Austin v. BFW Liquidation, LLC (In re BFW Liquidation, LLC)

• Decision Date: 26 March 2012
• Docket Number: Adversary No. 11–00007–BGC.,Bankruptcy No. 09–00634–BGC11.
• Citation: 471 B.R. 652
• Parties: In re BFW LIQUIDATION, LLC, Debtor. Tiffany Austin, Plaintiff, v. BFW Liquidation, LLC, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Alabama

471 B.R. 652

In re BFW LIQUIDATION, LLC, Debtor.Tiffany Austin, Plaintiff,

v.BFW Liquidation, LLC, Defendant.

Bankruptcy No. 09–00634–BGC11.

Adversary No. 11–00007–BGC.

United States Bankruptcy Court,

N.D. Alabama,

Southern Division.

March 26, 2012.

Lee Wendell Loder, Loder Law Firm, Birmingham, AL, for Plaintiff.

John D. Elrod, Greenberg Traurig, LLP, Atlanta, GA, for Defendant.

MEMORANDUM OPINION

BENJAMIN COHEN, Bankruptcy Judge.

I. Background

The plaintiff filed a complaint against Bruno's (now known as BFW Liquidation, LLC) and Southern Family Markets (formally know as Southern Family Markets Acquisition II LLC) on January 17, 2011.¹ Bruno's filed a motion to dismiss count five of that complaint on February 17, 2011. A.P. Docket No. 6.² Southern Family filed a motion to dismiss the entire complaint on February 18, 2011. A.P. Docket No. 9. The plaintiff filed an amended complaint on March 2, 2011. A.P. Docket No. 13. Bruno's filed a motion to dismiss that complaint on March 16, 2011. A.P. Docket No. 17.

After notice and a hearing, on March 18, 2011, this Court granted Southern Family's motion and dismissed it as a defendant. On March 31, 2011, the plaintiff filed a motion to reconsider Southern Family's dismissal.

The current matters before the Court are:

1. The Plaintiff's Motion to Reconsider Dismissal of Defendant Southern Family Markets filed on March 31, 2011, A.P. Docket No. 27, and heard on April 21, 2011; and

2. The Defendant Bruno's, Inc.'s Motion to Dismiss Plaintiff's Amended Complaint filed on March 16, 2011, A.P. Docket No. 17, and heard on May 19, 2011.

The plaintiff's attorney Mr. Lee Wendell Loder and the defendant/debtor-in-possession's attorney Mr. John D. Elrod, appeared at both hearings. Mr. Richard Patrick Carmody, the attorney for Southern Family Markets Acquisition II LLC, attended the April 21st hearing.

Both matters were submitted on the pleadings, the records in this adversary proceeding and in Bankruptcy Case No. 09–00634–BGC11, and the arguments and briefs of counsel. In addition, along with the plaintiff's motion to reconsider, the Court considered the Response By Southern Family Markets To Plaintiff's Motion to Reconsider Dismissal Of Defendant Southern Family Markets (Docket No. 30), and with the defendant BFW's motion to dismiss, the Court considered the Plaintiff's First Amended And Restated Complaint (Docket No. 13) and the Plaintiff's Restated Response in Opposition to BFW Liquidation, LLC f/k/a Bruno's Supermarkets, LLC's Motion to Dismiss (Docket No. 33).

II. Findings of Fact

Most of the facts necessary to resolve the two pending matters are contained in the Court's records or the plaintiff's amended complaint.

To begin, as noted above, the records in this case show that Bruno's Supermarkets, LLC filed a Chapter 11 case in this Court on February 5, 2009. On May 4, 2009, this Court approved the sale of some of the debtor's assets which included 31 retail grocery stores to be purchased by Southern Family Markets, including the store on Montclair Road in Birmingham, Alabama, the site of the actions complained of by the plaintiff. The plaintiff alleges that it was in that store that someone who had stolen checks from her in 2008, used one of those checks on November 19, 2008. According to her, that check, identified as number 158 in materials attached to her motion to reconsider dismissal of Southern Family, was negotiated at that Bruno's store number 8.

The plaintiff claims in addition that the person who presented the check also presented a drivers license for identification, “that was different from the plaintiff's driver's license.” Plaintiff's First Amended & Restated Complaint, Docket No. 13 at 4. The plaintiff alleges further that despite the driver's license discrepancy, Bruno's accepted the check and the other defendant, Southern Family Markets, “verified the same.” Id.

The check was later dishonored and returned for insufficient funds. Afterwards, it was referred to, or assigned to, Certegy Payment Recovery Services, Inc. for collection. Certegy then contacted the plaintiff on the defendants' behalf.

