Lowther v. Insley (In re Insley)

313 B.R. 667, 52 Collier Bankr. Cas. 2d 1120, 2004 Bankr. LEXIS 1270
CourtUnited States Bankruptcy Court, W.D. Pennsylvania
DecidedAugust 24, 2004
DocketBankruptcy No. 03-34234-MBM; Adversary No. 04-2690-MBM
StatusPublished
Cited by1 cases

This text of 313 B.R. 667 (Lowther v. Insley (In re Insley)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lowther v. Insley (In re Insley), 313 B.R. 667, 52 Collier Bankr. Cas. 2d 1120, 2004 Bankr. LEXIS 1270 (Pa. 2004).

Opinion

MEMORANDUM AND ORDER OF COURT

M. BRUCE MCCULLOUGH, Bankruptcy Judge.

AND NOW, this 24th day of August, 2004, upon consideration of (a) the adversary complaint filed by Robert J. Lowther, Jr. (hereafter “Lowther”), wherein Lowther (i) objects to the Chapter 7 discharge of Donald Insley, the instant Debtor (hereafter “the Debtor”), pursuant to 11 U.S.C. § 727(a)(2) — (5) & (7) (Count 1), (ii) seeks to have his pre-petition claims against the Debtor declared nondischargeable pursuant to 11 U.S.C. § 523(a)(4) (Count 2), and (iii) objects to the Debtor’s claim for an exemption of the Debtor’s personal residence (Count 3), (b) the Debtor’s motion to dismiss Lowther’s complaint in its entirety pursuant to Fed.R.Bankr.P. 7012(b) and Fed.R.Civ.P. 12(b)(6), which dismissal motion the Debtor bases upon, inter alia, Lowther’s alleged lack of standing to pursue the three causes of action that are set forth in his complaint, and (c) all of the exhibits attached to the aforesaid complaint and dismissal motion, as well as those that were handed up as exhibits at the hearing regarding such dismissal motion;

and after notice and a hearing on the Debtor’s motion to dismiss held on August 16, 2004,

it is hereby ORDERED, ADJUDGED, AND DECREED that:

1. The Debtor’s motion to dismiss shall henceforth be treated as one for SUMMARY JUDGMENT and disposed of as provided in Fed.R.Civ.P. 56 (made applicable herein via Fed. R.Bankr.P. 7056) because (a) such dismissal motion was brought under Fed.R.Civ.P. 12(b)(6), (b) matters outside of Lowther’s complaint were presented to, and were accepted and considered by, the Court in ruling upon such dismissal motion, namely the numerous aforementioned exhibits, and (c) such a motion to dismiss, when coupled with the introduction of evidence outside of a pleading, must be dealt with as if it is one for summary judgment, see Fed. R.Civ.P. 12(b), 28 U.S.C.A. (West 1992) (last sentence thereof). For the sake of convenience, the Court shall nevertheless continue throughout the instant memorandum and order to refer to the Debtor’s dismissal motion as such notwithstanding that it must be treated as one for summary judgment.
2. Lowther possesses standing to pursue each of the three causes of action presented in his complaint, that is his objection to the Debtor’s discharge, his nondischargeability cause of action under § 523(a)(4), and his objection to an exemption of the Debtor. Accordingly, the Debtor’s motion to dismiss cannot be granted with respect to any of the three causes of action brought by Lowther on the ground that Lowther lacks such standing. The Debtor contends that Lowther lacks such standing on the ground that, as of the bar date and the dates upon which Lowther sought to extend, and was granted an extension of, such bar date for bringing the three causes of action in question (hereafter col[670]*670lectively referred to as “the Bar Date”), which three dates are respectively March 8, 2004,1 February 5, 2004, and March 16, 2004, he (a) did not then possess an allowed claim against the Debtor, and (b) consequently was not then a creditor of the Debtor. In arguing as the Debtor does, the Debtor relies upon cases that stand for the proposition that a creditor cannot object to discharge under § 727 or object to an exemption of a debtor if such creditor’s claim has been disallowed. The Court rejects the Debtor’s position and rules that Lowther possesses relevant standing because the Court finds, in turn, that Lowther possessed, as of, the Bar Date, several contingent claims for contribution against the Debtor, which contingent contribution claims (a) pertinently had not been disallowed as of the Bar Date, and (b) pertinently also cannot be disallowed in the future, indeed are henceforth allowed and, pursuant to 11 U.S.C. § 502(e)(2), are now allowed as of — i.e., relate back to— the date upon which the instant bankruptcy case was commenced, given that such contribution claims have, since the Bar Date, become fixed by virtue of Lowther’s payment of partnership debts for which both he and the Debtor were personally liable. In ruling as the Court does, the Court pertinently distinguishes between the instant matter and the cases upon which the Debtor relies, that is those that ascertained a lack of standing on behalf of the plaintiffs that brought actions against the debtors therein, by pointing out that, in contrast to the plaintiffs in such latter cases, Lowther possessed a claim against the Debtor that had not been, and now will never be, disallowed as of the Bar Date. As a corollary, the Court finds to be irrelevant to the issue of standing the fact that, as of the Bar Date and absent the relation back mechanism afforded by § 502(e)(2), Lowther’s contingent contribution claims had not yet become fixed and consequently allowed; instead, what is relevant is that such claims had never been disallowed prior to the Bar Date. Finally, because the Debtor concedes that Lowther was personally liable on, and thus possessed a contingent contribution claim against the Debtor for, certain of the partnership debts that Lowther ultimately paid subsequent to the Bar Date, namely those partnership debts that Lowther satisfied on August 6, 2004, and August 12, 2004, it matters not whether Lowther was also personally liable on, and thus also possessed a contingent contribution claim against the Debtor for, that partnership debt that Lowther satisfied on March 16, 2004. However, and as an aside, the Court concludes that Lowther was personally liable on that partnership debt that Lowther satisfied on March 16, 2004 (hereafter “the Satisfied Debt”), which conclusion the Court arrives at by virtue of the fact that Lowther was a partner in the partnership that incurred the Satisfied Debt (hereafter “Insmer Real Estate”) when [671]*671the Satisfied Debt was incurred by Insmer Real Estate — the latter finding is compelled because Lowther became a partner in In-smer Real Estate on February 4, 1998, see Lowther Hearing Ex. 7, which date precedes the guarantee by Insmer Real Estate on May 18, 1999, of, inter alia, the Satisfied Debt, see Lowther Hearing Ex. 8 & Insley Hearing Ex. 8 (General Guaranty and Suretyship Agreement, dat. May 18, 1999, at ¶ II— i.e., guarantee of “all present and future obligations ... of Borrower to Bank”).
8.

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Bluebook (online)
313 B.R. 667, 52 Collier Bankr. Cas. 2d 1120, 2004 Bankr. LEXIS 1270, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lowther-v-insley-in-re-insley-pawb-2004.