Holber v. Segal (In re Segal)

532 B.R. 610
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedApril 23, 2015
DocketBankruptcy No. 10-16822; Advs No. 14-0504
StatusPublished

This text of 532 B.R. 610 (Holber v. Segal (In re Segal)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holber v. Segal (In re Segal), 532 B.R. 610 (Pa. 2015).

Opinion

OPINION SUR ORDER OF APRIL 1, 2015

Stephen Raslavich, United States Bankruptcy Judge

Introduction

On April 1, 2015 the Court entered a bench order granting the Plaintiff/Trustee’s Motion for Summary Judgment.1 On April 14, the Defendant/Debtor filed a Notice of Appeal. In accordance with L.B.R. 8001-l(b), this written opinion is filed to supplement the Court’s bench ruling on April 1st Order.

Background

- The Trustee filed this adversary proceeding against the Debtor seeking a declaratory judgment. In specific, the Trustee requested a declaration that (1) certain money which the Debtor may be owed under a contract (the “Consulting Agreement”) is property of his estate, and (2) that such money does not constitute otherwise “exempt” wages. The Debtor filed an Answer to the Complaint opposing the relief. The parties conducted discovery and the Trustee filed a Motion for Summary Judgment. In support of his motion, the Trustee offered evidence consisting of documents and deposition testimony. The Debtor filed a reply opposing the motion, but offered no independent evidence of his own. The Debtor relied entirely on purported contradictions in the Trustee’s evidence. Those inconsistencies, he main[612]*612tains, create issues of fact which require a trial.

On April 1, 2015 the Court heard oral argument on the summary judgment motion. The Trustee advanced three arguments for why any money due the Debtor was not wages. First, the Consulting Agreement had allegedly been breached and the Debtor filed a civil lawsuit seeking “damages” not “wages.” Second, and in the alternative, while the contract is styled as a “consulting” agreement, the payments due under that agreement derive from the sale of the Debtor’s largest asset; therefore, the money constituted sales proceeds but, once again, not wages. Third, the Debtor failed to disclose either the money already paid under the Agreement on his Statement of Financial Affairs,2 or the money yet to be received on Bankruptcy Schedule B. Transcript (Tr.) 2-4.

In response, the Debtor argued that the Consulting Agreement provides for compensation and this could broadly be construed as wages. Tr. 5. Based on the record, however, the Court questioned how the Debtor proposed to establish that the payments under the Consulting Agreement were “wages.” Wages, it was noted, require an employer/employee relationship. Tr. 6. Incidences of such a relationship would typically include the various payroll forms which attend that arrangement; to wit, Forms W-2, W-9, etc. Id. A tax return reflecting wage income would likewise be highly probative. To reiterate, the Debtor offered no evidence whatever in response to the Trustee’s Motion.3 The Debtor conceded that earning wages required one to be an employee. Tr. 8. Having no evidence before it that demonstrated this to be the nature of the Debt- or’s relationship under the Consulting Agreement, the Court found that the monies in question were not, in fact, wages, and that any monies remaining owed un- ' der the Consulting Agreement were property of the Debtor’s bankruptcy estate. The Court thereupon entered judgment in favor of the Trustee.

Standard for Summary Judgment

Motions for summary judgment are governed by Rule 56 of the Federal Rules of Civil Procedure4 (“Fed.R.Civ.P.”). Pursuant to Rule 56, summary judgment should be granted when the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). For purposes of Rule 56, a fact is material if it might affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party has the burden of demonstrating that no genuine issue of fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

The court’s role in deciding a motion for summary judgment is not to weigh evidence, but rather to determine whether the evidence presented points to a disagreement that must be decided at trial, or whether the undisputed facts are so one sided that one party must prevail as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 249-250, 106 S.Ct. at 2511-12. In making this determination, [613]*613the court must consider all of the evidence presented, drawing all reasonable inferences therefrom in the light most favorable to the nonmoving party, and.against the movant. See Halsey v. Pfeiffer, 750 F.3d 273, 287 (3d Cir.2014).

To successfully oppose entry of summary judgment, the nonmoving party may not simply rest on its pleadings, but must designate specific factual averments through the use of affidavits or other permissible evidentiary material that demonstrate a triable factual dispute. Celotex Corp. v. Catrett, 477 U.S. at 324, 106 S.Ct. at 2553. Such evidence must be sufficient to support a jury’s factual determination in favor of the nonmoving party. Anderson, supra, 477 U.S. at 250, 106 S.Ct. at 2511. Evidence that merely raises some metaphysical doubt regarding the validity of a material fact is insufficient to satisfy the nonmoving party’s burden. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). If the nonmoving party fails to adduce sufficient evidence in connection with an essential element of the case for which it bears the burden of proof at trial, the moving party is entitled to entry of summary judgment in its favor as a matter of law. Celotex Corp. v. Catrett, 477 U.S. at 322-23, 106 S.Ct. at 2552-53.

Post-Petition Wages and Property of the Estate

Section 541 of the Bankruptcy Code excepts from property of the estate “earnings from services performed by an individual debtor after the commencement of the case.” 11 U.S.C. § 541(a)(6). Wages earned postpetition are not part of the individual debtor’s estate. In re Braddy, 226 B.R. 479, 481 (Bkrtcy.N.D.Fla. 1998); see also In re Pentell, 1988 WL 39853, at *2 (Bkrtcy.N.D.Ill. Mar. 8, 1988) (“The purpose of § 541(a)(6) is to allow the debtor to earn wages to meet his personal needs”). The burden of proof as to what is property of the estate generally rests with' the creditor; here, the Trustee. In re Datesman, 1999 WL 608856, at *2 (Bankr. E.D.Pa. Aug. 9, 1999)

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Related

Anderson v. Liberty Lobby, Inc.
477 U.S. 242 (Supreme Court, 1986)
In Re Braddy
226 B.R. 479 (N.D. Florida, 1998)
Hammermill Paper Co. v. Rust Engineering Co.
243 A.2d 389 (Supreme Court of Pennsylvania, 1968)
Wilson v. IESI N.Y. Corp.
444 F. Supp. 2d 298 (M.D. Pennsylvania, 2006)
Byron Halsey v. Frank Pfeiffer
750 F.3d 273 (Third Circuit, 2014)
Newton v. M&B Lumber Inc.
75 Pa. D. & C.4th 387 (Blair County Court of Common Pleas, 2005)

Cite This Page — Counsel Stack

Bluebook (online)
532 B.R. 610, Counsel Stack Legal Research, https://law.counselstack.com/opinion/holber-v-segal-in-re-segal-paeb-2015.