Hart v. Kissinger

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
IN RE: :
:
ANDREW KISSINGER : Case No. 03-20598PM
: Chapter 7
Debtor :
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JOY HART :
Plaintiff :
vs. : Adversary No. 04-1883PM
:
ANDREW KISSINGER :
Defendant :
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - :
MEMORANDUM OF DECISION
This Complaint objecting to the Debtor’s discharge was filed by a person who has
known the Debtor since early childhood and who described herself as a close friend of Debtor’s
mother. Pursuant to a contract between the Debtor and the plaintiff dated February 5, 2002, that
appears as Exhibit 1, in consideration of the sum of $200,000.00, she sold him the corporate
stock of an entity known as Cleaning Unlimited, Inc., a commercial cleaning business. Included
in the assets of the corporation was tangible property consisting of a computer, a printer, two
ladders, two buffers, a copier, a 1988 Toyota 4-Runner, business records, existing contracts and
assignable insurance, as well as the trade name. Not included was the telephone number used.
The Plaintiff had formed another corporation with the name of Cleaning Unlimited II on July 2,
2001.
Date signed February 23, 2005
Entered: February 24, 2005 Case 04-01883 Doc 36 Filed 02/24/05 Page 1 of 4

The Complaint was filed in three Counts. The Plaintiff abandoned Count I of the
Complaint under § 727(a)(3), the failure to keep or preserve books and records. Count II seeks
denial of discharge based on a knowing and fraudulent statements under oath, namely, omitting
the Plaintiff as a creditor on Schedule F and failing to disclose his operation of his business.
Count III is filed under § 727(a)(5), the failure to explain satisfactorily the loss of the assets of
the business.
The Debtor paid lump sum payments aggregating $75,000.00 and made monthly
payments of $1,600.00 until August, 2003. At this point, Debtor appears to have lost interest in
the business. He is an admitted substance abuser, and whether this habit lead to his lack of
interest or to the two automobile accidents in August, 2003, that totalled the 4-Runner
and hospitalized him is a question this court need not answer. In any event, from the court’s
observation of the Debtor in open court and from the letters from former clients offered in
evidence by the Plaintiff, the court finds that, through his lack of attention to the business and to
the concerns of his valuable clients and their dissatisfaction with his incompetent handling of
their work, he lost these clients. The business failed. Because of Debtor’s personal problems,
and perhaps his personal injury, Debtor was unable to render the quality of service for the caliber
of clients that he dealt with.
The Complaint seems to confuse corporate property with the loss of assets by the Debtor.
He owned stock, not the buffers, ladders and 1988 motor vehicle. What happened to the
corporate stock is that the corporate charter was forfeited. Plaintiff had to be aware of this fact,
because at all times pertinent she was the registered agent of the corporation. The value of
Cleaning Unlimited, Inc., was not in the modest collection of tangible property conveyed, but
rather in the intangibles of the ongoing contracts and good will that Plaintiff had built up that the
Debtor frittered away. The court finds that there has been a satisfactory explanation for the
failure and loss of assets of the business.
The court finds as a fact that the Plaintiff has not proven by preponderance of the
evidence that the false oaths in this case, namely, the omission of the Plaintiff from Schedule F
and the omission of the corporate stock of the failed business from Schedule B, were done
knowingly and fraudulently. There are three reasons for this finding that the failure to schedule
Joy Hart was not done with fraudulent intent. First the answer to Question 4 on Debtor’s
Statement of Financial Affairs described the action filed by the Plaintiff then pending in the
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The false oath in failing to list the Plaintiff as a creditor is brought pursuant to1
§ 727(a)(4)(A) of the Bankruptcy Code that provides:
11 U.S.C. § 727. Discharge
(a) The Court shall grant the debtor a discharge, unless--
(4) the debtor knowingly and fraudulently, in or in connection with
the case--
(A) made a false oath or account.
Section 523(a)(3) of the Bankruptcy Code deals with the failure to list creditors. That
section provides:
11 U.S.C. § 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a) 1228(b), or 1328(b) of
this title does not discharge an individual debtor from any debt--
(3) neither listed nor scheduled under section 521(1) of this title,
with the name, if known to the debtor, of the creditor to whom such debt is
owed, in time to permit--
(A) if such debt is not of a kind specified in paragraph (2),
(4), or (6) of this subsection, timely filing of a proof of claim,
unless such creditor had notice or actual knowledge of the case in
time for such timely filing; or
(B) if such debt is of a kind specified in paragraph (2), (4),
or (6) of this subsection, timely filing of a proof of claim and
timely request for a determination of dischargeability of such debt
under one of such paragraphs, unless such creditor had notice or
actual knowledge of the case in time for such timely filing and
request.
Circuit Court for Montgomery County, Maryland. It was not ignored. The court finds that
failure to schedule Joy Hart as a creditor was a matter of carelessness, nothing more. Second, the
filing of this bankruptcy case was made known to Plaintiff’s counsel in state court in sufficient
time to enable Plaintiff to file a timely motion to extend the time for filing an appropriate
complaint. That was done.
Next, even assuming that the Plaintiff did not have knowledge of the filing of the case
prior to the bar date for filing a proof of claim under 11 U.S.C. § 523(a)(2), 523(a)(4) or
523(a)(6), she was enabled by 11 U.S.C. § 523(a)(3)(B) to file a claim for similar relief. Thus,
the failure of the Plaintiff to see that she was scheduled as a creditor accomplishes nothing. The1
court cannot find that this forms the basis for a finding of knowingly and fraudulently making a
false oath under 11 U.S.C. § 727(a)(4). If the debt were not of a sort encompassed by
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§§ 523(a)(2), (a)(4) or (a)(6), then the failure to schedule the creditor does not result in that debt
not being discharged. See In re Harmon, 213 B.R. 805 (BC Md. 1997); In re Stecklow, 144 B.R.
314 (BC Md. 1992). An appropriate order will be entered.
There remains the issue of sanctions to be imposed on account of the failure of the Debtor
to comply with the discovery requests made. While the Amended Scheduling Order provided a
cutoff for discovery by November 26, 2004, the certificate regarding discovery filed on
December 16, 2004, describes service on the previous day of Plaintiff’s interrogatories and
requests for admissions and requests for production of documents. The court accepts the
argument of Plaintiff that these requests were made a couple of months before and that it was
only the certificate that was filed after the bar date for discovery. Because of a combination of
circumstances, including the failure of Defendant and his counsel to keep in touch with one
another and to provide their current addresses on the court records, the discovery requests were
not complied with. The court believes that sanctions should be imposed.
Finally, the court will relieve the Defendant from the consequences of the deemed
admission of facts. These related primarily to the issue of records and property that the court
addressed earlier in this opinion. After careful consideration of the record, the court will impose
sanctions upon the Defendant of $950.00 for the expenses incurred by the Plaintiff in connection
with the discovery dispute. A separate order will be entered.
cc:
Joy Hart, 19313 Frenchton Place, Gaithersburg, MD 20886
Richard B. Rosenblatt, Esq., 30 Courthouse Square, Suite 302, Rockville, MD 20850
Andrew Kissinger, 5647 Queen Anne Court, New Market, MD 21774
E. Keith Eckloff, Esq., 2709 Murray Hill Pike, Louisville, KY 40242
United States Trustee, 6305 Ivy Lane, #600, Greenbelt MD 20770
Michael G. Wolff, Trustee, 11300 Rockville Pike, Suite 408, Rockville, MD 20852
End of Memorandum
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