United States Court of Appeals
For the First Circuit
No. 05-2687
IN RE: AARON H. WATMAN
Debtor.
AARON H. WATMAN,
Debtor, Appellant,
v.
LAWRENCE GROMAN,
Creditor, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Torruella, Lynch, and Lipez,
Circuit Judges.
Peter J. Haley, with whom Leslie F. Su and Gordon Haley LLP
were on brief, for appellant.
Joseph S.U. Bodoff, with whom Evan Slavitt and Bodoff & Slavit
LLP were on brief, for appellee.
August 21, 2006
LIPEZ, Circuit Judge. Debtor Aaron H. Watman appeals the
bankruptcy court's denial of his discharge of indebtness based on
its finding that he fraudulently transferred property under 11
U.S.C. § 727(a)(2)(A) and (a)(7). This is the second time an
appeal in this case has come before us. In 1999, creditor Lawrence
Groman initiated this adversary proceeding objecting to Watman's
discharge. After a trial, the bankruptcy court entered a judgment
in favor of Watman, and the Bankruptcy Appellate Panel ("BAP")
affirmed. In Groman v. Watman (In re Watman), 301 F.3d 3 (1st Cir.
2002) ("Watman I"), we vacated the judgment and remanded the case
for further proceedings in the bankruptcy court. Specifically, we
held that the bankruptcy court failed to consider fully the extent
of the transferred property and several indicia of fraudulent
intent. On remand, the bankruptcy court reconsidered its findings
and ultimately found in favor of Groman, denying Watman's
discharge. On appeal, the BAP remanded the case for additional
findings, which the bankruptcy court provided, again denying
Watman's discharge. Watman filed another appeal, which Groman
elected to present to the district court pursuant to 28 U.S.C.
§ 158(c)(1)(B). The district court affirmed the bankruptcy court's
decision. Watman now appeals to us, arguing that the bankruptcy
court erred in both its factual findings and its manner of inquiry
on remand following our decision in Watman I. After careful
review, we affirm.
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I.
A. Factual background
We restate the facts of this case, as described in Watman
I, 301 F.3d at 3-7. Watman, a dentist, joined Childrens Dental
Associates of Lowell ("Childrens Dental") in April 1988. At that
time, Groman, also a dentist, was the sole shareholder, officer,
and director of Childrens Dental. The parties agreed that Watman
would be given the opportunity to purchase fifty percent of the
practice at the end of one year if the two men worked well
together. Consistent with that plan, at the end of his first year
with Childrens Dental, Watman entered into an agreement to pay
Groman on a monthly basis for ten years in exchange for a fifty
percent ownership stake in the practice. In 1992, Watman agreed to
purchase the other fifty percent of the practice from Groman, and
the payment period was extended an additional ten years to cover
the other half of the purchase price. Watman made the monthly
payments to Groman until September of 1997, when Watman claimed
difficulties in making the payments. In response, Groman agreed to
reduce the monthly payments from $ 5,600 to $ 3,000.
Watman made only two of the reduced monthly payments. In
April 1998, Groman filed suit against Watman and Childrens Dental
as joint obligors for the remaining balance owed him. On December
14, 1998, Groman obtained a judgment against Watman and Childrens
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Dental in the amount of $ 437,918 in Middlesex Superior Court.
Neither Watman nor Childrens Dental appealed that judgment.
In or about March 1999, Groman filed a complaint seeking
the appointment of a receiver for Childrens Dental. A hearing on
the appointment of a receiver was scheduled for March 17, 1999 but
was continued by agreement of counsel to March 24, 1999.
On March 18, 1999, Watman wrote thirty-seven checks from
the Childrens Dental checking account, totaling $ 42,011.49. He
recorded these transactions in Childrens Dental's books. Of that
total, $ 14,702.02 went to prepayments of Childrens Dental's
anticipated expenses for the month of April, including office rent,
equipment rent, health insurance, and maintenance. Although
payroll was typically paid out every two weeks, Watman caused
payroll withdrawals to be made from Childrens Dental's bank account
on March 10, 1999 and March 18, 1999 (the day after the original
date of the receivership hearing). On March 19, 1999, on the
advice of counsel, Watman sent a letter of resignation to Michael
Dana Rosen, counsel for Childrens Dental, terminating his
employment immediately. On March 22, 1999, Watman filed his
Chapter 7 bankruptcy petition. On March 24, 1999, Childrens Dental
filed its Chapter 11 petition.1 At the time that these petitions
were filed, Watman was the sole officer and director of Childrens
1
According to Rosen's testimony at trial, Groman intended to
object to the confirmation of any Chapter 11 plan. The bankruptcy
judge sua sponte converted the Childrens Dental case to Chapter 7.
