Opinion
Case No. 11-59635 Adv. Pro. No. 13-2055
03-11-2014
In re: David S. Owens, Michael W. Lenhart, Sr., et. al, Plaintiffs. v. David S. Owens, Defendant.
Chapter 7
Judge Caldwell
ORDER DENYING PLAINTIFFS' JOINT MOTION FOR PARTIAL JUDGMENT ON
THE PLEADINGS (DOC. NO. 18)
On December 18, 2013, Michael W. Lenhart, Sr., Creekside Condos LLC, and the Chapter 7 Trustee, Larry J. McClatchy ("Plaintiffs"), filed a Joint Motion for Partial Judgment on the Pleadings. See Fed. R. Civ. P. 12(c). Plaintiffs seek revocation of the discharge issued on February 8, 2012, to David S. Owens ("Defendant"). In the Joint Motion, Plaintiffs allege that the facts, as pled, demonstrate Defendant's discharge should be revoked for failure to comply with Court orders. See 11 U.S.C. § 727(a)(6)(A). Specifically, Plaintiffs assert that the Defendant, in his Answer to the Amended Complaint, concedes that he violated two court orders. The first order compelled the turnover of a State of Ohio tax refund of $1,243.00. The second order required amendments to Defendant's Schedules and Statement of Affairs.
In this endeavor, the Court must assume that the Defendant's assertions in his Answer to Plaintiffs' Amended Complaint are true, while Plaintiffs must demonstrate that there are no material factual disputes, and that under the applicable statute (11 U.S.C. § 727(a)(6)(A)), they are entitled to judgment. Coyer v. HSBC Mortg. Services, Inc., 701 F.3d 1104, 1107-08 (6th Cir. 2012). Here, Plaintiffs seek to revoke the discharge based upon alleged failures to comply with Court orders, which involves the same criteria as civil contempt; i.e. an intentional violation of a specific order that required or precluded defined actions. Graham v. Knott (In re Knott), No. 12-3027, 2013 WL 1314989, at *1, *4 (Bankr. N.D. Ohio Mar. 28, 2013); Mueller v. Hall (In re Parker), 368 B.R. 86, *9 (B.A.P. 6th Cir. 2007) (citing Glover v. Johnson, 138 F.3d 229, 244 (6th Cir. 1998)).
An additional consideration in this case is that denying or revoking a discharge represents a harsh punishment, and should be meted out carefully, as it is the Court's duty to grant discharges, apart from statutorily provided exceptions. See Mortimer v. Bank of America, N.A., No. 12-01959, 2013 WL 1501452, at *1, *6 (N.D. Cal. Apr. 10, 2013) ("the order for relief affords the debtor an opportunity for discharge that, absent an exception or some type of debtor misconduct, must be granted.").
Regarding the State of Ohio tax refund, the Plaintiffs in essence complain the Defendant gave the Chapter 7 Trustee only the non-exempt portion ($894.96), rather than forwarding the uncashed check, and that this act violated the turnover order. However, it is not clear from the pleadings, whether there was some miscommunication or misunderstanding regarding the Defendant's obligation and instructions given by the Trustee's staff, as opposed to an intentional effort to circumvent the Court's directives. See Creighton v. City of Livingston, 628 F. Supp. 2d 1199, 1207 (E.D. Cal. 2009) ("All inferences reasonably drawn from these facts [in the pleadings] must be construed in favor of the responding party.").
Turning to the amendments, Plaintiffs claim that the Defendant's revisions filed on May 6, 2013, are incomplete, and still do not disclose all of his financial interests. Indeed, a litany of alleged errors and omissions are recited in Plaintiff's Amended Complaint. On the other hand, the Defendant denies that he made any errors or omissions with the intent to disobey the Court's Order. Also, like any other debtor, the Defendant has an affirmative and continuing duty to disclose all assets and interests, to amend that information whenever necessary, and to insure the accuracy and reliability of financial information. 11 U.S.C. § 521; Fed. R. Bankr. P. 4002; LBR 4002-1; Okan's Foods, Inc. v. R & B Development Co. (In re Okan's Foods, Inc.), 217 B.R. 739, 752 (Bankr. E.D. Pa. 1998). It is difficult to decide, prior to trial, whether the Defendant has indeed provided the best information available, given the complexity of his financial affairs. This of course is in stark contrast to concealment of assets, violation of a debtor's duties, and circumvention of the Court's instructions.
For these reasons, the Court DENIES Plaintiffs' Joint Motion for Partial Judgment on the Pleadings.
IT IS SO ORDERED. Copies to:
Andrew Nicoll, Esq. (electronic service)
James Botti, Esq. (electronic service)
Larry McClatchey, Esq. (electronic service)
Stephanie Union, Esq. (electronic service)
Daniel Hunter, Esq. (electronic service)
Kathleen Tourgeman, Courtroom Deputy