In re Southard
| Decision Date | 14 September 1988 |
| Docket Number | Adv. No. 86-427.,Bankruptcy No. 85-3890-8P7 |
| Citation | 91 BR 160 |
| Parties | In re Marion P. SOUTHARD and Albert J. Southard, Debtors. TAMBAY TRUSTEE, INC., and Stephanie Cates-Harman, Trustee, Plaintiffs, v. Marion P. SOUTHARD, individually and as Co-Trustee, Sun Bank of Tampa Bay f/d/a Sun Bank/Suncoast National Association, Co-Trustee, Regina Maria Southard and Rory Jude Southard, Defendants. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Edwin J. Bradley, Tampa, Fla., for Southard.
Jary Nixon, Tampa, Fla., for plaintiff.
George Howell, Tampa, Fla., for Sun Bank.
ORDER ON MOTION FOR SUMMARY JUDGMENT
THESE ARE consolidated Chapter 7 cases, and the matter under consideration is a Motion for Summary Judgment filed by Marion P. Southard (Mrs. Southard), Regina Maria Southard, and Rory Jude Southard, (Defendants) the Defendants in the above-styled adversary proceeding. It is the contention of these Defendants that as to Counts I and VIII of the Complaint, the Complaint was filed after the applicable statute of limitations had expired, and, therefore, the claims set forth in these counts are time-barred and should be dismissed as a matter of law. The Court has considered the record and finds the undisputed facts relevant to a resolution of the matter under consideration to be as follows:
It appears that sometime in September of 1982, the FDIC, which is the successor in interest of Metropolitan Bank, obtained a final judgment against Mr. and Mrs. Southard in the amount of $454,160.55 based on their default on a loan granted by Metropolitan Bank. This judgment was recorded one year later on November 28, 1983.
On December 27, 1983, Albert J. Southard (Mr. Southard) filed his voluntary Chapter 7 Petition. On December 28, 1983, Stephanie Cates-Harmon was appointed as Interim Trustee and on February 1, 1984, she subsequently succeeded herself as the permanent Trustee. Even though Mr. Southard died in October of 1985, the administration of his estate is yet to be concluded:
On December 31, 1985, Marion P. Southard filed her Chapter 7 Petition. On December 31, 1985, Tam-Bay Trustee was appointed as Interim Trustee. On January 29, 1986, Tam-Bay Trustee likewise succeeded itself as permanent Trustee. On September 4, 1986, this Court entered an Order consolidating the estate of Mrs. Southard with that of Mr. Southard for the specific purpose of allowing the Trustees to file this adversary proceeding, which they did on September 2, 1986.
A second amended complaint of the Trustees was ultimately filed on January 27, 1988. It consists of eight (8) counts. Although there are numerous and sundry claims asserted in the complaint, it is agreed that the narrow question for this Court's consideration is whether or not, based on the time sequence, the claims of the Trustee in the estate of Mr. Southard in Counts I and VIII and the claim of the Trustee in the case of Mrs. Southard in Count VIII are time barred by § 546(a) of the Bankrupty Code. Therefore, to the extent the statutes of limitation apply, those claims should be dismissed.
In their complaint, the Trustees for the estates of Mr. and Mrs. Southard seek to set aside certain transfers by Mr. and Mrs. Southard to Sunbank and to Mrs. Southard, as co-Trustees of an irrevocable trust created on March 3, 1982, by Mr. and Mrs. Southard (Exh. A. attached to Second Amended Complaint). The beneficiaries of the trust are the Southards' children, Regina Maria Southard and Rory Jude Southard. The corpus of the trust consists in part of a parcel of real estate located in South Pasadena, Florida. The Pasadena property was subsequently sold to a third party by a quit claim deed, executed initially by Sunbank as Trustee on April 15, 1983, and the sale proceeds of approximately $145,000.00 were deposited in the trust account on April 18, 1983. The trust corpus also consists of a second parcel of real estate located in Keystone Park Colony, Hillsborough County. Mr. and Mrs. Southard transferred their interests in these properties to the trust on March 3, 1982, the date the trust was created. The remainder of the corpus of the trust consisted of two mortgage receivables which were assigned to the trust on September 13, 1982; corrective assignments were later executed on a date undisclosed in the record. There is no dispute that the parcels of real estate and the mortgage receivables were owned by Mr. and Mrs. Southard prior to the commencement of the voluntary petition filed by Mr. Southard on December 27, 1983. It is further without dispute that the conveyance of the two parcels and the mortgage receivables to the trust were not recorded in the public records of Hillsborough or Pinellas County at the time Mr. and Mrs. Southard filed their respective Chapter 7 Petitions.
The Trustee's challenge in Count I of the complaint is based on § 544(a) of the Bankruptcy Code. It is the Trustee's contention that the transfer of Mr. Southard's interest in the real properties and the mortgage receivables is ineffective against the Trustee by virtue of the special voiding powers granted to the Trustee by § 544(a) of the Bankruptcy Code. This contention is based on the undisputed fact that none of the transfers were recorded and, therefore, the interests of the trust in these properties would be inferior to the interest of a bona fide purchaser and to the interest of a hypothetical judgment lien creditor granted by § 544(a). In Count VIII of the Complaint the Trustee seeks to avoid all conveyances by Mr. Southard to the trust pursuant to § 544(b) of the Bankruptcy Code on the grounds that the transfers would be voidable under state law by an unsecured creditor as fraudulent conveyances pursuant to Fla.Stat. § 726.01. Therefore, so can the Trustee upon showing the existence of an actual creditor of Mr. Southard holding a valid, unsecured claim.
In order to determine whether or not the claims of the Trustee of the estate of Mr. Southard are or are not time barred, one must consider the provisions of the Bankruptcy Code which deal with the limitations on the trustee's voiding power under § 546. § 546(a) of the Bankruptcy Code governs the time within which the Trustee may file an adversary proceeding based on § 544 of the Bankruptcy Code, and provides in relevant part as follows:
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