In re Colston

539 B.R. 738, 2015 Bankr. LEXIS 3478, 2015 WL 5989747
CourtUnited States Bankruptcy Court, W.D. Virginia
DecidedOctober 14, 2015
DocketCase No. 15-70654
StatusPublished
Cited by12 cases

This text of 539 B.R. 738 (In re Colston) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Colston, 539 B.R. 738, 2015 Bankr. LEXIS 3478, 2015 WL 5989747 (Va. 2015).

Opinion

MEMORANDUM OPINION

Paul M. Black, UNITED STATES BANKRUPTCY JUDGE

This matter comes before the Court on confirmation of a Chapter 13 Plan filed by the Debtor, Sandra Boggs Colston (the “Debtor” or “Ms. Colston”). Confirmation of the plan is supported by the Chapter 13 Trustee, Christopher T. Mieale (the “Chapter 13 Trustee”). An objection to confirmation and motion to dismiss were filed by Jacqueline Fay Alexander (“Ms. Alexander”), a disputed creditor of the Debtor, based on lack of good faith and lack of feasibility. Notwithstanding the Chapter 13 Trustee’s recommendation in favor of confirmation, this is essentially a two-party dispute involving allegations of undue influence, fraud, and willful and malicious injury to property by the Debtor. A lengthy evidentiary hearing was conducted on confirmation, the objection, and the motion to dismiss on September 16, 2015. For the reasons set forth below, the Court will sustain the objection to confirmation and dismiss this case.

FINDINGS OF FACT 1

Ms. Colston moved to Grayson County, a rural county in southwest Virginia, in 2012, where she currently works as a special education teacher. There, she formed three separate limited liability companies: Kickin Chicken Poultry & Game Bird Farm, LLC was established to sell poultry locally raised by Ms. Colston; Farmers Friend Old Time General Store, LLC was established to run a general store, café, and coffee shop; and S. Colston Properties, LLC was formed to own the real estate where the general store operated. The businesses are now each defunct.

[741]*741Prior to moving to Grayson County, the Debtor lived in Virginia Beach, Virginia, approximately 300 miles to the east, for most of her life. In Virginia Beach, she worked for the public school system, also as a teacher, having taught for a total of 23 years. In the course of her teaching in Virginia Beach, she became acquainted with Ms. Alexander, a teacher’s aide. Both worked at Princess Anne High School in Virginia Beach, where the Debt- or was a special education teacher. Testimony at trial, -including that from Ms. Alexander’s sister, Judy Walsh (“Ms. Walsh”), indicated that, due to a near drowning accident as a child, Ms. Alexander became mentally impaired, which Ms. Alexander herself described as a “learning disability.” Ms. Walsh also described her sister as “slow.” Ms. Walsh further described her sister as “gullible,” and unsophisticated in handling money, sometimes having trouble recognizing the differences in dollar values. Ms. Walsh related one specific instance of Ms. Alexander having an issue distinguishing between $100.00 and $10,000.00. Despite her intellectual challenges, Ms. Alexander was able to obtain a certificate to be a teacher’s aide,2 which led her to Princess Anne High School, where she met and became personally close to Ms. Colston.

Ms. Alexander’s parents owned and operated a successful electrical contracting company in Virginia Beach. Until her death in 2010, Ms. Alexander’s mother managed Ms. Alexander’s finances. Ms. Alexander’s father had predeceased her mother. In addition to income from a trust that was set up for the benefit of the three children in the family, including Ms. Walsh and Ms. Alexander, Ms. Alexander received approximately $403,000.00 when her mother died in the form of a direct distribution from her mother’s pension plan at the electrical construction company. The funds were not left in trust. Ms. Walsh helped her sister set up an account at a local bank to hold these funds, although Ms. Walsh had no oversight or control over that account. Ms. Walsh apparently believed, incorrectly, that the bank officer who assisted her in opening the account for Ms. Alexander would be “watching over it.”

Ms. Colston testified at trial that she became friends with Ms. Alexander at Princess Anne High School, and they would go to happy hours3 and school functions together. Their relationship progressed and became more involved, and although Ms. Colston denied any romantic interests with Ms. Alexander, she testified she believed Ms. Alexander wanted such a relationship. She further testified that Ms. Alexander was unhappy when Ms. Colston moved to Grayson County, and they continued to communicate with each other extensively by text and Facebook messaging. Ms. Colston also testified that Ms. Alexander would become upset with her if she did not respond as fast as Ms. Alexander expected. On one occasion, Ms. Alexander visited Ms. Colston in Grayson County and left an envelope of money with Ms. Colston when she departed. Ms. Col-ston stated that she did not ask for the money, but Ms. Alexander wanted her to have it. Recognizing Ms. Alexander had [742]*742access to substantial funds, and apparently emboldened, Ms. Colston began “receiving” money from Ms. Alexander on a regular basis. Ms. Colston characterized these monetary transfers as gifts. Ms. Alexander believed them to be loans. Ms. Col-ston said there were times when she tried to pay money back to Ms. Alexander, but she would not accept the money, getting angry when Ms. Colston offered to do so. However, no testimony was elicited of any specific dollar amount offered to be paid back, or the source of the funds.

In whatever fashion she acquired the money, it was apparent that Ms. Colston preyed upon Ms. Alexander’s weakness of mind and clear affection for her at the time. From July 2012 to January 2014, Ms. Alexander made 60 monetary transfers to Ms. Colston or entities controlled exclusively by her, totaling $414,590.00. Alexander Exhibits 2 & 3. An additional $39,755.05 in credit card or point of sale purchases were charged to Ms. Alexander as well. See Alexander Exhibit 3. These transfers completely depleted the bequest to Ms. Alexander from her mother’s pension fund. During this time frame, Ms. Walsh testified Ms. Alexander had lost contact with her family, being highly focused on Ms. Colston. The transfers to Ms. Colston were discovered by Ms. Alexander’s family in early 2014, when Ms. Alexander revealed to her older sister, Ms. Walsh, that she was unable to pay her bills. None of these transfers was evidenced by a check, as Ms. Walsh testified at trial that Ms. Alexander did not know how to write checks without assistance. Instead, the vast majority of the transfers were either cash deposits taken by Ms. Alexander from her account and deposited into one of Ms. Colston’s accounts, or into accounts of entities controlled by Ms. Col-ston. Two wire transfers in the amounts of $60,000.00 and $50,000.00, respectively, were made a week apart in November 2013 to Ms. Colston directly. Alexander Exhibit 2. Ms. Alexander stated that Ms. Colston asked for money because she was having financial issues, and she also provided Ms. Colston funds to remodel her home in Grayson County.4 According to Ms. Colston, some of the funds were used to acquire and remodel the general store property, among other things.5 The manner in which these transfers were made, the magnitude and frequency of the transfers, and the Court’s own observation of the witnesses’ demeanor and testimony on the stand do not lend credibility to Ms. Colston’s testimony that these alleged “gifts” were made by Ms. Alexander free from sway by Ms. Colston.

When the family discovered the transfers to Ms. Colston, they started probing Ms. Alexander for information about her dealings with Ms. Colston, of whom Ms. Walsh was becoming clearly suspicious. [743]*743Ms.

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Cite This Page — Counsel Stack

Bluebook (online)
539 B.R. 738, 2015 Bankr. LEXIS 3478, 2015 WL 5989747, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-colston-vawb-2015.