Souther v. Tate (In re Tate)
| Decision Date | 17 October 2014 |
| Docket Number | No. 12–20238.,12–20238. |
| Citation | 521 B.R. 427 |
| Parties | In re Kipp Leshone TATE and Carolyn Tate, Debtors. R. Michael Souther, Trustee, Movant v. Kipp Leshone Tate, Debtor/Respondent. |
| Court | U.S. Bankruptcy Court — Southern District of Georgia |
521 B.R. 427
In re Kipp Leshone TATE and Carolyn Tate, Debtors.
R. Michael Souther, Trustee, Movant
v.
Kipp Leshone Tate, Debtor/Respondent.
No. 12–20238.
United States Bankruptcy Court, S.D. Georgia, Brunswick Division.
Signed Oct. 17, 2014.
Paul A. Schofield, The Schofield Law Firm PC, Brunswick, GA, for Debtors.
OPINION AND ORDER FINDING RESPONDENT REMAINS IN CONTEMPT AND RENEWING REQUEST FOR ISSUANCE OF AN ARREST WARRANT
JOHN S. DALIS, Bankruptcy Judge.
This matter is before me on remand from the United States District Court for the Southern District of Georgia (“District Court”) following Debtor Kipp Leshone Tate's appeal of my Order of Civil Contempt and Application for the Issuance of an Arrest Warrant dated April 30, 2014 (“Incarceration Order”). (ECF No. 117.)1 In the Incarceration Order, I ordered Tate incarcerated until he complied with the terms of my civil contempt order (“Contempt Order”) dated March 28, 2014, which granted the Trustee's Motion for Contempt (“Contempt Motion”) and found Tate in civil contempt for his failure to comply with my turnover order dated September 12, 2013 (“Turnover Order”).
The District Court remanded the case for development of a more complete record. A hearing was held on September 11, 2014. I now issue this Opinion and Order finding that Tate remains in contempt and renewing my request to the District Court for the issuance of an arrest warrant.
JURISDICTION
This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A) and (E). Accordingly, this court has statutory authority to make a final ruling on the Contempt Motion. 28 U.S.C. § 1334.
Section 157(b)(2) provides a non-exclusive list of examples of core proceedings. The contempt proceedings here are core under 28 U.S.C. § 157(b)(2)(A) —“matters concerning the administration of the estate.” See In re Minh Vu Hoang, No. 05–21078, 2014 WL 1320322, *1 (Bankr.D.Md. Mar. 28, 2014).
Tate's actions in this case directly interfere with the Trustee's ability to administer the estate and provide a distribution to creditors. The contempt proceedings here are to ensure the effective administration of the estate. See Alderwoods Grp., Inc. v. Garcia, 682 F.3d 958, 969 (11th Cir.2012) (bankruptcy court necessarily has power to enforce its own orders regarding administration of the estate).
Additionally, civil contempt proceedings arising out of core matters are themselves core matters. In re Skinner, 917 F.2d 444, 448 (10th Cir.1990). When determining whether contempt proceedings are core or non-core, courts look to the underlying matter upon which the bankruptcy court was acting when sanctions were imposed. See In re Alpern, 191 B.R. 107, 111 (N.D.Ill.1995). An order to turn over property of the estate is a core proceeding under 28 U.S.C. § 157(b)(2)(E). The Trustee's motion for contempt and the proceedings that have followed, including this one, all arise out of the Turnover Motion and Order.
BACKGROUND
Tate and his wife, Carolyn Davis Tate, filed for chapter 7 bankruptcy relief on February 27, 2012. (Contempt Mot., ECF No. 62 ¶ 1.) Schedule B of the Tates' bankruptcy petition lists an “Arbitration Claim Pending vs. D.C. Metropolitan Dept.” as property of the estate. (Sch. B of ECF No. 1, at 10.) The Tates' petition values the arbitration action at $280,000.00 and claims a $10,000.00 exemption in the property. (Contempt Mot., ECF No. 62 ¶ 3.) On July 12, 2012, the Tates received a standard chapter 7 discharge.2 (ECF No. 20.)
In January 2013, the attorney representing Tate's union notified the Trustee that the arbitration action had been decided in late November, 2012. (Contempt Mot., ECF No. 62 ¶ 6.) The decision reinstated Tate to his former position with the D.C. Metropolitan Police and awarded him full back pay and other benefits for the period from February 18, 2006, to April 20, 2013. (Stipulations, Ex. A of ECF No. 76–1, at 2.) The November arbitration decision determined that Tate was entitled to payment for his claim, but the amount due was to be calculated and disbursed at an undetermined later date. (See Contempt Mot., ECF No. 62 ¶¶ 6–7.) Both the union's attorney and the Trustee repeatedly notified Tate that any amount paid to him under the terms of the arbitration award was property of the bankruptcy estate and that he was to notify the Trustee once the
amount of back pay had been determined.3 (Id. at ¶ 7.)
