Irons v. Maginnis (In re Irons)

572 B.R. 877, 2017 Bankr. LEXIS 1863
CourtUnited States Bankruptcy Court, N.D. Ohio
DecidedJuly 6, 2017
DocketCase No.: 12-32449; Adv. Pro. No. 16-3120
StatusPublished
Cited by3 cases

This text of 572 B.R. 877 (Irons v. Maginnis (In re Irons)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Irons v. Maginnis (In re Irons), 572 B.R. 877, 2017 Bankr. LEXIS 1863 (Ohio 2017).

Opinion

MEMORANDUM OF DECISION AND ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS AND DENYING DEFENDANT MAGINNIS’ AND PLAINTIFF’S MOTIONS FOR SUMMARY JUDGMENT

John P. Gustafson, United States Bankruptcy Judge

This adversary proceeding is before the court on Defendant Leon Maginnis’ (or “Maginnis”) “Motion to Dismiss or in the Alternative for Summary Judgment” (“Maginnis’ Motion”) [Doc. #4], Defendant Bellevue Farm, LLC’s (“Bellevue”) Motion to Dismiss (“Bellevue Motion”) [Doc. # 5], Plaintiff Logan R. Irons’ (“Plaintiff’) Motion for Summary Judgment (“Plaintiffs Motion”) [Doc, # 24], Plaintiffs Memorandum in Opposition to Defendants’ Motions and in Support of Plaintiffs Motion (“Plaintiffs Memo”) [Doc. # 25], Maginnis’ Reply to Plaintiffs Motion and Memo (“Maginnis’ Reply”) [Doc. #28], Bellevue’s Memorandum in Opposition to Plaintiffs Motion and Reply to Plaintiffs Memo (“Bellevue’s Memo”) [Doc, # 29], and Plaintiffs Reply to Belle-vue’s Memo (“Plaintiffs Reply”) [Doc. # 80]. Plaintiff is the debtor in the underlying Chapter 7 bankruptcy case. Defendant Maginnis is the trustee of the Amended and Restated Declaration of Trust for D. Ross Irons (the “Irons’ Trust” or “Trust”), and Defendant Bellevue is the purchaser of the trust interests that were sold by the Chapter 7 Trustee.

In his complaint, Plaintiff seeks,declaratory and injunctive relief relative to an alleged right he has to reside in the residence (“Residence") owned by the trust of Plaintiffs late father, D. Ross Irons. Plaintiff argues that his right to occupy the Residence, which was set forth in the Irons’ Trust, was not and could not have been transferred to Bellevue, the purchaser of the trust interests sold by the Chapter 7 Bankruptcy Trustee. [Doc. # 24-1, p, 1], Defendants Maginnis and Bellevue both argue that dismissal of the Complaint is proper pursuant to Fed. R. Civ. P. 12(b)(6), as they allege that the court-approved sale of the Irons’ Trust assets included all rights and interests of Plaintiff, including the right of occupancy in the Residence, Further, due to res judicata principles, Defendants believe that the court-approved sale of the Irons’ Trust rights cannot now be questioned.

For the reasons that follow, the court will grant Defendants’ Motions to Dismiss and deny Defendant Maginnis’ and Plaintiffs Motions for Summary Judgment.

BACKGROUND

Unless otherwise noted, the following facts are undisputed. On June 14, 2000, Plaintiffs late father caused to be made a trust agreement, which was amended and restated on June 26, 2006. [Doc. # 1-2, PI. Ex. B, Irons’ Trust]. The Irons’ Trust granted Plaintiffs mother a life estate in the Trust’s residential real property located at 5625 State Route 113, Bellevue, Ohio. Article IX(2), titled “Right of Residency”, set forth that if the Trustor (D, Ross Irons)’s spouse were to survive the Trustor, the Trustee was to “permit the Trustor’s spouse to reside in the residential real property. ...” [Id,, p. 8], Article IX(2)(a) provides that:

During the period following the death of the Trustor in which the Trustor’s [881]*881spouse resides in the Trustor’s principal residence ... the successor trustee shall pay any and all real property taxes or assessments, including interest and penalties thereon, as well as any and all homeowner’s insurance premiums such as maintained by the Trustor as of his date of death, or as may be typical in the geographic area for residences of similar value.

