Matter of Ware, Bankruptcy No. 88-1253-8B3

• Decision Date: 01 May 1989
• Docket Number: Bankruptcy No. 88-1253-8B3,Adv. No. 88-438.
• Parties: In the Matter of Henrietta WARE, a/k/a Henrietta Duvall, d/b/a Etta Ware Real Estate, Debtor. Henrietta WARE, a/k/a Henrietta Duvall, d/b/a Etta Ware Real Estate, Plaintiff, v. Hui-Chun MI, Su Yuan Mi, Defendants.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida

99 B.R. 103 (1989)

In the Matter of Henrietta WARE, a/k/a Henrietta Duvall, d/b/a Etta Ware Real Estate, Debtor Henrietta WARE, a/k/a Henrietta Duvall, d/b/a Etta Ware Real Estate, Plaintiff, v. Hui-Chun MI, Su Yuan Mi, Defendants.

Bankruptcy No. 88-1253-8B3, Adv. No. 88-438.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

May 1, 1989.

C.L. Turner, Tampa, Fla., for plaintiff.

S. Arcuri, Tampa, Fla., for defendants.

ORDER ON MOTION TO DISMISS ADVERSARY PROCEEDING

THOMAS E. BAYNES, Jr., Bankruptcy Judge.

THIS CAUSE came on for consideration upon the Motion to Dismiss the above-captioned adversary proceeding filed by HuiChun Mi and Su Yuan Mi (Defendants). The Court reviewed the Motion and heard argument of counsel and finds the following facts:

The Debtor, a real estate broker, owns three parcels of real estate. One parcel of real estate, Grove Park, is rental property and fully mortgaged. The other parcel is claimed as homestead. The third parcel, Sylvester Shores, is located in Polk County, Florida and is the focus of this Court's attention. Sylvester Shores was purchased in September, 1984 by the Debtor and Mr. Rufus Duvall. The Debtor and Mr. Duvall were not married at the time the deed was executed but eventually married several months later. Four years hence, on January 6, 1988, the Defendants obtained a final judgment in the amount of $48,000 against the Debtor only predicated on fraud surrounding the purchase of the Defendants' home. On January 12, 1988, the judgment was recorded in Polk County. On January 14th the Debtor and her husband executed a quit claim deed to "Rufus C. Duvall and Henrietta Duvall, his wife" on the Sylvester Shores property attempting to create an estate by the entireties. The deed was recorded on January 18, 1988. On March 8, 1988, the Debtor filed a Chapter 13 Petition in the United States Bankruptcy Court in Tampa, Florida. A Chapter 13 Plan filed on March 17 listed the Defendants' final judgment as unsecured. The Debtor's Schedules depicted the Sylvester Shores property as exempt by virtue of the form of ownership, i.e. tenants by the entireties.

The Defendants filed a motion to dismiss the general case based, inter alia, on bad faith filing and fraud. The motion to dismiss was subsequently denied.

Next, the Debtor filed a two-count Complaint in this adversary proceeding to avoid preferential transfer and to determine validity and extent of lien, i.e. Defendant's judgment. Count I of the Complaint alleged the filing of the final judgment in Polk County in January, 1988 was a preferential transfer.

Count Two alleged the final judgment dated January 6, 1988 was entered only against the Debtor and not against the Debtor's husband, Rufus Duvall. Any lien asserted by the Defendants is invalid and of no value contends the Debtor.

The Defendants' Motion to Dismiss the adversary proceeding alleges:

(1) The Complaint fails to state a certified copy of the final judgment was recorded in Polk County, Florida and the date of recordation.

(2) The Complaint fails to state the Plaintiff owned real estate in Polk County, Florida which was in any way affected by the recordation of the final judgment.

(3) The Complaint fails to state a certified copy of the final judgment was recorded in St. Lucie County, Florida and the date of recordation.

(4) The Complaint fails to state the Plaintiff owned real estate in St. Lucie County, Florida which was in any way affected by the recordation of the final judgment.

Finally, the Defendants moved the Court to dismiss the Complaint for lack of standing.

The Defendants filed a motion for authority to bring fraudulent transfer action on behalf of the estate in the general case inasmuch as the Chapter 13 Trustee will not pursue the matter. In their motion, the Defendants allege a fraudulent transfer of property was made by the Debtor within one year prior to the bankruptcy. Specifically, the Sylvester Shores property owned by the Debtor and her spouse as tenants in common was transferred to the Debtor and her spouse as tenants by the entireties after the final judgment was recorded. As noted, the Debtor has claimed the property as exempt due to its ownership form. The Defendants argue the fraudulent transfer action is necessary since the Debtor is now attempting to void the judgment lien through a Section 547 preferential transfer action which could place the real estate beyond the reach of Defendants. The Defendants further argue the injustice in allowing the Debtor to bring a preferential transfer action to avoid their judgment while their hands are tied from pursuing a fraudulent transfer action against the Debtor.

Based upon this Court's review of the record, the relevant chain of events as to the motion to dismiss as well as the motion for authority to bring a fraudulent transfer action are summarized as follows:

                      DATE                 EVENT
                   (1) 1984     Sylvester Shores purchased
                                by Debtor and Mr. Duvall
                                as tenants in common prior
                                to their marriage in 1984
                   (2) 1-06-88  Creditor obtains final judgment
                   (3) 1-12-88  Final judgment recorded in
                                Polk County
                   (4) 1-14-88  Debtor executes quit claim
                                deed creating tenants by
                                the entireties with Mr. Duvall
                                husband
                   (5) 1-18-88  Quit claim deed recorded
                   (6) 3-08-88  Debtor filed Chapter 13
                                bankruptcy petition
                

When considering a motion to dismiss, the Court may accept the well-pled allegations as true and construe the Complaint in the light most favorable to the non-moving party. Count I of the Complaint alleges the Defendants filed final judgments against the Debtor within ninety (90) days before the petition was filed as well as after the bankruptcy case commenced. These allegations, taken as true, sufficiently state a cause of action for avoiding the transfer of the Debtor's property in Bankruptcy.

Count two of the Complaint was brought to determine the validity and extent of any lien claimed by the Defendants. Count two alleges the January 6, 1988 final judgment was entered against the Debtor only and not against the Debtor's husband. The Complaint does not allege the Debtor owns property concurrently with her husband, however this point has been established elsewhere in the record. One final point raised by the Defendants in their Motion to Dismiss was the Debtor's lack of standing to bring the Complaint. The Court finds the Debtor indeed has standing. In so ruling, the Court concurs with the Court's decision in In the Matter of Coan, 72 B.R. 483, 485 (Bankr.M.D.Fl.1987) and In re Hall, 26 B.R. 10 (Bankr.M.D.Fl. 1982) and the cases cited therein which hold a Chapter 13 Debtor is empowered with the ability to exercise the trustee's avoidance powers. These Courts relied on Section 103...