UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO ...
This document was signed electronically on October 14, 2016, which may be different from its
entry on the record.
IT IS SO ORDERED.
Dated: October 14, 2016
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
In re
ANTHONY F. MAGLIONE,
Debtor.
-------------------------------------------HAROLD A. CORZIN, TRUSTEE,
Plaintiff,
v.
RUTH B. DIGIAMMARINO,
Defendant.
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Case No. 14-50685
Chapter 7
Adversary Proceeding No. 14-05110
Judge Alan M. Koschik
MEMORANDUM DECISION FOLLOWING TRIAL
ON PLAINTIFF¡¯S ACTIONS FOR AVOIDANCE OF FRAUDULENT TRANSFER
AND STATE-LAW PREFERENCE
INTRODUCTION
Now before the Court are the claims asserted by Plaintiff Harold A. Corzin, the dulyappointed Chapter 7 Trustee (the ¡°Plaintiff¡± or ¡°Trustee¡±) of the bankruptcy estate of debtor
Anthony F. Maglione (the ¡°Debtor¡±) in this adversary proceeding against Defendant Ruth B.
DiGiammarino (the ¡°Defendant¡±), the mother of the Debtor.
JURISDICTION AND VENUE
This Court has jurisdiction over this contested matter pursuant to 28 U.S.C. ¡ì 1334 and
General Order No. 2012-7 entered by the United States District Court for the Northern District of
Ohio on April 4, 2012. This is a core matter pursuant to 28 U.S.C. ¡ì 157(b)(2)(F) and (H).
Venue is proper pursuant to 28 U.S.C. ¡ì 1409(a).
PROCEDURAL HISTORY
On October 25, 2014, the Plaintiff Trustee filed his complaint in this adversary
proceeding seeking avoidance of the Debtor¡¯s transfer of $30,000 cash -- literally cash, as in
physical currency -- to Debtor¡¯s mother, the Defendant herein. After the Defendant¡¯s answer and
an opportunity for discovery, the parties filed their Stipulations of Fact on April 24, 2015
(Docket No. 19) (the ¡°Stipulations¡±). Although the Stipulations include only a signature block
for Defendant¡¯s counsel and no actual signature, the Defendant¡¯s counsel confirmed at trial that
the Stipulations were, in fact, agreed to by both parties. The Court conducted a trial on May 4,
2015. The Court received the testimony of the Debtor, the Defendant, and the Debtor¡¯s ex-wife,
Louise M. Maglione. The Court took the Plaintiff¡¯s claims and the Defendant¡¯s asserted
defenses under advisement.
FINDINGS OF FACT
Prior to May 2000, the Debtor and his now ex-wife, Louise M. Maglione (¡°Louise¡±),
incurred debts on certain credit cards that were in the name of both Frank DiGiammarino, the
Debtor¡¯s father, and the Debtor¡¯s mother, the Defendant here. Those accounts were with a
variety of creditors, including Key Bank, JPMorgan Chase, and Montgomery Ward. As of May
2000, the amount of these debts totaled $22,724.43. Based on the trial testimony of Louise,
these debts were incurred without the consent of the Debtor¡¯s parents, and that when the
Debtor¡¯s father learned of these charges, he was ¡°very upset.¡±
In mid-April 2000, the Defendant and her husband borrowed funds from National City
Bank, mortgaging their residence at 4740 Bali Drive, Akron, Ohio, and used a portion of the loan
proceeds to satisfy the balances on the credit cards that had been used by the Debtor and Louise.
The parties stipulate that at this point, the parents and the Debtor, along with his ex-wife, Louise,
agreed that the Debtor and Louise would repay the parents $22,724.43 in monthly installments.
This agreement was not reduced to writing. No promissory note was prepared, executed, or
delivered. The parties stipulate that the loan was to bear no interest.
