MEMORANDUM TO ORDER OF JULY 81, 1987, DISPOSING OF PLAINTIFF’S AND DEFENDANT’S CROSS-MOTIONS FOR DISMISSAL AND/OR SUMMARY JUDGMENT
On July 31, 1987, this Court entered an order denying Plaintiff’s motion for dismissal without prejudice, granting Debtor’s 1 motion for summary judgment, and abstaining from Debtor’s request for awards of attorney fees and punitive damages in this adversary proceeding for denial of discharge under 11 U.S.C. § 727(a). The motions were originally argued to the Court on November 24, 1986, and submitted on the basis of that short oral argument and a substantial pre- and post-hearing development of the record. The Court enters this memorandum to set forth the Findings of Fact and Conclusions of Law, and general rationale, underlying the order disposing of the motions.
Plaintiffs Complaint in these adversary proceedings seeks denial of Debtor's discharge in bankruptcy under 11 U.S.C. §§ 727(a)(2), 727(a)(3), and 727(a)(5). Plaintiff premises its cause of action on the course of dealing between its officers and Debtor on several secured loans from Plaintiff to Debtor, and specifically on events occurring on and after January 4, 1984. Plaintiff has not prayed in the alternative for a finding of nondischargeability of debt under 11 U.S.C. § 523(a). In a scheduling order dated May 2, 1986, the undersigned required the parties to make substantive motions by July 16, 1986. Counsel requested and were granted a two-month extension of this deadline. In early October, 1986, Debtor’s counsel (untimely) submitted a motion in the alternative for dismissal or summary judgment, without setting it on for hearing. On October 9, 1986, the Court entered a scheduling order for briefing. On October 17, 1986, the Clerk of this Court received Debtor’s Motion for Dismissal Without Prejudice. The Court then set November 24, 1986, as the date for hearing on the cross-motions.
Since then, the parties have submitted various “Objections,” amended motions, affidavits and memoranda. These pleadings have thickened the file in this adversary proceeding by over one inch, when both parties ostensibly want to put this litigation to an end. The memoranda are rife with misspellings, typographical errors, mis-cita-tions, inconsistent substantive arguments and conclusions, and numerous other failings burdensome to the Court in its review. The increasing stridency of the accusations summarily made by both parties’ counsel in the memoranda is nothing short of astounding. It is obvious that the joinder of these motions is only the lastest — and now the last — in a series of increasingly hostile legal confrontations between these parties, commencing in the throes of Debtor’s financial difficulties as a farmer, continuing through a replevin action and post-replevin accusations of fraud and conversion, going through the convening of a Goodhue County grand jury at Plaintiffs behest to determine whether Debtor should be charged with the state-law felony offense of misappropriation of Plaintiff’s security, and culminating in Debtor’s bankruptcy filing. If every minute charge and counter-charge were examined and treated in detail, review of the record made on these motions would be stultifying.
This Court’s function is not to assuage hurt feelings, perceived emotional slights, or a party’s sense of degradation and betrayal — regardless of whether those wrongs are alleged by a debtor claiming that a creditor failed to meet expectations born of assurances made in past credit transactions, or by a creditor claiming that a debtor fraudulently abused established trust. This Court's function is to fairly and promptly administer the Bankruptcy Code and Rules, applying appropriate procedural and evidentiary burdens and substantive law to reach a result consistent with Congressional intent. The record made on these motions has hampered rather than helped the Court to do this. All counsel are to blame. However, “using something more than a brush-hook but something less than a bulldozer,” it is possible to clear away the excess verbiage to consider and decide the issues at hand.
I. PLAINTIFF’S MOTION FOR DISMISSAL WITHOUT PREJUDICE.
Plaintiff’s motion may be treated summarily. Plaintiff's counsel failed to properly place its dismissal without prejudice before the Court by failing to fully comply with LOC.B.BANKR.P. (D.Minn.) 116(c); thus, the Court must deny its motion.
