In Re: Robyn B. Bennitt
| Decision Date | 04 November 2010 |
| Docket Number | AP No.: 05-00164-BGC,Case No.: 05-03935-BGC-7 |
| Parties | In re: Robyn B. Bennitt, Debtor. Rhonda Steadman Hood, Plaintiff, v. Robyn B. Bennitt, Defendant. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama |
The matter before the Court is Creditor Hood's Motion and Brief in Support of Summary Judgment filed on March 31, 2010. Docket No. 135. After notice, a hearing was held on April 14, 2010. The plaintiff, Ms. Rhonda Steadman Hood; Ms. Virginia P. Meigs, the plaintiff's attorney; and Mr. Henry E. Lagman, the defendant's attorney, appeared.
The matter was submitted on the plaintiff's motion; the exhibits attached to that motion, including excerpts from the deposition of the defendant taken on July 2, 2008; the Affidavit filed by the defendant on February 16, 2010, Docket No. 129; the Defendant Robyn Bennitt's Counter Affidavit and Response to Creditor Rhonda Hood's Motion and Brief in Support of Summary Judgment filed on March 17, 2010, Docket No. 134; briefs in support of and in opposition to the motion; the record in this case; and arguments of counsel.
As explained below, the Court finds that there are no genuine issues of material fact, and the plaintiff is entitled to judgment as a matter of law.
The litigation between the parties began on December 13, 1999, when the plaintiff filed her original complaint in state court. The debtor filed the pending case on April 21, 2005. The plaintiff filed the pending adversary proceeding on July 14, 2005.
Loosely calculated, the parties have been litigating their differences for over ten years. During the time in this Court both parties have filed summary judgment motions, all of which this Court denied. See Hood v. Bennitt (In re Bennitt), 348 B.R. 820 (Bankr. N.D. Ala. 2006); Hood v. Bennitt (In re Bennitt), Case No. 05-03935, A.P. No. 05-00164, 2007 WL 951828, (Bankr. N.D. Ala. March 27, 2007); and Hood v. Bennitt (In re Bennitt), Case No. 05-03935, A.P. No. 05-00164, 2007 WL 1805085 (Bankr. N.D. Ala. June 21, 2007).
The plaintiff and the defendant are both attorneys. The plaintiff holds a state court judgment against the defendant which the plaintiff obtained prepetition based on non-payment of referral fees.1
In this current phase of the parties' litigation the plaintiff seeks to have the defendant's discharge denied pursuant to Section 727(a)(3) of the Bankruptcy Code. 11 U.S.C. § 727(a)(3). That section provides:
The court shall grant the debtor a discharge, unless-(3) the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case;
Whether the debtor's discharge should be denied for this reason depends first on whether she did in fact keep records as required and second, if she did not, was she justified in not keeping those records. The discussion below of: her response to production of documents; records relating to her personal property; records relating to her accounts receivables; her bank account statements; her income tax returns; and specific facts relating to section 727(a)(3) proves for the most part that she did not keep the required records and did not justify why she did not keep them. The only evidence submitted to counter these facts are the defendant's two affidavits, which are also discussed below.
To support her complaint, the plaintiff served the defendant with a notice to produce 27 categories of documents. Notice to Take Deposition and for Production of Documents, Exhibit B1 to Creditor Hood's Motion and Brief in Support of Summary Judgment, Docket No. 135-3 (hereafter "Exhibit B1"). In written response to thatrequest, the defendant answered "None" to 23 of those categories, thus signifying that she had no such documents. Production by Robyn Bennitt in Response to Requests for Production of Documents, Exhibit B2 to Creditor Hood's Motion and Brief in Support of Summary Judgment, Docket No. 135-4 (hereafter "Exhibit B2").2
The defendant did not list any real property on her petition. She listed personal property of: $3,300 in an account at First Commercial Bank; $400 worth of acrylic paintings; $14,261.10 in accounts receivable; $100 in clothing; $25 in costume jewelry; and a 1996 Lexus automobile, which she valued at $300 because it was inoperable and needed repair.
In regard to the defendant's personal property record keeping, the plaintiff has not produced any evidence that it is usual for someone not to maintain records with respect to personal attire or household decor or that any such record keeping is generally expected or done. The Court cannot find, under these circumstances, that the defendant had a responsibility to maintain such records. In regard to the defendant's cash in the bank, the Court could not verify this information because bank records were not produced. In regard to the automobile, the defendant indicated that it was titled in her husband, not her. She therefore did not have any responsibility to maintain records about it.3
The debtor's accounts receivables are the most substantial asset she listed in her petition. In her deposition, she frankly admitted that she neither maintains nor keeps any financial records or books of account of any sort, and, more to this point, has no recorded information from which anyone could determine the amount, aging, nature or any other details pertaining to the accounts receivable owed to her when she filed her bankruptcy petition.
The plaintiff asked the defendant to produce all of her personal bank statements, as well as those for her business account, from 1996 to present. That request was over broad. The defendant needed to produce only bank statements from the month she filed bankruptcy and for a reasonable number of months preceding. If she had, those statements would have revealed a great deal about the condition of the debtor's financial situation and business dealings when she filed bankruptcy. However, the question of how many pre-bankruptcy bank statements the defendant should have produced is academic because she did not produce any bank statements either for the month in which she filed her bankruptcy case, or for any month preceding the filing or, for that matter, any months immediately following that filing. The few that she did produce, namely for one month in 2007 and for the first six months of 2008, are of no use for ascertaining her financial condition or business dealings at or around the time when she filed bankruptcy almost 3 years before.
In her written response to the plaintiff's production request, the defendant offered an explanation of why she did not produce her bank statements. She explained that she could not produce bank statements for the months relevant to the plaintiff's 727(a)(3) inquiry because she did not have a personal bank account and that her practice was not to retain bank statements for her business account. She stated, "I don't keep statements and I do not have a personal bank account." Exhibit B2. Her explanation is contradicted in part because she retained bank statements for at least one month in 2007 and for the first six months of 2008. In any event, for the purpose of complying with the plaintiff's production request, the defendant could have easily obtained the relevant past statements from the bank. She did not.
The plaintiff asked the defendant to produce copies of her income tax returns for 1996 through 2007 or any other documents pertaining to income earned in those years. That request is over broad. It seeks returns for years after 2005 as well as for yearswhich passed long before the defendant filed her bankruptcy petition. However, again this is academic because the defendant did not produce a tax return for any of the years in the request including the year in which she filed bankruptcy or the year preceding her bankruptcy filing. In her deposition, she explained that she did not file tax returns in either 2006 or 2007, and does not have copies of the returns that she filed in the years prior to that. She offered no explanation or justification for her failure to maintain copies of her tax returns, or to produce copies of her tax returns, even though she could have obtained those copies, or abstracts of the same, from the Internal Revenue Service.
Section 727(a)(3) does not require a debtor to produce any particular type or class of documents as a condition precedent to obtaining a discharge. Hence, the debtor's failure to produce particular types of documents such as tax returns or bank statements is not grounds for denying her discharge pursuant to 727(a)(3) per se. However, she is required to have maintained recorded information of some nature from which her financial condition or business dealings can be ascertained. In that regard, the plaintiff specifically asked the defendant to produce any documents relating to her "financial condition" or "financial affairs."
Specifically the plaintiff asked the defendant to produce:
Exhibit B1.4
The defendant's written response to both requests was "None," thus signifying that she had not kept, preserved, or maintained any such documents. Exhibit B2. In her deposition, she confirmed that she does not keep business records of any sort or any records of her financial...
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