ROBERT KRECHEVSKY, Bankruptcy Judge
I.
The Bankruptcy Court, on March 30, 2007, rendered a judgment ("Beaudoin I") in favor of Marc G. Beaudoin ("the debtor') and Loretta I. Beaudoin ("Loretta") (together "the defendants"), the defendants in a five count complaint brought by CadleRock Joint Venture II, L.P. ("CadleRock") and John J. O'Neil, Jr., the Chapter 7 trustee ("the trustee") ("together "the plaintiffs"). In a ruling dated December 12, 2007, arising from an appeal by CadleRock of the Bankruptcy Court judgment, the United States District Court vacated this judgment and remanded the case to the Bankruptcy Court for further proceedings consistent with the District Court opinion ("the Remand"). The Remand asks the Bankruptcy Court for clarification concerning three distinct issues arising from the debtor's transfer of title ("the Transfer"), on July 31, 1995, to Loretta of the family home known as 278 Corbin Avenue, New Britain, Connecticut ("the Corbin property"). Two issu es concern the application to the debtor of Bankruptcy Code § 727 (denial of discharge if the debtor retained an undisclosed interest in the Corbin property following the Transfer); and the third issue concerns the liability of Loretta under constructive trust and unjust enrichment doctrines. A copy of Beaudoin I is appended to the present ruling.
II. ISSUES ON REMAND
The first issue is whether a statement in Beaudoin I concerning the Transfer "represents the Bankruptcy Court's overall assessment of and conclusion regarding all of the facts and circumstances of the case — that is, a factual finding — or instead whether it reflects the Bankruptcy Court's understanding of the relevant legal principles governing this case." (Remand at 5.)
The second issue is the Remand's suggestion that "The Bankruptcy Court should consider whether it would be useful, in order to better facilitate what appears to be an inevitable appeal, for the court to make findings of fact on intent to hinder independent of any ruling on a retained interent, since CadleRock must establish both elements in order to prevail." (Remand at 12.)
The third issue is the Remand's "return [of] the unjust enrichment and constructive trust counts" to the Bankruptcy Court for "further findings regarding the nature of the arrangement between Mr. and Ms. Beaudoin for the payment of the mortgage on the Corbin Avenue property and the amount of that debt paid off by Mr. Beaudoin." (Remand at 14.)
III. FINDINGS OF FACT A. Clarification
The Remand requests clarification of whether the following statement in Beaudoin I represented the bankruptcy court's finding of fact or its statement of underlying legal principles:
The facts and circumstances described by both the plaintiffs and the defendants do not support an inference that the debtor retained any property interest in assets which he concealed for the purpose of hindering, delaying, or defrauding creditors.
The foregoing statement represents this court's finding of fact, i.e., its "overall assessment of and conclusion regarding all of the facts and circumstances of the case," and not a statement of legal princi;ples. (Remand at 5.) "[Section 727(a)(2)(A)] cases . . . are peculiarly fact specific, and the activity in each situation must be viewed individually." Cadle Co. v. Stewart (In re Stewart), 263 B.R. 608, 611 (10th Cir. B.A.P. 2001). While the factors indicated by CadleRock may, under certain circumstances, give rise to an inference of retained ownership, the debtor may rebut any such inference by providing a credible alternative explanation for his conduct. The court, after considering all the evidence, both testimonial and documentary, presented at trial, is satisfied that the debtor's explanations, which the court finds both credible and reasonable, are sufficient to rebut any inferenc e that the debtor retained an interest in the Corbin property. Thus the court made a finding of fact that the debtor neither retained nor concealed any interest in the Cor bin property following the Transfer.
