Matter of Wall, Bankruptcy No. 84-47.
| Decision Date | 13 August 1985 |
| Docket Number | Bankruptcy No. 84-47. |
| Citation | 52 BR 613 |
| Parties | In the Matter of James D. WALL and Sandra P. Wall, Debtors. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Shirley C. Arcuri, Tampa, Fla., for debtors.
Chris C. Larimore, Bradenton, Fla., Trustee.
Harley E. Riedel, Tampa, Fla., for Arthur R. Macias, creditor.
ORDER ON CONFIRMATION
THIS IS a Chapter 13 case which was commenced on January 9, 1984 by James D. Wall and Sandra P. Wall. The immediate matter under consideration is the confirmation of the Debtors' Second Amended Chapter 13 Plan and an Objection to Confirmation filed by Arthur R. Macias (Macias), a judgment creditor. The primary objection advanced by the Creditor, Macias, is that the Plan was not proposed in good faith.
The procedural history of the case reveals that the case was filed on January 9, 1984. On January 25, 1984, the Debtors filed a Motion to extend the time to file a plan due to the fact that the Debtors were unemployed because their previous employer (a corporation controlled by the Debtors) filed a Chapter 7 concurrent with the filing of the Debtor's Chapter 13. The Court granted the Debtors an additional 45 days to file a Plan and Budget Statement. On February 16, 1984, Macias filed a Motion to Dismiss the case on the grounds that the Debtors are not individuals with regular income, thus not eligible for relief by virtue of § 109(e) of the Code. On March 16, 1984, the Debtors filed their Plan and the confirmation hearing was scheduled for May 3, 1984. Based on this, this Court entered an Order and deferred ruling on Macias' Motion to Dismiss until the hearing on confirmation.
On May 2, 1984, Macias filed an Objection to Confirmation based on the contentions that the Plan does not yield more to creditors than they would receive in a Chapter 7 case; that the Plan was not proposed in good faith; and, that the Plan prepared by the Debtor is not feasible. At the May 3rd confirmation hearing, the Court announced that an evidentiary hearing is necessary to consider confirmation of the plan or in the alternative, dismissal. The hearing was scheduled for June 19, 1984, but on May 3, 1984, the Debtors filed an amended Chapter 13 Plan.
Having considered the matter, on August 16, 1984, this Court entered an order denying confirmation, but granted the Debtor's request to file an amended plan within 30 days. On September 6, 1984, the Debtors filed an amended plan. The confirmation hearing was rescheduled for October 22, 1984. Macias restated his objection and the debtor in an attempt to meet the objection, submitted a Second Amended Plan on November 5, 1985. The Second Amended Plan and Objection were rescheduled again to be heard.
As noted earlier, the principal objection to confirmation interposed by Macias was, at all times, that the Chapter 13 Plan was not filed in good faith. The Court heard argument of counsel, testimony of witnesses, considered the record in its entirety and now finds as follows:
In late 1981, Macias, a stockholder in Technical Design Engineering, Inc. filed a civil action for damages against James D. Wall, Sandra Wall and Technical Design Engineering, Inc. in the Circuit Court of the Tenth Judicial Circuit in and for Polk County, Florida. The matter was scheduled for trial and on September 27, 1983, a Final Judgment was entered by the Court in favor of Macias. The Judgment was based on the finding that the Debtor breached a fiduciary duty owed by him to both Technical Design and to Macias.
On September 14, 1983, prior to the entry of the final judgment, the Debtors sold two cars, which they owned free and clear of liens, for the sum of $10,000. The Debtors also transferred another car to their daughter. Although it is contended by the Debtors that the daughter was, at all times, the true owner of the vehicle, it is without dispute that the automobile was listed in the name of the Debtors. On September 16, 1983, the Debtor cashed in their Individual Retirement Account (IRA) and received approximately $35,000 to $45,000. With the proceeds from the IRA, the Debtors paid approximately $30,000 to the Internal Revenue Service in anticipation of a possible tax liability.
It appears that the Debtors used the proceeds from the sale of the automobiles and the remainder of the IRA, that is, the sum not paid to the IRS, to pay for substantial home improvements. For example, on or about September 16, 1983, the Debtors installed a swimming pool at an approximate cost of $20,000. James Wall testified that the pool was installed for health reasons inasmuch as his 19-year old son is afflicted with hemophilia, and benefits from the availability of a swimming facility.
The record further reveals that the Debtors paid their credit card balances in full prior to filing their Chapter 13 case. The Schedules filed in the case reveal that the Debtors listed five unsecured creditors which are Technical Design Engineering, Inc. in the amount of $38,000 (disputed); Arthur R. Macias, in the amount of $7,000 (disputed); Addington Bookkeeping Service (amount unknown); Tedder and Grimsley (amount unlisted and disputed); and Stephen C. Watson, Esq. (amount unknown). It should be noted that the amounts owed to Technical Design and Macias are the result of the September 27 state court judgment. None of the other stated unsecured creditors filed a Proof of Claim in this case.
Finally, it should be noted that prior to filing their Petition, the Debtors were both employed by Technical Design Engineering, Inc. On January 9, 1984, the date on which the Debtors filed their ...
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