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First, the affidavit of no considera
Further, Plaintiff did not notify all creditors of the hearing on its request for dismissal, as required by the local rule. An objection to discharge under 11 U.S.C. § 727(a) (as opposed to an exception to the dischargeability of a particular debt under 11 U.S.C. § 523(a)) affects all parties in interest to the bankruptcy case. A private creditor who commences a § 727(a) proceeding takes on some of the attributes of a trustee, advancing the interests of all of a debtor’s creditors. He challenges conduct on the debtor’s part which goes beyond a mere harm to the plaintiff-creditor’s individual pecuniary interests. Conduct properly addressed under § 727(a) is a broad, deliberate failure on the debtor’s part to act fairly, equitably, and responsibly in the conduct of debtor-creditor relations, resulting in a more pervasive injury to bankruptcy’s equitable process of adjustment of those relations.
In re Harrison,
A § 727(a) objection to discharge joins one of the gravest possible issues in a Chapter 7 case; a creditor should commence such a proceeding only after mar-shalling compelling evidence of all of the elements of one or more of the subdivisions of § 727(a). Consistent with Congressional intent, the statute governing objections to discharge is to be construed strictly against the objecting creditor and liberally in favor of the debtor.
In re Devers,
Defendant’s motion requires more extended treatment, in part because Plaintiff’s complaint alleges grounds for denial of discharge under three different subsections of § 727(a), and in part because the Court must separate counsel’s summary maledictions from the evidentiary record presented. After a winnowing-out of the extraneous accusations, several kernels of undisputed fact emerge. 4 First, it is clear that Debtor engaged in grain farming during the 1984 crop year. After Plaintiff denied him an operating loan for that year, he obtained seed and fertilizer on credit from the Goodhue Co-operative Elevator and then sold his 1984 crop on October 4, 1984, to that elevator and the Pine Island Elevator. It is also undisputed that Debtor directed the proceeds of the 1984 crop (of a total of $38,696.00) to the following expenses of that crop:
Goodhue Elevator (seed loan) $19,179.00
Debtor’s mother (land rent) $10,346.00
Farm and harvest labor $ 3,200.00
Machinery repair $ 3,600.00
$36,325.00
It also appears that Debtor diverted the balance of $2,371.00 to other miscellaneous expenses for his farming operation and, probably, for his own living expenses. 5 The Bank claims a perfected security interest in the 1984 crop under a security agreement executed by Debtor on January 4, 1984, perfected by the filing of a financing statement with the Goodhue County Recorder on January 13, 1984.
The Bank also claims a valid and perfected security interest in all of Debtor’s farm equipment and machinery, under a 1974 security agreement and several renewals or replacements of it. The security agreement enumerated specific items of equipment, including the following items which Plaintiff now alleges were not present and available when it repossessed its security from Debtor in December, 1984, and when it finally conducted its replevin sale in April, 1985:
1961 Allis-Chalmers D-17 tractor
1961 John Deere Model B tractor
1976 Chevrolet 3/4 ton pickup truck
1968 New Holland baler
40 foot Owatonna elevator
12 foot International grain drill
In his answers to Plaintiff’s interrogatories and in several affidavits, Debtor has stated that the relevant security agreement entries for the 1961 John Deere Model B tractor and the International grain drill were mistaken duplicates of other scheduled items of similar character. He also states that the 1961 Allis-Chalmers D-17 tractor was an item which he had rented for several years and never owned, that the Bank voluntarily released its lien on the 1976 Chevrolet pickup truck in 1979, that he disposed of the 1968 New Holland baler in the fall of 1984 as junk for nominal consideration of $85.00, and that the Owa-
As the last major factual basis of its complaint, Plaintiff notes that, in the January, 1984 financial statement, Debtor represented that he held an unencumbered ownership interest in 40 acres of real estate in Belvedere Township, Goodhue County (which asserted interest shall be referred to as “the Belvedere Township property” for brevity), and held a right to “settlement due on house,” consisting of a lien against his former marital homestead granted to him in a divorce decree, of a value of $50,000.00. It further alleges that Debtor promised to grant Plaintiff a lien or security interest in both of these alleged assets during discussions in December, 1983 and January, 1984 between Debtor and bank officers.
