Lawson v. Shehan (In re Lawson)

• Decision Date: 08 March 2019
• Docket Number: AP NO.: 5:18-ap-01079,CASE NO.: 5:18-bk-13620
• Citation: 598 B.R. 243
• Parties: IN RE: Celesta K. LAWSON, Debtor Celesta Lawson, Plaintiff v. Linda Shehan, Defendant
• Court: U.S. Bankruptcy Court — Eastern District of Arkansas

598 B.R. 243

IN RE: Celesta K. LAWSON, DebtorCelesta Lawson, Plaintiff

v.Linda Shehan, Defendant

CASE NO.: 5:18-bk-13620

AP NO.: 5:18-ap-01079

United States Bankruptcy Court, E.D. Arkansas, Pine Bluff Division.

Signed March 8, 2019

Jeremy Bueker, Bueker Law Firm, Stuttgart, AR, for Plaintiff.

Linda G. Sheehan, Dermott, AR, pro se.

MEMORANDUM OPINION AND ORDER

HONORABLE RICHARD D. TAYLOR, UNITED STATES BANKRUPTCY JUDGE

Celesta K. Lawson, the debtor ("debtor"), filed her Complaint for Turnover and Contempt, Conversion, and to Determine Extent Validity of Lien ("Complaint") on July 26, 2018. After the time to file an answer had run without a response, the debtor filed a Motion for Default Judgment ("Motion") on October 30, 2018, at docket entry 7. The court set the Motion for hearing on January 24, 2019. The debtor appeared personally and through her counsel; the defendant, Linda Shehan ("Shehan"), appeared pro se. The court held a trial on the merits without objection and pursuant to Federal Rule of Bankruptcy Procedure 7055. At the conclusion of trial, the court took the matter under advisement. For the reasons stated herein, the concurrent relief requested in both the Motion and Complaint is denied.

I. Jurisdiction

This court has jurisdiction over this matter under 28 U.S.C. §§ 1334 and 157. This is a core proceeding under 28 U.S.C. § 157(b)(2)(C), (E), and (K). The following opinion and order constitutes findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052.

II. Background

The Complaint is initially straightforward. The debtor alleges that she filed her Chapter 13 bankruptcy on July 5, 2018. (Compl., at ¶ 1.) Prior to her filing, on July 3, 2018, Shehan "repossessed" the debtor's 2011 Toyota Corolla ("Corolla"). (Compl., at ¶ 4.) The debtor subsequently informed Shehan of her bankruptcy proceeding, and Shehan initially refused to return the vehicle based on advice of counsel. (Compl., at ¶ 6.) Shehan later returned the Corolla on July 21, 2018, but "several items of personal property and the license plate were missing." (Compl., at ¶ 7.) So far, this is a classic case of a secured creditor repossessing collateral, a motor vehicle with valuable contents, and failing to fully account for the same after bankruptcy is filed.

The debtor, however, is apparently conflicted over her exact contractual and legal relationship with Shehan. Specifically and yet ambiguously, the Complaint references Shehan as both a "secured creditor" to be paid in full and one to whom "no debt" is owed with no collateral and no payment. (Compl., at ¶ 10.) Specifically,

That, pursuant to [the debtor's] Narrative Statement of Plan, [Shehan] is a secured creditor and provisions are made therein to pay the full any debt on the vehicle in question but there is no debt on the vehicle only a lien which was placed on it without [the debtor's] knowledge or permission when she was married to [Shehan's] son and when [Shehan] loaned money to her son. There is no writing evidencing a debt owed to [Shehan] by [the debtor].

(Compl., at ¶ 10.)¹

Consonant with the debtor's assertion that she had not known or consented to the imposition of a lien, the debtor also alleges in her Complaint that Shehan transferred the car title to Shehan's name, notwithstanding that Shehan "did not have any legal authority to transfer the title." (Compl., at ¶ 9.)

The debtor's Complaint alleges three causes of action against Shehan: (1) that Shehan converted the debtor's personal property; (2) that Shehan should be held in contempt for violating this court's automatic stay order; and (3) that the court should order Shehan to transfer title to the Corolla back to the debtor. At trial, debtor's counsel withdrew any issues concerning the Corolla or the title, as Shehan returned the vehicle and made the necessary transfer before trial. Thus, the remaining issues revolve solely around the items of personalty, not specifically described in the Complaint, supposedly in the Corolla when repossessed by Shehan, for which the debtor now seeks damages, including contempt.

III. Findings of Fact

Stated succinctly, the debtor's position is that she borrowed no money from Shehan on the Corolla, that she granted Shehan no lien, that Shehan had no right to repossess her Corolla or transfer title, and that valuable contents were missing upon return. Shehan admits a few items, but contends that she gave back everything she saw or knew to be in the vehicle. (Trial Trans., Jan. 24, 2019, ECF No. 14, at 24.) The two directly conflicting versions are unreconcilable. Resolution requires context, convincing exposition, corroboration—direct or inferred, and a measured assessment of credibility. In this instance, these factors weigh heavily and almost exclusively in favor of Shehan.

