The Campbells, the plaintiffs in this adversary proceeding, filed an involuntary petition against the debtor, Elmer Wilmot, under chapter 7 of the Bankruptcy Code on January 11, 1993. The debtor contested the petition. By memorandum opinion and order entered July 11, 1994, the court granted relief on the involuntary petition.

Prior to commencement of the involuntary bankruptcy proceedings the Campbells had on April 16, 1989 initiated an action in the Boyle Circuit Court against the defendant debtor, Elmer Wilmot, Peoples Bank, P.L. Management, G. Wayne Broaddus, and Mary Ellen Broaddus. The complaint in the civil action, 89-CI-110, alleged that Wilmot, Broaddus, and others, while acting in a fiduciary capacity, conspired to obtain for themselves the Campbell’s business, known as R & L Woodworking Company. The Campbells also asserted claims against Wilmot, Peoples Bank, and Broaddus for malicious prosecution growing out of the arrest of the Campbells for alleged fraud in dealing with mortgaged property. On this claim the Campbells sought both compensatory and punitive damages.

On June 17, 1992, after a protracted trial, a judgment based on a jury verdict was rendered against the defendants jointly and severally in the amount of $1,000,000 on the conspiracy claim. The Campbells were also awarded $5,000 compensatory damages and $25,000 punitive damages on their malicious prosecution claim against Wilmot individually.

On December 9, 1992, while the debtor’s appeal from the aforementioned judgment was pending, the Campbells commenced another action, No. 92-CI-00388, in the Boyle Circuit Court to set aside as fraudulent certain transfers of real and personal property alleged to have been made by Wilmot for the purpose of hindering, delaying, or defeating the Campbells in the collection of their judgment.

Other defendants, Peoples Bank and Broaddus had filed a supersedeas bond, which stayed enforcement of the judgment against them during the appeal. The defendant debtor Wilmot was unable to post a supersedeas bond. To prevent further transfers of real property by the debtor the Campbells caused judgment liens to be filed against real property in which Wilmot may have an interest, including a residence conveyed to Arvel Jerry Wilmot and Becky Wilmot, defendants in Adversary Proceeding No. 94-5087, as hereinafter described. Arvel Jerry Wilmot is deceased and the defendant, Becky Wilmot, is now the sole owner of the residence.

While the fraudulent conveyance action was pending in the Boyle Circuit Court the Campbells on January 11, 1993 filed an involuntary petition for relief against Wilmot under chapter 7 of the Bankruptcy Code. The involuntary petition operated to stay the state court actions of the Campbells against Wilmot. For reasons that are not clear Wilmot moved to dismiss the involuntary petition on technical grounds and resisted the petition on the merits. As previously indicated, an order granting relief on the petition was entered July 11, 1994 and a trustee was appointed.

Thereafter, on July 29, 1994, the debtor removed the fraudulent conveyance action from the Boyle Circuit Court to this court. That action is now denominated as Adversary Proceeding No. 94-5087. Upon the intervention of bankruptcy any causes of action to avoid the fraudulent transfers of property by the debtor became property of the estate to be pursued by the trustee in bankruptcy. 11 U.S.C. §§ 544(b) and 548. By agreement of the parties a pretrial order entered April 4, 1995 substituted the trustee in bankruptcy as the plaintiff in Adversary Proceeding No. 94-5087.

On December 27, 1994 the Campbells filed a complaint objecting to the discharge of the debtor based on transfers of property alleged to have been made by the debtor within a year of bankruptcy with intent to hinder, delay, or defraud creditors. Adversary Proceeding No. 94-5137.

On August 16, 1995, following a notice and a hearing, the court entered an order consolidating Adversary Proceeding Nos. 94-5087 and 94-5137 for purposes of trial and holding those proceedings in abeyance pending the outcome of the debtor’s appeal from the $1,030,000 judgment obtained against him by the Campbells. The debtor in the schedules to his petition represented that he owed only one debt, the debt to the Campbells, so that, if the debtor prevailed on the appeal, the ruling of the state appellate courts might be dispositive of the matters pending before this court. The court had on May 19, 1993 entered an order permitting the parties to proceed with the appeal from the judgment of the Boyle Circuit Court.

On June 15, 1995 the Campbells commenced the present adversary proceeding in this court, Adversary Proceeding No. 95-5053, against the debtor Elmer Wilmot, his wife, Veda I. Wilmot, their son, Edward A. Wilmot, G. Wayne Broaddus, M.E. Broaddus, Chester Turner, Watson Lumber Company, Inc., and Bobby G. Wombles, the debtor’s attorney. Mr. Wombles represented the debtor in the state court litigation and initially in the involuntary bankruptcy proceedings against the debtor.

The present adversary proceeding is before the court on the motion of the defendant, Bobby G. Wombles, to dismiss him as a defendant in the action.

