Layng v. Pansier (In re Pansier)

• Decision Date: 17 January 2020
• Docket Number: Adversary No. 18-2222,Case No. 18-22297-beh
• Citation: 613 B.R. 119
• Parties: IN RE: Gary L. PANSIER and Joan R. Pansier, Debtors. Patrick S. Layng, Plaintiff, v. Gary L. Pansier and Joan R. Pansier, Defendants.
• Court: U.S. Bankruptcy Court — Eastern District of Wisconsin

613 B.R. 119

IN RE: Gary L. PANSIER and Joan R. Pansier, Debtors.Patrick S. Layng, Plaintiff,

v.Gary L. Pansier and Joan R. Pansier, Defendants.

Case No. 18-22297-beh

Adversary No. 18-2222

United States Bankruptcy Court, E.D. Wisconsin.

Signed January 17, 2020

Laura D. Steele, Office of the U.S. Trustee, Milwaukee, WI, for Plaintiff.

Gary L. Pansier, pro se.

Joan R. Pansier, pro se.

DECISION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

Beth E. Hanan, United States Bankruptcy Judge

Starting several decades before they filed their third joint bankruptcy case, the debtors sought out ways to protect their assets. Over the years, but particularly since their last bankruptcy case, they have established a head-spinning sequence of trusts and an LLC into which they transferred their home, personal property, and monthly income.

Among the problems with this strategy were that the debtors continued living in the home, exercising control over the trust property and income as if they were the beneficiaries, or as if there were no trusts (of whatever stripe) in place. Another problem is that the debtors did not list their interests in each of these trusts and the LLC (and the related bank accounts) on their bankruptcy schedules. Those revelations came to light only months later, on the eve of their Rule 2004 examinations, and then after further document discovery.

Mr. Pansier is a retired airline pilot, with a bachelor's degree. Mrs. Pansier is a retired airline attendant and has an executive law degree. They are not unsophisticated, and they are experienced litigants.¹

The United States Trustee filed an adversary complaint seeking denial of the debtors' discharges based on concealment of assets, failure to maintain adequate books and records, false oaths, and failure to explain a loss or diminution of assets.² The U.S. Trustee has moved for summary judgment on all four causes of action asserted in the complaint, which the debtors oppose. Based on a review of the entire docket, the briefing and oral argument, the Court concludes that there are no genuine issues of material fact as to two of the causes of action asserted. Accordingly, the Court grants summary judgment to the United States Trustee on Count I (section 727(a)(2), concealment of assets) and Count III (section 727(a)(4)(A), false oath) of the complaint. The Court denies summary judgment as to Counts II and IV of the complaint.

JURISDICTION

The Court has jurisdiction under 28 U.S.C. § 1334 and the Eastern District of Wisconsin's July 16, 1984, order of reference entered under 28 U.S.C. § 157(a). This is a core proceeding under 28 U.S.C. § 157(b)(2)(J). This decision constitutes the Court's findings of fact and conclusions of law under Fed. R. Bankr. P. 7052.

UNDISPUTED FACTS

According to the exhibits of record and the parties' briefing and oral argument, the following facts are either undisputed, or not subject to genuine dispute.

A. Schedules, statements and testimony

1. The debtors filed for relief under Chapter 7 of the United States Bankruptcy Code on March 19, 2018 (the "Petition Date"). Case No. 18-22297-beh, ECF Doc. No. 1.

2. This is the debtors' third joint bankruptcy case since 1998. See Case Nos. 98-27488-rae (Chapter 13 Case, dismissed); 08-32400-svk (Chapter 7 case, discharged). Defendant Gary Pansier also filed a chapter 7 petition for relief in 1990. See Case No. 90-20906-jes.

3. Mr. Pansier is a retired airline pilot who holds a bachelor's degree. (UST Ex. 3,³ Rule 2004 Examination Transcript, at 12:21-24; 14:15-22).

4. Mrs. Pansier, a retired airline flight attendant, obtained a law degree from Concord Law School in 2009, but has never obtained a law license. (UST Ex. 3, at 10:16-12:9, 15:3-6; UST Ex. 5, Answer, at ¶ 64).

5. The debtors reside at N6755 Loop Lake Road, Crivitz, Wisconsin 54114 (the "Crivitz Property"). (UST Ex. 1, at 2; UST Ex. 3, at 7:6-19; UST Ex. 3, at 120:1-4).

6. The debtors signed the schedules and statements under penalty of perjury, declaring that the information disclosed in them was true and correct. (UST Ex. 1, Docket Nos. 1, 8, 10, 21, 43; UST Ex. 2, 11 U.S.C. § 341 Meeting of Creditors May 10, 2018 Transcript, at 5:16-23; UST Ex. 5, at ¶ 14).

7. The debtors testified under oath at their May 10, 2018 11 U.S.C. § 341 meeting of creditors that they listed all of their assets within their bankruptcy schedules. (UST Ex. 2, at 4:14-22).

8. In schedule A/B, the debtors disclosed that they:

(a) own a 1991 Buick Park Avenue with a value of $250 and lease a Chevrolet Equinox with a value of $32,570; own $1,000 in household goods consisting of major appliances, furniture, linens, china, crystal, and kitchenware; own $800 in electronics, consisting of televisions, stereo, computers, printers, cell phones, and camera; own $500 in sports equipment, including bicycles, golf clubs, skis, paddle boat, and a piano; and own $500 in personal jewelry.

