Shack, LLC v. Hickman (In re Hickman), Case No. 18-13706-JDL

616 B.R. 815

IN RE: Brent Barnes HICKMAN, Debtor.

The Shack, LLC, Plaintiff,

v.Brent Barnes Hickman, Defendant,andR&D "2" Investment Group, LLC, Plaintiff,Brent Barnes Hickman, Defendant.

Case No. 18-13706-JDL

Adv. No. 19-1042-JDL

Adv . No. 19-1043-JDL (Jointly Administered)

United States Bankruptcy Court, W.D. Oklahoma.

Signed April 17, 2020

Joel C. Hall, Jeffery S Ludlam, Hall & Ludlam PLLC, Oklahoma City, OK, for Plaintiff.

Phillip P Owens, II, Owens Law Office PC, Oklahoma City, OK, for Defendant

OPINION AND ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

Janice D. Loyd, U.S. Bankruptcy Judge

I. Introduction

"Honesty may not always pay, but lying always costs."¹

A discharge of indebtedness in bankruptcy is reserved for the "honest but unfortunate debtor who surrenders for distribution the property which he owns at the time of bankruptcy." Local Loan Co. v. Hunt , 292 U.S. 234, 244, 54 S.Ct. 695, 78 L.Ed. 1230 (1934) ; In re Snyder , 509 B.R. 945, 951 (Bankr. D. N.M. 2014). One of the debtor's duties in any bankruptcy case is to fully disclose his or her assets and liabilities. The Plaintiffs contend Debtor should be denied a discharge pursuant to 11 U.S.C. § 727(a)(4)(A)² because he knowingly and fraudulently made a false oath or account in disclosing assets and transactions in his Schedules and Statement of Financial Affairs. This matter is before the Court for resolution on Plaintiffs' Motion for Summary Judgment (the "Motion") [Doc. 18] and the Defendant's Response to Plaintiffs' Motion for Summary Judgment (the "Response") [Doc. 19].³ The following findings of fact and conclusions of law are made pursuant to Federal Rule of Bankruptcy Procedure 7052.⁴

II. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(b), and 157(a) and the Order of Reference of the United States District Court for the Western District of Oklahoma as Local Rule LCvR 81.4(a). This matter seeking a determination of an objection to discharge is a core proceeding under 28 U.S.C. § 157(b)(2)(J) over which this Court has authority to enter a final order. Furthermore, Plaintiffs and the Debtor/Defendant have consented to the jurisdiction of this Court and its ability to enter a final order pursuant to Rules 7008 and 7012 [Doc. 1, ¶ 5; Doc. 6, ¶ 2]. Venue is proper pursuant to 28 U.S.C. § 1409(a).

III. Findings of Fact

The determination of whether a motion for summary judgment is to be granted is based upon whether there are any material issues of fact which are undisputed and entitles the moving party to judgment as a matter of law. The Court finds the following material facts to be undisputed:

1. Brent Hickman ("Hickman") operates the restaurant HLMR, LLC d/b/a Brent's Cajun Seafood & Oyster Bar as general manager. [Doc 18, ¶ 1; Doc. 19, ¶ 4].

2. Prior to June 2018, Hickman deposited his salary into an account ending in 6176 at Prosperity Bank under his name. [Doc. 18, ¶ 2, Ex. C; Doc. 19, ¶ 2].

3. In June 2018, Berta Hickman (Debtor's wife) opened an account in her name only ending in 8938 at Prosperity Bank. [Doc. 18, ¶ 3; Doc. 19, ¶ 3].

4. From June 2018 through September 2018, Hickman deposited his salary into his wife's bank account. [Doc. 18, ¶ 4, Ex. D; Doc. 19, ¶ 4].

5. Prior to July 2018, Hickman was a 50% owner in HLMR, LLC. [Doc. 18, ¶ 5; Doc. 19, ¶ 5].

6. On July 2, 2018, Plaintiff, R&D "2" Investment Group, LLC, obtained a judgment in the amount of $46,179.39, plus interest, against Hickman in the District Court of Oklahoma County in Case No. CJ-2017-5064. [Doc. 18, ¶ 6, Ex. G; Doc. 19, ¶ 6].

7. On August 3, 2018, Plaintiff, The Shack, LLC, obtained a judgment against Hickman in the amount of $40,066.69, plus interest, in the District Court for Oklahoma County, Case No. CJ-2017-5065. [Doc. 18, ¶ 7, Ex. H; Doc. 19, ¶ 7].

8. Hickman knew about both of the state district court cases and the judgments entered against him. [Doc. 18, ¶ 8, Ex. E; Doc. 19, ¶ 8].

9. In mid to late July 2018, Hickman sold his interest in HLMR, LLC to Floyd Landry for $25,000. Hickman testified that the reason for the sale was that he needed the money to pay back taxes. [Doc. 18, ¶¶ 9 & 10, Ex. B & F; Doc. 19, ¶¶ 9 & 10].

10. On July 20, 2018, Hickman deposited the $25,000 from the sale of his interest in HLMR, LLC into his wife's bank account. [Doc. 18, ¶ 11, Ex. D & E; Doc. 19, ¶ 11].⁵

11. Around August 9, 2018, Hickman paid attorney O. Clifton Gooding for bankruptcy services using funds from his wife's bank account. [Doc. 18, ¶ 12, Ex. D; Doc. 19, ¶ 12].

