RBK Doc#: 14 Filed: 06/13/09 Entered: 06/13/09 21:15:45 Page 1 of 10 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MONTANA

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1 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 Neal G. Jensen Assistant United States Trustee Office of United States Trustee Liberty Center, Suite 0 Central Avenue Great Falls, MT 0 Phone (0 - Fax (0 - neal.g.jensen@usdoj.gov State Bar No. (Attorney for Plaintiff UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MONTANA In re Case No MATTHEW RAY CROCKER, Debtor. Adversary No UNITED STATES TRUSTEE, Plaintiff. v. MATTHEW RAY CROCKER, Defendant. MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT This memorandum of law is filed in support of e Plaintiff s Motion for Summary Judgment. The material facts upon which said motion is based are taken from is Court s docket and file for e aboveentitled case, and e United States Trustee s Statement of Uncontroverted Facts, which is being filed wi is Memorandum. I. JURISDICTION This Court has jurisdiction over is matter pursuant to U.S.C. and (b(. This action is a core proceeding under (b((j. The Plaintiff, as e Acting United States Trustee for Region, which encompasses e District of Montana, has standing to bring is action pursuant to U.S.C. 0 and (c(.

2 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 II. STANDARD FOR SUMMARY JUDGMENT Rule 0, F.R.B.P., incorporating Rule (c, FR Civ P, states at summary judgment shall be rendered forwi if e pleadings, depositions, answers to interrogatories, and admissions on file, togeer wi e affidavits, if any, show at ere is no genuine issue as to any material fact and at e moving party is entitled to judgment as a matter of law. This Court has confirmed e bases for summary judgment in its decision in United States Trustee v. Costello (In re Rankin, B.R., -, Mont. B.R., - (Bankr. D. Mont. 0. The Plaintiff respectfully submits at ere are no genuine issues of material fact in is case. Sufficient evidence upon which Count Two of e Plaintiff s Complaint rests is contained in is Court s docket and file for e above-entitled case, and e exhibits attached to Plaintiff s Statement of Uncontroverted Facts. Plaintiff is entitled to a judgment against Defendant for e relief sought in Count Two of his Complaint as a matter of law. III. BACKGROUND FACTS All of e facts necessary to find in favor of Plaintiff, United States Trustee, wi regard to Count Two of his Complaint to Deny Debtor s Discharge are contained in is Court s docket and file for e above-entitled case and adversary proceeding, and e excerpts from transcripts which are attached to e United States Trustee s Statement of Uncontroverted Facts ( Facts. From a review of e Facts, it can be seen at Defendant admittedly spent very little of his own time attempting to prepare his own Schedules, Statement of Financial Affairs, and oer required bankruptcy documents. (See Facts, at section. Instead, Defendant relied exclusively upon his former employees to prepare and type at least ose documents at were filed in is case. (See Facts, at sections and. During e hearing conducted by e Court on e Trustee s and UST s contempt motions, it became very clear at Defendant had taken no initiative to obey is Court s various orders; had, in fact, contemptuously disregarded e same; and had still not complied wi e Court s orders to complete e filing of accurate Schedules, a Statement of Financial Affairs, a Means Test calculation, and oer deficient materials. Defendant has not satisfied e Trustee s and UST s contempt judgments and no doubt never will. He appears impervious to anying and everying e Court has commanded him to do. There can be but one final solution: denial of discharge. - -

