Opinion
Case No. 05-20084.
May 16, 2005
ORDER ON MOTION TO TRANSFER CASE
On May 11, 2005, the court held a hearing on the "Motion to Transfer Chapter 7 Bankruptcy Case to Central District of California" filed by the Creditors Adjustment Bureau (CAB). The motion was opposed by the debtor, Milton Lee Vandevort (Debtor). The motion was supported by Roger M. Lindmark, who did not appear at the hearing.
Jurisdiction
The court has jurisdiction over this motion pursuant to 28 U.S.C. §§ 157 1334. A motion to change venue is a core proceeding within the definition of § 157(b)(2)(A), which may be heard by the bankruptcy court. In re 1111 Prospect Partners, L.P., 204 B.R. 222, 224 (Bankr. D. Kan. 1996); In re Thomason, 60 B.R. 629, 631 (Bankr. M.D. Tenn. 1986).
Findings of Fact
On January 20, 2005, the Debtor filed his chapter 7 petition for relief in this court. The Debtor had resided in a rented house in Thayne, Wyoming since April 2004 and is a Wyoming resident. The Debtor currently rents a house in Jackson, Wyoming. CAB agrees venue of this case in Wyoming is proper.
The Debtor is married to Melissa Hanlin. Ms. Hanlin owns a house in Beverly Hills, California. The Debtor and Ms. Hanlin have three children who live in and are enrolled in school in California. Ms. Hanlin lives in Beverly Hills, California, and Wyoming. She also spends time in other places.
Ms. Hanlin operates a nursing care business through two business entities known as Always There Nursing Care, Inc. and Always There Nursing Care Associates, LLC. The business was formerly a sole proprietorship of the Debtor. The Debtor claims he is not involved in the businesses, but he scheduled ATNC L.P. on his schedules.
The Debtor is a construction planning consultant, employed by ECI Limited Partnership (ECI), although he currently has no clients. The Debtor concedes he can engage in his business anywhere that a telephone is available.
ECI's partners are the Debtor, ECI Consultants, LLC, a Nevada entity, (ECI Consultants) and Construction Factoring Group, Inc., a Nevada corporation (CFG). All of ECI's partners have the same Beverly Hills, California address. The Debtor is the only Officer or Director of CFG. He and CFG are managing partners of ECI Consultants.
The Debtor did not list an interest in ECI Consultants or CFG in his bankruptcy schedules. By amendment, he scheduled an interest in ECI Limited Partnership, ATNC L.P. Limited Partnership, Spilet, and Ashel Partners, all stated to be valueless. The Debtor characterizes those interests as "liability interests" for "tax filing" purposes. All of these entities have California or Nevada legal addresses and a Los Angeles or Beverly Hills, California mailing address.
The Debtor is also involved in other unscheduled entities, including LMVEEEE Limited Partnership, Linda Flora, LLC, Bar America, Inc., and a family trust. Bar America, Inc. was allegedly created to protect the Debtor and Ms. Hanlin from the Russian mafia, when the Debtor and Ms. Hanlin were selling California property inherited by Ms. Hanlin. Linda Flora's principal place of business is Nevada.
The Debtor's testimony concerning his ignorance of the affairs of all of these partnership entities is not credible. The only property the Debtor listed of value is his clothing, stated to be worth $750. The Debtor's rent is funded by Ms. Hanlin, but paid by Linda Flora, LLC. The Debtor's gasoline bills are paid by a credit card issued to CFG with the Beverly Hills, California address common to the other entities. The Debtor did not explain how he pays his other expenses.
The Debtor listed seven creditors on Schedule F. All of the creditors are located in California. CAB is the major creditor, holding an assigned claim of over $700,000.00. The claim arises out of a lawsuit initiated by the Debtor in which he was ordered to pay the prevailing parties' attorney fees and costs.
Through collection efforts to enforce its judgment against the Debtor, CAB obtained an Order from the Los Angeles, California Superior Court which held that Ms. Hanlin's "wage earnings and other assets" were attachable to collect the debt owed by the Debtor to CAB. The basis for the Order is apparently a finding of community property. The Debtor contends the Order is not final. CAB contends the judgment is final and unappealable. Regardless, community property issues exist.
Discussion
The venue of a bankruptcy case is determined by 28 U.S.C. § 1408, which states:
[A] case under title 11 may be commenced in the district court for the district
(1) in which the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement[.]
CAB's motion to change venue is brought under 28 U.S.C. § 1412. That section states: "A district court may transfer a case or proceeding under title 11 to a district court for another district, in the interest of justice or for the convenience of the parties." There is no requirement in § 1412 that the case be transferred only to a district in which it might have originally been brought. In other words, a case does not have to be transferred to a proper district but only to one which meets the standards of § 1412. Lawrence P. King, Collier on Bankruptcy, ¶ 4.04[4][a] ¶ 4.04[5] (15th ed. rev. 2001).
The factors generally considered to determine a motion to transfer venue are the location of assets, economic and efficient administration of the debtor's estate, the proximity of the debtor to the court, the proximity of the creditors to the court, the proximity of witnesses, books and records, and the necessity of ancillary litigation. Id. at ¶ 4.04[4][a][ii]; In re WPRV-TV, Inc., 102 B.R. 226, 227 (Bankr. E.D. Okla. 1988).
The court concludes these factors require that this case be transferred. The debtor's known assets consist of a number of limited partnership interests which may or may not have value, income or assets. All of those entities conduct business from California or Nevada and have Beverly Hills, California addresses. Beverly Hills is located in the federal court's Central District of California. An investigation into the assets will be facilitated by a California chapter 7 trustee.
The California forum also will be more convenient for the creditors, all of which are located in California. Further, a California bankruptcy court is better suited than this court to determine the community property issues, because California is a community property state and Wyoming is not.
Finally, litigation may be necessary to determine whether the California Superior Court order regarding Ms. Hanlin's property is entitled to issue or claim preclusive effect. California law is applicable, and the result may affect the bankruptcy case.
Based on the foregoing reasons, IT IS ORDERED that this chapter 7 case is transferred to the United States Bankruptcy Court for the Central District of California.