IN RE: M. STEPHEN MINIX CASE NO. 88-70149

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

PIKEVILLE

IN RE:

M. STEPHEN MINIX CASE NO. 88-70149

DEBTOR

MEMORANDUM OPINION

This case is pending on motion of the debtor and the joint movant, Mary Minix, for allowance of applications for compensation and expenses previously filed by them in this case. The applications are made in behalf of the debtor and Mary Minix, who is identified in the application as a joint objector.

Mary Minix is the spouse of the debtor. At the time of commencement of this case on May 4, 1988 the debtor was divorced. At least he so indicated by his testimony at the meeting of creditors held June 14, 1988. The court surmises the debtor and Mary Minix were married after the commencement of this case. Thus, Mary Minix is not a debtor and is not a creditor in the case, and as a non-attorney she does not have standing to represent the interests of the debtor and creditors in the case. Consequently, the court does not comprehend on what thread she hangs her entitlement to monies from the bankruptcy estate.

The applications for compensation appear to be requests for reimbursement for fees and expenses paid by the debtor or Mary Minix to counsel for the debtor in the case. The applications indicate that the debtor and Mary Minix agreed to pay and have in fact paid the fees of counsel from postpetition earnings.

The fee applications all relate to the deposition of a Kawai baby grand piano. In the original schedules to his petition the debtor did not list ownership of the piano or other musical instruments. He listed himself as owning and claimed an exemption in "household furnishings" valued at $1,300.

At the time of bankruptcy the debtor had petitioned the Johnson Circuit Court for the dissolution of his marriage to his former spouse, Sherry Minix, Johnson Circuit Court C.A. No. 86-CI-010, Division No. 1. The state court entered a decree of dissolution of marriage on February 1, 1988, prior to the commencement of the debtor's bankruptcy case. The state court reserved ruling on all other issues.

On June 19, 1990 the debtor filed an adversary proceeding in this court, Adv. No. 90-0244, to restrain enforcement of a judgment of the Johnson Circuit Court. Attached as exhibits to the complaint were the Recommended Supplemental Findings of Fact, Conclusions of Law, and Decree of the Domestic Relations Commissioner of the Johnson Circuit Court, as well as the order of the Johnson Circuit Court adopting the recommendations of the Domestic Relations Commissioner as the Judgment of the Court.

The debtor’s ownership of the piano and other musical equipment was brought to the attention of the bankruptcy court by "Recommended Supplemental Findings of Fact, Conclusions of Law, and Decree" prepared by the Domestic Relations Commissioner of the Johnson Circuit Court and filed in the marriage dissolution proceedings in that court on February 15, 1990. The piano and musical equipment are listed in paragraph 10 of the Commissioner's recommended findings of fact which found that the piano and other musical equipment was in the debtor's possession at that time. In paragraph 4 of his proposed decree the Commissioner recommended that the Baby Grand piano be awarded to the respondent, Sherry Minix, the debtor's ex-wife, and that all other musical equipment be awarded to the debtor. The debtor was given the option of paying his ex-wife $5,000 in lieu of surrendering the piano to her. The Commissioner determined that the value of the other musical equipment was in excess of the value of the piano but that the other musical equipment was subject to a debt of $3,500, whereas there was no indebtedness on the piano. The holder of the debt on the musical equipment is not identified, and, insofar as the court can determine, was not listed by the debtor in the original or amended schedules to his petition as a creditor holding a secured claim.

On May 18, 1990, the Johnson Circuit Court adopted the Recommended Supplemental Findings of Fact, Conclusions of Law and Decree of the Domestic Relations Commissioner as the Judgment of the court in the marriage dissolution proceedings.

On March 13, 1991 the debtor filed a amendment to Schedule B-2c to his petition listing the Kawai Baby Grand piano as an asset, valuing the piano at $3,000, thereby increasing the value of his "homestead furnishings" to $4,300. He did not list as assets the other musical equipment referred to in the Domestic Relations Commissioner's report, which that report indicated was in the debtor's possession. The debtor's former spouse, by counsel, objected to this amendment to the debtor's schedules on the ground the piano had been awarded to her by the judgment of the Johnson Circuit Court.

Although the amendment filed by the debtor listing the piano as an asset did not list other musical instruments and did not purport to amend Schedule B-4 to claim an exemption in these items, the trustee timely filed an objection to the exemption claimed by the debtor in musical instruments and the baby grand piano.

On July 15, 1991, after an appraisal of the approximately 25 nonlisted items of musical equipment owned by the debtor, the trustee gave notice of the proposed sale of the equipment to the debtor for $500. The notice stated that the appraised value of the equipment was $3,082.00, but that considering the costs of sale, the trustee did not believe that a sum greater than $500 could be realized from the sale of the equipment at auction.

On the same date the trustee gave notice of sale of the Kawai baby grand piano to the debtor's former spouse Sherry Minix for $1,000, with the buyer to pay the expense of moving the piano from its present location. The notice stated the appraised value of the piano was $3,500, but that a greater amount could not be realized at auction because of the expenses of storage and moving the piano.

The debtor and his wife Mary Minix objected to the sale of the Kawai baby grand piano to Sherry Minix for $1,000. The objection states that prior to the notice of sale Mary Minix had offered to purchase the piano and the other musical equipment of the debtor for $2,000, of which $1,500 was for the piano, with her moving the piano at her cost.

