- Case Type:
- Case Status:
- 18-1166 (9th Circuit, Feb 11,2019) Not Published
- Chapter 7 Trustee was entitled to turnover of debtor’s residential property, and could evict debtor from the property, under § 542(a) inasmuch as “there [was] ample evidence demonstrating that [the] Debtor . . . [did] not cooperate with the [Trustee’s] efforts to market the residence . . . .”
- Procedural context:
- Chapter 7 trustee filed motion for turnover of property under section 542. Bankruptcy court granted motion. Appeal to the Ninth Circuit BAP followed.
- Trustee filed a Motion for Turnover to compel debtor to vacate her residential property and turn over possession of the property and certain records. Trustee argued that debtor had failed to cooperate with the real estate agent’s efforts to market and sell the property. Specifically, the Trustee argued that debtor had a duty to cooperate and turn over all property of the estate. The Trustee’s real estate agent needed to inspect the interior of the residential property, take photos, and show the property to prospective buyers. The agent twice attempted to make these arrangements with debtor, but debtor did not respond. At the hearing on the Motion for Turnover, the bankruptcy court ruled that the Trustee was entitled to turnover of the Residential Property and the records associated with certain rental property. Regarding the rental property records, the court required debtor to surrender the requested documents under § 521(a)(4). It also found that debtor was “interfering with the Trustee’s collection of rent from which to pay expenses and refusing to simply provide the documents containing the information necessary to pay the expenses ....” Finally, the court stated that the Trustee “is absolutely entitled to turnover of the residence.” The court stated that the Trustee can evict an uncooperative debtor under § 542(a), and “there’s ample evidence demonstrating that this Debtor and her family will not cooperate with the [Trustee’s] efforts to market the residence and that turnover is necessary.” The court listed the various facts demonstrating debtor’s failure to cooperate with the Trustee: “(1) Ms. Madatian failed to file chapter 11 monthly operating reports; (2) she failed to file a disclosure statement; (3) she sent the Trustee an e-mail threatening civil and criminal prosecution if the Trustee or her agents “trespassed” on the Rental Property; (4) she stormed out of the § 341(a) meeting and refused to appear thereafter; (5) she refused to provide the Trustee with her tax returns and other requested documents; (6) she appeared to tell the tenants not to pay rent to the Trustee; (7) she did not respond to the real estate agent’s e-mails; and (8) she did not provide any evidence to contravene the declaration testimony offered by the Trustee. The court concluded that Ms. Madatian’s “obstreperous conduct demonstrates there’s really no practical way for the Trustee and her broker to market this residence and show it to prospective buyers while the Debtor continues to occupy it.” The bankruptcy court issued an order granting the Motion for Turnover but allowed debtor a reasonable time to vacate the residential property.
- Faris, Kurtz, and Taylor
Ricky Sharpton v. Susan Manchester, Chapter 7 Tr
Summarizing by Lars Fuller
3142 in the system
1 Being Processed