Muhammad v. Reed (In re Reed)
| Citation | 542 B.R. 808 |
| Decision Date | 30 December 2015 |
| Docket Number | Case No. 13bk30975,Adversary No. 13ap01294 |
| Parties | In re: Byron F. Reed, Debtor. Hassan A. Muhammad, Plaintiff, v. Byron F. Reed, Defendant. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois |
Plaintiff (pro se): Hassan A. Muhammad, Chicago, IL
Attorneys for Debtor/Defendant: Anthony J. Peraica and Aleksander Djordjevich, Anthony J. Peraica & Associates, Ltd., Chicago, IL
The matter before the court arises out of the Complaint Objecting to the Discharge of Debt Owed to A & H Caring Connections, Inc. [Adv. Dkt. No. 1] (the "Complaint"), filed by Hassan A. Muhammad (the "Plaintiff") in the above-captioned adversary proceeding (the "Adversary"), seeking a determination of dischargeability of debt under section 523(a) of the Bankruptcy Code (as defined below) against the debtor, Byron F. Reed (the "Debtor"), and also objecting to the discharge of the Debtor under section 727(a) of the Bankruptcy Code.
More specifically, the Complaint asserts several causes of action, some of which are numbered as counts, and some of which are not. Given that the Plaintiff is pro se, the court has examined the Complaint and has concluded that the Plaintiff is actually seeking only two independent causes of action. First, the Plaintiff is seeking a determination that a debt owed to the Plaintiff, which arose out of a state court judgment that was rendered against the Debtor, is nondischargeable under sections 523(a)(2) and (a)(6). Second, the Plaintiff is seeking a determination that the Debtor is not entitled to a discharge under sections 727(a)(4) and (a)(5) because the Debtor allegedly failed to disclose income from his businesses on his bankruptcy petition and purposely avoided disclosing his ownership of one such entity, by transferring his ownership interest in the business to his wife in order to avoid disclosing the same on his bankruptcy petition.
For the remainder of this Memorandum Decision, the court will discuss these two independent causes of action but will not reference the Plaintiff's counts specifically as they are set forth in the Complaint because the counts mix concepts in a misleading manner.1
The matter was tried before the court in a two-day trial that took place on September 1, 2015 and September 2, 2015 (the "Trial"). For the reasons set forth herein, the court holds that the debt owed to the Plaintiff is dischargeable by the Debtor and the Debtor is entitled to a discharge.
This Memorandum Decision constitutes the court's findings of fact and conclusions of law in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). A separate order will be entered pursuant to Bankruptcy Rule 9021.
The federal district courts have "original and exclusive jurisdiction" of all cases under title 11 of the United States Code (the "Bankruptcy Code"). 28 U.S.C. § 1334(a). The federal district courts also have "original but not exclusive jurisdiction" of all civil proceedings arising under title 11 of the United States Code, or arising in or related to cases under title 11. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).
A bankruptcy judge to whom a case has been referred may enter final judgment on any proceeding arising under the Bankruptcy Code or arising in a case under title 11. 28 U.S.C. § 157(b)(1). A proceeding for determination of the dischargeability of a particular debt only may arise in a case under title 11 and is specified as a core proceeding. 28 U.S.C. § 157(b)(2)(I) ; Birriel v. Odeh (In re Odeh ), 431 B.R. 807, 810 (Bankr.N.D.Ill.2010) (Wedoff, J.); Baermann v. Ryan (In re Ryan ), 408 B.R. 143, 151 (Bankr.N.D.Ill.2009) (Squires, J.). An objection to a debtor's discharge may only arise in a case under title 11 and is also specified as a core proceeding. 28 U.S.C. § 157(b)(2)(A) and (J) ; Kontrick v. Ryan, 540 U.S. 443, 452, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004) ; Hunt v. O'Neal (In re O'Neal ), 436 B.R. 545, 550 (Bankr.N.D.Ill.2010) (Schmetterer, J.).
