Sturgill v. Mosley et al

UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
In re: 	TOMMY M. M OSLEY
SUSAN K. M OSLEY,
Debtors
Case No. 	05-42014
Adv. No. 	05-3480
BILLIE J. STURGILL ,
Plaintiff
v.
TOMMY M. M OSLEY,
Defendant
Judge Waldron
Chapter 7
DECISION DENYING (1) MOTION
TO JOIN RUTH SLONE, IN HER
CAPACITY AS CHAPTER 7
TRUSTEE [BANKRUPTCY RULE
7019] AND (2) DENYING MOTION
FOR JUDGMENT ON THE
PLEADINGS [BANKRUPTCY
RULE 7012(c)]
DATED AT DAYTON, OHIO this 2nd day of June, 2006:
Background
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: June 02, 2006
____________________________________________________________
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On October 6, 2005, Tommy M. Mosley and Susan K. Mosley filed a
chapter 7 bankruptcy. 	On December 19, 2005, Billie J. Sturgill, Tommy M.
Mosley’s stepmother, (the “Plaintiff”) filed a complaint (Doc.1) objecting to the
dischargeability 	of 	certain 	debts, 	to 	the 	Debtors’ 	discharge 	and 	requesting
additional relief, including a money judgment (see related proof of claim (#19) for
$100,000).
Tommy Mosley filed an answer on January 12, 2006. (Doc. 7) 	After a
series of initial filings not relevant to this decision (Docs. 5, 8, 19, 20), Susan K.
Mosley was dismissed from this adversary proceeding by stipulation of the
parties. (Doc. 24)
Separately, a Motion for a More Definite Statement (Doc. 6), was filed on
behalf of Tommy Mosley. 	This motion was resolved by an amended complaint,
which was filed on February 2, 2006. (Doc. 12) An amended answer was filed on
March 2, 2006. (Doc. 21) 	See Order Denying, Without Prejudice, Pending
Motions, Authorizing Complaint and Fixing Response Time. (Doc. 15 – February
3, 2006). 	For the balance of this opinion, the court will refer to the Debtor,
Tommy Mosley, as the Defendant.
At a pretrial conference on April 5, 2006, the Defendant raised the issue of
whether the Plaintiff failed to disclose assets in her own chapter 7 bankruptcy
filed in 2001 [Case No. 01-32523] and, therefore, whether the claims asserted in
the adversary proceeding, particularly any monetary relief, continue to belong to
the chapter 7 Trustee, Ruth Slone, in that now closed chapter 7 case. Consistent
with this argument, on May 3, 2006, the Defendant filed a Motion To Join Ruth
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Slone, In Her Capacity As Chapter 7 Trustee of Billie J. Mosley, nka Billie J.
Sturgill or Alternatively, to Dismiss/Sever All Allegations Pertaining to Defendant
Tommy M. Mosley’s Alleged Conduct Presented Preceding April 12, 2001, and
Notice of Responsive Pleading Deadline in Connection Herewith (Doc. 29). 	On
May 8, 2006, the Plainitiff filed a Memorandum in Opposition to Join Ruth Slone
or to Dismiss/Sever All Allegations Pertaining to Defendant Tommy M. Mosley’s
Alleged Conduct Preceding April 12, 2001. (Doc 30) 	Significantly, Ruth Slone,
the chapter 7 Trustee in that closed chapter 7 case [Case No. 01-32523] (the
Former Trustee), has, despite being served, not filed anything in this case or this
adversary proceeding.
Law and Analysis
The Plaintiff’s amended complaint alleges that the debt owed to Billie
Sturgill should be non-dischargeable under the fraud exception of §523(a)(2)(A)
and the exception for breach of fiduciary duty, embezzlement and defalcation [§
523(a)(4)]. 	The Plaintiff separately seeks to deny the Defendant’s discharge
pursuant to § 727(a)(4)(A), which addresses whether the Defendant knowingly
and fraudulently made a false oath in or in connection with his bankruptcy case
and § 727(a)(5), which addresses whether “the debtor has failed to explain
satisfactorily, before determination of denial of discharge under this paragraph,
any loss of assets or deficiency of assets to meet the debtor’s liabilities[.]”
The amended complaint details various allegations. They include, inter
alia: the Defendant was the Plaintiff’s step-son; upon the death of Roy Mosley,
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the 	Defendant’s 	father 	and 	Plaintiff’s 	husband, 	the 	Defendant 	became 	the
attorney in fact of the Plaintiff; a joint checking account was opened in the name
of the Plaintiff; the Defendant fraudulently signed the Plaintiff’s name on checks,
the Defendant lied about creating an insurance policy on the Plaintiff’s life, the
Defendant coerced the Plaintiff into selling a vehicle and subsequently kept the
proceeds, together with various other allegations of misappropriation of the
Plaintiff’s funds. 	In addition, the amended compliant alleges the Defendant kept
a series of items and/or sold them and converted the proceeds. 	Further, the
second count of the amended complaint alleges the Debtor has failed to disclose
various assets and undervalued various other assets.
Consistent with the amended complaint, the Plaintiff on March 13, 2006,
filed a proof of claim (#19) for $100,000 as an unsecured, non-priority claim. The
claim is based on “money obtained by fraud” and a series of items the Plaintiff
alleges were converted from her. See Exhibit A of Proof of Claim #19.
