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Water-park owner files for bankruptcy
[April 18, 2008]

Water-park owner files for bankruptcy

(The Joplin Globe, Mo. Via Thomson Dialog NewsEdge) Apr. 18--The legal battle over the accidental drowning of a Joplin boy last summer has moved from civil court to bankruptcy court.

An automatic stay that accompanies bankruptcy petitions has effectively stymied any legal action on a wrongful-death lawsuit filed by John and Lauren Cory, of Joplin, against the Swimmin' Hole Water Park, its owners James and Diana Burt, and the Boys & Girls Club of Southwest Missouri.

"This puts the brakes on (the civil case)" said Michael Mayes, a Springfield attorney representing the Boys & Girls Club. "At some point, they will resume (against the other defendants), but bankruptcy court stays the whole proceeding."

The Corys' 6-year-old son, Ethan Cory, drowned last summer at the Swimmin' Hole, a private water park in rural Joplin, while on a field trip with the Boys & Girls Club. Authorities ruled the death an accident, but alleged "a lack of supervision" on the part of club chaperones and the water-park employees.

A motions hearing in the civil case was scheduled for today in Jasper County Circuit Court, but it was canceled Thursday after the court became aware of the pending bankruptcy petition.

Because bankruptcy proceedings are filed in federal court, they supersede civil actions at the state level.

James Burt's bankruptcy petition was filed Feb. 29 in U.S. Bankruptcy Court for the Western District of Missouri. It seeks to wipe out nearly $125,000 in unsecured debt, including thousands of dollars in advertising and business purchases for the Swimmin' Hole and his landscaping business.

The petition is unlikely to nullify about $75,000 in withholding taxes owed to the Internal Revenue Service, according to Burt's bankruptcy attorney, Norman Rouse.

"In my opinion, his debts are dischargeable, except for the taxes," he said. "It's too soon to say what the outcomes could be."

Rouse said his client's intent with the bankruptcy filing is to be released from any liability to his creditors, including the Corys, who are listed in the initial bankruptcy filing, but he said that isn't the only reason for the filing.

"The accident created a loss of business, which generated a lot of other debt," he said. "It created a snowball effect."

A meeting of creditors has been scheduled for 1:30 p.m. Friday, May 2, at the Jasper County Court Annex in Carthage.

Burt declined to comment on the bankruptcy proceedings when reached by phone Thursday afternoon.

Kevin Checkett, a Carthage bankruptcy attorney who is serving as co-counsel for the Corys, said he has filed motions to object to Burt being released from his debts and to lift the stay so that the lawsuit may resume against the other defendants.

Checkett said that during bankruptcy proceedings, creditors are given up to 20 days to file an objection with the court, which can lead to their own trials.

"All the parties have an opportunity to come forward and say, 'Don't release this guy; here's why,'" he said. "The judge will decide if (the petitioner) can be released."

Burt claims in the bankruptcy documents that he earns about $3,700 a month, including $1,100 income from his rental properties, and that he has about $3,600 a month in expenses.

An itemized list of personal property indicates that Burt has assets worth about $102,300, not including some real estate.

But much of that property -- including a coin collection valued at $4,000, several vehicles and heavy machinery related to his landscaping business valued at about $42,000, and even five goats -- is claimed as exempt property, bringing the total amount of nonexempt assets to $9,700. The Swimmin' Hole is not listed as an exempt property.

Burt also is claiming exemptions for his home and three rental homes he owns on 50 acres of property at 2520 Jaguar Road in rural Joplin. He also has requested an exemption on 40 acres of wooded property across the street, titled jointly with his wife.

The property on which Burt's home is located has a value of $325,000 and a mortgage of $127,334 held by Arvest Bank in Joplin, according to the documents. The 40-acre property is valued at $120,000 and is owned by the couple outright.

Chuck Riske, a bankruptcy practitioner and member of the panel of trustees for the Eastern District of Missouri, said a Chapter 7 bankruptcy filing such as Burt's is a procedure by which nonsecured creditors do not receive money, unlike a Chapter 13 bankruptcy, which also is referred to as a "wage-earner plan" to repay creditors.

"Chapter 7 is a liquidation proceeding," he said. "Creditors do not receive money unless the bankruptcy trustee administers upon nonexempt property."

Court documents indicate that Patricia Ann Brown, of Joplin, is serving as the bankruptcy trustee for Burt.

In Missouri, bankruptcy petitioners are given exemptions of up to $15,000 equity in a homestead, $3,000 in a motor vehicle, and $3,000 in household goods and furnishings, Riske said, speaking generally and declining to comment on a specific case. Any property that is co-owned in its entirety by spouses is exempt from creditors' claims against only one spouse.

Riske cited Kawaauhau v. Geiger, a 1998 decision in which the U.S. Supreme Court held that negligent or even reckless conduct does not fall within the willful or malicious injury exemption for discharge.

"Generally speaking, bankruptcy allows you to discharge actions of negligence, but the court will except certain matters for intentional conduct," he said. "The U.S. Supreme Court decided even gross negligence isn't enough to get an exception. It has to be intentional."

The Corys' lawsuit lists three causes of action as allegedly contributing to the boy's death: a premises liability; negligent hiring and supervision on the part of the water park and the Burts; and negligent supervision on the part of the Boys & Girls Club. The suit seeks an unspecified amount of economic, noneconomic and punitive damages against the Burts and the Swimmin' Hole.

Ethan's Law

Ethan Cory's death prompted state legislators to introduce a bill that would require the owner of a for-profit, privately owned swimming pool or water park to maintain adequate liability insurance in an amount of at least $1 million in the event of injury or death of a patron.

"Ethan's Law," as the bill is called, carries a stipulation that the owner of any park not carrying insurance would be placed in jeopardy of being found guilty of a Class A misdemeanor and subject to a fine of $250 per day of violation.

The bill has passed the House and awaits action in the Senate.

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