McDermott v. Kerr (In re Kerr)

556 B.R. 343

In re: Jeremy Lynn Kerr, Debtor(s).

Daniel M. McDermott, United States Trustee, Plaintiff(s),

v.Jeremy Lynn Kerr, Defendant(s).

Case No. 15-30531

Adv. Pro. No. 15-03085

United States Bankruptcy Court, N.D. Ohio, Western Division.

Signed August 17, 2016

Scott R. Belhorn, Office of the United States Trustee, Cleveland, OH, for Plaintiff(s).

Jeremy Lynn Kerr, pro se.

MEMORANDUM AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

John P. Gustafson, United States Bankruptcy Judge

This adversary proceeding is before the court on Defendant's Motion for Summary Judgment (“Motion”) [Doc. # 39] and Plaintiff's Response to Defendant's Motion (“Response”) [Doc. # 43], which included the Affidavit of Christopher M. Frasor [Doc. # 43-1]. Defendant is the Debtor in the underlying Chapter 7 case pending in this court, and he is representing himself in this adversary proceeding. In the Complaint [Doc. # 1], Plaintiff, the United States Trustee, seeks an order denying Defendant a discharge pursuant to 11 U.S.C. §§ 727(a)(2)(A) and (B), 727 (a)(4)(a), and 727(a)(5).

The district court has jurisdiction over Defendant's underlying Chapter 7 bankruptcy case and all civil proceedings in it arising under Title 11, including this adversary proceeding. 28 U.S.C. § 1334(a) and (b). The Chapter 7 case and all proceedings in it arising under Title 11, including this adversary proceeding, have been referred to this court for decision. 28 U.S.C. § 157(a) and General Order No. 2012-7 entered by the United States District Court for the Northern District of Ohio. Proceedings to determine objections to discharge are core proceedings that this court may hear and determine. 28 U.S.C. § 157(b)(1) and (b)(2)(J).

This memorandum of decision constitutes the court's findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52, made applicable to this adversary proceeding by Fed. R. Bankr. P. 7052. Regardless of whether specifically referred to in this Memorandum of Decision, the court has examined the submitted materials and reviewed the entire record of the case.

Based upon that review, and for the reasons that follow, Defendant's Motion will be denied.

FINDINGS OF FACT

Unless otherwise noted, the following facts are not in dispute. In July 2010, Defendant acquired real property at 13926 Defiance Pike, Rudolph, Ohio (“Defiance”). In March 2011, Defendant acquired real property at 133345 Ash Street, Weston, Ohio (“Ash”). Also in March 2011, Defendant acquired real property at 10730 Cygnet Road, Cygnet, Ohio (“Cygnet”). And again in March 2011, Defendant acquired the real property located 28926 Simmons Road, Perrysburg, Ohio (“Simmons”). [Doc. # 1, ¶¶ 19-22].

“At some time prior to March 2012,” Defendant hired Ruth Ann Kramer, a realtor, to list the Ash property for sale. [Doc. # 1-2, Pl. Ex. B, p. 1]. After an offer was made and accepted on the Ash property, the Welles Bowen Title Agency initiated title work. [Id. ]. During the title investigation, it was discovered that five judgment liens were filed on the property, including those of Carter-Jones Lumber, Larry Eilert, and ABCO Services, Inc. [Id. ].

After being made aware of the liens, Defendant informed the Welles Bowen Title Agency that he was working on getting the liens paid and released. [Id. ]. On March 15, 2012, Defendant emailed Patricia Kost (“Ms. Kost”), an employee of Welles Bowen, and attached to the email “copies of several documents that purported to be releases of the judgment liens” of Larry Eilert, ABCO Services, and Carter-Jones Lumber. [Doc. # 1-2, Pl. Ex. B, p. 2].

After investigating the documents, Ms. Kost determined that they were forgeries. The forgeries contained forged signatures of “attorneys Bradley Le Bouef, Cory Spewik and William Jennings, as well as the forged signatures of [three different] notaries ....” [Doc. # 1, ¶ 26]. In July 2012, Defendant-Debtor was indicted in the Wood County Court of Common Pleas for four charges of forgery and four charges of tampering with evidence [Doc. # 43, ¶ 14].

On October 22, 2012, Defendant deeded the Defiance, Ash, Cygnet, and Simmons properties (collectively, the “Properties”) to Beaver Creek Development LLC (“Beaver Creek”) for no consideration. [Id. at ¶ ¶ 15-16; Doc. 43,]. Beaver Creek is an LLC wholly owned by Defendant.

