In re: Earl Blasingame, et al

Filing

OPINION filed : The bankruptcy court's order denying Debtors' discharges pursuant to Section 727(a)(4) for making false oaths is AFFIRMED, and its order striking certain documents from the record on appeal is REVERSED, as specified in the opinion.; decision fully precedential pursuant to local BAP rule 8013-1(b). Marian F. Harrison, Guy R. Humphrey, and C. Kathryn Preston (authoring judge), Bankruptcy Appellate Panel Judges. [15-8008, 15-8025]

Case: 15-8008

Document: 42-2

Filed: 11/07/2016

Page: 1

RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 16b0006p.06

BANKRUPTCY APPELLATE PANEL
OF THE SIXTH CIRCUIT
_________________

In re: EARL BENARD BLASINGAME; MARGARET
GOOCH BLASINGAME,
Debtors.
__________________________________________
CHURCH JOINT VENTURE, L.P.; FARMERS &
MERCHANTS BANK.; EDWARD L. MONTEDONICO,
Chapter 7 Trustee,
Plaintiffs-Appellees,
v.
BENARD BLASINGAME; MARGARET GOOCH

EARL
BLASINGAME

Defendants-Appellants.

┐
│
│
│
│

>

│
│
│
│
│
│
│
│
│
│
┘

Nos. 15-8008/8025

Appeal from the United States Bankruptcy Court
for the Western District of Tennessee at Memphis.
No. 08-28289—Jennie D. Latta, Judge.
Argued: March 1, 2016
Decided and Filed: November 7, 2016
Before: HARRISON, HUMPHREY, and PRESTON, Bankruptcy Appellate Judges.
_________________
COUNSEL
ARGUED: David J. Cocke, EVANS│PETREE, PC, Memphis, Tennessee, for Appellants.
Bruce W. Akerly, CANTEY HANGER LLP, Dallas, Texas, for Appellees. ON BRIEF: David
J. Cocke, EVANS│PETREE, PC, Memphis, Tennessee, Michael P. Courty, GLANKER
BROWN, PLLC, Memphis, Tennessee, for Appellants. Bruce W. Akerly, CANTEY HANGER
LLP, Dallas, Texas, C. Barry Ward, BALLIN, BALLIN & FISHMAN, P.C., Memphis,
Tennessee, for Appellees.

Case: 15-8008

Nos. 15-8008/8025

Document: 42-2

Filed: 11/07/2016

In re Blasingame

Page: 2

Page 2

_________________
OPINION
_________________
C. KATHRYN PRESTON, Chief Bankruptcy Appellate Panel Judge.

In these

consolidated appeals, Earl Benard Blasingame (“Benard Blasingame”) and Margaret Gooch
Blasingame (“Margaret Blasingame”) (together, “Debtors”) appeal the order denying their
discharges and the order striking certain documents from the record on appeal. For the reasons
stated below, the Panel affirms the order denying Debtors’ discharges, and affirms in part and
reverses in part the order striking documents from the record.
ISSUES ON APPEAL
Debtors raised the following issues on appeal:
1. Was the bankruptcy court’s finding that Debtors concealed assets or
transferred property with intent to hinder and delay a creditor or officer of the
estate, as required to deny their discharges pursuant to § 727(a)(2)(A) and (B) of
the Bankruptcy Code, clearly erroneous?
2. Was the bankruptcy court’s finding that Debtors knowingly and
fraudulently made false oaths for purposes of 11 U.S.C. § 727(a)(4) clearly
erroneous?
3. Was the bankruptcy court’s finding that Debtors did not reasonably rely
on the advice of their bankruptcy counsel in connection with their bankruptcy
filings clearly erroneous, not supported by the facts, and contrary to the law of the
case?
4. Was the bankruptcy court’s decision to strike certain documents in the
record on appeal in BAP Case No. 15-8008 (specifically ECF Nos. 543, 556, 557
and 564 in the underlying bankruptcy case, and ECF Nos. 477, 508, 528, 535, 536
and 537 in the adversary proceeding) clearly erroneous and an abuse of
discretion?
JURISDICTION AND STANDARD OF REVIEW
Under 28 U.S.C. § 158(a)(1), this Panel has jurisdiction to hear appeals “from final
judgments, orders, and decrees” issued by the bankruptcy court. For purposes of appeal, an

