491 B.R. 419
Bankr. E.D. Tex.2013Background
- Sherry R. Buescher is a Texas-licensed attorney married to Dean E. Buescher, who previously owned a large residential homebuilding enterprise (Biel/Buescher Interests, L.P.).
- First United Bank & Trust Co. loaned about $19 million to BIL, guaranteed by Dean; after BIL’s liquidation, the bank pursued guaranty remedies totaling about $8 million.
- An involuntary petition against BIL led to liquidation, prompting discovery efforts by the bank about pre-petition transfers and asset dispositions.
- The Debtor and her husband filed a Chapter 7 petition in 2009, initially without schedules; schedules were later filed but with attention to alleged incomplete and misleading information.
- The Trustee and the bank discovered substantial omissions in the Debtor’s schedules/statement of financial affairs and late-disclosed pre-petition liquidations and Lewisville storage assets.
- The Court previously granted summary judgment against Dean Buescher; the present memorandum resolves the Debtor’s dischargeability and related claims against Sherry Buescher.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Debtor’s discharge must be denied under § 727(a)(4)(A). | Debtor knowingly made false oaths in schedules/SOFA. | Any errors were due to counsel/complex filing system; not knowingly false. | Discharge denied under § 727(a)(4)(A). |
| Whether the Debtor’s discharge must be denied under § 727(a)(2). | Lewisville assets concealed; actions intended to hinder creditors. | No concealment; assets were non-debtor or mischaracterized. | Discharge denied under § 727(a)(2). |
| Whether the Debtor’s discharge must be denied under § 727(a)(3). | Debtor failed to keep adequate records to explain financial transactions. | Records were sufficient or justified; reliance on counsel. | Discharge denied under § 727(a)(3). |
| Whether attorneys’ fees may be awarded to Plaintiff; treatment of costs. | Fees are recoverable as costs. | American Rule bars fee-shifting absence statutory/contract basis. | Only taxable costs awarded; no attorney’s fees. |
Key Cases Cited
- Beaubouef v. Beaubouef (In re Beaubouef), 966 F.2d 174 (5th Cir. 1992) (false oaths require proof of material misstatement and intent)
- Cadle Co. v. Duncan (In re Duncan), 562 F.3d 688 (5th Cir. 2009) (elements for § 727(a)(4)(A); circumstantial proof of intent available)
- Guillet v. Neary (In re Guillet), 398 B.R. 869 (Bankr.E.D.Tex. 2008) (preservation of records; standard for § 727(a)(3))
- Hughes v. Wells (In re Wells), 426 B.R. 579 (Bankr.N.D.Tex. 2006) (need for reliable financial records in discharge proceedings)
- Mezvinsky (In re Mezvinsky), 265 B.R. 681 (Bankr.E.D.Pa. 2001) (discharge is a privilege; disclosure is prerequisite)
- Reed (In re Reed), 700 F.2d 986 (5th Cir. 1983) (discharge standards and creditor protection)