In re Robertson
| Decision Date | 19 June 1990 |
| Docket Number | Adv. No. 88 A 579.,Bankruptcy No. 86 B 9589 |
| Citation | 115 BR 613 |
| Parties | In re A. John ROBERTSON, Jr., Debtor. John H. REDFIELD, not individually, but as Trustee in bankruptcy of A. John Robertson, Jr., Plaintiff, v. PEAT, MARWICK, MITCHELL AND COMPANY, A. John Robertson, Jr., and State Street Bank & Trust Co., as Trustee of Peat Marwick 401(k) Plan for Partners, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Chad H. Gettleman, Gail Tuler Friedman, Adelman & Gettleman, Ltd., Chicago, Ill., for defendant Robertson.
Thomas P. Arden, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, Ill., Alan C. Kohn, Mark J. Bremer, Kohn, Shands, Elbert, Gianoulakis & Giljum, St. Louis, Mo., Leonard P. Novello, Anthony J. Costantini, Office of Gen. Counsel, New York City, for defendants Peat, Marwick and State Street Bank.
John H. Redfield, Chicago, Ill., trustee.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The plaintiff, John H. Redfield, trustee in the bankruptcy of A. John Robertson, Jr., brought this action against Peat, Marwick, Mitchell and Company under 11 U.S.C. § 542 to recover $93,279.01 transferred to Robertson from his account balance in a qualified retirement plan.1 This action was called for trial. At that time the parties stipulated as to all the evidence to be considered in the case. Both sides rested on the stipulated record. That record consists of: (1) a Joint Stipulation filed on February 8, 1990; (2) the transcript of Debtor's testimony at a hearing before this court on January 26, 19892; and (3) certain other exhibits whose authenticity has been stipulated to by the parties. The parties specifically agreed that this proceeding be adjudicated upon this record, "without the need for any live testimony or any further introduction of evidence." Joint Stipulation ¶ 15. On the eve of trial, Defendant Peat, Marwick sought leave to file an Amended Answer so as to withdraw certain admissions in its earlier pleading. That motion was denied, but without prejudice to its motion under Rule 15(b) F.R.Civ.P. (Bankr.R. 7015) to amend its pleadings to conform to the evidence. Now that the trial is completed on the stipulated record, the pleadings are deemed amended to conform to the evidence.
The stipulated record left many pertinent questions unanswered. Such is the risk of relying on stipulations with no opportunity for parties and the Court to probe deeper. However, such is the record on which we must determine whether the Plaintiff met his burden.
The court having considered the submitted evidence and the arguments of counsel, now makes and enters the following Findings of Fact and Conclusions of Law.
1. John H. Redfield is the duly appointed, qualified and acting Trustee in Bankruptcy ("Trustee") for A. John Robertson, Jr. ("Debtor") in the presently pending Chapter 7 bankruptcy case in this Court, case No. 86 B 9589.3
2. This adversary proceeding (hereinafter "the Adversary") arises in and relates to the aforesaid Chapter 7 case of Debtor.
3. Peat, Marwick, Mitchell and Company (presently known as Peat, Marwick, Main & Co.) ("Peat, Marwick") is a partnership engaged in public accounting.
4. Debtor was born on December 25, 1937. He is divorced and has no minor children.
5. Debtor was a partner of Peat, Marwick until May 31, 1985 when he was terminated. Joint Stip. ¶ 13. Prior to his termination, Debtor was a managing partner at Peat, Marwick's St. Louis, Missouri office.
6. On June 20, 1986, Debtor filed in this Court a voluntary petition under Chapter 11 of the Bankruptcy Code to which was appended a List of Creditors and List of 20 Largest Creditors.
7. The bankruptcy schedules filed by Debtor listed as property of the Debtor four accounts held by Peat, Marwick, namely: (1) a capital withdrawal account, (2) a profit withdrawal account, (3) a deferred compensation account, and (4) a 401(k) Plan account in the stated amount of "$73,662.00 (approx.)." Schedule B — Statement of All Property of Debtor, including Rider to Schedule B-2(p) and Rider to Schedule B-2(s). The 401(k) Plan account referred to Debtor's account in the "Peat Marwick 401(k) Plan for Partners" (hereinafter the "401(k) Plan"). Those schedules, however, were not filed until July 30, 1986, and no motion was made or order entered allowing extension of time to file schedules beyond the 15 days after June 20, 1986 allowed by Bankr.R. 1007(c).
8. The Debtor's schedules claimed that the 401(k) Plan account was exempt property. Schedule B-4 — Property Claimed as Exempt item 5 and Rider to Schedule B-2(s).
9. On June 30, 1986, this court entered, and the Clerk served copies on creditors, of an order stating that "any objection to the debtor's claim of exempt property . . . must be filed within 30 days after the above date 7/30/86 set for the meeting of creditors." (Order and Notice, June 30, 1986, docketed July 14, 1986.)