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Dental. At the time of filing, Childrens Dental had cash in bank
accounts in the amount of approximately $ 30,000 and accounts
receivable of about $ 69,000. These assets were disclosed in the
bankruptcy schedules and turned over to the bankruptcy trustee. On
or about March 25, 1999, Watman informed Lowell Doctors Park,2 from
whom Childrens Dental was renting its office space, that Childrens
Dental would be terminating its occupancy of the premises.
From March 24, 1999 through March 31, 1999, Watman
operated a dental practice under his own name at the office space
that had been occupied by Childrens Dental at 75 Arcand Drive, in
Lowell, Massachusetts (75 Arcand Drive location), using the same
furniture and equipment that Childrens Dental had used. Watman
offered the employees of Childrens Dental positions in his practice
on the same terms as Childrens Dental was employing them. Then, on
March 31, 1999, Lowell Dentistry for Children, P.C. ("Lowell
Dentistry") was incorporated and began operations out of the same
75 Arcand Drive location. The corporate documentation to form
Lowell Dentistry had been prepared in January 1999 by the law firm
of Devine, Millimet & Branch. Childrens Dental paid the cost of
these services from a retainer that it had paid to that firm.
Watman became, and continues to be, the president, sole shareholder
and director of Lowell Dentistry. Most of Childrens Dental's 3000
2
Lowell Doctors Park is a limited partnership in which Watman had
a 12.5 percent interest.
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patients became patients of Lowell Dentistry when Childrens Dental
ceased operating.
On August 27, 1999, Groman filed a complaint, alleging,
inter alia, that Watman's actions warranted a denial of his
discharge pursuant to 11 U.S.C. § 727(a)(2) and (a)(7). Watman
subsequently moved to dismiss Groman's complaint for failure to
state a claim under Rule 7012 of the Federal Rules of Bankruptcy
Procedure and Rule 12(b)(6) of the Federal Rules of Civil
Procedure. That motion was granted by the bankruptcy court. On
appeal, the BAP reversed the bankruptcy court's dismissal of the
§ 727 objections to discharge and remanded for a trial on the
merits. After trial, the bankruptcy court entered judgment in
favor of Watman. On appeal, the BAP affirmed the judgment of the
bankruptcy court. Groman appealed, and we vacated the judgment of
the bankruptcy court in Watman I.
B. Watman I and subsequent procedural history
During the bankruptcy court proceedings and on appeal,
Groman argued that Watman's transfer of the assets of Childrens
Dental to Lowell Dentistry -- including patient records, office
space, equipment, and employees -- "shifted all the goodwill of
Childrens Dental to Lowell Dentistry, stripped Childrens Dental of
its aggregate value as a going concern, and eliminated its ability
to generate income for the estate, leaving Groman with an empty
shell at Childrens Dental (save approximately $ 99,000 in cash and
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accounts receivable[]) against which to pursue collection of his
$ 437,918 judgment." Watman I, 301 F.3d at 9. For his part,
Watman argued that he formed Lowell Dentistry to preserve the
assets of Childrens Dental so that he could pay the debts to
Groman, and explained that he did so relying on advice of counsel.
The bankruptcy court, noting that Watman did not conceal his
actions and emphasizing Watman's claim that he relied on counsel's
advice, initially concluded that Groman had not established
Watman's "intent to hinder, delay, or defraud" under 11 U.S.C.
§ 727(a)(2).
In reviewing the bankruptcy court's reasoning, we found
it problematic and incomplete in several respects. We noted that
Watman's claim that he formed Lowell Dentistry to preserve the
assets of Childrens Dental "was never memorialized in writing, is
not in any way referenced in any written memoranda, and was not
reported in Childrens Dental's bankruptcy schedules." Watman I,
301 F.3d at 9. We also observed that the bankruptcy court had not
accounted for the fact that the assets of Childrens Dental were
transferred to Lowell Dentistry without consideration, and had not
considered whether several other indicia of fraud were evident in
this case. See id. at 12-13. We therefore remanded the case for
further findings. Id.
On remand, the bankruptcy court held a status conference
at which the parties agreed that no further evidence was needed to
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make the findings on remand. The bankruptcy court gave the parties
an opportunity to submit further proposed findings of fact and
conclusions of law. After reviewing those submissions and the
record, the bankruptcy court found in favor of Groman on Count II
of his complaint, denying Watman a discharge pursuant to 11 U.S.C.