The nature of these asserted property rights is established under two state-court decrees, which the parties have made a part of the record on these motions. Plaintiff has produced no evidence to rebut factual findings — ior legal conclusions — which might be drawn from them.
In a Second Amended Judgment and Decree entered in Olmsted County Court, Family Division, on January 5, 1984, Marit Drenckhahn, Debtor’s ex-wife, was awarded their Goodhue County Minnesota marital homestead, subject to a lien in the amount of $50,000.00 payable to Debtor on October 26, 1987, or at a prior date in the event of certain contingencies. Debtor’s ex-wife was given the right to offset any accrued arrearages in Debtor’s child support obligation against the lien. Debtor was restrained from assigning his interest in the lien, and from encumbering it prior to approval by the dissolution court. 6
In a Final Decree of Distribution entered in Goodhue County Probate Court in the probate of the estate of Adolph W. Drenck-hahn, Debtor’s deceased father, Debtor’s mother, Violet M. Drenckhahn, was decreed a life estate in all of the decedent’s real estate, and Debtor was given an undivided one-fourth remainder interest in that real estate, to be held in common with his three siblings. That order was entered on April 11, 1966. At all times it was a matter of public record in Olmsted County. Debt- or’s mother was alive at all times between 1984 and the date of hearing on the parties’ motions, and had not transferred her interest in her deceased husband’s farm to any person or entity.
There is no genuine issue of fact as to the foregoing events and circumstances; Plaintiff has produced no evidence that the actual status of Debtor’s ownership interests in any of the assets in question was in any way different from the status alleged
A. . § 727(a)(2): Transfer of property with intent to hinder, delay, or defraud a creditor.
Plaintiff’s major objection to discharge is founded on the following provision of 11 U.S.C. § 727(a)(2):
(a) The court shall grant the debtor a discharge, unless—
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(a) the debtor, with intent to hinder, delay, or defraud a creditor ... has transferred, removed, destroyed, mutilated, or concealed—
(A) property of the debtor, within one year before the date of the filing of the petition ...
A petitioning creditor must prove four basic elements under-§ 727(a)(2)(A):
1. A transfer of property occurred, made by the debtor or made at his sufferance;
2. The transfer involved property of the debtor;
3. The transfer was made within one year of the commencement of the bankruptcy case;
4. The debtor had, contemporaneously with the transfer, intent to hinder, delay, or defraud a creditor.
In re Clausen,
As to the transfer of the 1984 crop, it is uncontested that Debtor did in fact transfer the crop to two different elevators within one year of the commencement of his bankruptcy case; thus, Plaintiff has satisfied the first and third elements. However, Plaintiff's case as to the transfer of the 1984 crop fails as a matter of law as to the second element; in addition, Plaintiff has failed to come forward with evidence to rebut Debtor’s statement that in making the transfer he never had the specific intent to hinder, delay or defraud it, required under the fourth element, and an inference of such an intent is utterly unsupported by the record.
A creditor complaining of an unauthorized disposition of its security may successfully obtain an exception of its debt from discharge under 11 U.S.C. § 523(a)(6), if it can prove that the debtor acted willfully and maliciously in making the disposition.
See, e.g., In re Long,
Plaintiff’s case under § 727(a)(2)(A) also fails as to the alleged unauthorized disposition of farming equipment, for the same reason as to several items and for a more basic reason as to a number of other entries on Debtor’s equipment schedules attached to Plaintiff’s security instruments. Out of all of the scheduled equipment not present at repossession, Plaintiff could be said to have actually had security interests in only the 1968 New Holland baler and the Owatonna elevator. Debtor’s disposition of those items is, for the reasons discussed above, not properly addressed under § 727(a)(2)(A).
