Court Opinion

ID: 22558
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:59:38+00
Date Added: 2024-06-11T15:04:06.610472
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT

                   _______________________________

                              No. 00-20236

                   _______________________________

IN THE MATTER OF: SIDNEY L. BERGER,

                                                                 Debtor.
SIDNEY L. BERGER,

                                                                 Appellant,
versus

DANNY M. LANG, SR. and
DANNY M. LANG, JR.,

                                                                 Appellees.

         _________________________________________________

              Appeal from the United States District Court
         for the Southern District of Texas, Houston Division
                               (H-99-2177)
         _________________________________________________
                            December 7, 2000

Before HIGGINBOTHAM, WIENER, and DENNIS, Circuit Judges.

PER CURIAM*:

     Appellant Sidney L. Berger (“Berger”), debtor in bankruptcy,

appeals the denial of his bankruptcy discharge because of his

fraudulent     concealment   of   assets   and   willful   and   malicious

conversion of property owned by Appellees, Danny M. Lang, Sr.

(“Lang, Sr.”) and Danny M. Lang, Jr. (“Lang, Jr.”; collectively,

     *
        Pursuant to 5th Cir. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5th Cir. R.
47.5.4.
“the Langs”).      We affirm the denial of bankruptcy discharge,

finding no error on the part of the bankruptcy court.

                       I.   FACTS AND PROCEEDINGS

     The events leading to this adversary proceeding began in 1989,

when Berger, a Houston attorney, was appointed receiver of Regame,

Inc., d/b/a the Edward H. Bohlin Company (“Regame”).             Appellee

Lang, Jr. was president and owner of a one-third interest in

Regame, which made western saddlery and accessories of custom-

tooled leather ornamented with sterling silver and 18-carat gold.

Regame had corporate offices in Houston and a manufacturing plant

in Burbank, California.       Lang, Jr. worked from the California

office, and both he and Lang, Sr. kept items of personal property

there, including files, guns, belt buckles, and used clothing and

boots.   The elder Lang also kept an expensive saddle, the Sterling

Silver Indian Head “Bonnell Saddle,” at the California office,

along with matching gunbelt, trappings and gauntlets.

     Before Berger was appointed receiver, Regame ceased operations

because of financial problems related to Lang, Jr.’s acrimonious

divorce,   and   the   landlord   seized   the   California   offices   for

nonpayment of rent.     Berger obtained a $200,000 loan guaranteed by

Lang, Jr.’s former in-laws, gained access to the building, and re-

started the California operations.          Berger did not return the

Langs’ personal property to them, however, contending that he could

not distinguish corporate from personal property and that he

“thought it best for a court to determine the rightful ownership of

                                     2
the items.”

     A 1993 judgment entered after a jury trial in Texas state

court ordered Berger to return the Bonnell Saddle to Lang, Sr.,

conditioned upon his payment to Berger of $6,931 in receiver fees.

Berger also was ordered to return Lang, Jr.’s property to him, and

Lang, Jr. was ordered to pay Berger $25,000 in receiver fees.

Berger’s duty to return Lang, Jr.’s property was not, however, made

conditional on payment of Berger’s receiver fees.1

     Lang, Sr. paid his fees to Berger and received the saddle, but

the stalemate over Lang, Jr.’s fees and property continued.2              In

1994, the Langs sued Berger for conversion of personal property and

won a $125,000 judgment against him, which was affirmed on appeal.

That judgment is the basis of the Langs’ instant claims against

Berger.

     In 1996, Berger filed a voluntary petition seeking relief

under Chapter 13 of the Bankruptcy Code, later converted to Chapter

7.   The Langs filed this adversary proceeding, objecting to any

bankruptcy discharge for Berger and specifically to discharge of

Berger’s judgment debt to them.              After a two-day trial, the

Bankruptcy    Court   for   the   Southern    District   of   Texas   denied

discharge under Bankruptcy Code §§ 727(a)(2) and (4), and also

     1
        A turnover order issued two years later did permit Berger
to withhold Lang, Jr.’s property until the fees were paid.
     2
          Lang, Jr. never has paid Berger the $25,000 in receiver
fees.

                                     3
found    that   the   Langs’   judgment   was   nondischargeable   under

§ 523(a)(6) because the conversion of the Langs’ property was

willful and malicious.         The district court affirmed, and this

appeal followed.

                               II.   ANALYSIS

A.   Standard of Review

     We review for clear error the bankruptcy court’s findings of

fact that have been affirmed by the district court.        We review de

novo the bankruptcy court’s conclusions of law.3

B.   Fraudulent Concealment

     Intent to hinder, delay, or defraud creditors may be inferred

from the actions of the debtor, and may be proven by circumstantial

evidence.4      To prevent discharge for making a false oath under

§ 727(a)(4)(A),5 a plaintiff must prove by a preponderance of the

     3
        Haber Oil Co. v. Stinehart, 12 F.3d 426, 434 (5th Cir.
1994); HECI Exploration Co. v. Holloway, 862 F.2d 513, 518 (5th
Cir. 1988).
     4
         Pavy v. Chastant, 873 F.2d 89, 91 (5th Cir. 1989).
     5
        The provisions of 11 U.S.C. § 727(a) applicable to this
case state:

