In re Tower Metal Alloy Co.
| Decision Date | 02 August 1996 |
| Docket Number | Bankruptcy No. 91-02828. Adversary No. 94-0279. |
| Citation | 200 BR 598 |
| Parties | In re TOWER METAL ALLOY COMPANY, Debtor. Ruth A. SLONE-STIVER, Plaintiff, v. Sharon BROOCK, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
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John Paul Rieser (Rieser & Marx, of counsel), Dayton, Ohio, for Plaintiff/Trustee.
Richard Boydston, Benesch, Friedlander, Coplan & Aronoff, Cincinnati, Ohio, for defendants.
DECISION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO COMPEL
This matter is before the court upon the Plaintiff-Trustee's Motion to Compel (Doc. 22-1), Defendants' Memorandum in Opposition (Doc. 28-1), and the hearing held May 6, 1996.
The court has jurisdiction pursuant to 28 U.S.C. §§ 157(a) & 1334 and the standing order of reference entered in this district. This proceeding constitutes a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) & (H).
1. Plaintiff Ruth A. Slone-Stiver ("Plaintiff-Trustee") is a duly appointed, qualified, and acting Chapter 7 trustee of the bankruptcy estate in Case No. 91-02828 in this court.
2. Leslie R. Broock is a principal shareholder, director, and officer of Tower Metal Alloy Company, the corporate debtor in Case No. 91-02828. Leslie Broock is presently the target of a grand jury investigation.
3. Defendant Sharon A. Broock is and has at all times relevant to this adversary proceeding the wife of Leslie R. Broock. Defendants' Proposed Findings of Fact, ¶ 2. Sharon Broock is presently a subject of a grand jury investigation.
4. Defendant Ben Broock is the father of Leslie R. Broock. Testimony of Ben Broock; Defendants' Proposed Findings of Fact, ¶ 11.
5. Defendant Mindi L. Broock is the daughter of Leslie R. Broock. Testimony of Ben Broock; Defendants' Proposed Findings of Fact, ¶ 12.
6. Defendant BMS, a.k.a. B.M.S. ("BMS"), is an entity whose nature is in dispute.
7. BMS stands for Ben, Mindi, and Sharon. Testimony of Ben Broock.
8. The only records regarding the name "BMS" or "B.M.S." in the office of the Ohio Secretary of State concern a corporation which has no apparent connection to Defendant BMS in this case. Defendants' Exhibits 9 and 10; Defendants' Proposed Findings of Fact, ¶ 22.
9. A checking account, number 0518524 in the name of BMS, was established at Provident Bank in September 1992. Signatories on the BMS checking account were Ben Broock and Mindi Broock. Plaintiff's Exhibit 4. The account existed until at least July of 1993. Plaintiff's Exhibit 25.
10. Separate accounting sheets were kept in the BMS name. Plaintiff's Exhibit 13.
11. A Sole Proprietorship Certificate dated September 4, 1992 for BMS was filed with Provident Bank. The Certificate lists Ben Broock and Mindi Broock as authorized signatories for the BMS checking account. The Certificate, signed by Ben Broock, states at the outset the following: "I, the undersigned, do hereby certify that I am doing business under the name and style of /BMS/ that no one else has any right, title or interest therein, and that said business is unincorporated." Plaintiff's Exhibit 5.
12. The billing address for the BMS checking account is the home address of Leslie R. Broock and Sharon Broock. Plaintiff's Exhibit 4; Defendants' Proposed Findings of Fact, ¶¶ 10 and 15. This address was also used in conducting BMS transactions. Plaintiff's Exhibits 6, 8, 26, and 27; Defendants' Proposed Findings of Fact, ¶ 18.
13. Scrap metal and other items were purchased and sold under the BMS name. Plaintiff's Exhibits 2, 3, 6, 7, 8, 9, 13, 26, and 27; Defendants' Proposed Findings of Fact, ¶ 17. Business was conducted by Ben Broock under the BMS name. Plaintiff's Exhibits 2, 3, 6, 7, 8, 9, and 13.
14. Checks drawn on the BMS checking account were written in Sharon Broock's handwriting. Testimony of Mindi Broock; Plaintiff's Exhibit 7. These checks were signed by Ben Broock. Plaintiff's Exhibit 7.
15. A check, dated January 27, 1993 and signed by Ben Broock, was drawn on the BMS checking account in the amount of $19,000. The payee on the check was Leslie Broock. The memo line of the check reads: "For Repayment of Loan." Plaintiff's Exhibit 11.
16. Defendant Springmore, Ltd. ("Springmore") is a general partnership with partners Leslie Broock and Sharon Broock. Defendants' Proposed Findings of Fact, ¶ 23.
17. Springmore conducted the business of horse training and showing. Plaintiff's Exhibits 23 and 24; Defendants' Proposed Findings of Fact, ¶ 25.
18. A statement from Equine Medical Associates, Inc. dated August 31, 1992, is addressed to "Mindy Broock" and Springmore, LTD. Plaintiff's Exhibit 19.
