United States District Court, M.D. Tennessee, Nashville Division
FREDERICK ARNEMAN COOPER and KATHERINE HARRISON COOPER, Debtors
SAMUEL K. CROCKER, UNITED STATES TRUSTEE, REGIONS 8, Appellee. FREDERICK ARNEMAN COOPER and KATHERINE HARRISON COOPER Appellants.
WILLIAM L. CAMPBELL, JR. UNITED STATES DISTRICT JUDGE.
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).
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.
FACTS AND PROCEDURAL HISTORY
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.)
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).
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, and never listed their 2014 residential
loan application. (Id. at 31-36).
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.).
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).
STANDARD OF REVIEW
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).
ISSUE ON APPEAL
the Bankruptcy Court erred in denying Appellants a discharge
under 11 U.S.C. § 727(a)(2) and (a)(4).