In Count I of the Campbells’ complaint they allege that "[i]n order to deprive plaintiffs of collection of any damages awarded for the conspiracy covered by the attached judgment" (the June 17, 1992 judgment of the Boyle Circuit Court), the defendant debtor, Elmer Wilmot, and his attorney, Bobby G. Wombles, developed a scheme and engaged in a conspiracy whereby the debtor conveyed all his assets with a design and effect to prefer other creditors and to defraud the Campbells. The transfers itemized are the transfers alleged in the fraudulent conveyance action which the Campbells filed in the Boyle Circuit Court on December 9, 1992, all of which conveyances occurred prior to that date.

The Campbells also allege in Count I of the complaint that in furtherance of the foregoing alleged conspiracy Wombles accepted attorney fees in excess of $100,000 from Wilmot, without adequate consideration, which fees are unreasonable, excessive, and an additional effort to defeat the claims of the plaintiffs, all contrary to law and the Rules of Professional Conduct promulgated by the Supreme Court of Kentucky, particularly SCR 3.130, Rules 1.2(d), 1.5, 1.6(b)(1) and (2), 4.4, and 8.3(a)-(c).

Plaintiffs allege they have been damaged as a proximate result of this conduct of the debtor and Wombles.

With respect to the defendant debtor Wilmot, plaintiffs allege he is made a party to the action only for acts after January 11, 1993, the date of commencement of their involuntary bankruptcy proceedings against Wilmot.

In the Count V of the complaint the Campbells allege that in furtherance of the conspiracy (the conspiracy to keep the Campbells from collecting the damages for conspiracy awarded to them by the June 17, 1992 judgment of the Boyle Circuit Court), on April 21, 1995, the debtor, Elmer Wilmot, G. Wayne Broaddus, Watson Lumber Company, Inc., and Bobby Wombles caused the filing of a civil complaint (adversary proceeding) in this court against the Campbells, Adversary Proceeding No. 95-5039. The complaint in that adversary proceeding, filed as an exhibit to the complaint herein, is related to the R & L Wood Products, Inc. bankruptcy, Case No. 85-50649, the former business of the Campbells.

The latter complaint alleged that the original action filed by the Campbells in the Boyle Circuit Court in which the $1,000,000 judgment for injury to the Campbells was awarded against the debtor, Elmer Wilmot, Peoples Bank, P.L. Management, G. Wayne Broaddus, and Mary Ellen Broaddus, should have been brought in the name of R & L Wood Products, Inc.; that the recovery in that action should be determined to be an asset of the estate of R & L Wood Products, Inc., and that the Campbells should be required to turn over the proceeds of the $1,000,000 judgment to the trustee in bankruptcy in the R & L Wood Products, Inc. bankruptcy case. To this end the trustee in that case was also named as a defendant.

On December 31, 1993, during the appeal from the judgment of the Boyle Circuit Court, the Campbells and Peoples Bank, by and through its successors, First Southern Bank of Fayette County and National Bank of Lancaster ("the banks"), entered into a General Release and Settlement Agreement whereby the banks paid the Campbells $375,000 for release of the malicious prosecution claim against the banks, and $1,000,000 in full satisfaction of the "joint and several" conspiracy judgment.

In an unpublished opinion rendered on March 28, 1997 the Kentucky Court of Appeals ruled that the full satisfaction of the $1,000,000 conspiracy judgment operated to discharge the debtor Wilmot from liability on that judgment. "The joint and several conspiracy judgment has, thus, been fully satisfied and Wilmot effectively discharged from liability thereunder. Indeed, to hold otherwise would entitle the Campbells to recover upon a judgment already paid."

On February 11, 1998 the Kentucky Supreme Court denied a motion for discretionary review of the judgment of the Kentucky Court of Appeals and the decision of the latter court is now final.

The ultimate result of this so-called "bank litigation" is that the debtor remains liable on only the $30,000 judgment rendered against him individually for malicious prosecution. Following a hearing in this matter held on May 20, 1998 the court on May 21, 1998 granted partial summary judgment limiting the claim of the Campbells against Elmer Wilmot to $30,000 plus interest at the rate of 12% from June 17, 1992 until paid in full.

At the hearing on May 20, 1998, counsel for the defendants Elmer Wilmot, Edward Wilmot, Veda Wilmot, deceased, and Chester Turner, represented to the court her clients were prepared to pay to the Campbells the amount required to satisfy the $30,000 judgment when the judgment of this court so limiting the liability of said defendants becomes final. The partial summary judgment this court to that effect entered on May 21, 1998 has been appeal by the Campbells and is not yet final.

It should be noted we now know that at the time of the commencement of this adversary proceeding on June 15, 1995, the Campbells had a year and a half earlier received from the defendant "banks" $1,000,000 in satisfaction of the damages for conspiracy awarded to them by the June 17, 1992 judgment of the Boyle Circuit Court, and had received $375,000 in satisfaction of the malicious prosecution claims asserted against the "banks" and employees and agents of the banks.

Consequently, it is not clear how the plaintiffs are injured by a conspiracy to keep them from collecting a judgment which they have already collected. The complaint does not specifically allege the debtor and his attorney engaged in a conspiracy to prevent the Campbells from collecting the $30,000 malicious prosecution judgment against the debtor Wilmot.

