475 B.R. 233
Bankr. W.D. Pa.2012Background
- Plaintiff Thomas T. Good obtained a state-court judgment against Debtor Charles F. Kantorik in 2006 for about $26,631.38, and pursued garnishment in 2003-2010 but funds were not collected.
- Debtor filed for bankruptcy on December 27, 2010, triggering Plaintiff’s Complaint to deny discharge under 11 U.S.C. § 727(a)(2)(A).
- Plaintiff alleged Debtor engaged in a pattern of fraudulent transfers to his wife and son to defeat collection over several years, including after the 2003 garnishment.
- Trial evidence showed Debtor transferred cash/checks from his family accounting practice to his wife/son beginning in 2003 and continuing into the one-year pre-petition period.
- Debtor admitted ongoing concealment of income from the family accounting practice and that his wife and son paid his expenses and supported a cash‑only practice, facilitating collection avoidance.
- Court denied Plaintiff’s summary-judgment motion and held a trial, ultimately finding in Plaintiff’s favor on the merits and sustaining the discharge objection.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor’s transfers or concealment violated § 727(a)(2)(A). | Good argues Debtor concealed assets to hinder collection. | Kantorik contends no improper transfers or intent within one year. | Discharge denied; continuous concealment established. |
| Whether concealment occurred within one year before filing. | continuous concealment extended into the year before filing. | No clear evidence of concealment within one year. | Yes, concealment continued into the one-year period. |
| Whether Debtor’s conduct constitutes a pattern of fraudulent transfers. | Transfers to wife/son and cash exchanges constituted fraud. | No fraud proven; ordinary business family arrangements. | Court finds pattern of fraudulent transfers. |
| Whether the evidence supports that Debtor intended to frustrate collection. | Debtor admitted avoiding garnishment; cash handling supports intent. | Intent to avoid garnishment not proven as to all transfers. | Intent to defraud established. |
Key Cases Cited
- Seedling Landscaping & Design, Inc. v. Fryer (In re Fryer), 288 B.R. 193 (Bankr.W.D.Pa.2003) (requires proof of transfer/concealment within one year under § 727(a)(2)(A))
- Rosen v. Bezner, 996 F.2d 1527 (3d Cir.1993) (continuous concealment doctrine requires ongoing improper intent into the year prior to filing)
- Coady v. D.A.N. Joint Venture III, L.P., 588 F.3d 1312 (11th Cir.2009) (fruits of labor diverted to a spouse’s business can constitute concealment)
- In re Batch, 25 B.R. 22 (Bankr.N.D.Tex.1982) (debtors’ discharge denied when proceeds deposited to related-party account to avoid creditors)
- Cadle Co. v. Ogalin (In re Ogalin), 303 B.R. 552 (Bankr.D.Conn.2004) (objections to discharge are strict; dishonesty impairs discharge)