McDermott v. Kerr (In re Kerr)
| Decision Date | 30 August 2017 |
| Docket Number | Case No. 15-30531,Adv. Pro. No. 15-03085 |
| Parties | In Re: Jeremy Lynn Kerr, Debtor(s). Daniel M. McDermott, United States Trustee, Plaintiff(s), v. Jeremy Lynn Kerr, Defendant(s). |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
MEMORANDUM OF DECISION
This adversary proceeding is before the court for decision after trial on Plaintiff Daniel M. McDermott's Complaint [Doc. # 1] against Defendant Jeremy Lynn Kerr (or "Mr. Kerr"), which requests a order denying Defendant's discharge pursuant to 11 U.S.C. § 727(a). Defendant is the debtor in the underlying Chapter 7 case. The pro se Defendant is currently incarcerated and appeared at the trial telephonically. Plaintiff (or "UST") is the duly-appointed United States Trustee.
The District Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1334(b) as a civil proceeding arising in or related to a case under Title 11. This proceeding has been referred to this court by the District Court under its general order of reference. 28 U.S.C. § 157(a); General Order 2012-7 of the United States District Court for the Northern District of Ohio. The above captioned adversary case is a core proceeding in which this court can make a final determination because it involves a debtor's right to a discharge. 28 U.S.C. § 157(b)(1) and (2)(J).
This Memorandum of Decision constitutes the court's findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52, made applicable to this adversary proceeding by Fed. R. Bankr. P. 7052. Regardless of whether specifically referred to in this Memorandum of Decision, the court has examined all the submitted materials, weighed the credibility of the witnesses, considered all of the evidence, and reviewed the entire record of the case. Based upon that review, and for the reasons discussed below, the court finds that Defendant's discharge should be denied.
This adversary proceeding was commenced on August 13, 2015 [Doc. # 1] when Plaintiff filed a Complaint alleging that Defendant: 1) concealed possessory and equitable interests in four different properties within one year before the petition date; 2) concealed the same possessory and equitable interests in the four properties after the petition date; 3) knowingly and fraudulently made one or more false oaths or accounts in connection with his bankruptcy case; and 4), failed to satisfactorily explain the loss of assets or deficiency of assets. [Id.]
Many of the following facts were previously set forth in the court's Memorandum and Order Denying Defendant's Motion for Summary Judgment. [Doc. #46]. In July 2010, Defendant acquired real property at 13926 Defiance Pike, Rudolph, Ohio ("Defiance"). In March 2011, Defendant acquired real property at 133345 Ash Street, Weston, Ohio ("Ash"). Also in March 2011, Defendant acquired real property located at 10730 Cygnet Road, Cygnet, Ohio ("Cygnet") and 28926 Simmons Road, Perrysburg, Ohio ("Simmons"). [Doc. # 1, ¶¶ 19 - 22].
"At some time prior to March 2012," Defendant hired realtor Ruth Ann Kramer to list his Ash property for sale. [Pl. Ex. 3-1]. After an offer was made and accepted on the Ash property, the Welles Bowen Title Agency initiated title work. [Id.]. As the title was being investigated, it was discovered that five judgment liens were filed against the property, including those of Carter-Jones Lumber, Larry Eilert, and ABCO Services, Inc. [Id.].
After Ruth Ann Kramer informed Defendant of the liens, Defendant acknowledged their existence and indicated that he was working on getting the liens paid and released. [Id.]. On March 15, 2012, Defendant emailed Patricia Kost ("Ms. Kost"), an employee of Welles Bowen, and attached to the email "copies of several documents that purported to be releases of the judgment liens" of Larry Eilert, ABCO Services, and Carter-Jones Lumber. [Pl. Ex. 3, p. 3-2].
After investigating the documents, Ms. Kost determined that the releases were forgeries. The documents contained forged signatures of "attorneys Bradley Le Bouef, Cory Spewik and William Jennings, as well as the forged signatures of [three different] notaries . . . ." [Pl. Ex. 3, p. 3-2, 3-3]. In July 2012, Defendant-Debtor was indicted in the Wood County Court of Common Pleas for four charges of forgery and four charges of tampering with evidence [Pl. Ex. 2, ¶ 3].
On October 22, 2012, Defendant deeded the Defiance, Ash, Cygnet, and Simmons properties (collectively, the "Properties") to Beaver Creek Development LLC ("Beaver Creek"). [Pl. Exs. 8-11]. Beaver Creek is an LLC wholly owned by Defendant. Christopher Frasor ("Frasor), the state court appointed receiver, swore in an affidavit [Pl. Ex. 2, ¶ 8] and testified at trial that the Properties were transferred for no consideration.
On April 5, 2013, a Wood County Court of Common Pleas jury returned a guilty verdict on all eight charges against Defendant [Pl. Ex. 3], and he was sentenced on June 4, 2013 to seven years and eight months in prison. [Pl. Ex. 3, p. 3-1]. As of the date of the trial, Defendant remained incarcerated at the North Central Correctional Institution in Marion, Ohio.