On June 25, 2013, Tate received a net payment of $171,534.61 from the arbitration award. (ECF No. 75 ¶ 4.) Of the amount awarded, the parties agree that $120,873.39—less Tate's $10,000.00 exemption—constitutes property of the Tates' chapter 7 bankruptcy estate. (ECF No. 76 ¶ 3.) The remaining $50,661.22 represents postpetition earnings and benefits and therefore is not subject to turnover. (Id. )
The same day Tate received the payment, he deposited $171,408.05 into two accounts at SunTrust Bank (“SunTrust”): $31,408.05 in Account # xxx8597 and $140,000.00 in Account # xxx8589. (Stips., ECF No. 76 ¶ 6.)
On August 19, 2013, the Trustee emailed the union's attorney for a status update. (Contempt Mot., ECF No. 62 ¶ 8.) The next day, Tate called the Trustee's office to inform the Trustee that he had received a net payment from the arbitration award in late June. (Id. ) Tate explained that he had already spent most of the award money on living expenses and repaying personal loans, but still had roughly $80,000.00 left. (Id. ) The Trustee's office informed Tate that the money awarded to him as back pay was property of the estate and requested Tate turn over the remaining funds immediately. (Mot. to Compel Turnover, ECF No. 51 ¶ 10.) Tate refused to do so, but said he was willing to negotiate a settlement regarding the amount he would turn over. (Id. )
The next day, August 21, 2013, the Trustee filed a “Motion to Compel Turnover of Property of the Bankruptcy Estate.” (Contempt Mot., ECF No. 62 ¶ 9.) Following a hearing on September 12, 2013, I granted the Trustee's motion:
IT IS HEREBY ORDERED that the Trustee's Motion to Compel Turnover of Property of the Bankruptcy Estate is hereby granted; that Debtor Kipp Tate is hereby ORDERED to immediately turnover to the Trustee all funds received pursuant to the arbitration award in his favor against the D.C. Metropolitan Police Department, less any claimed exemption; and, to provide Trustee with an accounting as to all funds received pursuant to such award, including but not limited to, disbursement from such funds.
(ECF No. 56.)
Shortly thereafter, Tate notified the Trustee that he had spent the remaining funds from the arbitration award and therefore would be unable to comply with the Turnover Order. On October 2, 2013, the Trustee filed a Motion for Order of Contempt and Sanctions (“Contempt Motion”) requesting the court find Tate: “[i]n willful contempt for his failure to comply with this Court's Order dated September 12, 2013 (Doc # 56), to order the incarceration of Tate until he complies with the aforesaid Order....” (Contempt Mot., ECF No. 62.)
After two hearings on the Contempt Motion, I issued the Contempt Order on March 28, 2014, finding Tate in civil contempt for his failure to comply with the Turnover Order. (ECF No. 86, In re Tate, No. 12–20238, 2014 WL 1330567 (Bankr.S.D.Ga. Mar. 28, 2014).) The Contempt
Order stated the requirements for Tate to purge his contempt. (ECF No. 86 at 26–27.) The Contempt Order further ordered Tate incarcerated until he complies, but stayed implementing incarceration for twenty-eight days to allow him to purge his contempt or to file an appeal of the Contempt Order. (Id. ) Finally, the Contempt Order required Tate appear at a continued hearing on contempt on April 30, 2014. (Id. )
Tate did not appeal the Contempt Order. (ECF No. 96 at 3.) At the call of the matter on April 30, 2014, Tate failed to appear as ordered. (Id. ) After reviewing the requirements I set out in the Contempt Order, I determined that Tate had not taken substantial steps towards purging his contempt. (Id. at 4.) I also found that Tate's repeated disregard for the court's orders demonstrated that daily fines and the threat of imprisonment were not sufficiently coercive to force him into compliance. (Id. )
Immediately following the April 30, 2014 hearing I issued the Incarceration Order. (ECF No. 96.)
FINDINGS OF FACT4
The Turnover Order requires that Tate “turnover to the Trustee all funds received pursuant to the arbitration award ... less any claimed exemption; and ... provide [the] Trustee with an accounting as to all funds received pursuant to such award.” (ECF No. 56) (emphasis added). Since the date of the Turnover Order, September 12, 2013, Tate has provided only dribbles of information concerning what he did with the arbitration award funds. (Contempt Hr'g Apr. 30, 2014, at 10:40:48). More importantly, Tate has frustrated the Trustee's attempts to determine what happened to $78,541.91 of the arbitration...
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