Source: https://law.justia.com/cases/federal/appellate-courts/F2/997/852/382060/
Timestamp: 2020-06-01 08:56:46
Document Index: 454263006

Matched Legal Cases: ['§ 727', '§ 158', '§ 158', '§ 727', '§ 727', '§ 341', '§ 727']

Bankr. L. Rep. P 75,404in Re Fred J. Wines, Debtor.fred J. Wines, Plaintiff-appellee, v. Marian A. Wines, Defendant-appellant, 997 F.2d 852 (11th Cir. 1993) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eleventh Circuit › 1993 › Bankr. L. Rep. P 75,404in Re Fred J. Wines, Debtor.fred J. Wines, Plaintiff-appellee, v. Marian A. W...
Bankr. L. Rep. P 75,404in Re Fred J. Wines, Debtor.fred J. Wines, Plaintiff-appellee, v. Marian A. Wines, Defendant-appellant, 997 F.2d 852 (11th Cir. 1993)
US Court of Appeals for the Eleventh Circuit - 997 F.2d 852 (11th Cir. 1993) Aug. 10, 1993
In September, 1989, the Debtor filed a petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida. On December 15, 1989, Claimant filed a complaint seeking to deny the Debtor's discharge under 11 U.S.C. §§ 727(a) (2) (A) and (a) (4) (A). Then, on January 17, 1990, Claimant filed a proof of claim which notified the Debtor of her intention to apply her $765,000 cash settlement to the portion of the Enterprise loan not guaranteed by the Debtor.
The district court had jurisdiction under 28 U.S.C. § 158(a). This Court has jurisdiction pursuant to 28 U.S.C. § 158(d). We review the district court's factual findings for clear error and the district court's determinations of law de novo. In re Sublett, 895 F.2d 1381, 1383 (11th Cir. 1990).
Put briefly, if a creditor fails to designate within a reasonable time how payment is to be applied, the court may allocate the payment in an equitable manner. First Nat'l Bank in Palm Beach v. United States, 591 F.2d 1143, 1147 (5th Cir. 1979); see also In re Comer, 716 F.2d 168, 175 (3d Cir. 1983); In re Securities Groups, 116 B.R. 839, 845 (Bankr.M.D. Fla .1990). Half a year after Marian Wines received the $765,000 cash settlement from Advanced's bankruptcy, she elected to treat the $765,000 as not applicable to the $50,000 partial payment Fred Wines had guaranteed. This interval was an unreasonable period of time in which to designate payment allocation.
Six months prior to his chapter 7 petition, Fred Wines transferred to Randee Wines, whom he married after divorcing Marian Wines, the right to acquire 26% of the stock which United Shipping Company ("USC"), a Chapter 11 debtor-in-possession, proposed to issue under its plan of reorganization. Marian Wines contends that pursuant to 11 U.S.C. § 727(a) (2) (A)7 Fred Wines' discharge from bankruptcy should be denied because the transfer to Randee Wines was a fraudulent conveyance made within one year of the bankruptcy petition. Both the bankruptcy and the district court concluded that the transfer was not fraudulent and, therefore, declined to deny the Debtor's discharge from bankruptcy.
In order to deny a bankruptcy discharge, evidence of actual intent to defraud creditors must be shown. In re Reed, 700 F.2d 986, 991 (5th Cir. 1983); 4 Collier on Bankruptcy, p 727.02 at 727-15 (Lawrence P. King ed., 15th ed. 1993). Whether the debtor had the requisite wrongful intent is a question of fact which we review for clear error. In re Reed, 700 F.2d at 992.
At trial, Marian Wines had the initial burden of proving her objection to Fred Wines' bankruptcy discharge. See In re Chalik, 748 F.2d 616, 619 (11th Cir. 1984) (citing Bankruptcy Rule 4005). The only evidence of actual fraudulent intent that Marian Wines produced were statements made by Randee Wines in the course of settlement negotiations conducted by telephone. These statements were held inadmissible by the bankruptcy court under rule 408 of the Federal Rules of Evidence (evidence of statements made in compromise negotiations is inadmissible).
The bankruptcy court's factual findings, affirmed by the district court, must be accepted by us unless they are clearly erroneous. Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 56 n. 5, 102 S. Ct. 2858, 2863 n. 5, 73 L. Ed. 2d 598, 605 n. 5 (1982). "When the district court has affirmed the bankruptcy court's findings .... we will apply the clearly erroneous doctrine with particular rigor." In re Jet Florida Systems, Inc., 861 F.2d 1555, 1558; see also In re Garfinkle, 672 F.2d 1340, 1344 (11th Cir. 1982) (strict application of clearly erroneous doctrine paramount when district court affirms bankruptcy court's findings). Here, we are unable to say that the bankruptcy court's finding that Fred Wines made the stock transfer to Randee Wines without actual intent to defraud Marian Wines was clearly erroneous.
Seeking a denial of the Debtor's discharge under 11 U.S.C. § 727(a) (4) (A),8 Marian Wines contests the district court's holding that evidence was insufficient to support her charge that the Debtor made a false oath in valuing certain assets in his chapter 7 schedules. Her challenge is predicated on a loan made by the Debtor to USC. At the time USC filed for bankruptcy the outstanding balance due on the loan, reflected by a proof of claim the Debtor filed against USC, was $381,450. Claimant contends that the Debtor's valuation of the loan--listed in his bankruptcy schedule as a $12,000 asset--was so "grossly incorrect" as to constitute a false oath. Five months after the Debtor's alleged undervaluation of his claim, it was predicated at trial in the bankruptcy court that the claim's probable distribution would be approximately $32,500. The bankruptcy court concluded that the Debtor's undervaluation did not warrant the denial of his discharge. The district court affirmed.
Absent clear error, we will not disturb the factual findings of the district court. Northern Pipe Line Construction Co., 458 U.S. at 56 n. 5, 102 S. Ct. at 2863 n. 5, 73 L. Ed. 2d at 605; In re Sublett, 895 F.2d at 1383. Based on our review of the record, we see no clear error to warrant setting aside the finding of the bankruptcy court and the district court that the Debtor did not make a false oath.9 These courts found correctly that no evidence suggested that Fred Wines deceived his creditors. The district court was impressed that the Debtor's subsequent correction to the scheduled amount and explanation to the bankruptcy trustee at a 11 U.S.C. § 341 creditors' meeting demonstrated a bona fide effort to value his assets.
Section 727(a) (2) (A) provides that a debtor shall receive a discharge unless, with intent to hinder or defraud a creditor, he or she transferred " [p]roperty of the debtor ... within one year before the filing of the petition."
11 U.S.C. § 727(a) (4) (A) states that a debtor shall be granted a discharge, unless he "knowingly and fraudulently, in or in connection with the case--made a false oath or account."