While none of the parties have raised the issue of whether this court has constitutional authority to enter a final judgment on all counts of the Complaint in light of the United States Supreme Court's decision in Stern v. Marshall, 564 U.S. ––––, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), this court has an independent duty to determine whether it has such authority. Rutkowski v. Adas (In re Adas ), 488 B.R. 358, 379 (Bankr.N.D.Ill.2013) (Hollis, J.).
The counts in the Complaint are based on sections 523(a)(2)(A), 523(a)(6), 727(a)(4) and 727(a)(5) of the Bankruptcy Code. Sections 523 and 727 are unequivocally bankruptcy causes of action. While such actions may turn on state law, determining the scope of a debtor's discharge is a fundamental part of the bankruptcy process. See Deitz v. Ford (In re Deitz ), 469 B.R. 11, 20 (9th Cir. BAP 2012). As observed by one bankruptcy court, "there can be little doubt that [a bankruptcy court], as an Article I tribunal, has the constitutional authority to hear and finally determine what claims are non-dischargeable in a bankruptcy case." Farooqi v. Carroll (In re Carroll ), 464 B.R. 293, 312 (Bankr.N.D.Tex.2011) ; see also Deitz, 469 B.R. at 20 ; White Eagle, Inc. v. Boricich (In re Boricich ), 464 B.R. 335, 337 (Bankr.N.D.Ill.2011) (Schmetterer, J.). A bankruptcy court also has the constitutional authority to enter final judgment on an objection to a Debtor's discharge in a bankruptcy case. Wellness Intern. Network, Ltd. v. Sharif, 727 F.3d 751, 773 (7th Cir.2013), rev'd on other grounds, ––– U.S. ––––, 135 S.Ct. 1932, 191 L.Ed.2d 911.
There is therefore no question as to the court's authority to hear and determine nondischargeability of a debt and discharge of a debtor. See generally Stern, 564 U.S. ––––, 131 S.Ct. 2594, 180 L.Ed.2d 475.
Accordingly, final judgment is within the scope of the court's authority.
In considering the relief sought by the Plaintiff, the court has considered the evidence and argument presented by the parties at the Trial, has reviewed the Complaint, the attached exhibits submitted in conjunction therewith, and has reviewed and found each of the following of particular relevance:
To continue reading
Request your trial
-
Busey Bank v. Cosman (In re Cosman)
...authority to hear and finally determine what claims are non-dischargeable in a bankruptcy case." Muhammad v. Reed (In re Reed) , 542 B.R. 808, 815 (Bankr. N.D. Ill. 2015). See also, e.g. , Gasunas v. Yotis (In re Yotis) , 521 B.R. 625, 631 (Bankr. N.D. Ill. 2014) (citing Stern v. Marshall ,......
-
Pausch v. DiPiero (In re DiPiero)
...of the bankruptcy process” and so is core (internal quotation omitted)), aff'd 760 F.3d 1038 (9th Cir.2014) ; Muhammad v. Reed (In re Reed), 542 B.R. 808, 815 (Bankr.N.D.Ill.2015).Unquestionably, then, this is a core proceeding in which the bankruptcy court is empowered to enter a final jud......
-
MWRD Employees' Credit Union v. Frazier (In re Frazier), Bankruptcy Case No. 15 B 05304
...by a preponderance of the evidence. Peterson v. Scott (In re Scott), 172 F.3d 959, 966–67 (7th Cir.1999) ; Muhammad v. Reed (In re Reed), 542 B.R. 808, 823 (Bankr.N.D.Ill.2015). Turning to the statutory provision invoked by the Plaintiff, § 727(a)(2) provides that a debtor's discharge may b......
-
PNC Bank, N.A. v. Leongas (In re Leongas), Bankruptcy Case No. 15 B 27967
...of the elements of the applicable claim by a preponderance of the evidence. Scott , 172 F.3d at 966–67 ; Muhammad v. Reed (In re Reed) , 542 B.R. 808, 823 (Bankr. N.D. Ill. 2015) ; see also Fed. R. Bankr. P. 4005 ; In re Meyers , 616 F.3d 626, 631 (7th Cir. 2010) (explaining that "proof by ......