Dennis Fiandola v. Jennifer Rebecca Moore , 619 F. App'x 951 ( 2015 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-11195
Non-Argument Calendar
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D.C. Docket No. 2:14-cv-00335-SPC,
Bkcy No. 9:12-bkc-12132-FMD
IN RE: ROBERT PAUL MOORE, JR.
JENNIFER REBECCA MOORE,
Debtors.
_____________________________________________________________
DENNIS FIANDOLA,
LISA FIANDOLA,
Plaintiffs - Appellants,
versus
JENNIFER REBECCA MOORE,
ROBERT PAUL MOORE, JR.,
Defendants - Appellees.
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Appeal from the United States District Court
for the Middle District of Florida
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(September 8, 2015)
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Before MARCUS, WILLIAM PRYOR, and DUBINA, Circuit Judges.
PER CURIAM:
This is an appeal from the district court’s order affirming the bankruptcy
court’s final judgment in favor of the appellees, Robert and Jennifer Moore
(“Moores”) on an adversary complaint brought by the appellants, Dennis and Lisa
Fiandola (“Fiandolas”).
After reviewing the record and reading the parties briefs, we affirm the final
judgment of the bankruptcy court.
I. BACKGROUND
The facts are taken almost verbatim from the district court’s order.
Jennifer Moore, through her business Moore Pizazz, LLC, entered into an
agreement on February 28, 2011, to perform interior design services and provide
custom goods for the Fiandolas. As part of the agreement, the Fiandolas tendered
$30,000.00 to Moore Pizazz for custom furnishings. The agreement called for the
Fiandolas to pay 80 percent of all custom furnishings upon ordering. Jennifer
Moore subsequently requested that the Fiandolas provide another $40,000.00 for
the work. The Fiandolas questioned the need for the additional funds so soon into
the project but were assured by Jennifer Moore that the funds would not be lost and
the project would be completed.
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Jennifer Moore was unable to complete the Fiandolas’ project and did not
deliver all of the agreed upon goods and services. The Fiandolas acknowledge that
they received some of the goods and services they paid for but not everything. As
a result of Jennifer Moore’s failure to deliver on the agreement, the Fiandolas sued
Moore Pizazz in state court. The Fiandolas prevailed in their lawsuit and a
judgment was entered against Jennifer Moore and Moore Pizazz. Robert and
Jennifer Moore and Moore Pizazz, LLC subsequently filed for bankruptcy on
August 7, 2012.
Shortly after entering bankruptcy, the Moores disclosed their income in the
statement of financial affairs. The Moores did not list assets they had sold—
prefiling—namely two vehicles that were sold earlier that year for approximately
$35,000.00. In addition, Robert Moore failed to disclose moneys received from a
consignment shop that sold assets belonging to Moore Pizazz during the 341
meeting of creditors. The Moores amended their statement of financial affairs after
the 341 meeting and added the sale of the vehicles but still did not disclose the sale
of assets belonging to Moore Pizazz. Several months after the amendment, the
bankruptcy court entered a final judgment in favor of the Moores. The Fiandolas
then appealed the bankruptcy court’s judgment to the district court. After the
district court affirmed, this appeal followed.
II. ISSUES
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(1) Whether the bankruptcy court erred in determining that a debtor does
not have an obligation to explain the loss of the funds under 11 U.S.C.
§ 727(a)(5) when the funds belong to a single-member limited liability
company.
(2) Whether the bankruptcy court erred in determining that the Moores
did not deliberately omit the proceeds from the sale of vehicles from
their petition.
(3) Whether the bankruptcy court erred in determining that money
received by Robert Moore should not be imputed as income because
the funds were not used for the maintenance and support of the
Moores.
III. STANDARDS OF REVIEW
We review the factual findings and legal conclusions of the bankruptcy court
under the same standards as the district court. Heatherwood Holdings, LLC v.
HGC, Inc. (In re Heatherwood Holdings, LLC), 746 F.3d 1206, 1216 (11th Cir.
2014). Legal questions are reviewed de novo, and factual findings are reviewed
for clear error. Id. When the district court affirms the bankruptcy court’s order,
we review only the bankruptcy court’s decision. Educ. Credit Mgmt. Corp. v.
Mosley (In re Mosley), 494 F.3d 1320, 1324 (11th Cir. 2007).
IV. DISCUSSION
We conclude from the record that the bankruptcy court correctly decided
that the Moores should not be denied a discharge of debts under 11 U.S.C.
§ 727(a)(5) because they were under no obligation to explain the loss of corporate
owned assets in a single-member limited liability corporation. The bankruptcy
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court made factual findings, after a two day trial, that the assets of the corporation
were never owned by the Moores or at any time available to them for their use and
thus were not within the reach of a creditor. These findings were not clearly
erroneous.
Additionally, as the district court noted, even if the bankruptcy court erred in
its decision, the error was harmless because the Moores explained the disposition
of the corporate assets to the satisfaction of the trier of fact, the bankruptcy court.
To deny a discharge under § 727(a)(5), the bankruptcy court correctly found that
the Fiandolas had the burden of proving that the assets were converted by the
Moores from the limited liability corporation. The Fiandolas had to prove that the
Moores at one time owned the assets which are no longer available for creditors.
See In re Harmon, 379 B.R. 182, 190 (Bankr. M.D. Fla. 2007). The Fiandolas
failed to prove at trial that any assets were not the property of the corporation or
that any assets were not always titled in the corporation’s name.
In sum, we conclude that there was ample evidence presented to show that
all moneys paid to Moore Pizazz were deposited in the corporation’s accounts and
were never the personal property of the Moores. Moreover, the evidence was
uncontroverted that the Moores paid corporate liabilities from the sale of corporate
assets.
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We next conclude that the bankruptcy court was correct in concluding that
the Moores did not intentionally fail to disclose the sale of two vehicles in their
statement of financial affairs. The omitted disclosures in this case were not
material misrepresentations. First, the assets in question were not retained by the
Moores postpetition, nor were the proceeds from the sale of the automobiles
hidden from the bankruptcy trustee or the court. The Moores complied with the
trustee’s request for documentation of the sale of the automobiles and the proceeds
of each.
We finally conclude that the bankruptcy court did not err finding that Robert
Moore’s receipt of money from sale of Moore Pizazz’s assets was not imputed
income that had to be disclosed in the Moores’ statement of financial affairs.
Thus, the bankruptcy court correctly concluded that his failure to disclose did not
constitute a false oath under 11 U.S.C. § 727(a)(4)(A).
For the foregoing reasons, as well as the reasons set forth in the bankruptcy
court’s well-reasoned memorandum opinion filed on April 16, 2014, and the
district court’s well-reasoned order affirming the bankruptcy court’s judgment filed
on June 1, 2015, we affirm the final judgment entered in this case.
AFFIRMED.
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