In re Robbins
| Decision Date | 13 September 1988 |
| Docket Number | Bankruptcy No. 81-03534-S-2,Adv. No. 86-0377-S-2. |
| Citation | 91 BR 879 |
| Parties | In re Denzil ROBBINS, Debtor. Douglas S. EVANS, Trustee, Plaintiff, v. Denzil ROBBINS, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Western District of Missouri |
James R. Doran, Paul White, Springfield, Mo., for debtor.
Mathew W. Placzek, Springfield, Mo., for trustee.
Duane E. Schreimann, Jefferson City, Mo., Clifford C. Ruder, FDIC Legal Div., Oklahoma City, Okl., for FDIC.
AMENDED MEMORANDUM OPINION
This is an adversary proceeding in which the Trustee in bankruptcy seeks to set aside a mortgage held by the FDIC as receiver of the failed First National Bank of Del City (Bank), on property allegedly belonging to the estate of Denzil Robbins, debtor in a Chapter 7 proceeding.
The events leading up to this dispute began before this bankruptcy case was ever filed. On July 29, 1980, the real estate in question, called the Finley River Ranch (Ranch), was transferred from Frank and Georgia Whitman to Gard Corporation. On the same day, Gard Corporation deeded the Ranch to Denzil Robbins who then (also on the same day), along with his wife at that time, Audrey Robbins, deeded the property to Deegene Land Company. On July 15, 1981, Deegene Land Company deeded the Ranch to Gene Robbins (Denzil's son). The trustee asserts the purpose of the transfer to Deegene Land Company and later to Gene Robbins was an attempt by Denzil Robbins to shield the property from his wife upon their divorce which took place on August 14, 1981. On November 16, 1981, an involuntary petition for relief under Chapter 7 was filed against Denzil Robbins and subsequently an order was entered granting such relief on November 2, 1983. The trustee filed notice of the Denzil Robbins Bankruptcy with the Recorder of Deeds in Christian County, Missouri on December 27, 1983, and he later filed such notice with the Recorder of Deeds in Oklahoma County, Oklahoma on April 16, 1984.
On January 7, 1985, Gene Robbins deeded the Ranch to Ashley Hotel Company and on the same day, the Bank issued a loan in the name of Ashley Hotel Company in the amount of $153,446.86, secured by the Ranch. By December 31, 1985, the loan to Ashley Hotel Company was paid down to $98,446.86, however, on January 6, 1986, the loan was increased and renewed for $152,561.81. On March 13, 1986, the Ashley Hotel Company deeded the Ranch to Finley River Ranch Company and on the same day, a new loan was issued by Bank for $247,367.17 in the name of Finley River Ranch Company. Finally, on August 28, 1986, the Adversary Complaint to Compel Turnover was filed in this proceeding against Bank.
On March 25, 1988, the Office of the Comptroller of the Currency determined that the Bank was insolvent and ordered the Bank closed. The Office of the Comptroller of the Currency took possession of the Bank's assets and affairs and tendered to the FDIC the appointment as receiver of the Bank. Pursuant to 12 U.S.C. Section 1821(c), the FDIC accepted appointment as receiver and took possession of the Bank's assets and affairs, including the Bank's claim against the debtor in this bankruptcy proceeding. LAW AND ANALYSIS:
1. Is the Ranch part of the Bankruptcy Estate?
To be property of the estate, Debtor must have had a legal or equitable interest in the Ranch at the time of the filing of the petition, or the Trustee must use one of his avoidance powers and bring the property into the estate pursuant to Section 550. (11 U.S.C. § 541(a)(3)). At the time the petition was filed, Gene Robbins had legal title to the Ranch.
Section 541 defines "property of the estate" as all interests of the Debtor as of the commencement of the case, and includes certain property acquired thereafter, including property acquired by virtue of avoided transfers. Property of the estate includes any interest in property that the trustee recovers under 11 U.S.C. Section 550. "If a transfer is avoided under Sections 544, 545, 547, 548, 549, or 724(a), the property transferred may be recovered by the trustee, under certain circumstances, for the estate pursuant to section 550(a); and the property recovered under section 550(a) becomes property of the estate pursuant to section 541(a)(3)." In re Jameson's Foods, Inc., 35 B.R. 433, 435 (Bkrtcy. D.S.C.1983).
The only relevant avoidance sections under Section 550 which can be used by the trustee in this case to recover the Ranch would be Section 548 or Section 544(b). Section 559 is not relevant in initially determining whether the Ranch is property of the estate because that section deals with bringing post-petition transfers of property which have already been determined to be property of the estate back into the estate.