3 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 During e hearing held on April, 0, in connection wi e Trustee s and UST s contempt motions (a transcript of e same can be found at Docket No., e Court had e following to say to Defendant (at pp. - 0: I have pro se debtors filing schedules and filling em out all e time. They re self-explanatory. You can read rough em, fill in e information at you can e best at you can. You sign em under penalty of perjury. You do all e schedules, A ough J; you do e statement of financial affairs; and you do e oer ings at it requires: Statement of Social Security number, and few of ose ings at are required. And you re going to have to spend time doing at. You can t expect somebody else to do it for your. This is if you want e benefits of a bankruptcy and e automatic stay, you have e burdens. And you d better be spending every hour at you can getting is stuff done. If you ve got boxes full of papers, you d better be going rough em and you d better be identifying what you ve got, what your assets are. There are probably financial statements at have a lot of is stuff disclosed already. You know, ere s e Story Mill project. That s pretty easy to list. So I don t take much credence from what you re saying. I have people in situations wi a lot less knowledge an you and experience an you at work rough and seem able to file stuff. So I take at reason very well, I just don t believe it. I don t ink you ve spent much time on at. I ink you wanted e automatic stay because of what was happening in Colorado so at you wouldn t be put in jail. And I may be wrong, but you re bringing to e to is Court a pretty poor reason not having is stuff done. You ve already gone rough a 0 exam, as I recall. And I just find it bizarre and almost ridiculous at you haven t gotten stuff filed. As a businessman, you should be on top of is stuff, and maybe at s why we re where we re at now. But I expect more out of you, e Court expects more out of you. And you re going to have to do more in order to comply wi e bankruptcy code. The Court went on to criticize Defendant for his failure to timely file schedules, statements and e like, at which point Defendant stated And I have been working hard on it, and I ll make sure at I have em in in e 0 days. To which e Court responded (at pp. - : him: THE COURT: Well, I question at. I question at. When was is case filed? How long ago? MR. CROCKER: February. THE COURT: February. So we re talking two mons? MR. CROCKER: Correct. THE COURT: And we don t have schedules filed? You haven t been working on is at all. You d better get your nose to e grindstone and get is stuff filed. In two mons, you easily could have gone rough every paper at you have and been able to put down if it s an asset or a debt, put togeer a list of all of your creditors, statement of financial affairs... The Court en placed Defendant on e stand and e UST solicited e following information from Q: [Jensen] You filed is bankruptcy on February, correct? - -

4 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 A: [Crocker] Correct. Q: And you sought on February, you sought and received additional time to file your schedules, statement of financial affairs, means test, and oer documents, correct? Q: You were given until Friday, March to file everying, correct? Q: And you did not do so, correct? Q: On March, you filed Schedules D, E, F, and G, and a spreadsheet of some sort, correct? Q: None of e materials you filed were dated or signed, correct? Q: You signed noing under penalty of perjury or, for at matter, you signed noing at all in any capacity, correct? Q: On February, e Court ordered you to appear for a Rule 0 examination in Bozeman on March, correct? Q: You were to produce various specified documents and materials at e 0 exam, right? Q: You did not appear for at examination, did you? A: No. Q: And when asked wheer you knew about e 0 exam, you confirmed at yes, you did, correct? Q: And when you were asked why you didn t appear, you indicated at you didn t ink it was mandatory at you do so, correct? Q: You were ordered in e 0 examination order to produce various documents and materials, and you have not done you did not do so at at date, did you? A: No. - -

5 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 Defendant went on to confirm at he had spent not very much time personally trying to prepare his schedules and oer required bankruptcy documents, and did not even know what a means test was. (Tr. p. He confirmed at he personally had made no attempt to prepare e statement of financial affairs and was relying solely on his former employee Theda Bouldin to prepare all of e bankruptcy documents. (Tr. p. Q: [Jensen] So you basically assigned your bookkeeper e task of preparing your bankruptcy documents. Would at be safe to say? A: [Crocker] I ought at she was far more qualified to get at information now, yes. st Q: When Theda [Bouldin] was asked on April during her deposition wheer, wheer you provided any information to her or for e schedules, her response was no. We asked wheer she provided all e information, and she confirmed at at yes, she had. Is at true? A: Yes. Q: The spreadsheet at you have filed, did you even understand what at was? A: Yes. Q: How many hours have you spent at e your warehouse at contains all e records and e computers and everying else? Since e day you filed bankruptcy, how many hours have you spent at e warehouse trying to put togeer your bankruptcy documents? A: None... (Tr. at pp. - After hearing Defendant s testimony, e Court noted it had every, every basis at I would ever need to dismiss is case immediately. It s only because e trustee has requested at it not be dismissed at it s still active, based upon e testimony I m hearing right now. (Tr. at p. The Court was readily convinced to hold Defendant in contempt of its orders. I ink you re clearly in contempt of is Court, based upon e orders issued and for e issuance of e filing of e schedules at were required by order of is Court.... I don t know at since I ve been on e bench I ve seen someing is flagrant.... I am just shocked, to be quite honest, at you haven t taken more effort and more action in getting stuff filed over a two-mon period. (Tr. at p. The Court en ordered Defendant to file all schedules, A rough J, as well as e statement of financial affairs all be filed by next Monday, e [of April]. This was to include e means test and oer documents [e Court had referenced] and e clerk s office has referenced in its deficiency notice... Everying at s not been filed needs to be filed, all forms. And all signed under penalty of perjury. (Tr. at p. - -

