Prochnow v. Apex Properties, Inc.

467 B.R. 656 (2012)

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Nature of the Case

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Facts

P was a duly licensed realtor or realtor associate. D is a duly licensed real estate broker. In August 2006, P and D entered into a Broker-Realtor-Associate Contract. P was compensated on a commission basis. No commissions were considered earned or payable to P until the transaction has been completed and the commission has been collected by D. P received 100% of commissions, less franchise and referral fees. P also paid rent, certain expenses (including general overhead, expenses required by the local MLS office, and advertising expenses), and interest for unreimbursed charges. In October 2007, the parties changed the arrangement so that P would receive 70% of the commissions he earned with the remaining 30% payable to D. P was no longer charged rent but still paid office overhead, other billed expenses, and interest on outstanding balances. On August 3, 2009, P filed his Chapter 7 bankruptcy petition. P and continued with D until January 8, 2010. P listed an unsecured debt owed to D in the amount of $51,027.47. On his Schedule B, P represented that he had no accounts receivable, no liquidated debts owed to him, and no contingent or unliquidated claims of any nature. On his Schedule G, Prochnow affirmatively represented that he had no executory contracts of any nature. On September 3, 2009, the Trustee filed a Report of No Distribution stating he found no assets to administer in the case. On December 3, 2009, P was granted a discharge. On January 8, 2010, P ceased working with D. On February 23, 2010, P's bankruptcy case was closed. On June 16, 2010, P filed a Motion to Reopen Case. P alleged that he became entitled to the payment of compensation from D for real estate commissions from three closings occurring after August 3, 2009, the date of his bankruptcy petition. D had applied the commissions to P's pre-petition indebtedness. D retained the commissions after the filing but before discharge. P sought to hold D in contempt for violation of the automatic stay. Both parties filed cross-motions for summary judgment. P claimed he had earned the commissions post-petition and that money was not subject to recoupment. P conceded that he owed the post-petition expenses billed to him, excluding the interest on the pre-petition indebtedness. The bankruptcy court found that P had earned the Hudson contract commission pre-petition and that it was part of the bankruptcy estate. Because P failed to disclose his interest in a share of the Hudson contract commission on his schedules, the bankruptcy court found he was judicially estopped from claiming an interest in those funds. P also lacked standing because his entitlement to the commission became the property of the estate and was never abandoned by the Trustee. P appealed.