§ 727(a)(7).3 On appeal, the BAP found that the bankruptcy court
addressed some, but not all, of the points mentioned in our Watman
I decision and thus remanded for additional findings. The
3
In Count I of his complaint, Groman objected to the discharge
under 11 U.S.C. § 727(a)(2), based on Watman's transfer of the
property of Childrens Dental. The bankruptcy court dismissed that
claim, holding that § 727(a)(2) applies to the fraudulent transfer
of property in which the debtor had a direct proprietary interest,
not the transfer of the property of a corporation in which the
debtor may have derivative interest. See Riumbau v. Colodner (In
re Colodner), 147 B.R. 90, 93 (Bankr. S.D.N.Y. 1992); see also
MCorp Management Solutions, Inc. v. Thurman (In re Thurman), 901
F.2d 839, 841 (10th Cir. 1990) ("Congress intended to limit the
reach of § 727(a)(2)(A) only to those transfers of property in
which the debtor has a direct proprietary interest."). Instead,
the bankruptcy court denied the discharge under 11 U.S.C.
§ 727(a)(7). A court may deny a debtor's discharge under
§ 727(a)(7) if the debtor has committed an act specified in
§ 727(a)(2) in connection with a bankruptcy case "concerning an
insider." 11 U.S.C. § 727(a)(7). Where the debtor is an
individual, the term "insider" is defined to include a "corporation
of which the debtor is a director, officer, or person in control."
11 U.S.C. § 101(31)(A)(iv). In Count II of his complaint, Groman
alleged that Childrens Dental is an "insider" of Watman and that
Watman fraudulently transferred the property of Childrens Dental.
As we noted in Watman I, "[i]n light of Watman's status as sole
officer, shareholder, and director of Childrens Dental, Childrens
Dental clearly qualifies as an 'insider' of Watman for purposes of
§ 727(a)(7), and Watman does not argue otherwise." Watman I, 301
F.3d at 8. In challenging Groman's § 727(a)(7) claim on appeal,
Watman focuses on whether his actions concerning Childrens Dental
are prohibited acts under § 727(a)(2). We thus examine whether
Groman has established the elements of § 727(a)(2) with respect to
the property of Childrens Dental.
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bankruptcy court supplemented its findings but came to the same
conclusion. Watman filed another appeal, which Groman elected to
present to the district court pursuant to 28 U.S.C. § 158(c)(1)(B).
The district court affirmed the decision of the bankruptcy court.
This second appeal to us ensued.
II.
We review the bankruptcy court's conclusions of law de
novo and its factual findings for clear error. See Davis v. Cox
(In re Cox), 356 F.3d 76, 82 (1st Cir. 2004).4 Although the
district court reviewed the bankruptcy court's decision in this
case, we "exhibit no particular deference to the conclusions of
. . . the district court." Brandt v. Repco Printers &
Lithographics, Inc. (In re HealthCo Int'l, Inc.), 132 F.3d 104, 107
(1st Cir. 1997).
In this appeal, Watman asserts that the bankruptcy court
clearly erred in its findings on (a) what property of Childrens
Dental was transferred to Lowell Dentistry and (b) whether Watman
acted with intent to hinder, delay, or defraud his creditors.
Watman also argues that the bankruptcy court erred in its approach
to the inquiry on remand by reversing some of its initial factual
findings without hearing additional evidence and exceeding the
scope of remand. We address these arguments in turn.
4
We discuss in more detail our approach to reviewing the
bankruptcy court's findings of indicia of fraud in Part II.A.2.
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A. The bankruptcy court's findings of fraudulent transfer under
11 U.S.C. § 727(a)(2)(A)
On remand, the bankruptcy court concluded that Watman is
precluded under 11 U.S.C. § 727 (a)(7), applying § 727(a)(2)(A),
from receiving a discharge in Chapter 7 bankruptcy. Section
727(a)(2)(A) states:
The court shall grant the debtor a discharge,
unless . . . the debtor, with intent to
hinder, delay, or defraud a creditor or an
officer of the estate charged with custody of
property under this title, has transferred,
removed, destroyed, mutilated, or concealed,
or has permitted to be transferred, removed,
destroyed, mutilated, or concealed [] property
of the debtor, within one year before the date
of the filing of the petition[.]
