Thruston v. Reaves (In re Thruston)

Summarized by Dean Rallis , Hahn & Hahn, LLP
12 years 7 months ago

Citation:

BAP No. AZ-12-1297-TaAhJu/Bk. No. 10-27593 (not appropriate for publication)

Tag(s):

Ruling:

The Ninth Circuit BAP vacated the Bankruptcy Court's order granting the trustee's motion for summary judgment denying the debtor's discharge and remanded for further proceedings.

Procedural context:

The Chapter 7 Trustee commenced an adversary proceeding objecting to the debtor's discharge under §§727(a)(2), (3) and (4) based upon the debtor's failure to disclose significant assets in his schedules and provide the trustee with requested records. The Trustee filed a motion for summary judgment, which was opposed by the debtor (acting in pro se). The Bankruptcy Court granted the Trustee's motion based on its findings that the debtor concealed and failed to disclose significant assets, and a further finding that the debtor made a false oath as to real and personal properties. The debtor appealed the order and ensuing judgment denying his discharge. The 9th Circuit BAP vacated the order and judgment based upon an insufficient record and remanded the case to the Bankruptcy Court for further proceedings.

Facts:

The debtor, a married man, filed a chapter 7 petition. Following several extensions of time, the debtor filed schedules that were essentially blank. Though the debtor identified a number of pending lawsuits in his statement of financial affairs, he did not schedule any real property, vehicles or creditors. Upon instruction from the Bankruptcy Court, the debtor amended his schedules and statement of financial affairs to include a few items of personal property and a number of creditors to Schedule F. However, Schedules A, C, D and E remained blank. The Trustee filed an action objecting to the debtor's discharge. Nine months later, the Trustee filed a motion for summary judgment asserting that as of the petition date, the debtor or his non-debtor wife owned real and personal properties in which the debtor held either a direct interest or a community property interest. The Trustee further asserted that the debtor concealed or transferred property of the estate, concealed records relating to his financial condition and business transactions, and knowingly and fraudulently omitted assets from his schedules and statement of affairs. In support of the motion, the Trustee submitted his affidavit and supporting documentary evidence. The debtor opposed the motion, however, the debtor did not file any supporting declaration. After argument, the Bankruptcy Court granted the Trustee's motion and entered a judgment denying the debtor's discharge. On appeal, the 9th Circuit BAP noted that the record was devoid of any findings (i) that the debtor concealed or failed to maintain records (as required under §727(a)(3)), or (ii) of the debtor's subjective intent to hinder, delay or defraud creditors or the trustee (under §727(a)(2)) or fraudulent intent (under §727(a)(4)). Though the BAP noted that the record does include facts to support an abusive filing, and that the debtor failed to submit evidence in support of his opposition, the absence in the record of the Bankruptcy Court's findings as noted above and the debtor's pro se status prompted the BAP to determine that there remains a genuine dispute as to the debtor's subjective intent in connection with the Trustee's objecting to the debtor's discharge. The BAP vacated the order granting the Trustee's summary judgment and ensuing judgment denying the debtor's discharge, and remanded the case to the Bankruptcy Court.

Judge(s):

TAYLOR, AHART and JURY, Bankruptcy Judges

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