19. A credit card, in the name of Springmore, Ltd., was used on different occasions to purchase food and gasoline. On one occasion the charge slip was signed by Mindi L. Broock. Plaintiff's Exhibit 20.
20. Federal partnership tax returns in the name of Springmore, Ltd. were compiled in 1990 and 1991. Plaintiff's Exhibits 23 and 24.
21. Defendant Broockwood Stables ("Broockwood") is an entity whose nature is in dispute.
22. On April 12, 1992, there existed no records with the state of Ohio of the existence of Broockwood, "Brookwood Stables, Inc." or "Broockwood Stables, Inc." as separately registered business entities. Defendants' Exhibits 6, 7, and 8.
23. A checking account, number XXXXXXXX-X in the name of "Broockwood, Leslie or Sharon A. Broock," was maintained at Security National Bank. Plaintiff's Exhibit 28; Defendants' Exhibits 3, 4, and 5.
24. Leslie Broock maintained a separate, personal checking account, number XXXXXXXXXXX, at the Huntington National Bank. Plaintiff's Exhibits 16, 17, 29, 30, and 31. A revised signature card dated December 18, 1984, authorized either Leslie Broock or Sharon Broock as signatories for the Huntington checking account.
25. The Broockwood account was used to pay ordinary household expenses such as utility, grocery, and department store bills. Defendants' Exhibit 5; Defendants' Proposed Findings of Fact, ¶ 31.
26. On June 13, 1991, a petition under Chapter 11 of Title 11 of the United States Code was filed by the debtor, Tower Metal Alloy Company. The proceeding, Case No. 91-02828, was converted Chapter 7 on September 21, 1993.
27. On December 30, 1994, this adversary proceeding was instituted by the Plaintiff-Trustee in order to, among other things recover pre- and post-petition transfers, fraudulent conveyances.
28. On February 13, 1995, Plaintiff-Trustee served Plaintiff-Trustee's First Combined Set of Interrogatories, Document Production Requests, and Requests for Admission to the defendants. Included in that request was an offer by Plaintiff-Trustee of thirty additional days to respond if so requested by Defendants in writing before the response deadline.
29. On March 15, 1995, the deadline for responses to said request, Defendants responded by accepting in writing Plaintiff-Trustee's offer for an additional thirty days to respond.
30. On March 30, 1995, Defendants filed a Motion for Stay, claiming the Fifth Amendment privilege against self-incrimination.
31. On September 8, 1995, this court denied the Motion for Stay "for the fundamental reason that artificial entities have no Fifth Amendment privilege."
32. On September 29, 1995, Leslie Broock, on behalf of BMS, Broockwood, and Springmore, responded to the Trustee's request by claiming a Fifth Amendment privilege against self-incrimination.
33. Plaintiff-Trustee made additional requests for information on January 17, 1996 and January 30, 1996.
34. To date, BMS, Broockwood, and Springmore have not responded to any of Plaintiff-Trustee's request other than by claiming Fifth Amendment privilege.
35. On February 8, 1996, Plaintiff-Trustee moved the court for an order compelling BMS, Broockwood, and Springmore to provide answers to Plaintiff-Trustee's discovery requests. It is this motion, and the subsequent memoranda and filings by the parties regarding this motion, that is before the court today.
Leslie Broock, in response to discovery requests by Plaintiff-Trustee, has invoked the Fifth Amendment privilege against self-incrimination on behalf of defendants BMS, Springmore, and Broockwood. For the reasons more fully stated below, this court finds that defendant BMS, as either the sole proprietorship of Ben Broock or a collective entity, and Springmore, as a collective entity, are not entitled to Fifth Amendment privilege. In addition, although defendant Broockwood is determined by this court not to be a collective entity, the court finds that responses to Plaintiff-Trustee's discovery requests for documents relating to Broockwood would be testimonial, and thus the defendants may properly invoke the Fifth Amendment privilege against self-incrimination as to those requests.
The constitutional privilege commonly known as the privilege against self-incrimination arises out of the Fifth Amendment, which states that "no person . . . shall be compelled in any criminal case to be a witness against himself. . . ." U.S. Const. Amend V; see also Boyd v. United States, 116 U.S. 616, 630, 6 S.Ct. 524, 532, 29 L.Ed. 746 (1886).
When presented with an invocation of this Fifth Amendment privilege, it is the trial court's task to determine if the claim is valid. Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951).
While the Fifth Amendment privilege against self-incrimination applies to civil proceedings when the responses might carry with them criminal consequences, having a valid Fifth Amendment claim does not automatically entitle the claimant not to answer. Compare United States v. Kordel, 397 U.S. 1, 7-8, 90 S.Ct. 763, 766-68, 25 L.Ed.2d 1 (1970) with Hoffman v. United States, 341 U.S. 479, 481, 71 S.Ct. 814, 815-16, 95 L.Ed. 1118 (1951).
In civil discovery, courts must weigh the...
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