In re Reppert
| Decision Date | 30 September 2022 |
| Docket Number | Case No. 17-20639-GLT |
| Citation | 643 B.R. 828 |
| Parties | IN RE: Laura L. REPPERT, Debtor. |
| Court | U.S. Bankruptcy Court — Western District of Pennsylvania |
Dennis J. Spyra, Esq., Spyra Law Office, Pittsburgh, PA, Attorney for the Debtor.
Owen W. Katz, Esq., Office of the Chapter 13 Trustee, Pittsburgh, PA, Attorney for Ronda Winnecour.
Related to Dkt. Nos. 60, 64-66, 69, 73-74, and 79
The failure to timely disclose post-petition assets in chapter 13 cases is the concealment of property of the estate and, therefore, must carry heavy consequences no matter how late in the case it occurs. It is undisputed that Laura L. Reppert ("Debtor") took title to an unencumbered 2021 BMW 235 automobile (the "BMW") in March 2021, approximately four years into her chapter 13 case, but did not inform the Court or chapter 13 trustee.1 Instead, the existence of the BMW was revealed nearly a year later by the Debtor's husband in his own bankruptcy.2 This prompted an evidentiary hearing on an Order to Show Cause why, among other things, the Debtor's now-completed chapter 13 case should not be dismissed with prejudice for her failure to promptly disclose a substantial post-petition asset.3 The Debtor primarily argues that the BMW was an early birthday gift from her parents to her then 14 year old daughter.4 For the reasons set forth below, the Court is unconvinced, leaving a dismissal with prejudice the only appropriate outcome under these unusual circumstances.
The Debtor filed her chapter 13 petition on February 21, 2017. Although it was not discovered at the time, she failed to list her general unsecured creditors on the creditors mailing matrix and they did not receive notice of this filing.5 Nevertheless, the Debtor scheduled nonpriority unsecured claims totaling $29,150.43 on Schedule E/F .6 Since she listed only $6 of monthly net income on Schedule J ,7 no iteration of her confirmed plan ever contemplated a dividend to general unsecured creditors.8 Instead, the plan focused on curing mortgage and real estate tax arrears.9 Thus, the lack of unsecured creditor engagement was unsurprising given their prospects.
The Debtor's case proceeded quietly until February 2022, when the chapter 13 trustee moved to dismiss because the plan term had elapsed without the Debtor satisfying her financial commitment.10 At the same time, the Debtor's husband, Todd Reppert, sought to convert his chapter 7 case to chapter 13, or alternatively dismiss it.11 It is undisputed that they have been married at all relevant times despite the Debtor having indicated that she was not married on her Statement of Financial Affairs .12 Critically, to refute an allegation by the United States Trustee that he had acquired an undisclosed BMW, Mr. Reppert explained that the Debtor owned the BMW and attached a copy of the Pennsylvania Certificate of Title as proof.13 In light of this revelation and the pending motion to dismiss, the Court scheduled a status conference to determine whether she had, in fact, acquired and concealed an estate asset.14
Prior to the status conference, the Debtor cured her plan default by remitting the final payment to the trustee.15 She also filed a response admitting that the BMW is titled in her name, but asserting that it was purchased by her parents for the benefit of her underage daughter.16 This was followed by a self-styled "Affidavit under Penalty of Perjury" ("Affidavit") purportedly signed by James and Kathy Palfrey stating that the BMW was an early sixteenth birthday gift for their granddaughter.17
The Debtor did not attend the status conference, but Mr. Reppert did and offered a preview of her defense. He also confirmed that his daughter's name is misspelled in the Affidavit . With the final plan payment completed, the chapter 13 trustee pragmatically took no position with respect to the BMW, noting that "[t]his is, I suppose, an unusual case in the sense that no unsecured creditors filed claims."18 She withdrew the motion to dismiss, but the Court nonetheless continued the status conference in order to hear from the Debtor directly and assess her eligibility to receive a discharge.