6 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 Defendant has still not prepared and filed all of e documents required by e Bankruptcy Code and Rules, and specifically required for e last and final time to be filed by April, 0, pursuant to e Court s April, 0, contempt order. He has still not signed all of his bankruptcy documents under penalty of perjury. And as evidenced by e Court s docket [No. ], Defendant has not provided e Court wi a valid mailing address. IV. ARGUMENT U.S.C. (a((a, provides as follows: (a The court shall grant e debtor a discharge, unless ( e debtor has refused, in e case (A to obey any lawful order of e court... The UST continues to contend at ere should be serious consequences for debtors who do not devote e appropriate time and attention to e careful preparation of documents ey filed in bankruptcy cases. Extreme care should be required of debtors up front at e time at e Official Forms are initially being prepared to ensure at sufficient research has been done to assure e Court and oer parties at e information being portrayed is as accurate and complete as possible. Debtors should not be allowed to simply rely on oer individuals (in is case former employees to prepare eir schedules and oer required documents. If Schedules and Statements are to be meaningful, debtors should be required to take great pains to get em right e first time. If a debtor s declarations of trufulness in his Schedules and Statements are to have any tee, it is respectfully submitted at e Court should not abide careless and cavalier responses at are not carefully researched and considered. Defendant certainly had sufficient time to organize his papers and records, and to prepare fully accurate Schedules and Statements in e time allowed by e Code and Rules, and en in e additional time allowed by is Court. Defendant clearly had sufficient time in which to prepare truful, accurate and complete Schedules and Statements, had he boered to personally prepare, and en carefully review and sign em. Wi increasing frequency, debtors Schedules and Statements of Financial Affairs are not being prepared trufully, completely and accurately. See, for example, is Court s discussion of is problem in e case of Abbey v. Retz (In re Retz, Montana Bankruptcy Case No , in its Memorandum of Decision dated September, 0. In writing a veritable law review on e subject of inaccurate - -

7 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 schedules and e consequences at must flow from filing e same, citing various auorities, is Court observed: (a sworn statements in bankruptcy schedules must be regarded as serious business because e system will collapse if debtors are not forcoming; (Retz, at p. 0 (b e preparation and filing of [schedules and statements] is no idle task; and e debtor has a duty to prepare schedules carefully, completely and accurately; (Retz, at p. 0 (c a debtor must correct such documents filed wi a court upon learning of eir inaccuracy or incompleteness... e debtor has no discretion in is regard; (Retz, at p. 0 (d courts can deny debtors discharge where ere has been a pattern of falsity or from a debtor s reckless indifference to or disregard of e tru; (Retz, at p. 0 (e [a] reckless disregard of bo e serious nature of e information sought and e necessary attention to detail and accuracy in answering may rise to e level of fraudulent intent necessary to bar discharge; (Retz, at p. (f [a] debtor s bankruptcy schedules must be verified or contain an unsworn declaration under penalty of perjury... Accordingly, a false statement or omission in a debtor s schedules or statement of financial affairs qualifies as a false oa...; (Retz, at p. (g [a] debtor cannot, merely by playing ostrich and burying his head deeply enough in e sand, disclaim all responsibility for statements which he has made under oa; (Retz, at p. and (h [t]he efficacy of e bankruptcy system depends in important aspects on accurate self-reporting by debtors. Debtors and bankruptcy professionals who do not fulfill eir obligations deserve to be chastised severely. (Retz, at p. When debtors demonstrate a cavalier indifference to e bankruptcy process (as e Court has previously found in its Order of April, 0, at p., e remedy must be appropriate to punish e current conduct and to deter such conduct in e future. It is clear at timely and accurate schedules and statements were not important to is debtor. It should not be incumbent upon e Court or parties in interest to take affirmative and time-consuming actions, such as e filing of repeated Rule 0 motions followed by e filing of repeated contempt motions, in order to secure proper compliance wi e rule of law. Debtors who file for bankruptcy relief should be charged wi being knowledgeable enough about e - -