Case: 15-8008

Document: 42-2

Filed: 11/07/2016

Page: 3

In re Blasingame

Nos. 15-8008/8025

Page 3

order is final if it “ends the litigation on the merits and leaves nothing for the court to do but
execute the judgment.” Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct.
1494, 1497 (1989) (citation and quotation marks omitted). “An order denying a discharge
pursuant to 11 U.S.C. §§ 727(a)(2)(A) and (a)(4)(A) is a final order, see, e.g., Hamo v. Wilson
(In re Hamo), 233 B.R. 718, 720 (B.A.P. 6th Cir.1999), and final orders of a bankruptcy court
may be appealed by right under 28 U.S.C. § 158(a)(1).” Pinnacle Tech. Res., Inc. v. Spencer (In
re Spencer), 2006 WL 3539295 at *1, 359 B.R. 357 (B.A.P. 6th Cir. 2006) (table).
The Panel reviews a “bankruptcy court’s factual findings for clear error and [its]
conclusions of law de novo.” Adell v. John Richards Homes Bldg. Co. (In re John Richards
Homes Bldg. Co.), 439 F.3d 248, 254 (6th Cir. 2006) (citation omitted). “A finding of fact is
clearly erroneous ‘when although there is evidence to support it, the reviewing court, on the
entire evidence, is left with the definite and firm conviction that a mistake has been committed.’”
United States v. Mathews (In re Mathews), 209 B.R. 218, 219 (B.A.P. 6th Cir. 1997) (quoting
Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S. Ct. 1504, 1511 (1985)).
FACTS
After meeting with several attorneys, Debtors filed a voluntary petition for relief under
Chapter 7 of the Bankruptcy Code on August 15, 2008. Tommy L. Fullen (“Fullen”) signed the
petition as the attorney of record. The petition, schedules, and statement of financial affairs
(“SoFA”), as initially filed, did not disclose Debtors’ interests in several trusts and corporations,
certain household goods, multiple annuities, property held for others, several bank accounts and
several

liabilities,

1

and

an

assignment

to

Martin

Grusin

(“Grusin”).1

On August 8, 2008, Margaret Blasingame executed an engagement letter with Grusin, purportedly
assigning Grusin her interest in $20,000 held by the McNairy County (Tennessee) Circuit Court as payment for
representation in connection with Church Joint Venture et al. v. Aqua Air Aviation, and related issues arising
therefrom. The engagement letter did not mention debt counseling or bankruptcy proceedings, although Grusin has
conceded that he consulted with Fullen and advised Debtors on many issues in connection with the bankruptcy case.
Grusin actively participated in the bankruptcy case ostensibly as attorney for Debtors’ children, the trusts, and the
corporations.

Case: 15-8008

Document: 42-2

Filed: 11/07/2016

Page: 4

Prior to their testimony at the § 341 Meeting, Edward L. Montedonico, the Chapter 7 Trustee
(“Trustee”) required both of the Debtors to sign and submit an affidavit. (Required Statement By
Debtor for 341 Hearing (collectively, “§ 341 Affidavits”), Sept. 24, 2008, Bankr. Case No. 0828289 Pl. Exs. 118, 119). Debtors signed the § 341 Affidavits under oath. In the § 341
Affidavits, Debtors affirmed that they had read and signed their petition, schedules, statements,
and related documents; that they were personally familiar with the information contained in the
documents; and that, to the best of their knowledge, the information contained in the documents
was true and correct. Additionally, during the § 341 Meeting, Debtors testified under oath that
they had helped prepare, had read, and had signed their bankruptcy petition; that it listed all of
their assets and liabilities; that the information contained in their schedules and SoFA was true;
and that the statements in their § 341 Affidavits were true. (Certified Copy of Meeting of
Creditors Record, Sept. 24, 2008, Bankr. Case No. 08-28289 ECF No. 463-1 Pl. Ex. 114). The
SoFA and schedules were amended multiple times throughout the course of the bankruptcy case.
Trustee and creditors Church Joint Venture and Farmers & Merchants Bank (together, “Church
Joint Venture”) conducted extensive discovery, including lengthy Rule 2004 examinations of
Debtors and others. Debtors also received several extensions of time to file amendments. On
September 29, 2009, Trustee and Church Joint Venture filed an adversary proceeding (Adv. No.
09-00482) seeking denial of Debtors’ discharges pursuant to several Bankruptcy Code sections.2
Lengthy and contentious litigation ensued, which is detailed in other opinions, including
an opinion from this Panel entered contemporaneously with this opinion.3 In summary, the
Trustee and Church Joint Venture filed a motion for partial summary judgment on the discharge
issue which the bankruptcy court granted, but later set aside. Church Joint Venture filed motions
for sanctions against Fullen and Grusin, which were granted and Grusin appealed.