For purposes of clarification, the court notes that in,Beaudoin I, it also found as fact that: — "With the exception of some water and sewer liens on the properties for which he was paying monthly installments, the debtor, as of July 31, 1995, was current on all indebtedness" and the plaintiffs did not establish that the debtor was insolvent on that date; — Loretta, who was earning considerably more than the debtor, was the sole owner of the savings account in her name from which she withdrew funds to pay for the materials used for improvements to the Corbin property, notwithstanding that some deposits may have included gifts from Loretta's parents or joint tax refunds, which were in the form of checks made payable to both Loretta and the debtor; — From the time of their marriage in 1990, the debtor and Loretta had maintained separate checking accounts and had allocated all expenses as follows: the debtor generally (with one exception) made all mortgage payments from his account and Loretta paid all other household expenses. The defendants' usual practice was to allocate certain expenses to be paid from a particular checking account and not switch payment from one account to the other. Between 1990 and 1995, the defendants had two children and Loretta paid, from her checking account, all of the family's increased expenses, e.g. daycare, clothing, etc. while the debtor continued to pay the same mortgages as before. Following the Transfer, three of the mortgages being paid by the debtor were paid off. Thus, while Loretta's share of the family expenses had increased substantially, the debtor's share decreased. The defendants reallocated their family expenses by having the debtor, from his checking account, make the payments toward Loretta's mortgage on the Corbin property. The court finds that decision consistent with the defendants' usual practice of not switching payment of a particular expense from one checking account to the other. The court finds, as a finding of fact, that, in light of all of the relevant circumstances, the debtor has provided a credible explanation sufficient to rebut any inference that the debtor made such mortgage payments because he retained a property interest in the Corbin property. — Loretta testified (Remand at 8, citing 12/7/2006 Transcript at 52:1-10) that she had considered the Linsley property, located in Meriden, Connecticut (an investment property which had been parchased by the debtor and on which CadleRock had foreclosed prepetition) — not the Corbin property in New Britain — to be an investment which she had hoped would help provide for college tuition and retirement.
B. Fraudulent Intent
The second issue is for the court to make a finding on the intent of the debtor to hinder creditors. The court, having consider ed all of the circumstances surrounding both the transfer and the debtor's subsequent u se of the Corbin property, finds, as fact, that the debtor did not act with intent to hinder delay, or defraud creditors. In making such findings, the court has considered the totality of the circumstances, including conduct that may be considered "badges of fraud."
"Badges of fraud" recognized in the Second Circuit include (1) the lack or inadequacy of consideration; (2) the family, friendship or close associate relationship between the parties; (3) the retention of possession, benefit or use of the property in question; (4) the financial condition of the party sought to be charged both before and after the transaction in question; (5) the existence or cumulative effect of a 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; and (6) the general chronology of the events and transactions under inquiry. Salomon v. Kaiser (In re Kaiser), 722 F.2d 1574, 1582 (2d Cir. 1983); Hirsch v. Steinberg (In re Colonial Realty Co.), 226 B.R. 513, 522 (Bankr. D. Conn. 1998).
Concerning the Transfer, the court notes the following facts. Although the Transfer was to his wife, the debtor received adequate consideration in return. The debtor was not insolvent at the time of the Transfer and was making timely payments on the Linsley mortgage (presently held by CadleRock) and continued to do so until January 1997. The Transfer had no negative impact on the debtor's financial situation. The debtor did not file his bankruptcy petition until seven years after the Transfer. The court also finds the family moved from the Ridgewood property, which had been owned by Loretta prior to her marriage to the debtor, to the Corbin property at the time of the Transfer, and they needed additional funds to pay off the Ridgewood mortgages. The court finds, as fact, that the debtor did not make the Transfer with an intent to hinder, delay or defraud his creditors.
