Henri v. Wheeler (In re Wheeler)

511 B.R. 240, 71 Collier Bankr. Cas. 2d 1973, 2014 WL 2580059, 2014 Bankr. LEXIS 2545
CourtUnited States Bankruptcy Court, N.D. New York
DecidedJune 9, 2014
DocketBankruptcy No. 13-30759; Adversary No. 13-50017
StatusPublished
Cited by6 cases

This text of 511 B.R. 240 (Henri v. Wheeler (In re Wheeler)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Henri v. Wheeler (In re Wheeler), 511 B.R. 240, 71 Collier Bankr. Cas. 2d 1973, 2014 WL 2580059, 2014 Bankr. LEXIS 2545 (N.Y. 2014).

Opinion

Memorandum — Decision and Order

MARGARET CANGILOS-RUIZ, Bankruptcy Judge.

Christine Joan Henri and her two offspring with Gary Wheeler — Stephanie L. Wheeler and Nicholas C. Wheeler— (“Plaintiffs”) seek a determination that an $81,057.81 judgment debt be excepted from discharge under 11 U.S.C. §§ 523(a)(2), 523(a)(4), 523(a)(5) and 1328(a)(3).1 Plaintiffs also seek to recover and have declared nondischargeable pre-petition attorney fees of $14,062.50 incurred in originally pursuing the judgment and postpetition fees and costs of $9,292 incurred in this action.2 Defendant Linda M. Wheeler (“Debtor” or “Defendant”) filed an answer in general denial.

Plaintiffs have separately objected to confirmation of Debtor’s amended chapter 13 plan under §§ 1325(a)(3) and (7) on the basis that Debtor did not file her petition nor propose her plan in good faith, and request dismissal of the case. Debtor’s amended plan proposes payments of $170 for 60 months, resulting in an anticipated dividend of 10 percent on Plaintiffs’ claim.

Because the evidentiary record to address both the issues raised as to non-dischargeability and the objection to confirmation overlap, this court set a joint discovery schedule and joined both matters to be tried together. When prior to the close of discovery the Debtor failed to timely respond to Requests for Admission propounded by Plaintiffs, this court entered an order, after notice and a hearing, deeming the statements admitted pursuant to Fed.R.Civ.P. 36(a)(3). (Doc. 17). The parties filed a Joint Statement of Undisputed Facts prior to trial in accordance with the court’s scheduling order. (Doc. 16).

The Debtor was scheduled as the only witness to testify at trial. However, she did not appear at the hearing and no other witnesses were called to testify. Plaintiffs’ Exhibits A-J and L-NN were received in evidence, which include the Requests deemed admitted (Ex. NN). Defendant did not introduce any exhibits nor other evidence. The court took judicial notice of [245]*245the Debtor’s filings in the main case and reserved decision.

Summary Conclusion

Based upon the entire record, the court finds as follows:

• The $81,057.81 judgment debt is non-disehargeable under Code §§ 523(a)(4), 523(a)(2)(A) and 1328(a)(2);
• Plaintiffs’ claims under §§ 523(a)(5) and 1328(a)(3) are dismissed;
• Plaintiffs shall recover of Defendant prepetition attorney’s fees of $14,062.50 and postpetition attorney’s fees of $9,292; and
• Confirmation of Debtor’s amended plan is denied and Debtor’s case is dismissed with prejudice.

This memorandum-decision sets forth the court’s findings of fact and conclusions of law in accordance with Fed. R. Bankr.P. 7052.

Jurisdiction

The court has jurisdiction of the matters framed for decision pursuant to 28 U.S.C. § 1334(b) and §§ 157(b)(1) and 157(b)(2)(I) and (L).

Facts

The operative facts are drawn from the exhibits in evidence, the proceedings to date in this case and the parties’ Joint Stipulation of Facts (“Jt. Stip.”). Defendant is the widow of Gary Wheeler. At the time of his death in October 2010, Mr. Wheeler held two life insurance policies with aggregate benefits totaling $233,432.73. (Jt. Stip., p. 1). Pursuant to an earlier judgment of divorce and a related stipulation of settlement between Mr. Wheeler and Plaintiff Christine Henri, Mr. Wheeler was to maintain his children— Plaintiffs Stephanie and Nicholas Wheeler — as beneficiaries on the policies indefinitely. (Jt. Stip., pp. 1-2). In derogation of his obligation, Mr. Wheeler changed the policy beneficiaries, removing his children and naming Defendant. (Jt. Stip., p. 2). As a result, the insurance proceeds were paid to Defendant upon the death of Gary Wheeler. (Id).

Shortly after Mr. Wheeler’s death, counsel for Plaintiffs sent a demand letter to Defendant’s then counsel, Ann Manion, Esq., requesting turnover of the insurance proceeds. (Ex. NN, Req. for Admiss. 13). Based upon her client’s representation, Attorney Manion communicated to Attorney Eisenhut that the insurance proceeds would be held by Debtor in escrow pending resolution of the ownership dispute. (Ex. NN, Req. for Admiss. 15). At the time this representation was made, Debtor intended to take possession of the proceeds rather than place them in escrow, (Ex. NN, Req. for Admiss. 17), and to permanently deprive Plaintiffs of the proceeds. (Ex. NN, Req. for Admiss. 18). Debtor knew that her representation was false. (Ex. NN, Req. for Admiss. 19). Debtor intended that Plaintiffs rely on it, (Ex. NN, Req. for Admiss. 20), and to forbear from filing an application in court to require that the funds be placed in escrow. (Ex. NN, Req. for Admiss. 21). Between December 1, 2010 and February 29, 2012, Defendant took possession of the insurance proceeds of the two policies totaling $233,432.73. (Ex. NN, Req. for Ad-miss. 23).

On January 24, 2011, Plaintiffs commenced an action in New York State Supreme Court, Oneida County (“State Court”), to recover the proceeds of the two policies. (Jt. Stip., p. 2). In December 2011, the State Court granted Plaintiffs partial summary judgment on their entitlement to the proceeds of the smaller $50,000 policy and directed Defendant to immediately pay over that sum to the Plaintiffs, which the Debtor did. (Jt. Stip., [246]*246p. 3). The State Court denied summary judgment as to the larger policy based upon an issue of fact raised by Defendant’s assertion that this policy did not exist at the time of the divorce and was not governed by the terms of the stipulation of settlement. (Id.). On January 18, 2012, the State Court granted Plaintiffs’ renewed motion for summary judgment and directed turnover of the larger policy’s proceeds approximating $183,000 (Ex. KK — State Court Trial Transcript, p. 13). The State Court found that evidence submitted by Debtor — a letter purportedly from Mr. Wheeler’s former employer to support her defense — had been “concocted” by the Debtor and that Debtor’s sworn affidavit presented to the State Court contained false representations. (Id. at p. 7). The State Court found that Debtor attempted to deceive the court and expressed outrage at what the court termed “one of the most blatant things that has ever come [before] me in my twelve years being a judge.” (Ex. KK — State Court Trial Transcript at pp. 7-8).

Defendant then informed the State Court that she had only $102,376.12 of the insurance proceeds and had spent the balance of the funds. (Id. at p. 8). The State Court directed an accounting and enjoined the Debtor from further transfers. (Ex. EE — Order of State Court).

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Cite This Page — Counsel Stack

Bluebook (online)
511 B.R. 240, 71 Collier Bankr. Cas. 2d 1973, 2014 WL 2580059, 2014 Bankr. LEXIS 2545, Counsel Stack Legal Research, https://law.counselstack.com/opinion/henri-v-wheeler-in-re-wheeler-nynb-2014.