11 U.S.C. § 727(a)(2)(A). We explained in Watman I that
in order for a debtor to be denied a discharge
under § 727(a)(2), an objector must show by a
preponderance of the evidence that (1) the
debtor transferred, removed, destroyed,
mutilated, or concealed (2) his or her
property (or the property of the estate if the
transfer occurs post- petition) (3) within one
year of the petition filing date (for
prepetition transfers) (4) with intent to
hinder, delay or defraud a creditor.
301 F.3d at 7. Groman, as the party requesting the denial of the
discharge in this case, has the burden of establishing these
elements. Fed. R. Bankr. P. 4005; see also Watman I, 301 F.3d at
7.
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1. Property of Childrens Dental transferred to Lowell
Dentistry
Under the first two elements of the fraudulent transfer
test under 11 U.S.C. § 727(a)(2), as applicable here under
§ 727(a)(7), Groman must show that Watman transferred or concealed
property that belonged to Childrens Dental. The bankruptcy court,
in its initial decision, concluded that there "was no transfer here
in the customary sense" and that "transfers, if they did take place
at all, were not of the formal legal title nature, and to the
extent that patients' files, records, et cetera, are property of
the estate . . . they haven't been transferred." In Watman I, we
concluded that this analysis was inadequate. 301 F.3d at 10.
Specifically, we questioned whether the bankruptcy court applied
the correct definition of "transfer" in its analysis, noting that
bankruptcy law defines "transfer" broadly to include a transfer of
possession, custody, or control even if there is no transfer of
legal title. See Watman I, 301 F.3d at 10 (discussing the
legislative history of 11 U.S.C. § 101(54), which defines
"transfer" (citing S. Rep. No. 989, 95th Cong. 27 (1978), as
reprinted in 1978 U.S.C.C.A.N. 5787, 5813)); see also Martin v.
Bajgar (In re Bajgar), 104 F.3d 495, 498 (1st Cir. 1997) (noting
the broad definition of "transfer" in bankruptcy law). We
explained that the bankruptcy court should have determined whether
"assets such as Childrens Dental's employees, patient files, office
space, goodwill and overall going concern value were (a) properly
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considered property of Childrens Dental such that they would have
been included in the estate for the benefit of creditors; and (b)
if so, whether they were transferred to Watman or Lowell
Dentistry." 301 F.3d at 11-12 (footnote omitted).
On remand, the bankruptcy court concluded that Childrens
Dental's "space, patient records, employees, and good will" were
property of Childrens Dental and that they were transferred to
Lowell Dentistry. The bankruptcy court noted that Watman "also
used Childrens Dental's funds to prepay expenses that he knew he or
a new corporation would incur." The bankruptcy court found that
the only property not transferred and thus "remaining in [Childrens
Dental's] estate for liquidation by its Chapter 7 Trustee consisted
of accounts receivable, an obsolete computer that Lowell Dentistry
originally used then stopped using at some point, furnishings,
decorations, and a box of dental supplies of unknown value." The
bankruptcy court concluded that Watman's actions thus harmed
Childrens Dental's creditors.
Watman challenges these findings on two interrelated
grounds. First, he argues that the bankruptcy court erred by
failing to calculate the specific value of these assets. Second,
he argues that the bankruptcy court's finding that Childrens
Dental's assets had some value was clearly erroneous. Both of
these arguments are specious.
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a. Calculating the value of the assets
The bankruptcy court was not required to calculate the
precise value of the assets of Childrens Dental in order to
determine whether those assets were "property" capable of being
transferred in this context. The question of whether those assets
were "property" capable of being transferred depends on whether
they are "'susceptible of having value.'" Watman I, 301 F.3d at 12
(emphasis added) (quoting Robinson v. Watts Detective Agency, 685
F.2d 729, 734 (1st Cir. 1982)); see also Robinson, 685 F.2d at 734
(explaining that the term "property" in the context of transfers is
defined generally as "anything of value -- anything which has debt
paying or debt securing power"); Glosband v. Watts Detective
Agency, Inc., 21 B.R. 963, 971 (D. Mass. 1981) (holding that the
term "property" in the context of transfers should be interpreted
"'most generously' to incorporate anything of value which but for
the transfer might have been preserved for the trustee to the
ultimate benefit of the bankrupt's creditors" (quoting Segal v.