As to the debtor's alleged secret retained interest in the Corbin property, the court found there was none. However, even if i: had found such a retained interest, the court finds that the debtor lacked the intent to hinder, delay or defraud his creditors. The debtor's application for building permits as "owner" rather than as a contractor was consistent with the applicable statutory definition of "owner" as "a person who ownsor resides in a private residence and includes any agent thereof." Conn. Gen. Stat. § 20-419(6) (emphasis added). In addition, the court finds nothing about such statements that exhibited an intent to deceive the debtor's creditors. Nor does the court find that the defendants' method of allocating household expenses in such a way that the mortgage, tax, and insurance payments for the Corbin property were paid from the debtor's checking account, while expenses for food, transportation, health insurance, and daycare were paid from Loretta's account, exhibited any intent to deceive or defraud creditors. Finally, the debtor did not schedule the Corbin property as an asset in his bankruptcy petition because he believed, on the advice of counsel, that he had no property interest in it following the transfer. The court finds, as fact, that the debtor had no intent to hinder, delay or defraud creditors by concealing an interest in the Corbin property.
C. Unjust Enrichment and Constructive Trust
CadleRock has argued that Loretta holds the Corbin property under a constructive trust and has been unjustly enriched by the amount of any principal repaid by checks from the debtor's account on nortgages Loretta placed on the Corbin property following the Transfer. The Renmand thus asks for "further findings regarding the nature of the arrangement between Mr. and Ms. Beaudoin for the payment of the mortgage on the Corbin Avenue property and the amount of that debt paid off by Mr. Beaudoin." (Remand at 14.)
With regard to the debtor's making post-transfer mortgage payments for the Corbin property, the court has found that the defendants, who had never had a joint checking account, shared the family expenses by writing checks from their individual accounts to pay various bills. Although a portion of the debtor's checks was applied toward principal repayment (at most $10,000 in total) on the Corbin mortgage, the court finds that the debtor received reasonably equivalent value in return from Loretta's payment of other expenses. The evidence indicated that each of the defendants contributed about the same amount toward the family's living expenses and that Loretta occasionally gave the debtor additional money from her own earnings from time to time as needed. See, e.g. United States v. Goforth, 465 F.3d 730, 736 (6th Cir. 2006) ("[A] debtor does indeed receive `reasonably equivalent value' when he/she makes payments to his/her spouse (or co-habitant) that are used for household expenses.")
IV. CONCLUSION
Having responded to each of the three specific issues raised in the Remand, this court concludes that the debtors remain entitled to the judgment rendered in Beaudoin I, but vacated in the Remand, on all counts of the complaint.
MEMORANDUM OF DECISION I.
Marc G. Beaudoin ("the debtor") filed a Chapter 7 petition on October 2, 2002, and John J. O'Neil, Jr. ("the trustee") was appointed trustee of the debtor's bankruptcy estate. CadleRock Joint Venture II, L.P. ("CadleRock") and the trustee, as joint plaintiffs (together "the plaintiffs"), on February 6, 2003, commenced the present adversary proceeding by filing a five-count complaint against the debtor and his wife, Loretta Beaudoin ("Loretta") (together "the defendants"). The complaint seeks, in the first count, to impose a constructive trust on property owned by Loretta; a judgment, in the second count, against Loretta based on unjust enrichment; and, in the remaining three counts, denial of the debtor's discharge pursuant to Bankruptcy Code sections 727(a)(2)(A), 727(a)(2)(B), and 727(a)(4)(A).
The parties, at the trial held on November 29 and December 7, 2006, presented both testimonial and documentary evidence, and, subsequent thereto, submitted memoranda of law in support of their respective positions.
The court, on November 29, 2006, granted the trustee's motion to consolidate, for purposes of trial, the instant adversary proceeding with Adversary Proceeding No. 04-2080, filed by the trustee on October 1, 2004, seeking to recover, as allegedly fraudulent transfers, certain prepetition payments made by the debtor. The court will issue separate rulings on the merits of the complaints.
II. BACKGROUND
The following factual background concerns a number of interrelated transactions over a period of seventeen years in regard to three parcels of real property.
A.