In furtherance of her claims against the defendants, the plaintiff alleges that Bruno's and Southern Family reported the bad check to various credit reporting agencies, thus besmirching her credit rating. And finally, that on March 25, 2009, Bruno's swore out a warrant for her arrest. She contends that this warrant caused her arrest on November 18, 2009, even though, according to her, she had notified BFW, through its, “principal check verification service, Certegy check services ...,” id. at 6, that check number 158 had been stolen from her and she was not the one who negotiated it. The criminal charges against the plaintiff were dismissed on December 12, 2009.

Based on these facts, the plaintiff makes various claims for relief. First, the plaintiff claims that the actions taken and omissions of Bruno's and Southern Family caused her to suffer, “lost wages and benefits, extreme mental anguish, past present and future pain and suffering, past, present and future medical bills, lost profits, permanent injury, damage to her reputation and credit standing, loss of check writing privileges and access to credit, an unlawful arrest, etc.” Id. at page 9. She contends further that she is entitled to compensatory damages to compensate her for those injuries and punitive damages because the actions taken and omissions of BFW and Southern Family: (1) violated sections 1681e(a) and 1681s–2(a)(1)(A)–(a)(3) of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681e(a), 1681s–2(a)(1)(A)–(a)(3); (2) constituted slander and libel per se; (3) constituted an invasion of her privacy; (4) were negligent, reckless, and malicious; (5) constituted malicious prosecution; (6) constituted false imprisonment; and (7) constituted misrepresentation or fraud.

Second the plaintiff claims that, because of Bruno's maleficent acts, the debt which it owes her is non-dischargeable pursuant to 11 U.S.C. § 523(a)(3) and (a)(6) and she is entitled to have the sale by Bruno's in its Chapter 11 reorganization case of substantially all of its assets to Southern Family set aside.

Third, the plaintiff claims that confirmation of Bruno's plan of reorganization did not, by virtue of 11 U.S.C. § 1141(d)(3), result in the discharge of her debt because Bruno's will not engage in business post-confirmation, the plan provides for complete liquidation of its assets, and it would be denied a discharge under 11 U.S.C. § 727 if it was in chapter 7.

Fourth, the plaintiff claims that she entitled to file a claim or request for administrative expense in Bruno's chapter 11 case even though the applicable bar dates for filing such things have past and she is entitled to have the sale by Bruno's to Southern Family set aside because she did not receive notice of it.

III. Conclusions of Law

A. Plaintiff's Motion to Reconsider Dismissal of Southern Family

1. Background

Southern Family's motion to dismiss was based primarily on facts of record in BFW's Chapter 11 case number 09–00634.³ Those facts are that Southern Family did not purchase the assets of the Montclair store or acquire the rights to sell anything out of that store until May 4, 2009, after BFW filed bankruptcy and six months or so after the check was written and presented at that store.

At the hearing on Southern Family's motion to dismiss, plaintiff's attorney agreed that Southern Family had not acquired the assets of the Montclair store until May 4, 2009, and that, consequently, it could not have done the things with respect to check no. 158 (dated November 19, 2008) as alleged in her complaint. With that concession, plaintiff's attorney agreed that Southern Family's motion to dismiss should be granted, which it was by order of this Court on March 18, 2011. Docket No. 22.

On March 31, 2011, the plaintiff filed the pending motion asking the Court to reconsider that dismissal. A.P. Docket No. 27. The argument asserted was that counsel had been mistaken in his assessment and concession that Southern Family could not have done what was alleged in the complaint. The support offered was that the plaintiff had discovered evidence through other litigation that Southern Family had actually accepted another of the plaintiff's stolen checks, check number 98, dated July 29, 2009, after Southern Family acquired the assets of the subject store on May 4, 2009. On that basis, the plaintiff concluded not only that Southern Family could have done what was alleged in the complaint, but also that there was evidence that it did. Check number 98 was also dishonored, and it too was referred to Certegy for collection.

2. The Plaintiff's Arguments

The plaintiff makes three general arguments for reconsideration. Those are: (a) check number 98 proves that check number 158 is actionable; (b) the plaintiff should be allowed to substitute check number 98 for check number 158 if 158 is not actionable; and (c) Southern Family should have intervened on the plaintiff's behalf against BFW in any event.

a. Check No. 158 Is Actionable

The plaintiff wants the Court to allow her to continue her suit on check number 158 because of something she alleges occurred after Southern Family purchased the debtor's assets. At the argument for the motion for reconsideration, plaintiff's counsel appeared to argue that Southern Family's acceptance of and attempt to collect check number 98 after it had acquired the assets of the Montclair store and the right to sell those assets, supports the inference that it also accepted and attempted to collect check number 158 before it acquired the assets of that store and the right to sell those assets. This Court can find nothing in that argument to support that inference.

b. If Check Number 158 is Not Actionable, Check Number 98 Should Be

In her motion, the plaintiff appears to argue that if her allegations against Southern Family of wrong doing are not actionable under...