Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-5_06-ap-05133/USCOURTS-canb-5_06-ap-05133-0/pdf.json

Parties Involved:
Suzanne L. Decker
Plaintiff
Kenneth M. Doolittle
Defendant

Document Text:

UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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ORDER ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re:

KENNETH M. DOOLITTLE and

MARILYN A. DOOLITTLE,

Debtors.

Case No. 05-55696-MM

Chapter 7

The Hon. Marilyn Morgan

 SUZANNE L. DECKER,

Adv. No. 06-5133

Plaintiff, 

 v. MEMORANDUM DECISION ON

PLAINTIFF’S MOTION FOR 

SUMMARY JUDGMENT

 KENNETH M. DOOLITTLE,

[Docket No. 30]

Defendant. ______________________________________

INTRODUCTION

Plaintiff, Suzanne Decker, the trustee of the bankruptcy estate of debtors, Kenneth M. and

Marilyn A. Doolittle alleges that Kenneth Doolittle should be denied a discharge. Specifically, the

complaint alleges that: (1) under section 727(a)(4) of the Bankruptcy Code, Doolittle knowingly and

fraudulently made false statements and omissions in his bankruptcy schedules; (2) under section

727(a)(2), Doolittle transferred property of the estate to another state with intent to hinder, delay or

defraud the trustee or creditors; and (3) under section 727(a)(6)(A), Doolittle has refused to obey a

The following constitutes 

the order of the court. Signed December 10, 2007

Marilyn Morgan

U.S. Bankruptcy Judge

________________________________________

Entered on Docket 

December 10, 2007

GLORIA L. FRANKLIN, CLERK 

U.S BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 06-05133 Doc# 36 Filed: 12/10/07 Entered: 12/10/07 11:19:33 Page 1 of 7 
UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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ORDER ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

lawful order of the court. The trustee moves for summary judgment urging that undisputed evidence

establishing each of these claims provides a basis for judgment in her favor. She further contends that

she is entitled to summary judgment because: (1) Doolittle withheld an accounting relating to the

property of the estate from the trustee; and (2) Doolittle acquired property of the estate but failed to

deliver the property to the trustee. Doolittle, acting in pro per, did not file an opposition and did not

appear at the hearing to oppose the motion. Having read the moving papers, and considered the

arguments of counsel, and for the reasons set forth below, the trustee’s motion for summary judgment

is granted in favor of the plaintiff and against defendant Kenneth Doolittle.

BACKGROUND

On September 12, 2005, Kenneth and Marilyn Doolittle filed a voluntary petition under Chapter

7 of the Bankruptcy Code. In their petition, the Doolittles estimated that after taking into account any

exempt property, there would be no funds available for distribution to unsecured creditors. Each of the

Doolittles executed the bankruptcy petition and set forth in the accompanying schedules an accounting

of their personal property, debts and finances. 

At a meeting of creditors held on December 8, 2005, Doolittle testified that he owned four

vehicles identified in his schedules. He further stated that he took all four to Idaho. He did not obtain

permission from the trustee. 

After the meeting of creditors, based on what appeared to be incomplete and inaccurate

bankruptcy schedules filed by the Doolittles at the outset of the case, and creditors’ allegations of fraud

and misrepresentation, the trustee decided it was necessary to conduct a substantial examination of the

debtors’ assets. Pursuant to an order for Rule 2004 examination, Doolittle appeared for examination

on February 27, 28 and March 1, 2006. During the course of the examination, Doolittle acknowledged

having read the bankruptcy schedules and testified he understood that he was signing them under

penalty of perjury. 

As set forth below, Doolittle’s testimony at his Rule 2004 examination disclosed several

discrepancies in the Doolittles’ bankruptcy schedules:

Case: 06-05133 Doc# 36 Filed: 12/10/07 Entered: 12/10/07 11:19:33 Page 2 of 7 
UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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ORDER ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

1. 54 Mobile Home Carryback Promissory Notes: In the bankruptcy schedules, Doolittle

failed to identify his fractional interest in 54 mobile home notes, which have an

approximate aggregate value of $154,000. 

