Matter of Wickstrom, Bankruptcy No. GM 87-00167
| Decision Date | 20 April 1990 |
| Docket Number | Adv. No. 88-0016,88-0015.,Bankruptcy No. GM 87-00167 |
| Citation | 113 BR 339 |
| Parties | In the Matter of George Axel WICKSTROM, Debtor. William G. LASICH, Trustee, Plaintiff, v. ESTATE OF A.N. WICKSTROM, Defendant. William G. LASICH, Trustee, Plaintiff, v. James Steven WICKSTROM, Defendant. |
| Court | U.S. Bankruptcy Court — Western District of Michigan |
Darrell R. Dettmann, Marquette, Mich., for plaintiff William G. Lasich, Trustee.
Donald W. Bays, Marquette, Mich., for defendants James Steven Wickstrom and The Estate of A.N. Wickstrom.
These adversary proceedings were instituted by William G. Lasich, the Chapter 7 Trustee and Plaintiff, hereinafter "Trustee", against the Defendants. The Trustee seeks to recover a $20,000 payment and two transfers of real property made by George Axel Wickstrom, hereinafter "Debtor", which are asserted to be avoidable preferential transfers or fraudulent conveyances under 11 U.S.C. §§ 547(b), 548(a), and 550(a).
The Debtor filed his petition for relief under chapter 7 of the Bankruptcy Code on August 28, 1987. Subsequent to the filing of the adversary proceedings, Defendant Stella Wickstrom became deceased and her entire estate passed to her husband, Defendant A.N. Wickstrom. Pursuant to court order, Stella Wickstrom was dismissed as a defendant in one of the adversary proceedings. Subsequently, Defendant A.N. Wickstrom also became deceased and the Estate of A.N. Wickstrom has been substituted as the proper party defendant in one of the adversary proceedings. Because the court's examination of facts in this case focuses upon the interests of the parties at, or prior to, the date of the bankruptcy filing, for the sake of consistency, ease of understanding, and proper prospective, the court will refer to those interests now represented by the Estate of A.N. Wickstrom as the "Defendant Parents". Defendant James Steven Wickstrom, hereinafter "Defendant Son", is the son of the Debtor in this case. The Defendant Son and Defendant Parents are sometimes collectively referred to as the "Defendants".
There are three transfers of property made by the Debtor to the Defendants involved in this consolidated adversary proceeding; (1) the transfer of real property, the "marital home", to the Defendant Parents on May 18, 1987; (2) the transfer of real property, the "recreational camp", to the Defendant Son, also on May 18, 1987; and (3) the payment of $20,000 to the Defendant Parents on July 9, 1987.1
The Defendants deny that they have received any avoidable preferential transfer or fraudulent conveyance. In the alternative, to the extent they may have received any avoidable transfers, the Defendants assert certain affirmative defenses under 11 U.S.C. §§ 522(b)(2) and 547(c)(2).2
The above two adversary proceedings were previously consolidated for trial purposes by order of this court. The court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(F) and (H). The Defendants contend they are entitled to a summary judgment as a matter of law.3
The parties have submitted a Stipulated Statement of Facts to the court which is fully set forth in the Defendants' brief in support of their motion. The stipulated facts are summarized below.
The Defendant Parents loaned the Debtor approximately $56,000 during the seven years prior to the Debtor's bankruptcy filing. All loans to the Debtor by the Defendant Parents were made prior to any of the transfers subject of the Trustee's causes of action.
On April 29, 1987, the Debtor was advised by the Iron River National Bank, "Bank", that unless a debt, in excess of $80,000, was repaid on or before May 6, 1987, a collection action would be instituted. The Bank made demand for repayment on May 6, 1987. The parties agree the Debtor was rendered insolvent as of May 6, 1987. During oral argument, opposing counsel stipulated that the Debtor remained insolvent after that date until the Debtor's bankruptcy filing.
On May 18, 1987, the Debtor and his non-debtor wife, Sharon Wickstrom, as tenants by the entireties, conveyed to the Defendant Parents the marital home. Pursuant to a financial statement furnished by the Debtor to the Bank, in 1983 the value of the marital home was $60,000. The Debtor's schedules filed in connection with this bankruptcy case stated the property was transferred for a consideration of $32,000. The deed stated the consideration for the transfer was less than $100.
