Sullivan v. Sullivan, BAP No. MB 11–020.
| Decision Date | 08 September 2011 |
| Docket Number | Adversary No. 09–01211–JNF.,Bankruptcy No. 08–18652–JNF.,BAP No. MB 11–020. |
| Citation | 455 B.R. 829,66 Collier Bankr.Cas.2d 493 |
| Parties | Brian J. SULLIVAN, Debtor.Stephanie R. Lussier, Plaintiff–Appellee,v.Brian J. Sullivan, Defendant–Appellant. |
| Court | U.S. Bankruptcy Appellate Panel, First Circuit |
OPINION TEXT STARTS HERE
Herbert Weinberg, Esq., North Andover, MA, on brief for Defendant–Appellant.Stephanie Lussier, pro se, on brief for Plaintiff–Appellee.Before VOTOLATO, KORNREICH, and TESTER, United States Bankruptcy Appellate Panel Judges.VOTOLATO, Bankruptcy Judge.
Brian J. Sullivan (the “Debtor”) appeals the bankruptcy court order denying his discharge under 11 U.S.C. § 727(a)(4)(A).1 On appeal, the Debtor contends that the bankruptcy court erroneously denied his discharge on the grounds that: (1) Stephanie R. Lussier (“Lussier”) lacked standing to object to his discharge; (2) he was denied his Sixth Amendment right to effective assistance of counsel; and (3) the facts in the record do not support the judgment. Based upon its review of the evidence, the applicable law, and the written and oral arguments, the Panel concludes that the order of the bankruptcy court should be AFFIRMED.
I. Factual and Procedural History
For some time prior to 2006, the Debtor, an attorney, and Lussier had a domestic relationship and they are parents to a child. While they were still involved, Lussier loaned the Debtor approximately $36,000 as a down payment in his attempt to purchase a Florida condominium. That sale did not take place. Lussier also made a $100,000 deposit toward their joint purchase of property located at 121 Albatross Road (the “Property”) in Quincy, Massachusetts. By May 2006, the Debtor and Lussier had ended their relationship, deeded the Property to the Debtor, and refinanced the mortgage, so that Lussier was no longer liable on the promissory note and mortgage. During the refinancing, the Debtor wrote Lussier a check for money he owed her for various deposits and expenses on the Property.
In October 2006, Lussier filed a state court complaint to recover damages regarding the loan for the Florida property, and on January 11, 2007, she obtained a writ of attachment on the Property in the amount of $100,000. 2 A trial was scheduled, but has been held in abeyance pending the outcome of this adversary proceeding.
On November 13, 2008, the Debtor filed a chapter 7 petition and listed, among other assets, a Citizens Bank account in the amount of $300, and a 1970 Chevrolet Chevelle estimated at $9,500 in value. In the category “furs and jewelry,” the Debtor stated “none.” On Schedule C, the Debtor claimed the bank account and the Chevelle as exempt under § 522(d)(2) and (d)(5), and on Schedule E, stated that he had a domestic support obligation, and included Lussier as the holder of a $2,015 claim. On Schedule F, the Debtor listed Lussier as the holder of a $100,000 claim, adding that the claim was “undetermined and subject matter of pending litigation.” The Debtor did not designate either of Lussier's claims as “contingent,” “unliquidated,” or “disputed”.
On February 5, 2009, at a § 341 meeting of creditors, Lussier informed the trustee that the Debtor had failed to include on Schedule B a Rolex watch she had given him as a gift. The Debtor, who was wearing the Rolex, held it up and, at the chapter 7 trustee's request, turned it over to his counsel.
Lussier filed this adversary proceeding in August 2009. One year later, the Debtor moved to amend his Schedules B and C to include a “Submariner Rolex Watch (used)” worth $1,760, and claimed it as exempt. In his motion, the Debtor argued that the Rolex “could not be authenticated due to its condition but based on eBay comparables, which appear to be in better condition, the watch could be worth as much as $1,760.” The Debtor also explained unpersuasively that he had delayed filing the amendment until the trustee informed the Debtor that he (the trustee) had no interest in the watch.
In November 2010, a trial was held on the merits of Lussier's complaint. Lussier appeared pro se, and the Debtor was represented by counsel. Twenty exhibits were introduced into evidence and the Debtor was the only witness. During a colloquy among the trial judge, Lussier, and Debtor's counsel, the bankruptcy judge addressed the issue whether Lussier had standing as a creditor, and held that the Debtor failed to establish that Lussier was not a creditor. The other dispositive issue was whether Lussier satisfied her burden to establish that the Debtor knowingly and fraudulently made a false oath with respect to material facts, by omitting and undervaluing his assets.
