Beohm v. Pickel (In re Pickel)

• Citation: 493 B.R. 258
• Decision Date: 07 June 2013
• Docket Number: Adversary No. 12–1319–T.,Bankruptcy No. 12–13262–TA.
• Parties: In re Jack D. PICKEL, Debtor. Mary Beohm, Plaintiff, v. Jack D. Pickel and Alameda Virgin Islands Company, LLC, Defendants.
• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of New Mexico

493 B.R. 258

In re Jack D. PICKEL, Debtor.

Mary Beohm, Plaintiff,

v.Jack D. Pickel and Alameda Virgin Islands Company, LLC, Defendants.

Bankruptcy No. 12–13262–TA.

Adversary No. 12–1319–T.

United States Bankruptcy Court,

D. New Mexico.

June 7, 2013.

Christopher M. Gatton, Law Office of George Dave Giddens, PC, Albuquerque, NM, for Plaintiff.

Daniel J. Behles, Moore, Berkson & Gandarilla, P.C., Albuquerque, NM, for Defendants.

MEMORANDUM OPINION

DAVID T. THUMA, Bankruptcy Judge.

Plaintiff Mary Boehm asks the Court for a declaratory judgment that she validly terminated Alameda Virgin Islands Company, LLC's (“AVIC's”) rights under a certain agreement relating to the purchase of stock. Defendants AVIC and Debtor counterclaimed, asserting that Plaintiff's attempted termination was ineffective and asking for specific performance and damages. For the reasons set forth below, the Court will deny Plaintiff's requested relief and grant some of the relief Defendants requested.

I. FACTS

1. Debtor formed AVIC and at all times was its sole member and manager.

2. On or about September 24, 2007, AVIC entered into an agreement (the “Agreement”) with Plaintiff and her son Richard “Derryck” Boehm to buy their right, title, and interest, including all voting, management, and dividend rights, in and to 447.5 shares ¹ of the common stock of Club Comanche, Inc., a Virgin Islands corporation (the “Corporation”). The 447.5 shares and all related rights and interests are referred to herein as the “Shares.”

3. The Corporation owns, inter alia, the Club Comanche hotel and restaurant in St. Croix, Virgin Islands.

4. The purchase price for the Shares was $800,000, payable in installments. Debtor guaranteed payment of the purchase price.

5. Plaintiff and her late husband had been involved in the ownership and/or management of the hotel since they purchased 50% of the Corporation's stock in 1972.

6. On May 25, 2007, a judgment was entered by the Superior Court of the Virgin Islands, Division of St. Croix, in a case styled Florence McDonnell v. Mary Boehm, et al., SX02–CV–465 (the “McDonnell Judgment”). The McDonnell Judgment awarded Ms. McDonnell a money judgment against the Corporation of about $433,000 and ordered Plaintiff, her husband, and the Corporation to issue McDonnell 156 shares of the Corporation's common stock.²

7. Entry of the McDonnell Judgment prompted Plaintiff to sell her interest in the Shares to AVIC.

8. Despite the clear language of the Agreement, Plaintiff testified at trial that she did not believe she was selling her stock in the Corporation, only her proxy rights. During her testimony, Plaintiff's counsel pointed out this language in paragraph 4 of the Agreement:

If and when such certificates may be legally transferred to Alameda in compliance with applicable law, any applicable agreement or stipulation of shareholders, by any applicable court order, or provisions of the Articles, Bylaws and other corporate documents of Club Comanche, Inc., which may be applicable, then Mary Boehm and Derryck Boehm shall transfer to Alameda the shares evidenced by such certificates to Alameda upon demand for one dollar ($1.00) provided Alameda is not in default under this Agreement.

When asked about her understanding of this provision, Plaintiff said the language was just “one of those odd little things that lawyers do.”

9. To memorialize its payment obligation under the Agreement, AVIC executed a Non–Negotiable Promissory Note in the original principal amount of $800,000, payable to the order of Plaintiff (the “Note”).

