Lillie Mae McDonald

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Case 8:04-bk-08585-MGW Doc/71 Filed 10/07/04 Page1ofi11

UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

In re
LILLIE MAE McDONALD, Case No. 8:04-bk-8585-MGW /

Debtor.

wee ee

In re
EDWARD GLENN McDONALD, Case No. 8:04-bk-1742-MGW

Debtor.

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MEMORANDUM OPINION

The matters before the Court arise in two related
Chapter 13 cases: one in which the debtor is an 83+ year old
nursing home resident, Lillie Mae McDonald (hereinafter, “Mrs.
McDonald”); in the other case the debtor is Mrs. McDonald’s
son, Edward Glenn McDonald (hereinafter, “Mr. McDonald”).

On October 1, 2004, the Court conducted a hearing on
several motions and responses dealing with a dispute between
Mr. McDonald and Julie M. Goddard (hereinafter, “Goddard”),
who was appointed by the state court, post-petition, to act as
emergency temporary guardian for Mrs. McDonald. In general,
Mr. McDonald alleges that Goddard violated the automatic stay

in both Chapter 13 cases by (a) commencing the guardianship

AUTHENTICAPED

U.S. GOVERNMENT

INFORMATI
GPO

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proceeding and (b) placing a “hold” on Mrs. McDonald’s bank
accounts. Goddard asserts that she is disinterested, did not
intend to violate the stay, and requests relief from the

automatic stay. ?

Goddard and Mr. McDonald represented
themselves at the hearing. Attorney Scott Rosin appeared on
behalf of Mrs. McDonald’s bankruptcy estate.

The Court has considered the pleadings and exhibits
filed in these cases, particularly Document Nos. 33, 34, 38,
48, 49 and 51 in Mrs. McDonald’s case and Document Nos. 74, 80
and 90 in Mr. McDonald’s case. Also, the Court has considered
the parties’ representations made at the hearing, which were
taken as proffers of evidence. For the reasons set forth
below, the Court concludes that: {a) no violation of the
automatic stay occurred in Mr. McDonald’s case and (b) the
stay will be annulled in Mrs. McDonald’s case to allow the
issues of the guardianship to be adjudicated in state court.

The Court makes the following findings of fact

common to all pending motions:

+ The Court has jurisdiction pursuant to 28 U.S.C.

Sections 157 and 1334. This matter is a core proceeding
pursuant to 28 U.S.C. Section 157(b) (2) (G). This Opinion and
Order constitutes findings of fact and conclusions of law made
pursuant to Federal Rule of Bankruptcy Procedure (“FRBP”)
7052, which is applicable to contested matters pursuant to
FRBP 9014.

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1. Mrs. McDonald is at least 83 years old. She has
resided in a nursing home, the Ybor City Healthcare and
Rehabilitation Center (hereinafter, “Ybor City Healthcare
Center”), since July 2002. She is a retired school-teacher.
Her income consists of monthly pension and social security
payments of approximately $1,900.51 and $997.00, respectively.

2. Mr. McDonald is also a retired school-teacher.
His income consists of monthly pension and social security
payments of approximately $1,200 and $600, respectively. His
non-debtor wife, Ruby Nell McDonald, has an annual income in
excess of $100,000; their combined annual income is
approximately $132,000.

3. Mrs. McDonald’s pending case was commenced on
April 28, 2004; Mr. McDonald’s pending case was commenced on
January 29, 2004. Each case is the second serial case for

each debtor.”

* Mrs. McDonald’s first Chapter 13 case was filed

on March 6, 2001, immediately prior to a mortgage creditor’s
motion for summary judgment of foreclosure (Case No. 8:01-bk-
3559-MGW). The Court granted the mortgagee relief from the
automatic stay. On July 11, 2003, Mr. McDonald filed his
first Chapter 13 case, asserting that he had an interest in
the residence that was subject to the mortgage (Case No. 8:03-
bk-14454-ALP). In Mr. McDonald’s case, the mortgagee obtained
stay relief and the foreclosure action was again set for trial
on January 30, 2004. On January 29, 2004, Mr. McDonald filed
his second Chapter 13 case while his first Chapter 13 case was
still pending; on March 22, 2004, the Court again granted the

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4. Goddard is a “professional guardian” whose full-
time occupation is administering court-ordered guardianships.
She is presently serving as a guardian in approximately 42
cases.

5. On or about June 15, 2004, while these two
Chapter 13 cases were pending, Goddard filed a petition in the
Circuit Court for Hillsborough County commencing plenary
guardianship proceedings for Mrs. McDonald. She did so after
being contacted by the Elder Justice Center (hereinafter,
“BJC”), a program of the Circuit Court for Hillsborough
County.

