Montoya v. Gary Edward Sasso, Debra K. Sasso, Ace Enters., Inc. (In re Sasso), 7-12-14564 JA

• Decision Date: 25 October 2016
• Docket Number: No. 7-12-14564 JA,Adv. No. 15-1043 J,7-12-14564 JA
• Parties: In re: GARY EDWARD SASSO, Debtor. PHILIP J. MONTOYA, Chapter 7 Trustee, Plaintiff, v. GARY EDWARD SASSO, DEBRA K. SASSO, ACE ENTERPRISES, INC., and ARON FINCH, Defendant.
• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of New Mexico

In re: GARY EDWARD SASSO, Debtor.

PHILIP J. MONTOYA, Chapter 7 Trustee, Plaintiff,
v.
GARY EDWARD SASSO, DEBRA K. SASSO, ACE ENTERPRISES, INC., and ARON FINCH, Defendant.

No. 7-12-14564 JA
Adv. No. 15-1043 J

UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW MEXICO

October 25, 2016

MEMORANDUM OPINION

This adversary proceeding is before the Court for a trial on the merits. The Chapter 7 Trustee, Philip J. Montoya (the "Chapter 7 Trustee" or "Trustee"), by and though his attorneys Askew & Mazel, LLC ("A&M"), seeks a declaratory judgment that the Debtor had a community interest in the 2013 Monte Carlo 40SC Trailer, with the VIN # 5CZ200R36D1123116 (the "Monte Carlo") as of the Petition Date and that Debtor failed to list his interest in the Monte Carlo on his bankruptcy schedules.¹ Defendants², the Debtor and his non-filing spouse, Debra K. Sasso, contend that Mrs. Sasso purchased the Monte Carlo from separate funds she accumulated from her social security income such that the Debtor did not have a community interest in it as of the Petition Date.

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A. Findings of Fact

In accordance with Fed. R. Civ. P 52(a)(1), made applicable by Fed. R. Bankr. P. 9014, the Court finds the following facts.³

The Debtor and Mrs. Sasso have been married since May 23, 2001.⁴ On September 19, 2009, Mrs. Sasso purchased three certificates of deposit with Wells Fargo totaling $35,000.00 (the "Certificates of Deposit").⁵ Other than Mrs. Sasso's uncorroborated testimony, there is no evidence she purchased the Certificates of Deposit with separate funds. On July 13, 2013, Mrs. Sasso liquidated the Certificates of Deposit and purchased a cashier's check in the amount of $28,000.00 (the "Cashier's Check").⁶ On the same day, Mrs. Sasso negotiated the Cashier's Check to Margret McMillian as payment for the Monte Carlo.⁷ In exchange, Ms. McMillian gave Mrs. Sasso the Monte Carlo and it's Certificate of Title (the "Certificate of Title").⁸ There is no evidence regarding in whose name the Monte Carlo was titled.

The Debtor and Mrs. Sasso attempted to sell real property located at 69B Range Rd, Edgewood, New Mexico (the "Range Road Property") to LeighAnn and Samuel Harrison.⁹ The Harrisons delivered monthly payments to the Debtor for the purchase of the Range Road Property.¹⁰ The Debtor gave the payments from the Harrisons for the purchase of the Range Road Property to Mrs. Sasso to repay her for her purchase of the Monte Carlo.¹¹

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The Debtor did not disclose any interest in the Monte Carlo on his Schedules.¹² On February 14, 2013, the Trustee held a meeting of creditors pursuant to 11 U.S.C. § 341, at which he examined the Debtor under oath.¹³ At the § 341 Meeting, the Debtor testified under oath that his schedules and statements were true and correct.¹⁴ At the 341 Meeting, the Debtor testified under oath that he listed everything he owned.¹⁵ At the 341 Meeting, the Debtor testified under oath that he did not own any automobiles.¹⁶

B. Discussion.

i. Determining Credibility and Weighing Evidence Submitted.