2. Tania’s Court apartments: In the bankruptcy schedules, Doolittle identified a one percent

ownership interest in four townhouses in Tania’s Court in Aptos, California. Indeed, the

trustee sold the estate’s right, title and interest to the Doolittles for $31,000 based on the

Doolittle’s stated representation as to the amount of his ownership interest. Doolittle’s

ownership interest, however, is at least a 1.8 percent interest.

3. Domain names: In the bankruptcy schedules, Doolittle failed to identify as assets his

partial interest in hundreds of domain names. After filing the bankruptcy petition,

Doolittle sold approximately five domain names. He has not provided any accounting

whatsoever of the proceeds from those domain name sales.

4. BMW motorcycle: In the bankruptcy schedules, Doolittle identified a 1973 BMW R75/5

motorcycle valued at $900 with a lien against the motorcycle that exceeded the value of

the motorcycle. However, the certificate of title for the motorcycle reflected that the lien

had been released by its holder prior to the petition date. 

5. Monterey Bay Investment Corp. (“MBIC”): Doolittle is the sole owner and shareholder

in MBIC, a corporate entity through which defendant or independent contractors sell

insurance. Doolittle does not dispute the trustee’s allegations that he is the alter ego of

the corporation and that any residuals and commissions of MBIC should be surrendered

to the trustee as property of the estate. To date, Doolittle has failed to provide an

accounting or any documents which might reflect the value of residuals and commissions

collected by MBIC or himself. 

6. Crocker litigation: In the bankruptcy schedules, Doolittle failed to disclose his 25 percent

interest in any recovery on judgment entered against Theodore Crocker and Rob

Mariani. Doolittle’s recovery is based on the amount he contributed to pursue the

litigation. 

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UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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ORDER ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

In light of these revelations, on June 6, 2006, the trustee filed this adversary proceeding to deny

discharge based on Doolittle’s false statements. Additionally, after Doolittle failed to cooperate in his

duty to deliver both old and newly disclosed assets to the trustee, she moved for an order compelling

turnover of the assets, demanding an accounting and objecting to certain claims of exemption.

Specifically, the turnover motion sought recovery of the following assets: (1) cash in the amount of

$2,000; (2) personal deposit accounts, including a balance of approximately $3,258.65; (3) 2000 or 2002

Ford E350 Minivan; (4) 1997 Ford E350 Van; (5) 2002 GMC Cargo Van; (6) 1973 BMW R75/5

motorcycle; (7) residuals and commissions from the sale of insurance owed to Monterey Bay Investment

Corp. (“MBIC”); and (8) estate’s interest in 54 mobile home notes and any payments related thereto.

Doolittle did not oppose the turnover motion. In fact, Doolittle’s counsel appeared and agreed to the

terms of the turnover. 

On April 4, 2007, after counsel for both the trustee and Doolittle approved its form, the court

entered an order granting the relief sought by the trustee. The turnover order authorized the trustee to

deduct the value of assets from Doolittle’s $75,000 homestead exemption and required the Doolittles

to turnover the value of the assets that exceeded the $75,000 homestead exemption within 15 days from

the date of the turnover order. Additionally, the turnover order required the Doolittles to provide an

accounting of all residuals and commissions collected by MBIC and any and all sums collected from

the Doolittles’ fractional ownership in 54 mobile home notes.

To date, Doolittle has failed to comply with the turnover order. Doolittle has not turned over

the value of the assets exceeding the homestead exemption or provided an accounting of all residuals

and commissions collected by MBIC and any and all sums collected from the fractional interest in the

Mobile Home notes. 

