Matter of Dowell

• Decision Date: 07 January 1988
• Docket Number: Bankruptcy No. 85-00285-3,Adv. A. No. 85-0638-3.
• Citation: 82 BR 998
• Parties: In the Matter of Norma Ann DOWELL, Debtor. UNITED STATES of America, Plaintiff, v. Norma Ann DOWELL, Defendant.
• Court: U.S. Bankruptcy Court — Western District of Missouri

82 B.R. 998 (1987)

In the Matter of Norma Ann DOWELL, Debtor.

UNITED STATES of America, Plaintiff, v. Norma Ann DOWELL, Defendant.

Bankruptcy No. 85-00285-3, Adv. A. No. 85-0638-3.

United States Bankruptcy Court, W.D. Missouri, W.D.

December 16, 1987.

Reconsideration of Final Judgment January 7, 1988.

David DeTar Newbert, Asst. U.S. Atty., Kansas City, Mo., for plaintiff.

Maurice B. Soltz, Soltz & Shankland, P.C., Kansas City, Mo., for defendant.

ORDER RECONSIDERING FORMER JUDGMENT DENYING DISCHARGE, ON INSTRUCTIONS FROM THE DISTRICT COURT, AND, ON RECONSIDERATION, DENYING COMPLAINT OF PLAINTIFF OBJECTING TO DISCHARGE AND ACCORDINGLY GRANTING DEFENDANT HER DISCHARGE IN BANKRUPTCY

DENNIS J. STEWART, Chief Judge.

On April 15, 1986, after full trial of the issues which had been joined on the plaintiff's objection to the defendant's discharge in bankruptcy on the grounds that she had willfully disobeyed an order of the bankruptcy court within the meaning of section 727(a)(6)(A) of the Bankruptcy Code, this court issued its final judgment denying the defendant's discharge in bankruptcy. In issuing that judgment, this court made the following material findings of fact and conclusions of law:

"(W)ith respect to (four separate orders directing the debtor to file schedules and statements of affairs) the plaintiff established that timely notice of each of the hearings and each of the duties to be performed by the debtor was given to the defendant Norma Ann Dowell by regular mail. It was further shown that the notices and orders were timely deposited in the mail on each occasion and that they were addressed correctly to the address at which debtor admits during the time periods in question to residing with her husband. The defendant\'s defense is a simple one: she claims that she did not receive any of the notices. Although they were mailed to her correct address, she admits, she did not receive any of them or know of any of their contents and she had no idea that she was involved in a bankruptcy proceeding until she received, belatedly, she contends, the order setting a hearing on the within complaint to deny discharge. She states that she knew that her husband was involved in a bankruptcy proceeding and assumed that all matters which came in the mail from the bankruptcy court and the district court were solely concerned with that bankruptcy. She further states that her husband, although he must have been the person who received the mail and opened it, did not on any occasion confide to her any of the content of the orders of this court or the bankruptcy court until he let her know of the setting of the hearing on the within complaint objecting to discharge. Although granted an explicit opportunity to do so, the defendant declined to call her husband as a witness in this case. The files and records in this case show that no fewer than 11 different pleadings and orders were mailed to the defendant at the address at which she admits to have resided during the time periods in question and that none was returned. Otherwise, the files and records in these cases purport to show that, at least on one occasion, the defendant filed a `waiver of exemptions\' with the court on September 26, 1985, thus indicating that she knew or should have known of her status as a debtor in title 11 proceedings prior to the time of the initial order setting a hearing in these objections to discharge, which is, according to her current contentions, the first she knew of the bankruptcy proceedings. . . . `Where notice has been mailed to the current and current address and the item is not returned, delivery is presumed.\' Matter of Depoy, 29 B.R. 471, 477 (Bkrtcy.N.D.Ind.1983) . . . The debtor does not offer any evidence directly to rebut this presumption. She, in fact, appears to predicate her defense on the assumption that her husband must have received all orders, pleadings and notices and that he failed over a long period of time to tell her about any of them until he told her, or otherwise arranged for her to find out, about the setting of the within complaint objecting to discharge. In this regard, however, the defendant\'s testimony is simply not credible. In part, this determination is based upon the appearance and demeanor of the defendant as a witness. Further, it tends to be contradicted by the files and records in this case and the natural tendency of a husband to transmit information to a wife in which both of their interests might be vital. Finally, as observed above, the defendant was granted an explicit opportunity to call her husband as a witness and declined to do so . . . "

Because, in fact, as of the date of the judgment in that instance, April 15, 1986, this court had no knowledge of the precise status of contempt proceedings which had been earlier initiated in the district court on this court's report and recommendation of May 16, 1985, this court made no mention of those proceedings in its foregoing findings of fact and conclusions of law and in fact considered those proceedings to be irrelevant to the action at bar.

