In re Wiencko, 7-01-05219.

• Decision Date: 03 April 2002
• Docket Number: No. 7-01-05219.,No. 7-01-05217.,7-01-05219.,7-01-05217.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Virginia
• Parties: In re Akemi Takayama WIENCKO, Debtor. In re Clyde T. Shaw and Doris Lederer, Debtors.

275 B.R. 772

In re Akemi Takayama WIENCKO, Debtor In re Clyde T. Shaw and Doris Lederer, Debtors.

No. 7-01-05219.

No. 7-01-05217.

United States Bankruptcy Court, W.D. Virginia, Roanoke Division.

April 3, 2002.

COPYRIGHT MATERIAL OMITTED

Howard J. Beck, Roanoke, VA, for debtor.

Rebecca Connelly, Roanoke, VA, trustee.

DECISION and ORDER

Ross W. KRUMM, Chief Judge.

Before the court are amended motions to dismiss Chapter 13 petitions of debtors and amended motions for entry of orders determining that certain state court orders are null and void. For the reasons that follow, the motion to dismiss will be granted and the motion for entry of an order nullifying and avoiding state court orders will be dismissed as moot.

BACKGROUND

In 1974, Clyde T. Shaw ("Shaw") founded the Audubon Quartet ("Quartet"). Membership in the Quartet varied over the years. In 1976 and 1997, Doris Lederer ("Lederer") and Akemi Takayama Wiencko ("Wiencko") joined the Quartet, respectively. The above three members constitute the current composition of the Quartet and will be referred to hereinafter as "Quartet Members."¹ David Ehrlich ("Ehrlich") was also a member of the Quartet. He joined the Quartet in 1984.

Allegedly, as early as the 1980s, Ehrlich and the Quartet Members could not agree on the artistic direction of the Quartet. Believing that the differences were irreconcilable, on February 21, 2000, Shaw notified Ehrlich by letter that he was being removed from the Quartet by the other members. Ehrlich responded with litigation.²

One law suit in particular was filed on May 30, 2000, in the Court of Common Pleas of Allegheny County, Pennsylvania. In this suit, Ehrlich sought an injunction against the Quartet Members to prevent them from having corporate meetings, from utilizing corporate assets, and from performing as a musical group. Ehrlich also requested that a custodian be appointed for the corporation.

On or about October 15, 2001,³ the Allegheny County Court of Common Pleas entered an adjudication. The adjudication issued consisted of two separate documents entitled (1) Opinion and Adjudication and (2) Decree Nisi. Relevant to the proceedings here is the Decree Nisi, which directed the Quartet and the Quartet members to jointly and severally pay Ehrlich $611,119.24. The decree nisi states that it "is issued pursuant to PA Rule of Civil Procedure 1517 and shall be final unless appropriate Post-Trial Relief, pursuant to Rule 227.1, is sought within 10 days after the filing of this Decree."

On October 22, 2001, Ehrlich filed a post-trial motion pursuant to Pa. Rule 227.1 and requested the court to modify the decree nisi to: (1) grant Ehrlich access to a power point program; (2) direct the Quartet Members to comply with an arrangement regarding musical scores; (3) compel Shaw to transfer the trade name "Audubon Quartet" to the Quartet; (4) require all defendants to pay additional attorney's fees, costs, and expenses that Ehrlich may incur in connection with this case in all jurisdictions; (5) keep an injunction in tact until Ehrlich's entire judgment is paid; (6) direct the prothonotary to enter judgment in favor of Ehrlich; (7) order that all defendants will be jointly and severally liable for custodian fees, costs, and expenses; and (8) modify the facts in the adjudication to reflect that Shaw, Lederer, and Wiencko are no longer employed at Virginia Tech.

In addition to filing a response to Ehrlich's post-trial motion, the Quartet Members filed their own post-trial motion on October 26, 2001.⁴ They too requested post-trial relief and asked the court to (1) enter an order admitting certain exhibits into the record, (2) modify the decree pertaining to ownership of the power point program, and (3) dissolve a preliminary injunction. A hearing was held on these post trial motions on November 28, 2001.

On November 30, 2001, the Quartet and the Quartet Members filed a supplemental motion for post-trial relief. In this motion the parties requested leave to file this late post-trial motion which noted numerous exceptions to the court's adjudication and decree nisi and which drew into question the propriety of the money judgment awarded to Ehrlich. On December 5 and December 6, 2001, the court denied the supplemental motion for post-trial relief as untimely filed.

