Klein v. Weidner (In re Weidner)

476 B.R. 873
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedSeptember 10, 2012
DocketBankruptcy No. 10-31034 ELF; Adversary No. 11-0294 ELF
StatusPublished
Cited by7 cases

This text of 476 B.R. 873 (Klein v. Weidner (In re Weidner)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Klein v. Weidner (In re Weidner), 476 B.R. 873 (Pa. 2012).

Opinion

OPINION

ERIC L. FRANK, Bankruptcy Judge.

I. INTRODUCTION

Plaintiff Deborah Klein (“Klein”) is the former spouse and judgment creditor of Defendant-Debtor Douglas Weidner (“the Debtor or Weidner”). Klein and the Debt- or were divorced in California in 1999. Pursuant to the divorce decree, Klein was awarded spousal and child support. On June 2, 2008, after protracted litigation between the parties, the California state court entered judgment in Klein’s favor in the amount of $548,797.07 for unpaid spousal and child support (“the California Judgment”).

In August 2008, Klein commenced a lawsuit (“the District Court Action”) against the Debtor in the United States District Court for the Eastern District of Pennsylvania (“the District Court”). In the District Court Action, Klein alleged that the Debtor fraudulently transferred certain assets to himself and his current wife as tenants by the entireties in an effort to evade payment of the California Judgment. In three (3) orders and opinions issued in 2010, the District Court found in Klein’s favor, ordered that title to the transferred property be restored to the Debtor solely and awarded Klein punitive damages in an amount equal to the California Judgment.

In this adversary proceeding, Klein seeks a determination that the prior state and federal court judgments are nondis-chargeable under 11 U.S.C. § 523(a) and that the Debtor is not entitled to a general bankruptcy discharge pursuant to 11 U.S.C. § 727(a). In her amended complaint, Klein asserted twelve (12) claims, including four (4) claims under § 523(a) and seven (7) claims under § 727(a).

Relying on the findings of fact and conclusions of law entered in the District Court Action and the doctrine of collateral estoppel,1 Klein has moved for summary judgment on four (4) of her claims under § 727(a)(2) and (a)(4).

The summary judgment motion focuses largely on three (3) pre-petition transfers made by the Debtor. Two (2) of the three (3) transfers were transfers of the Debt- or’s interest in his residential real property; the other was a transfer of his ownership interest in a closely-held business. The residential real property transfers involved: (1) the transfer of ownership from the Debtor to himself and his current wife and (2) the grant of a mortgage to Robert Benedix (“the Benedix Mortgage”).

As explained more fully below, I conclude that there are no material issues of fact in dispute and that Klein is entitled to [877]*877judgment as a matter of law under 11 U.S.C. § 727(a)(2)(A) based upon the Be-nedix Mortgage transfer. I reach this result because:

(1) the Debtor is precluded from relit-igating the issues previously decided by the District Court based upon the doctrine of collateral estoppel; and
(2) the District Court’s findings establish that the Debtor granted the Be-nedix Mortgage within one (1) year of the filing of his bankruptcy petition with an intent to hinder, delay or defraud a creditor.

Consequently, I will enter judgment in Klein’s favor and deny the Debtor’s chapter 7 discharge.2

II. PROCEDURAL HISTORY

On December 23, 2010, the Debtor filed a voluntary chapter 11 bankruptcy case. The case was converted to a chapter 7 on June 6, 2011. 0See Bky. No. 11-31034, Doc. # 69).

On April 5, 2011, Klein instituted this proceeding by filing a complaint asserting various claims under 11 U.S.C. § 523(a). (See Adv. No. 11-294, Doc. # 1). After the Debtor answered and filed a counterclaim against Klein, the parties stipulated to allow Klein leave to amend her complaint.

On July 1, 2011, Klein filed a twelve count amended complaint (“the Amended Complaint”). (Adv. No. 11-294, Doc. # 13). In addition to her allegations under § 523(a), Klein added claims objecting to the Debtor’s general bankruptcy discharge under several subsections of § 727(a). The Debtor filed an answer to the Amended Complaint on August 10, 2011 and asserted two (2) counterclaims against Klein. (See Adv. No. 11-294, Doc. # 19).

After a pretrial conference on January 25, 2012, the court entered an order granting Klein leave to file a dispositive motion prior to the commencement of discovery.3 Klein filed her Motion for Summary Judgment on March 30, 2012 (“the Motion”). (Adv. No. 11-294, Doc. # 34). The Debtor filed a Response to the Motion on April 27, 2012. (Adv. No. 11-294, Doc. # 41).

III. FACTUAL BACKGROUND

A. The California State Court Litigation

Klein and the Debtor were divorced in California in 1999. As part of the divorce decree, the Superior Court of Orange County, California ordered the Debtor to pay child and spousal support to Klein. Klein subsequently returned to the California state court to enforce the support obligations. On June 2, 2008, the state court entered the $548,797.07 California Judgment. Klein transferred the California Judgment to the Court of Common Pleas, Chester County, Pennsylvania on August 25, 2008.

[878]*878B. The District Court Litigation

On August 11, 2008, Klein commenced the District Court Action against the Debt- or to avoid and recover certain alleged fraudulent transfers of the Debtor’s property under the Pennsylvania Uniform Fraudulent Transfer Act, 12 Pa.C.S. §§ 5101 et seq., (“PUFTA”). Specifically, Klein sought to avoid the transfer of the Debtor’s interest in the real property located at 1123 St. Matthew’s Road, Chester Springs, Pennsylvania (“the Residence”), and the Debtor’s interest in DMW Marine, LLC (“DMW Marine”)4 that the Debtor transferred to himself and his current wife, Kathleen Weidner,5 as tenants by the entireties (the transfers referred to collectively as “the 2 Transfers”).

1. the District Court’s decisions

As stated earlier, the District Court Action resulted in three (3) separate written decisions.

The first decision granted, in part, Klein’s motion for summary judgment. See Klein v. Weidner, 2010 WL 27910 (E.D.Pa. Jan. 6, 2010) (“Weidner I”). The District Court found that the Debtor’s January 17, 2006 transfer of his interest in the Residence to himself and his wife as tenants by the entireties was fraudulent under 12 Pa.C.S. § 5104(a)(1).6 The District Court reasoned that six (6) of the eleven (11) factors set forth in PUFTA, see 12 Pa.C.S. § 5104(b)(1), supported the finding of actual intent to hinder, delay or defraud Klein.7 The District Court alternatively held that the transfer of the Residence satisfied the constructive fraud provision of PUFTA, see 12 Pa.C.S. § 5104(a)(2), and the PUFTA provision applying to present creditors, see 12 Pa.C.S. § 5105.

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Cite This Page — Counsel Stack

Bluebook (online)
476 B.R. 873, Counsel Stack Legal Research, https://law.counselstack.com/opinion/klein-v-weidner-in-re-weidner-paeb-2012.