In adversary proceeding trial, the bankruptcy court sitting without a jury has the duty to make findings of fact.¹⁷ The Court makes findings of fact by considering all admitted evidence, assessing its credibility, and determining its relative weight.¹⁸ The bankruptcy court is granted broad authority to assess credibility and determine weight of admitted evidence and will not be overturned absent clear error.¹⁹ The bankruptcy court's duty and authority to assess credibility and weigh admitted testamentary evidence applies to deposition transcripts as well as oral testimony.²⁰ In assessing the credibility of transcribed testimony, the bankruptcy court may

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consider: (i) deficiencies in the testimony; (ii) consistencies or inconsistencies between the testimony and other testimony or documentary evidence; (iii) whether the testimony is self-serving; and (iv) whether the witness is biased.²¹ The bankruptcy court may also use common sense, knowledge, and experience in making its credibility assessment.²²

Here, the only testamentary evidence admitted at trial was the transcript of the depositions of the Debtor and Mrs. Sasso and of the § 341 meeting held in the bankruptcy case. The Court found the testimony contained in the transcripts, standing alone, to have low probative value, particularly where the testimony was self-serving. Where the testimony was either against the witness's self-interest or corroborated by documentary evidence, the Court found it more credible and assigned it more weight. The Court's findings of fact stated above were made in accordance with its credibility assessments and weight determination.

ii. The Monte Carlo is Community Property.

New Mexico is a community property state.²³ "Community property" is statutorily defined as "property acquired by either or both spouses during marriage which is not separate property."²⁴

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Property acquired in a community property state achieves its character upon acquisition.²⁵ Under New Mexico law, all property acquired by either spouse during the marriage is presumed to be community property.²⁶ A party asserting that property acquired during the marriage is, in fact, separate property, can overcome the presumption of community property by producing evidence of the separate character of the property by a preponderance of the evidence.²⁷ "[A]s long as the identity of the property or funds can be traced and identified, a wife's separate estate may undergo changes and mutations without affecting its character as separate property."²⁸

The central issue in this adversary proceeding is: whether the Monte Carlo is Mrs. Sasso's separate property. The Court begins with the presumption that the Monte Carlo is community

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property because Mrs. Sasso purchased it during her marriage to the Debtor.²⁹ In light of the presumption, the burden of production shifts to the Debtor and Mrs. Sasso to submit evidence rebutting that presumption.³⁰

Mrs. Sasso purchased the Monte Carlo with the Cashier's Check, which she purchased with funds she received from the liquidation of the Certificates of Deposit.³¹ The Certificates of Deposit are presumed to be community property because they were also purchased during her marriage to the Debtor.³² Mrs. Sasso testified in her deposition that she has received Social Security Disability income since 2007.³³ She further testified that she received three lump sum payments from the Social Security Administration after her application was approved.³⁴ She also testified that she used a portion of the lump sum payments to purchase the Certificates of Deposit.³⁵ The Debtor and Mrs. Sasso did not produce any evidence to support Mrs. Sasso's conclusory testimony that she purchased the Monte Carlo with Social Security Disability benefit proceeds. Further, there is no evidence of how the Monte Carlo was titled after it was purchased. The Debtor and Mrs. Sasso waived their right to submit evidence at trial by failing to appear in person. The Court finds that Mrs. Sasso's testimony on this issue lacks sufficient credibility, because it is self-serving and uncorroborated, to establish by a preponderance of the evidence that she purchased the Certificates of Deposit with Social Security Disability benefit proceeds. Further, even if separate funds were used, there is no evidence the Monte Carlo was titled in Mrs. Sasso's name. Therefore, the Court

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concludes that Mrs. Sasso's testimony is insufficient to rebut the presumption that the Certificates of Deposit were community property.

The Court does not reach this conclusion lightly. It is possible that Mrs. Sasso purchased the Certificates of Deposit with her separate funds. However, the Debtor and Mrs. Sasso had a full and fair opportunity to appear in person at trial and present evidence corroborating Mrs. Sasso's testimony. They simply did not take advantage of that opportunity. If the Debtor or Mrs. Sasso could have produced corroborating evidence and chose not to, then they only have themselves to blame for the outcome.

C. Conclusion.

Based on the foregoing, the Court will enter a declaratory judgment in favor of Plaintiff, Philip J. Montoya Chapter 7 Trustee, providing that, as of the Petition Date, the Monte Carlo was a community interest of the Debtor and Mrs. Sasso. The Court will also order the Debtor and Mrs. Sasso to turnover the Monte Carlo to the Chapter 7 Trustee no later than November 30, 2016.³⁶

/s/________...