Silver-Hacker v. Allen (In re Allen)

653 B.R. 895

IN RE: Sarah ALLEN, Debtor.

Nancy Silver-Hacker, Personal Administrator of the Estate of Kirk Clawes, Deceased, Plaintiff, v. Sarah Allen, Defendant.

Case No. 20 BK 05391

Adv. No. 20 AP 00214

United States Bankruptcy Court, N.D. Illinois, Eastern Division

Signed August 11, 2023

William J. Factor, Chicago, IL, Michael J. Fleck, Michael J. Fleck - Attorney at Law, Huntley, IL, for Plaintiff.

Steven J. Grace, Chicago, IL, for Defendant.

Amended Memorandum Opinion

Jacqueline P. Cox, United States Bankruptcy Judge

This matter concerns the dischargeability of a debt owed by the Defendant-Debtor, Sarah Allen (the "Debtor," "Defendant-Debtor," or "Allen"), to the Plaintiff, Nancy Silver-Hacker (the "Plaintiff" or "Silver-Hacker"), due to the Defendant-Debtor's failure to turn over several items of artwork that a court ruled were part of the probate estate of the Plaintiff's deceased son, Kirk Clawes (who had been an artist), of which the Plaintiff is the personal administrator.

On June 5, 2023, this court ruled on Silver-Hacker's Motion for Summary Judgment. Dkt. 90. The motion was denied in part and granted in part. This court held, based on collateral estoppel grounds that the Debtor caused an injury and that a state court's findings about the amount of the debt precluded re-litigation of those issues. The ruling noted that this court would conduct a trial on whether the Debtor acted willfully and maliciously when she failed to return the items in issue.

A trial was held on those issues on July 11, 2023 where both the Debtor, Sarah Allen, and the Plaintiff, Ms. Silver-Hacker, testified in person. Based on the evidence adduced therein, the court finds that the Plaintiff has shown that the Debtor acted willfully and maliciously under 11 U.S.C. § 523(a)(6), when she failed to return the items in issue, especially since she had been ordered to do so by multiple court orders.

I. Facts

The Plaintiff Nancy Silver-Hacker testified that in 2017 her son Kirk Clawes lived in a residence she owned in Elgin, Illinois. July 11, 2023 Transcript at 7-8 ("Transcript").¹ He lived there with the Defendant-Debtor Sarah Allen for some time before he passed suddenly from sleep apnea on September 28, 2017. Id. at 7, 9. Silver-Hacker operated a hair salon in the basement there. Id. at 8-9.

When Kirk passed, Silver-Hacker and her husband went to the residence where they encountered the Debtor. Id. at 9-10. Silver-Hacker told the Debtor and her parents that she would have to sell the residence unless they were able to pay "the bills" for the property. Id. at 10. Silver-Hacker was told that they did not have the means to pay for it. Id.

On October 22, 2017, Silver-Hacker realized that because she would not get any funds to maintain the residence from the Debtor, she needed to clean the property to show it to prospective purchasers. Id. at 10-11. The Debtor was told on the premises she needed to leave so that the property could be sold. Id. at 11. The Debtor got mad and ran into a room and closed the door, refusing to come out. She refused to open the door. Id. She finally opened the door and was told she had to leave by the end of the month or the beginning of the next month. Id. at 12. The Debtor was very upset; crying, she told Silver-Hacker that she had nowhere else to go because her parents refused to help her. Id. Then, the Plaintiff testified that she told the Debtor, "they're your family. You need to ask someone if they'll help you," and the Debtor got mad and stormed out. Id.

Silver-Hacker testified that on that same day, October 22, 2017, her husband suggested that if they were not going to pack up everything that day they needed to photograph Kirk's artwork. Id. at 13. Silver-Hacker took photos of his artwork, including his pottery. Id.²

Silver-Hacker returned to the premises on October 24, 2017, two days after she had asked the Defendant-Debtor to move out, when she discovered that "all of the artwork was off the walls and gone." Id. at 14.

The Plaintiff called the Debtor and told her to bring the items back. Id. at 15. She got her voicemail and the voicemails of the Debtor's mother and sister; the Debtor's mother and sister said they would talk to the Debtor and tell her to bring the items back. Id. The Debtor's mother told Silver-Hacker that some items were at Planter's Palette where the Debtor was employed. Id.

The Debtor later agreed to bring everything back but refused to do so in Silver-Hacker's presence. Id. at 15-16. Both parties testified that the Debtor eventually left some items in the residence's garage. Id. at 16, 40, 44. The evidence showed that the items the Debtor dropped off were essentially a game set, not artwork. Id. at 16, 40. As Silver-Hacker's counsel argued, the Debtor returned insignificant items, garbage; she kept what mattered. Id. at 102. The Debtor claimed that some of the artwork was hers but did not substantiate that at trial. Id. at 16, 44.

