McDermott v. Larson (In re Larson)

553 B.R. 646
CourtUnited States Bankruptcy Court, W.D. Michigan
DecidedJune 20, 2016
DocketCase No. BT 15-01394; Adversary Proceeding No. 15-80194
StatusPublished
Cited by3 cases

This text of 553 B.R. 646 (McDermott v. Larson (In re Larson)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McDermott v. Larson (In re Larson), 553 B.R. 646 (Mich. 2016).

Opinion

OPINION GRANTING UNITED STATES TRUSTEE’S MOTION FOR PARTIAL SUMMARY JUDGMENT

James W. Boyd, United States Bankruptcy Judge

I. INTRODUCTION and JURISDICTION.

This matter is before the court on the motion for partial summary judgment filed by the United States Trustee (“UST”) in this adversary proceeding. (AP Dkt. No. 22.) The UST’s complaint seeks revocation of the Debtor’s discharge under § 727(d)(1) of the Bankruptcy Code1 due to the Debtor’s alleged concealment of a pending sale of her residence, for a price that was much higher than the value of the property disclosed in her bankruptcy schedules. The motion for partial summary judgment raises one discrete issue: whether the chapter 7 trustee’s knowledge of the Debtor’s alleged fraud in connection with the potential sale should be imputed to the UST for purposes of § 727(d)(1).

The court has jurisdiction over this bankruptcy case. 28 U.S.C. § 1334. The bankruptcy case and all related proceedings have been referred to this court for decision. 28 U.S.C. § 157(a); L. Civ. R. 83.2(a) (W.D,Mich.). This revocation of discharge action is a statutory core proceeding. 28 U.S.C. § 157(b)(2)(J). Both parties have consented to this court entering a final order in this adversary proceed[648]*648ing. (UST’s Complaint, AP Dkt. No. 1 at ¶3; Debtor’s Answer, AP Dkt. No. 5 at ¶ 3.)

II. FACTS.

The facts that are material to the UST’s motion for partial summary judgment are not disputed. On March 12, 2015, the Debtor filed a voluntary chapter 7 petition. (Dkt. No. 1.) The Debtor also filed her bankruptcy schedules and statement of financial affairs on March 12, 2015. (Id.)

Kelly M. Hagan (hereafter “Trustee”) was appointed as the chapter 7 trustee in the Debtor’s bankruptcy case. The Trustee has served on the panel of chapter 7 trustees in the Western District of Michigan since 2004. (Affidavit of Kelly M. Hagan, attached as Exh. 1 to UST’s Motion for Partial Summary Judgment, AP Dkt. No. 22, at ¶ 2.) The Trustee is not an employee of the UST Program. (Hagan Affidavit, at ¶ 3.) Instead, the UST asserts in its Motion that the Trustee is an “independent contractor” with the U.S. Department of Justice. The Trustee agrees.2 (Hagan Affidavit, at ¶4.) The Debtor denies this characterization as an “unsupported legal conclusion.” (Debtor’s Response to UST’s Motion for Partial Summary Judgment, AP Dkt. No. 25, at ¶ 13.)

A § 341 meeting was held in the Debt- or’s case on May 5, 2015. (Dkt. No. 7.) The Debtor appeared and testified under oath at the meeting.

On July 6, 2015, the Trustee received an email from Kelly S. Miehlke, an escrow agent for Capital Title Insurance Agency, regarding an upcoming sale of the Debt- or’s home. (Hagan Affidavit, at ¶ 7.) This email correspondence was the first time the Trustee learned of the pending sale of the Debtor’s residence. (Id. at ¶ 8.) On July 7, 2015, the Trustee contacted Robert Weisbrodt, a realtor, about the pending sale. (Id. at ¶ 9.) Mr. Weisbrodt informed the Trustee of the details of the sale, including the list price, the date of the listing agreement, and the proposed sale price. (Id. at ¶ 10.)

On July 13, 2015, the Debtor received her chapter 7 discharge. (Dkt. No. 11.) On July 28, 2015, the Trustee informed Michelle M. Wilson, trial attorney for the Office of the United States Trustee, of the pending sale of the Debtor’s home via email. (Id. at ¶ 11.) Both the Trustee and Ms. Wilson have represented that this email was the first time the UST was advised of the pending sale or of the other facts that lead to the UST’s complaint to revoke the Debtor’s discharge. (Hagan Affidavit, at ¶ 12; Affidavit of Michelle M. Wilson, attached as Exh. 2 to UST’s Motion for Partial Summary Judgment, AP Dkt. No. 22, at ¶ 4 & 5.) In her response to the UST’s motion, the Debtor admits that the July 28, 2015, email was the first time the UST learned of the proposed sale of the Debtor’s residence, and that prior to that time, the UST had not learned of any of the facts giving rise to the adversary complaint in this proceeding from any other source. (Debtor’s Response to UST’s Motion for Partial Summary Judgment, AP Dkt. No. 25, at ¶ 15 & 16.)

On July 28, 2015, the UST filed a complaint to revoke the Debtor’s discharge. The UST’s motion for partial summary judgment was filed on February 10, 2016. A hearing was held on March 17, 2016, in Traverse City, Michigan. At the conclusion of the hearing the court took the motion under advisement.

[649]*649III. DISCUSSION.

A. Summary Judgment Standard.

Bankruptcy Rule 7056, which incorporates Federal Rule of Civil Procedure 56, governs motions for summary judgment or partial summary judgment in bankruptcy adversary proceedings. The relevant portion of the rule states that:

A party may move for summary judgment, identifying each claim or defense — or the part of each claim or defense — on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.

Fed. R. Bankr.P. 7056 (incorporating Fed. R.Civ.P. 56(a)). When considering a motion for summary judgment, the court is not to “weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

The moving party has the initial burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Upon making this showing, the burden shifts to the non-moving party to “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citation omitted). All facts and related inferences are to be viewed in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513. However, the non-moving party must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356; see also Fed.R.Civ.P. 56

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Bluebook (online)
553 B.R. 646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcdermott-v-larson-in-re-larson-miwb-2016.