In re Weatherspoon

• Decision Date: 18 January 2019
• Docket Number: Case No. 17-56006
• Citation: 605 B.R. 472
• Parties: IN RE: Kenneth Paris WEATHERSPOON, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

605 B.R. 472

IN RE: Kenneth Paris WEATHERSPOON, Debtor.

Case No. 17-56006

United States Bankruptcy Court, S.D. Ohio, Eastern Division.

Signed January 18, 2019

Jeffrey Willis, Willis The Firm Legal Services, Ronald A. Wittel, Jr., 1141 S. High St., LLC, Columbus, OH, for Debtor.

OPINION AND ORDER SUSTAINING OBJECTION TO CLAIM OF EXEMPTIONS

John E. Hoffman, Jr., United States Bankruptcy Judge

I. Introduction

Creditor Thirty Four Corporation ("Thirty Four") objects to the exemptions claimed by debtor Kenneth Weatherspoon (the "Debtor") under sections 2329.66(A)(12)(b) and (c) of the Ohio Revised Code in funds that several asbestos personal injury trusts have paid or will pay to the probate estate of his father, Paris Weatherspoon, Jr. Sections 2329.66(A)(12)(b) and (c) permit a debtor to exempt payments made on account of the wrongful death or bodily injury of an individual of whom the debtor was a dependent. The parties agree that the exemptibility of the funds turns on whether the Debtor was a dependent of his father at the time of his death or during the year leading to his passing, a time when he would have been experiencing bodily injury from the asbestos exposure.

Under Ohio law, an individual is a dependent of another person if he relies on the other person for support in the form of the necessities of life such as food and shelter or the money used to purchase those necessities. Support also may take the form of necessary services that reduce the expenses the dependent must incur to hire someone else to perform the services. For the reasons explained below, the Court concludes that Thirty Four has carried its burden of proving by a preponderance of the evidence that the Debtor did not rely on Paris Weatherspoon for support and thus was not a dependent of his father during the relevant time period.

II. Jurisdiction and Constitutional Authority

The Court has jurisdiction to hear and determine this contested matter under 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See 28 U.S.C. § 157(b)(2)(B). And because exemption disputes "stem[ ] from the bankruptcy itself," the Court also has the constitutional authority to enter a final order adjudicating this matter. In re Hamm , 586 B.R. 745, 747 (Bankr. N.D. Ill. 2018) (quoting Stern v. Marshall , 564 U.S. 462, 499, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) ); see also Murphy v. Felice (In re Felice) , 480 B.R. 401, 432–33 (Bankr. D. Mass. 2012) (holding that "the right to exempt property from the bankruptcy estate stems directly from § 522(b) of the Bankruptcy Code").

III. Procedural History

On September 20, 2017, the Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code along with, among other documents, his schedules of assets and liabilities. He listed his interest in the asbestos funds on his schedule of assets and also included them on his schedule of exemptions. At issue here are the exemptions the Debtor claims under sections 2329.66(A)(12)(b) and (c) of the Ohio Revised Code, which exempt payments made on account of the wrongful death or bodily injury of an individual of whom the debtor is a dependent or was a dependent on the date of the individual's death. Doc. 1 at 22, 25.¹

On October 17, 2017, the meeting of creditors required by § 341 of the Bankruptcy Code was convened. Thirty Four, which holds a state court judgment against the Debtor for unpaid rent in the amount of $31,400 plus interest, participated in the § 341 meeting. During the meeting, its counsel asked the Debtor whether he had been financially dependent on Paris Weatherspoon at the time of his death, and the Debtor testified under oath that he had not. Relying on this testimony, Thirty Four filed an objection to the exemption that the Debtor was asserting in the asbestos funds. Doc. 19. The Debtor then filed a response in which he contended that he had in fact been a dependent of his father. Doc. 23.

Because it was clear that the exemptions under sections 2329.66(A)(12)(b) and (c) would be available to the Debtor only if he were determined to be a dependent of Paris Weatherspoon, the Court entered an agreed order setting an evidentiary hearing on that issue (the "First Hearing"). Doc. 50. The transcript of the First Hearing (Doc. 68) will be referred to as "Transcript I." In addition to hearing the testimony of the Debtor during the First Hearing, the Court admitted into evidence Thirty Four's Exhibits 1–20 and 22–46, as well as the Debtor's Exhibits E, I, J, and the amended claim form (but not the accompanying email) attached to his Exhibit N. Tr. I at 44–47, 103–04.

