Jackson v. Jackson (In re Jackson)

548 B.R. 353

In re: Frances Edith Jackson, Debtor.

Matthew E. Jackson Jr. and Velma L. Jackson, Plaintiffs,

v.Frances Edith Jackson, Defendant.

Case No. 14–72501–PWB

Adversary Proceeding No. 15–5100–PWB

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

Signed April 8, 2016

Filed April 11, 2016

Matthew E. Jackson, Jr., pro se.

Velma L. Jackson, pro se.

Schuyler Elliott, Schuyler Elliott & Associates, Inc., Norcross, GA, for Defendant.

ORDER DENYING THE PLAINTIFFS' MOTION FOR ABSTENTION AND REMAND, GRANTING THE DEBTOR'S MOTION FOR SUMMARY JUDGMENT, AND DENYING THE PLAINTIFFS' CROSS–MOTION FOR SUMMARY JUDGMENT

Paul W. Bonapfel, U.S. Bankruptcy Court Judge

This is a long order. Its length is not attributable to the need for analysis of complex or novel legal issues or the presence of critical factual disputes. To the contrary, this proceeding involves the simple application of fundamental legal principles of federal and bankruptcy law and procedure to undisputed facts.

Rather, this Order is long because of the nature of the numerous factual allegations and legal contentions that the Plaintiffs—who are Pennsylvania lawyers but are appearing pro se in this proceeding—have made in the 59 paragraphs of their complaint. Most of their factual allegations are wholly unsupported by the record; most of their legal theories are frivolous. The Court is compelled to set forth almost all of their allegations and contentions verbatim and specifically address the deficiencies of each one.

I. INTRODUCTION

A. Background and the District Court Litigation

The Plaintiffs in this adversary proceeding are Matthew E. Jackson, Jr., and Velma L. Jackson, the brother and sister of the Chapter 7 debtor and Defendant, Frances Edith Jackson. The action involves a transfer in February 2000 by their mother, Sarah Jackson, of real property known as 339 Little Street, Sewickley, Pennsylvania, 15143 (the "Property") to the Debtor and the claims that the Plaintiffs brought against the Debtor in June 2013 in the United States District Court for the Western District of Pennsylvania with regard to the transfer and the Property.¹ Part II(A) further describes the circumstances surrounding the transfer of the Property, and Part II(B) further discusses the details of the District Court Litigation.

In the complaint (the "D. Ct. Complaint")² in the District Court Litigation, the Plaintiffs asserted that their mother had intended that the Debtor hold title to the Property for the benefit of the Plaintiffs, the Debtor, and two other siblings who were not parties to the District Court Litigation and are not parties here. The Plaintiffs also asserted nine other claims against the Debtor for: unjust enrichment; breach of duty to keep informed; breach of duty of loyalty and to avoid self-dealing; breach of duty to exercise reasonable care and prudence; promissory estoppel; intentional infliction of emotional distress; fraud and conversion of property and funds of Velma Jackson; fraud; and invasion of privacy.

On June 4, 2014, the Magistrate Judge assigned to the proceeding issued a Report and Recommendation (the "Mag. R & R")³ that recommended (1) the grant of summary judgment in favor of the Plaintiffs on their claim for imposition of a constructive trust and (2) the sua sponte grant of summary judgment against the Plaintiffs on all other counts of their complaint. With regard to the constructive trust, the Magistrate Judge recommended an accounting with regard to payments the parties had made for taxes and other matters relating to the Property and that any conveyance of the Property be made conditional upon payment of the expenditures.

The District Court on August 15, 2014, entered a Memorandum Order (the "District Court Order")⁴ that adopted the Report and Recommendation as its ruling and directed further proceedings with regard to the accounting. Although it does not appear that the District Court entered a judgment, the Plaintiffs appealed the District Court Order to the United States Court of Appeals for the Third Circuit on September 12, 2014.⁵

An evidentiary hearing before the Magistrate Judge on the accounting was scheduled for November 17, 2014. The Debtor filed her Chapter 7 petition in this Court on November 13, 2014, however, and the evidentiary hearing did not go forward.

B. Debtor's References to the Property and to the District Court Litigation in Her Bankruptcy Papers

The Debtor referred to her interest in the Property and to the District Court Litigation in several places in her Statement of Financial Affairs ("SOFA") and Schedules of Assets and Liabilities ("Schedules").