The

bankruptcy court removed Fullen and Grusin as counsel for Debtors. Debtors then obtained new
counsel and the bankruptcy court conducted a trial on the complaint objecting to Debtors’
bankruptcy discharges. On January 15, 2015, the bankruptcy court entered its opinion and order
denying Debtors’ discharges pursuant to § 727(a)(2)(A) and (B) and § 727(a)(4) of the
Bankruptcy Code.

2

The adversary proceeding also sought other relief not relevant to this opinion.

3

Church Joint Venture v. Blasingame (In re Blasingame), 14-8046 (B.A.P. 6th Cir. Nov. 7, 2016).

1

Case: 15-8008

Document: 42-2

Nos. 15-8008/8025

Filed: 11/07/2016

Page: 5

In re Blasingame

Page 5

Debtors timely filed this appeal asserting that the bankruptcy court erred in determining
that they had fraudulent intent under § 727. Debtors assert that they fully disclosed everything to
their attorneys and relied on the advice of counsel in completing their petition, schedules and
SoFA.

In connection with this appeal, Debtors filed the obligatory designation of record;

Appellees moved to strike certain documents included in the designation. The bankruptcy court
granted the motion in part. Debtors filed an additional appeal, challenging the bankruptcy
court’s order sustaining Appellees’ objection to certain documents listed in the designation of
record. The appeal from that order has been consolidated with the appeal on the merits of the
denial of discharge. This opinion shall address both appeals.
DISCUSSION
I. Denial of Debtors’ Discharges (BAP Case No. 15-8008)
Section 727(a)(4) provides that:
(a) The court shall grant the debtor a discharge, unless-...
(4) the debtor knowingly and fraudulently, in or in
connection with the case-(A) made a false oath or account[.]
11 U.S.C. § 727(a)(4). For a court to deny a debtor’s discharge under § 727(a)(4), the plaintiff
must prove that: “1) the debtor made a statement under oath; 2) the statement was false; 3) the
debtor knew the statement was false; 4) the debtor made the statement with fraudulent intent; and
5) the statement related materially to the bankruptcy case.” Montedonico v. Beckham (In re
Beckham), 2009 WL 1726526 at *8, 421 B.R. 602 (B.A.P. 6th Cir. 2009) (table) (quoting Keeney
v. Smith (In re Keeney), 227 F.3d 679, 685 (6th Cir. 2000)). It is well established that “[a] debtor
has an affirmative duty to disclose all of its assets to the bankruptcy court.” Id. at *9 (quoting
Browning v. Levy, 283 F.3d 761, 775 (6th Cir. 2002)).
Statements made in bankruptcy schedules, the statement of financial affairs, the
341 meeting of creditors, and testimony given at Rule 2004 exams are made under
oath. See, e.g., Hamo v. Wilson (In re Hamo), 233 B.R. 718, 725 (B.A.P. 6th
Cir.1999). Statements are material if they concern the discovery of assets or the
existence and disposition of a debtor’s property. In re Keeney, 227 F.3d at 686
(citation omitted). The debtor had knowledge of the statement if “the debtor

