Saviano v. Tylee (In re Tylee)

512 B.R. 409
CourtUnited States Bankruptcy Court, E.D. New York
DecidedApril 24, 2014
DocketCase No. 11-74670-reg; Adv. Proc. No. 11-09488-reg
StatusPublished
Cited by8 cases

This text of 512 B.R. 409 (Saviano v. Tylee (In re Tylee)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Saviano v. Tylee (In re Tylee), 512 B.R. 409 (N.Y. 2014).

Opinion

Chapter 7

DECISION AFTER TRIAL

Robert E. Grossman, United States Bankruptcy Judge

This matter is before the Court pursuant to an adversary proceeding commenced by Glen and Karen Saviano (“Plaintiffs”) against James Tylee and Carrie Tylee (“Defendants” or “Debtors”). The Plaintiffs seek to revoke the Debtors’ Chapter 7 discharge and seek a turnover of property by the Debtors to the Chapter 7 Trustee. See 11 U.S.C. §§ 105, 542, and 727. The Plaintiffs assert that the Debtors’ discharge was obtained through fraud in their bankruptcy petition including failure to list the Plaintiffs as creditors, misrepresenting the Debtors’ true income, and failure to disclose assets. The Defendants argue that they did not fail to list assets on their petition, as the omitted assets are worthless and the Debtors’ income changed before filing bankruptcy. Additionally, the Defendants stated that the failure to list the Plaintiffs as creditors in the original petition was attributable the Debtors’ attorney.

The Court finds that the Plaintiffs established all elements required to revoke the Defendants’ discharge pursuant to § 727(d)(1). The Plaintiffs showed, by a preponderance of the evidence, that the Defendants obtained their discharge by submitting false and misleading documents to the Court regarding their income and assets. Additionally, the Plaintiffs established that they could not have brought a timely § 727 motion prior to the Debtors receiving their discharge. The Plaintiffs first learned of the Debtors’ bankruptcy case one day prior to the Debtors receiving their discharge, when the Plaintiffs were added as creditors of the Debtors’ estate. Regardless of why the Debtors omitted the Plaintiffs as creditors in the original petition, this omission deprived the Plaintiffs of the opportunity to commence a timely investigation into the Debtors’ conduct. Section 727(d)(1) remedies this by giving creditors such as the Plaintiffs additional time to commence an action to revoke the Debtors’ discharge. The Defendants’ assertion that these representations were not false is implausible, and is not a credible defense against the Plaintiffs prima facie claims. Therefore, the Defendants’ discharge shall be revoked pursuant to § 727(d)(1).

The Plaintiffs also seek entry of an order directing the Defendants to turnover certain omitted assets to the Chapter 7 Trustee (“Trustee”) pursuant to 11 U.S.C. § 542(a). This cause of action is denied due to the Plaintiffs’ lack of standing to bring such action. This right is reserved for the Trustee.

PROCEDURAL HISTORY

On June 29, 2011, the Debtors filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code and Marc A. Pergament was appointed as the Trustee. On August 12, 2011, the Chapter 7 Trustee determined that there would be no distribution to creditors, as there were no nonexempt assets in the estate. On November 1, 2011, the Plaintiffs were added as creditors of the Debtors, and one day later, on November 2, 2011, the Debtors received their discharge. On November [413]*41310, 2011, the Plaintiffs commenced this adversary proceeding to revoke the Debtors’ discharge. The Defendants filed their answer on February 6, 2012, claiming that many of the allegations in the complaint were false. The Debtors then filed an amended complaint on April 10, 2012 stating causes of action including: (1) revocation of the Debtors’ discharge pursuant to § 727(d)(1), (2) revocation of the Debtors’ discharge pursuant to § 727(d)(2) and (3) directing the Debtors to deliver to the Trustee or account for their business property omitted from the petition or its cash value pursuant to § 542(a). On August 80, 2012, the Defendants filed an answer and counterclaim to the amended complaint, asserting that the Plaintiffs violated the automatic stay by pursuing an eviction proceeding against the Debtors in state court after the bankruptcy filing and asking for three times their court expenses, as well as criminal sanctions against the Plaintiffs.

On May 21, 2012, the Trustee revoked his no-asset statement, on the basis that he discovered assets of the estate. However, on March 12, 2013, the Trustee once again filed a no-asset report and concluded that there was no property available for distribution.

On June 10, 2013, the Plaintiffs and the Defendants filed a Joint Pretrial Memorandum. The Court conducted a trial on June 13, 2013. The Defendant, James Ty-lee, and both of the Plaintiffs testified at trial. Pursuant to the Joint Pretrial Memorandum, the Plaintiffs’ Exhibits 1-13 were admitted into evidence without objection. The Plaintiffs’ Exhibit 14, the Debtors’ amended bankruptcy schedule, was admitted during trial without objection. Trial Transcript (“Trial Tr.”), p. 110. Thereafter, the adversary proceeding was marked submitted.

FACTS

As of December 2010, the Defendant, James Tylee, was employed by Bank of America and earned just under $110,000 per year. Trial Tr., p. 7-8; Plaintiffs’ Ex. 1. However, this employment ended on December 10, 2010, after which the Defendant claims he only received a severance of medical insurance and unemployment of $1,740 per month. Trial Tr., p. 6-7, 25. The Plaintiffs were the Defendants’ landlords during this time period, and continuing through September of 2011. Trial Tr., p. 27. The rental agreement entered into between the parties required the Debtors to pay $2,300 per month. Trial Tr., p. 28.

The Defendants stopped paying rent as of April 2011, and the Plaintiffs thereafter commenced an eviction proceeding in New York State Court in the Sixth District, Suffolk County District Court on April 25, 2011 (“State Court Proceeding”). Trial Tr., p. 27; Plaintiffs’ Ex. 11. The Defendants’ answer to the complaint in the State Court Proceeding, signed and dated on April 26, 2011, stated that the Defendant, James Tylee, earned $403.87 per day as income. Trial Tr., p. 12; Plaintiffs’ Ex. 12. A Judgment of Possession and a warrant of eviction were entered in favor of the Plaintiffs. Trial Tr., p. 39. The Debtor filed an Order to Show Cause to vacate this judgment on June 28, 2011, one day before the Debtors filed their bankruptcy petition on June 29, 2011 (“Petition Date”). Trial Tr., p. 41-44. The Judge in the State Court Proceeding later vacated these judgments after the Debtor appeared on July 6, 2011 and informed the court of the bankruptcy case. Trial Tr., p. 46-47.

In relation to the landlord-tenant relationship between the parties, the Defendant called the Plaintiffs on September 6, 2011. Trial Tr., p. 116. He told them he was ready to move and that if the Plaintiffs paid him $7,000, he would be out in [414]*414two weeks, but if not, the Defendants would be in the house “until it snowed.” Id. The Defendant admitted on the phone that this was extortion. Trial Tr., p. 117. Both Plaintiffs were on the phone at the time and both heard the Defendant make these statements. Trial Tr., p. 124. After this, at some point in September, the Defendants moved to Georgia but did not tell the Plaintiffs they moved, nor did they give back the keys to the property. Trial Tr., p. 120. The Plaintiffs were unable to obtain the property until December 2011 after a legal eviction process.

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Cite This Page — Counsel Stack

Bluebook (online)
512 B.R. 409, Counsel Stack Legal Research, https://law.counselstack.com/opinion/saviano-v-tylee-in-re-tylee-nyeb-2014.