567 B.R. 188
D. Utah2016Background
- Debtor Brian W. Steffensen, an experienced attorney, filed a Chapter 7 petition; Peggy Hunt was appointed Chapter 7 Trustee and sued under 11 U.S.C. § 727 to deny discharge for inadequate financial records.
- Trustee served initial disclosures and later provided a proposed pretrial order listing witnesses/exhibits; no trial date was ever set.
- Steffensen served interrogatories seeking the Trustee’s trial witnesses/exhibits; Trustee said she would identify them 30 days before trial.
- Trustee deposed Steffensen (Feb 24, 2015). He received the transcript, then submitted 75 Rule 30(e) corrections after the Trustee filed for partial summary judgment; he did not supply reasoned statements for each change.
- Bankruptcy court struck Steffensen’s deposition corrections as untimely/deficient, denied his motion to bar the Trustee under Rule 37(c)(1), and granted partial summary judgment denying discharge under § 727(a)(3).
- District court reviewed the three rulings (abuse of discretion for discovery rulings; de novo for summary judgment) and affirmed the bankruptcy court.
Issues
| Issue | Steffensen’s Argument | Trustee’s Argument | Held |
|---|---|---|---|
| Motion to bar Trustee under Rule 37(c)(1) for failing to disclose trial witnesses/exhibits | Trustee failed to disclose witnesses/exhibits in discovery; thus she should be barred and the claims dismissed | Rule 26(a)(3) disclosures are only required 30 days before trial; no trial date was set, so no violation | Affirmed: denial of motion to bar — no Rule 26(a)(3) violation without a trial date; sanctions unwarranted |
| Motion to strike 75 Rule 30(e) deposition corrections | Corrections merely clarified inaccuracies and ambiguities; tardiness and lack of explanations should be excused | Corrections changed substance, were untimely/unsupported by signed reasons as required by Rule 30(e) | Affirmed: strike appropriate — Rule 30(e) requires signed statement of changes and reasons; general/conclusory reasons insufficient |
| Partial summary judgment denying discharge under 11 U.S.C. § 727(a)(3) | Corrected deposition material created genuine issues of fact; records produced are sufficient to ascertain financial condition or were all produced | Struck corrections were sham attempts; undisputed facts show debtor failed to keep adequate, intelligible records and has no justified excuse | Affirmed: summary judgment for Trustee — debtor failed to maintain adequate records; justification defenses (cost, busy, sufficiency for personal use) insufficient |
Key Cases Cited
- Franks v. Nimmo, 796 F.2d 1230 (10th Cir. 1986) (sham-affidavit doctrine permits courts to disregard affidavits contradicting prior sworn testimony)
- Gullickson v. Brown (In re Brown), 108 F.3d 1290 (10th Cir. 1997) (standard for § 727(a)(3) — trustee’s burden to show inadequate records and effect on ability to ascertain financial condition)
- Meridian Bank v. Alten, 958 F.2d 1226 (3d Cir. 1992) (§ 727(a)(3) requires records sufficient to trace financial history; debtor’s duty to create/maintain books)
- Somerlott v. Cherokee Nation Distribs., Inc., 686 F.3d 1144 (10th Cir. 2012) (abuse-of-discretion standard for discovery and exclusion rulings)