Case: 15-8008

Document: 42-2

Filed: 11/07/2016

In re Blasingame

Nos. 15-8008/8025

Page: 6
Page 6

knew the truth, but nonetheless failed to give the information or gave
contradictory information.” In re Hamo, 233 B.R. at 725 (quotation marks and
citation omitted). “[A] knowingly false statement or omission made by the
Debtor with reckless indifference to the truth will suffice as grounds for the denial
of a Chapter 7 general discharge.” Id.
Beckham, 2009 WL 1726526 at *9.
In the case on appeal, the bankruptcy court found that:
The evidence of the Plaintiffs overwhelmingly demonstrates that the Defendants
repeatedly gave false oaths in connection with their bankruptcy case. Their
Schedules and SoFA made under oath were fraught with omissions and
misstatements. In addition, they gave false oaths at their meeting of creditors.
(Mem. Op. at 41, Jan. 15, 2015, Adv. No. 09-00482 ECF No. 598). On appeal, Debtors
challenge the bankruptcy court’s conclusion:
While the Debtors concede that the initial Schedules and SoFA contained
omissions regarding several material matters, they contend that they always acted
in good faith, and without fraudulent intent, to provide the information that their
lawyers requested prior to their initial filing and throughout the case in order for
their lawyers to prepare appropriate documents to be submitted to the Court.
They further contend that they reasonably relied upon counsel to include that
information appropriately on their Schedules and SoFA; that they reasonably
relied on their counsel to prepare and file appropriate amendments; and that at no
time did they have actual fraudulent intent to deceive which would warrant a
denial of their discharge.
(Appellants’ Br. at 22, BAP Case No. 15-8008 ECF No. 26).
Debtors made sworn statements at the § 341 Meeting and in the § 341 Affidavits that they
had read and were personally familiar with the contents of the petition, schedules, and SoFA.
Despite these sworn statements, Debtors repeatedly asserted, both at trial and on appeal, that they
never reviewed the completed petition, schedules, and SoFA and that they bear no responsibility
for any errors or omissions.

At trial, Margaret Blasingame testified “We didn’t read our

schedules enough. We didn’t understand them and a big mistake.” Then when asked “Not that
you didn’t read them enough, you didn’t read them?” She answered “Correct.” Margaret
Blasingame conceded that she knew she signed the documents under oath. (Tr. of July 17, 2014
Proceedings at 1541:25-1542:13, Adv. No. 09-00482 ECF No. 549).

Likewise, Benard

Case: 15-8008
Nos. 15-8008/8025

Document: 42-2

Filed: 11/07/2016

In re Blasingame

Blasingame testified “We did not read the petition prior to filing.”

Page: 7
Page 7

(Tr. of Nov. 5, 2013

Proceedings at 233:2-3, Adv. No. 09-00482 ECF No. 445). He also stated that he understood
that he had signed the documents under oath.
Based on their own testimony, Debtors gave false oaths in connection with this
bankruptcy when they signed the § 341 Affidavits and testified at their § 341 Meeting that they
had read the documents and were personally familiar with the contents of the documents. The
bankruptcy court found Debtors’ trial testimony to be credible on this point and correctly held:
“These false oaths alone would provide cause to deny their discharge.” (Mem. Op. at 47).
Debtors cannot claim that they relied upon the advice of counsel with regard to the false
oaths they made in the § 341 Affidavits and at the § 341 Meeting that they had read and signed
their petition, schedules, and SoFA, and disclosed all of their assets and liabilities. Certainly,
there is no indication in the record that either Fullen or Grusin told Debtors to testify that they
had read the documents before signing them if they had not. Even if Debtors tried to claim such
advice, reliance upon it would not be reasonable. The importance of having read and being
familiar with the information in the petition, schedules, and SoFA should have been abundantly
clear to Debtors given that they were asked to sign a written document acknowledging that they
had done so and testified in person under oath to that effect. Moreover, both Debtors testified at
trial that they understood that they had signed the petition, schedules and SoFA under oath.
There is no reason to determine that Debtors did not have the same understanding with regard to
the § 341 Affidavits.
During oral argument, Debtors’ attorney attempted to explain the inconsistency between
their oaths at the § 341 Meeting and their trial testimony. He argued that it is possible that
Debtors did not understand what documents the § 341 Affidavits referenced. However, the § 341
Affidavits specifically listed the petition, schedules, statements and related documents filed in
the bankruptcy case. Debtors’ attorney also argued that Debtors should be absolved from their
responsibility to be truthful in their § 341 Affidavits because Fullen did not tell Debtors how
important it was. Debtors’ attorney even went so far as to state that Fullen should have stopped
Debtors from signing the § 341 Affidavits. But Fullen signed the § 341 Affidavits stating that he
had reviewed that document with his clients. And the record is devoid of any evidence that he