On August 20, 2013, the Common Pleas Court of Henry County, Ohio appointed a Receiver for all the real and personal property of Defendant, Kerr Buildings Inc. (an Ohio corporation wholly owned by Defendant), and Beaver Creek. [Pl. Ex. 1]. Defendant admitted that before and after the Receiver was appointed, he "continued to represent to his Judgment Creditors and the Receiver that the Defiance, Ash, Cygnet, and Simmons" properties were the "exclusive property of Beaver Creek." [Doc. # 1, ¶ 32; Doc. # 5, ¶ 32].
In a decision issued on December 12, 2014, Defendant's Wood County criminal convictions were affirmed by the Sixth District Court of Appeals. State v. Kerr, 2014-Ohio-5455, 2014 WL 7004796, 2014 Ohio App. LEXIS 5286 (6th Dist. Ct. App. December 12, 2014).
Defendant filed his Chapter 7 bankruptcy petition on February 27, 2015. [Case No.15-30531, Doc. # 1]. In his schedules, Defendant listed his "[s]tock and interests in incorporated andunincorporated businesses" as "none", and he listed no value for those interests. [Id. at p. 10]. He did not list his interests in Kerr Buildings Inc. ("Kerr Buildings") and Beaver Creek on Schedule B, line 13, nor did he identify any values associated with those interests. [Case No. 15-30531, Doc. # 1, Schedule B].
Additionally, in the documents filed with his Petition on February 27, 2015, Defendant did not include the names and addresses of the Receiver or certain judgment creditors (Carter-Jones Lumber Co., Keith Lenz, Larry Eilert and Juliet Eilert, ABCO Services, Steven Zimmerman, Scott Bishop and Kathy Bishop) and/or their attorneys - either on Schedule F or on the Creditor Matrix1. Instead, Defendant listed just case numbers from civil actions brought by certain creditors, and used the addresses of the courts in which the lawsuits were brought. [Case No. 15-30531, Doc. # 1].
Plaintiff filed the "Complaint to Deny Discharge Pursuant to 11 U.S.C. § 727" (the "Complaint") on August 13, 2015 [Doc. # 1], seeking an order denying Defendant's discharge. The Complaint alleges four counts against Defendant: (1) that Defendant, with the intent to "hinder, delay or defraud" one or more creditors, concealed property within one year before the filing date of his petition; (2) that Defendant, with the requisite intent, concealed property of the estate after the date his petition was filed; (3) that Defendant knowingly and fraudulently, in or in connection with the case, made one or more false oaths or accounts; and (4), that Defendant failed to explain satisfactorily before determination of denial of discharge under § 727, any loss of assets or deficiency of assets to meet the debtor's liabilities. [Doc. # 1].
In the court's Order Denying Defendant's Motion for Leave to File Revised Summary Judgment, the court recorded the following stipulation between the parties: "[t]he parties stipulate that the factual findings of the state court decisions regarding Mr. Kerr will not be re-litigated at trial." Any objections to the stipulation were to be made no later than November 30, 2016. [Doc. # 56]. On November 23, 2016, Defendant filed his "Opposition to the Trustee's Motion In Limine", which the court construed as Defendant's objection to the aforementioned stipulation. [Doc. # 60]. As of November 23, 2016, the UST had not filed a motion in limine.
Prior to the trial, each party filed written motions in limine. [Doc. ## 63, 72]. Plaintiffargued that the court should refuse to admit any evidence offered by the Defendant that would attempt to re-litigate his state court convictions, and instead adopt the state court findings "as conclusive and binding for purposes of adjudicating the Complaint." [Doc. # 72, p. 6]. In his Opposition filed in response to Plaintiff's written motion in limine, Defendant argued that collateral estoppel should not apply to the case at hand, as "Ohio Law . . . states if the outcome of the trial can be overturned on review, then Collateral Estopple [sic] cannot apply. [Doc. # 81, p. 2].
In ruling on the motions, the court denied Defendant's motion in limine and granted in part and denied in part Plaintiff's motion in limine. See, McDermott v. Kerr (In re Kerr), 2017 WL 923941, 2017 Bankr. LEXIS 606 (Bankr. N.D. Ohio Mar. 6, 2017). The crux of the motions in limine involved the extent to which collateral estoppel applied to the judgment of conviction against Defendant entered in state court. Defendant argued that the disposition of certain properties, described in detail in the Sixth District Court of Appeal's opinion [Doc. #1-2] and again in this court's Order Denying Summary Judgment [Doc. # 46], "never took place on March 15 or 20 of 2015." [Doc. # 63, p. 2]. He also argued that collateral estoppel should not apply. Plaintiff urged the court to adopt the state court...
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