LEGAL DISCUSSION

Under Rule 7056 of the Federal Rules of Bankruptcy Procedure, Rule 56 of the Federal Rules

of Civil Procedure is applicable to an adversary proceeding in the bankruptcy court. Under Rule 56, a

motion for summary judgment should be granted if there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 247-258 (1986). The moving party bears the initial burden of informing the

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 For The Northern District Of California

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court of the basis for the motion, and identifying portions of the pleadings, depositions, answers to

interrogatories, admissions or affidavits which demonstrate the absence of a triable issue of material

fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In addition the moving party must provide

evidence for each essential element of her claims to establish that she is entitled to judgment in her favor

as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. at 254. In response, the nonmoving party

may not rest upon mere allegations or denials of the adverse party’s evidence, but instead must produce

admissible evidence that shows there is a genuine issue of material fact for trial. See Id. Further, he

must “identify with reasonable particularity the evidence that precludes summary judgment.” Keenan

v. Allen, 91 F.3d 247, 251 (7th Cir. 1995)(stating that it is not a district court’s task to “scour the record

in search of a genuine issue of triable fact.”). A genuine issue of fact is one that could reasonably be

resolved in favor of either party. A dispute is “material” only if it could affect the outcome of the suit

under the governing law. Anderson, 477 U.S. at 248-49.

I. Undisputed Evidence Establishes that Defendant Failed to Obey a Court Order within

the Meaning of Section 727(a)(6)

Under section 727(a)(6)(A) of the Bankruptcy Code, the court may deny discharge if “the debtor

has refused in the case to obey any lawful order of the court, other than an order to respond to a material

question or to testify.” 11 U.S.C. §727(a)(6)(A). Elements of the claim are (1) defendant refused to

obey a lawful court order; (2) the order was entered in defendant’s related bankruptcy case; and (3) the

order was other than an order to respond to a material question or to testify. Id. “[I]t is totally within

the discretion of the bankruptcy court to find a particular violation of the court’s order so serious as to

require denial of discharge under § 727(a)(6)(A).” In re Devers, 759 F.2d 751, 755 (9th Cir. 1985). The

trustee has offered credible proof establishing each of the required elements. 

With respect to the first two elements, the declaration of the trustee’s counsel demonstrates that

Doolittle failed to abide by this court’s August 4, 2007 turnover order and has not provided an

accounting of all residuals and commission collected by MBIC and sums collected from the mobile

home notes. As discussed above, Doolittle was served with the turnover order but has not proffered

any explanation for his failure to comply with its requirements. Further, the language of the order itself

makes clear that it was not an order to respond to a material question or to testify. The trustee has

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UNITED STATES BANKRUPTCY COURT

 For The Northern District Of California

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ORDER ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

established all the elements required to prove this claim. Doolittle’s failure to turn over substantial

assets significantly impacts creditors in the case and is detrimental to the bankruptcy proceedings and

the court’s administration of the case. As a result, it is entirely appropriate to deny defendant a

discharge on this basis. See, e.g., In re Costantini, 201 BR 312, 316 (Bkrtcy. M.D. Fla. 1996)(citation

of relevant factors in deciding whether to deny discharge on the basis of refusing to obey a court order).

Accordingly, the trustee’s motion for summary judgment to deny discharge on this basis is granted.

II. It is Not Necessary to Rule on the Trustee’s Other Grounds for Denial of Discharge

The trustee also contends that Doolittle should be denied his discharge because Doolittle

knowingly and fraudulently made false statements and omissions in his bankruptcy schedules, Doolittle

transferred four vehicles to Idaho with intent to hinder, delay or defraud the trustee or creditors, and

Doolittle has refused to obey a lawful order of the court. Because discharge will be denied on the basis

explained above, it is not necessary to consider these additional grounds. 

CONCLUSION

For the foregoing reasons, the trustee’s motion for summary judgment is granted, and

Doolittle’s discharge is denied. 

Good cause appearing, IT IS SO ORDERED.

* * * END OF ORDER * * *

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 For The Northern District Of California

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ORDER ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

Adv. No. 06-5133

SERVICE LIST

Barry Migrom

Nhung Le

Luce, Forward, Hamilton & Scripps LLP

Rincon Center II

121 Spear Street, Ste. 200

San Francisco, CA 94105-1582

United States Trustee

Office of the U.S. Trustee

280 South First Street #268

San Jose, CA 95113

Kenneth M. Doolittle

892 E. Stormy Drive

Meridian, ID 83642

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