Dismissal of attorney bankruptcy could give green light to suit filed by doctor

By Lawrence Smith | May 31, 2006

Danny Westmoreland POINT PLEASANT – A Mason County doctor who alleges his attorney forged his signature on a 2004 settlement check, may receive his day in court if the attorney's current bankruptcy case is dismissed.

Danny Westmoreland

POINT PLEASANT – A Mason County doctor who alleges his attorney forged his signature on a 2004 settlement check, may receive his day in court if the attorney's current bankruptcy case is dismissed.

On April 4, Helen M. Morris, the trustee assigned to oversee the bankruptcy filing of Point Pleasant attorney Raymond G. Musgrave and his wife, Twila A. Musgrave, filed a motion that the case be dismissed. In her motion, Morris said the Musgraves are delinquent in their repayment plan.

"This day comes the Trustee and moves the Court to dismiss the above-referenced case for the reason that the Debtors have failed to make payments as required by the Plan," Morris said in her motion.

"In support of this motion, the Trustee asserts that the Debtors last payment in the amount of $250 was made on February 22, 2006. The Debtors have a deficiency in plan payments in the amount of $750 including the April 2006 payment."

Through their attorney, Andrew Nason, partner in the Charleston law firm of Pepper, Nason and Hayes, the Musgraves filed a response to Morris' motion on April 8 disputing the arrearage. The Musgraves, Nason wrote, "have made two payments to the Trustee in the amount of $250."

So that the Musgraves can cure the additional $500 arrearage, Nason petitioned the court to allow them to "pay an additional $25 per month for twenty months."

Details of bankruptcy

The Musgraves filed for bankruptcy on Oct. 13, 2005, under Chapter 13 of U.S. Bankruptcy Code. Chapter 13 allows for individuals to reorganize their debts and begin repayment approved by the bankruptcy court.

Under Chapter 13, the debtor keeps his or her property, but makes regular payments to a court-appointed trustee. Repayments take between three to five years with unpaid and eligible debts discharged at the end of the repayment plan.

According to court records, the Musgraves list 39 individuals, firms or governmental agencies as creditors. Among the creditors listed are Washington Mutual, the West Virginia departments of Tax and Revenue and Bureau of Employment Programs, the Internal Revenue Service, City National Bank, BB&T and Danny R. Westmoreland, the Mason County doctor who alleges Musgrave forged his signature on the settlement check.

According to court records, the Musgrave's debts total to $184,000 to creditors with secured claims and $102,170.25 to creditors with unsecured claims. The Musgraves, according to court records, list their monthly income at $10,500, all coming from Raymond.

The records show Raymond earning $9,000 from his law practice and $1,500 in Social Security payments.

In their motion for repayment filed on Dec. 8, 2005, the Musgraves pledged to repay a total of $25,430.12 over the next 60 months to creditors with unsecured claims. These included the IRS and state Department of Tax and Revenue for back taxes, BEP for unpaid workers' compensation premiums and the city of Point Pleasant for unpaid health insurance premiums.

To creditors with secured claims, the Musgraves pledged to repay a total of $11, 437.81 over the next 60 months. According to court records, the Musgraves are in arrears to Washington Mutual of Orange, Calif., BB&T of Charlotte, N.C., and One Valley Bank of Gallipolis, Ohio, for real estate payments on their home and office.

Brother to aid in repayment

Furthermore, as part of their reorganization plan, the Musgraves were to pay the bankruptcy trustee $48,816.94. According to court records, repayment was to begin in February with the Musgraves paying $250 per month for the next 60 months.

The balance was to be paid by Raymond Musgrave's brother John C. Musgrave, director of the West Virginia Lottery and acting secretary of the state Department of Tax and Revenue.

"Debtor's brother by will inherited property from parents," a statement in the Musgrave's reorganization plan reads. "Debtor's brother will gift $33,816.14 to the debtor to complete the plan."

It was not immediately clear when John Musgrave, 66, a former Point Pleasant mayor and U.S. Department of Agriculture official – whose current salary is $99,000 according to the state Auditor's Office – would contribute to repayment of his brother and sister-in-law's debts as he refused to return repeated telephone calls.

Raymond Musgrave, 70, also declined to comment.

When contacted, Musgrave said "You should look up the name of the person representing me in the records," referring to Nason, before he abruptly hung up the telephone.

Nason was not immediately available for comment. According to court records, he was paid $2,000 to aid in the Musgrave's bankruptcy case with $1,500 plus a $194 filing fee paid in advance with the balance of $500 paid over the next year.

Civil suit likely to proceed

The likelihood of Musgrave's bankruptcy being dismissed leaves open the possibility a pending civil suit Westmoreland has against him may proceed. Early last year, Westmoreland filed criminal and civil charges against Musgrave in an attempt to collect a $15,000 settlement check due him.

In March 2004, Westmoreland, 52, won a lawsuit filed against him by Gallipolis, Ohio contractor Gary Barry over a dispute the two had regarding work Barry was to perform on Westmoreland's office, which was damaged by a September 2000 fire. Though he asked for $79,000 in damages, Barry agreed to pay Westmoreland $15,000 to settle the case.

Westmoreland maintains he never received the check and alleges Musgrave, who represented Westmoreland in the suit, forged his signature on it when it was produced at Barry's sentencing on a related criminal charge.

Though he was listed as a creditor, Westmoreland was not one to receive money under Musgrave's repayment plan. However, according to court records, Nason filed a motion March 17 asking the court to "dismiss his [Musgrave's] claim against Danny R. Westmoreland in exchange for Danny R. Westmoreland dismissing the claim against him."

"The debtor seeks permission to enter into an order dismissing the claim against him and his counter-claim against Danny R. Westmoreland, which would result in no claim against the estate and no money be received by the debtor on his counter-claim," Nason said in his motion. "Debtor believes it is in the best interest of his bankruptcy estate to enter into this agreed dismissal order."

Court records show no ruling made on the motion or a response from Westmoreland. Unless Westmoreland agrees to dismissal of the civil suit, it is scheduled for trial on August 1 in Mason County Circuit Court.

Case numbers: U.S. Bankruptcy Court for the Southern District of West Virginia, Case No. 05-31246, Mason Circuit Court, Case No. 05-C-48

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