The debtor's parents, on August 25, 1986, transferred to the debtor, by warranty deed, title to their family residence, located at 278 Corbin Avenue, New Britain, Connecticut ("the Corbin property"). The debtor, on that date, obtained a $50,000 loan from American Savings Bank, secured by a first mortgage on the Corbin property. The entire proceeds of such loan were used for the benefit of the debtor's parents who were to continue to reside on the Corbin property.
The debtor, a carpenter by occupation, on December 21, 1989, purchased from Paul Bongiovanni ("Bongiovanni") a three-family dwelling located at 74 Linsley Avenue, Meriden, Connecticut ("the Linsley property") as an investment with the intention of renovating and renting the units. At that time, the Linsley property was subject to a first mortgage in the original amount of $100,000, granted by Bongiovanni to Meriden Trust and Safe Deposit Company "Meriden Trust") on August 14, 1987. As of May 1, 1989, Meriden Trust had assigned the Bongiovanni mortgage to Central Bank; and Centerbank Mortgage Company ("Centerbank"), on October 18, 1991, acquired it from the Federal Deposit Insurance Corporation, as receiver of Central Bank. (Pl. Exh. 5.) The debtor assumed, as part of the purchase price, the Centerbank mortgage. The debtor, on January 12, 1990, obtained from American Savings Bank, a $10,000 equity line of credit, secured by a second mortgage on the Corbin property, to finance some of the renovations to the Linsley property.
B.
The debtor, on July 20, 1990, married Loretta. At that time, Loretta was the owner of a residence located at 52 Ridgewood Street, New Britain, Connecticut ("the Ridgewood property"), which was subject to a first mortgage, in the original amount of $50,000. Loretta, on October 18, 1990, quitclaimed a one-half interest in the Ridgewood property to the debtor to enable the defendants to obtain from Travelers Mortgage Services, Inc. a loan for $40,000, secured by a second mortgage on the Ridgewood property. The debtor used the $40,000 proceeds, together with $12,000 from the sale of his Corvette, for renovations o the Linsley property. Subsequent to an August 14, 1992 due date for a balloon payment under the Linsley mortgage, the debtor and Centerbank, on March 23, 1993, signed a modification agreement extending the note to provide for a balloon payment on August 14, 1997.
C.
The defendants, on July 31, 1995, sold the Ridgewood property to Jeffrey and Inez Jennings. The defendants, with their two minor children, had been residing at the Ridgewood property, but had been seeking to sell it and move to the larger Corbin property. With the exception of some water and sewer liens on the properties for which he was paying monthly installments, the debtor, as of July 31, 1995, was current on all indebtedness.
On the Ridgewood property sale date, the outstanding balances of the two mortgages on the property exceeded the property's sale price. To consummate the sale to the Jennings, the defendants were required to bring to the closing sufficient cash to pay the shortfall and various closing costs. The debtor, on that date, transferred title to the Corbin property to Loretta, who was in a better position than the debtor to obtain a mortgage loan on the Corbin property sufficient to provide the funds needed to complete the Ridgewood sale. Loretta obrained a mortgage loan on the Corbin property for $85,000 from Centerbank. At Centerbank's request, the debtor's deed to Loretta recited that he transferred the Corbin property to Loretta for consideration of $108,000. An appraisal valuing the Corbin property at $85,000 as of July 31, 1995 was received into evidence. (Pl. Exh. 59.) The proceeds of the mortgage loan obtained by Loretta were distributed as follows: Corbin Property Payment of balance of debtor's first mortgage to American Savings Bank (Pl. Exh. 11) $ 29,747.05 Payment of balance of debtor's second mortgage to American Savings Bank (Pl. Exh. 11) 9,824.80 Miscellaneous costs (water, sewer, taxes, closing costs, etc.) (Pl. Exh. 11) 9,452.89 Payment from debtor to his parents for vacating the Corbin property and moving to senior housing (Tr. at 146) 20,000.00 Ridgewood Property Shortfall due from defendants at Ridgewood closing (Pl. Exh. 20) 15,230.58 _________ Total $ 84,255.32
D.