Also on May 18, 1987, the Debtor transferred the recreational camp to the Defendant Son. The 1983 financial statement given to the Bank listed the recreational camp as having a value of $18,000. The Debtor's schedules stated the consideration given for the transfer was $2,500. The deed stated that the consideration given for the transfer was less than $100.
Prior to the bankruptcy filing, the Debtor received a lump sum redemption with respect to a worker's compensation claim in the amount of $23,000. The Debtor used $3,000 of these proceeds for living expenses. The remainder of the proceeds, i.e., $20,000, were paid to the Defendant Parents on July 9, 1987.
The Debtor filed his voluntary petition under Chapter 7 of the Bankruptcy Code on August 28, 1987. The Debtor's statement of affairs and schedules listed unsecured debts, excluding any obligations to the Defendants, in the amount of $94,269.93. All unsecured debts listed were solely the Debtor's obligations except for one joint debt in the amount of $300. The Defendants assert the non-debtor wife intends to pay that joint debt outside of the bankruptcy case.
The parties have agreed that the stipulated facts are solely applicable for purposes of the Defendants' motion for summary judgment. If summary judgment is denied, the parties have reserved the right to present other evidence at the trial of this adversary proceeding.
In considering the Defendants' Motion for Summary Judgment, this court is guided by the standards set forth by Judge Gibson in FMB-First Michigan Bank v. Von Rhee, 681 F.Supp. 1264, 1266 (W.D. Mich.1987), wherein it is stated:
Summary judgment is appropriate only where no genuine issue of material fact remains to be decided and the moving party is entitled to judgment as a matter of law. Atlas Concrete Pipe, Inc. v. Roger J. Au & Son, Inc., 668 F.2d 905, 908 (6th Cir.1982), see Willetts v. Ford Motor Co., 583 F.2d 852, 854 (6th Cir. 1978); Felix v. Young, 536 F.2d 1126, 1130 (6th Cir.1976). The function of a motion for summary judgment is not to allow the court to decide issues of fact but rather to determine whether there is an issue of fact to be tried. United States v. Articles of Device, Etc., 527 F.2d 1008, 1011 (6th Cir.1976); Aetna Ins. Co. v. Cooper Wells & Co., 234 F.2d 342, 345 (6th Cir.1956). The moving party bears the burden of clearly establishing the nonexistence of any genuine issue of fact material to a judgment in his favor. Adickes v. S.H. Kress and Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Articles, 527 F.2d at 1011. In determining whether there are genuine issues of fact warranting a trial, the evidence will be viewed in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Bohn Aluminum & Brass Corp. v. Storm King Corp., 303 F.2d 425, 427 (6th Cir.1962). If a disputed question of material fact remains, the motion for summary judgment must be denied. Atlas, 668 F.2d at 908; Felix, 536 F.2d at 1030; Bohn, 303 F.2d at 427.
The court must examine all stipulated facts and conclude that no genuine issue of material fact exists before granting summary judgment.
The Defendants also argue that they should prevail because the Trustee has failed to state a cause of action. B.R. 7012; FRCP 12(b)(6). Therefore, the court must also consider a different standard from that which governs a summary judgment motion.
A Rule 12(b)(6) dismissal should be granted only when the court, upon review of the complaint, is convinced that the complainant can prove "no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). See also Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).
Martin v. Kelley, 803 F.2d 236, 239 n. 4 (6th Cir.1986). The court will address certain legal issues raised to determine if the causes of action asserted by the Trustee are sufficient as a matter of law.
The Trustee seeks to avoid certain pre-petition transfers of real property and money from the Debtor to the Defendants pursuant to 11 U.S.C. §§ 547(b) and 548(a). The Debtor, in his schedules, elected to exempt property under state law. 11 U.S.C. § 522(b)(2). The Defendants allege the transferred proceeds from the worker's compensation settlement were, and remain, exempt from recovery or execution by creditors under Michigan law. The Defendants also contend that the marital home and recreational camp transferred by the Debtor was and remains exempt under Michigan law because the property was previously held by the Debtor and his non-debtor wife as tenants by the entireties. Therefore, the Defendants assert, as a matter of law, that they are entitled to a judgment for failure to state a cause of action.
To determine the effect and limits of any state law exemption claimed in bankruptcy by the Debtor, or asserted by the Defendants, the court must examine and construe the laws of Michigan.
Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested pa...
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