Wenzoski v. Palmer (In re Palmer)

26 B.R. 746, 1982 Bankr. LEXIS 5448
CourtUnited States Bankruptcy Court, D. Oregon
DecidedNovember 23, 1982
DocketBankruptcy No. 82-02047; Adv. Nos. 82-0778, 82-0782
StatusPublished
Cited by1 cases

This text of 26 B.R. 746 (Wenzoski v. Palmer (In re Palmer)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wenzoski v. Palmer (In re Palmer), 26 B.R. 746, 1982 Bankr. LEXIS 5448 (Or. 1982).

Opinion

MEMORANDUM OPINION

HENRY L. HESS, Jr., Bankruptcy Judge.

On October 12, 1982 the plaintiffs filed a complaint in Adversary No. 82-0782 and a complaint in Adversary No. 82-0778. In 82-0782 the complaint is entitled “Complaint Por 1. Relief From Automatic Stay 2. Modification of Automatic Stay.” In 82-0778 the complaint is entitled “Complaint For Order Denying Dischargeability and Vacating Stay.” The defendant thereafter filed motions to dismiss each of the complaints. The plaintiffs waived the time restrictions imposed by 11 U.S.C. § 362(e).

AUTOMATIC STAY

A long history of litigation in several courts in this state and in the state of California precedes this bankruptcy case. Only a part of this history is relevant to the present bankruptcy case.

On September 7, 1973 a judgment was entered in action No. 62826 in the Superior Court of California for Marin County in favor of the plaintiff class and against Robert W. Pollock, the United Financial Group, and a number of parties defendant both individual and corporate in the amount of $66,900,000. The debtor herein was not a party to this action.

On March 23,1976 an action was filed by the plaintiff class, judgment creditors in action number 62826, in the Superior Court for the State of California for Marin County which is designated as No. 79255. The debtor herein was not named as a defendant in the complaint filed in No. 79255 but the complaint did name a number of John Does. About November 6, 1980 a second amended and supplemental complaint was filed which named the debtor herein as a defendant. Along with the debtor this second amended complaint specifically names over 50 individual and corporate defendants. The second amended complaint recites the entry of the judgment in number 62826 and that the judgment was based upon schemes of Robert Pollock, of corporations controlled by him, and certain of the defendants, to defraud prospective investors made up of the plaintiff class. It alleges that the defendants in number 79255 conspired with Robert Pollock to collaborate in certain fraudulent distribution and sale schemes, to conceal from the plaintiffs facts and evidence of transactions with funds placed by the plaintiffs with Robert Pollock and other defendants, and to avoid payment of the judgment entered in number 62826. In paragraph 64 there are 16 separate sub-paragraphs each naming specifically one or more of the defendants and alleging actions taken in furtherance of the conspiracy. Subparagraph m alleges:

“m. Robert Palmer was employed by Standard Investment Company as a stock broker, in 1968, 1969, and 1970, and as a construction superintendent in 1971; and by Royal Real Estate, during the period from 1972 to the present date. He has assisted in the conversion of stocks, real estate and other property, from the beneficial ownership of the plaintiffs to the personal profit and use of Robert Pollock and the other defendants herein and to conceal such property, so it would not be subject to execution, to satisfy the Judgment entered in Action 62826.”

These allegations appear to assert not that Palmer was a part of the conspiracy upon which the judgment in 62826 was based, but that Palmer, subsequent to the entry of the judgment, assisted in the conversion and concealment of property to pre[748]*748vent collection of the judgment. The allegations concerning Palmer are different from the allegations contained in the other 15 subparagraphs of paragraph 64.

11 U.S.C. § 362(d), in so far as relevant to this bankruptcy case, provides that relief from the stay shall be granted “for cause”.

The plaintiffs assert that relief from the stay should be granted in order to permit them to proceed against the debtor in number 79255 along with the other defendants in that action when it is tried. The plaintiffs recognize that the determination of the dischargeability of any debt owing to them by the debtor which might be established by a judgment in number 79255 is within the exclusive jurisdiction of this bankruptcy court. They assert that the liability of the debtor should be established in the case pending in California and that this court could then determine whether or not any liability established in that case is or is not dischargeable. They contend that the expenses of the plaintiff would be increased if the matters of both liability and dischargeability were to be tried in this court. On the other hand the debtor asserts that his expenses would be greatly increased were he required to first defend the case in California and then defend the complaint for dischargeability in this court.

From the allegations of the second amended complaint in the California case it appears that Robert Pollock owned or controlled the various corporations involved in the fraudulent investment schemes. The complaint does not allege what connection Palmer may have had to Pollock or his corporations other than that Palmer is Pollock’s brother in law. Nor does the complaint allege any reason why Palmer was involved in any scheme to prevent collection of the Judgment in number 62826 or in what manner Palmer was to benefit from such an alleged scheme. If Palmer did convert or assist in the conversion of property of the plaintiffs or of property of the defendants in number 62826 which could have been reached to satisfy the judgment, the measure of damages would not be the amount of the judgment but rather the value of the property converted. The claims against other defendants in number 79255 are not similar to the claim made against Palmer. To require that Palmer defend the California case would be to require him to attend a trial that could involve weeks or months in which the evidence for and against other defendants would not be related to the claim against him.

The California case has now been pending for over 7 years. A trial date has not been set and will not be set until a conference scheduled for January 1983. There is no assurance that at that time all of the parties will be ready for trial.

One of the major purposes of bankruptcy is to provide the debtor with a fresh start. The law contemplates that a discharge be promptly granted if no objections to discharge are filed. In this ease a discharge was entered on November 8,1982. It is also important for the debtor’s fresh start that he know promptly what debts will be excepted from the effect of a discharge.

Were relief from the stay granted and the plaintiffs permitted to proceed against Palmer in the California case it would still be possible that this court might determine that the debt was dischargeable. Economy of judicial effort and expense to the parties would be served by trying both issues of liability and dischargeability in this court.

The court finds that the plaintiffs have failed to show cause for relief from the stay provided by 11 U.S.C. § 362. An order will be entered herein denying such relief.

DISCHARGEABILITY

In response to the plaintiffs’ complaint for an order denying dischargeability and vacating stay, the defendant filed a motion to dismiss upon the ground that the complaint fails to state grounds for relief under 11 U.S.C. § 523.

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Bluebook (online)
26 B.R. 746, 1982 Bankr. LEXIS 5448, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wenzoski-v-palmer-in-re-palmer-orb-1982.