Callaway, Trustee v. Droke

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
JEFFREY W. DROKE
DEBTOR
CASE NO.
05-03962-5-ATS
JOSEPH N. CALLAWAY, TRUSTEE
Plaintiff
v.
KRISTINA DROKE
Defendant.
ADVERSARY PROCEEDING NO.
S-06-00006-5-AP
ORDER ALLOWING MOTION FOR SUMMARY JUDGMENT
The matter before the court is the plaintiff's motion for summary
judgment. A hearing took place in Raleigh, North Carolina on October
26, 2006.
Jeffrey W. Droke filed a petition for relief under chapter 7 of
the Bankruptcy Code on September 15, 2005, and Joseph N. Callaway was
appointed trustee. On January 9, 2006, Mr. Callaway filed a complaint
SO ORDERED.
SIGNED this 27 day of October, 2006.
________________________________________
A. Thomas Small
United States Bankruptcy Judge
____________________________________________________________
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in this adversary proceeding against the debtor's former wife, Kristina
Droke, to recover sums she was to pay to the debtor pursuant to an
equitable distribution order entered by the North Carolina District
Court for Wake County on September 2, 2005. Ms. Droke, acting pro se,
filed an answer on March 10, 2006, contending that the debtor failed to
comply with certain terms of the order and, as a result, Ms. Droke was
relieved of her obligations.
"[S]ummary judgment is proper 'if the pleadings, depositions,
answers to interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a
matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.
Ct. 2548, 2552 (1986). In making this determination, conflicts are
resolved by viewing all facts and inferences to be drawn from the facts
in the light most favorable to the non-moving party. United States v.
Diebold, Inc., 369 U.S. 654, 82 S. Ct. 993 (1962). Summary judgment
should not be granted unless the moving party establishes his right to
judgment "with such clarity as to leave no room for controversy."
Portis v. Folk Constr. Co., 694 F.2d 520, 522 (8th Cir. 1982).
The facts are largely undisputed. The state court entered a
Consent Order for Equitable Distribution and Confirmation of Alimony
Arbitration Award on September 2, 2005, with the following provision:
Defendant [Ms. Droke] shall have sole use, ownership
and possession of the marital residence located at 108 Arbor
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Forest Drive, Holly Springs, NC beginning on August 31,
2005. Defendant shall permit Plaintiff [Mr. Droke] to
remain the residence until no later than August 30, 2005.
Plaintiff shall make the mortgage payments for August, 2005.
At the time of the execution of this Agreement, Plaintiff
shall execute a Non-Warranty Deed conveying his interest in
the residence to Defendant. Within seven days of the
execution of this Consent Order, Defendant shall pay to
Plaintiff the sum of $7,500. Defendant shall be solely
responsible for the mortgage payments associated with the
residence (Chase mortgage and First Citizens equity line)
from September 2005 forward. Defendant intends to sell the
residence as soon as possible. Should Defendant not sell
the residence, she shall make reasonable efforts to remove
Plaintiff's name from the first and second mortgages within
ninety days of the entry of this Order. Plaintiff will
ensure that all personal property is removed from the
marital residence and that the residence is clean, in good
repair, and is readily marketable no later than August 30,
2005.
Plaintiff's Memorandum in Support of Summary Judgment, Ex. B at 3
(emphasis added). Ms. Droke wrote a check to Mr. Droke dated August
30, 2005, in the amount of $7,500. However, on or before September 8,
2005, Ms. Droke directed the bank to stop payment on the check. The
trustee contends that the $7,500 is property of the bankruptcy estate,
and that he is entitled to recover the funds pursuant to 11 U.S.C. §
541.
Ms. Droke contends that Mr. Droke failed to comply with the order,
specifically by failing to deliver the property in readily marketable
condition. Instead, Ms. Droke claims that she was required to expend
substantial sums cleaning the property and replacing carpet. It is her
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1 Because this case was previously a "no asset" case, no claims
bar date has been established.
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belief that Mr. Droke's failure to comply with the order nullified her
obligation to adhere to the terms of the order.
Though there is obviously a disputed issue with respect to the
condition of the property, the question on summary judgment is whether
the disputed issue is one of material fact. In this case, the court
can determine as a matter of law that Ms. Droke's performance under the
terms of the order was not dependent upon Mr. Droke's compliance.
Accordingly, Ms. Droke is obligated to pay the $7,500 to Mr. Droke's
bankruptcy estate. To the extent she has claims against Mr. Droke
arising out of the expenses incurred to make the property marketable,
she may file a claim against the estate.1
The trustee also seeks additional damages as a result of the
dishonored check pursuant to North Carolina General Statutes §§ 25-3-
506 and 6-21.3. Because Ms. Droke believed she was acting within her
rights, the additional damages will not be allowed.
Based on the foregoing, the plaintiff's motion for summary
judgment is ALLOWED, and Ms. Droke is directed to turn over $7,500 to
the estate. A separate judgment will be entered.
SO ORDERED.
END OF DOCUMENT
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