Rochelle, 382 U.S. 375, 379 (1966))). Once the bankruptcy court
determined that the assets of Childrens Dental had some value, it
did not have to calculate the precise value.
b. Whether Childrens Dental's assets had value
Watman essentially argues that the assets of Childrens
Dental were valueless. He focuses much of his argument on whether
the bankruptcy court properly determined the extent of Childrens
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Dental's goodwill and going concern value independent of Watman's
own practice. We need not reach those arguments, however, because
the evidence demonstrates that other assets of Childrens Dental had
value. As the district court aptly observed,
Watman, both as a solo petitioner and as part
of Lowell Dentistry, decided to operate at the
same location, use the same furniture,
equipment and supplies, employ the same
employees (including an orthodontist and
another dentist), retain the same patient
records, and service the same patients as
Childrens Dental. Before Watman filed for
bankruptcy, he was willing to make monthly
payments for these combined Childrens Dental
assets.
In re Watman, 331 B.R. 502, 511 (D. Mass. 2005) (citations
omitted). In addition, as the bankruptcy court noted, Watman "used
Childrens Dental's funds to prepay expenses that he knew he or a
new corporation would incur." Watman transferred these assets
identified by the bankruptcy court precisely because they had
value. If Watman had walked away from Childrens Dental, he would
have had to expend resources to find a new location for his
practice, buy new equipment, hire new employees, find new patients
or encourage his old patients to follow him despite changes in
location and employees, and develop new patient records or enter
into some arrangement to get the old records. Instead, Watman
simply transferred by possession these assets of Childrens Dental
to Lowell Dentistry. We therefore affirm the bankruptcy court's
finding that Childrens Dental's assets had value and that Watman
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used those assets for his new practice.5 Given this finding, we
conclude that Watman transferred the property of Childrens Dental
to Lowell Property within the meaning of 11 U.S.C. § 727(a)(2)(A).6
2. Intent to hinder, delay, or defraud a creditor
Under the last element of § 727(a)(2)(A), Groman had to
convince the bankruptcy court that Watman acted with the intent to
hinder, delay, or defraud his creditors. Section 727 requires a
showing of actual intent, not constructive intent. Watman I, 301
F.3d at 8 (citing 6 Collier on Bankruptcy ¶ 727.02[3][a] (L. King
ed., 15th ed. 2002)). "Because a debtor rarely gives direct
evidence of fraudulent intent, we have recognized that . . . intent
to defraud a creditor can be proved by circumstantial evidence."
Marrama v. Citizens Bank (In re Marrama), 445 F.3d 518, 522 (1st
5
We therefore also affirm the bankruptcy court's finding that
Lowell Dentistry's use of these assets harmed the creditors of
Childrens Dental. Watman's sole basis for challenging this finding
is his contention that the assets of Childrens Dental had no value.
We have rejected that claim and thus find no merit in Watman's
argument.
6
Because we affirm the bankruptcy court's conclusions on the basis
of the findings mentioned above, we do not reach Watman's challenge
to the bankruptcy court's finding that a noncompetition agreement
between Watman and Childrens Dental was evidence of the independent
value of Childrens Dental. While the district court observed that
a noncompetition agreement could support the inference of the
goodwill and going concern value of a business independent from the
practitioner under certain circumstances, the court also noted that
the law on noncompetition agreements in the discharge context is in
"disarray" and that a finding on this issue was not necessary to
support the judgment.
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Cir. 2006). There are several objective indicia of fraudulent
intent:
(1) insider relationships between the parties;
(2) the retention of possession, benefit or
use of the property in question; (3) the lack
or inadequacy of consideration for the
transfer; (4) the financial condition of the
party sought to be charged both before and
after the transaction at issue; (5) the
existence or cumulative effect of the pattern
or series of transactions or course of conduct
after the incurring of debt, onset of
financial difficulties, or pendency or threat
of suits by creditors; (6) the general
chronology of the events and transactions
under inquiry; and (7) an attempt by debtor to
keep the transfer a secret.
Watman I, 301 F.3d at 8 (citations omitted). We have also
recognized that "'[t]he shifting of assets by the debtor to a
corporation wholly controlled by him is another badge of fraud.'"
Id. (quoting Salomon v. Kaiser (In re Kaiser), 722 F.2d 1574, 1583
(2d Cir. 1983)).
Reviewing evidence of these indicia, we construe the
grounds for discharge liberally in favor of the debtor. See Boroff
v. Tully (In re Tully), 818 F.2d 106, 110 (1st Cir. 1987). Where
the intent issue turns on the credibility and demeanor of the
debtor, we typically defer to the bankruptcy court's conclusions.
See Palmacci v. Umpierrez, 121 F.3d 781, 785 (1st Cir. 1997). The
determination of actual intent is a factual finding and, "[i]n all
events, we will affirm the bankruptcy court's findings of fact
unless they appear to be clearly erroneous -- that is, unless we
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are 'left with the definite and firm conviction that a mistake has
been committed.'" Watman I, 301 F.3d at 8 (quoting Anderson v.