On December 12, 2001, the Quartet Members and the Quartet filed petitions in bankruptcy, Chapter 13 and Chapter 7 respectively. The putative debtors mailed a notice of the bankruptcy filings to the Pennsylvania court on December 18, 2001. The notice was filed on the records of the state court case on December 21, 2001. On that same date, the court in Pennsylvania entered an Adjudication and Final Decree, awarding Ehrlich a judgment in the amount of $611,119.24 and dissolving the injunction imposed on the Quartet Members.⁵ On or about January 8, 2002, the court also ordered the Quartet and the Quartet Members to pay the fees, costs, and expenses of a court appointed custodian.

It appears that sometime around December 31, 2001, the Quartet Members and the Quartet filed a third motion for post-trial relief. This motion addressed the December 21, 2001 Adjudication and Final Decree. According to the Quartet Members, this motion was filed to inform the state court of the bankruptcy filings and to preserve the record for appeal.⁶ On January 11, 2002, the court released a memorandum order denying the Quartet Member's last motion for post-trial relief. In the memorandum order the state court reiterates the procedural events and decisions in the case and further states:

The Prothonotary's record shows that a suggestion of bankruptcy was filed by all Defendants on December 21, 2001, the day after I entered my Final Decree. Since my Final Decree was indeed, a "final" order, the pending bankruptcy has no impact on my disposition of the case. Moreover, the Suggestion of Bankruptcy was never served on me.

Ehrlich v. Audubon Quartet, Inc., Case No. GD 00-9438 (Ct.Com.Pl. Jan. 11, 2002) (Memorandum Order).

The Quartet Members argue that the adjudication (particularly the decree nisi) entered on October 15, 2001 was a provisional order and they refer to it as such throughout their pleadings. They further argue that the Adjudication and Final Decree of December 21, 2001 modified the adjudication entered on October 15, 2001. The Quartet Members contend that the entry of the December 21, 2001 order and all of the other post-trial orders were more than mere ministerial acts because they disposed of post-trial motions for relief, the disposition of which required deliberation and the exercise of judicial discretion. Hence, the post-petition orders were entered in violation of the automatic stay of 11 U.S.C. § 362(a).⁷ The Quartet Members request this court to enter an order nullifying and avoiding the December 21, 2001, January 8, 2002, and January 11, 2002 orders of the state court as violating the automatic stay.

Ehrlich contends that the December 21, 2001 Adjudication and Final Decree did not substantively address issues regarding the amount of and liability for the debt in question; thus, as pertaining to the monetary award, the entry of the December 21 order was purely a ministerial act. Additionally, Ehrlich moves for dismissal of the Chapter 13 petitions of Quartet Members, arguing that the Quartet Members are ineligible under 11 U.S.C. 109(e) since their debts exceeds the statutory ceiling imposed therein. Ehrlich argues that the sum awarded him by the state court is sufficiently liquidated to bar the Quartet Members from filing petitions under Chapter 13.

ANALYSIS

The first issue before the court is whether the judgment awarded in the decree nisi (an interlocutory decree) can serve as the basis for determining eligibility under 11 U.S.C. § 109(e). The operative question is whether the debt the Quartet Members owe to Ehrlich is liquidated and exceeds the statutory ceiling. Eligibility under § 109 is a threshold inquiry because the filing of a petition by an eligible debtor affords the debtor the rights and protections embodied in the Bankruptcy Code. The statutory provision defining who may be a debtor states:

(e) Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $290,525 and noncontingent, liquidated, secured debts of less than $871,550 or an individual with regular income and such individual's spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts that aggregate less than $290,525 and noncontingent, liquidated, secured debts of less than $871,550 may be a debtor under chapter 13 of this title.

11 U.S.C. § 109(e). The language of the Bankruptcy Code plainly limits the evaluation of the amount of the debt to that established as of the date the petition is filed. See In re Slack, 187 F.3d 1070, 1075 (9th Cir.1999) (citing 11 U.S.C. § 109(e)); In re Robertson, 84 B.R. 109 (Bankr.S.D.Ohio 1988) (holding debt must be proven to exceed statutory limit at the time of filing).

According to § 109(e), a debtor is ineligible to file under Chapter 13 if he or she has noncontingent, liquidated, unsecured debts in excess of $290,525.00.⁸ The term "liquidated" is not defined in the Bankruptcy Code and the court is unable to find a reported Fourth Circuit case wherein the term is specifically analyzed. BLACK'S LAW DICTIONARY 930 (6th ed.1990) defines the term as "ascertained; determined; fixed; settled; made clear or manifest." A "liquidated debt" is defined as one that is "certain what is due and how much is due." Id.

Courts have endeavored to define the term and, consequently, there are numerous definitions provided in reported cases. One court recognized that the liquidation requirement of § 109(e) concerns the ascertainability of the amount of a debt. In re McGovern, 122 B.R. 712 (Bankr.N.D.I...