The court by an order entered August 7, 1991 ruled that notwithstanding the judgment from the Johnson Circuit Court the debtor's interest in the piano was property of the bankruptcy estate. At a hearing held on September 19, 1991 the court authorized the trustee to sell the piano to either Sherry or Mary Minix, whichever made the highest bid. An order to that effect was entered on October 28, 1991. There being no objection the other musical equipment was sold to the debtor at private sale for the sum of $500.

Here the plot thickens. Earlier, on or about February 21, 1991, the trustee had sold the debtor's residence at public auction. The property was purchased by Family Federal Savings and Loan Association of Paintsville toward satisfaction of its mortgage indebtedness on the property. The piano remained in the premises after the sale. On February 21, 1991 the trustee had the piano appraised for $3,500. The record is not clear as to when the debtor vacated the premises. On or about April 12, 1991 Family Federal sold the residence to Paul Brown of Paintsville. When Brown took possession of the property the piano was still on the premises. He demanded storage fees as a condition of releasing the piano.

Apparently, Mary Minix had increased her offer for the piano to $2,000 conditioned on the trustee producing the piano. In other words, the debtor moved out of the residence leaving the piano behind, and the debtor's new wife was offering $2,000 for the piano provided the trustee would produce the piano. This $2,000 offer perhaps was no greater than the previous offer, pursuant to which the purchaser was to pay the moving costs. The debtor and his new wife definitely have chutzpah.

The trustee's solution to this dilemma was to send a notice to creditors and parties in interest proposing to abandon the estate's interest in the piano on the ground the state court had awarded the piano to the debtor's former spouse Sherry Minix in the marriage dissolution proceedings and on the further ground that the cost of litigation to recover the piano from Brown might exceed the value of the piano.

The debtor and Mary Minix objected to the proposed abandonment of the piano by the trustee. Thereafter, the trustee commenced an adversary proceeding against Paul Brown, Sherry Minix and the Internal Revenue Service, which the complaint alleged may have a lien on the property. The bankruptcy estate incurred a filing fee of $120 for filing the adversary proceeding. The IRS filed pleadings indicating it did not claim or assert a lien on the piano. Brown filed an answer asserting that the piano had been abandoned to him or alternatively that he held a lien thereon in excess of the value of the piano. The court sustained the motion of the trustee for an order directing Brown to turn over the piano, reserving the issue of whether Brown was entitled to storage fees. This order was entered May 5, 1993. The record indicates that thereafter the trustee sold the piano to Mary Minix for $2,000.

Insofar as the court can determine the debtor and Mary Minix are seeking reimbursement in the amount of $900 for attorney fees paid by them relating to the saga that resulted in them paying $2,000 to the bankruptcy estate for the baby grand piano, on the ground their purchase of the piano benefited the estate by $1,000 over the amount of the trustee's initial proposal to sell the piano to the debtor's former wife Sherry Minix for $1,000.

The record indicates that by failing to list the piano and other musical instruments as assets the debtor effectively concealed the ownership of these items from the trustee for more than two years, during which the debtor retained the unencumbered use of these items of property. In fact the debtor has never amended the schedules to the petition to list ownership of and to place a value on these items of property. The property was brought to the attention of the court by the complaint the debtor filed on August 2, 1990, Adversary Proceeding No. 90-0244, contesting the validity of the judgment entered in the marriage dissolution proceedings the debtor had commenced against his former spouse, Sherry Minix, in the Johnson Circuit Court in 1986. There was no mention in the schedules to the debtor's bankruptcy petition of the pending marriage dissolution proceedings. In Item 10 to the Statement of Financial Affairs to the petition the debtor indicated he was not a party to any pending suit at the time of filing bankruptcy. The schedules were not amended to indicate otherwise until September 17, 1992, more than four years after the commencement of this case. While the debtor may have informed the state court of his bankruptcy he did not timely inform the bankruptcy court of the marriage dissolution proceedings.

The debtor's lack of cooperation in disclosing ownership of assets and the state court litigation has resulted in litigation and costs to the estate that might have been avoided had he been forthcoming concerning ownership of assets and the state court litigation. The debtor's secretive and litigious conduct has resulted in enormous delay and costs in the administration of this bankruptcy case, which he seems to view as an extension of the contested and apparently still unresolved marriage dissolution proceedings.

This court is not persuaded that the purchase by the debtor's present spouse of the piano which he concealed and used for several years after bankruptcy resulted in any ultimate benefit to the bankruptcy estate, certainly that would not be so if his request for reimbursement for attorney fees were honored. The $900 he is seeking, plus the $120 costs of the filing the adversary proceeding to recover the piano, made necessary by his conduct in leaving the piano behind when he moved from his residence, exceed the extra $1,000 the trustee received by selling the piano to the debtor's present wife instead of his former wife.

The fee application in question shall be denied. The court's tolerance for the debtor's chutzpah is at an end.

Dated:

By the court -

 

______________________________

JOE LEE, CHIEF JUDGE

 

Copies to:

 

J. James Rogan, Esq.

Joseph Rosenbaum, Esq.

 

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

PIKEVILLE

 

 

IN RE:

 

M. STEPHEN MINIX CASE NO. 88-70149

 

DEBTOR

 

 

ORDER

 

 

In conformity with the memorandum opinion of the court this day entered, IT IS ORDERED that the motion of the debtor and the joint movant, Mary Minix, for allowance of their applications for compensation and expenses is DENIED.

Dated:

By the court –

 

________________________________

JOE LEE

CHIEF JUDGE

 

Copies to:

 

J. James Rogan, Esq.

Joseph Rosenbaum, Esq.