In re Walker
| Decision Date | 31 August 1990 |
| Docket Number | Bankruptcy No. 88-11850,Adv.No. 89-1129,88-11851,89-1130. |
| Citation | 125 BR 177 |
| Parties | In re Ronald A. WALKER, Debtor. In re Richard A. D'AGOSTINO, Debtor. OXFORD VIDEO, INC., Plaintiff, v. Ronald A. WALKER, Defendant. OXFORD VIDEO, INC., Plaintiff, v. Richard A. D'AGOSTINO, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Michigan |
Stanley T. Dobry, Warren, Mich., for plaintiff.
Carl L. Bekofske, Flint, Mich., for defendants.
The issue in these consolidated adversary proceedings is whether a creditor may be considered as "listed" or "scheduled" for purposes of 11 U.S.C. § 523(a)(3), notwithstanding the fact that the debtors' matrices and schedules list the creditors at an incorrect address.
On August 5, 1988, Ronald A. Walker and Richard A. D'Agostino ("Debtors" or "Defendants") filed their voluntary petitions for relief under Chapter 7 of the Bankruptcy Code. The deadline in these cases for filing a complaint to determine the dischargeability of a debt under § 523(a)(2), (4) or (6) was November 7, 1988. The Debtors received their discharges on November 8, 1988. The Walker case was closed as a no-asset estate on November 9, 1988. The D'Agostino case technically remains open, although the trustee filed a no-asset report on October 10, 1988. The Clerk sent a notice to creditors in each case stating that No subsequent notice was sent in either case.
On April 18, 1989, Oxford Video, Inc. ("Plaintiff") filed an adversary proceeding against each of the Defendants, alleging that the debt owed to it and scheduled by the Defendants was non-dischargeable under 11 U.S.C. § 523(a)(3), (4) and (6). The Plaintiff alleged in its complaints that the Defendants, who rented the Plaintiff's videotapes to the public from a pizza parlor which they operated, had breached an agreement with the Plaintiff to forward the rental receipts to the Plaintiff. The Defendants denied the substantive allegations. At the conclusion of the Plaintiff's opening statement, the Defendants moved for dismissal on the ground that the complaints were filed outside the time limit set by Bankruptcy Rule 4007(c) and, as the debt had been listed at the inception of each case, the Plaintiff had no cause of action under § 523(a)(3). In the course of argument, it was discovered that the Defendants' Schedules A-3 and mailing matrices did not accurately state the Plaintiff's address. The Plaintiff is located at 153 S. Washington, Oxford, Michigan, 48051. The Debtors, however, listed the address as "153 N. Washington, Oxford, Michigan, 48051." The Plaintiff offered to prove that it never received notice of either bankruptcy case in time to file complaints before the deadline under Rule 4007(c) had passed. Accordingly, the Defendants' motion was denied and proofs were received. The Court must now decide whether the debts were "scheduled" or "listed" for purposes of 11 U.S.C. § 523(a)(3), notwithstanding the fact that the schedules and matrices bear an incorrect address.
The following are the Court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052. The Court has jurisdiction pursuant to 28 U.S.C. § 1334. This is a core proceeding. 28 U.S.C. § 157(b)(2)(I).
In order for the Plaintiff to prevail in this case, then, the Court must conclude: (1) that the debts are non-dischargeable under § 523(a)(2), (4) or (6);1 (2) that the debts were not listed or scheduled; and (3) that the Plaintiff did not have notice or knowledge of the bankruptcy cases in time to seek a determination of dischargeability within the specified time frame.2
With respect to the first of these issues, we note that the parties had an express understanding that the videotape rental receipts were property of the Plaintiff and that the Defendants were to account for such receipts and pay them over to the Plaintiff. The Defendants nevertheless comingled these funds with their own to the eventual prejudice of the Plaintiff. We conclude that the Defendants intentionally comingled these rental receipts with their own funds, without just cause or excuse, and with the knowledge that their action was "substantially certain to result in harm" to the Plaintiff. In re Woolner, 109 B.R. 250, 254 (Bankr.E.D.Mich.1990). The Defendants' debt to the Plaintiff, therefore, is of a type which is ordinarily non-dischargeable under § 523(a)(6).
Turning our attention to the next element essential to a determination of nondischargeability, § 521(1) requires a debtor to "file a list of creditors, and unless the court orders otherwise, a schedule of assets and liabilities. . . ." Pursuant to Bankruptcy Rule 1007(a)(1), the list of creditors must include each creditor's address. Bankruptcy Rule 1007(b), in turn, provides that the schedules of assets and liabilities are to be "prepared as prescribed by Official Form No. 6. . . ." This official form calls for disclosure of the full address for each creditor.
Id. at 456 (citation omitted). So long as an inaccuracy in the listed address is not so serious as to defeat the objective of providing notice to the creditor, then, the debt will be deemed properly scheduled. See id. at 456-57; In re Adams, 734 F.2d 1094, 1098 (5th Cir.1984) ; cf. In re Frankina, 29 B.R. 983, 985 (Bankr.E.D. Mich.1983) ()
Based on the foregoing authorities, we conclude that a creditor has been duly scheduled and listed if the address provided by the debtor is sufficiently accurate to permit delivery by the United States Postal Service to the appropriate party.4 Where a creditor challenges the accuracy of a listed address, the burden should properly fall upon the creditor to establish that the address provided by the debtor was so incorrect as to fall short of this threshold. See Hill v. Smith, 260 U.S. 592, 595, 43 S.Ct. 219, 220, 67 L.Ed. 419 (1923); State of Connecticut v. Duncan, 37 Conn.Super. 825, 438 A.2d 1212, 1214 (1981); King v. Harry, 131 F.Supp. 252, 254-55 (D.D.C. 1955); In re Brown, 27 B.R. 151, 153 (Bankr.N.D.Ohio 1982); 3 Collier on Bankruptcy, ¶ 523.136 (15th ed.1989). Contra In re American Properties, Inc., 30 B.R. 239, 10 B.C.D. 879 (Bankr.D.Kan.1983) (). If the creditor is able to show that the address was inadequate for the purpose intended, the burden then shifts to the debtor to show that, notwithstanding the incorrect address, the "creditor had timely notice or actual knowledge of the case." 11 U.S.C. § 523(a)(3). Hill v. Smith, 260 U.S. at 595, 43 S.Ct. at 220; United States v. Bridges, 894 F.2d 108, 111 (5th Cir.1990); 3 Collier on Bankruptcy, supra.
After due consideration of the evidence adduced at trial, we conclude that the Plaintiff has failed to establish that the error in listing its address was so serious as to thwart delivery by the Postal Service. The only evidence which the Plaintiff submitted on this issue was the testimony of its president, Noreen Addison, to the effect that the Plaintiff never received the notices in question. However, Ms. Addison conceded that, during the time period when the notices of bankruptcy would likely have been delivered, she was frequently out of town.5 No evidence was submitted by the Plaintiff as to its internal procedures regarding receipt and sorting of mail. Compare In re Dodd, 82 B.R. 924, 929 (N.D.Ill. 1987) . Although offered the opportunity to supplement the proofs, the Plaintiff also failed to introduce evidence that the Postal Service would or could not properly deliver the notice of bankruptcy in this case. Ms. Addison acknowledged that she received both notices of discharge which were mailed by the Clerk to the same...
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