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On a more basic level, it has failed to demonstrate that Debtor ever even owned a 1961 John Deere Model B tractor,
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International grain drill, or a 1961
This leaves the alleged transfer of Debtor’s dissolution lien rights to his children. At least on its face, this is the most troubling of the events argued by Plaintiff under § 727(a)(2)(A). While Plaintiff has not produced any evidence of the actual amount of child support arrearages and prospective obligation which were forgiven in consideration for the alleged transfer, it can be inferred from the terms of the divorce decree in the record that the total value of these components did not exceed $14,000.00. The fact that Debtor and his former counsel apparently discussed the question of whether the proposed transfer would be subject to legal challenge evidences Debtor’s awareness that he was then financially distressed and near bankruptcy, notwithstanding Plaintiff's failure to elicit any direct evidence of a motivation founded in economic desperation.
Standing alone, without challenging evidence of contrary intent,
these factors would support an inference of a transfer without consideration to a family insider with intent to hinder, delay, or defraud creditors. See
In re Reed,
The Court’s conclusions as to all sequences of events other than the dissolution lien transfer would in themselves merit a grant of summary judgment in Debtor’s favor on all but one of the § 727(a)(2)(A) claims. See
Celotex Corp. v. Catrett,
Plaintiff’s case thus fails as a matter of law as to the fourth element, on all of the transfers alleged. Debtor is entitled to entry of judgment in his favor on the count of Plaintiff’s complaint sounding under 11 U.S.C. § 727(a)(2)(A).
B. § 727(a)(3): Failure to keep and preserve recorded information relating to Debtor’s financial condition or business transactions.
Plaintiff’s second count sounds under the following language of 11 U S.C. § 727(a)(3): (a) The court shall grant the debtor a discharge, unless—
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(3) the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case
While § 727(a)(3) could be interpreted in a draconian fashion to require maintenance, preservation, and production of comprehensive records of every minute detail of a bankruptcy debtor’s financial and business activity as a precondition to grant of discharge, it is clear that such an interpretation is wholly inappropriate.
Rhoades v. Wikle,
The obvious purpose of the statute is to “assure ... the trustee and creditors that they will be provided with sufficient information with which they can assess the debtor’s estate and general financial posture.”
In re Shapiro,
Plaintiff seems to have added this count to its complaint in a “shotgun” approach. The complaint does not even quote or paraphrase the statutory language and refers only to the statute by section number; Plaintiff’s counsel never addressed it in argument or memorandum; and neither party has seen fit to produce any hard evidence material to the issue on these motions. If one were for the sake of analysis (albeit ignoring the duties of the adversarial process) to construe the complaint most favorably to Plaintiff, the act complained of is Debtor’s failure to produce books and records to document the disposition of the 1984 crop and the farming equipment, and to document the nature, extent, and alleged disposition of Debtor’s rights to the dissolution homestead lien and the Belvedere Township property. While Debtor did not produce actual records relating to the disposition of the crop and the farming equipment on these motions, his affidavits and answers to interrogatories are detailed enough to support an inference that Debtor retained receipts and other records of his sale of the crop and disposition of farming equipment (to the extent he even owned particular items of equipment). The supporting records on the crop sale were certainly maintained by and available from the Goodhue Elevator Association, which by letter of September 24, 1985 to Plaintiff advised that it would not release the records “without a court order.” Plaintiff’s counsel could have obtained them via discovery in this adversary proceeding, and cannot complain either of their unavailability or inadequacy in support of a denial of discharge, at this late date.
The sale or abandonment of the two or three pieces of useless farming equipment does not merit preparation or preservation of extensive records to satisfy the particularized standard of § 727(a)(3). Debtor was a farmer who operated exclusively on rented land, and the only property he actually owned in connection with his farming activity was his equipment. Plaintiff has produced no evidence that Debtor was experienced or sophisticated in business or in any trade other than farming, and no evidence that either the nature and level of his farming business activity or his personal financial structure was so intensive or of such size to merit comprehensive and formal accounting, books and records.
