Associates v. Walsh (In Re Walsh)

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT August 2, 2005
Charles R. Fulbruge III
Clerk
05-50032
Summary Calendar
In The Matter Of: EDWARD N. WALSH; LAURA S. WALSH,
Debtors,
BOBBY D. ASSOCIATES,
Appellant,
versus
EDWARD N. WALSH; LAURA S. WALSH,
Appellees.
Appeal from the United States District Court
for the Western District of Texas
(1:04-CV-283)
Before JONES, BARKSDALE, and PRADO, Circuit Judges.
PER CURIAM:*
Bobby D. Associates appeals the bankruptcy discharge granted
its judgment debtors, Edward and Laura Walsh. In October 2001,
Associates obtained a $112,439 judgment in state court against the
Walshes, who proceeded pro se. The state court judgment was
affirmed by the Court of Appeals of Texas on 26 August 2002. On 30
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
October 2002, the Walshes filed a petition for relief pursuant to
Chapter 7 of the Bankruptcy Code.
Prior to that bankruptcy petition’s being filed, Edward
Walsh’s father had died in November 2000; and, between March 2001
to October 2002, Walsh received approximately $160,000 in inherited
funds and insurance proceeds. Walsh was employed as a contract
laborer in construction. Laura Walsh was a housewife, who had done
some housecleaning work. The Walshes’ tax returns reflect income
of $15,391 for 2000 and $24,461 for 2001. (No tax return was filed
for 1999.)
At the time of his father’s death, Edward Walsh lived with
his wife and two teenage sons in a 500 square-foot cabin. He had
been working sporadically on building a house since 1999. Until
receiving the inheritance, however, little progress had been made.
Progress increased dramatically after receipt of the inheritance.
Walsh supervised most of the work and paid his subcontractors and
laborers in cash at their request. Walsh also paid approximately
$43,000 in cash for the land on which the house was located. The
Walshes failed to keep records of expenditures for the house’s
construction or for their living expenses in general. The only
records that could be produced were bank statements showing cash
withdrawals. The Walshes moved into the new house in August 2002.
As of the 30 October 2002 petition, the Walshes had $622 in
cash. Associates objected to the Walshes discharge on the grounds
that they: failed to keep business records; knowingly and
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fraudulently made false oaths; and failed to satisfactorily account
for their assets. See 11 U.S.C. § 727(a)(3), (a)(4)(A), (a)(5).
In granting the discharge, the bankruptcy court held: (1) the
failure to keep adequate records was “justified under all of the
circumstances”, see 11 U.S.C. § 727(a)(3); (2) although some of the
schedules were inaccurate, that alone did not establish the Walshes
knowingly and fraudulently made a false oath, as is required under
11 U.S.C. § 727(a)(4)(A); and (3) they adequately explained the
loss of the inheritance funds. (The court made these rulings in a
detailed statement from the bench.) On appeal, and after a
hearing, the district court affirmed. Bobby D. Associates v.
Edward Walsh (In re Walsh & Walsh), Ch. 7 Case No. 02-14362-FM,
Adv. No. 03-1025-FM (W.D. Tex. 23 Nov. 2004).
Pursuant to 11 U.S.C. § 727 (a)(3), (a)(5), Associates present
seven issues related to the Walshes not maintaining adequate
records, including concerning an admission and stipulations
pertaining to the general records issue. As does the district
court, we review a bankruptcy court’s findings of fact for clear
error; its conclusions of law, de novo. E.g., In re El Paso
Refinery, 171 F.3d 249, 253 (5th Cir. 1999). A bankruptcy court
has “wide discretion” in determining whether a debtor’s failure to
keep adequate records was “justified under all the circumstances”.
In re Dennis, 330 F.3d 696, 703 (5th Cir. 2003). For essentially
the reasons stated by the district court in its 23 November 2004
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opinion, the bankruptcy court neither abused its discretion nor
clearly erred in granting the discharge.
AFFIRMED
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