6. Goddard was advised by the EJC’s representative
that Mrs. McDonald was an incapacitated person and that Mr.
McDonald was using her monthly income while her own expenses
were not being paid, principally the accumulating debt owed to

her nursing home.

mortgagee relief from stay in that case. On April 28, 2004,
this second Chapter 13 case was filed on behalf of Mrs.
McDonald. On August 24, 2004, the Court again granted the
mortgagee relief from stay in Mrs. McDonald’s case (Document
No. 48), finding that her second case was filed in “bad faith”
and providing that stay relief would continue through any
subsequent petition filing.

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7. Ybor City Healthcare Center may have brought
this matter to the attention of the EJC because it was not
being paid.

8. Goddard is one of more than a dozen professional
guardians that EJC could have contacted. She has not been
employed by the nursing home. The Court finds that Goddard is
a disinterested person in these matters.

9. On or about June 18, 2004, Circuit Judge Susan
Sexton (Probate Division) entered an order appointing Goddard
as emergency temporary guardian for Mrs. McDonald. The order
included the finding that “property of that person is in
danger of being wasted, misappropriated or lost unless
immediate action is taken.” After being alerted about the
pendency of Mrs. McDonald’s Chapter 13 case, the Circuit Court
refrained from conducting further proceedings to determine
whether Mrs. McDonald is incapacitated or whether Goddard will
be permanently appointed as her plenary guardian.

10. On or about June 24, 2004, Goddard placed a
“hold” on two Bank of America accounts, each in the name of
“Lillie Mae McDonald ITF Edward McDonald:” a checking account
with $5,001.92 and a savings account with about $17.00.
Thereafter, Goddard has collected $2,797.51 per month from

Mrs. McDonald’s pension and social security payments. Goddard

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is now holding about $13,000. Goddard has made no
disbursements of these funds.

11. There is no evidence that Mr. McDonald provided
any of the funds being held by Goddard.

12. From June 2002, just before Mrs. McDonald moved
to the nursing home until June 2004, and during the pendency
of her two Chapter 13 cases, about $80,000 (94%) of her income
was spent.

13. There is a genuine need for the Circuit Court
to determine whether Mrs. McDonald is incapacitated and who
will be authorized to represent her interests in her pending
Chapter 13 case.

14. Ruby Nell McDonald, Mr. McDonald’s non-debtor
spouse, has asserted her intention to apply to be appointed
guardian of her mother-in-law.?

15. Mr. McDonald admitted that he regards his

mother’s pension and social security income as “family” money.

> On July 22, 2004, Ruby Nell McDonald filed a
motion for relief from stay in her mother-in-law’s Chapter 13
case, so that she could apply to state court for appointment
as plenary guardian for Lillie Mae McDonald (Document No. 37).
The motion was denied for improper service and failure to pay
the filing fee (Document No. 39). Ruby Nell McDonald filed a
second motion for relief from stay on September 30, 2004
(Document No. 68). This motion will be denied as moot based
on the Court’s ruling on the matters that were heard on
October 1, 2004.

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16. The principal assets in Mrs. McDonald’s Chapter
13 case are two residential properties: one on East
Pocahontas, where Mr. McDonald lives, that is the subject of
foreclosure proceedings (see note 2 above); the other on West
Lemon Street, where Mrs. McDonald lived before moving to the
nursing home. The West Lemon Street property is under a
contract of sale for about $83,000; but it is also subject to
a first mortgage to Bank of America in the amount of about
$42,000 and a lien of about $50,000 to Ybor City Healthcare
Center.‘

17. The principal assets in Mr. McDonald’s case are

ot? Street where

two real properties: a residence on North 4
Ruby Nell McDonald resides, and a five acre parcel of grove
land near Plant City, Florida. The mortgage on the North 40%
Street property is current.

18. The Court rejects Mr. McDonald’s assertion that

Goddard’s “hold” on his mother’s bank accounts is “imperiling”

his Chapter 13 case. There is no justification for his use of

* This Court has entered an order continuing the

automatic stay as to the West Lemon Street property on
condition that arrearages of $2,245 owed to Bank of America
are brought current by November 2004 and the regular monthly
payments of $550.48 are made (See Document No. 64).

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those funds to pay the $217 per month mortgage payment on his
five acres near Plant City.
DISCUSSION

As to Mr. McDonald’s case, the Court finds no
evidence that Goddard exercised any control over property of
his bankruptcy estate. Neither the guardianship, nor the
freezing of Mrs. McDonald’s bank accounts involved assets of
Mr. McDonald’s bankruptcy estate. Therefore, there is no
violation of the automatic stay in that case.