The bankruptcy court took the matter under advisement and issued a Memorandum in which it found that the Debtor intentionally and fraudulently omitted and undervalued assets on Schedule B, including a Rolex watch, the bank account, and the 1970 Chevelle. In her written decision, the bankruptcy judge addressed how the omission(s) and/or undervaluation of these assets influenced her in determining that the Debtor's discharge should be denied. This appeal followed.
II. The Evidence in the Bankruptcy CourtA. The Omission of the Rolex Watch
Although he did not list it on his original Schedule B, at trial the Debtor admitted that he owned a Rolex when he filed for relief, but explained that he sold the watch Lussier gave him and replaced it with two different watches purchased from Hingham Jewelers. He gave one watch to his girlfriend and kept the other, which he wore to the § 341 meeting. On cross-examination, the Debtor admitted that the receipt for the two Rolex watches clearly indicated Hingham Jewelers as a Rolex dealer. The Debtor testified that several months prior to filing his bankruptcy petition, he attempted unsuccessfully to sell his Hingham Jewelers Rolex watch at a pawn shop in Newport, Rhode Island, and that because the serial number and Rolex crown hologram on the back of the watch had worn off, it could not be authenticated as a genuine Rolex.
B. The Inconsistent Representations Regarding the Bank Account
On Schedule B, the Debtor listed a Citizens Bank checking account containing $300. At trial, the Debtor testified that he remembered having exactly $264 in the account at the time he filed his petition. The Debtor further explained that he “informally” monitored the account balance through his check register, and ATM and bank receipts, and admitted that he did not keep track of his money very well. Also, “at the time, money came in; money went out,” and he made most payments in cash. On cross-examination, Lussier clearly established that the Debtor had $1,840 in the account on the petition date. Contrary to his sworn representation on Schedule B, the Debtor explained that in response to interrogatories he stated, “what I represented in my bankruptcy Schedule B is accurate as related to cash in my pocket at the time of filing.”
C. The Undervaluation of the Chevelle
On Schedule B, the Debtor listed a 1970 Chevrolet Chevelle worth $9,500. In 2005, the Debtor purchased the Chevelle via eBay for $33,433, and insured the vehicle for $39,000 based upon the opinion of a licensed appraiser. He then took the vehicle to a shop for minor repairs, where it was vandalized. The Debtor never filed an insurance claim for the alleged damage.
Thereafter, the Debtor brought the Chevelle to Ash's Auto Body (“Ash's”) to repair the vandalism damage. At Ash's, he learned that the initial assessment of the Chevelle was flawed, i.e., in disassembling the car, Ash's found rot and other structural damage. While the exact dates are unclear, it appears from the record that Ash's started repairing the Chevelle pre-petition and that the repair work extended over approximately a one and one-half year period. The Debtor testified that Ash's performed approximately $23,000 in repairs on the Chevelle, and the bankruptcy court noted that the interrogatories stated that the Debtor's parents paid Ash's more than $25,000 in labor charges, and $3,792 for parts.
Notwithstanding such large expenditures, the Debtor valued the Chevelle at $9,500 based on a NADA Blue Book value at the time of filing, and testified, based on his knowledge of classic cars, that his car was not worth as much as an original because his vehicle was compromised by having too many incorrect parts. Specifically, the Debtor testified that Mr. Ash told him that his Chevelle had a Buick Skylark clip on a Chevrolet Chevelle frame and body. 3
In addition to the initial insurance appraisal, the bankruptcy court considered two other appraisals of the vehicle. In her written decision, the bankruptcy judge thoroughly discussed the technical aspects of each appraisal. One appraiser estimated that the vehicle would bring $15,000–$20,000 in a commercially reasonable liquidation sale, and another valued it at $27,300. Neither appraiser mentioned that the car had non-matching parts.
Before considering the merits of an appeal, the Panel must determine whether it has jurisdiction, even if the litigants have not raised the issue. See Boylan v. George E. Bumpus, Jr. Constr. Co. (In re George E. Bumpus, Jr. Constr. Co.), 226 B.R. 724, 725–26 (1st Cir. BAP 1998). Bankruptcy appellate panels have jurisdiction to hear appeals from “final judgments, orders, and decrees” pursuant to 28 U.S.C. § 158(a)(1) or, “with leave of the court, from interlocutory orders and decrees” pursuant to 28 U.S.C. § 158(a)(3). Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R. 643, 645 (1st Cir. BAP 1998). “A decision is final if it ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ” Id. at 646. “The Panel has repeatedly ruled that a judgment denying discharge under § 727 is a final order.” Gagne v. Fessenden (In re Gagne), 394 B.R. 219, 224 (1st Cir. BAP 2008) ...
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