In re Visser
| Decision Date | 23 March 1999 |
| Docket Number | Bankruptcy No. 98-38132 RCM-13. |
| Citation | 232 BR 362 |
| Parties | In re David A. VISSER, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Texas |
Joseph Colvin, Fort Worth, TX, for Wells, Felber, Purcell and Kraatz.
Charles R. Chesnutt, Dallas, TX, for Debtor.
On March 16, 1999, came on to be heard the motion of Wells, Felber, Purcell and Kraatz, a law firm ("Wells"), to dismiss on § 109(e) eligibility grounds.1 The issue involved is whether the Wells claim is a "liquidated" debt within the meaning of § 109(e). For the reasons hereafter stated, such motion is granted and this case will be dismissed unless David A. Visser ("Debtor") converts to another chapter within seven days of entry of a final order on this opinion.
On February 13, 1998, Debtor filed a petition under the Bankruptcy Code requesting relief in accordance with chapter 13 of title 11 of the United States Code.
Wells has a proof of claim in these proceedings in the sum of $272,546.71, exclusive of attorney fees. In live testimony, Wells reduced its claim to $263,955.20. Wells filed its claim in its own name, but on behalf of itself and its subrogee, Fidelity & Deposit Company of Maryland ("Fidelity Company"). (Wells Exhibit 10.)
Debtor never objected to the Wells claim,2 and in his final plan he proposed to pay Wells on its filed claim of $272,546.71. Under the plan, the unsecured are to receive approximately 3% of their claims consisting of $170 per month for sixty months, or $10,200. Debtor's position was that the payment was the best he could do and he realized 3% was a small amount on Wells' claim whether it was $160,000 or $272,000, and that is the reason he made no objection to the Wells claim.
Debtor had been employed for 8½ years by the firm of Wells, Felber, Purcell and Kraatz and/or its predecessor law firm, with certain accounting and management duties. While in such employ, a certain level of trust was developed between David Visser and the principals of the law firm.
Debtor resigned from the law firm on or about May 14, 1997.
Debtor admitted that he had misappropriated funds from the law firm's IOLTA Trust Account as well as the law firm's trust account.
Debtor has destroyed records of the law firm in connection with the misappropriation of funds from such law firm. Since the initial destruction of such records, Debtor has been cooperating with Wells in attempting to assist in recovering the moneys misappropriated, and has repaid some of the funds.
Wells' representative testified that $363,549 was stolen and that, after credits and payments, the combined debt due Wells and Fidelity Company was $263,955.
Fidelity Company, Wells' insurance company, paid Wells $225,000 for its loss. Debtor admitted misappropriation of $240,000, but was of the opinion that $240,000 was the starting figure, as opposed to the $363,549.
At the March 16, 1999 hearing, Debtor made a profuse good faith apology to the Wells firm, his family and others, for the grief that he caused to them by his lack of judgment. He apparently had made like apologies to the Wells firm in the past.
Debtor's initial Schedule F showed unsecured debts of $200,539, including a listing of an "unliquidated" claim of $160,000 for the Wells firm. (Wells' Exhibit 2.) His amended Schedule F (Wells' Exhibit 3) showed the same listing for Wells, but, among other things, he omitted a $10,961 debt to his mother Irene Visser. The amended Schedule F showed $186,230 in unsecured debt.
The undisputed evidence was that Fidelity Company paid Wells $225,000 on Debtor's misappropriation; therefore, its subrogee part of the Wells claim was $225,000. Per the amended Schedule F, excluding the Wells and Fidelity Company claim, the unsecured claims were $26,230. Additionally, it was undisputed that, notwithstanding the amendment of Schedule F, Debtor's mother was owed $10,961 on the date of filing. Thus, the undisputed evidence was that, considering only the Fidelity Company subrogee portion of the Wells claim ($225,000), the $26,230, and the $10,961 (and without regard to the balance of the Wells claim), Debtor was ineligible to be a chapter 13 debtor under § 109(e) since his liquidated unsecured debts totaled $262,191. From October 24, 1994 to March 30, 1998, the chapter 13 dollar limits under § 109(e) were $250,000 unsecured and $750,000 secured. The statute was amended to reflect CPI increases as of April 1, 1998. Such conclusion disposes of the § 109(e) issue.
The following brief additional discussion is for the purpose of establishing the context of such conclusion within existing case law.
The undersigned agrees with the following court's disagreement with Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. 1985):
. . . this Court rules that even if the schedules reflect the eligibility requirements are met, if it is determined within a reasonable time that the debts exceed the statutory maximums, the case must be dismissed, or the debtor may be given the opportunity to convert to a different proceeding under the Bankruptcy Code.
Lucoski v. I.R.S. (In re Lucoski), 126 B.R. 332, 338 (S.D.Ind.1991).
In the case of In re Pulliam, 90 B.R. 241, 244, 246 (Bankr.N.D.Tex.1988), the court stated:
See also United States v. Verdunn, 89 F.3d 799, 802 & n. 9 (11th Cir.1996), where the court, citing to numerous authorities, opined that the overwhelming body of precedent is that debts in dispute are included in the § 109(e) computations and further stated:
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