The debtor was current on the Linsley mortgage payments through January, 1997. He had completed the renovations to the property and had been renting the units, but, in late 1996 or early 1997, all three tenants vacated the units within a short time. As a result of losing the rental income, he was unable to make the payments on the Linsley mortgage and, in February 1997, defaulted. Centerbank, on March 31, 1997, assigned the Linsley mortgage to CadleRock. CadleRock, on November 19, 1997, commenced an action in state court to foreclose on the Linsley property, and, on December 7, 1997, obtained a judgment of sirict foreclosure. Title to the Linsley property vested in CadleRock on May 7, 1999. The debtor did not appear at either the foreclosure or the deficiency hearings. The state court, on August 16, 1999, finding the outstanding balance on the Linsley mortgage to be $119,383.06 and the value of the property to be $50,000, awarded CadleRock a deficiency judgment of $69,383.06 against Bongiovanni and the debtor.
E.
Since July 31, 1995, the defendants and their children have resided at the Corbin property. The defendants are both employed and both contribute roughly equal amounts towards the family's living expenses Each maintains a separate checking account and pays certain expenses therefrom. The debtor has generally paid the mortgage payments and utilities from his account, while Loretta has paid the expenses for health insurance, food, daycare and transpertation from her account. Loretta also maintains a savings account in her name. The debtor has used his carpentry skills to do various repairs and home improvements over the years to the Corbin property, including installation of a new roof and siding, Although the materials used for such improvements were often charged to the debtor's contractor credit card account, Loretta paid such charges from her savings account. Loretta has twice refinanced the mortgage on the Corbin property — on July 5, 2001 with a $70,000 mortgage loan from American Savings Bank, and again, on November 8, 2001, with a similar mortgage loan from Webster Bank.
III. ARGUMENTS OF THE PARTIES
The gist of the plaintiffs' complaint is that the debtor's 1995 transfer of the Corbin property to Loretta ("the transfer") was a sham intended to fraudulently conceal the debtor's continued ownership of such property from his creditors. The plaintiffs allege that the transfer was made for inadequate consideration and that the debtor thereafter continued to exercise all of the right; and responsibilities of ownership.
Counts I and II seek either imposition of a constructive trust in favor of the debtor's estate on the Corbin property, or payment to the estate by Loretta of the value thereof, asserting that Loretta was unjustly enr ched by receipt of the Corbin property. The plaintiffs contend that Loretta "has obtained or holds the legal right to property which she ought not, in equity and good conscience, hold and enjoy." (Complaint ¶ 10.)
In Counts III, IV and V, the plaintiffs seek denial of the debtor's discharge, alleging that, despite transfer of title to the C orbin property to Loretta, the debtor retained a beneficial ownership interest therein; that such beneficial interest was an asset which the debtor fraudulently concealed from creditors during the year preceding his bankruptcy filing (Count III), and from the trustee postpetition (Count IV); and that by filing his petition without scheduling such alleged interest in the Corbin property, the debtor made a false oath (Count V).
The relevant subsections of the Bankruptcy Code referenced in Counts III (§ 727(a)(2)(A)), IV (§ 727(a)(2)(B)), and V (§ 727(a)(4)(A)) provide:
(a) The court shall grant the debtor a discharge, unless —
. . .
(2) 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 — (A) property of the debtor, within one year before the date of the filing of the petition; or (B) property of the estate, after the date of the filing of the petition; . . . (4) the debtor knowingly and fraudulently, in or in connection with the case — (A) made a false oath or account;. . . .
The defendants contend that Loretta is sole holder of both legal and equitable title to the Corbin property; that she gave, as adequate consideration for the transfer, the entire $85,000 from the proceeds of the Centerbank mortgage she placed on the Corbin property; that, having paid the reasonably equivalent value for the Corbin property, she was not unjustly enriched by the transfer; and that the debtor did not have, and therefore did not conceal, any interest in the Corbin property after July 31, 1995.