(b) do not own any real property.

(c) do not have any cash on hand as of the petition date.

(d) do not have any bank accounts or deposits of money as of the petition date.

(e) do not have any negotiable instruments including money orders.

(f) do not have an interest in any incorporated or unincorporated businesses, including an interest in an LLC.

(g) do not have an interest in any trust, equitable or future interest in property, and rights or powers exercisable for their benefit.

(UST Ex. 1, at 14-23; 73-84).

9. In total, the debtors disclosed $27,036.45 in personal property. (Id. at 23, 83).

10. On June 20, 2018, the United States Trustee filed a Fed. R. Bankr. P. 2004 motion seeking documents regarding FLY SLOW F.O., CT, CL and the Sheffield Crest Trust. (Case No. 18-22297, ECF Doc. No. 29, see also ECF Doc. Nos. 48, 44, and 54).

11. On July 26, 2018, the debtors amended their schedule A/B. (UST Ex. 1, at 73-84).

12. In amended schedule A/B question 25, the debtors did not check either box to provide a "yes" or "no" answer to whether they have an interest in any "[t]rusts, equitable or future interests in property ... and rights or powers exercisable for your benefit." (UST Ex. 1, at 79-80, 84; UST Ex. 5, at ¶ 27).

13. In the blank box of amended schedule A/B question 25, the debtors entered "FLY SLOW F.O., a Living Trust Checking Account for Social Security deposits, withdrawn the same month. See Attachment," with a $0 value. (UST Ex. 1, at 79-80, 84).

14. On the referenced attachment, the debtors stated: "Sheffield Crest Trust, Tuscany Trail Trust – no equitable or future interests in property. No rights or powers exercisable for our personal benefit. Therefore, the trusts do not constitute a financial asset." (Id. at 80, 84).

15. On Schedule I, the debtors disclose that they are not employed. (UST Ex. 1, at 34).

16. The debtors disclose total monthly income of $7,391.15 from social security income and pension or retirement income. (UST Ex. 1, at 34-35).

17. The debtors disclose total monthly expenses of $5,082.82, including: (a) $1,275 home rental payment; (b) $449.15 vehicle lease payment; (c) $254 telecommunication expense; and (d) $677 food and housekeeping supplies. (Id. at 36-38).

18. After expenses, the debtors report $2,308.33 in net monthly income. (Id. at 38).

19. On schedule G, the debtors disclose their vehicle lease with GM Financial Leasing. (Id. at 32).

20. The debtors do not disclose any residential rental agreement on schedule G. (Id. at 32).

21. The debtors filed an amended statement of financial affairs ("SOFA") on May 3, 2018 as Docket No. 21. (Id. at 58-70).

22. The debtors do not disclose any rental income on SOFA item 5. (Id. at 59).

23. The debtors disclose on SOFA item 18 that they did not sell trade or transfer any property to anyone, other than property transferred in the ordinary course of the debtors' business or financial affairs, within two years of their petition date. (Id. at 66).

24. The debtors disclose on SOFA item 19 that they did not transfer any property to a self-settled trust or similar device of which they are a beneficiary (often called asset-protection devices) within 10 years before the petition date. (Id. at 67).

25. On SOFA item 27, the debtors disclose that they did not own a business or have any of four specified connections to a business, including as a member of a limited liability company (LLC), within four years before filing bankruptcy. (Id. at 69-70).

B. The Sheffield Crest Trust

26. In September 1985, Mrs. Pansier, as creator and trustor, executed a declaration of trust to form the Sheffield Crest Trust. (UST Ex. 4, at 83-91).

27. The trustees of the trust were Gary J. Simon and Sandford G. Knapp. (Id. ).

28. Soon after forming the trust, Mrs. Pansier conveyed the Crivitz Property, which previously was titled in her name, to the Sheffield Crest Trust. (Id. at 18, 83-91).

29. According to the trust documents, as consideration for this conveyance of real property, the trust was "empowered to issue to Joan Pansier a total of 200 Units of Beneficial Interest." Those Units of Beneficial Interest were then to be issued to named beneficiaries Alan Edwin Bader and Donna Claire Pansier (100 Units each). (UST Ex. 4, at 85).

30. According to the debtors, the Sheffield Crest Trust "was not organized under state law.... [T]he Trust is an irrevocable contractual trust agreement ...." (UST Ex. 10, at 5, Interrogatory no. 5).

31. The Crivitz Property has a 2016 tax-assessed value of $343,500 and is not encumbered by a mortgage lien. (UST Ex. 12, at 142; UST Ex. 3, at 69:19-25)

32. The debtors, along with Mr. Pansier's sister, Donna Pansier, reside on the Crivitz Property, although Donna Pansier resides in a separate house on the property. (UST Ex. 3, at 145:1-146:5).

33. The debtors and Donna Pansier entered into a property rental agreement with the Sheffield Crest Trust on January 1, 2003. (UST Ex. 4, at 92-96).

34. The 2003 rental agreement requires the debtors and Donna Pansier to pay the Sheffield Crest Trust a total of $1,275 in monthly rent, or $15,300 annually. (Id. ).

35. Donna Pansier makes

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