The following month, on May 19, 2000, the Debtor and his wife, Louise, filed a joint,
voluntary petition for relief under Chapter 13 of the United States Bankruptcy Code. This filing
was made with the full knowledge of the Defendant. The Debtor¡¯s petition in the Chapter 13
case, Case No. 00-51482, which was also filed in the Northern District of Ohio at Akron, did not
schedule the alleged debt to the Defendant or her husband.
Notwithstanding the fact that the Debtor and his wife were then Chapter 13 debtors who
were obligated to make plan payments to the Chapter 13 trustee on account of their creditors in
an amount that exhausted their disposable income above and beyond their reasonable expenses,
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the Debtor and Louise nevertheless either began to make or continued to make monthly
installment payments to the Defendant and her husband on account of the oral agreement to
repay the original credit card debt. It is unclear to the Court whether the Chapter 13 Trustee was
aware of these payments or the income or assets used to make them. The parties have stipulated
to exhibits that include a series of handwritten receipts for each such monthly payment. While
the installment payments were documented, the legal obligation to repay was not.
The Defendant, and perhaps the Debtor, were relatively fastidious with respect to keeping
records of the monthly installment payments. The Debtor and Louise initially paid, over the
course of eleven months, $600 per month. As a result of a refinancing of their mortgage on April
28, 2001, the Debtor and her husband paid off National City Bank and replaced it with a
mortgage loan from Bank One at a lower rate with lower payments. The Debtor and Louise
continued to make payments thereafter for the following twelve months at a reduced rate of $500
per month. On June 28, 2002, the Defendant and her husband again refinanced their mortgage
debt. This time they refinanced with the same lender, Bank One. Following this refinance, the
Debtor and Louise reduced their payments to his parents to $466 per month and those payments
were made for an additional eight months from August 6, 2002 until March 12, 2003. The
evidence and stipulations suggest that the repayment terms between the Debtor and the
Defendant and their respective spouses were designed to cover the payments the parents were
obligated to make to their mortgage lender. Because the parties had agreed that the Debtor
would repay the credit card expenditures without interest, it appears that each payment simply
was intended to be applied to principal.
During a couple of months in the Spring of 2003, several events happened in rapid
succession. First, the Debtor and Louise were granted a discharge under Chapter 13 of the
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United States Bankruptcy Code on April 16, 2003. This was one month following the last
payment they made to the Defendant and her husband on account of the original credit card
charges. Two months later, in June 2003, the Debtor became disabled and could no longer work,
presumably limiting the Debtor¡¯s income and ability to make payments. The payments that were
made over the course of approximately three years by the Debtor to the Defendant and her
husband totaled $16,864. Simply using arithmetic, this would leave a mathematical balance due
of $5,860.43. This mathematical result, however, ignores the facts that the debt, to the extent
that it was ever an enforceable debt rather than an unenforceable promise, predated the Debtor
and Louise¡¯s Chapter 13 filing in May 2000, that the Defendant was aware of the filing, and that
the Debtor and Louise obtained a discharge of all of their prepetition debts on April 16, 2003.
Shortly after the Debtor became disabled, on July 14, 2003, he transferred title to his
1973 Dodge Charger to the Defendant in exchange for no consideration. The Defendant testified
at trial that this was the Debtor¡¯s car ever since he was first married. While the title transferred
to the Defendant, the testimony at trial makes clear that at all times the Debtor retained
possession of the 1973 Dodge Charger. Just as the Debtor¡¯s supposed debt obligation to his
parents was never scheduled in his Chapter 13 bankruptcy petition, neither was the 1973 Dodge
Charger scheduled as an asset of that estate.
The factual record then skips forward approximately eight years. Based on the testimony
at trial and the Stipulations of Fact, the Debtor made no further payments to the Defendant after
March 2003.
While the evidence is not clear as to whether it was related to the disability that prevented
the Debtor from working after June 2003, the record is clear that the Debtor is a Vietnam
Veteran who suffered injuries related to exposure to Agent Orange while serving in Vietnam.
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