SOFA No. 4 requires a debtor to list pending suits. The Debtor's response to this item⁶ lists the complaint filed against her by the Plaintiffs in the District Court Litigation, with its complete civil action file number. With regard to its status or disposition, she stated:⁷

Ruled on 10/2014 for constructive trust to be set up making Debtor 1/5 owner and that accounting be filed to determine the share of expenses. 11/2014 appeal filed by Plaintiffs.

Schedule A directs a debtor to list her interests in real property. In addition to interests in other real estate, the debtor described her interest in the subject property on Schedule A⁸ as follows:

Small single family home: 339 Little Street, Sewickley, PA 15143.

Deeded to Debtor prior to her mother's death, Ordered by Judge to be split 5 ways between siblings and ordered accounting, siblings all living in property (2) Deeds: Land with Gagage [sic] adjoined to land with small house.

She stated that the nature of her interest in the Property was "warranty deed."

Schedule B, No. 16, requires a debtor to list "accounts receivable." In this part of her Schedule B,⁹ the Debtor stated:

Possible reimbursement to Debtor for money paid to maintain home in PA for the previous 12 years prior to Judges [sic] ruling 10/2014. Accounting ordered by Judge 10/2014.

The Debtor did not list the Plaintiffs as holding an unsecured claim against her on Schedule F, but she did list them as codebtors on Schedule H.

C. Summary of the Plaintiffs' Requests for Relief in this Adversary Proceeding and the Reasons They Are Not Entitled to Any Relief

The Plaintiffs filed their complaint initiating this adversary proceeding on February 13, 2015. Parts II(C) and IV(B) describe the complaint in detail.

The complaint contains 59 paragraphs that are not broken down into counts. In the prayer for relief, the Plaintiffs request:¹⁰

a. that the Court find that the Defendant holds no equitable interest in the Sewickley property and that all of the equitable interests in the Sewickley property are exempt from attachment and are excluded from the bankruptcy estate under 11 U.S.C. § 541(d) ;

b. that the Court find that Defendant, having submitted false and misleading information on her bankruptcy petition, cannot discharge any debt associated with those false statements;

c. that, in the event that the Court finds that the sole purpose of Defendant's bankruptcy filing was to defeat the action brought by Plaintiffs' [sic] to recover the Sewickley property from Defendant, the Court dismiss Defendant's bankruptcy petition or covert [sic] it to a bankruptcy proceeding under Chapter 11 or Chapter 13;

d. that the Court find that, under 11 U.S.C. § 523, Defendant cannot discharge any debt or judgment against Defendant as a result of her actions in a fiduciary capacity with respect to the Sewickley property; and

e. that the Court grant such further relief that the Court deems appropriate.

A number of motions, including the Plaintiffs' motion for abstention and remand to the Third Circuit and motions for summary judgment, are pending. The Court sets forth in later parts detailed descriptions of the proceedings in this adversary proceeding and its rulings on the motions that have been filed. In particular, Part III states the reasons for denial of the Plaintiffs' motion for abstention and remand, and Part IV explains why, based on the undisputed material facts and applicable law, the Plaintiffs are not entitled to any of the relief they seek and the Debtor is entitled to summary judgment.

Although dealing with the various substantive and procedural positions the Plaintiffs have taken in this case requires extensive discussion, the results are actually quite simple. The Court here summarizes its disposition with regard to the merits.

With regard to the Plaintiffs' request in paragraph (a) that the Court determine that the Debtor has no interest in the Sewickley property, the fundamental problem with the complaint is that it does not seek relief against the Chapter 7 Trustee, who is the proper party to assert any interest in property of the Debtor's estate and to defend any claims that it is not.

It is noteworthy that the Debtor did not claim any exemption in this property and that the trustee has taken no action in this Court to attempt to liquidate any interest the Debtor has for the benefit of creditors. Indeed, the Trustee has filed a report of no distribution, indicating that any interest of the Debtor will be abandoned as property of the estate by operation of law upon the closing of this case.¹¹

If the Plaintiffs' purpose was to proceed with the litigation in the District Court, their proper—and simple—remedy would have been to file a motion for relief from the automatic stay of 11 U.S.C. § 362(a) to permit that to happen, naming the Trustee and the Debtor as respondents. The Trustee would have either opposed the motion, consented to it, or possibly not responded at all. Absent some contention by the Trustee that this Court should revisit another court's determination of the issue—an unlikely result—the only question would be when the stay would be modified to permit the District Court Litigation to proceed. The Trustee's decision not to attempt to liquidate the Debtor's interest in the property strongly indicates that the Trustee's most likely response would have been to consent to, or not oppose,...