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Cooper v. Crocker

United States District Court, M.D. Tennessee, Nashville Division

April 23, 2018




         Appellants appeal the final Bankruptcy Court's December 8, 2016 “Order Denying Discharge” and Memorandum Opinion (the “Order”). In the Order, the Bankruptcy Court denied Appellants discharge of debts based on Appellants' concealment of personal property of the bankruptcy estate and for knowingly making a materially false oath or account under to U.S.C. §§ 727(a)(2) and (a)(4).

         Appellants argue the Bankruptcy Court committed clear error when it denied their discharge under 11. U.S.C. § 727. Appellants allege the evidence showed miscommunication, mistake, and inadvertence rather than intentional fraud. For the reasons set forth below, the judgment of the Bankruptcy Court is AFFIRMED.


         In January 2015, Appellants hired Todd Jackson (“Mr. Jackson”) to help them file for Chapter 7 Bankruptcy. (Doc. No. 9-1, 33). In February 2015, Appellants filled out an online questionnaire that was later used to draft Appellants Schedules and Statement of Financial Affairs. (Id. at 34). Mr. Jackson then met with Appellants and went over the bankruptcy petition line-byline before Appellants signed the petition. On March 13, 2015, Appellants filed their Chapter 7 petition, and filed their Schedules and the Statement of Financial Affairs on March 19, 2015. (Id. at 29). Their petition indicated this was a “No Asset” bankruptcy case. (Id.)

         On April 10, 2015, Appellants filed their first amendment to their Schedule and disclosed Guerin Senter as a creditor. (Id.). The Chapter 7 Trustee reviewed Appellants bankruptcy pleadings and noticed some “red flags” regarding the valuation of Appellants residence and lack of personal property. (Id.). Thereafter, the Chapter 7 Trustee hired Ethan Massa (“Mr. Massa”) to appraise Appellants personal property. (Id.). On April 17, 2015, Mr. Massa conducted an inventory of Appellants assets located at their residence and discovered personal property that was not disclosed in Appellants Schedules. (Id. at 30).

         On April 20, 2015, Appellants watched a video presentation on debtor's responsibilities in filing for Chapter 7 bankruptcy before attending the Meeting of the Creditors. (Id.). After seeing the video, Appellants realized they made mistakes on their filings due to a possible miscommunication with their attorney. (Id.). Appellants believed they were only to list personal property they planned to keep and a representative of the Trustee would take everything else. (Id.). On May 25, 2015, Appellants amended their Schedules for the second time to add the property found by Mr. Massa, but the value of this property was listed as “Unknown”. (Id. at 31). Their undisclosed property eventually sold at an auction conducted by Mr. Massa for $60, 033.34. (Id.). On June 14, 2015, Appellants amended their Statement of Financial Affairs for the third time. (Id.). With every amendment to the Schedule, Appellants added more property. (Id. at 34-36). Appellants failed to include a pending civil suit filed against them in 2013 by Guerin Senter until their second amendment, and failed to list firearms they sold on consignment for approximately $23, 000 until their third amendment, Appellants never listed their 100% membership interest in Global Track GPS, LLC, undervalued their home at $330, 000[1], and never listed their 2014 residential loan application. (Id. at 31-36).

         Appellants are educated and have significant business experience. (Id. at 32). Appellant Frederick Cooper has a degree in business administration, and founded a company, where he was the president and CEO. Appellant Katherine Cooper also has a degree in business administration and worked for Appellant Frederick Cooper's company as the director of operations. (Id.). Appellants also have experience in bankruptcy due to the Chapter 11 petition filed in Nevada, where Appellants signed pleadings and verified statements. (Id. at 33). Appellant Katherine Cooper has personal experience in bankruptcy due to filing two Chapter 7 petitions in the 1980s and 1990s, where she received a discharge in both petitions. (Id.).

         On December 16, 2015, the Trustee filed a complaint objecting to Appellants' discharge. (Id. at 3-16). A trial on the issues occurred on August 29, 2016, and the Bankruptcy Court entered its decision on December 8, 2016, denying Appellants discharge based on 11 U.S.C. §§ 727 (a)(2) and (a)(4). (Doc. No. 9-1, 28-48). On December 22, 2016, Appellants filed a Motion to Reconsider or Vacate Order Denying Discharge or in the alternative, Motion for New Trial. (Id. at 50-53) and the Trustee replied. (Id. at 57-62). The Bankruptcy Court denied Appellants Motion (Id. at 69), and Appellants filed a timely appeal on March 12, 2017. (Doc. No. 1).


         The Court reviews the Bankruptcy Court's findings of fact for clear error, and its conclusions of law de novo. Rembert v. AT&T Univ. Card Serv. (In re Rembert), 141 F.3d 277, 280 (6th Cir. 1998). A factual finding is clearly erroneous when the reviewing court is left with the definite and firm conviction from the entire evidence that a mistake has been made. Id. If a mixed question of law and fact exists the court “must break it down into its constituent parts and apply the appropriate standard of review for each part.”Wesbanco Bank Barnesville v. Rafoth (In re Baker & Getty Fin. Servs., Inc.), 106 F.3d 1255, 1259 (6th Cir.1997).


         Whether the Bankruptcy Court erred in denying Appellants a discharge under 11 U.S.C. § 727(a)(2) and (a)(4).

         IV. ...

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