United States District Court, D. Connecticut
RULING AND ORDER ON APPEAL OF BANKRUPTCY
A. BOLDEN UNITED STATES DISTRICT JUDGE.
Jones (“Debtor” or “Appellant”) filed
for bankruptcy under Chapter 11 of 11 U.S.C. §§ 101
et seq. (“Chapter 11”). Because the
United States Bankruptcy Court for the District of
Connecticut (“Bankruptcy Court”) found that Ms.
Jones willfully and intentionally failed to comply with an
order to pay $11, 250, the Bankruptcy Court denied discharge
of the debtor under 11 U.S.C.§ 727(a)(6). In Re
Jones, No. 09-bk-51596, ECF No. 1251.
appeal raises whether the Bankruptcy Court erred in (1)
finding that Ms. Jones willfully and intentionally failed to
comply with its order and (2) ordering that Ms. Jones be
denied a discharge of the debt.
reasons discussed below, the Court AFFIRMS
the judgment of the Bankruptcy Court.
FACTUAL AND PROCEDURAL BACKGROUND
August 14, 2009, Ms. Jones filed a voluntary petition for
relief under Chapter 11. In re Jones, No.
09-bk-51596, ECF No. 1. On February 25, 2011, The Bankruptcy
Court appointed Mr. Coan to serve as the Chapter 11 trustee.
In Re Jones, No. 09-bk-51596, ECF No. 631-34. On
April 23, 2013, the Bankruptcy Court converted the case to
one under Chapter 7, rather than under Chapter 11, and
retained Richard Coan as the Chapter 7 trustee. In Re
Jones, No. 09-bk-51596, ECF No. 1032.
4, 2013, the Bankruptcy Court ordered Ms. Jones to turn over
$11, 250 to Richard Coan to replace rents “collected by
the debtor but not deposited in the estate bank account nor
delivered to the Trustee.” In Re Jones, No.
09-bk-51596, ECF No. 1057 (“Turnover Order”). The
Bankruptcy Court ordered Ms. Jones to make the payment within
fourteen days of the Order. Id. But Ms. Jones failed
to do so.
Jones argues instead that she paid Mr. Coan $7, 500 twice
before the adversary proceedings started. Appellant Br., ECF
No. 14, at 7. Ms. Jones claims that Mr. Coan kept the first
payment, because he alleged the funds belonged to the
bankruptcy estate. Id. And Mr. Coan returned the
second payment to Ms. Jones. Id. Ms. Jones also
argues that another payment of $3, 750 made in February 2015,
which Mr. Coan accepted, should apply to the Turnover Order.
Id. at 9. Ms. Jones argues that, although untimely,
she made the total payment amount of $11, 250 required in the
Bankruptcy Court's Turnover Order. Id.
Coan asserts that the funds were either late or
misappropriated bankruptcy estate funds. On October 29, 2015,
when questioned at trial, Ms. Jones admitted not paying the
disputed $11, 250 on time. Appellee Br., ECF No. 15, at 3-4
(citing October 29, 2015 Trial Tr., at 86-88) (“Q:
Okay. Now if you'd look at the last page of Exhibit 5 it
calls for you to pay $11, 250 within 14 days of the entry of
the order. Did you do that? A: No, I did not.”).
Coan argues that “the uncontroverted evidence
established that the Debtor lied to convince the Trustee not
to pursue her for $11, 250 even though she received a check
for more than $400, 000 while the turnover Motion was
pending.” Id. at 6-7. Mr. Coan declares that
Ms. Jones first tried to satisfy the Turnover Order six weeks
late with $7, 500 that “was the satisfaction of the
Trustee's separate demand that the Debtor deliver
settlement funds related to a real-estate commission that the
bankruptcy estate-not the Debtor-had received while the
bankruptcy case was pending under Chapter 11.”
Id. at 7. In other words, the “Debtor first
attempted to pay the bankruptcy estate with the bankruptcy
estate's own money.” Id.
on February 9, 2015, Ms. Jones paid $3, 750 to Mr. Coan,
which he argues “was $7, 500 too little and was paid
twenty months after payment was due.” Id. at
9. Moreover, “the Trustee had commenced the discharge
action, the parties had filed witness and exhibit lists, and
a scheduled trial date was approaching.” Id.
Finally, on October 15, 2015, more than two years after the
Court entered the Turnover Order, Ms. Jones paid the Trustee
$7, 500. Id. But Mr. Coan returned the payment.
November 19, 2015, the Bankruptcy Court issued an order
denying discharge of the debtor under § 727(a)(6).
In Re Jones, No. 09-bk-51596, ECF No. 1251.
November 25, 2015, Ruth Jones appealed the order denying the
debtor's request for discharge and judgment ...