Days later, the Debtor filed an Amended Schedule A/B to disclose the BMW and listed its unencumbered fair market value as $36,000.19 Notably, she did not indicate that any other person had an interest in the BMW despite an explicit prompt to do so.20 The Debtor also failed to list the BMW's approximate mileage on the appropriate line.21
Curiously, the Debtor's written response only suggested that any "electronic filing error" was the result of "clerical error" and otherwise took no position with respect to the Order to Show Cause .24 The chapter 13 trustee now supports dismissal with prejudice.25
The Court held an evidentiary hearing on the Order to Show Cause in May, 2022. From the outset, the Debtor challenged the contention that the BMW was property of the estate. She argued that neither the Bankruptcy Code nor any case state that non-monetary gifts of assets received by the debtor more than 180-days after the petition date become part of the chapter 13 estate.26 In fact, counsel suggested that a contrary rule "makes no sense" and that this happens all the time.27 Alternatively, the Debtor asserted that she merely holds title to the BMW in trust for her daughter. When pressed about the appropriate outcome for this case, she grudgingly suggested that dismissal was preferrable to a discharge so she could file a chapter 7 case to discharge the unsecured debt that did not receive notice in this case.28 Yet, to be clear, the Debtor did not move to voluntarily dismiss her case.
In support of her trust argument, the Debtor testified that her stepfather and mother, the Palfreys, purchased each of their other two grandchildren new cars (a "truck" and a Camaro) for their sixteenth birthdays.29 Her youngest daughter, for whom the BMW is allegedly held in trust, turned 16 years old on April 23, 2022.30 In other words, when the BMW was acquired, the daughter was only 14.31 According to the Debtor, Mr. Palfrey insisted on purchasing a vehicle early because he is suffering from dementia and wanted an opportunity to see it enjoyed before his symptoms worsened.32 The Debtor testified that she took title to the BMW pursuant to the Palfreys’ wishes with the understanding that she would transfer ownership to her daughter "when they can."33
Despite supposedly being a gift from the Palfreys to their granddaughter, the Debtor and Mr. Reppert alone selected the vehicle and negotiated its purchase.34 Her daughter's only input related to its color.35 When asked why the BMW was chosen, the Debtor only offered a vague statement about its relative safety.36 Emphasizing that the BMW is a gift, the Debtor testified that it has only been used "occasionally"—about once a month—and was otherwise stored in the garage until her daughter obtained her learner's permit.37 She admitted, however, that other family members may have used the BMW from time to time without her knowledge.38
At the hearing, the Debtor could not recall how much the BMW cost, but believed it was in the "thirties."39 She testified that the Palfreys gave them the funds to purchase the BMW and her husband paid the dealership.40 The Debtor said that she did not know the Palfreys’ financial condition, nor how they could afford such expensive gifts for each of her three children.41 She explained that they are both retired, but Mr. Palfrey previously drove a school bus while Mrs. Palfrey worked at K-Mart until it closed.42
After the Debtor's testimony, Mr. Reppert took the stand ostensibly to clarify details that the Debtor could not recall or misremembered. Like his wife, he could not explain why they picked the BMW for their daughter.43 Mr. Reppert stated that the Palfreys supplied a cashier's check for $40,000 payable directly to the dealership.44 He did not know the source of the Palfreys’ funds, but noted that Mr. Palfrey was a supervisor at Snyder's of Berlin for 30 years before driving a school bus part-time.45 In any event, Mr. Reppert repeatedly and unequivocally testified that the cashier's check covered the full purchase price of the BMW, including taxes and fees, and that neither he nor his wife contributed funds to the transaction.46
At the conclusion of the hearing, the Court directed the Debtor to file a certification of the BMW's current mileage and, in light of the seeming testimonial inconsistency, a verified copy of the cashier's check used to purchase it.47 Her timely submission reflects that as of March 2022, one month prior to the daughter's sixteenth birthday, the BMW's odometer read 3,559 miles.48 The Debtor also filed a copy of a cashier's check from PNC Bank payable to "Bobby Rahal" for $40,000.49 The Court then took the Order to Show Cause under advisement.
While this decision was undergoing final revisions, certain developments occurred in Mr. Reppert's chapter 7 case that are relevant to the matter at bar. Under Federal Rule of Evidence 201,50 the Court may take judicial notice of its own records.51
Following an examination of Mr. Reppert conducted pursuant to Federal Rule of Bankruptcy Procedure 2004, the United States Trustee filed a complaint seeking to deny him a discharge based on a series of false oaths.52 Of particular importance here, the Trustee states that Mr. Reppert testified that his sole proprietorship paid...
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