Cf. In re Greenwalt,
Plaintiff's § 727(a)(3) claim stemming from Debtor’s asserted interests in the dissolution lien and the Belvedere Township property, and any disposition he may have made of them, is even less supportable. The only possible complaint is that Debtor did not maintain records from which the nature and disposition of these assets may now be determined. Debtor has produced two court decrees to establish the nature of these assets. He admits he executed a quitclaim deed and attempted to divest himself of the dissolution lien in favor of his sons. There is some question as to whether the transfer was legally effective. To the extent that he even accomplished the transfer, it cannot be said that Debtor failed to maintain adequate records in relation to the transaction; it was obviously accomplished without cash consideration and on an informal basis, and was not such as to merit or mandate the maintenance or retention of extended books, records, or documents. To the extent that justification for the transfer was called for, it could have been elicited by deposing Debtor or the other parties involved.
Plaintiff has not strenuously argued its objection to discharge under § 727(a)(3). In any event, for the reasons stated, it is clear that Debtor is entitled to entry of judgment as a matter of law on the count.
C. § 727(a)(5): Failure to explain satisfactorily any loss or deficiency of assets to meet liabilities.
Plaintiffs third count sounds under the following language of 11 U.S.C. § 727(a)(5):
(a) The court shall grant the debtor a discharge, unless—
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(5) 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 ...
On its face, the statute allows a debtor to make satisfactory explanation of loss or deficiency of assets at any time “before determination of denial of discharge under [the] paragraph.” Thus, a debtor may come forward with an explanation of loss or deficiency of assets during the trial of an objection to discharge under § 727(a)(5), and present that explanation to the court for its determination as to whether or not it is satisfactory. It is clear, however, that this section is directed toward insuring debtors’
accountability
for past transactions, and does not require or even allow inquiry into the substantive character of the loss or deficiency of assets itself.
In re Nye,
Because § 727(a)(5) is ultimately designed to promote the integrity of the bankruptcy process by punishing a debtor’s failure to respond to proper inquiry by a creditor or the trustee, the factual inquiry which must be made in a summary judgment motion in a § 727(a)(5) action goes only to the facial sufficiency of the explanation and accounting made, and to its indicia of credibility; it does not go to the facts asserted in the explanation. In the case at bar, Plaintiff’s complaint under § 727(a)(5) focuses on Debtor’s alleged failure to account for or to be forthcoming with information as to the nature and/or disposition of his alleged rights in the dissolution homestead lien and the Belvedere Township property. In his affidavits and various responses to discovery, Debtor has complied with his duty under § 727(a)(5). He has been sufficiently forthcoming about the nature of his remainder interest in the Belvedere Township property and the nature and possible transfer of his dissolution homestead lien to satisfy the disclosure requirements which § 727(a)(5) is designed to vindicate. 13 The fact that Debtor may once have promised Plaintiff’s employees that he would either encumber asserted interests in these assets in Plaintiff’s favor, or that he would liquidate them and apply the proceeds to Plaintiff’s debt, is simply not properly addressed under § 727(a)(5). 14
Plaintiff has not come forward with any evidence — or even any specific legal argument — to challenge the adequacy of Debt- or’s explanations of the deficiency or loss of assets which it alleges. Given Plaintiff’s failure to rebut, the Court can fairly conclude that Debtor’s explanations are satisfactory.
In re Wheeler,
D. Unclassified Complaints re: Debtor’s Failure to Grant Liens to Plaintiff.
As noted
infra
at p. 704, Plaintiff complains loudly of Debtor’s alleged bland
III. DEBTOR’S MOTIONS FOR IMPOSITION OF SANCTIONS AND AWARDS OF PUNITIVE DAMAGES AND ATTORNEY FEES.
The remaining issue is raised by Defendant’s repeated and persistent requests for imposition of sanctions on Plaintiff for its alleged “overzealous” and “malicious” pursuit of Debtor through this and other legal forums.