[Id.].

Article IX(2)(c) establishes that the right of residency and the financial obligations of the Trust incident thereto terminate upon the occurrence of any of three events: 1) the death of the Trustor’s spouse; 2) the voluntary or involuntary establishment of a new permanent residence by the Trustor’s spouse; and 3) the remarriage or co-habitation with another of the Trustor’s spouse. [Id., p. 8-9].

Article IX(4)(a)(ii), titled “Management of Residential Real Property”, states the following:

The Successor Trustee shall retain in the Trust Estate the Trustor’s residential real property .,. Said right of residency as it pertains to [Plaintiff], shall occur in the event of the death of the Trustor’s spouse, or the termination of her right of residency as such is defined in Article IX(2) of this Trust Agreement. Should [Plaintiff] wish to reside in such residential real property, he shall be permitted to do so under the same terms and conditions as provided the Trustor’s spouse under Article IX(2) of this Trust Agreement ....

[Id., p. 10].

The Irons’ Trust also provided that upon the termination of the right to reside in the real property, the property shall be managed and distributed and conveyed as provided in 'Article IX(4) of the Irons’ Trust. [Id., p. 9], The Trustor, D. Ross. Irons, died on or about July 6, 2006, and until September 30, 2016, his wife Linda Irons resided at the Residence. [Doc. # 6, p. 18].

Plaintiff filed for relief under Chapter 7 of the Bankruptcy Code on May 26, 2012. [Case No. 12-32449, Doc. # l].1 At the time the petition was filed, John N. Graham (the “Chapter 7 Trustee”) was appointed as the interim Chapter 7 Trustee, and he has continued in that capacity as the duly appointed trustee. In Debtor’s originally filed Schedule C [Case No 12-32449, Doc. # 10, p. 13] and Amended Schedule C [Id., Doc. # 27, p. 27], Debtor did not claim that any or all of his interest as a beneficiary of the Irons’ Trust were exempt.

On April 30, 2014, the Chapter 7 Trustee filed an adversary proceeding in this court. [Case No. 14-3065, Doc. # 1]. The Chapter 7 Trustee’s complaint sought a declaratory judgment that Plaintiffs interests in the “Property Rights of the ... Trust are assets of the Bankruptcy Estate.” [Id., Doc. # 1, ¶ 25]. Count One of the Complaint was dismissed without prejudice in an agreed order [Id., Doc. # 39], and sum[882]*882mary judgment was granted in favor of the Chapter 7 Trustee on the remaining two counts. Specifically, the order granting summary judgment [Id., Doc. # 34] held that:

[T]he interests of [Plaintiff] as a limited partner in the D. Ross Irons Partnership ... and as a beneficiary of the D. Ross Irons Trust Agreement dated June 14, 2000 and as amended and restated on June 26, 2006 are held to be assets of the Bankruptcy Estate in Case No. 12-32449 ....

[Id., at p. 3].

Plaintiff did not object to or appeal the order granting summary judgment, and he did not assert in Case No. 14-3055 that any interest of his was excluded from his Chapter 7 Bankruptcy Estate.

On September 16, 2015, the Chapter 7 Trustee filed a “Motion to Sell Assets of the Estate Pursuant to 11 U.S.C. 363, to Designate and Approve a Stalking Horse Purchaser, to Establish Bid Procedure for the Stalking Horse Sale Hearing and Consideration of Bid Protections in Connection Therewith” (“Sale Motion”). [Case. No. 12-32449, Doc. # 293], The Sale Motion referenced the court’s order granting summary judgment in the 2014 adversary case, stating that

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Bluebook (online)
572 B.R. 877, 2017 Bankr. LEXIS 1863, Counsel Stack Legal Research, https://law.counselstack.com/opinion/irons-v-maginnis-in-re-irons-ohnb-2017.