Wilhoite v. Lemah (In re Wilhoite)
| Decision Date | 14 May 2014 |
| Docket Number | Adversary No.: 14-90008,Case Number: 3:11-06339 |
| Court | U.S. Bankruptcy Court — Middle District of Tennessee |
| Parties | In re: MURRAY OWEN WILHOITE, JR., Debtor. MURRAY OWEN WILHOITE, JR., Plaintiff v. EVA MARIE LEMAH, TRUSTEE Defendant. |
__________
Randal S. Mashburn
U.S. Bankruptcy Judge
Murray Wilhoite is clearly unhappy with the results of his bankruptcy. He is upset with his prior attorneys, his estranged wife, previous court rulings, and the entire bankruptcy system. He has currently singled out his Chapter 7 bankruptcy trustee as the object of his discontent. Regardless of his frustrations, he has failed to state a cause of action against the trustee that would allow this adversary proceeding to go forward. Therefore, the trustee's motion to dismiss will be granted.
Mr. Wilhoite has been acting pro sein this adversary proceeding, as he has throughout much of his bankruptcy case and in the course of several other lawsuits, contested matters, and appeals. His overriding theme in all of his pleadings is that he feels he lost his business as a result of a combination of negligence, improper conduct, and improvident decisions by professionals and other participants in the bankruptcy system.
His latest pleadings attempt to construct a complaint out of the same hodgepodge of claims and to place blame on the trustee, Eva Marie Lemeh. Despite the Court allowing an amended complaint after identifying obvious defects in the original complaint, the revised complaint still fails to meet applicable legal standards.
For the reasons stated herein, the Court is contemporaneously entering an order granting the trustee's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court also incorporates by reference its prior Order dismissing certain counts of the original complaint. [14-90008, Docket no. 14]. The following constitutes the Court's findings of fact and conclusions of law. Fed.R.Bankr.P. 7052.
Many of the facts relating to Mr. Wilhoite's Chapter 7 case have been previously detailed in the Court's Memorandum Opinion found at 2014 WL 505171 (Bankr. M.D. Tenn. Feb. 7, 2014) and CMECF, Adv. No. 13-90362, Docket No. 27 and are restated and supplemented here based only upon the facts accepted as true from Mr. Wilhoite's amended complaint and the Court's judicial notice of the Court docket and filings during the bankruptcy proceedings.1
Mr. Wilhoite filed a chapter 11 bankruptcy through his first attorney in April of 2011. Mr. Wilhoite's original statements and schedules listed a one-half interest in three separate pieces of real estate and a fee simple interest in three other properties. [11-03499, Docket no. 12]. There was no mention at all on his Schedule B of an ownership interest in Bren Instruments, Inc. - the company that ultimately became the focus of many of Mr. Wilhoite's allegations. That chapter 11 case was dismissed for failure to appear at the meeting of creditors in May 2011.
Mr. Wilhoite's first attorney filed a motion to set aside the dismissal [11-03499, Docket no. 18], but was killed in a plane crash before that hearing was held. Mr. Wilhoite hired new counsel to represent him. Instead of proceeding on the motion to set aside the dismissal, Mr. Wilhoite's new counsel withdrew his motion [11-03499, Docket no. 28], and the case remained dismissed and was closed. [11-03499, Docket no. 36].
In June of 2011, Mr. Wilhoite filed a new chapter 11 petition accompanied by new statements and schedules which claimed a different ownership interest in one of the properties identified in the earlier bankruptcy, and omitted another propertythat had been listed in the first bankruptcy case. [11-06339, Docket no. 1]. Although there were changes in the schedule of assets, there was still no mention of an ownership interest in Bren Instruments Inc. on the debtor's Schedule B. However, Mr. Wilhoite did reference a 25% stock interest in Bren in his Statement of Financial Affairs in response to Question 21 about debtor partnerships.
In August of 2011, the United States Trustee filed a motion to convert the second bankruptcy case to Chapter 7. The allegations in the motion included the following key points:
4. Immediately before filing his first Chapter 11 case, the Debtor transferred three parcels of real property to his non-filing spouse. The non-filing spouse also transferred a parcel of real property to the Debtor. These transfers were not reflected on the bankruptcy schedules filed in the Debtor's first bankruptcy case.
5. The Debtor is the President of a corporation known as Bren Instrument, Inc. ("Bren Instruments"), which is located in Franklin, Tennessee. Bren Instruments is in the business of producing stencil machines, sign and decal systems, and stencil related materials for industrial and military customers. The Debtor placed a total entity value of $498,095.00 on Bren Instruments on the Form B26 filed in this bankruptcy case (Docket No. 27).
