Court Opinion

ID: 2972247
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:46:16.579471+00
Date Added: 2024-06-11T15:30:41.590643
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 05a0259n.06
                             Filed: April 5, 2005

                                             04-3311

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

IN RE: MARTHA R. BAUER
- Debtor

LINDA J. MILLER,                                  )
                                                  )
Plaintiff-Appellee,                               )
                                                  )   ON APPEAL FROM THE BANKRUPTCY
v.                                                )   APPELLATE PANEL FOR THE SIXTH
                                                  )   CIRCUIT
MARTHA R. BAUER,                                  )
                                                  )
Defendant-Appellant.                              )

       Before: MERRITT and ROGERS, Circuit Judges; HOOD, District Judge.*

       ROGERS, Circuit Judge. Defendant-Appellant Martha R. Bauer appeals the Bankruptcy

Appellate Panel’s (“BAP”) decision denying Bauer a discharge of all scheduled debt pursuant to 11

U.S.C. § 727(a)(3) and (5), and valuing Bauer’s debt to Plaintiff-Appellee Linda J. Miller at

$62,780.00. For the reasons set forth in the BAP’s opinion, the Bankruptcy Court’s decision to deny

a discharge was proper. For the reasons set forth in the Bankruptcy Court’s opinion, the challenged

debt valuation was proper. We therefore affirm.

       *
       The Honorable Joseph M. Hood, United States District Court for the Eastern District of
Kentucky, sitting by designation.
04-3311
Miller v. Bauer

       The Bankruptcy Court concluded both that Bauer’s debt to Miller was non-dischargeable

pursuant to 11 U.S.C. § 523(a), and that Bauer should be denied a discharge of all scheduled debt

pursuant to 11 U.S.C. § 727(a). The BAP, however, properly determined § 523(a) to be inapplicable

in this case. We also agree with the BAP’s reasoning concerning Miller’s § 727(a) claim. Bauer

argues that the Bankruptcy Court’s analysis on this issue was incorrect because it employed a fraud

rationale, and because it placed too onerous a burden of production on Bauer. However, the

Bankruptcy Court properly held that Bauer failed to explain satisfactorily the depletion of settlement

funds pursuant to § 727(a)(5), and that she failed to preserve information pursuant to § 727(a)(3).

The Bankruptcy Court did not err in requiring Bauer to supply documentation or corroborating

testimony as part of providing a “satisfactory explanation” of expenditures under § 727(a)(5). The

Bankruptcy Court found Bauer’s testimony to be “extremely vague” on some matters and, given

Bauer’s considerable business sophistication and familiarity with the dispute over the settlement

funds, it was reasonable to question Bauer’s failure to substantiate major expenditures. See

Strzesynski v. Devaul (In re Devaul), 318 B.R. 824, 840 (Bankr. N.D. Ohio 2004).

       Further, we affirm the Bankruptcy Court’s valuation of Bauer’s debt to Miller at $62,780.00.

It does appear that the BAP was incorrect in finding that a state court judgment in Miller’s favor in

that amount was final, and in finding that the Bankruptcy Court therefore did not have jurisdiction

to review the amount. The Bankruptcy Court had properly exercised jurisdiction over this question.

The Bankruptcy Court correctly concluded that, because Bauer’s legal malpractice claim against

                                                -2-
04-3311
Miller v. Bauer

Miller was unlikely to succeed, the amount of damages reflected in the state court jury verdict

should stand.

AFFIRMED.

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