Case: 15-8008
Nos. 15-8008/8025

Document: 42-2

Filed: 11/07/2016

Page: 8

In re Blasingame

Page 8

did not review the affidavits with the Debtors, or that Debtors did not understand the seriousness
of the § 341 Affidavits.
The Panel finds Debtors’ argument without merit. The § 341 Affidavits are written in
plain English. Debtors should not need an attorney to tell them how important it is to be truthful
when signing an affidavit which states that it is given under penalty of perjury.
A debtor has “a paramount duty to carefully consider all questions included in the
Schedules and Statement [of Financial Affairs] and see that each is answered
accurately and completely.” In re Colvin, 288 B.R. at 480 (quoting Casey v.
Kasal (In re Kasal), 217 B.R. 727, 734 (Bankr. E.D. Pa. 1998), aff’d, 223 B.R.
879 (E.D. Pa. 1998)). “The burden is on the debtors to complete their schedules
accurately.” Rion v. Spivey (In re Springer), 127 B.R. 702, 707 (Bankr. M.D. Fla.
1991). “A debtor is assumed to have read his bankruptcy petition and schedules
before signing them under pains and penalties of perjury, and he is responsible for
their contents.” Carpenter v. Fanaras (In re Fanaras), 263 B.R. 655, 667 (Bankr.
D. Mass. 2001). A “debtor’s failure to read the schedules before signing them
indicates a complete disregard for the duty of honesty imposed by the
Bankruptcy Code.” In re Lundy, 216 B.R. 609, 611 (Bankr. E.D. Mich. 1998).
“A debtor cannot, merely by playing ostrich and burying his head deeply enough
in the sand, disclaim all responsibility for statements which he has made under
oath.” Boroff v. Tully (In re Tully), 818 F.2d 106, 111 (1st Cir. 1987). See also
Mosley v. Sims (In re Sims), 148 B.R. 553, 557 (Bankr. E.D. Ark. 1992)
(Debtor’s assertion that he merely glanced over the petition constituted proof
of a “cavalier and reckless disregard for truth which is inconsistent with the
relief to be afforded the honest debtor.”).
In re Rice, 452 B.R. 623, 626 (Bankr. E.D. Mich. 2011) (alterations in original) (emphasis
added), aff’d, 478 B.R. 275 (E.D. Mich. 2012).
Debtors bear responsibility for the accuracy of their own petitions, schedules and SoFA.
Debtors gave false oaths at the § 341 Meeting when they testified that they had read and were
personally familiar with the contents of the documents. Debtors signed the § 341 Affidavits,
which plainly stated that they had read and were personally familiar with the contents of their
petition and schedules. But then, they testified to the contrary at the trial. Both admitted at trial
that they never fully read the documents and they were not aware of the contents. Thus,
Debtors’ sworn statements in the § 341 Affidavits and at the § 341 Meeting that they had read
and were personally familiar with the documents were false. The petition and schedules were
material documents to Debtors’ bankruptcy, and the record supports the conclusion that Debtors’

