Opinion
In Bankruptcy Case No. 01-71841, Adversary No. 01-7108.
October 25, 2001
OPINION
This proceeding is before the Court on the Motion for Summary Judgment filed by the Defendants.
On May 7, 2001, Defendants filed their voluntary Chapter 7 bankruptcy petition. On June 18, 2001, Plaintiff filed its two-count adversary complaint. Count I is filed as an objection to discharge pursuant to 11 U.S.C. § 727(a)(2). Count II is filed as an objection to dischargeability of debt pursuant to 11 U.S.C. § 523(a)(6).
All of the factual allegations made in the complaint are against Mr. Moulton. There are no allegations that Mrs. Moulton committed any of the acts which serve as a basis for either count of the complaint. In fact, the debt subject to Count II of the Complaint arises from a promissory note signed by Mr. Moulton only.
For these reasons, the Court finds that summary judgment in favor of Mrs. Moulton is appropriate.
Defendants also seek summary judgment on behalf of Mr. Moulton with respect to Count I of the complaint. Defendants contend that, as a matter of law, the transfer, removal, destruction, mutilation, or concealment of fully encumbered property does not give rise to an action under 11 U.S.C. § 727(a)(2). Defendants cite In re Lane, 166 B.R. 133 (Bankr.E.D.Mo. 1993) as authority for this proposition.
This Court is not bound to follow, and does not agree with the holding in Lane. First, the plain language of 11 U.S.C. § 727(a)(2) does not provide much support for the Lane holding.
Second, this Court has previously held that the purpose of a § 727 action is to promote the integrity of the bankruptcy process. In re Rich, 202 B.R. 107, 108 citing In re Drenckhahn, 77 B.R. 697 (Bankr.D.Minn. 1987). "The purpose of the statute is to punish a debtor who behaves obstructively or fraudulently and whose conduct is identified by another player in the bankruptcy process, e.g. the trustee, the United States trustee, or a creditor." Ryan, supra, 202 B.R. at 108. Accordingly, the law does not and should not allow a debtor who has transferred, removed, destroyed, mutilated, or concealed property to keep his discharge merely because the property is fully encumbered.
Accordingly, the Court holds that whether the subject property was or was not fully encumbered at the time of the transfer does not, as a matter of law, determine whether or not Mr. Moulton should be denied a discharge under 11 U.S.C. § 727(a)(2). For this reason, the Motion for Summary Judgment is denied as to Mr. Moulton.
This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure.
See written Order.
ORDER
For the reasons set forth in an Opinion entered this day,
IT IS HEREBY ORDERED that the Defendants' Motion for Summary Judgment be and is hereby granted as to Mrs. Moulton.
IT IS FURTHER ORDERED that the Defendants' Motion for Summary Judgment be and is hereby denied as to Mr. Moulton.