Matter of Ayoub
| Citation | 72 BR 808 |
| Decision Date | 21 April 1987 |
| Docket Number | Bankruptcy No. 82-1722. |
| Parties | In the Matter of Stephen J. AYOUB, Debtor. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida |
Russell S. Bogue, III, Tampa, Fla., for debtor.
James D. Wing, Miami, Fla., David G. Mulock, Tampa, Fla., Francis H. Cobb, Tampa, Fla., for John Kearney, Creditor.
ORDER ON MOTION TO REOPEN CHAPTER 7 CASE
THIS IS an aborted Chapter 11 case which was converted into a liquidation case. On January 3, 1986, the Trustee filed a Report of No Distribution, and on February 20, 1986, the case was closed as a no-asset case by entry of a Final Decree. The present controversy before this Court has a procedurally convoluted background in which the principal actors are the wrong parties to begin with, both of whose standing even to argue the matter is highly questionable. In order to put the matter in the proper posture a recap of the historical background should be noted, which reveals the following:
On August 24, 1982, Stephen J. Ayoub, the Debtor (Debtor), filed a voluntary Petition under Chapter 11. The Petition was accompanied by a list of the Debtor's ten largest unsecured creditors, which listed only three creditors: The First National Bank of Clearwater in the amount of $271,654.29; Shelby Ostensen & Paul Argentiere in the amount of $20,000.00; and Freedom Savings and Loan in the amount of $25,000.00. On September 16, 1982, this Court entered an order on its own motion and directed the Debtor to file a Schedule of Assets and Liabilities, a Statement of Financial Affairs, a Statement of Executory Contracts, and the 219(b) Statement, which at that time required attorneys to disclose the fee arrangement with the Debtor. On October 5, 1982, counsel for the Debtor filed the 219(b) Statement and also the Statement of Financial Affairs of a Debtor engaged in business and the Summary of Assets and Liabilities.
In response to question 10 on the Statement of Financial Affairs which called for the disclosure of suits, executions and attachments, the Debtor stated as his answer "yes" without specifying, however, the nature of his involvement in the lawsuits referred to in the answer. The Schedule of Liabilities listed the same unsecured creditors whose names were furnished earlier and listed as secured creditors the First National Bank of Clearwater, stated as having a lien on a 1979 BMW, and named counsel of record for the Debtor as being Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., without indicating the nature of the collateral but stating it is to secure costs and fees for the bankruptcy proceeding. On the Schedule of Assets the Debtor listed his assets as some cash, some bank deposits, and in answer to question Q, which calls for the disclosure of contingent and unliquidated claims of every nature including counterclaims, the Debtor answered in the negative stating "None".
On August 1, 1983, the Debtor filed a Notice of Conversion. On August 4, 1983, this Court entered an order and converted the Chapter 11 case to a Chapter 7 case and appointed Lynn Tepper Sestak (Trustee) as interim trustee. While there is no record of the examination of the Debtor at the § 341 Meeting, since no creditor appeared, it is fair to assume that the examination of the Debtor was merely perfunctory. On September 16, 1983, the Debtor filed what is called a Supplemental Amendment to Schedule A-3, which for the first time listed 75 creditors additional to the original three scheduled. The Supplemental Amendment, which was not signed and verified by the Debtor as required by Bankruptcy Rule 1008, while it stated the name and address of the creditors, it did not indicate the amount owed or the nature of the obligation owed to these creditors.
On September 30, 1983, the Debtor filed a new Supplemental Amendment and added one additional creditor. The amendment again was not signed and verified by the Debtor and again did not indicate the amount or the nature of the liability. Inasmuch as no complaints objecting to discharge were filed and neither were any complaints which sought a determination of nondischargeability of any debts pursuant to § 523(c) of the Bankruptcy Code, on November 18, 1983, the Debtor received his discharge.
On December 17, 1983, or approximately 19 days after the entry of the discharge, the Debtor filed an amendment to Schedule B-4. The amendment the first time stated an exemption claim under Article X of the Florida Constitution, the Debtor's interest in a lawsuit identified as Stephen J. Ayoub, et al. vs. John E. Kearney, et al., Case No. 83-342, which was then pending in the U.S. District Court for the Middle District of Florida, Tampa Division. The Debtor stated that the lawsuit has no real value and the Debtor wanted to include this cause of action in his personal property exemptions available to debtors in this state pursuant to Article X as mentioned earlier. Again, this amendment, just like the earlier amendments, was not verified by the Debtor but indicated that a copy of same was furnished by mail to the Trustee, Lynn Tepper Sestak, 7135 State Road 52, Suite 202-A, Hudson, Florida. The record fails to reveal any activity in the case whatsoever between December 7, 1983, when the amendment to Schedule B-4 was filed, and July 2, 1985, when this Court issued an order directing the Trustee to complete the administration of the estate. On January 3, 1986, the Trustee filed a Report of No Distribution and on February 20, 1986, this Court entered a Final Decree and closed the case.
This Court is satisfied and it is without dispute that while the case was still pending the Debtor was a successful plaintiff in a lawsuit against John E. Kearney in the Circuit Court for the Thirteenth Judicial Circuit of the State of Florida, in and for Hillsborough County (Circuit Court), but not in the lawsuit which was scheduled by the Debtor on his Schedule B-4 which he claimed as exempt which was pending in the United States Court for the Southern District of Florida, Tampa Division. It should be noted that the Circuit Court lawsuit was never scheduled by the Debtor as one of his assets and was not claimed as exempt. It further appears that the Circuit Court lawsuit was concluded by jury trial in which the jury awarded to the plaintiff a verdict against Kearney in the amount of $220,000.00.
Kearney promptly filed a Motion NOV in the Circuit Court based on the contention that the chose of action does not belong to the Debtor but to the estate of the Debtor, and the Debtor has no standing to assert a claim which must be asserted by the Trustee. Based on this...
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