On April 5, 2013, a jury in the Wood County Court of Common Pleas returned a guilty verdict on all eight charges against Defendant, related to the forgery and tampering charges. [Id. at ¶ 17]. Defendant was sentenced on June 4, 2013 to a total of seven years and eight months in prison. [Doc. # 1-2, Pl. Ex. B, p. 1]. Defendant is currently incarcerated at the North Central Correctional Institution in Marion, Ohio.

On August 20, 2013, the Common Pleas Court of Henry County, Ohio entered an order appointing a Receiver for all the real and personal property of Defendant, Kerr Buildings Inc. (an Ohio corporation wholly owned by Defendant), and Beaver Creek. [Doc. # 1-3, Pl. Ex. C]. Defendant admits that before and after the Receiver was appointed, he “continued to represent to his Judgment Creditors and the Receiver that the Defiance, Ash, Cygnet, and Simmons” properties were the “exclusive property of Beaver Creek.” [Doc. # 1, ¶ 32].

Defendant filed his Chapter 7 bankruptcy petition on February 27, 2015. [Case No. 15-30531, Doc. # 1]. In his petition and schedules he filed on that date, Defendant listed his “[s]tock and interests in incorporated and unincorporated businesses” as “none”, and he listed no value for those interests. [Id. at p. 10]. He did not list his interests in Kerr Buildings Inc. (“Kerr Buildings”) and Beaver Creek, nor did he identify values associated with those interests. [Case No. 15-30531, Doc. # 1, Schedule B].

Additionally, in the petition and schedules filed on February 27, 2015, Defendant did not include the names and addresses of the Receiver or certain judgment creditors (Carter-Jones Lumber Co., Keith Lenz, Larry Eilert and Juliet Eilert, ABCO Services, Steven Zimmerman, Scott Bishop and Kathy Bishop) and/or their attorneys on Schedule F and the Creditor Matrix. Instead, Defendant listed case numbers from civil actions brought by certain creditors and used the addresses of the courts in which the lawsuits were brought. [Case No. 15-30531, Doc. # 1].

Plaintiff timely filed a “Complaint to Deny Discharge Pursuant to 11 U.S.C. § 727 ” (the “Complaint”) on August 13, 2015. [Doc. # 1]. The Complaint seeks an order denying Defendant's discharge and alleges four counts against Defendant: (1) that Defendant, with the intent to “hinder, delay or defraud” one or more creditors, concealed property within one year before the filing date of his petition; (2) that Defendant, with the requisite intent, concealed property of the estate after the date his petition was filed; (3) that Defendant knowingly and fraudulently, in or in connection with the case, made one or more false oaths or accounts; and (4), that Defendant failed to explain satisfactorily before determination of denial of discharge under § 727, any loss of assets or deficiency of assets to meet the debtor's liabilities. [Doc. # 1; Doc. # 43].

LAW AND ANALYSIS

I. Summary Judgment Standard

Under Rule 56 of the Federal Rules of Civil Procedure, made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7056, summary judgment is proper only where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). In reviewing a motion for summary judgment, however, all inferences “must be viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

The party moving for summary judgment always bears the initial responsibility of informing the court of the basis for its motion, “and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any' which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party can discharge its initial burden of proof by either coming forward with evidence showing the absence of a genuine issue of material fact, or by “showing” that there is no such issue by pointing out to the court that there is an absence of evidence to support the non-moving party's case. Id. at 325, 106 S.Ct. 2548.

Where the moving party has met its initial burden, the adverse party “may not rest upon the mere allegations or denials of his pleading but ... must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

A genuine issue for trial exists if the evidence is such that a reasonable factfinder could find in favor of the nonmoving party. Id. “The non-moving party, however, must provide more than mere allegations or denials ... without giving any significant probative evidence to support” its position. Berryman v. Rieger , 150 F.3d 561, 566 (6th Cir.1998).

In his Motion, Defendant states that “[u]ndoubtedly, the non-disputed facts of this case demonstrate that the Henry Court Appointed Receiver... had complete control and possession of the equity on the properties during the entire year prior to the filing of the petition”, and as such, Plaintiff “cannot produce any evidence that the Defendant controlled the equity of the properties in the one year prior to filing ...” [Doc. # 39, p. 6]. Defendant posits that the Plaintiff will not be able to produce evidence that Defendant intentionally did something improper within one year before the filing date of his petition.

However, Defendant's argument regarding Claim One of the Complaint does not invalidate Plaintiff's cause of action brought pursuant to 11 U.S.C. §...