In re Yelverton
| Decision Date | 30 January 2013 |
| Docket Number | Case No. 09-00414 |
| Parties | In re STEPHEN THOMAS YELVERTON, Debtor. |
| Court | United States Bankruptcy Courts – District of Columbia Circuit |
The document below is hereby signed.
____________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
Not for publication in
West's Bankruptcy Reporter.
MEMORANDUM DECISION RE CROSS MOTIONS FOR SUMMARY JUDGMENTThe chapter 7 trustee filed objections to the debtor's amended claims of exemption. This matter comes before the court on the debtor's and the chapter 7 trustee's cross motions for summary judgment on the trustee's objections.
On June 18, 2012, this court approved a global settlement negotiated by the chapter 7 trustee that provides for the transfer of the debtor's stock in the family business, Yelverton Farms, Ltd., to his siblings and the mutual release of all claims in consideration of a cash payment to the bankruptcy estate in the amount of $110,000. The debtor subsequently filed amended exemption schedules. The amended exemptions relate to property that is subject to the global settlement. The trusteefiled objections to the amended exemption schedules arguing both that the debtor should not be allowed to amend his exemptions at this late stage in the case and that the property may not be exempted under either the federal or state law exemptions.
Summary judgment may be granted only if there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56. "A dispute over a material fact is 'genuine' if 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Arrington v. United States, 473 F.3d 329, 333 (D.C. Cir. 2006) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). A fact is "material" if it might affect the outcome of the suit under the substantive governing law. Id. To create an issue of material fact, the nonmoving party's factual assertion must be supported by the record. See Hinson ex rel. N.H. v. Merritt Educ. Ctr., 579 F. Supp. 2d 89, 92 (D.D.C. 2008) ().
In evaluating a motion for summary judgment, the court must view the evidence in the light most favorable to the nonmoving party. Arrington, 473 F.3d 329, 333 (D.C. Cir. 2006). "Furthermore, in ruling on cross-motions for summary judgment,the court shall grant summary judgment only if one of the moving parties is entitled to judgment as a matter of law upon material facts that are not genuinely disputed." Footbridge Ltd. Trust v. Zhang, 584 F. Supp. 2d 150, 158 (D.D.C. 2008), aff'd, 358 F. App'x 189 (D.C. Cir. 2009). "The fact that both parties have moved for summary judgment does not mean that the court must grant judgment as a matter of law for one side or the other; summary judgment in favor of either party is not proper if disputes remain as to material facts." Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987).
The following undisputed facts are drawn from Yelverton's and the chapter 7 trustee's statements of undisputed facts, as well as the record in this case.1
On May 14, 2009, the debtor filed a voluntary petition under Chapter 11 of the Bankruptcy Code (11 U.S.C.). The casewas later converted to chapter 7. Dkt. No. 323. Wendell W. Webster was appointed as the chapter 7 trustee. Dkt. No. 336.
Yelverton's principal assets consist of his shares of stock in a family owned business named Yelverton Farms, Ltd., and certain litigation claims filed by Yelverton in the Federal District Court in North Carolina and this court. Tr. Stmt. ¶¶ 2—4.
On May 19, 2009, the debtor filed his schedules. In the schedules, the debtor listed his sole ownership of 1,333 shares in Yelverton Farms, Ltd., but he did not claim any exemption for the Yelverton Farms stock. Yelverton's Stmt. ¶ 2.2 On May 29, 2009, Yelverton filed Amended/Supplemental Schedules. In these schedules, Yelverton listed his sole ownership interest in certain litigation claims against the majority shareholders of Yelverton Farms for dilution and diminution in the value of his equity in the corporation. He did not claim any exemption for the Yelverton Farms stock or the related litigation claims. Tr. Stmt. ¶ 3. On September 27, 2010, the debtor filed an Amended Schedule B on which he listed as personal property the Production Contract with Maxwell Foods, Inc. Yelverton's Stmt. ¶ 5; Dkt. No. 348.
After filing his bankruptcy petition, Yelverton commenced several lawsuits. He filed two adversary proceedings in this court, one seeking turnover of his shares of stock in Yelverton Farms (Adv. Proc. No. 10-10003) and one seeking to avoid the sale of a tract of land in North Carolina (Adv. Proc. No. 10-10004). Yelverton also filed suit in the U.S. District Court for the Eastern District of North Carolina against Yelverton Farms and the majority shareholders, seeking judicial dissolution and liquidation of Yelverton Farms, Ltd., or a mandatory buyout of his stock, among other claims (the "North Carolina case"). Yelverton's Stmt. ¶ 6, Tr. Stmt. ¶ 15.
