IN RE DORSEY (Bankr.D.D.C. 6-27-2011)

Case No. 88-00153.United States Bankruptcy Court, D. Columbia.
June 27, 2011

MEMORANDUM DECISION AND ORDER REQUIRING SUPPLEMENTATION OF APPLICATION FOR RELEASE OF UNCLAIMED FUNDS
S. TEEL JR., Bankruptcy Judge

On May 16, 2011, Oak Point Partners, Inc., successor-in-interest to the Hechinger Liquidation Trust, through its authorized representative, Eric A. Linn, filed an application for release of unclaimed funds in the amount of $166.98 (Dkt. No. 35). On September 17, 1993, the chapter 13 trustee deposited the unclaimed dividend in question into the court’s registry pursuant

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to 11 U.S.C. § 347(a), [1] and the funds remain on deposit pursuant to 28 U.S.C. §§ 2041 and 2042. Absent a showing by Oak Point Partners, Inc. that the debt once payable to Hechinger has not been previously satisfied, the court will not grant the relief sought.

The burden is on Oak Point Partners to demonstrate that it is entitled to the funds sought. Hansen v. United States, 340 F.2d 142, 144 (8th Cir. 1965). Although the record before the court demonstrates that Hechinger was at one time entitled to the funds, Oak Point Partners, as Hechinger’s successor-in-interest, has not demonstrated a present entitlement. The court will

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require pursuant to 28 U.S.C. § 2042[2] that the withdrawal of the funds and payment to Oak Point Partners be ordered only upon a demonstration by Oak Point Partners of a present right to the funds. See Willametz v. Susi, 489 F.2d 364, 366 (1st Cir. 1973).

This is a 1988 case and the check in question was deposited by the trustee more than a decade ago. The application does not indicate why the check went uncashed, and although the funds were originally distributed by check made payable to Hechinger pursuant to an allowed claim, the court is not willing to deem this satisfactory evidence, standing alone, of Oak Point Partners’ present entitlement, as Hechinger’s successor-in-interest, to the funds. See Willametz, 489 F.2d at 366 (funds originally deposited with district court on condition that such court enjoin enforcement of previously entered but potentially duplicative state court judgment could be distributed to creditor

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of prevailing party despite absence of provision for such payment upon change in circumstances justifying such payment). If Hechinger’s claim that was the basis for the issuance of the distribution has already been satisfied, circumstances have changed such that Oak Point Partners is no longer entitled, as Hechinger’s successor-in-interest, to the funds. Id. at 367 (quoting Harris v. Balk, 198 U.S. 215, 226 (1905) (“It ought to be and is the object of courts to prevent the payment of any debt twice over.”)).

Any overpayment that might result from payment of the unclaimed funds to Oak Point Partners is not simply a matter to be resolved by Oak Point Partners and the debtor. Instead, § 2042 requires that the court determine Oak Point Partners’ entitlement to the funds.[3] It is thus

ORDERED that within 28 days of the entry of this order Oak Point Partners shall supplement its application for release of unclaimed funds with the court by providing documentation showing that the unclaimed funds amount has not been previously paid to

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Hechinger or Oak Point Partners as its successor-in-interest (e.g., foreclosure records, account statements, etc.) and that if such documentation is not timely filed, the court will deny the Application without prejudice.

The document below in hereby signed.