In Re Carrico

206 B.R. 447, 1997 Bankr. LEXIS 201, 1997 WL 96924
CourtUnited States Bankruptcy Court, S.D. Ohio
DecidedFebruary 5, 1997
DocketBankruptcy 95-53937
StatusPublished
Cited by4 cases

This text of 206 B.R. 447 (In Re Carrico) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Carrico, 206 B.R. 447, 1997 Bankr. LEXIS 201, 1997 WL 96924 (Ohio 1997).

Opinion

MEMORANDUM OPINION AND ORDER

CHARLES M. CALDWELL, Bankruptcy Judge.

This Memorandum Opinion and Order details a civil contempt proceeding against Michael E. Carrico (“Debtor”), attorney Patrick A.T. West (“Mr. West”), attorney Gina M. Dougherty (“Ms. Dougherty”), attorney Danny W. Bank (“Mr. Bank”), and Antonio J. Ornelas (“Mr. Ornelas”). This Opinion describes the Debtor’s transfer of an estate asset, two attorneys’ disregard for the Court’s specific instructions to return an estate asset to the Chapter 7 Trustee, Myron N. Terlecky (“Trustee”), and yet another attorney’s actions that interfered with the Court’s efforts to have the estate asset returned.

One oral ruling and three written orders were issued by this Court in an effort to obtain basic compliance with the bankruptcy laws: (1) an oral ruling issued on January 31, 1996, (“Oral Ruling”); (2) an Order on Motion for Authorization to Obtain Credit entered on January 31, 1996, (“First Order”); (3) an Order to Show Cause for Civil Contempt Pursuant to FRBP 9020(b) entered on February 1, 1996, (“Second Order”); and (4) an Order Scheduling Continued Hearing on Order to Show Cause for Civil Contempt Pursuant to FRBP 9020(b) entered on February 27,1996, (“Third Order”).

While this Court is aware of the serious nature of imposing sanctions for civil contempt, the egregious behavior of the Debtor and three officers of the Court merit such measures. Based upon a review of the arguments of counsel, supporting affidavits, exhibits and the entire record in this case, the Court finds the Debtor, Mr. West, Ms. Dougherty, and Mr. Bank in civil contempt. The history of the Debtor’s involvement in the bankruptcy process and the actions of all the subjects of this Memorandum Opinion and Order are described in considerable detail, to aid their understanding of the Court’s conclusion and the consequences of their actions.

On July 17,1995, attorney Mark M. Flanagan (“Mr. Flanagan”) filed the instant Chapter 13 petition on behalf of the Debtor, and at the October 16,1995, confirmation hearing notified the Court of his client’s intention to convert the case to Chapter 7. On November 1, 1995, Mr. West filed a Notice of Substitution of Counsel and a Notice of Conversion to Chapter 7, and on November 21,1995, the Trustee was appointed. On December 18, 1995, the Debtor did not appear at the scheduled Meeting of Creditors; however, Mr. West and Sally Carrico-Baum (“Ms. Baum”) appeared. Ms. Baum is the mother and a creditor of the Debtor, and has a power of attorney for the Debtor.

In early January 1996, the Debtor entered into a contract for the sale of a D-6 liquor *450 license from Ms defunct restaurant, The Clock, with Mr. Ornelas, president of Corona, Incorporated (“Corona”). On January 19, 1996, Mr. Bank, attorney for Corona, gave Ms. Dougherty, liquor license attorney for the Debtor, $16,230.00 in escrow to complete the sale. On January 23,1996, Ms. Dougherty advanced $1,820.00 from her trust account to the Ohio Department of Liquor Control to renew the license so it could be sold.

As a result of Mr. West and Ms. Dougherty's January 26,1996, conversation regarding the transaction, Ms. Dougherty sent Mr. West a facsimile of the purchase agreement between the Debtor and Corona. This conversation with Ms. Dougherty and subsequent facsimile evidences Mr. West’s first involvement with the purchase agreement, and Ms. Dougherty testified it was her first knowledge the Debtor had filed the present bankruptcy petition. 1 On January 26, 1996, at 5:15 p.m., Mr. West sent the Trustee a facsimile of the purchase agreement.

On January 29,1996, the Trustee delivered a letter to Ms. Dougherty advising her the Debtor did not have the authority to sell the liquor license because it constituted property of the estate under control of the Trustee. The letter stated an expedited hearing would be held, “on January 31,1996, in an effort to obtain post-petition financing pursuant to 11 U.S.C. § 364 in order to pay the filing fee to renew the license. I [the Trustee] ... would very much appreciate you advising me to [sic] the status of these matters as soon as possible. In the event funds have been deposited into your trust account, I am putting you on notice not to disburse the funds.” (emphasis added).

On January 31, 1996, at 9:30 a.m., the Court conducted an expedited hearing on the Trustee’s Motion for Authorization to Obtain Credit. . The Debtor, Mr. West, the Trustee, and Darnel R. Swetnam, counsel for High Street Bistro, Inc., the entity that was going to loan funds for the license renewal, were present. During the hearing, the Trustee informed the Court that Ms. Dougherty held proceeds from the liquor license that had been sold without Ms knowledge and without prior Court authorization. At the conclusion of the hearing, the Court issued the Oral Rulmg that required Ms. Dougherty to turn over all proceeds by January 31,1996, at 5:00 p.m. and established a show cause hearing for civil contempt on February 1,1996, m the event of noncomplianee. The Court instructed the Trustee to prepare an order memorializing its Oral Rulmg.

Shortly after the 9:30 a.m. hearing on January 31,1996, Mr. West and the Debtor went to Ms. Dougherty’s office, and Mr. West informed her a hearing had been held where the Court determined the liquor license was an asset of the bankruptcy estate and prior Court approval was necessary for its transfer. Ms. Dougherty testified Mr. West did not inform her of the Oral Ruling requiring the turnover of the sale proceeds to the Trustee. Mr. West and the Debtor left Ms. Dougherty’s office, and Mr. West went to Mr. Bank’s office. Mr. Bank testified Mr. West informed him about the hearing, explained the liquor license was property of the estate and claimed the Debtor had committed a fraud on Corona by entering mto a purchase agreement without obtaining prior Court approval. Mr. Bank testified he lacked knowledge of the Debtor’s pendmg bankruptcy until Mr. West’s post-hearing contact on January 31,1996. After Mr. West left, Mr. Bank called Ms. Dougherty to notify her of Corona’s decision to rescmd the contract and retrieve the funds held in escrow by Ms. Dougherty.

On January 31, 1996, at approximately 12:20 p.m., the Trustee delivered a letter and an unsigned, courtesy copy of the First Order to Ms. Dougherty. The cover letter advised her of the Trustee’s intention to submit the attached proposed First Order as required by the Court, requested she allot time for the transfer of the sale proceeds to the Trustee, and referred to the January 31, 1996, hearing where the Oral Ruling origmat *451 ed. 2 At 1:27 p.m., the Trustee submitted the First Order to the Court for its consideration. The Court immediately signed the First Order that provided in pertinent part:

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Gina M. Dougherty, counsel for Corona, Inc., [sic] shall turn over all proceeds resulting from the sale of the liquor license to the Trustee, no later than 5:00 p.m.

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Bluebook (online)
206 B.R. 447, 1997 Bankr. LEXIS 201, 1997 WL 96924, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-carrico-ohsb-1997.