Family feud: Mother uses bankruptcy to keep daughter from collecting $3.3M verdict

Roberta Moberley Dickson seems well-fixed for a senior citizen.

The 81-year-old widow of a prominent businessman, who once lived on a 538-acre farm in Bourbon County, boasts more than $5 million in assets, including a $2 million IRA and more than $200,000 in furnishings and antiques such as two 12-piece Wedgewood dinner services and 11 Bavarian fruit bowls.

But Dickson, who lives in Louisville and Paris, Kentucky, filed for bankruptcy protection last month, citing a single creditor – her daughter – and a single debt: A $3.3 million judgment awarded last November by a Jefferson Circuit Court jury that found Dickson had cheated her daughter, Mary Louise Dickson Shook, known as Mollie, out of her inheritance. 

The verdict included $405,000 in punitive damages against Dickson for promising to give Shook $1.5 million if she would stop saying she was raped by her brother some 30 years earlier.

Related:  Jury awards $3.3 million to silenced heiress 

By filing for bankruptcy June 2 in Lexington, Dickson has halted collection on the judgment and avoided having to post a bond in the amount of the verdict while she appeals it to the Kentucky Court of Appeals.

Attorneys for Shook say Dickson has abused the bankruptcy process to thwart justice.

“This is not a case that should be in bankruptcy court,” said lawyer Jamie Harris of Lexington.

Shook has won an important ally: The United States Trustee – an arm of the Justice Department that ensures the integrity of bankruptcy courts and identifies fraud and abuse – has moved to dismiss Dickson’s petition, saying it was filed in “bad faith.”

The U.S. Trustee for the Eastern District of Kentucky, where the bankruptcy was filed, says courts have defined bad faith to include “improper” prior conduct by the debtor and attempting to evade court orders.

“This debtor has already been ruled against for breaching fiduciary duty to her daughter and for wrongfully interfering with her daughter’s inheritance from her late husband,” the motion says. “She is not fit to serve as a fiduciary to guard the assets she has been found to have unlawfully begotten from her daughter in the first place.”

More:Louisville speakeasy owners address public outcry over name confusion

But Dickson’s lawyer, John Hamilton, said there was “nothing bad faith” about the filing. He said the Chapter 11 bankruptcy was needed to keep Shook, who lives out of state, from collecting the judgment, spending all of the money and then losing the appeal and being unable to repay it to her mother. 

Hamilton also said that while it seems Dickson has abundant assets, liquidating $3 million to post an appeal bond would cost her about $500,000 in taxes and fees, leaving her only about $1.5 million. That’s still a lot of money, Hamilton conceded, but it would be eaten up quickly if she is forced to go to a nursing home. 

In its motion, the U.S. Trustee's office says that if Chief U.S. Bankruptcy Judge Tracey N. Wise doesn’t throw out the case altogether, she should appoint an outside lawyer to protect or liquidate the assets in “trustworthy fashion.”

Bankruptcy specialist David Cantor, who has taught bankruptcy law at the University of Louisville and is not involved with the case, said the court is likely to “kick this lady out of Chapter 11.”

“It’s not like her business failed or she suffered a catastrophic illness,” he said, referring to typical reasons for filing bankruptcy. “A jury found she conspired to screw her daughter out of her inheritance.”

Read this:Taxpayers on hook for Kentucky clerk Kim Davis' fight against gay marriage

John Pottow, who teaches bankruptcy law at the University of Michigan, said Shook has the edge because the U.S. Trustee rarely intervenes in cases. He said, "having the U.S. Trustee lead the battle is great news" for the effort to have the filing "chucked for bad faith." The motion is to be argued Aug. 29.

Dickson was married to Stanley Dickson, a onetime president of BellSouth in Kentucky whose fortune included Glen Oak, the Bourbon County family farm on the National Register of Historic Places.

In her suit, Shook alleged that when she and her brother Bill were teenagers, he raped her and threatened to injure or kill her if she told anyone. Bill, testifying in the lawsuit, denied her claim, which was never reported to authorities.

In court papers Shook said she told her mother about the alleged rape in 2009 and that her mother and her brother then exploited her dying father to keep her quiet and to keep her from getting a fair share of his estate.

More:Prosecutor who had sex with lead detective removed from murder case by judge

Roberta Dickson, through her lawyers, told a different story – that in 2009, Mollie threatened to sue and go public with her rape accusation if she did not get her share of the farm's value in cash. 

In January 2010, Dickson amended her trust to provide a gift of up to $1.5 million to Shook on the condition that she make no public allegations against her brother or his wife for “injuries done to her, whether the allegations were true or false.” Bill’s wife, Vanessa Dickson, was then running for a district court seat.

Shook claimed the conditions placed on the gift caused her emotional distress. The jury agreed, awarding her $50,000, plus $405,000 in punitive damages. The rest of the verdict was for a series of moves through which Roberta Dickson essentially disinherited Shook.

More:Doc's Cantina group needs to open restaurant or make way for something else

Hamilton, Dickson’s lawyer, said the trial judge, Brian Edwards, erred by allowing inflammatory evidence about the purported rape and in holding that a child has a right to inherit from her parents.

But winning on appeal, Hamilton said, would be meaningless if Shook already had the money and couldn't pay it back.

Reporter Andrew Wolfson can be reached at 502-582-7189 or awolfson@courier-journal.com.