Kapila v. Dailey (In Re Dailey)

405 B.R. 386, 21 Fla. L. Weekly Fed. B 740, 2009 Bankr. LEXIS 1294
CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedMay 11, 2009
Docket18-16723
StatusPublished
Cited by3 cases

This text of 405 B.R. 386 (Kapila v. Dailey (In Re Dailey)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Florida. primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kapila v. Dailey (In Re Dailey), 405 B.R. 386, 21 Fla. L. Weekly Fed. B 740, 2009 Bankr. LEXIS 1294 (Fla. 2009).

Opinion

FINDINGS OF FACT AND CONCLUSIONS OF LAW

JOHN K. OLSON, Bankruptcy Judge.

On February 4, 2009, the court conducted a trial of this proceeding on the trustee’s five-count complaint objecting to the debtor’s obtaining a discharge of his debts pursuant to section 727(a) of the Bankruptcy Code, and the debtor’s answer. The court makes the following findings of fact 1 and conclusions of law:

Findings of Fact

A. The debtor filed his voluntary petition commencing this chapter 7 case on October 14, 2005.

B. At the close of business on October 13, 2005, the debtor owned a checking account # 3794 (the “Peoples account”) at People’s Bank in Moorehead, Kentucky.

C. On October 13, 2005, the debtor deposited check #535 in the amount of $24,000 from the Peoples account into his account # 1428 at Bank of America (the “BofA account”). The check is post-dated October 14.

D. On October 14, 2005, the debtor borrowed $25,000 on a line of credit from People’s Bank secured by a mortgage upon a parcel of real property that he owned located in Kentucky. He deposited this amount into the Peoples account on October 14, leaving the account with a balance of $25,894.32.

E. The balance of funds in the Peoples account at the close of business on October 14, 2005 was $25,894.32, but the $24,000 check deposited October 13 into the BofA account had not yet been posted to the Peoples account.

F. The Peoples account had only two transactions on October 14: the $25,000 deposit, and a $24,000 debit by the check described above by which monies were transferred from the Peoples account to the BofA account.

*389 G. At the close of business on Thursday, October 13, 2005, the balance of funds in the BofA account was $33,346.44.

H. The only transactions in the BofA account on October 14, 2005 were debits, totaling $6,823.69. There were no deposits.

I. At the close of business on October 14, 2005, the balance of funds in the BofA account was $26,522.75.

J. On October 11, 2005, Your Discount Broker, Inc. issued a check in the amount of $5,470 made payable to Dan Dailey, from his account # 3LR-121303-1 at Your Discount Broker, Inc. Mr. Dailey deposited the check into the BofA account on Monday, October 17, 2005.

K. The $26,522.75, $1,894.32, and $5,470 described above were property of the estate when the debtor commenced this case.

L. In the debtor’s schedules of assets filed on December 2, 2005, the debtor listed the value of the BofA account as of the petition date as $33,336.44. This matches the amount shown on the bank statement for the BofA account as the balance in the account at the close of business on October 13, 2005.

M. The debtor claimed the entire BofA account as exempt on his Schedule C, filed December 2, 2005, citing Article 10, Section 4(a) of the Florida Constitution.

N. The trustee timely objected to the claimed exemption for the account, and the exemption was disallowed.

O. The debtor did not list his Your Discount Broker, Inc. account or the check from that account that he was preparing to deposit as an asset in his schedules.

P. The debtor did not list the Peoples account or the check from that account that he was preparing to deposit into the BofA account as an asset in his schedules. However, the $24,000 of the $25,894.32 in the People account on October 14, was included in the $33,336.44 which the debtor scheduled as the value of his BofA account.

Q. On October 21, 2005, Mr. Dailey drew another $12,000 from the line of credit on his Kentucky property, and People’s Bank deposited that sum into the Peoples account. On October 24, People’s Bank debited the account $12,000, for a check which Mr. Dailey had written to himself and deposited into the BofA account. Consequently, Mr. Dailey, post-petition, effected a transfer of $12,000 of the equity in his Kentucky property into his Bank of America account in Florida. That $12,000 was property of the estate.

R. At the time that the debtor signed and filed his Schedule D on December 2, 2005, he included the additional borrowings on the secured line of credit in the amount of the secured claim, even though the $12,000 described above was not yet owing to People’s Bank on the petition date.

S. On October 19, 2005 the debtor deposited into the BofA account a United States Treasury check dated October 13, 2005 in the amount of $3,053.69, from a tax refund. These funds were also property of the estate on the petition date.

T. The debtor did not list his entitlement to a tax refund as an asset in his schedules.

U. In February 2006, the debtor received a Rule 2004 examination notice which included a document request.

V. The Rule 2004 examination was held on February 23, 2006.

W. At no time prior to the Rule 2004 examination did the debtor produce any documents relating to the Peoples Bank account or the Your Discount Broker, Inc. account or the tax refund or disclose the *390 existence of these assets to the court or to the trustee.

X. Prior to Bank of America’s and Peoples Bank’s production of the debit and credit items from October 2005, the debtor consistently argued to the court that the $24,000 had not been deposited into the BofA account until October 14, 2005 and was not property of his estate. At a hearing on April 24, 2006, the debtor’s then counsel, Michael Sheinvold, presented a document that the debtor gave to Mr. Sheinvold. That document shows that the debtor made the $24,000 deposit on October 14, which is not true.

Y. On May 16, 2006, the court entered its Order Granting in Part Trustee’s Motion for Turnover of Debtor’s Non-Exempt Property in the main case, directing the debtor to turn over $8,252.10 within ten days. The debtor didn’t turn over the monies until after this suit was filed on June 1, 2006 pointing out the debtor’s refusal to turn over the monies.

Z. On May 26, 2006, the court entered its Order Granting Trustee’s Supplemental Motion for Turnover of Debtor’s Non-Exempt Property and Trustee’s Motion to Compel Production of Documents, directing that the debtor produce all requested documents, including:

all documents relating to the mortgages and mortgage re-financings for the Boca Raton home purchase;
all documents relating to the real properties located in Kentucky, including HUD-1 closing statements, mortgages and mortgage re-financings; and
all bank records for the bank account(s) in Kentucky within ten days. The debt- or never produced any of these records, before or after his failure to produce was highlighted in the adversary complaint.

AA. At the Rule 2004 examination the debtor testified that his only relationship with Metragen Pharmaceuticals, Inc. was that he provided consulting services from time to time.

BB. The debtor wrote Metragen Pharmaceuticals, Inc.

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Bluebook (online)
405 B.R. 386, 21 Fla. L. Weekly Fed. B 740, 2009 Bankr. LEXIS 1294, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kapila-v-dailey-in-re-dailey-flsb-2009.