Section 548 grants the trustee the power to avoid fraudulent transfers. Under Section 548, a trustee may avoid a transfer of the debtor's interest in property within one year before the petition is filed if the debtor voluntarily or involuntarily made such transfer with actual intent to hinder, delay or defraud any entity to which the debtor was or became indebted to on or after the date such transfer was made. 11 U.S.C. § 548(a)(1). The trustee believes that, prior to bankruptcy, the debtor conveyed the Ranch to a third party (his son, Gene Robbins) who subsequently conveyed the Ranch to Ashley Hotel Company, an Oklahoma Corporation, in an effort to conceal assets or defraud creditors.
On July 29, 1980, Gard Corp. deeded the Ranch to Denzil Robbins, and on that same day, Denzil and his then wife, Audrey, deeded the Ranch to Deegene Land Company. Deegene Land Company then deeded the Ranch to Gene Robbins on July 15, 1981. The involuntary bankruptcy was filed on November 16, 1981. Therefore, the transfer made by Denzil and Audrey Robbins would be outside the one year period, but the transfer by Deegene Company to Gene Robbins would be within the one year Section 548 avoidance period.
This court must then decide whether the transfer made by Deegene Corporation to Gene Robbins was actually a transfer made by the debtor, Denzil Robbins, and if so, whether Denzil Robbins made such transfer with the intent to hinder, delay or defraud any entity to which the debtor was or became indebted to on or after the date such transfer was made.
This court has previously determined that Deegene Corp. was an alter ego of Denzil Robbins and that the transfer of properties by Denzil Robbins into said corporation was with the express purpose of attempting to place any assets put into it beyond the lawful reach of his creditors. (See Order of June 22, 1988). . Further, the order states that said corporations are nothing more than the alter ego of Denzil Robbins and therefore, said corporate entities should be disregarded as fictitious and have no legal effect. As such the transfer by Deegene Corp. was a transfer by Denzil and thus Section 548 applies and the requisite intent to hinder, delay or defraud has been found.
Assuming an action under 548 can be sustained, the court must also determine if such an action was brought within the limitations period. According to Section 546(a), an action under Section 548 must be commenced before the earlier of: (1) two years after appointment of the trustee or (2) the time the case is closed or dismissed. This case has not been closed or dismissed, therefore, the limitation period is two years after the appointment of the trustee, and not within two years of the date the mortgages were made as asserted by the trustee in his brief. The trustee was appointed on November 2, 1983. The date of the turnover complaint was filed August 28, 1986, which is more than two years after the appointment of the trustee, therefore, the trustee would be time barred from asserting an action under Section 548.
Under Section 544(b):
The trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim. . . .
The trustee's first amended complaint alleges that debtor has transferred property in fraud of creditors and in violation on Section 428.010 RSMo. and in violation of Title 24, §§ 101-101 of the Oklahoma Statutes, 1981, and in violation of the Bankruptcy Code, both prior to and subsequent to the filing of the involuntary petition.
This court's Findings of Fact and Conclusions of Law of June 22, 1988 held that Deegene Corporation, Ashley Hotel Company and Finley River Ranch Company are all alter egos of Denzil Robbins (Consolidated Sun Ray, Inc. v. Oppenstein, 335 F.2d 801, 806 (8th Cir.1964); Fidelity and Casualty Company v. Glass, 327 S.W.2d 538, 541 (Mo.App.1959)), and that: ". . . any conveyances of properties into said corporations by Denzil Robbins were with the intent to defraud creditors in violation of § 428.020, V.A.M.S., and are null, void and of no effect." See Bank of New Cambria v. Briggs, 361 Mo. 723, 236 S.W.2d 289, 291 (1951); Conrad v. Diehl, 344 Mo. 811, 129 S.W.2d 870, 877 (1939); Community Federal Savings & Loan Association v. Boyer, 710 S.W.2d 332, 334 (Mo.App.1986); Barnard v. Barnard, 568 S.W.2d 567, 570 (Mo.App.1978). Section 428.020 is the Missouri statute covering conveyances to defraud creditors.
"Applicable law" under Section 544(b) has been widely held to include state law. 4 Collier on Bankruptcy § 544.031 (15th ed. 1987); In re TMIC Industrial Cleaning Co., 19 B.R. 397, 399 (Bkrtcy.W. D.Mo.1982); In re Hescon Developers, Inc., 81 B.R. 26, 30 (Bkrtcy.S.D.Cal.1987). Although Section 546(a)(1) states that "An action or proceeding under Section 544, 545, 547, 548, or 553 of this...
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