Nevertheless, because the district court considers those proceedings to be highly relevant, their development will be briefly traced. The trustee in bankruptcy in this case, Paul E. Berman, filed a motion to adjudge the debtor Norma Ann Dowell in contempt for failure to file her schedules and statements of affairs in this bankruptcy case. This motion culminated in a report and recommendation transmitted by this court over the signature of the undersigned to the district court on May 16, 1985. That report and recommendation recommended that Norma Ann Dowell be adjudged in civil contempt of court and subjected to such appropriate coercive measures as would compel her to file her schedules and statements of affairs. It recited the following basic facts, some of which were the same as the basic facts found in this action in support of the judgment denying the discharge in bankruptcy:

"The files and records in these chapter 7 bankruptcy proceedings show that a petition for involuntary adjudication of the debtor under chapter 7 of the Bankruptcy Code was filed on January 28, 1985; that an order for involuntary relief was entered on March 19, 1985; that, on March 19, 1985, the court issued its order that the debtor file her statement of affairs and schedules within 20 days of the date of entry of such order; that, on April 4, 1985, the court consolidated the within proceedings with case no. 83-00364, the proceedings of debtor Douglas Arlen Dowell, husband of Norma A. Dowell, based upon the substantial likelihood of duplicate assets, debts and creditors, and in an effort to promote efficient administration for the benefit of all creditors; that, on April 4, 1985, the court also issued its order that Paul E. Berman and Charles E. Rubin, previously appointed trustees in these separate estates, act as co-trustees in the consolidated estate; that on April 16, 1985, because the debtor had failed to file her statement of affairs and schedules within 20 days of March 19, 1985, as required by the aforementioned order of that date, the court ordered that the debtor Norma A. Dowell appear before the court on May 8, 1985, and then and there show cause why she should not be adjudged in civil contempt of court; and that, in direct contravention of the court\'s order of April 16, 1985, requiring the debtor\'s appearance on May 8, 1985, the debtor failed to appear. . . . For the foregoing reasons, the bankruptcy court will recommend to the district court that the debtor Norma A. Dowell be adjudged in civil contempt for her repeated failure to obey orders requiring her to file her statement of affairs and schedules and to appear and show cause why she should not be adjudged in civil contempt. The material facts recited above are conclusively demonstrated by the files and records of this court and they warrant and necessitate the imposition of coercive measures to secure compliance with orders which are necessary to bankruptcy estate administration."

The report and recommendation of the bankruptcy court thus issued culminated in an adjudication of civil contempt issued by the district court on October 17, 1985, which also stated that the respondent Norma Ann Dowell was:

"fined in the sum of $250.00 payable into the registry of the Court within fifteen (15) days of the date of entry of this order unless the respondent, within the same fifteen (15) days, brings herself into compliance with the Bankruptcy Court\'s orders by filing with the Court her statement of affairs and schedules."

Thereafter, on January 17, 1986, the debtor filed schedules and statements of affairs. Accordingly, thereafter, on April 21, 1986, some six days after this court had issued its above-described judgment denying discharge in bankruptcy, the district court set aside its contempt order, stating as follows:

"Pending before the Court is debtor\'s motion to set aside the contempt order. Debtor states that her husband is an attorney who was also going through a bankruptcy proceeding through most of 1985. While debtor lived at the address where the Court notices were mailed, she contends her husband handled the mail and she was unaware she was even involved in a bankruptcy proceeding until she appeared at a Bankruptcy hearing on January 3, 1986. Shortly thereafter, debtor hired her own attorney, and on January 17, 1986 filed her Bankruptcy schedules.

"This situation is similar to the case of Matter of Depoy, 29 B.R. 471 (Bkrtcy. Ind.1983) where the court refused to hold a defendant in contempt where it was shown her attorney-husband never consulted with, informed, or otherwise brought the fact of bankruptcy to her attention. In order to find a person in civil contempt, the party accused of contemptuous conduct must be shown to have had notice or knowledge of the court\'s order sufficient to put the party on notice of the proscribed (or, in this case,

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