The Plaintiff testified that the Debtor was angry because she was told to vacate the residence. Id. at 17.

The probate court judge eventually found that the missing artwork was property of the probate estate and awarded it to the probate estate's representative, Silver-Hacker, in a citation to discover assets proceeding. Transcript at 78-81; see In re Allen, 2023 WL 3860307, at *2. Kirk had debts when he died which Silver-Hacker paid from her personal resources even though she never received the probate estate assets that could have been sold to generate funds for the probate estate to pay Kirk's debts. Transcript at 17-18.

The court finds that the Debtor acted willfully and maliciously under 11 U.S.C. § 523(a)(6) based on the anger she expressed in 2017 and when testifying herein in 2023.

According to Silver-Hacker's testimony, the Debtor told a state court judge that she owned certain items and that she would not return them. Id. at 18. She should have appealed that order; she should not have refused to obey it. This shows that her failure to turn the items over was willful and malicious. Her blatant disregard of a court order indicates that she knew she was causing Silver-Hacker pain and that she intended the injury.

The Debtor testified in state court that the missing items were at her mom's home in a basement, at an ex-boyfriend's house, and in storage. Id. at 20, 28. However, none of the items have been recovered. Id. at 20.

Silver-Hacker testified herein that she told the Debtor how important the missing artwork was to her. Id. at 20-21.

The Debtor sought help from her Facebook friends to move the items; five persons helped her. Id. at 58, 61. However, the Debtor did not keep records of what was taken or where the items were stored. Id. at 22. The Debtor denied having items in her possession during the state court case and at the hearing held herein on July 11, 2023.

The Debtor suggests that because she claims to have owned some of the items in issue, she has negated Silver-Hacker's assertion that her failure to produce them was willful and malicious.

Silver-Hacker testified credibly that the Debtor kept the missing items so that Silver-Hacker could not have them. Id. at 35. Silver-Hacker asked the Debtor if there was anything in the house that she wanted. Id. Instead, the Debtor took the items in question even though her mother said that she was not supposed to take Kirk's belongings. Id.

Silver-Hacker credibly testified that the Debtor had items Kirk gifted her. The Debtor had been told to take items she gave Kirk:

Q. Are you aware of any instances where Kirk gifted items to Ms. Allen?

A. Anything that he gifted her, we already talked about and she got. Any gift that she gave Kirk, I told her to take that. I didn't want any of those things.

See Transcript, p. 36.

Silver-Hacker testified that the Debtor previously said that she had the items in her possession, some boxes, and that she stored them at her parents' home. Id. at 40. However, she testified at the July 11, 2023 hearing that she does not know where the items are. Id. at 41, 49-51, 55, 57, 68-69. The Debtor's inconsistency tells the court that she willfully and maliciously caused the injury Silver-Hacker experienced. The court also notes that the Debtor was flippant and disrespectful when testifying about Silver-Hacker. Her anger and desire to injure Silver-Hacker was evident.

Silver-Hacker testified that Kirk would not have gifted the Debtor certain of his tools. Id. at 36-37. The court will not give this statement a lot of weight or credibility, as it sounds speculative.

The Debtor testified that she uses disability funds to pay for her current housing. Id. at 42-43. She also testified that she and Kirk jointly created a number of bottles for a party. Id. at 43. She then said that because of her issues she has trouble remembering dates. Id. However, she said that the party in issue occurred around the second Christmas that she and Kirk were together. Id.

The Debtor may be suggesting that she labors under a disability that excuses her failure to obey the court order requiring her to return the items in issue to Silver-Hacker. As noted by a district court:

While there is evidence in the record explaining that appellant might have been experiencing some mental health issues around the time of the conduct, the evidence does not establish, if and how, appellant's mental health issues affected his ability to make decisions and understand the effects of his consequences.

Simas v. Powell, 635 B.R. 366, 377 (N.D. Cal. 2021).

A debtor's mental illness can weigh against a finding of maliciousness for purposes of 11 U.S.C. § 532(a)(6) if the debtor submits "evidence establishing how one's mental illness impacts their ability to make decisions and to understand the ramifications of their actions." Simas, 635 B.R. at 377 n.5 (N.D. Cal. 2021).³ Did the Debtor understand the natural consequences of her failure to return the artwork to Silver-Hacker? Yes, as evidenced by how disrespectful she was toward...