     (a) The court shall grant the debtor a discharge,
     unless . . .
          (2) the debtor, with intent to hinder, delay, or
     defraud a creditor . . . has transferred, removed,
     destroyed, mutilated, or concealed, or has permitted to
     be transferred, removed, destroyed, mutilated, or
     concealed ——
               (A) property of the debtor, within one year
     before the date of the filing of the petition; or
               (B) property of the estate, after the date of
     the filing of the petition; . . . [or]

                                      4
evidence that (1) the debtor made a statement under oath; (2) the

statement was false; (3) the debtor knew the statement was false;

(4) the debtor made the statement with fraudulent intent; and (5)

the statement related materially to the bankruptcy case.6

      False oaths sufficient to justify the denial of discharge

include “‘(1)      a   false   statement   or   omission     in   the   debtor’s

schedules or (2) a false statement by the debtor at the examination

during the course of the proceedings.’”7             We have affirmed as not

clearly erroneous a bankruptcy court’s finding “that the existence

of more than one falsehood, together with [the debtor’s] failure to

take advantage of the opportunity to clear up all inconsistencies

and omissions when he filed his amended schedules, constituted

reckless indifference to the truth and, therefore, the requisite

intent to deceive.”8

      In    this   case,   after   conducting    the    two-day    trial,    the

bankruptcy court wrote seventeen single-spaced pages of findings

and   conclusions,     frequently    drawing    on    the    court’s    negative

assessment of Berger’s credibility at trial.                The court detailed

           (4) the debtor knowingly and fraudulently, in or
      in connection with the case ——
                (A) made a false oath or account. . . .

      6
           Beaubouef v. Beaubouef, 966 F.2d 174, 178 (5th Cir.
1992).
      7
        Id. (quoting 4 Collier on Bankruptcy ¶ 727.04[1], at 727-
59 (15th ed. 1992)).
      8
           Id.

                                      5
several errors and omissions in Berger’s bankruptcy schedules and

found that Berger had grossly understated the value of his numerous

firearms, western collectibles (gunbelts, spurs, belt buckles,

etc.), and a diamond ring.       In addition, Berger claimed as an

exempt homestead   a 15.56-acre tract of raw urban land on which

there was no dwelling, and on which he apparently never resided.

Berger also failed to disclose the $25,000 account receivable from

Lang, Jr., and the court found that the schedules misstated the

date of liens executed in favor of Berger’s mother, which were

perfected four days before his bankruptcy filing.9

     Berger denies that he knowingly and fraudulently misstated his

financial   position,   and   disclaims   any   intent   to   defraud   his

creditors. He insists that the discrepancies on his schedules were

“inadvertent and unintentional.”          Berger contends that “[t]he

problems in the original schedules were in part a result of simple

oversights and misunderstandings by Berger and his first attorney.”

He also asserts that he “simply made oversights and mistakes in

hastily filling out his bankruptcy schedules.”

     The bankruptcy court found Berger’s testimony not credible.

“There are too many errors for Debtor not to have noticed, and the

errors are obviously willful and fraudulent,” the court concluded.

The bankruptcy court further noted that, when trial was held three

years after Berger filed for bankruptcy, he still had never filed

     9
        Berger contends the notes and security interests involved
merely memorialized debts he already owed his mother.

                                   6
a    full   set    of   correct    bankruptcy    schedules   and    financial

statements, even though he had replaced his counsel approximately

one year earlier.10

      Berger further argues that the evidence was inadequate to

support the bankruptcy court’s finding of intent because he was

candid and cooperative in dealing with the Bankruptcy Trustee.

Specifically, Berger urges that he disclosed the transactions

involving his mother and subsequently reversed them, and that the

Trustee was aware of the $25,000 receivable from Lang, Jr. from the

inception of the bankruptcy proceeding.              The bankruptcy court

rejected     these      arguments,   however,     finding    that    Berger’s

cooperation with the Trustee was forced in part by the Langs’

disclosures and generally amounted to “too little, too late.”

      On review, the district court found the bankruptcy court’s

conclusion that Berger acted with fraudulent intent to hinder his

creditors to be supported both by the record and by the bankruptcy

court’s credibility assessments. The district court found no basis

to reverse the bankruptcy court’s denial of discharge, and neither

do we.

C.   Willful and Malicious Conversion

      Having      affirmed   the   denial   of   discharge   on    grounds   of

      10
        Berger argues on appeal that his previous lawyer “for
some unknown reason” failed to file with the court a set of
amended schedules, which were delivered to the Trustee and the
Langs. The bankruptcy court points out, however, that even this
set of the “missing” schedules (offered to the court by the
Langs) was both incomplete and false.

                                       7
fraudulent concealment, we need not and therefore do not address

the bankruptcy court’s alternative denial of dischargeability of

Berger’s debts to the Langs under Bankruptcy Code § 523(a)(6).

                        III.   CONCLUSION

     Berger has not shown that the bankruptcy court clearly erred

in finding that he concealed property and made a false oath in

connection with his bankruptcy case.     He presents us the same

explanations of his actions that the bankruptcy court weighed and

rejected, based in significant part on the court’s assessment that

Berger lacked credibility. We will not second-guess the bankruptcy

court’s credibility determinations on this evidence. The denial of

Berger’s discharge in bankruptcy is

AFFIRMED.

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