Case: 15-8008
Nos. 15-8008/8025

Document: 42-2

Filed: 11/07/2016

In re Blasingame

Page: 9
Page 9

§ 341 testimony and § 341 Affidavits were made knowing those statements were false and with
fraudulent intent.
Moreover, these false oaths cannot be blamed on reliance on the advice of counsel.
Debtors cannot avoid the consequences of their false oaths.
The bankruptcy system is intended to grant a discharge to the “honest but
unfortunate debtor,” Grogan v. Garner, 498 U.S. 279, 287, 111 S. Ct. 654, 112 L.
Ed. 2d 755 (1991) (internal quotation omitted), and depends on debtors being
“fully forthcoming about their financial affairs.” Swartz v. Spears (In re Spears),
291 B.R. 825, 829 (Bankr. C.D. Ill. 2003) (internal quotation omitted). A
discharge will be denied to “a debtor who was less than honest.” Village of San
Jose v. McWilliams, 284 F.3d 785, 790 (7th Cir. 2002); see also Peterson v. Scott
(In re Scott), 172 F.3d 959, 968 (7th Cir. 1999) (noting that “complete financial
disclosure is a condition precedent to the privilege of discharge”) (internal
quotations omitted).
Jeffrey M. Goldberg & Assocs., Ltd. v. Holstein (In re Holstein), 299 B.R. 211, 226 (Bankr. N.D.
Ill. 2003), aff’d, 2004 WL 2075442 (N.D. Ill. Aug. 31, 2004).
The Panel need not address Debtors’ argument that the bankruptcy court’s findings in the
sanctions orders and order denying the motion to compromise the malpractice action regarding
Fullen and Grusin’s competence is the law of the case which somehow absolves Debtors from
their responsibility to be truthful. As previously stated, there is no evidence that either Fullen or
Grusin encouraged Debtors to lie in their § 341 Affidavits or at the § 341 Meeting. And even if
they had done so, Debtors should know that is not advice upon which they could reasonably rely.
Because the Panel affirms the bankruptcy court’s conclusion that Debtors’ discharges
should be denied pursuant to § 727(a)(4), it declines to address whether the omissions on the
petition and schedules would also require denial of Debtors’ discharges pursuant to
§ 727(a)(2)(A) and (B). See Kane v. Stewart Tilghman Fox & Bianchi, P.A. (In re Kane),
755 F.3d 1285, 1297 (11th Cir.), cert. denied, 135 S. Ct. 718, 190 L. Ed. 2d 441 (2014) (holding
that court need not address an alternate holding that a debtor’s discharge would also be barred
under a different section of § 727). See also Protos v. Silver (In re Protos), 322 F. App’x 930,
932-33 (11th Cir. 2009); In re Krehl, 86 F.3d 737, 744 (7th Cir. 1996); Farouki v. Emirates Bank
Int’l, Ltd., 14 F.3d 244, 250 (4th Cir. 1994); First Tex. Sav. Ass’n, Inc. v. Reed (In re Reed),
700 F.2d 986, 989 (5th Cir. 1983).

Case: 15-8008
Nos. 15-8008/8025

Document: 42-2

Filed: 11/07/2016

In re Blasingame

Page: 10
Page 10

II. Designation of Record (BAP Case No. 15-8025)
Debtors also appeal the bankruptcy court’s order granting Appellees’ motion to strike
certain documents from the designation of record filed in BAP Case 15-8008. Debtors argue that
the sanctions orders against Grusin and Fullen and related documents, such as motions and
briefs filed by the parties (Adv. No. 09-0482 ECF Nos. 477, 508, 528, 535, 536, 537), as well as
the order denying the motion to compromise the malpractice action and related documents
(Bankr. Case No. 08-28289 ECF Nos. 543, 556, 557, 564) contain important factual findings and
conclusions of law related to their advice of counsel defense. The bankruptcy court granted
Appellees’ motion to strike all of these documents from the record, holding that the court did not
consider those orders and related documents when making its decision on the discharge issue.
Debtors argue these documents should be included in the record on appeal pursuant to
Bankruptcy Rule 8009 which provides, in part: “The record on appeal must include . . . any
opinion, findings of fact, and conclusions of law relating to the issues on appeal, including
transcripts of all oral rulings[.]” Fed. R. Bankr. P. 8009(a)(4).
The general rule for designation of the record is that only items considered by the
bankruptcy court in reaching a decision should be included. In re Ames
Department Stores, Inc., 320 B.R. at 521 (quoting Metro North State Bank v. The
Barrick Grp., Inc. (In re Barrick Grp., Inc.), 100 B.R. 152, 154 (Bankr. D.
Conn.1989)) (other citations omitted). As noted in the Purvi Petroleum decision,
there is a recognized exception to this rule. In re Purvi Petroleum III, LLC,
2012 WL 360047 at *2. Courts have allowed the inclusion of other pleadings in a
case even though they were not made exhibits and were not considered by the
court if the pleading to be added is closely related to the matter at issue. Food
Distribution Ctr. v. Food Fair, Inc., (In re Food Fair, Inc.), 15 B.R. 569,
572 (Bankr. S.D.N.Y. 1981) (finding record may be supplemented with materials
from other adversary proceedings arising from the same bankruptcy case closely
related to the appeal); Saco Local Development Corp. v. Armstrong Business
Credit Corp. (In re Saco Local Development Corp.), 13 B.R. 226, 230 (Bankr. D.
Me. 1981).
In re McKenzie, No. 08-16378, 2013 WL 5309008, at *4 (Bankr. E.D. Tenn. Sept. 19, 2013)
(emphasis in original).
The Panel agrees with Debtors that some of the documents should not have been stricken.
The sanctions orders and the order denying the motion to compromise are opinions that closely

