523 B.R. 765
Bankr. E.D. Pa.2015Background
- Kevin and Teresa Burke filed a voluntary Chapter 7 petition on November 1, 2013; trustee reported no assets.
- Todd Nurick (their pre-petition attorney) amended a complaint seeking denial of the Debtors’ discharge under 11 U.S.C. § 727(a)(2), alleging undisclosed assets, undervaluation, and pre-petition transfers.
- Plaintiff failed to respond to Debtors’ interrogatories and document requests; he answered requests for admission with an unsigned document.
- Debtors moved for summary judgment arguing Plaintiff lacks evidentiary support for § 727(a)(2) elements (and alternatively that admissions are deemed established).
- Plaintiff filed a late response but submitted no admissible evidence (affidavits, depositions, expert reports or documentary proof) to create a genuine dispute of material fact.
- The court granted summary judgment for the Debtors because Plaintiff failed to produce evidence sufficient to defeat the motion on the § 727(a)(2) claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtors concealed or transferred assets with intent to hinder, delay, or defraud (§ 727(a)(2)) | Nurick: Debtors omitted collectible toys, arcade games, comics, gym equipment; undervalued real property, furniture, electronics, jewelry; made undisclosed transfers. | Burke: Plaintiff has no admissible evidence to prove omission, undervaluation, or fraudulent transfers; admissions may be deemed admitted due to procedural defects. | Court: Granted summary judgment for Debtors—Plaintiff produced no admissible evidence to meet his burden, so no genuine issue for trial. |
| Whether failure to disclose/undervaluation can support § 727(a)(2) denial of discharge | Nurick invoked § 727(a)(2) asserting concealment and transfers support denial. | Burke: contends § 727(a)(4) (false oath) might be more apt but does not contest legal sufficiency of § 727(a)(2). | Court: Did not resolve statutory-theory dispute; treated alleged omissions as potentially actionable but dismissed for lack of evidence. |
| Effect of Plaintiff’s discovery noncompliance and unsigned admissions response | Nurick: asserted he has sufficient evidence to proceed to trial. | Burke: argued Requests for Admission are deemed admitted (unsigned) and otherwise Plaintiff failed to produce discovery evidence. | Court: Declined to rely on deemed admissions but held Plaintiff’s failure to present admissible evidentiary materials at summary judgment was fatal. |
| Whether intent (scienter) can be resolved on summary judgment | Nurick: intent exists based on alleged omissions/transfers. | Burke: absence of evidence means Plaintiff cannot prove intent. | Court: Recognized intent usually is factual but can be decided on summary judgment when evidence is one-sided; here lack of any evidence warranted decision for Debtors. |
Key Cases Cited
- Rosen v. Bezner, 996 F.2d 1527 (3d Cir. 1993) (denial of discharge is an extreme step; § 727 construed liberally in favor of debtors)
- Adeeb v. Spencer, 787 F.2d 1339 (9th Cir. 1986) (intent to hinder/delay/defraud may be proved by circumstantial evidence)
- Celotex Corp. v. Catrett, 477 U.S. 317 (movant may show absence of evidence to support nonmoving party’s case)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard; genuine issue vs. mere allegations)
- Wishkin v. Potter, 476 F.3d 180 (3d Cir. 2007) (issues of intent and credibility rarely suitable for summary judgment)