10. No objection to Debtor's claim of exemption regarding the 401(k) Plan account was filed within the thirty days following the first date set for meeting of creditors on July 30, 1986.
11. At no time prior to expiration of the thirty days following the first date set for meeting of creditors on July 30, 1986 did anyone request of or receive from the Court an extension of time for filing an objection to Debtor's claim of exemption.
12. At no time did the Debtor file any amendment to his list of property claimed as exempt.
13. On October 1, 1986 the debtor-in-possession filed a complaint (Adversary No. 86 A 1090) against Peat, Marwick seeking turnover of property and an accounting. Paragraph 6 of the Complaint alleged that:
the debtor was a partner in Peat, Marwick and, in conjunction therewith, maintained various monetary accounts, including but not limited to: (a) Capital Withdrawal Account, (b) Profit Withdrawal Account, and (c) Deferred Compensation Account (hereinafter collectively referred to as the "Accounts").
The "Accounts" as thus defined excluded the 401(k) Plan account (see ¶ 8 supra). The Complaint further alleged that "the Accounts are in the possession, custody or control of Peat, Marwick" (¶ 7). The Complaint sought the remedy of an accounting as to "all funds" of the Debtor held by Peat, Marwick (prayer, (c)). The remedy of turnover, however, was sought only as to:
any and all funds in Peat, Marwick\'s possession, custody or control of any kind or nature whatsoever held for the benefit or account of the debtor (excluding only those funds of the debtor invested in the Peat Marwick 401(k) Plan). . . .
Prayer, (a). (Emphasis supplied.) The Complaint also sought "such other and further relief as this Court deems just and equitable." Prayer, (d).
14. On February 9, 1987, while the foregoing adversary proceeding against Peat, Marwick was still pending, Debtor's bankruptcy case was converted to a Chapter 7 case. This Court on March 12, 1987 issued an Order and Notice announcing a new meeting of creditors to commence April 7, 1987, and stating that "any objection to the debtor's claim of exempt property (Schedule B-2) must be filed within 30 days after the conclusion of the meeting of creditors."
15. On February 12, 1987, John H. Redfield, Esq. filed his acceptance of his appointment as trustee.
16. On April 6, 1987, the Trustee filed an objection to Debtor's claim of exemption regarding his 401(k) Plan account held by Peat, Marwick. The objection was served by mail upon Debtor's counsel and other persons, but not upon Debtor himself or upon Peat, Marwick.
17. The Trustee proceeded as Plaintiff, in the place and stead of Debtor, in Adversary No. 86 A 1090 against Peat, Marwick. At no time was the Complaint against Peat, Marwick amended.
18. On September 17, 1987 this Court in Adversary No. 86 A 1090 entered a consent order resolving the Trustee's Complaint against Peat, Marwick (Agreed Order, 9/17/87). The Order concluded as follows:
IT IS ORDERED that the turnover of the funds from Peat, Marwick to the Trustee be and the same is with prejudice, and upon such turnover, this cause (Adversary No. 86 A 1090) shall be deemed dismissed with prejudice as to Peat, Marwick.
19. Peat, Marwick made payment of $126,112.20 to the Trustee on or shortly after October 12, 1987 and thereby fully satisfied its turnover obligations under the Consent Order of September 17, 1987 in Adversary No. 86 A 1090. On October 27, 1987, after the agreed funds had been paid to Trustee, the adversary case and complaint were ordered dismissed with prejudice without costs pursuant to agreement by and between the parties, all matters having been settled. Neither order specified what accounts the funds turned over came from.
20. Debtor was aware that Peat, Marwick had turned over his partnership accounts to the Trustee in adversary proceeding No. 86 A 1090 and it was his understanding the funds (hereinafter "the 401(k) funds") held in Debtor's account with the 401(k) Plan were not involved. (Hearing Tr. 24, 31 & 46). Debtor believed the 401(k) funds were exempt property that he could properly take and use for his benefit. (Hearing Tr. 24-26, 31 & 39).
21. Sometime in August 1987 Debtor contacted "Peat, Marwick" to inquire how to withdraw the 401(k) funds. (Hearing Tr. 39.) Who exactly Debtor contacted is not clear from the stipulated evidence. Id. The necessary form was sent to Debtor. This form contained the Peat, Marwick logo in the upper left hand corner and is captioned "401(k) Plan." Debtor completed the form. Debtor testified that he submitted it to "Peat, Marwick" to obtain a lump sum withdrawal of his profit sharing account. The handwritten cover letter dated December 18, 1987 was addressed to "Chuck." PM Ex. 5. Who Chuck is, and what his employment position and responsibilities were, are not in evidence. Similarly, the form has a line designated "approved by" and is signed by Kathy Moriarity. Her position is also not in evidence.
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