Case: 15-8008
Nos. 15-8008/8025

Document: 42-2

Filed: 11/07/2016

In re Blasingame

Page: 11
Page 11

relate to the issues presented in this appeal. Although the bankruptcy court did not consider
those documents in reaching its decision, they contain findings of fact and legal conclusions
regarding the actions of Debtors’ former counsel in this case. Debtors assert that those findings
and conclusions relate directly to Debtors’ advice of counsel defense, which formed a large part
of Debtors’ argument on appeal. It is appropriate to include these orders in the record even
though they were not considered by the bankruptcy court. The same cannot be said about the
related documents (Adv. No. 09-0482 ECF Nos. 477, 508, 535, 536 and Bankr. Case No. 0828289 ECF Nos. 543, 556, 557). Those documents were filed by the parties; do not contain
findings of fact or legal conclusions of the court, and thus are not appropriately included in the
record for this appeal. On this point, the bankruptcy court did not err. When considering motions
to strike designated items for the record on appeal, bankruptcy courts should be mindful that they
should only strike documents that were not filed in the case, have no bearing on the appeal, or
contain evidence which was not admitted at trial. When in doubt, it is better to err on the side of
caution, include the items, and allow the appellate court to determine the relevance of the
designated items. See Saco Local Dev. Corp., 13 B.R. at 229.
In the present appeal, the Panel has reviewed the inappropriately stricken documents and
has determined that they have no relevance to the issues that the Panel finds determinative.
None of the stricken documents persuade the Panel that Debtors relied on the advice of their
counsel in making false oaths at their § 341 Meeting and in their § 341 Affidavits regarding
whether they had read and signed their petition, schedules, and SoFA, or in stating that they were
familiar with those documents.
CONCLUSION
For the reasons stated, the bankruptcy court’s order denying Debtors’ discharges pursuant
to § 727(a)(4) for making false oaths is AFFIRMED. The bankruptcy court’s order striking
certain documents from the record on appeal is REVERSED as to the Order Granting Motion for
Sanctions (Adv. No. 09-00482 ECF No. 528), the Order Setting Amounts of Additional
Sanctions (Adv. No. 09-00482 ECF No. 537), the Order Denying Motion to Approve
Compromise and Settlement (Bankr. Case 08-28289 ECF No. 564) and AFFIRMED as to the
Motion For Sanctions Against Tommy L. Fullen and Martin A. Grusin (Adv. No. 09-00482 ECF

Case: 15-8008
Nos. 15-8008/8025

Document: 42-2

Filed: 11/07/2016

In re Blasingame

Page: 12
Page 12

No. 477), the Supplemental Response in Opposition to Motion For Sanctions Against Tommy L.
Fullen and Martin A. Grusin (Adv. No. 09-00482 ECF No. 508), the Amendment to Second
Verified Supplement to Motions for Sanction Against Tommy L. Fullen and Martin A. Grusin
(Adv. No. 09-00482 ECF No. 535), the Second Amendment to Second Verified Supplement to
Motions for Sanction Against Tommy L. Fullen and Martin A. Grusin (Adv. No. 09-00482 ECF
No. 536), the Motion to Approve Compromise and Settlement (Bankr. Case 08-28289 ECF No.
543), the Church Joint Venture and Farmers and Merchants Limited Post-hearing Memorandum
Regarding Debtors’ Motion to Approve Compromise and Settlement, the Motion to Compromise
(Bankr. Case 08-28289 ECF No. 556), and the Trustee’s Response to Creditor’s Post-hearing
Memorandum Regarding Motion to Approve Compromise and Settlement (Bankr. Case 0828289 ECF No. 557).