Roberts v. Vara (In re Roberts)

659 B.R. 271

IN RE: Mary Ann ROBERTS, Debtor.

Mary Ann Roberts, Movant, v. Andrew R. Vara, U.S. Trustee for Regions 3 & 9, Rosemary C. Crawford,in her capacity as Chapter Trustee, and AMA Support Services, LLC, Respondents.

Bankruptcy No. 21-20618-JAD

United States Bankruptcy Court, W.D. Pennsylvania

Signed May 8, 2024

David M. Kobylinski, Esquire, for Mary Ann Roberts

Robert B. Stein, Esquire, for AMA Support Services, LLC

Rosemary C. Crawford, Esquire, Chapter 7 Trustee

Joseph P. Schalk, Esquire, for the United States Trustee

Related to ECF No. 82

MEMORANDUM OPINION

Jeffery A. Deller, United States Bankruptcy Judge

I.Introduction

In the context of a Motion to Reopen filed by the above captioned debtor (Mary Ann Roberts), this case delves into the dynamics of bankruptcy law, focusing on the duty of debtors to fully disclose assets and the exclusive right of a chapter 7 trustee to administer property of the estate for the benefit of all creditors. Central to the matter before the Court are the issues of whether Mary Ann Roberts' bankruptcy case should be reopened due to her willful concealment of an asset of the bankruptcy estate (hereinafter referred to as the "AMA Action"), and whether Ms. Roberts' concealment of the AMA Action gives rise to judicial estoppel thereby precluding the administration of the asset by a chapter 7 trustee.

Upon consideration of the factual and legal context of the Motion to Reopen, and with due regard to the policy considerations related to the same, the Court exercises its equitable discretion and finds that cause exists to grant the Motion to Reopen to permit the chapter 7 trustee to administer the AMA Action.

II.Background

Mary Ann Roberts initiated this Chapter 7 bankruptcy case on March 18, 2021. She filed her bankruptcy petition and prosecuted this case pro se (that is, without the assistance of counsel), which is not a simple task by someone without legal experience or legal education.

The undisputed record reflects that Ms. Roberts has a high school education, but struggled with the filing of the necessary paperwork to complete her Chapter 7 bankruptcy. By way of example, at one point in time she filed schedules of liabilities that reflected zero creditors. See ECF No. 17 at pp. 5-24.¹ Obviously this was a mistake since she petitioned for bankruptcy relief in the first instance and could not afford to pay the filing fee. See ECF No. 7.

The forms used by Ms. Roberts were a mish-mash of forms— some of which are presently approved by the Administrative Office of the United States Courts and others which are no longer approved or authorized. Id.

That Ms. Roberts had difficulty completing her filings is readily apparent in the docket maintained by the Clerk's Office. Illustrating the confusion, the docket in this case indicates a myriad of filings made by Ms. Roberts that are error filled and/or are confusing.

For example, the docket reflects that Ms. Roberts' initial bankruptcy petition has been amended at least twice. Compare ECF No. 1 with ECF Nos. 6 and 15. She also had to amend her application for waiver of the filing fee at least once. See ECF No. 7. She had to amend her mailing matrix on three occasions. Compare ECF No. 4 with ECF Nos. 5, 13, and 14. She had extensive problems filing her schedules of assets, exemptions, and liabilities. See ECF Nos. 16, 17, 24, 30, 33, 36, 38, 68, 69, and 70). And, she received at least seven notices of deficiencies and/or non-conforming document warnings from the Clerk's Office. See ECF Nos. 10, 19, 29, 34, 39, 46 and 71.

To add to the problems associated with the filing and prosecution of this case, the record reflects that the Chapter 7 was filed during the pendency of the Covid-19 Pandemic and Ms. Roberts contracted the virus at some point during the pendency of the case. See ECF No. 63 (where Ms. Roberts explained that she missed her Section 341 Meeting with creditors due to contracting covid); see also Cty. of Allegheny v. The Cracked Egg, LLC (In re Cracked Egg), 624 B.R. 84, 86-87 (Bankr. W.D. Pa 2021) (describing the Covid-19 Pandemic).

Examining the filings made by Ms. Roberts, it appears that much of them are "head scratchers." For example, after initially filing schedules reflecting no creditors, Ms. Roberts filed numerous amendments including an amended Schedule E/F: Creditors Who Have Unsecured Claims at ECF No. 38. In this amendment, Ms. Roberts identified 8 creditors to whom she owed $26,293.16 in aggregate. This schedule also identified another 9 creditors "to be notified." As to the creditors whose debts were specifically listed, one was named "P.O. Box 607," an obvious error in identification.