6. During the Meeting of Creditors, the Debtor testified that he owns 25% of Bren Instruments, that his two brothers each own 25% of Bren Instruments, and that his non-filing wife owns 25% of Bren Instruments. However, the Debtor also testified during the Meeting of Creditors that he has filed numerous corporate tax returns on behalf of Bren Instruments, which reflect that his non-filing spouse, Brenda Wilhoite, owns 51% of Bren Instruments. The value of the bankruptcy estate will largely depend on the ownership interest owned by Mr. Wilhoite.
7. As President, the Debtor controls the funds held by Bren Instruments. The Debtor used a check from Bren Instruments to pay the attorneys fees related to this bankruptcy case. Payment of individual attorneys fees do not appear to be a normal corporate expense of Bren Instruments. The value of the bankruptcy estate will also depend on the cash flow of Bren Instruments.
[11-06339, Docket no. 40].
The debtor, through counsel, initially filed an objection to the motion to convert and requested a hearing. [11-06339 Docket no. 46]. However, an agreedorder was entered in September 2011 converting the case to Chapter 7. The order was signed with approval by debtor's counsel and the United States Trustee. [11-06339 Docket no. 57].
Mr. Wilhoite's counsel subsequently moved to withdraw from representation because "the attorney client relationship has eroded because of differences in courses of action to be followed in the case," and an order was entered allowing withdrawal. Mr. Wilhoite objected to a few motions pro se regarding the trustee's right to hire certain professionals, but at that point Mr. Wilhoite did not complain about the conversion of his case to Chapter 7. [11-06339, Docket nos. 69-110].
The Chapter 7 trustee filed a motion to compel the debtor to file conversion statements and schedules in late 2011. [11-06339, Docket no. 103]. Mr. Wilhoite then hired a third attorney who filed new schedules. These schedules indicated that Mr. Wilhoite held a fee simple interest in one of the pieces of real estate identified in the prior filings and that he was a joint tenant on various other properties. Mr. Wilhoite also listed himself as a 49% owner in Bren Instruments on Schedule B. [11-06339, Docket no. 110].
Mr. Wilhoite's third attorney filed a motion to withdraw as counsel a few months after being hired, alleging that "the attorney client relationship has eroded because of a breakdown of communications between attorney and client and because of differences in courses of action to be followed in the case." [11-06339, Docket no. 154]. She too was allowed to withdraw.
Mr. Wilhoite then filed various pleadings pro se: "Notice of Objection to Motion of Trustee to Pay Fees of Agent" [11-06339, Docket no. 156] (objecting to the source of funds to pay the trustee's agent); "Motion to Refer Case for Alternative Dispute Resolution" [11-06339, Docket no. 158] (asking the Court to refer this case to an ADR Program because the trustee had breached contracts of Bren Instruments, Inc. by removing key employees); and "Motion to Compel the Trustee to Examine the Acts of the Debtor" [11-06339, Docket no. 187] (asking the court to examine if grounds exist for dismissal with or without a discharge and stating he disagreed with the trustee's effort to sell and partition property that Mr. Wilhoite owned with others). None of these motions were granted.
On April 10, 2012, SunTrust Bank filed an adversary proceeding alleging that the debt owed to it was nondischargeable due to Mr. Wilhoite's fraud. [Adv. Pro. No. 12-90201]. The complaint alleged that Mr. Wilhoite pledged real property as collateral for a loan when the property was really owned by his father. SunTrust obtained a nondischargeable judgment for fraud against Mr. Wilhoite on anunopposed motion for summary judgment in the amount of $1,393,418.03 as of December 26, 2012. [Adv. Pro. No. 12-90201, docket no. 28].
Fidelity National Title Insurance Company, also involved in the SunTrust loan transaction, filed its own adversary proceeding against Mr. Wilhoite for fraud. Fidelity received a default judgment against Mr. Wilhoite, who failed to timely respond. Mr. Wilhoite's debt to Fidelity in the amount of $394,914.16 was held nondischargeable for fraud and/or willful and malicious injury in March of 2013. [Adv. Pro. No. 12-90274, Docket no. 40].
On April 30, 2012, the trustee filed a motion to sell Mr. Wilhoite's 49% ownership in Bren Instruments Inc. [11-06339, Docket no. 216]. Mr. Wilhoite was sent notice of the sale but did not object, and an order was entered on June 27, 2012, approving the sale. [11-06339, Docket no. 234]. This order was not appealed. No motion to set aside the sale order was filed.
In the spring of 2013, Mr. Wilhoite became active again in the Chapter 7 case, having taken no significant action since mid-2012. In April of 2013, he filed a pleading...
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