A review of the file reveals that Debtor’s request for attorney fees and sanctions started modestly and, like Topsy, “it just growed.” Debtor’s answer, interposed by prior counsel, contains a standard boilerplate request for judgment in his favor and for allowance of his costs, disbursements and attorney fees. The answer contains no counterclaim against Plaintiff and does not cite any federal statute or rule in support of its prayer for sanctions. In Debtor’s original “Motion to Dismiss, or in the Alternative Motion for Summary Judgment,” filed on October 15, 1986, his present counsel requested an award of attorney fees from Plaintiff in the amount of $2,000.00, and “his costs and expenses and penalties determined by the Court.” After Plaintiff filed its request for dismissal, Debtor’s counsel filed on October 22, 1986 a document titled “Objection to Dismissal at Instance of Plaintiff,” in which the requested attorney fee award grew to $3,500.00 and, for the first time, an award of punitive damages (in the sum of $20,000.00) was requested. In a memorandum of law to support this “Objection,” filed on November 17, 1986, Debtor’s counsel first cited FED.R.CIV.P. 11 and 28 U.S.C. § 1927, as well as the perennial ground of “bad faith,” as the legal bases for Debtor’s request for attorney fees and sanctions. In the memorandum of law, Debtor’s counsel now argued that punitive damages in an amount of “at least one-third of the amount that Plaintiff has attempted to have exempted [sic] from discharge herein ... or $45,900.00,” should be awarded to him. Counsel did not accompany the memorandum with an amended motion with a corresponding prayer for relief. Lastly, in a “Fee Statement,” filed on December 17, 1986, Debtor’s counsel now requested an award of attorney fees and costs for his own services in connection with this adversary proceeding (for a total of $4,853.20), and “for excess fees [paid to Debtor’s prior counsel] incurred as a result of this and prior actions percipitated [sic] by Plaintiff.” The latter request was for attorney fees for services performed by Debtor’s prior counsel as early as October 22, 1984, including the defense of Plaintiff’s state court replevin action, representation in connection with the grand jury proceedings, and defense in the early stages of this adversary proceeding, for a total of $1,568.00. In the “Fee Statement,” Debtor renewed his request for an award of punitive damages.
Debtor’s request for an award of sanctions is presented in such a disorganized and inconsistent fashion, and consists of so many different components, that it is difficult to either analyze or dispose of it in a succinct fashion. Toward the end of his pleading barrage on Plaintiff, Debtor’s counsel seemed to suggest that an award of punitive damages was mandated by the totality of Plaintiff’s debt-collection and other efforts directed toward Debtor, going back all the way to the fall of 1984. The fact that Debtor now requests an award of his attorney fees in connection with several pre-bankruptcy legal proceedings buttresses this conclusion. As such, a major com
This then leaves Debtor’s request for imposition of sanctions for Plaintiff’s actions in prosecuting this adversary proceeding. As evidenced by the preceding sections of this Memorandum, the Court to some extent shares Debtor’s indignation at the extreme lengths to which this adversary proceeding had to be litigated. It has some degree of sympathy for Debtor for the expense and uncertainty visited on him by Plaintiff's continued assertion of inconsistent and somewhat illogical positions. Plaintiff’s pursuit of the harsh remedy of denial of discharge was inappropriate under all of the circumstances, and its arguments ultimately were unsupported by the record which it brought forward on these motions.
However, the Court cannot conclude that Plaintiff would have acted utterly without foundation in pursuing some other bankruptcy-law cause of action against Debtor on the evidence presented. In Section II of this Memorandum, the Court concluded that Plaintiff’s complaint, to the extent it was appropriately founded in any section of the Code, should have been founded on 11 U.S.C. §§ 523(a)(2)(A), 523(a)(2)(B), or 523(a)(6). The judgment entered on Debtors’ motion has disposed of the complaint in Debtor’s favor entirely and with complete certainty.