The Court determined after the First Hearing that discrepancies between the Debtor's testimony and his 2015 federal income tax return required reopening the record. In particular, when the Debtor was asked during the First Hearing how he was able to meet certain expenses after his father passed away on October 24, 2015, he testified that he used income earned in 2015 from the rental of lawn care equipment. The Debtor, however, had not included the amount of that income on his 2015 federal income tax return. And contrary to the Debtor's testimony that he only began receiving social security disability benefits in 2016, Tr. I at 49, 58, the Court discovered after the First Hearing that more than $6,000 of such benefits appeared on his tax return for 2015, a discrepancy that had not been explored by counsel during the hearing. Concluding that justice required reopening the record for the sole purpose of hearing evidence on those two points, the Court entered an order scheduling a second evidentiary hearing in order to receive such evidence (the "Second Hearing"). Doc. 57. The transcript of the Second Hearing (Doc. 70) will be referred to as "Transcript II." The Court heard the testimony of the Debtor and received his Exhibit O into evidence during the Second Hearing.

IV. Findings of Fact

The Debtor, who was not married in 2015, Tr. I at 49, contends that he relied on his father for support during that year in four ways: (1) to work without compensation at the convenience store that the Debtor owned and operated; (2) to assist with the Debtor's transportation needs by giving him a car; (3) to provide free after-school childcare for an elementary-school-age son of the Debtor whom the Court will identify only by the initials "TD"; and (4) to provide cash assistance throughout the year. Tr. I at 11–13, 50–57. According to the Debtor, he used the cash to pay his bills, including bills relating to housing and childcare expenses incurred after his father became too sick to provide childcare. Id. at 11–12, 50–55, 66–67. But the Debtor, who made a number of inconsistent statements under oath, was not a reliable witness, and the Court did not find his testimony to be credible.

Having reviewed the evidence, and having observed the Debtor's demeanor and assessed his credibility, the Court makes the following findings of fact.

A. The Convenience Store

The convenience store the Debtor operated was not his first business venture.

Before beginning operations at the store in early 2015, he operated a lawn-care business during the first half of 2014. Tr. I at 39, Tr. II at 15–16. But after suffering a stroke at the age of 46 in July 2014, Tr. I at 57, Tr. II at 16, the Debtor decided to leave the business behind, leading him to sell his lawn-care equipment in October 2014, Tr. II at 15–16. Some time later, he purchased the convenience store and in February 2015 began operating it under the name of "Angel's Carryout" with a license to sell beer and wine and a license to operate as an Ohio lottery retailer. Tr. I at 52, 74.

Early in 2015, the Debtor's father would help out at Angel's Carryout two or three days a week by "ringing up" customers at the cash register while the Debtor was away from the store on errands. Tr. I at 51–52. Paris Weatherspoon, however, was unable to come to the store during the four to five months before he passed away from lung cancer

on October 24, 2015. Id. at 52, 88. The Debtor therefore could not possibly have been relying on his father to work at the store starting around June 2015. Further, after initially testifying that he needed his father to work at the store for free because he could not afford to pay anyone to do the work, id. at 52, the Debtor's own attorney pointed out—and the Debtor then conceded—that he in fact paid a couple of employees eight dollars an hour to do "heavy lifting stuff that I couldn't do," id. at 53. The Debtor offered no explanation as to why those employees would have been unable to perform the work he said his father did (i.e., operating the cash register while the Debtor was running errands), and it is reasonable to infer that the Debtor would have been able to operate the store without his father's assistance during the entire year, as he admittedly did during the four to five months before his father passed away.² For these reasons, the Court finds that the Debtor did not rely on the services his father occasionally provided at the convenience store.

B. The Debtor's Transportation Needs

Paris Weatherspoon, who did not have a driver's license, gave the Debtor his high mileage 1995 Cadillac DeVille. Tr. I at 56, 72. But the Debtor also owned a truck, and although he stated that the truck "had problems," he provided no testimony or other evidence suggesting that it could not be driven. Id. at 56. In fact, the Debtor claimed a business expense for the truck on his 2015 federal income tax return, stating on the return that he drove the truck over 5,000 miles for work, including using it to commute to the store. The Debtor also stated on the return that the truck was available for his personal use. Ex. 32 at 5. Because the Debtor had his own vehicle available for both work and personal use, the Court finds that he did not rely on his father to provide transportation.

C. Childcare Services for TD

The Debtor...