorded Deed also modified the legal description as follows:

Lot 27, and lot 28, block N, ORLO VITA HEIGHTS ADDITION, according to the plat thereof recorded in plat book L, Page 75, of the public records of Orange County, Florida ("Property").

The deed correctly transferred all of Lot 28, not just the north one-half of Lot 28, as was reflected in the earlier deed of May 22, 1998.

Based on a review of the 1998 Revised Recorded Deed, the Court would find that the parties did not execute a new deed. Rather, the Original Warranty Deed was modified and initialed by the selling parties, Mr. and Mrs. Holtzclaw. The words "HUSBAND AND WIFE" were typed onto the revised deed. The legal description was modified to cross out the notation "NORTH ONE-HALF" of Lot 28. As modified, the 1998 Revised Recorded Deed then was filed in the public records of Orange County, Florida.

The defendant's parents, who were elderly and moving to the United States, were the intended residents of the Observatory Home. They moved into the home shortly after its purchase. The debtor never lived in the home. The defendant's parents, perhaps with assistance from other family members, made substantial improvements to the Observatory Home. They added a room and made other alterations. They, with the help of the defendant's sister, paid all the real estate taxes, insurance, and maintenance costs related to the Observatory Home.

The debtor, however, did assist in gathering the funds needed to buy the Observatory Home. The purchase price was $77,000. The debtor and his soon-to-be-wife, the defendant, contributed $35,000 to the purchase price. They obtained these funds by taking out a separate, second mortgage on their home located on Killary Court in Orlando. The defendant signed two checks, both written on her sister's bank account, each in the amount of $456.74, for the mortgage payments due in July and August, 1998. (Defendant's Ex. No. 10). The Court could not ascertain who provided the funds to make these two payments. However, the defendant's sister, Bhoopwattie Balgobin, clearly provided the funds to pay off the debtor's second mortgage. Ms. Balgobin wrote a check to the mortgage holder, First Union Bank, in the amount of $35,833.32 on September 1, 1998. (Defendant's Ex. No. 11).

As such, although the debtor did contribute $35,000 to the initial purchase price of the Observatory Home, he never paid any portion of the mortgage and the loan was repaid within four months on September 1, 1998. After the repayment of this mortgage, neither the debtor nor the defendant made any further financial contribution to the Observatory Home. Rather, the defendant's family, her sister, brother, and parents, paid the balance of the purchase price and paid all other costs associated with the improvements, maintenance and care of the Observatory Home.

As the years passed, the debtor's business encountered financial difficulties. He was unable to pay the operating expenses. Creditors were not being paid on a timely basis, and they were suing him for monies due and owing. At this point, the defendant, who was concerned that her husband's creditors would try to obtain title to the Observatory Home property, demanded that the debtor transfer his interest in the house to her. The debtor complied. On June 9, 2003, the debtor and defendant, as husband and wife, executed and delivered a Quit Claim Deed to the defendant, conveying to her all of their interests in the Observatory Home. (Plaintiff's Ex. No. 4). The deed was recorded that same day in Orange County, in Book 06945, at page 3638. The parties intended to convey their entire interest to the defendant alone in this deed; however, the deed contained an incorrect legal description. The Quit Claim Deed, as executed, only conveyed the "North One-Half of Lot 28", not the entire lot.

On the same day the debtor transferred his interest in the Observatory Home, June 9, 2003, a Stipulated Final Judgment was entered against him and in favor of United Financial `Group, Inc. in the amount of $180,140.66. (Plaintiff's Ex. No. 3.) Other judgments were later entered against the debtor, including:

Final Summary Judgment in favor of General Electric Capital Corporation against Thakurdial Ramsurat dated May 18, 2004, in the amount of $103,747.21. (Plaintiff's Ex. No. 4).

Summary Final Judgment in favor of Huntington National Bank and against Get Tours and Thakurdial Ramsurat dated January 14, 2005, in the amount of $19,282.55. (Plaintiffs Ex. No. 5).

Neither the defendant nor her husband share any joint creditors, with the exception of a mortgage on their homestead. The defendant and the debtor always have maintained separate credit, bank, and business accounts. The debtor has no knowledge of his wife's finances or of her family's financial condition.

At the same time that the debtor's business was declining, the defendant's parents were encountering more serious health problems and needed to move even closer to their daughter so she could help with their daily needs. The defendant and her sister found a closer, suitable home for their parents and, sometime prior to May 2005, the defendant and her sister purchased another single-family home, financed by a purchase money mortgage, for their parents. This new home was titled in the name of the defendant and her sister.

When their parents were settled in the new home, the defendant sold the Observatory Home. On July 25, 2005, the defendant executed and delivered a Warranty Deed conveying the Property to Kaveita Kanhai, who is a disinterested third party and not connected to the parties in any way. (Plaintiff's Ex. No. 8).¹ The purchase price of the new home was $190,000.00. After paying costs of sale and reimbursing her sister for repairs and improvements made on the Observatory Home, the defendant received approximately $75,000, which she invested in the new home where her parents lived. She used these funds to pay down the mortgage encumbering the property.

In order to allow the Observatory Home to be sold, however, the debtor was required to sign a Corrective Quitclaim Deed to fix the error in the legal description made on both the Original Deed and subsequently repeated in the Quit Claim Deed, dated June 9, 2003. The defendant and debtor, as husband and wife, executed and delivered a Corrective Quit Claim Deed on July 25, 2005, which provided that:

This deed is being recorded to correct that certain quitclaim deed recorded June 9, 2003 in Official Records Book 6945, page 3638, Public Records of Orange County, Florida, to correct the legal description and to add a non-homestead clause.

(Plaintiff's Ex. No. 7) (emphasis added). The only portion of the Property conveyed by this Corrective Quit Claim Deed, and not included in the 2003 Quit Claim Deed, was a small portion of the property — the South One-Half of Lot 28. The Court would find that the parties intended to convey their entire interest in the Observatory Home in 2003, but that they failed simply because they repeated the earlier mistake contained in the Original Warranty Deed.

Shortly thereafter, on October 16, 2005, the debtor filed this Chapter 7 bankruptcy case. His appointed trustee has filed this adversary proceeding seeking to avoid the transfer of his interest in the Observatory Home to his wife on June 9, 2003, in accordance with Section 548 and 544 of the Bankruptcy Code² and Chapter 726, Florida Statutes. The trustee alleges both constructive and actual fraud, seeks to recover money damages in proportion to the debtor's former interest in the Observatory Home, and, lastly, seeks a determination of the debtor's interest in the Observatory Home, if the transfer is avoided.

The defendant denies that the...