In re Brown

484 B.R. 322, 2012 Bankr. LEXIS 3972, 2012 WL 3670640
CourtUnited States Bankruptcy Court, E.D. Kentucky
DecidedAugust 24, 2012
DocketNo. 12-70013
StatusPublished

This text of 484 B.R. 322 (In re Brown) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Brown, 484 B.R. 322, 2012 Bankr. LEXIS 3972, 2012 WL 3670640 (Ky. 2012).

Opinion

ORDER GRANTING IN PART MOTION TO APPROVE SETTLEMENT AGREEMENT UNDER RULE 9019 AND AUTHORIZING TRANSFER OF ASSETS UNDER 11 U.S.C. § 363

JOSEPH M. SCOTT, JR., Bankruptcy Judge.

This matter comes before the Court on the Joint Motion to Settle and Compro[325]*325mise and Authorizing Transfer of Assets under 11 U.S.C. § 363 (the “Settlement Motion”) (Bk. Doc. 225; AP Doc. 32)1 seeking approval of a settlement agreement (“Settlement Agreement”) pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and a transfer of assets pursuant to 11 U.S.C. § 363, by and among (i) James A. Brown (“Mr. Brown”), by and through Richard Wehrle, conservator (“Conservator”) and Paul Brown, guardian (“Guardian,” collectively with Mr. Brown and the Conservator, the “Conservator Parties”); (ii) Martin’s Rest Home Inc., d/b/a Grand Haven Nursing Home (“Nursing Home”); (iii) CBS Corporation d/b/a Lee’s Famous Recipe (“Lee’s”); (iv) Brown Ambulance Service, Inc. (“Ambulance”); (v) Brown & Gasser Thrift Food Market, Inc. (“Food”); (vi) James A Brown Enterprises LLC d/b/a Ramada Paintsville (“Ramada”); (vii) Redd-Brown and Williams Construction Co., Inc. (“RBW”); (viii) M. Goldberg Incorporated (“Goldberg”, which collectively with the Conservator Parties, Nursing Home, Lee’s, Ambulance, Ramada, and RBW and Goldberg, are hereinafter referred to as the “Brown Parties”), and the bankruptcy estate (“Estate”) of Brenda Kay Brown (“Debtor”), by and through the Estate’s trustee, James R. Westenhoefer (“Trustee”) (hereinafter, the Brown Parties, Estate and Trustee, are referred to as the “Movants”). The Debtor filed an Objection to the proposed settlement (AP Doc. 37) and a memorandum in support of the Objection (AP Doc. 48) (collectively, “Objection”). Hearings were held on July 19, 24 and 27, 2012 (collectively “Hearings”), on the Settlement Motion.

Venue for Debtor’s Chapter 7 case and the adversary proceeding is proper in this District under 28 U.S.C. §§ 1408 and 1409. This Court has jurisdiction of this Chapter 7 case and this adversary proceeding pursuant to 28 U.S.C. § 1334(b). This matter arising under Federal Rule of Bankruptcy Procedure 9019(a) constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(A). The following constitutes the Court’s findings of facts and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052.

FACTS

1. The Debtor and Mr. Brown were married on February 2, 2008.

2. On the day of their marriage, Mr. Brown and the Debtor entered into an agreement (“Antenuptial Agreement”). Under the Antenuptial Agreement, the Debtor and Mr. Brown agreed that all property, both real and personal, owned by each party as of the date of the marriage would remain the owner’s separate property, both during and after the marriage.

3. Attached to the Antenuptial Agreement are financial statements reflecting that the Debtor had a net worth of $236,000 and Mr. Brown had a net worth in excess of $114,000,000.

4. John M. Keith, Jr., signed the Ante-nuptial Agreement as counsel for Kay Brown, stating, “I have reviewed the foregoing Antenuptial Agreement and explained the same to Kay.”

5. F. Gerald Greenwell prepared the Antenuptial Agreement and signed it as counsel for Mr. Brown.

6. Prior to his marriage to Debtor, Mr. Brown prepared a will and estate plan (“Initial Will”), which left all of his property to a charitable trust.

[326]*3267. Under the terms of the Antenuptial Agreement and the Initial Will, the Debtor will not receive anything from Mr. Brown’s estate upon dissolution of their marriage or at his death.

8. On December 23, 2008, approximately ten months after their marriage, Mr. Brown suffered a disabling stroke that left him incapable of caring for himself or handling his financial affairs.

9. Approximately four months after his stroke, the Debtor caused Mr. Brown to execute, a Durable Power of Attorney appointing the Debtor as Mr. Brown’s attorney-in-fact, with the power to handle his financial affairs (the “Power of Attorney”).

10. The Power of Attorney expressly provided that the Debtor could not give away any of Mr. Brown’s property.

11. The Conservator Parties allege that after Mr. Brown’s stroke, the Debtor engaged in a pattern of fraudulent activities to transfer substantially all of Mr. Brown’s assets to Debtor.

12. On March 3, 2010, Wehrle filed with the Commonwealth of Kentucky, Harrison District Court (the “District Court”) (i) a petition seeking a jury determination of Mr. Brown’s competency, and if he was determined by the jury to be disabled, the appointment of a guardian to protect Mr. Brown’s health and assets (the “Conservator Action”) and (ii) an emergency petition for the appointment of a fiduciary to prevent the Debtor from selling the Nursing Home until Mr. Brown’s competency could be determined and a guardian appointed in the Conservator Action.

13. Following a hearing on the appointment of a conservator and permanent guardian, on October 11, 2011, by order of the District Court (“Conservator Order”), Wehrle was appointed Conservator for Mr. Brown and Mr. Brown’s brother, Paul Brown, was appointed as his health care Guardian.

14. In the Conservator Order, the District Court instructed the Conservator to “vigorously pursue the recoupment of [Mr. Brown’s] assets.” Conservator Order at 8.

15. In summary, the District Court found that based upon the limited and, “questionable Power of Attorney,” the Debtor:

a. Paid off her daughter’s home mortgage of $123,000 plus. Debtor’s daughter is not Mr. Brown’s daughter;
b. Changed all of Mr. Brown’s Certificates of Deposit (“CDs”) from his sole name to “James A. Brown or Kay Brown” thereby “giving away” one-half of Mr. Brown’s approximate $5,000,000 in CD’s to herself, and making herself surviving owner by operation of law of the entire Certificate balance;
c. Gave her daughter checks totaling $30,500;
d. Purchased a residence in her sole name at 250 Robin Hill Road, Paints-ville, Kentucky, for the sum of $800,000 in July, 2009, for which no mortgage appears of record (“Paintsville House”);
e. Had prepared and “executed” by Mr. Brown a deed to Mr.

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Bluebook (online)
484 B.R. 322, 2012 Bankr. LEXIS 3972, 2012 WL 3670640, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-brown-kyeb-2012.