8 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 mandates of e bankruptcy system to comply wi eir duties from Day One, commencing wi e filing of e case. Debtors should not be allowed to take a stab at preparing eir schedules and statements when ey get around to it, or to file a first draft of e same; or, worse yet, ey should not be allowed to wholly delegate full responsibility for such preparation to someone who used to work for em. Moreover, ey should not be allowed to simply wash away all sins by amending whenever it becomes obvious because of questioning by e UST or oer parties at eir initial attempt at schedules and statements were incomplete or inaccurate. U.S. Bankruptcy Judge Alan Jaroslovsky had it right back in, when he auored his famous Open Letter to Debtors and Their Counsel (see Exhibit. It should not be a continuing hunt for e tru by e Court, e UST and creditors. Debtors should be expected to get it right e first time... and on time. The bankruptcy system is premised on e Honor System. Self-reporting of all assets, liabilities, income, expenses, prepetition transfers, etc., is required of all debtors. Not after two or ree tries. Not after debtors just guess about eir assets and oer financial information e first go around. Or after ey hire out e duty to prepare eir schedules to a former employee. The tru should not be a moving target. Close enough or we ll just amend later should not be e mantra of debtors. Why should e UST or oer parties be required to push for more information and significant amendments to documents in order to try to figure out what e debtor was required by law to know and report in e first instance? Why should it be necessary to conduct a second, continued meeting after a debtor finally gets around to filing accurate amendments to his Schedules and Statements after not even filing all of his schedules or a statement of financial affairs or a means test before his initial creditors meeting? If signing bankruptcy documents under penalty of perjury is to mean anying, debtors should be expected to tell e tru in eir initial schedules and statements. Or, in is case, Defendant must not be permitted to entirely disregard his obligation to sign what he has filed. It should not be incumbent upon parties in interest to take e initiative and file moving documents in order to secure timely, truful, complete and accurate information from debtors. More critically, debtors should not be allowed to disregard formal Court orders compelling em to file documents or to perform oer actions on or by certain dates. Debtors must understand beyond any doubt at Court orders are, in fact, mandatory and cannot be cavalierly disobeyed. - -

9 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page of 0 0 At e commencement of e hearing on e Trustee s and UST s contempt motions, e Court inquired as to wheer e instant adversary proceeding and such motions should be consolidated. The UST confirmed at e matters overlap factually. The same grounds for e contempt motion are stated in e complaint to deny discharge. The only additional element at e complaint has in it is a (a( allegation at some of e debtor s testimony has not been accurate, has not been truful. [This was before e UST recently amended his complaint to add additional counts.] But e, but e premise on e failure to abide by court orders at is before e Court today is also captured in e complaint to deny discharge. The UST indicated it would be fine to consolidate bo matters. (Tr. at p. - Ultimately, e matters were not consolidated but during e contempt hearing Defendant admitted all of e facts necessary for a determination of is matter. The Court has already found such facts to be true and sanctionable. The fact at Defendant has still not produced e documents referenced in e Court s two Rule 0 examination orders, and still has not filed all of e required bankruptcy documents, simply compounds e grounds compelling a summary judgment against Defendant. The facts are clear. The law is clear. The Court should summarily deny Defendant s discharge as a matter of law. CONCLUSION All of e facts necessary for is Court to grant Plaintiff s motion for summary judgment have been conclusively established. These are all e grounds which are necessary for e Court to conclude at Defendant s discharge must be denied pursuant to U.S.C. (a((a, and for is reason e Court is respectfully requested to grant e United States Trustee s motion for summary judgment as to Count Two if his Complaint and order e denial of Defendant s discharge. DATED is day of June, 0. ROBERT D. MILLER JR. Acting United States Trustee /s/ Neal G. Jensen NEAL G. JENSEN Assistant United States Trustee (Attorney for Plaintiff - -

10 0-000-RBK Doc#: Filed: 0//0 Entered: 0//0 :: Page 0 of 0 0 Certificate of Mailing I, e undersigned, Neal G. Jensen, Assistant United States Trustee, do hereby certify under penalty of perjury at a copy of e following described documents were sent by first class mail postage prepaid on e day of June, 0, at Great Falls, Montana, and directed to above-named Defendant at e address which follows:. United States Trustee s Motion for Summary Judgment; and Notice.. United States Trustee s Statement of Uncontroverted Facts.. Memorandum in Support of Motion for Summary Judgment. Mailed to: Matew Ray Crocker 0 Tawny Brown Lane Bozeman, MT /s/ Neal G. Jensen NEAL G. JENSEN - 0 -