IV. DISCUSSION A.
The court finds unsupported the plaintiffs' allegation that the debtor transferred the Corbin property to Loretta for inadequate consideration. The evidence adduced by the plaintiffs, as well as the testimony of the defendants, support the conclusion that Loretta provided consideration of approxima tely $85,000 from the proceeds of the Centerbank mortgage loan; that such amount was applied for the benefit of the debtor; and that such amount was reasonably equivalent to the value of the Corbin property.
B. Counts I and II — Constructive Trust and Unjust Enrichment
Imposition of a constructive trust is not a cause of action in itself, but provides an equitable remedy that may be imposed by the court upon property held by one who "by fraud . . ., by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. Moreover, the party sought to be held liable for a construetive trust must have engaged in conduct that wrongfully harmed the plaintiff."Wendell Corp. Trustee v. Thurston, 239 Conn. 109, 113-14 (1996). The issue raised by a claim for a constructive trust is, in essence, whether a party has committed actual or constructive fraud or whether he or she has been unjustly enriched. Stornawaye Properties, Inc. v. O'Brien, 94 Conn. App. 170, 176 (2006).
The trustee argues that the debtor's transfer of the Corbin property to Loretta was a fraudulent transfer under Connecticut's Uniform Fraudulent Transfer Act ("the UFTA"), Conn. Gen. Stat. § 52-552a, et seq. Such argument is unavailing. The July 31, 1995 transfer of the Corbin property was clearly prior to the four-year statute of repose in the UFTA, Conn. Gen. Stat. § 52-552j. The trustee contends that the misstatement in the deed of the amount of consideration obscured the nature of the transfer and should permit the court to equitably toll the running of the limitation. The court need not consider whether such a statute of repose may ever be subject to equitable tolling because, even if it could be, the circumstances of the Corbin transfer would not justify doing so. Where, as here, the deed and Loretta's mortgage were properly recorded and were a matter of public record, there can be no basis for a claim that the transfer was concealed, even if the amount of the consideration recited in the deed was incorrect. Cf. Epperson v. Entertainment Express, Inc., 338 F.Supp.2d 328 (D.Conn. 2004), aff'd, 159 Fed. Appx. 249 (2d Cir. 2005), cert. denied, 126 S.Ct. 2296 (2006) ("[D]efendants could not, as a matter of law, have concealed the existence of the security interests . . . in light of UCC-1 filings" despite the mischaracterization of secured debt as a capital contribution on the debtor's balance sheet).
Conn. Gen. Stat. § 52-552j states:
A cause of action with respect to a fraudulent transfer or obligation under sections 52-552a to 52-5521, inclusive, is extinguished unless action is brought: (1) Under subdivision (1) of subsection (a) of section 52-552e, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant; (2) under subdivision (2) of subsection (a) of section 52-552e or subsection (a) of section 52-552f, within four years after the transfer was made or the obligation was incurred; or (3) under subsection (b) of section 52-552f, within one year after the transfer was made or the obligation was incurred.
The plaintiffs allege, in Count II, that Loretta was unjustly enriched by the transfer and seek to recover from her the value of the Corbin property. Unjust enrichment is an "essentially equitable" doctrine, based on the principle that "in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another." Weisman v. Kaspar, 233 Conn. 531, 550 (1995), quoting Connecticut National Bank v. Chapman, 153 Conn. 393, 399 (1966). "Plaintiffs seeking recovery for unjust enrichment must prove (1) that [Loretta was] benefitted, (2) that [Loretta] unjustly did not pay the [debtor] for the benefits, and (3) that the failure of payment was to the [debtor's] detriment." Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn 276, 283 (1994).