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However, when this ad
This leaves the possibility that Debtor’s request for attorney fees and punitive damages arising solely out of the prosecution of this adversary proceedirg may also constitute a state-law cause of action for abuse of process. To the extent that this cause of action was not joined at the commencement of this adversary proceeding or later via counterclaim or a specific prayer for relief in an original or amended answer, it is not properly addressed now for the reasons discussed supra at n. 15. Whether such a cause of action for abuse of process has continuing vitality given the conclusions stated in the preceding paragraph is an open question, too. In any event, this Court again has elected to abstain from deciding these issues. They arise exclusively under state law. There does not seem to be an independent basis of federal court jurisdiction for them, other than their genesis in Debtor’s bankruptcy case. Finally, Debtor has simply not given this Court sufficient legal and factual development to fairly adjudicate his asserted entitlement to actual and/or punitive damages under an abuse of process theory.
Thus, in the Order for Judgment and Judgment entered on July 31, 1987, the Court abstained in full from considering and determining Debtor’s request for damages from Plaintiff. Debtor should feel free to renew any meritorious claims against Plaintiff in the Minnesota state courts — subject to approval by his Chapter 7 trustee where appropriate — if he obtains a thorough and favorable evaluation from counsel after consideration of the conclusions reached in this Memorandum.
Notes
. For the sake of clarity, Defendant Kenneth Robert Drenckhahn will be referred to as "Debt- or" in this Memorandum.
. The Local Rule provides in pertinent part as follows:
Complaints A complaint objecting to discharge may not be dismissed under Rule 7041 at the plaintiffs instance except by order of the court after hearing on notice to all creditors and other parties in interest and after the plaintiff has filed an affidavit stating that nothing has been received by or promised to the plaintiff in consideration of the request for dismissal.
. It is a mystery why Plaintiff obdurately refused to concede to Debtor’s request for dismissal with prejudice. Its counsel admitted at hearing that Plaintiff did not intend to re-file an objection to discharge. (There is a serious question as to whether Plaintiff could successfully re-file and maintain an objection to discharge after dismissal of an earlier discharge proceeding.
See Davis v. Lewis,
. Though Debtor’s motion is captioned in the alternative, Debtor has made numerous references to affidavits, discovery responses, and other pleadings outside Plaintiffs complaint; thus, one must treat the motion as one for summary judgment rather than as one for dismissal on the pleadings. FED.R.CIV.P. 12(b), made applicable to this adversary proceeding by BANKR.R. 7012(b). Entry of summary judgment in favor of the moving party is mandatory “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits [supporting the motion], if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c), made applicable to this adversary proceeding by BANKR.R. 7056.
. In a Memorandum filed on November 4,1986, Debtor’s counsel summarily alleges that the four major categories of expense detailed above consumed the full proceeds of the 1984 crop. A totalling of the expenses falling in the four categories and a comparison of that total with the proceeds shows this is not the case. In view of the circumstances (a relatively minimal surplus, Debtor’s uncontroverted statement that he had to meet additional expenses such as insurance, and the certainty that he also had personal living expenses to meet), the existence of a minor surplus, and Debtor's failure to provide a penny-for-penny accounting of it, certainly do not support findings that Debtor improperly disposed of or concealed the surplus, or has not properly accounted for it.
