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Vucurevich v. Valley Exchange Bank

United States District Court, D. South Dakota, Southern Division

February 13, 2015



KAREN E. SCHREIER, District Judge.

Appellant, Kent A. Vucurevich, appeals from the July 9, 2014, decision issued by the United States Bankruptcy Court for the District of South Dakota, [1] granting appellee Valley Exchange Bank's motion for summary judgment in part and denying Vucurevich a general discharge of debts. Bankr. Docket 45.[2] For the following reasons, the court affirms the bankruptcy court's decision.


The pertinent, undisputed facts of this appeal are as follows:

Vucurevich was placed into bankruptcy on June 27, 2011, following an involuntary petition filed by several creditors. See 4:11-bk-40501. On August 1, 2011, the bankruptcy court granted the petition and entered an order for relief under Chapter 7 of U.S.C. title 11. Valley Exchange subsequently filed an adversary complaint against Vucurevich on February 2, 2012, arguing that Vucurevich was not entitled to a discharge of indebtedness. Bankr. Docket 1. The case was held in abeyance pending resolution of other adversary proceedings until the bankruptcy court issued an order on November 7, 2013, which allowed the case to resume. Bankr. Docket 29.

Valley Exchange moved for summary judgment on December 27, 2013, arguing Vucurevich was not entitled to a discharge of debts pursuant to 11 U.S.C. §§ 727(a)(3), (a)(4), and (a)(5). See Bankr. Docket 30-4. Accompanying its motion and brief for summary judgment, Valley Exchange submitted a statement of undisputed material facts and a number of evidentiary exhibits. See Bankr. Docket 30-1 to -3. Vucurevich timely responded, raised several objections to Valley Exchange's motion, and argued that summary judgment was inappropriate. See Bankr. Docket 37.

In its motion for summary judgment, Valley Exchange's statement of undisputed material facts set forth the following:

25. Debtor does not have a bank account but runs everything on a cash basis.
32. Neither Debtor's original [Statement of Financial Affairs] nor Amendments, disclose transfers within the last 2 years of Debtor's interest in KCC One Real Estate, LLC for $250, 000.00 nor transfer as security Debtor's interest in 57th and Louise Partners, LLC.
47. Debtor only deals in cash.
57. Debtor considers himself a sophisticated business person and has been a banker.[3]
64. When asked where all the funds went from all the sales of his business entities, Debtor[']s only response was that a lot went to reinvesting, debt payments and distributions to himself.[4]

Bankr. Docket 30-1 at ¶¶ 25, 32, 47, 57, 64. Vucurevich did not object to these statements. Bankr. Docket 37-1 at ¶¶ 25, 32, 47, 57, 64.

With respect to certain assets or records of assets that Valley Exchange argued Vucurevich had not sufficiently accounted for, Valley Exchange identified as undisputed facts that:

62. Debtor sold a watch for $16, 000.00 and furnishings for $25, 000.00, within a year before the Petition was filed, and is unable to account for any of the $41, 000.00.
63. Debtor's only explanation for the use of the $41, 000.00 in sales was he probably paid off creditors.
65. Debtor admits, under oath, that he does not have accurate records to account for his business entity sales.

Bankr. Docket 30-1 at ¶¶ 62-63, 65. These statements were accompanied by a transcript citation from Vucurevich's depositions. See id. (citing 30-3 (Exhibits 34a; 34b)). Vucurevich objected to ¶¶ 62-63, contending instead that the money from those sales went to pay for the living expenses of his estranged wife and his children. Bankr. Docket 37-1 at ¶¶ 62-63. Regarding records from the entity sales, Vucurevich "clarifie[d] that accurate records would exist once files were reviewed by an accountant."[5] Id. at ¶ 65 (citing 30-3 (Exhibit 34b)).

With respect to other business and financial records which Valley Exchange alleged that Vucurevich had not kept or preserved, Valley Exchange's statements of undisputed material facts stated that:

42. Debtor has very limited business records, admitting he threw away records.
43. Debtor failed to maintain business records but instead allowed previous employees to take computers, with all business records on them, while Debtor did not retain a copy.
44. Debtor uses emails extensively in business transactions.
45. Debtor has set up his email system to automatically purge all emails after 2 weeks, starting in the year 2008.
46. After lawsuits started against Debtor, and after discovery requests, Debtor made the decision that no records or emails would be saved. Debtor decided everything was to be deleted even from the hard drive.

Bankr. Docket 30-1 at ¶¶ 42-46 (citations omitted). Each of these facts was also accompanied by a citation to portions of Vucurevich's deposition testimony. See id. Vucurevich disputed these statements because he "stopped maintaining records for entities that were foreclosed upon and were no longer doing business. At the time this decision was made Debtor had no intention for filing for bankruptcy." Bankr. Docket 37-1 at ¶ 42.

The bankruptcy court issued its decision on July 9, 2014, and ruled in Valley Exchange's favor. Specifically, the court concluded that Vucurevich was not entitled to a general discharge of debts pursuant to 11 U.S.C. §§ 727(a)(3) and (a)(5). See Bankr. Docket 45 at 6, 9. The court did ...

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