1. Loan to the Debtor

A close examination of the record exposes the debtor. First, a loan exists, and it was a loan from Shehan to the debtor. Specifically, by check dated March 13, 2016, Shehan paid off an approximate $ 5000 balance owed by the debtor on the debtor's Corolla. (Tr. Trans., at 20–21.) Shehan testified that she and the debtor had a verbal agreement, stating, "[s]he did not—it was verbal that they, you know, was going to pay me back for the car, because she was having trouble paying her car payment, she couldn't even pay her credit card payments." (Tr. Trans. at 14.) Further, Shehan testified that "[the debtor] had only paid 750 [back to Shehan] on the car when [the debtor and Shehan's son] went their separate ways." (Tr. Trans. at 13.) Also,

And with that amount that was—she's asking for, may be true, you know, in her mind, but the car—she knew what she owed on the car. She had only paid 750 on the car when they went their separate ways. And I did pay off the car. And she would not have signed me to be lienholder if she did not know that she owed for that car. Yes, she was with my son, but she's a grown woman, and she signed that. So, she knew that she still owed me 5,000 some odd dollars on that car. And I asked her to make a payment and she never attempted to make a payment, not one payment.

(Tr. Trans. at 13.) Shehan offered the only testimony on this issue; the debtor did not address or contradict Shehan's testimony in any way regarding a verbal agreement whereby Shehan extended a loan to the debtor to pay off her debt on her Corolla.

2. Security Agreement From the Debtor

Second, the debtor alleged in her Complaint that she did not grant Shehan a lien and testified in court that she did not know how Shehan got title to the Corolla transferred to her name. (Compl., at ¶ 10; Tr. Trans. at 8.) In fact, there is a security agreement signed by the debtor, not her husband. (Tr. Trans. at 15; Shehan's Ex. A.) Shehan's Exhibit A is a Security Agreement (Motor Vehicle) ("Security Agreement") dated May 24, 2016, shortly after Shehan paid off the debtor's debt on the Corolla. (Tr. Trans. at 14–15.) The Security Agreement describes the Corolla and is signed by the debtor as "debtor(s)." (Shehan's Ex. A.) Further, Shehan obtained possession of the title to the Corolla after she paid off the debtor's debt. (Tr. Trans. at 21.) Again, only Shehan elucidated this issue or the existence of the Security Agreement with the debtor's signature thereon; the debtor neither addressed nor contradicted Shehan's testimony.

3. The Contents

Remaining is the issue of the list of supposedly unaccounted for items. Juxtaposed against Shehan's proof, the debtor's testimony and proof lacked corroboration, compelling exposition, or sufficient credibility. The debtor introduced a list and testified that the following items were in the Corolla when repossessed and were missing upon return.

Personalized license plate        $55.00
                Baggo set                        $150.00
                Ariat boots                      $185.00
                Spare tire                       $100.00
                Born dress shoes                 $125.00
                2 gold bracelets                 $225.00
                1 inch belt buckle ring          $175.00
                Dress pants                      $200.00
                Blouses                          $175.00
                Jeans                            $150.00
                Leggings                         $125.00
                3 purses                         $150.00
                Shoes                            $225.00
                Nike jacket                       $90.00
                                               _________
                                               $2,130.00
                

(Pl.'s Ex. A.) Below is the extent of the debtor's testimony concerning the above list on direct examination by her counsel, Mr. Bueker, which lacked compelling and supporting exposition.

Bueker: Okay. But, at some point, she gave it back; I believe it was July the 5th?

Debtor: Yes, sir.

Bueker: And upon her giving it back, did you notice that there were some things missing out of the car?

Debtor: Yes.

Bueker: Did you make a list of those things?

Debtor: Yes.

Bueker: I'm going to show you what's been marked as [debtor's] Exhibit A. I don't know how to make this zoom in or out. Is this a list that you made?

Debtor: Yes, sir.

Bueker: And is this—are these things that were in the car when she took it?

Debtor: Yes, sir.

Bueker: And when you got the car back, were these things in there?

Debtor: No, sir.

Bueker: Just go down the list briefly. What's the first thing on the list?

Debtor: The personalized license plate, a Baggo set, some Ariat boots that belong to Mr. Manus, my spare tire, Born dress shoes, two gold bracelets, it's a gold belt buckle ring, dress pants, some blouses, jeans, leggings, some purses, shoes, and a Nike jacket.

Bueker: You've placed a value next to each of these things. Where did you arrive at those values?

Debtor: Of what it would cost to replace them.

Bueker: The total of those items is 2,130 dollars?

Debtor: Yes, sir.

(Tr. Trans. at 8–10.) That is the full extent of the debtor's testimony regarding the items. In sum, "there ," then "not there ."

Conversely, Shehan was qualitatively and persuasively more expositive. In the first instance, she did not act in haste, suddenly or vindictively,...