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Dunker v. Bachman

United States District Court, D. Nebraska

May 17, 2018

DANIEL H. DUNKER, and RICHARD W. HILL, Plaintiffs/Appellees,
v.
JAMES E. BACHMAN, Defendant/Appellant. ADV No. 15-08043

          MEMORANDUM AND ORDER

          JOSEPH F. BATAILLON, SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the court on Appellant James E. Bachman's (hereinafter, “Bachman” or “the debtor”) appeal of an order of the United States Bankruptcy Court in the matter of Dunker and Hill v. Bachman, 15 BK-80069, 15AP8043 (Bankr. D. Neb.) (hereinafter, “Adv. P.”). Bachman appeals the bankruptcy court's order denying a discharge of his debts under 11 U.S.C. § § 727(a)(2)(A) and subsequent denials of motions to reconsider that order.[1] Adv. P. Filing Nos. 102, 104, 108. The bankruptcy court found that certain judgment debt owed to the appellees Dunker and Hill was excepted from discharge in Bachman's bankruptcy. For the reasons set forth below, the court affirms the decision of the bankruptcy court.

         I. BACKGROUND

         The record shows that Appellees Daniel H. Dunker and Richard W. Hill (“the creditors”) each received judgments against Bachman and his company Eran Industries, Inc., (“Eran”) in State Court Litigation in 2014 for amounts due on certain promissory notes and loan guarantees. Hill obtained a judgment in the amount of $175, 589.04 and Dunker obtained a judgment in the amount of $213, 354.79, plus post-judgment interest. Those judgments were final and unappealable at the time Bachman filed his petition in bankruptcy on January 19, 2015.

         Dunker and Hill filed an adversary complaint against Bachman in bankruptcy court seeking a determination of dischargeability of debt and objecting to a discharge. In the parties' Joint Pretrial Statement, Bachman admitted to making the following transfers during the months leading up to his bankruptcy filing: (1) on August 21, 2014, Mr. Bachman deeded his interest in his residence, located at 1138 South 185th Circle, Omaha, Nebraska, to his wife Adella Bachman; (2) in August, 2014, he transferred his interest in a 2002 Chevrolet Trailblazer; his 50 percent interest in a 2003 Chevrolet Suburban; and his 50 percent interest in a 2005 Cobalt Boat to his wife Adella Bachman; (3) in August or September, 2014, the Defendant removed his name from the First Westroads Bank Checking Account held with his wife Adella Bachman thereby relinquishing any ownership interest in that account; and (4) in October, 2014, the Defendant transferred Berkshire B stock or the proceeds from sale of such stock that he owned to his wife Adella Bachman. See Adv. P., Filing No. 49. There is no dispute that all of these transfers were made just a couple of months before he filed bankruptcy and that all were transfers of property that was owned or controlled solely by Bachman prior to the transfers.

         The bankruptcy court found Dunker and Hill had established by a preponderance of the evidence that Bachman transferred his interests in property to his wife within one year before filing his bankruptcy petition, with the intent to hinder, delay, or defraud creditors, and was thus not entitled to discharge the debt. The bankruptcy court's decision was based on stipulated facts and on evidence from a hearing held on December 18, 2014, in Douglas County, Nebraska, District Court. In that hearing, a proceeding to determine garnishee liability, Bachman testified as follows:

Q. I'll rephrase my question. Did you intend to thwart the plaintiffs' efforts to recover assets by transferring them out of your immediate name?
A. Absolutely.

         Adv. P., Filing No. 83-5, Declaration of Lauren R. Goodman, Ex. C at 23. Finding an explicit statement of intent to defraud creditors, supported by the weight of circumstantial evidence, the bankruptcy court stated that “[t]he evidence before the court overwhelmingly indicates [Bachman's] actions were intended to benefit and protect himself and his family's lifestyle at the expense of Dr. Dunker and Dr. Hill.” Adv. P., Filing No. 102, Order at 6. In denying Bachman's motion for reconsideration of that order, the bankruptcy court stated:

The motion to reconsider/motion for new trial (Fil. #105) is denied. Defendant's argument that he did not have fraudulent intent in making the transfers because he was purportedly trying to protect other creditors rings quite hollow. Defendant clearly and unequivocably on several occasions admitted to making the transfers to prevent the plaintiffs from executing on the assets. Having fraudulent intent as to some creditors but not others is simply not a defense. It is difficult to imagine a more clear case for denial of discharge.

Adv. P., Filing No. 108 (text order).

         On appeal, Bachman, who is an attorney and is representing himself, argues that the transfers were made in good faith without the intent to defraud creditors. He also argues that Dunker and Hill suffered no injury by his conduct, because there was little value in the assets he allegedly fraudulently conveyed. He states that his intent was not fraudulent because he had a “subjective belief” that a bank had a security interest on all of his personal property and that the transferred property was fully encumbered and of no value to the creditors. He argues that his underlying motive for the transfers “was not to preserve the assets for himself or his wife, but to prevent a voracious creditor from causing immediate and severe harm to other creditors.” Filing No. 14, Reply Brief at 7.

         II. DISCUSSION

         A. ...


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