The court, having found that Loretta gave the debtor adequate consideration for the transfer of the Corbin property, concludes that the plaintiffs have not met their burden of proving, by a preponderance of the evidence, that Loretta was unjustly enriched thereby. To the extent that the plaintiffs claim the debtor's payment of Loretta's mortgage payments or application of his carpentry skills to maintain, repair and improve the Corbin property, the court's conclusion, infra, that such matters were in the nature of family support preclude a finding of unjust enrichment. Accordingly, the court concludes that the plaintiffs cannot prevail on Count I or Count II of the complaint.
B. Counts III, IV, and V — Denial of Discharge
Courts generally have recognized the in portance of the discharge to the debtor and, accordingly, have construed the provisiors of § 727 liberally in favor of debtors. "Clearly, § 727 imposes an extreme penalty for wrongdoing. As such, [the Second Circuit Court of Appeals has] held that it must be construed strictly against those who object to the debtor's discharge and liberaly in favor of the bankrupt." In re Chalasani, 92 F.3d 1300, 1310 (2d Cir. 1996) (citation and quotation marks omitted).
The plaintiff has the burden of proof ir an adversary proceeding objecting to discharge. Fed.R.Bankr.P. 4005. The standard of proof is the preponderance of the evidence. Wolfson v. Wolfson (In re Wolfson) 152 B.R. 830, 832 (S.D.N.Y. 1993); Cf. Grogan v. Garner, 498 U.S. 279, 286, 111 S. Ct. 654 (1991) (preponderance of evidence standard for fraud under § 523). "Once sufficient evidence is presented by the plaintiff to satisfy the burden of going forward with the evidence, the burden thereafter shifts to the debtor to provide evidence to rebut the plaintiff's prima facie case. The plaintiff, however, always bears the ultimate burden of proving, by a preponderance of the evidence, the essential elements of an alleged objection to discharge."PaineWebber, Inc. v. Gollomp (In re Gollomp), 198 B.R. 433, 440 S.D.N.Y. 1996).
Although the transfer at issue occurred more than seven years prepetition, "a debtor's transfer of legal title to property prior to one year before the bankruptcy petition date, coupled with a retention of certain attributes of beneficial ownership into the one year reach-back period of Section 727(a)(2)(A), can constitute `a concealment' within the meaning of that Section." In re Ogalin, 303 B.R. 552, 557 (Bankr. D.Conn. 2004). Accordingly, the court must initially dete rmine whether the debtor, following the transfer, retained the attributes of beneficial ownership of the Corbin property.
The plaintiffs argue that, following the Corbin transfer and continuing until the present, the debtor retained a beneficial interest in the Corbin property in that he resides there with his family, made payments on Loretta's mortgage from his checking account, provided the labor and materials for the maintenance, repairs and improvements to such property, and, on his applications for building permits, indicated his status as "owner."
The court credits the defendants' testimony that the debtor's payment on the Corbin mortgage were part of his contribution towards household expenses and not indicative of any retained ownership interest in the property. Copies of the defendants' joint tax returns for 1997-99 (Pl.'s Exh. 64, 65, 66) indicate that both defendants were employed, with Loretta providing more than half of their combined income. The defendants testified that, since their marriage in 1990, they had always maintained separate checking accounts, and that they shared the household expenses. Following the transfer, the debtor generally made the payments on both the Linsley and Corbin properties and some of the household utilities. Loretta paid the larger share of the family expenses, including those for food, health insurance, day care, car payments, clothing, etc. In addition, Loretta occasionally assisted the debtor in making his payments on the Linsley mortgage.
The facts and circumstances described by both the plaintiffs and the defendants do not support an inference that the debtor retained any property interest in assets which he concealed for the purpose of hindering, delaying, or defraudung creditors. The Connecticut District Court, in a case in which the Internal Revenue Service advanced an argument, similar to that of the present plaintiffs, that a husband retained a concealed beneficial interest in property transferred to his wife, held:
The IRS relies on the events subsequent to the transfer to show that, because the defendants acted as if [the husband] had a continuing interest in the Clintonville Road property, the or iginal transfer was a mere sham. I find that the evidence presented is not persuasive on this point. [The husband] did continue to reside at the Clintonville Road property, but I see nothing unusual in a husband/father wanting to live with his family. The fact that [the husband] helped with the repairs to and maintenance of the property indicates nothing more than a desire to provide his family with a comfortable and safe home.
