Sikes v. Norton (In re Norton)

185 B.R. 945, 1995 Bankr. LEXIS 1222
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedMarch 2, 1995
DocketBankruptcy No. A92-62567-REB; Adv. No. 92-6501
StatusPublished
Cited by3 cases

This text of 185 B.R. 945 (Sikes v. Norton (In re Norton)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sikes v. Norton (In re Norton), 185 B.R. 945, 1995 Bankr. LEXIS 1222 (Ga. 1995).

Opinion

[947]*947 ORDER DENYING CROSS MOTIONS FOR SUMMARY JUDGMENT

ROBERT E. BRIZENDINE, Bankruptcy Judge.

This adversary proceeding is before the Court on cross motions for entry of summary judgment. In his complaint, Plaintiff contends that Defendant-Debtor's discharge should be denied pursuant to 11 U.S.C. § 727(a)(2)(A) and (B). This is a core proceeding under 28 U.S.C. § 157(b)(2)(J). Upon consideration of the motions and the record, the Court concludes that both motions should be denied.

Plaintiff’s complaint objecting to Debtor’s discharge arises in connection with a state court judgment obtained against Debtor on July 9, 1991, on a joint and several basis along with Inter-State Computer Corporation and another individual with regard to unpaid legal fees. Prior to said judgment, Debtor had transferred his interest in three certain parcels of real property to his wife without consideration as evidenced by warranty deeds recorded by the Clerk of Superi- or Court, Cherokee County, Georgia and the Clerk of Superior Court, Pickens County, Georgia, on December 14, 1990 and December 18, 1990, respectively. Plaintiff alleges that these transfers were made in violation of O.C.G.A. § 18-2-22(1), (2), and (3) (Michie 1991) and were fraudulent and void and constitute a continuing concealment of assets. Further, he asserts that the transfers in question have already been determined to be null and void based on this Court’s earlier findings and conclusions in another adversary proceeding in this bankruptcy case and that they were made with intent to hinder, delay, or defraud creditors. See Judgment of March 7, 1994, Adv.Proc. No. 92-6843, Chapter 7 Case No. A92-62567-REB; see also Partial Transcript of February 28, 1994 (Ruling of the Court).

It is Plaintiffs position that these prior findings are binding upon this Court in this adversary proceeding and Debtor is collaterally estopped from relitigating same. In addition, he argues, Debtor concealed the beneficial interest he retained in that certain parcel of property on which he resides into the one year statutory period set forth in Section 727(a)(2)(A). Thus, he maintains, Debtor’s discharge may still be denied notwithstanding the fact that the transfer occurred fourteen months before the filing of this bankruptcy case on February 11, 1992. Plaintiff contends that Debtor’s continued living on one of the transferred parcels and that Debt- or’s claim of an exemption in this property in his bankruptcy schedules are both evidence of such concealed beneficial interest.

Debtor counters that Plaintiff, subsequent to the filing of the bankruptcy petition, has no standing as an individual creditor, as opposed to the trustee, to bring a claim under state fraudulent conveyance law to challenge transfers of property made fourteen months before bankruptcy. See Section 544(a).1 He argues that Plaintiff is estopped from claiming an interest in property allegedly retained by Debtor after the transfers. Only the Trustee, he maintains, is able to assert such a claim as it belongs to the estate. Further, any claim predicated upon O.C.G.A. § 18-2-22(1) and (3) has already been decided by the Court in Adversary Proceeding No. 92-6843 in favor of the Debtor when it was determined that, among other things, the Trustee failed to prove insolvency. In addition, the obligation allegedly owed to Plaintiff was not among those found to be in existence on the date of the subject transfers and, therefore, Debtor contends that relief on these grounds cannot be relitigated by Plaintiff.

Debtor also asserts that the present action is in violation of Fed.R.Bankr.P. 9011 because it is obvious that Section 727(a) does not apply to transfers occurring more than one year before bankruptcy. In defense of the alleged concealment as same relates to Debtor’s claim of an exemption in the transferred property, he contends that the exemp[948]*948tion was claimed in error. Moreover, he states that the transfers were filed of public record and that he has never denied that he lived on one of the properties he transferred to his wife.2 Plaintiffs reliance upon matters of public record and those freely admitted by Debtor, he insists, cannot serve as proof of concealment.

Additionally, Debtor disputes the underlying basis of Plaintiffs claim for unpaid attorney’s fees, for which Debtor was found jointly and severally liable, on grounds that the legal services provided were performed for the benefit of and restricted to the corporate co-defendant, which was the entity that had agreed to compensate Plaintiff. Therefore, Debtor alleges that the judgment entered against him in state court for these fees was improper.3 Finally, he demands attorney’s fees under Section 523(d), claiming that this is an abusive and frivolous action.4

In the present action, Plaintiff is not seeking a judgment against Debtor based on this Court’s determination of liability. Consequently, there is no danger of duplicate judgments as asserted by Debtor. Instead, based on the prayers in his complaint, Plaintiff is only objecting to Debtor’s discharge under 11 U.S.C. § 727(a). Because such a challenge may be initiated by a creditor pursuant to Section 727(c)(1), it is necessary to establish whether Plaintiff does in fact hold a claim against Debtor and his estate.

As noted above, Debtor disputes the basis of Plaintiffs claim against him because Plaintiff allegedly only represented the corporate co-defendant in the original suit. Yet, he admits that the plaintiffs in the original state court action were not only seeking judgment against the corporation, but also against him as an employee. Debtor states that Plaintiff herein successfully argued that Debtor was not individually liable because he was merely an employee. Thereafter, Plaintiff brought suit against Debtor and the other defendants for unpaid legal fees in the State Court of Fulton County. Debtor contends that there was no contract to pay the fees, and further, that he was served with process in Fulton County, at his place of work, although he is a resident of Cherokee County.5

Although Debtor raised, among others, the defense of lack of jurisdiction and venue, Plaintiff obtained an unopposed summary judgment in his favor. He then initiated collection procedures in the Superior Court of Cherokee County as well as State Court of Fulton County; whereupon, Debtor sought bankruptcy protection. Apparently, this summary judgment was never appealed.

Debtor argues that a judgment which is void for lack of jurisdiction of the person may be contested at any time. See O.C.G.A. § 9 — 11—60(f). Preclusive effect, however, must be accorded to state court judgments as would be appropriate under the law of that state. See Harbuck v. Marsh Block & Co., 896 F.2d 1327

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Bluebook (online)
185 B.R. 945, 1995 Bankr. LEXIS 1222, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sikes-v-norton-in-re-norton-ganb-1995.