12. On August 31, 2018, Hickman filed for Chapter 7 Bankruptcy. [Case No. 18-1306, Doc. 1].

13. Hickman filed his Bankruptcy Petition, Schedules and Statement of Financial Affairs under penalty of perjury. [Doc. 18, ¶ 15, Ex. A; Doc. 19, ¶ 15].

14. In his Schedules Hickman stated under oath that he was the sole proprietor of HLMR, LLC. Hickman listed the value of his interest in HLMR, LLC as "unknown." [Doc. 18, ¶¶ 16 & 22; Doc. 19, ¶¶ 16 & 22].⁶

15. In discovery Hickman denied he was the sole proprietor. At the § 341 First Meeting of Creditors, Hickman testified that he owned 49% of HLMR, LLC. [Doc. 18, ¶¶ 17 & 31, Ex. E & F; Doc. 19, ¶¶ 17 & 31].

16. Hickman's Statement of Financial Affairs filed August 31, 2018, reflected that he did not sell, trade, or otherwise transfer property to anyone other than in the ordinary course of business within two years preceding the filing of bankruptcy. [Case No. 18-13706, Doc. 1, pg. 53, ¶ 18]. In fact, in July 2018, Hickman had sold his interest in HLMR, LLC to Floyd Landry for $25,000. [See Undisputed Fact ¶ 9]. Additionally, he failed to disclose in his Schedules or Statement of Financial Affairs that he had put the $25,000 in his wife's bank account. [Doc. 18, ¶ 25; Doc. 19, ¶ 25]. At the § 341 First Meeting of Creditors, Hickman admitted that at the time he signed his Petition, Schedules, and Statement of Financial Affairs he knew that he had placed the $25,000 into his wife's account. [Doc. 18, Ex. F, pg. 90, Response to Request for Admission No. 11 ; Doc. 19, ¶ 25, Ex.1, pg. 7-8].

17. At his § 341 First Meeting of Creditors, Hickman testified under oath that his Petition, Schedules and Statement of Financial Affairs were correct with no errors or omissions. [Doc. 18, ¶ 30, Ex. E, pg. 81; Doc. 19, Ex.1, pg. 2].

18. Hickman testified at his § 341 First Meeting of Creditors that he owned the $25,000 which was still in his wife's bank account. He further testified that the money was to pay his debt to the Internal Revenue Service. [Doc. 18, ¶¶ 32, 33 & 34, Ex. E, pg. 7 & 12; Doc. 19, ¶¶ 32, 33 & 34].

19. Subsequent discovery by the Trustee revealed that a portion of the $25,000 had been spent on a trip to Cabo San Lucas, Mexico, dining out and miscellaneous other personal expenses, with none paid to the Internal Revenue Service. [Doc. 18, ¶¶ 35 & 36, Ex. D; Doc. 19, ¶¶ 35 & 36].

20. Following the § 341 First Meeting of Creditors, at the direction of the Trustee, Hickman turned over to the Trustee $18,000 remaining from the $25,000 sale of his interest in HMLR, LLC. [Doc. 18, ¶ 37, Ex. D; Doc. 19, ¶ 37].

21. In his Statement of Financial Affairs, Hickman stated that he had only $33.09 in his bank account ending in 6176 at Prosperity Bank and that he had no other bank accounts. [Case No. 18-13706, Doc. 1, pg. 11, ¶ 17].

22. Hickman did not disclose that he had been putting his salary into his wife's bank account. Bank records reflect that from June through September, 2018, Hickman deposited his bi-monthly paychecks of approximately $2,200 each into his wife's account. Just prior to the § 341 First Meeting of Creditors, Hickman started putting his salary into a bank account in his own name. [Doc. 18, ¶¶ 26 & 38, Ex. D & E; Doc. 19, ¶¶ 26 & 38].

IV. Summary Judgment Standards in General

It is appropriate to grant a motion for summary judgment when the pleadings and other materials in the record, together with supporting affidavits, if any, demonstrate that there is no genuine dispute with respect to any material fact and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c), made applicable to this adversary proceeding by Rule 7056. "[A] party seeking summary judgment always bears the initial responsibility of informing the ... court of the basis for its motion, and ... [must] 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). Courts must review the evidentiary material submitted in support of the motion for summary judgment to ensure that the motion is supported by evidence. If the evidence submitted in support of the summary judgment motion does not meet the movant's burden, then summary judgment must be denied. Hearsay evidence cannot be considered on a motion for summary judgment.

Wiley v. United States , 20 F.3d 222, 226 (6th Cir. 1994). When considering a motion for summary judgment, the court views the record in the light most favorable to the party opposing summary judgment. See Deepwater Investments, Ltd. v. Jackson Hole Ski Corp. , 938 F.2d 1105, 1110 (10th Cir. 1991) (the court "must view the record in a light most favorable to the parties opposing the motion for summary judgment."); Harris v. Beneficial Oklahoma, Inc. (In re Harris ), 209 B.R. 990, 995 (10th Cir. BAP 1997).

Denial of summary judgment requires existence of genuine material issues that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). No genuine issue of fact exists if a rational fact finder, when viewing the record as a whole, could not find for the party opposing the summary judgment. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ("Where the record taken as a whole could not lead a rational trier of fact to find for...