Matter of Carter
| Decision Date | 30 September 1997 |
| Docket Number | Bankruptcy No. 91-80587-TBB-7. |
| Citation | 213 BR 26 |
| Parties | In the Matter of Clyde Thomas CARTER, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
Mark Stewart, Winchester, TN, for debtor.
Robert H. Adams, Birmingham, AL, for trustee.
Lee Benton, Birmingham, AL, for Creditors.
In an attempt to ameliorate the impact of a jury verdict returned in February, 1991, in the Probate Court of Bexar County, Texas against Clyde Thomas Carter ("Carter") for, among other things, breach of fiduciary duties imposed on him as a trustee of the Harry Lee Carter Estate Management Trust, Carter initiated his bankruptcy case in March, 1991, under the provisions of chapter 11 of the Bankruptcy Code. In September, 1991, judgment was entered on the jury verdict for an amount in excess of eight million dollars ("Texas Judgment"). To date, the hopes for mitigation has not been realized. What has occurred has been an unnecessary protraction of Carter's bankruptcy case and an extensive delay in the collection of the Texas Judgment. In part, the prolonging arises from the delay in seeking and lack of obtaining confirmation of Carter's plans for reorganization. This was followed in July, 1994, by the involuntary conversion of his chapter 11 case to one under chapter 7 of the Bankruptcy Code. Joined with the reorganization and conversion skirmishes were Carter's appeals of the Texas Judgment to the Supreme Court of Texas and that of the United States which were for naught. Not to be overlooked is the calamity caused by a February, 1995, judgment of non-dischargeability of seven million dollars of the Texas Judgment by a prior judge — the second — to have been assigned Carter's bankruptcy case. All of these are but part of the history and legal melodrama which accompanied this case when assigned to this judge — the third at the bankruptcy court level.
By the time of assignment of Carter's case to this judge, all matters from the trivial to the consequential had been and continue to be contested. Furthermore and after various rulings adverse to Carter succeeding his case's conversion, he has repeatedly requested its transfer to where he asserts it more properly should be because it is closer to where he resides: the Eastern District of Tennessee. His defense to his selected forum ___ this Court ___ is that his first attorney chose it believing Carter would more certainly get what he wanted. These requested changes of venue have been predicated on a state of affairs which stands in stark contrast to that on which Carter has based his claim of an Alabama homestead exemption. When all does not go according to the laid plans and not believing that a debtor should structure his case to be before a court by asserting under oath one thing when the converse is true, these venue transfer motions have been uniformly denied. Since several years elapsed from the filing of Carter's bankruptcy case to the filing of these venue changing motions, this treatment was even more justified.
Early in this case, principal and the principles of the combating parties combined to further draw out these proceedings in a manner and with the effect on the adjudication of a bankruptcy case which gives new meaning to the cost of the 279 B.C. victory over the Romans at Apulum. Counsel for Carter have come and gone. So too, have trustees of and trustee's counsel for his bankruptcy estate. Suffice it to say that some of those who arrived unscathed and vital departed less than willingly and subject to reproach.
With an exception relevant to resolution of Carter's request for payment of his asserted homestead exemption, constancy and consistency of Carter's factual testimony and assertions before this Court have not been his hallmark. What is before this judge is part of the attrition now inherent in this case. It is yet another reprise of a ruling which necessitates review of a struggle heard by the first judge in this case. It is Carter's perseverance to be paid five thousand dollars ($5,000) by James G. Henderson, the trustee of Carter's bankruptcy estate ("Trustee"), as the value of his asserted Alabama homestead exemption which must now be addressed. It is a dispute which one new to this case might have assumed was concluded by court order in 1992. Such is not the plight for Carter's right to payment for a claimed Alabama homestead exemption.