See In re Johnson,
. Statements in various pleadings in this adversary proceeding suggest that Debtor transferred, or at least attempted to transfer, his lien interest in the marital homestead to his two sons in satisfaction of child support arrearages and prospective child support obligations, at some unknown date. Plaintiff has produced no objective evidence of the actual or attempted transfer. Debtor states in his October 31, 1986 affidavit that he "transferred said lien to his children by quit claim deed,” but then goes on to state that he did so only on prior advice of counsel to the effect that he was transferring exempt property, presumably in satisfaction of a nondischargeable debt. Plaintiff could have generated evidence of Debtor’s intent in the transfer via discovery but apparently did not do so, and did not bring forward any such evidence on these motions. While Plaintiff argues that the alleged transfer itself would be a valid basis for denial of discharge under § 727(a)(a)(A), its shrillest arguments in relation to the transfer focus on Debtor’s alleged fraudulent representation that he could and would grant the Bank a lien against his dissolution-lien interest, and his subsequent failure to do so, and Debtor's alleged failure to account for his inability to grant the lien, as grounds for objection to discharge under § 727(a).
. Indeed, all the Bank has put into controversy was whether Debtor actually or impliedly made representations that he had full, otherwise — unencumbered ownership interests in all of the assets in question when he signed the security agreement. Though Debtor’s denial that he made such representations creates a dispute of fact, it does not give rise to a genuine issue of fact that is material to an inquiry under § 727(a) — as will be seen.
.The parties do not dispute that, at all relevant times from mid-1983 on, Plaintiff was seriously undersecured. The parties have ignored the issue of whether Debtor’s 1984 suppliers and landlord had input liens against the crop and its proceeds that were senior to Plaintiffs security interest. It is not necessary to address the issue. However, if the suppliers and landlord had superior, all-encumbering liens, any effective infringement on Plaintiffs security rights was minimal, or nonexistent.
. It would seem that Plaintiff would have a nearly-insuperable burden under § 523(a)(6) in proving that Debtor acted with malice toward Plaintiff in disposing of these two items, which were plainly of negligible value in any event.
. As Debtor noted, it seems that there is no such thing as a 1961-model John Deere B tractor. Deere apparently discontinued manufacture of the B line in the mid-1950’s.
. The record could in fact support a finding that, at least at some point before his sale of the 1984 crop, Debtor did not believe that Plaintiff held a security interest in the crop, or at least was confused about whether it did.
. Plaintiff does not complain of Debtor’s failure to account for the disposition of the 1984 crop and the disputed equipment in the count of its complaint sounding under § 727(a)(5). Had it done so, the Court would find that Debtor has satisfactorily explained his disposition of any such assets, in his affidavits, and answers to Plaintiffs discovery.
. This ruling in favor of Debtor on the discharge objection founded on the dissolution lien transfer has no effect on the issue of whether the transfer is avoidable by Debtor’s Chapter 7 Trustee on the basis of this Court’s decision in
In re Olson,
. These representations would have been properly addressed only under 11 U.S.C. § 523(a)(2)(A), to the extent that Plaintiff’s officers relied on them in extending or refinancing Debtor’s loan — if under any Bankruptcy Code provision.
But see In re Reder,
. The foregoing analysis avoids an all-too-evident procedural defect. As the pre-petition cause of action is essentially a counterclaim by Debtor against Plaintiff, it should have been initially joined in Debtor's answer and made fully subject to discovery during the course of the adversary proceeding, rather than sprung upon Plaintiff and the Court in the final frenzy of the cross-motions for dismissal. See FED.R. CIV.P. 13(a) and (b), made applicable to this adversary proceeding by BANKR.R. 7013. The improper procedural posture of this component of the request for sanctions, standing alone, merits its denial at this stage of this litigation.
. As an aside, it should be noted that final disposition of an objection to discharge on motion for summary judgment — rather than after trial — should be the exception rather than the rule. More often than not, discharge objections involve questions of subjective motive and intent, which by their nature are particularly inappropriate for summary adjudication.
In re D'Avignon,
. Now that the Court’s sentiments are made abundantly clear by the entry and publication of this Memorandum, it will not be open to Minnesota counsel in general — and particularly to Plaintiffs counsel — to take the same positions in the future without considerable exposure to sanctions under BANKR.R. 9011.