Teitelman v. Dale Petroleum Corp. (In re A & L Oil Co.)

200 B.R. 21, 1996 Bankr. LEXIS 1003, 29 Bankr. Ct. Dec. (CRR) 707
CourtUnited States Bankruptcy Court, D. New Jersey
DecidedAugust 15, 1996
DocketBankruptcy No. 95-37612; Adv. No. 96-3087
StatusPublished
Cited by5 cases

This text of 200 B.R. 21 (Teitelman v. Dale Petroleum Corp. (In re A & L Oil Co.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Teitelman v. Dale Petroleum Corp. (In re A & L Oil Co.), 200 B.R. 21, 1996 Bankr. LEXIS 1003, 29 Bankr. Ct. Dec. (CRR) 707 (N.J. 1996).

Opinion

MEMORANDUM OPINION

STEPHEN A. STRIPP, Bankruptcy Judge.

This is the court’s decision on a motion by plaintiff Steven Teitelman (hereinafter “trustee”) to compel defendant Alfred Dale, Jr. (hereinafter “Mr. Dale”) to continue with his testimony at a deposition in this adversary proceeding. After the initial day of testimony, Mr. Dale refused to answer most additional questions on the grounds of his Fifth Amendment privilege against self-incrimination. The trustee argues on this mo[23]*23tion that Dale waived that privilege by his prior testimony, and seeks to compel the continuation of testimony. This court has jurisdiction under 28 U.S.C. §§ 1334(b), 157(a) and 151. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A); (E) and (O). The following shall constitute the court’s findings of fact and conclusions of law.

FINDINGS OF FACT

A & L Oil Co., Inc. (hereinafter “A & L” or “the debtor”) filed a petition for relief under chapter 11 of title 11, United States Code (hereinafter “Bankruptcy Code” or “Code”) on October 26, 1995. Shortly thereafter, the court directed the appointment of a chapter 11 trustee and Steven Teitelman was appointed. On March 14, 1996, the trustee filed an adversary proceeding against Alfred Dale, Jr., Veronica Dale and Dale Petroleum Corp. (collectively “the Dales”) alleging that they converted property of the debtor. The debtor was a wholesale distributor of gasoline to service stations. Dale Petroleum Corp. delivered gasoline for the debtor. The verified complaint alleges that the Dales converted payments for 47 loads of gasoline, totaling approximately $353,000.00, by failing to turn the payments over to the debtor. In addition to recovery of that, the complaint seeks to enjoin transfer of the Dales’ assets.

In connection with the adversary proceeding, counsel for the trustee commenced an examination of Mr. Dale by deposition under Fed.R.Bankr.P. 2004 on March 13, 1996. Mr. Dale was represented by Guy R. Wilson, Esq. At the examination, Mr. Dale produced many corporate and personal documents, including bank statements, canceled checks, various certificates of title, financial statements of Dale Petroleum, tax returns and insurance policies. He also testified about numerous business and personal matters, including his employment relationship with A & L, his and Dale Petroleum’s loan arrangement with the debtor, the diversion of oil deliveries to Wally’s Gulf using Dale Petroleum as a conduit, and the assets and operations of Dale Petroleum. Mr. Dale testified freely without asserting a Fifth Amendment privilege.

After Mr. Dale testified for several hours, the examination ended and was scheduled to continue on March 20, 1996. Mr. Wilson contacted the trustee’s counsel shortly before the March 20th examination was scheduled to begin and informed her that Mr. Dale would not be attending because Mr. Wilson had not heard from his client. Thereafter, Steven Skoller, Esq. contacted the trustee’s attorney and told her that he now represented the Dales and agreed to produce Mr. Dale on April 11, 1996.

On April 11, 1996, Mr. Dale appeared with his attorney at the continued Rule 2004 examination and asserted the Fifth Amendment privilege to almost all questions asked by the trustee’s attorney. Mr. Dale has refused to submit to any further examination. On or about June 12, 1996, the trustee filed this motion to, inter alia, compel Alfred Dale to continue with a Rule 2004 examination and for a determination that he has waived his Fifth Amendment privilege against self-incrimination.1 The trustee alleges that Mr. Dale waived his right to assert the privilege because he failed to assert it at the examination on March 13, 1996.

Mr. Dale contends that he can assert the privilege because it has not been waived. Mr. Dale argues that he did not knowingly and intelligently waive his Fifth Amendment right by testifying at the March 13, 1996 examination because he was never informed by his attorney that he had such a right. Moreover, he asserts that he only became aware of possible criminal ramifications after he completed his testimony.

CONCLUSIONS OF LAW

The Fifth Amendment provides in pertinent part that “[n]o person ... shall be compelled in any criminal case to be a witness against himself....” U.S. Const. amend. V. The privilege against self-incrimi[24]*24nation may be invoked whether the response would itself support a criminal conviction or the response would provide a link in the chain of evidence required to prosecute. Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). The privilege applies to both civil and criminal matters. Kastigar v. United States, 406 U.S. 441, 444, 92 S.Ct. 1653, 1656, 32 L.Ed.2d 212 (1972). The witness can refuse to testify in a civil proceeding if his testimony can incriminate him or her in a future criminal matter. Lefkowitz v. Turley, 414 U.S. 70, 77, 94 S.Ct. 316, 322, 38 L.Ed.2d 274 (1973). The Fifth Amendment privilege extends to bankruptcy proceedings. McCarthy v. Arndstein, 266 U.S. 34, 45 S.Ct. 16, 69 L.Ed. 158 (1924); In re Martin-Trigona, 732 F.2d 170, 175 (2d Cir.1984), cert. denied, 469 U.S. 859, 105 S.Ct. 191, 83 L.Ed.2d 124 (1984).

It is the court’s duty to decide whether a witness’ silence is justified and to require him to answer if it appears that the witness is improperly asserting the privilege. Hoffman, 341 U.S. at 486, 71 S.Ct. at 818. The witness must have reasonable cause to apprehend a real danger of incrimination to validly assert the privilege. Id. “To sustain the privilege, it need only be evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result.” Id. at 486-87, 71 S.Ct. at 818.

In the present case, the trustee is not arguing that Mr. Dale has improperly asserted the privilege. In fact, the trustee’s counsel believed that the debtor’s disclosures at the March 13, 1996 examination created a threat of prosecution because she told Mr. Wilson at the end of the deposition that she would be forwarding the matter to the U.S. Trustee’s Office for criminal referral. Instead, the trustee claims that Mr. Dale has waived his right to assert the privilege because he has already provided incriminating testimony at the deposition on March 13, 1996. The issue for this court to decide is whether Mr.

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200 B.R. 21, 1996 Bankr. LEXIS 1003, 29 Bankr. Ct. Dec. (CRR) 707, Counsel Stack Legal Research, https://law.counselstack.com/opinion/teitelman-v-dale-petroleum-corp-in-re-a-l-oil-co-njb-1996.