(a) First In Time And Unchanged
Carter first asserted a homestead exemption in the schedules filed at the commencement of his chapter 11 bankruptcy case. On schedule B-4, this is set forth: "Homestead rights under Alabama Code § 6-10-2. . . ." Although Carter did not identify which of multiple parcels of Alabama real estate he professed to be his homestead, the voluntary bankruptcy petition listed his address as 1807 Roseberry, Jackson County, Scottsboro, Alabama ("Scottsboro Property"). Carter also swore in his petition that he had resided within the Northern District of Alabama, more specifically in Scottsboro, Jackson County, Alabama, for the one hundred eighty days preceding the bankruptcy filing or for a longer portion of this period than in any other district. Although not expressly claimed as his Alabama homestead, a cursory review of his filings which initiated this case could lead one to conclude that the Scottsboro Property may have been his Alabama homestead. As with other matters in this case, the drawing of such a conclusion based on the petition and supporting schedules, without more, is fraught with the risk of error.
It is a fact that the Scottsboro Property was owned jointly by Carter and his former wife, Francis Corrine Carter, at the time the bankruptcy case was filed. However, Carter was separated from his wife at this time, and she later requested relief from the automatic stay to be able to obtain a determination of her property interests as a part of the divorce. The request was granted by the first bankruptcy judge in this case subject to a very specific limitation on the enforcement of any divorce judgment's effect on property of the estate and on division of any property interests of the bankruptcy estate between the Carters. A divorce decree which incorporated a property division as a part of the judgment of divorce ("Divorce Decree") was entered by default on or about August 11, 1993, in the Circuit Court for Jackson County, Family Court Division. The default was based on Carter's failure to defend in the divorce action. It purported to award Francis Carter, among other properties, the full right, title, and interest in and to the Scottsboro Property free of any claims of Carter and his bankruptcy estate. Surprising as it may seem in a case with the degree of contentiousness as this one, no immediate contest of this property settlement occurred. As could be anticipated, a challenge was finally initiated by the first trustee of Carter's bankruptcy estate.
An adversary proceeding against Francis Carter alleging that the property settlement incorporated in the Divorce Decree violated the terms of this Court's order modifying the automatic stay of § 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a), was filed in September, 1995. The Trustee reached a compromise with Francis Carter and others resolving the conflict between what (a) the Divorce Decree provided and (b) this Court's stay modification order and the bankruptcy laws permitted. It was approved by this Court in April, 1997. The Trustee was paid one hundred thousand dollars ($100,000) for the release of any and all right, title, and interest in and to the (i) Scottsboro Property, (ii) one thousand three hundred forty-nine (1,349) acres of real estate located in Franklin County, Tennessee (iii) 1.18 acres of real property located in the Roseberry Creek Subdivision in Jackson County, Alabama, and (iv) approximately 459.95 acres of real property located in Jackson County, Alabama. The compromise also allowed the parties to retain any and all real and personal properties as allocated pursuant to the Divorce Decree.
(b) An Amendment In Form. But Not In Effect
Carter attempted to amend his exemptions in his amended and restated plan of reorganization filed on September 22, 1992. Listed among the proposed amendments to exemptions was one for a homestead under Ala. Code §§ 6-10-2, 6-10-4 et. seq. with respect to the claimed Alabama homestead exemption. No change had been made by this attempted amendment to what had previously been asserted for the homestead. As in schedule B-4, all that was referenced was the Alabama authority for a homestead exemption. No specific property was described or otherwise delineated as the Alabama homestead property. Numerous creditors consisting of the Harry Lee Carter Estate Management Trust, Doris Carter Corum, Joe Carter, Neil Corum, Michael Lee Corum, Grace Carter, Joette Lee Carter, Crystal Jones, Edward M. Rigsby, Blanche Carter Martin, Mollie Martin Cannon, and John Carter Martin (collectively "the Trust") objected to the Debtor's proposed claim of exemptions set forth in his amended and restated plan of reorganization. The creditors wanted Carter to specifically identify any property claimed as exempt. This objection was supposedly resolved by what happened before the Court at a hearing held on November 4, 1992. The germane portions of this hearing are:
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