. . .
The Connecticut courts to my knowledge have never considered a husband's contributing to the mortgage payments on his wife's property to be proof of a prior fraudulent conveyance of that property from the husband to the wife. To the contrary, Connecticut places an obligation on a spouse and parent to support his family; there is both a common law and statutory duty to do so. The support obligation continues even if the wife owns property of her own.
United States v. Edwards,
572 F.Supp. 1527, 1536-1537 (D.Conn. 1983);
see also Cadle Co. v. DiFabio (
In re DiFabio),
2004 WL 5250438 (Bankr. D.Conn. 2004),
aff'd ___ B.R. ___ (D.Conn. 2007).
The debtor acknowledges that he proviced the labor for various improvements to the Corbin property, but denies paying for the materials. The debtor testified that he charged the materials using his business credit accounts with several suppliers because such suppliers sell only to the trade and not to the general public. However, actual payment of such charges were made from funds in Loretta's separate savings account.
The plaintiffs have not alleged that the debtor, following the transfer, ever claimed an ownership interest in the Corbin property on any financial statement. They argue that, by signing two applications for building permits for the Corbin property as "owner," the debtor recognized and represented to others that he had retained beneficial ownership of the Corbin Property. The court credits the debtor's testimony that one could apply for a building permit either as an owner or as a contractor, and that, as a contractor, he would be required, inter alia, to obtain a contractor's license and provide worker's compensation insurance. The debtor's explanation is supported by the definition of "owner," under the Conr ecticut Home Improvement Act, as "a person who owns or resides in a private residence and includes any agent thereof." Conn. Gen. Stat. § 20-419(6) (emphasis added).
Furthermore, it was Centerbank, then holder of the mortgage on the Linsley property, that suggested transferring the Corbin property to Loretta and that provided Loretta with the mortgage needed to effectunte the transfer. The plaintiffs have profferred no explanation as to how the defendants' acting on Centerbank's recommendation could be construed to show any intent to hinder, delay or defraud Centerbank, CadleRock's predecessor in interest on the Linsley mortgage.
On the basis of the evidence presented, the court concludes that the debtor did not, following the July 31, 1995 transfer of the Corbin property to Loretta, retain any beneficial interest therein. Consequently, the court concludes: (1) that the debtor did not conceal assets from his creditors or the estate either during the one year prepetition reach-back period or postpetition; (2) that the debtor did not make a false oath "in or in connection with the case" by not listing an interest in the Corbin property in his bankruptcy schedules; and (3) that the plaintiffs' objection to the debtor's discharge be overruled.
V. CONCLUSION
The court, having considered all the evidence presented by the parties and all arguments raised by the plaintiffs, concludes, in accordance with the forgoing discussion, that the debtor is entitled to judgment on all Counts of the complaint. The plaintiffs are not entitled to a constructive trust on the Corbin property; nor are the plaintiffs entitled to money damages. In addition, the plaintiffs' objections to the debtor's discharge pursuant to Bankruptcy Code §§ 727(a)(2)(A), 727(a)(2)(B), and 727(a)(4) are overruled, and the debtor will be granted a discharge. Judgment will so enter.
JUDGMENT
This action came on for trial before the court, the Honorable Robert L. Krechevsky, United States Bankruptcy Judge presiding, and the issues having been duly tried and the court having issued a Memcrandum of Decision of even date, it is
ORDERED AND ADJUDGED that the plaintiffs, CadleRock Joint Venture II, L.P. and John J. O'Neil, Jr., Chapter 7 Trustee, take nothing and that the objection by the plaintiffs to the discharge of the debtor, Marc G. Beaudoin, be denied and the debtor's discharge be granted.