Thereafter, at ECF No. 68, Ms. Roberts filed another list of creditors utilizing an outdated form entitled Schedule F-Creditors Holding Unsecured Nonpriority Claims. In this document she identifies 9 creditors owed in aggregate $3,217.60, and miscalculates the aggregate debt as being "$21.04." Ms. Roberts also fails to identify in this filing the name of one creditor, double counts the claim of Credit Collection Services, and perhaps duplicates some of the creditors which Ms. Roberts identified as parties "to be notified" in the filing previously docketed at ECF No. 38. This recitation of the confusion in Ms. Roberts schedules of debts is not intended to be exhaustive. Rather, it highlights her struggle in preparing the documentation required by the Bankruptcy Code, Bankruptcy Rules, and Local Rules of this Court.²

Ms. Roberts' struggles were in no way confined to her schedule of debts. For example, in Schedule A/B: Property filed by Ms. Roberts at ECF No. 30, she identified her ownership interest in a motor vehicle but did not identify the value of it. Since the vehicle was a 2008 model year vehicle with over 200,000 miles, the Court can assume that the value of the automobile was not significant. She also identified in this schedule everyday clothes, jewelry, and one dog, yet did not assign a guestimated value as to these items. She also identified household goods and furnishings valued at $600, one television valued at $400, and a checking account having $100. See ECF No. 30 at pp. 2-5.

Given the descriptions of these assets, even with the failure to identify a stated value, a fair inference based upon what was filed by Ms. Roberts is that the value of these assets fall below the upper limits of the exemptions allowable under Section 522 of the Bankruptcy Code, 11 U.S.C. § 522. Notwithstanding this fact, the record reflects that Ms. Roberts filed Schedule C: The Property You Claim as Exempt at ECF No. 16, where she claimed no exemptions protecting her property from liquidation. This is a "head scratcher" be cause exempting property from liquidation is in her personal best interest, yet she did not claim any exemption whatsoever.

Ms. Roberts' schedule of assets had a material omission, which is the focus of the Motion to Reopen. That is, in her schedules on file with the Court, Ms. Roberts failed to disclose her involvement as the plaintiff in the AMA Action, which is a lawsuit pending in the Court of Common Pleas of Allegheny County, Pennsylvania against her former employer alleging wrongful termination. Specifically, in response to interrogatories requesting information on "[o]ther amounts someone owes you" and "[a]ny claims against third parties," Ms. Roberts checked the box adjacent to the word "no." See ECF No. 30 at pp. 7-8 (interrogatory nos. 30 and 33).

Ms. Roberts' Statement of Financial Affairs for Individuals Filing for Bankruptcy also failed to disclose the existence of the AMA Action, despite the fact that this document required Ms. Roberts to identify all legal actions for which she is a party. See ECF No. 30 at p. 27. Toward this end, the document required Ms. Roberts to identify all legal actions "[w]ithin 1 year before [she] filed for bankruptcy . . . where [she is] a party." Id. And if such a lawsuit or proceeding was pending, Ms. Roberts was asked to further identify the proceeding by supplying the "case title," "case number," "nature of the case," and "court or agency" before which the case was filed, and "status of the case." Id. All of this identifying information was left blank by Ms. Roberts because she checked the box adjacent to the word "no," id., thereby affirmatively indicating that no such case or proceeding exists (when the opposite is true).

After Ms. Roberts commenced her bankruptcy case, Rosemary Crawford, Esquire was appointed chapter 7 trustee (the "Chapter 7 Trustee").

At the hearing held on the Motion to Reopen, the Chapter 7 Trustee informed the Court that she keeps contemporaneous notes of the meeting of creditors presided over by her pursuant to 11 U.S.C. § 341. Based on those notes, the Chapter 7 Trustee further advised the Court that the Chapter 7 Trustee examined Ms. Roberts under oath at the Section 341 meeting. When Chapter 7 Trustee asked Ms. Roberts at the Section 341 meeting whether she was a party to any lawsuit, Ms. Roberts answered the question with a "no."

Given the content of the schedules and statement of financial affairs, all filed by Ms. Roberts under penalty of perjury, and given Ms. Roberts' sworn testimony at the Section 341 meeting, the Chapter 7 Trustee declared that this bankruptcy case is a "no asset" case and proceeded to close out the administration of this estate without having the opportunity to examine and prosecute the AMA Action and without having any funds for distribution to creditors.³

Of course, we now know that Ms. Roberts' representations were not true. In the AMA Action, Ms. Roberts was (and is) represented by counsel. The AMA Action was filed several months before Ms. Roberts filed for bankruptcy, and counsel was not aware of the bankruptcy filing. As a result, counsel was not in a position to inform this Court of the pendency of the AMA Action before the bankruptcy process concluded with a discharge in favor of Ms. Roberts under 11 U.S.C. § 727(a) on ...