Hazelrigg v. United States Trustee (In re Hazelrigg)

Citation:
In re Hazelrigg, 9th Cir. B.A.P., WW-13-1230-TaDJu (November 19, 2013) [NOT FOR PUBLICATION]
Tag(s):
Ruling:
in an unpublished opinion, the 9th Circuit Bankruptcy Appellate Panel affirmed the ruling by the bankruptcy court, to deny the debtor's (Thomas Hazelrigg) motion for reconsideration of the bankruptcy court's order granting the trustee's motion for summary judgment pursuant to § 727(a)(5).
Procedural context:
On October 31, 2011, creditors of the Debtor (Thomas Hazelrigg) commenced an involuntary Chapter 7 proceeding against him. The UST issued a Rule 2004 document subpoena (“Subpoena”) to the Debtor requesting documents regarding the transfer, disposition, or ownership of certain assets owned or previously owned by the Debtor, that were not scheduled or referenced in the Debtor’s amended schedules or SOFA. Debtor responded to the Subpoena (“Subpoena Response”), asserting a blanket Fifth Amendment privilege to the UST’s inquiry and did not produce any documentation. UST commenced an adversary proceeding against the Debtor, objecting to the Debtor’s discharge under § 727(a)(2), (a)(3), (a)(4), and (a)(5). The Debtor immediately sought dismissal of the adversary complaint under Civil Rule 12(b) and (c) (“Motion to Dismiss”). The UST subsequently moved for summary judgment (“MSJ”), but only as to the § 727(a)(3) and (a)(5) claims. The bankruptcy court denied summary judgment on the § 727(a)(3) claim, but granted summary judgment on the § 727(a)(5) claim. Debtor moved for reconsideration (“Motion to Reconsider”) on the § 727(a)(5) determination under Rule 9023.
Facts:
On October 31, 2011, creditors of the Debtor (Thomas Hazelrigg) commenced an involuntary Chapter 7 proceeding against him. Prior to this time, the Debtor was a well-known financier and businessman in the Seattle area. He also was an associate of an individual named Michael Mastro (“Mastro”). Mastro was formerly a major Seattle real estate developer and, like the Debtor, was involuntarily placed into chapter 7 bankruptcy. Other than stating his name and address on the petition and executing the documents, the schedules and SOFA were blank; the Debtor, instead, asserted a blanket Fifth Amendment privilege next to each signature block. The UST moved to compel the Debtor to file amended and complete schedules and a SOFA or to assert a Fifth Amendment privilege to each question. The bankruptcy court agreed and entered an order directing the Debtor to comply. He submitted a first and then a second set of amended schedules and a SOFA. The Debtor listed one vehicle in his amended Schedule B and disclosed that two cars were sold to Carmax approximately one or two years prior to petition; he did not describe these vehicles or provide any other details of the transactions. The UST issued a Rule 2004 document subpoena (“Subpoena”) to the Debtor. In an attached document, the UST outlined a request for documents regarding the transfer, disposition, or ownership of certain assets owned or previously owned by the Debtor, assets neither scheduled nor otherwise referenced in the Debtor’s amended schedules or SOFA. Apparently, as part of the investigation in the Mastro bankruptcy case, the UST came into possession of a balance sheet dated July 31, 2008 (“Balance Sheet”),3 detailing the Debtor's assets (and their value) as of that date. Using this document, the UST expressly identified the following assets in the Subpoena: five luxury vehicles valued at $459,000; fees receivable valued at $1,145,500; and real estate owned personally and indirectly, valued at $49,956,350. The Debtor responded to the Subpoena (“Subpoena Response”), once again asserting a blanket Fifth Amendment privilege to the UST’s inquiry; he did not produce any documentation. In response, the UST commenced an adversary proceeding against the Debtor, objecting to the Debtor’s discharge under § 727(a)(2), (a)(3), (a)(4), and (a)(5). Among other things, the adversary complaint alleged that the Debtor owned the Assets in 2008, but failed to account for the transfer, disposition, or ownership of the Assets in the bankruptcy case. The Debtor immediately sought dismissal of the adversary complaint under Civil Rule 12(b) and (c) (“Motion to Dismiss”). The UST subsequently moved for summary judgment (“MSJ”), but only as to the § 727(a)(3) and (a)(5) claims. The bankruptcy court denied summary judgment on the § 727(a)(3) claim, but granted summary judgment on the § 727(a)(5) claim. Debtor moved for reconsideration (“Motion to Reconsider”) on the § 727(a)(5) determination under Rule 9023.
Judge(s):
Hon. Randall L. Dunn, Hon. Laura S. Taylor, Hon. Meredith A. Jury

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