The complaint makes the defendant debtor, Elmer Wilmot, a party to this action only for acts after January 11, 1993. Yet the complaint alleges that the debtor and his attorney engaged in a conspiracy to place the assets of the debtor beyond the reach of the Campbells for satisfaction of their judgment, relying on acts (transfers of property) of the debtor which occurred prior to January 11, 1993.

The complaint also relies on payments made by the debtor to his attorney, Wombles, for legal services performed prior to January 11, 1993.

Since two people must conspire in order for there to be a conspiracy, and Count I of the complaint by its terms absolves the debtor as co-conspirator for acts occurring prior to January 11, 1993, it follows that Count I of the complaint does not state a conspiracy claim against the defendant, Bobby G. Wombles, for his conduct as attorney for the debtor with respect to acts of the debtor or compensation received from the debtor prior to January 11, 1993, for which reason Count I of the complaint should be dismissed.

Count I of the complaint in this adversary proceeding is an attempt to obtain a judgment against the debtor for damages on a prepetition claim, which action is stayed by title 11 U.S.C. § 362(a). The last paragraph of the complaint requests a money judgment against each of the defendants, which, of course, includes the debtor. This is a further reason why Count I of the complaint should be dismissed with respect to the conspiracy claim against the debtor and his attorney Mr. Wombles.

Count V of the complaint alleges that in furtherance of the conspiracy to keep the Campbells from collecting the debt evidenced by the $1,000,000 judgment of the Boyle Circuit Court, the judgment debtors Elmer Wilmot, G. Wayne Broaddus, d/b/a B & W Enterprises, as well as Watson Lumber Company, Inc. and their attorney, Bobby G. Wombles, commenced an adversary proceeding, No. 95-5039, in this court on April 21, 1995, raising issues which had been decided adversely to defendants by this court by order entered August 5, 1991.

The issue referred to was the contention of the defendants that the proceeds which the Campbells had received in settlement of the conspiracy claim in the June 17, 1992 judgment of the Boyle Circuit Court should be declared an asset of the bankruptcy estate of R & L Wood Products, Inc. and should be turned over by the Campbells to the trustee in bankruptcy of R & L Wood Products, Inc.

It is true this issue was decided adversely to the defendants by this court, but an appeal was pending and the matter was not finally resolved in favor of the Campbells until June 21, 1998 by an unpublished opinion of the Sixth U.S. Circuit Court of Appeals.

The Court of Appeals of Kentucky had earlier agreed in its unpublished opinion entered March 28, 1997, that the Campbells had standing to prosecute the action in the Boyle Circuit Court in their individual capacities.

Nevertheless, on April 21, 1995, at the time the defendants commenced Adversary Proceeding No. 95-5039 in this court the issue of whether the proceeds of the money judgment obtained by the Campbells in the Boyle Circuit Court on June 17, 1992 belonged to the Campbells individually or to R & L Wood Products, Inc. was unresolved. Thus, the adversary proceeding in question does not rise to the level of outrageous and vexatious litigation, maintenance, and battery as alleged by the Campbells.

In any event, the court agrees with the defendant Wombles that the Campbells do not have standing to assert a cause of action against Wombles for his alleged breach of the Rules of Professional Conduct promulgated by the Supreme Court of Kentucky. There is no indication that Mr. Wombles violated the Rules of Professional Conduct in receiving compensation for his services from the debtor, but even if he did, as alleged, such conduct does not give rise to a civil cause of action for damages in favor of the Campbells. Hill v. Wilmot, Ky. App., 561 S.W.2d 331 (1978).

Finally, as previously noted, the original conspiracy claim of the Campbells against the debtor had been fully satisfied before this action was commenced. Thus, the alleged continuing conspiracy to keep the Campbells from collecting on their conspiracy claim from the debtor Wilmot has been mooted by the decision of the Kentucky Court of Appeals.

Accordingly, the court finds the motion of the defendant Bobby G. Wombles to dismiss him as a party defendant in this adversary proceeding should be sustained.

Dated:

By the court –

________________________________
JOE LEE, U.S. BANKRUPTCY JUDGE

Copies to:

Richard Clay

Bobby G. Wombles

Edward S. Monohan

Gina S. McCann

James W. Gardner

W. Keith Ransdell

Tracey Wise

W. Thomas Bunch, II

Wayne Broaddus

In conformity with the memorandum opinion of the court this day entered, IT IS ORDERED that the motion of the defendant Bobby G. Wombles to dismiss him as a party defendant in this adversary proceeding be and the same is hereby sustained.

Dated:

By the court –

________________________________
JOE LEE, U.S. BANKRUPTCY JUDGE

Copies to:

Richard Clay

Bobby G. Wombles

Edward S. Monohan

Gina S. McCann

James W. Gardner

W. Keith Ransdell

Tracey Wise

W. Thomas Bunch, II

Wayne Broaddus