In re Simeone
| Decision Date | 13 November 1997 |
| Docket Number | Adversary No. 97-0654DAS.,Bankruptcy No. 97-13506DAS |
| Citation | 214 BR 537 |
| Parties | In re Ronald SIMEONE, Debtor. Ronald SIMEONE, Plaintiff, v. Jeanne[1] SIMEONE, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
COPYRIGHT MATERIAL OMITTED
Lee M. Herman, Broomall, PA, General Counsel for Debtor.
Michael P. Pierce, Pierce & Hughes, P.C., Broomall, PA, Special Counsel for Debtor.
L. Theodore Hoppe, Jr., Black & Associates, Inc., Media, PA, for Defendant.
Edward Sparkman, Phila., PA, Standing Chapter 13 Trustee.
Presently at issue is a proceeding ("the Proceeding") initiated by RONALD SIMEONE ("the Debtor") to equitably distribute the marital property regarding which a dispute remains between the Debtor and his ex-wife, JEANNE SIMEONE ("the Wife"), consisting mostly of three parcels of real property. Considering all of the factors set forth in the applicable state law, 23 Pa.C.S. § 3502(a), which are relevant to this dispute, plus the facts that the Debtor has been in possession of all of the properties in issue for the past nine years and that he does not appear to be a responsible financial manager, we hold that a fair and equitable distribution of the assets is to give the Wife full title to two triplexes and to allow the Debtor to keep a property in which he operates a motor vehicle repair service. To even the distribution, we will allow the Debtor to retain his modest IRA, and we hold that our disposition eliminates all of the otherwise secured claims of the Wife against him. We also fix the future rent of the Debtor, who resides in one unit of one of the triplexes, at $600/month including utilities.
The parties were married on December 8, 1973. After a separation in November 1985, they reconciled, apparently in 1987, but separated permanently on December 1, 1988. The Wife filed a Complaint for Divorce in the Court of Common Pleas of Delaware County ("the C.C.P.") on August 6, 1986, which she resumed after the reconciliation failed, and a bifurcated divorce was entered on August 10, 1990.
The docket entries of the C.C.P. action reflect continuous efforts of the Wife to alter the status quo, which left the Debtor in possession of all three parcels of real estate owned by the parties by the entireties at separation. These included two triplexes at 50-52 Windemere Avenue ("Windemere") and 180 North Union Avenue ("Union"), Lansdowne, Pennsylvania, valued in March 1997 by Kenneth P. Barrow, Jr., a C.C.P. court-appointed broker, at $150,000 and $110,000, respectively, and a building housing Ron's Car Care ("Ron's"), the Debtor's auto repair service business, at 195 North Wycombe Avenue, Lansdowne, Pennsylvania ("Wycombe"), which is adjacent to the Union property, the range of values of which Barrow fixed at $115,000 to $125,000.
Although the Debtor was ordered to pay all real estate taxes due on all of the properties, the Wycombe property was sold at a September 11, 1995, tax sale. Conveniently, the purchaser was the Debtor's current wife, Susan Whiteside, for $21,495.86.
The Union property was damaged by a fire in 1985. The Debtor collected, but has not accounted for, insurance proceeds which he testified amounted to $62,000. He further testified that Union was rehabilitated between 1988 and 1993 with these proceeds and loans of $44,000 from his parents, Albert and Mary Louise Simeone ("the Parents").
The first floor unit at Windemere was the parties' residence during their marriage and remains the Debtor's residence. The Wife claimed that $30,000 of the Union insurance proceeds were used to install a swimming pool at this property. Both triplexes are fully tenanted at present, but the Debtor claimed that there have been periodic vacancies over the years, not quantified by his testimony nor his voluminous written records.
On March 7, 1997, a Divorce Hearing Officer ("the DH Officer") submitted recommendations which proposed a sale of the properties, a 55-45 division of the proceeds in favor of the Wife, and a $5,000 award towards her counsel fees in light of the Debtor's "uncooperative ... posture ... resulting in excessive legal expenses." The Debtor excepted to this Recommendation and the matter percolated further in the C.C.P. for two years. The last C.C.P. order, on March 12, 1997, directed the Debtor to respond to certain outstanding discovery of the Wife within seven days.