After the case was converted to chapter 7, Webster, the chapter 7 trustee, was substituted as plaintiff in the North Carolina case. Tr. Stmt. ¶ 16. On March 23, 2012, the trustee concluded negotiations with Yelverton Farms, Phyllis Edmundson, Charles Edmundson, Deborah Marm and Walter Marm, Jr. ("the defendants") for the full and complete settlement and release of all claims asserted by or against the debtor and the defendants in connection with the debtor's ownership interest in Yelverton Farms, Ltd. Id. The settlement provides for the transfer of the debtor's stock to the defendants and the mutual release of all claims, in consideration of a cash payment to the bankruptcy estate in the amount of $110,000. Id.
On May 4, 2012, the trustee filed a motion for approval of the settlement. Tr. Stmt. ¶ 17; Dkt. No. 451. On June 18, 2012, the court held an evidentiary hearing on the motion and approved the settlement. Dkt. No. 477. Yelverton filed objections to the approval of the settlement and objected at the hearing, but he did not raise the issue of exemptions in any of his objections. See Dkt. Nos. 464, 475. The debtor's subsequent motion to vacate the order and for a new trial (Dkt. No. 483) was denied by this court (Dkt. No. 507).
Yelverton then filed a flurry of amended claims of exemption. Since the court issued the order approving the settlement agreement, Yelverton has filed four amended Schedules C, the schedule used for listing property claimed as exempt. On July 22, 2012, he filed Debtor's Amended Schedule C (Dkt. No. 487), in which he claimed as exempt under D.C. Code § 16-910 property he asserts is owned as tenants by the entireties with his former spouse, Senyi.3 The property claimed as exempt is 277 acres in North Carolina, his stock in Yelverton Farms, Ltd., all claims in the North Carolina case, a Mercedes-Benz, all non-bankruptcy claims in two adversary proceedings in this court, and a residence.
On July 24, 2012, Yelverton filed Further Amended Schedule C (Dkt. No. 491), which added more causes of action as exempt as tenancy by the entireties property. Specifically, Yelverton added all claims arising from Yelverton Farms, Ltd., all claims against the defendants in the North Carolina case, all claims by Yelverton during the marriage against any third parties, and all claims for "tortuous [sic] interference with marital relations under North Carolina law."
On July 26, 2012, Yelverton filed Debtor's Amended Schedules and Response to Orders (Dkt. No. 494), which revised the previously filed exemptions by changing the valuations of the property claimed as exempt and adding the Production Contract with Maxwell Foods, Inc. as exempt property. That filing and all prior filings asserted exemptions only under § 522(b)(3).
On August 30, 2012, Yelverton filed Debtor's Supplemental Amended Schedule C (Dkt. No. 519), which claims "additional alternative exemptions" under § 522(d). First, under § 522(d)(5), Yelverton claims an exemption in 1,333.3 shares of stock in Yelverton Farms, Ltd. and in the Production Contract with Maxwell Foods, Inc. He states that the value of each of these claimed exemptions is $7,500. Second, under § 522(d)(11)(E) he claims exemptions as to (1) the income from 1,333.3 shares of stock in Yelverton Farms, Ltd.; (2) thecompensation for loss of income from Yelverton Farms, Ltd.; and (3) Count 1 in Case No. 5:09-cv-331 before the U.S. District Court for the Eastern District of North Carolina. For each of these three exemptions, Yelverton states that the value of the claimed exemption is "limited to reasonable support."
To clarify, Yelverton has claimed exemptions in his Yelverton Farms, Ltd. stock, various litigation claims, and the Production Contract with Maxwell Foods, Inc. as tenants by the entireties property owned jointly with his former spouse pursuant to 11 U.S.C. § 522(b)(3)(B). In the alternative, Yelverton has claimed exemptions in his Yelverton Farms stock, Count I of the North Carolina case, the Production Contract, and compensation for loss of income from Yelverton Farms, Ltd., all pursuant to 11 U.S.C. § 522(d). The trustee has filed objections to Yelverton's amended claims of exemption in his Yelverton Farms, Ltd. stock and the related litigation claims.
To exempt property from the bankruptcy estate, the debtor must file a list of property that the debtor claims as exempt. 11 U.S.C. § 522(l). A debtor asserts his claim of exemptions on Schedule C, "Property Claimed as Exempt." Fed. R. Bankr. P. 4003. Federal Rule of Bankruptcy Procedure 1009(a) permits a debtor to amend his claim of exemptions "as a matter of course at any time before the case is closed," and no court approval isrequired for such an...
To continue reading
Request your trial