In re Rizzo

603 B.R. 550
CourtUnited States Bankruptcy Court, D. South Carolina
DecidedJuly 29, 2019
DocketC/A No. 19-01303-JW
StatusPublished

This text of 603 B.R. 550 (In re Rizzo) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Rizzo, 603 B.R. 550 (S.C. 2019).

Opinion

John E. Waites, US Bankruptcy Judge

This matter comes before the Court on the Motion to Modify Stay ("Motion") filed by Olivia Austin and Michelle Dinatale, as Co-Executors for the Estate of Albert Robert Scansaroli ("Movants"). Helen Marie Rizzo ("Debtor") objects to the Motion. This Court has jurisdiction pursuant to 28 U.S.C. § 1334, and this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), and (G). Pursuant to Fed. R. Civ. P. 52, which is made applicable to this proceeding by Fed. R. Bankr. P. 7052 and 9014, the Court makes the following findings of fact and conclusions of law:1

FINDINGS OF FACT

1. On July 18, 2018, Olivia Austin, as General Guardian for Albert Robert Scansaroli ("Scansaroli"), an incapacitated person, commenced an action against Helen Rizzo ("Debtor") in the Beaufort County Court of Common Pleas ("State Court") to recover funds in the amount of $250,000 ("Disputed Funds") that Debtor withdrew from a joint bank account held in Debtor's and Scansaroli's names, as well as other personal property belonging to Scansaroli that is alleged to be in Debtor's possession. The complaint asserts the following causes of action: 1) Declaratory Judgment, 2) Conversion, 3) Constructive Trust, 4) Temporary Restraining Order/Preliminary and Permanent Injunction, and 5) Recovery of Attorney's Fees and Costs.

2. On December 17, 2018, the State Court entered an order ("State Court Order") granting a preliminary injunction against Debtor, prohibiting her and her *552officers, agents, employees, attorneys and all those in active concert or participation with her from using, spending, transferring, disbursing, diverting, encumbering, collateralizing, pledging, releasing, and/or otherwise disposing of any funds taken from the joint account, including using those funds for the payment of Debtor's attorney's fees, costs, and litigation expenses. As a result of that order, Debtor placed $136,644.36 into an escrow trust account of Debtor's attorney in the State Court action.

3. In December of 2018, Scansaroli passed away, and Movants were appointed co-executors of his probate estate by a probate court in North Carolina.

4. On January 8, 2019, Movants filed a motion to compel Debtor to respond to discovery requests. Thereafter, Debtor's state court attorney moved to be relieved as counsel.

5. On March 5, 2019, the state court parties filed a Proposed Consent Order relieving Debtor's attorney as counsel. On that same day, Debtor filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code, schedules, statements, and chapter 13 plan. Debtor's schedules list as an asset "Funds held in an attorney's Olivetti, McCray and Withrow, LLC trust account" in the amount of $136,572.52. The only secured creditor listed in Debtor's schedules is Digital Federal CU, which holds a secured claim in the amount of $117,070.47 secured by a mortgage on Debtor's real property, which is valued at $380,000. Debtor listed the pending state court action in her Statement of Financial Affairs.

6. Debtor's chapter 13 plan proposes to maintain the current payments to Digital Federal CU and does not provide for payment of any arrearage since Debtor is not in default. Her plan further provides for 100% payment of the unsecured claims listed in her schedules, which includes an $8,200 debt owed to her former state court attorney for attorney's fees and a $602.32 credit card debt. No payments are proposed to be made to Movants.

7. On April 19, 2019, Movants filed a proof of claim asserting a secured interest in the amount of $136,644.36 pursuant to the injunctive relief granted by the state court order, and an unsecured interest in the amount of $113,355.63, based upon other amounts alleged to have been converted or taken. They also objected to confirmation of Debtor's plan due to the alleged mischaracterization of Debtor's interest in the escrow account funds, the omission of Movants as creditors and omission of the claim, and the Debtor's lack of good faith in filing the plan.

8. On May 13, 2019, Movants filed the Motion, seeking relief from stay pursuant to 11 U.S.C. § 362(d)(1) so that the parties may continue the proceedings in state court and obtain a final adjudication declaring the rights and interests of the parties in the Disputed Funds. Alternatively, Movants seek abstention under 11 U.S.C. § 1334(c)(1)-(2) and suspension of Debtor's case under 11 U.S.C. § 305(a)(1).

9. On May 14, 2019, Debtor filed an Objection to Claim of Movants, asserting that she does not owe any money to Movants and that the funds being held in her attorney's trust account are hers and therefore property of the estate. Movants filed a timely response to Debtor's objection to their claim.

10. On June 24, 2019, Movants commenced an adversary proceeding against Debtor by filing a complaint seeking non-dischargeability of their claim pursuant to 11 U.S.C. § 523 and to deny Debtor's discharge as to such claim for reasons of (1) fraud by fiduciary, embezzlement, larceny, (2) false pretenses, false representations, *553and actual fraud, and (3) willful and malicious injury.

11. On July 9, 2019, the parties filed a Joint Statement of Dispute relating to the Motion. The Joint Statement of Dispute, which is signed by counsel for both Movants and Debtor, provides that the parties submitting this Joint Statement of Dispute consent to this Court entering final orders or judgments in this proceeding.

CONCLUSIONS OF LAW

Section 362 of the Bankruptcy Code provides for an automatic stay, applicable to all entities, of various actions against a bankrupt debtor, including actions to obtain possession of property of the estate, actions to create, perfect or enforce liens against property of the estate, and actions to collect or recover a claim against the debtor. 11 U.S.C.

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Cite This Page — Counsel Stack

Bluebook (online)
603 B.R. 550, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-rizzo-scb-2019.