On March 24, 1997, possibly to avoid complying with that order, the Debtor filed the instant individual Chapter 13 bankruptcy case. On April 4, 1997, the Wife moved for relief from the automatic stay in this court to resume the C.C.P. action. After a hearing of that date, we entered an order of April 24, 1997, stating that, unless the Debtor or the Standing Chapter 13 Trustee, Edward Sparkman, Esquire, commenced an action to pursue equitable distribution in this court by May 15, 1997, relief would be granted to the Wife. This order was consistent with our holdings in In re Sokoloff, 200 B.R. 300, 301 (Bankr.E.D.Pa.1996); In re Simpson, 140 B.R. 857, 860 (Bankr.E.D.Pa. 1992); and In re Ziets, 79 B.R. 222, 224 (Bankr.E.D.Pa.1987), aff'd, 1988 WL 220217 (E.D.Pa.1988), expressing reluctance to allow equitable distribution proceedings, which necessarily involve significant estate assets, to be maintained in nonbankruptcy forums. The parties both appeared satisfied with this result, the Debtor because he could avoid the C.C.P. action and the Wife because it presented a prospect of a swift final resolution of the matter and a change of the status quo.
The Debtor then filed the instant Proceeding on May 15, 1997. After two continuances it was tried on October 1, 1997. After completion of the trial, we entered an order allowing the parties an opportunity to supplement the record with depositions of experts relating to potential environmental contamination of the Wycombe and Union properties, and to make initial submissions by October 31, 1997. In addition, they were each given leave to submit any replies to their respective opponent's initial submission by November 7, 1997. Although we denied an attempt of the Debtor to depose an expert addressing the tax sale of the Wycombe property, and the Debtor then chose not to take any depositions, the Debtor saw fit to attach a report regarding contamination of Wycombe to its brief. That brief was, moreover, submitted only after we denied a request for a week's extension which was opposed by the Wife.
On November 5, 1997, at a hearing originally scheduled to determine the consequences of any late submission by the Debtor, we shared with the parties our general intention to attain the instant result, and invited any comments. Only the Wife chose to submit a reply, therein vigorously protesting the Debtor's attempt to submit the environmental report as an exhibit to his brief and also protesting our proposed award as allegedly distributing to her only forty-seven (47%) percent of the marital estate. Much of the argument focused upon our reluctance to direct the Debtor to pay any part of the claim of the Wife's counsel for fees and costs amounting to $73,061.64.
The confirmation hearing in the main bankruptcy case was originally scheduled on September 16, 1997, and has now been continued to December 16, 1997. The only timely proofs of claim filed were (1) a secured claim of $25,484.65 by Eleanor P. Guille, who holds a blanket mortgage against the Union and Wycombe properties which appears to be the only valid outstanding mortgage against any of the properties; (2) secured claims reflecting that 1995 and 1996 real estate tax liens were filed against Windemere and Union, in the respective amounts of $10,682,44 and $5,948.04, by the Delco Tax Claim Bureau; and (3) an unitemized secured claim of $435,746.83 filed by the Wife. An objection to the Wife's claim was filed by the Debtor on October 16, 1997, and is listed for a hearing on December 9, 1997.
The Debtor's plan contemplates payments of $100 monthly for 36 months. Holders of "two mortgages" on Union are to be paid outside of the plan. The reference to a mortgage other than that held by Guille is apparently to a Mortgage of September 6, 1995, on the Union and Wycombe properties in favor of the Parents in the amount of $71,741.00. However, as the Parents' Mortgage was executed only by the Debtor, it appears to be invalid, and cannot constitute a valid secured claim against at least the Union property.
The issues presented were simplified in comparison to the panoply of matters potentially at issue in an equitable distribution dispute by the parties' agreement that all matters regarding the division of personalty have been resolved by agreement or rendered moot by the passage of time except the distribution of the Debtor's Individual Retirement Account ("IRA"), valued at $10,000. The testimony therefore focused on the realty.
On this subject, the Debtor produced an inch-thick volume including copies of a myriad of receipts for services and repairs allegedly performed to maintain the properties from 1988 through 1995, and similar information updated to the time of trial. The 1988-95 volume is fronted by a page which purports to summarize its contents, although we could not perceive the correlation. The bottom line of this summary reports an excess of expenditures over income of $365,072.83.
These records were not supported by federal tax returns, as the Debtor had not filed any returns between 1988 and the present as of the date of his bankruptcy filing. He recently had returns prepared for tax years 1992 through 1996, which were admitted into evidence, and it was noted that completion of returns for tax years 1988 through 1992 were a work in progress. The tax returns, rather than reflecting any losses in connection with the properties, reported income of $5,621 in 1996, a break-even in 1995, and income of $1,964.12,...
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