The Defendant’s Motion (Doc. 29) argues that many of the assets sought
in the Amended Complaint (Doc. 12), and referred to in the related proof of claim,
were not disclosed in the Plaintiff’s separate bankruptcy in 2001 [Case No. 01-
32523]. 	For purposes of this decision, the court assumes, without deciding, that
the assets sought in the Amended Complaint (Doc. 12) were not disclosed in the
Plaintiff’s separate bankruptcy in 2001 [Case No. 01-32523].
The court recognizes the general principle that property which is not
disclosed remains property of the estate and is not abandoned. See generally
Harker v. Troutman (In re Troutman), 244 B.R. 761, 768-69 (Bankr. S.D. Ohio
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2000). 	This general principle, however, must always be measured against the
facts of a specific case or proceeding. 	The uncontested facts in this case and
adversary establish that the Former Trustee has not entered an appearance in
this case or this related adversary proceeding. 	Additionally, the Former Trustee
has not sought to re-open the closed 2001 bankruptcy [Case No. 01-32523].
Perhaps, more significantly, after being specifically served with the Defendant’s
Motion To Join Ruth Slone, In Her Capacity As Chapter 7 Trustee of Billie J.
Mosley, nka Billie J. Sturgill or Alternatively, to Dismiss/Sever All Allegations
Pertaining 	to 	Defendant 	Tommy 	M. 	Mosley’s 	Alleged 	Conduct 	Presented
Preceding 	April 	12, 	2001, 	and 	Notice 	of 	Responsive 	Pleading 	Deadline 	in
Connection Herewith (Doc. 29) and the Plaintiff’s Memorandum in Opposition to
Join Ruth Slone or to Dismiss/Sever All Allegations Pertaining to Defendant
Tommy M. Mosley’s Alleged Conduct Preceding April 12, 2001 (Doc. 30), the
Former Trustee, again, did not complete any filings in the closed case [Case No.
01-32523], this case or this adversary. 	The Court does not suggest that the
Former Trustee was obligated to file anything in connection with any of these
cases or this adversary. 	To the contrary, it is within the specific purview of a
Trustee to exercise independent judgment with regard to the Trustee’s choices to
take or decline to take certain actions. 	The Trustee in the exercise of such
responsibilities is not a representative of any specific creditor’s concerns.
Against these facts, and in the specific circumstances of this adversary,
the court concludes that, to the extent the Plaintiff failed to initially disclose any of
the property alleged by the Defendant to have been property of the estate and, to
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the extent any of the assets sought in the Amended Complaint and referred to in
the related proof of claim could be determined to continue to be property of the
estate in the closed 2001 case [Case No. 01-32523], all such property is
determined to be abandoned. 	This conclusion is compelled by the facts in this
case and adversary proceeding and is consistent with the Court’s permissible
discretion pursuant to applicable Code provisions. 	See 11 U.S.C. § 554(d)
(“Unless the court orders otherwise, property of the estate that is not abandoned
under this section and that is not administered in this case remains property of
the estate”; underlining added) and 11 U.S.C. § 554(c) (Unless the court orders
otherwise, any property scheduled under section 521(1) of this title not otherwise
administered at the time of closing of a case is abandoned to the debtor and
administered for purposes of section 350 of this title.”; underlining added).
Additionally, 	it 	is 	necessary 	to 	recall 	that 	this 	adversary 	concerns
dischargeability and discharge issues, and, only peripherally, the determination
of a monetary amount in connection with a proof of claim. Accordingly, based on
the general procedural standards determined by the Sixth Circuit, the court finds
that Ruth Slone is not an indispensable party pursuant to Federal Rule of Civil
Procedure 19(a), applicable by Bankruptcy Rule 7019, nor is it appropriate to
dismiss this adversary pursuant to Federal Rule of Civil Procedure 19(b). 	See
generally Hooper v. Wolfe, 396 F.3d 744, 747-51 (6th Cir. 2005).
Further, as previously discussed, accepting the allegations in the Plaintiff’s
complaint as true, the court finds no basis to dismiss this adversary based on the
pleadings, 	since 	the 	Plaintiff 	could 	obtain 	relief 	based 	on 	the 	Amended
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Complaint. 	See Federal Rule of Civil Procedure 12(c), made applicable by
Bankruptcy Rule 7012; Kottmyer v. Mass, 436 F.3d 684, 689 (6th Cir. 2006) (The
court noting the standard for Rule 12(c) is “nearly identical” to a Rule 12(b)(6)
motion to dismiss.).
The Court, however, notes the denial of the Defendant’s motion should not
be construed as an expression by the Court concerning whether the Plaintiff’s
amended complaint (Doc. 12) will ultimately be successful in a trial of this
adversary.
Conclusion
The Defendant’s Motion (Doc. 29) is DENIED.
SO ORDERED.
c:
Mary K. C. Soter, 5518 North Main Street, Dayton, Ohio 45415-3455 (Atty. for
Plaintiff)
Arthur R. Hollencamp, 130 West Second Street, Suite 2107, Dayton, Ohio
45402-1502 (Atty. for Defendant)
Ruth A. Slone, P.O. Box 3340, Dayton, Ohio 45401
John Paul Rieser, Esq., 1520 First National Plaza, 130 West Second Street,
Dayton, Ohio 45402 (Trustee)
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