Docket: Case No. DG 15-00760; Adversary Pro. No. 16-80273
Court: United States Bankruptcy Court, W.D. Michigan; March 24, 2017; Us Bankruptcy; United States Bankruptcy Court
A two-count complaint was filed by Chapter 7 trustee Jeff A. Moyer against Sally J. Denman, seeking to revoke her discharge and recover a money judgment due to her alleged non-compliance with a Turnover Order from May 21, 2016, which required her to turn over tax returns and non-exempt tax refunds totaling $1,736.00. Denman did not respond to the complaint, resulting in a default entered on January 10, 2017. The Plaintiff moved for default judgment, supported by an affidavit under the Servicemembers Civil Relief Act. At a hearing on March 21, 2017, the court considered the Plaintiff's Motion but noted that a discharge can only be revoked if the debtor "refused" to obey a lawful order, as opposed to merely failing to do so. The court emphasized that refusal implies contempt, whereas failure suggests inability or ignorance. In this case, while the Plaintiff's complaint implied Denman refused to comply, the lack of explicit evidence of willful non-compliance complicated the matter, particularly given her transient lifestyle. The court determined that Denman did receive the Turnover Order and acknowledged her non-compliance by not contesting the allegations. Consequently, the burden shifted to her to explain her non-compliance, which she did not do. The court expressed concern over potentially revoking her discharge, as it could lead to the revival of $130,000 in discharged debts for a relatively minor amount owed.
The Defendant, despite being served with the summons and complaint at her listed address, may be unaware of the adversary proceeding due to her history of residing at multiple addresses in Michigan. The Plaintiff served her at two addresses, including one from the case docket and another in Stanton, indicating uncertainty about her whereabouts. The court noted that many debtors mistakenly believe their cases are concluded upon receiving discharges, which could explain the Defendant's lack of response, as she may have failed to update her address with the court. Under Federal Rule of Bankruptcy Procedure 4002(a)(5), debtors are required to keep court records current.
The court found no fault with the Plaintiff for serving the complaint at the address on the docket, even if those addresses were outdated. As the Defendant did not respond to the properly served complaint and failed to comply with the Turnover Order, the court concluded she refused to obey it. Consequently, the Plaintiff is entitled to relief on both Count I, relating to the Turnover Order, and Count II, which seeks a money judgment for non-exempt tax refunds.
The court will grant the Plaintiff's Motion and instruct him to submit a judgment within 21 days. Additionally, it clarified that the Clerk's office can issue garnishment writs based on turnover orders, contrary to the Plaintiff's belief that a formal judgment was required. This ruling emphasizes the court's reliance on accurate docket information and the necessity for the Plaintiff to clarify the enforcement of the Turnover Order.
