Foreman v. J. Walter Construction Co. (In Re Foreman)

378 B.R. 717, 58 Collier Bankr. Cas. 2d 1798, 2007 Bankr. LEXIS 3991, 2007 WL 4170629
CourtUnited States Bankruptcy Court, S.D. Georgia
DecidedNovember 26, 2007
Docket15-30089
StatusPublished
Cited by13 cases

This text of 378 B.R. 717 (Foreman v. J. Walter Construction Co. (In Re Foreman)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Foreman v. J. Walter Construction Co. (In Re Foreman), 378 B.R. 717, 58 Collier Bankr. Cas. 2d 1798, 2007 Bankr. LEXIS 3991, 2007 WL 4170629 (Ga. 2007).

Opinion

ORDER DENYING DEBTOR’S MOTION TO AMEND SCHEDULES

JOHN S. DALIS, Bankruptcy Judge.

By motion, Avis M. Foreman (“Debtor”) seeks to amend the schedules in her Chapter 13 case to reflect her interest in a wrongful death claim that arose post-confirmation. Because the tort claim arose post-confirmation it is not property of the estate; and because Debtor has no ongoing duty to disclose assets acquired post-confirmation that are not property of the estate, Debtor’s motion to amend her bankruptcy schedules is DENIED as unnecessary and improper. For the same reasons Defendants’ Objection is OVERRULED. This Court has jurisdiction to decide this matter under 28 U.S.C. § 157(b)(2)(A).

Background

Debtor and her husband, Brad E. Foreman (together “Debtors”), filed a joint petition for relief under Chapter 13 of the Bankruptcy Code on September 14, 2001. The Debtors’ case was confirmed on March 5, 2002. According to Debtor, on August 17, 2002, co-debtor Brad E. Foreman was critically injured in an explosion while working at the Durango-Georgia Paper Company. As a result of his injuries, Mr. Foreman remained hospitalized in the burn unit until his death on September 14, 2002. Throughout Debtor continued to make the plan payments until a discharge was granted on October 16, 2006.

As administratrix of the estate of Brad E. Foreman and next of friend for Mr. Foreman’s three minor children, Debtor filed a wrongful death action in the State Court of DeKalb County, Georgia, on September 23, 2004, against J. Walter Construction Company, Hartford Steam Boiler Inspection and Insurance Company (together “Defendants”), and a number of other parties. See State Court of DeKalb County Civil Action File No. 04A23593-7. On March 5, 2007, Debtor filed this Motion to Amend her Schedules (“Motion”), pursuant to Federal Rule of Bankruptcy Procedure (“F.R.B.P.”) 1009, seeking to list her interest in the wrongful death action as an asset in Debtors’ confirmed bankruptcy case.

Defendants filed an Objection to Debt- or’s Motion to Amend Schedules (“Objection”), asserting that Debtor’s request should be denied because the proposed amendment was brought in bad faith. The Objection alleges that Debtor knew of her duty to disclose the wrongful death action to the bankruptcy court, and point to the pre-confirmation amendments made to her joint plan as evidence of her knowledge. Additionally, Defendants argue that because Debtor did not request to amend her schedules immediately following her husband’s death, the court should find that Debtor attempted to conceal an asset in bad faith.

Debtor filed a Response to Non-creditor’s Objection asserting that the law is well settled on this issue, “that post petition, post-confirmation causes of action are not part of the bankruptcy estate and not subject to disclosure.” (Dkt. # 94:1). Debtor states that the request to amend her schedules to include the post-confirmation tort claim was made out of an abundance of caution. Debtor alleges that Defendants are attempting to use the bankruptcy court as a means to circum *720 vent responsibility for the death of Mr. Foreman and avoid facing the merits of the State Court cause of action. Debtor cites to Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir.2000) and argues that, based on binding precedent set by the Eleventh Circuit Court of Appeals, the cause of action that arose post-confirmation is not property of the estate. Debtor cites to the unpublished decision in Muse v. Accord Human Resources, Inc., 129 Fed.Appx. 487 (11th Cir.2005), and maintains that Debtor does not have an ongoing duty to disclose an asset acquired post-confirmation.

Debtor alleges that Defendants’ objections are groundless based on the affidavit of M. Elaina Massey the Chapter 13 Trustee (“Trustee”), which states: Debtor had no duty to disclose the post-confirmation cause of action; the post-confirmation cause of action was not necessary to the administration of the'case; and the cause of action would have been abandoned back to the Debtor. However, Debtor asserts that if the Court determines, in spite of the prior case law, 1 that Debtor did have a duty to amend her schedules to reflect this post-confirmation cause of action, Debtor’s Motion should not be denied absent a showing of bad faith or prejudice to a creditor by clear and convincing evidence. See F.R.B.P. 1009.

Because Debtor’s interest in this cause of action arose post-confirmation, the potential asset is not property of the bankruptcy estate as defined by 11 U.S.C. § 541. See Witko v. Menotte (In re Witko), 374 F.3d 1040 (11th Cir.2004) (concluding that “[p]re-petition causes of action are part of the bankruptcy estate and post petition causes of action are not”); see also Telfair, 216 F.3d 1333 (adopting the estate transformation approach to post petition acquired property, and holding that after confirmation only the property necessary for the execution of the plan remains as property of the bankruptcy estate). Furthermore, because the cause of action is not property of the bankruptcy estate, Debtor is under no ongoing duty to disclose and amend the schedules of her confirmed bankruptcy case. See Muse, 129 Fed.Appx. 487.

Discussion

Duty to Disclose

The issue in this case is whether Debtor has the ongoing duty to amend the schedules of her confirmed bankruptcy case to disclose a potential asset acquired post-confirmation. A debtor’s duty to disclose assets begins with the filing of a petition for protection under the Bankruptcy Code. See 11 U.S.C. § 521. The debtor is required to disclose all assets that could be property of the bankruptcy estate. As to property of the estate, the debtor’s duty to disclose is an ongoing one. See Burnes v. Perneo Aeroplex, Inc., 291 F.3d 1282 (11th Cir.2002). However, for this duty to be ongoing and for this Debtor to be required to disclose this post-confirmation cause of action, it must be determined that the post-confirmation asset is property of the estate.

Property of the Estate

The Bankruptcy Code defines property of the estate as “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a); see also Witko, 374 *721 F.3d at 1042.

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378 B.R. 717, 58 Collier Bankr. Cas. 2d 1798, 2007 Bankr. LEXIS 3991, 2007 WL 4170629, Counsel Stack Legal Research, https://law.counselstack.com/opinion/foreman-v-j-walter-construction-co-in-re-foreman-gasb-2007.