City of Bessemer City, 470 U.S. 564, 573 (1985)).
Watman asserts that the bankruptcy court ignored his
claims that he acted on advice of counsel and did not conceal his
actions. We reject that argument. The bankruptcy court did not
ignore his claims; it simply found that other indicia of fraud were
prevalent in the case. The court noted that Watman "took virtually
all of [Childrens Dental's] assets, tangible and intangible, and
transferred them to his new corporation," yet paid no consideration
for the transfer. The bankruptcy court found that Watman's actions
resulted in the diminution and possibly the complete elimination of
the value of Childrens Dental as a whole. The court rejected
Watman's testimony and the testimony of his attorney that Watman
created Lowell Dentistry to "preserve the value" of Childrens
Dental (on the theory that Lowell Dentistry could purportedly make
payments to Childrens Dental) as "not credible," given the lack of
any memorialization of such an arrangement. Instead, the court
found that Watman created Lowell Dentistry "to get out from under
his and [Childrens Dental's] obligation to Groman." The court
recognized that "Watman's actions were not done in secret," but
concluded that the fact "[t]hat they were not secretive, however,
is not sufficient to overcome the conclusion that they were
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intended to hinder, delay and defraud Groman." These findings are
not clearly erroneous.
B. The bankruptcy court's reconsideration of its initial findings
Watman also challenges the bankruptcy court's approach to
the inquiry on remand. First, Watman argues that the bankruptcy
court exceeded the scope of the remand by addressing the fraudulent
intent issue. Second, Watman asserts that the court should not
have reversed its initial finding that he lacked the requisite
intent, particularly in terms of its credibility determination,
without hearing additional evidence. These arguments are
unavailing.
Watman insists that the scope of our remand was limited
to addressing the issue of the value of the transferred property,
precluding reconsideration of the issue of fraudulent intent.
However, we specifically noted in our first decision that remand
was required because the bankruptcy court had "left unexamined
. . . indicia of fraudulent intent." Watman I, 301 F.3d at 13.
The bankruptcy court properly considered all of the issues that we
identified on remand.
There was also nothing improper in the bankruptcy court's
reversal of its findings on the intent issue without hearing any
additional evidence. Our concern with its initial decision was the
incompleteness of its analysis of the fraudulent intent issue. See
id. at 12-13. In addition, we expressed our skepticism of Watman's
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claim that he formed Lowell Dentistry in order to preserve the
assets of Childrens Dental given the lack of any written
memorialization of that arrangement. See id. at 8-9. On remand,
the bankruptcy court considered all of the indicia of fraud in this
case and reevaluated the testimony. Based on its complete
analysis, the court reversed its credibility findings and its
conclusion that Groman had not established Watman's intent to
hinder, delay, or defraud his creditors.
In light of the bankruptcy court's incomplete analysis of
the issues in its first decision and our remand "for adequate
findings on these issues," Watman I, 301 F.3d at 13, the bankruptcy
court acted properly in considering all of the evidence and
reevaluating its findings accordingly. See Ramey Constr. Co. v.
Apache Tribe of Mescalero Reservation, 673 F.2d 315, 318 (10th Cir.
1982) (concluding that district court's reconsideration of its
findings on remand was proper where appellate court had concluded
that the initial findings were inadequate and incomplete); William
G. Roe & Co. v. Armour & Co., 414 F.2d 862, 865 (5th Cir. 1969)
(concluding that, where the appellate court had remanded for more
specific findings, "it was . . . within the court's power on remand
to find that it had been wrong the first time and reverse itself").
We discern no error in the bankruptcy court's approach or its
conclusions.
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III.
The legal dispute between these parties began with state
court proceedings in 1998, which produced a judgment for Groman
against Watman and Childrens Dental in the amount of $ 437,918.
Then, after bankruptcy filings by Watman and Childrens Dental, the
case has wound its way up and down the federal court system for the
last seven years. With our affirmance here, one portion of this
long saga may finally have come to an end -- Watman is not entitled
to a discharge of his indebtedness to Groman. The bankruptcy court
properly concluded that Watman transferred the property of
Childrens Dental to Lowell Dentistry and that he acted with actual
intent to hinder, delay, or defraud his creditors, in violation of
§ 727(a)(2). Its approach to our remand was appropriate, and the
district court correctly upheld the decision.
Affirmed.
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