Goddard has requested relief from the automatic stay
in Mrs. McDonald’s Chapter 13 case, albeit after she froze
Mrs. McDonald’s accounts. This Court has broad discretion in
determining the scope of the relief to be granted under 11
U.S.C. Section 362(d). See Dixie Broadcasting, Inc. v. Radio
WBHP, Inc. (In re Dixie Broadcasting, Inc.), 871 F.2d 1023,
1026 (lith Cir. 1989); Ford v. A.C. Loftin (In re Ford), 296
B.R. 537, 556 n.40 (Bankr. N.D. Ga. 2003).

There is more than sufficient “cause” to grant
Goddard’s motion for relief from stay. The alleged incapacity
of Mrs. McDonald, the serial Chapter 13 filings, and the
suspected impropriety of the prior use of Mrs. McDonald’s
funds, all warrant the appointment of a disinterested person

to protect the funds, render an accounting, and fairly

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administer her Chapter 13 case. The Circuit Court is a
specialized tribunal that deals with issues of alleged
incapacity and guardianship on a regular basis.

The guardianship has had no material adverse impact
on Mrs. McDonald’s bankruptcy estate. Whoever is ultimately
appointed as plenary guardian will have to comply with the
obligations of the debtor in the Chapter 13 case.° There are
sufficient funds being held to cure any deficiencies that have
occurred.

Absolutely no purpose would be served, however,
in granting only prospective stay relief. The funds would be
“unfrozen,” only to be refrozen when proceedings resume in
the state court.

After considering the serial filings that have
occurred and the need for thorough consideration by the
Circuit Court of the need for a guardian, this Court concludes

that the automatic stay should be annulled as to guardianship

> It appears that a guardian may administer a

Chapter 13 case for the ward. Cf. In re Healy, 1989 Bankr.
LEXIS 2109, 1n.1 (Bankr. Md. 1989). For example, as long as
the Chapter 13 is pending, the guardian will have to make pre-
confirmation payments to the trustee and adequate protection
payments to Bank of America (Document No. 64) and will have to
propose and confirm a Chapter 13 plan.

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proceedings. Mr. McDonald and his wife will have the right to
appear and assert their interests.

The Bankruptcy Code expressly grants bankruptcy
courts the power to annul the stay. Albany Partners, Ltd. v.
Westbrook (In re Albany Partners, Ltd.), 749 F.2d 670, 675
(llth Cir. 1984); 11 U.S.C. Section 362(d). The Court has
considered and applied the legal standards for annulment to
the automatic stay set forth in Fjeldsted v. Lien (In re
Fjeldsted), 293 B.R. 12, 21-25 (B.A.P. 9th Cir. 2003); In re
Weber, 283 B.R. 630, 633 (Bankr. Mass. 2002); and Soares v.
Brockton Credit Union (In re Soares), 107 F.3d 969, 977 (1st
Cir. 1997).

Annulling the stay constitutes a retroactive grant
of relief from the stay. Fjeldsted, 293 B.R. at 15. The
Court hereby validates prior actions taken in the guardianship
proceeding and defers to the Circuit Court on the issues of
the debtor’s incapacity and the choice of guardian.

Therefore, the Court concludes that the stay in
Mrs. McDonald’s case is hereby annulled as to Circuit Court
guardianship proceedings. The Court will deny Mr. McDonald’s
motions, in both his and his mother’s cases, seeking sanctions
against Goddard (Document Nos. 74 and 80 in her Chapter 13

case and Document Nos. 38 and 51 in his own case). The Court

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will enter separate orders in each case consistent with this
opinion.
DONE and ORDERED in Tampa, Florida, this Lt day of
October, 2004.
Key No

K. RODNEY MAY
United States Bankruptcy Judge

Certificate Of Service

I transmitted today a copy of this order to the
Bankruptcy Noticing Center for mailing to the following
persons:

Lillie Mae McDonald, Debtor, 7203 N. 40° Street, Tampa,
Florida 33604

Lillie Mae McDonald, Debtor, Ybor City Healthcare, 1709
Taliafero, Room #250, Tampa, Florida 33602

Scott A. Rosin, Esquire, Attorney for Debtor, 5835 Memorial
Highway, Suite 6, Tampa, Florida 33615

Edward Glenn McDonald, Debtor, 4010 Pocahontas Avenue, Tampa,
Florida 33610

Julie M. Goddard, Emergency Temporary Guardian, Post Office
Box 273792, Tampa, Florida 33688

Jill Giordano, 806 E. Jackson Street, Tampa, Florida 33602

Robert McDonald, Jr., 1311 N. Church Avenue, Tampa, Florida
33607

United States Trustee, Timberlake Annex, Suite 1200, 501 E.
Polk Street, Tampa, Florida 33602

Dated: JO-7- OF By: N he ry] C.
Deputy Clerk

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