10. AVIC paid $550,000 of the purchase price.

11. The final installment payment of $250,000 was due November 1, 2009.

12. AVIC did not pay the final installment on the due date.

13. Plaintiff testified that after AVIC defaulted, she reviewed her default remedies under the Agreement and elected to exercise her option to terminate the Agreement and declare it null and void. Plaintiff also testified that her daughter reviewed the termination option language in the Agreement and laughed, saying “they put that in, because they never expected it to happen....” ³

14. On November 2, 2009, Plaintiff hand delivered to Defendants' counsel a notice of payment default, stating, inter alia, that the last day to cure the default was November 13, 2009.

15. A different default notice had been drafted by Eszart A. Wynter, Sr. Esq., Plaintiff's counsel at the time. However, Plaintiff testified that when she was driving home from Mr. Wynter's office, she had her car windows down and Mr. Wynter's default notice blew out of the car and was lost.

16. Plaintiff further testified that, instead of going back and getting another copy from Mr. Wynter's office, she and her daughter drafted a default notice, which she then delivered to Defendants' counsel. The notice did not give an address where the payment should be made.

17. Paragraph 15 of the Agreement provides in part that “Alameda shall be deemed in default, if after ten (10) business days after receipt of written notice of default, Alameda fails to cure the default and remains in breach of this Agreement or the promissory note attached hereto as Exhibit ‘A.’ ”

18. Plaintiff, her daughter and/or Mr. Wytner miscounted the cure period, perhaps missing the plain language in ¶ 15 that the period was ten business days rather than ten calendar days. The cure period actually ended November 17, 2009.⁴

19. Plaintiff never corrected or attempted to correct the error.

20. On November 12, 2009, Mr. Wynter drafted and signed a letter to Debtor, purporting to terminate the Agreement and declare it null and void. After consulting with Plaintiff, Mr. Wynter waited until November 13, 2009 to hand deliver the letter to Debtor.

21. The termination letter, inter alia, demanded immediate possession of the hotel, demanded keys, terminated Defendant's employment by the Corporation, ordered all employees to vacate the hotel, and terminated all corporate directors.

22. The uncontradicted evidence before the Court is that AVIC attempted to cure the default within the cure period, including a tender of full payment delivered to Mr. Wynter on November 16, 2009. Mr. Wynter refused to accept the tender.

23. The payment address specified in the Note is the Club Comanche hotel address, i.e., 1 Strand Street, Christiansted, St. Croix, Virgin Islands, 00820.⁵ Defendant testified that AVIC had a check waiting for Plaintiff to pick up, at the specified hotel address, and left a message on Plaintiff's answering machine to pick up the check at the hotel. Plaintiff did not do so.

24. Plaintiff testified that she never received such a message from Defendant.

25. The proposed cure was in the form of a check dated November 16, 2009 for $250,369.86, drawn on Debtor's bank account at the Bank of the Rio Grande in Las Cruces, New Mexico (the “Cure Payment Check”).

26. Debtor testified that there were insufficient funds in the account on November 16, 2009 to honor the Cure Payment Check. However, Debtor testified he had made arrangements to borrow the necessary funds from Duane Bobeck, a real estate investor who lives in the Virgin Islands.

27. Debtor testified that had Plaintiff accepted the Cure Payment Check, Debtor would have immediately executed the necessary loan documents prepared by Mr. Bobeck's attorney, Donovan Hamm, and would have wired the funds to the Bank of the Rio Grande account. Debtor testified that the loan documents were ready and waiting for him to sign, and that he had spoken to a bank officer, who was ready to accept the wire transfer and honor the check if presented.

28. Debtor's testimony about the loan from Mr. Bobeck is corroborated by a November 17, 2009 e-mail from Mr. Hamm to Debtor.

29. There is no evidence about the form of prior payments. Neither the Agreement nor the Note prohibits payments by United States check. At trial, Plaintiff did not argue that payment by a check drawn on a New Mexico bank was improper, only that the Cure Payment Check could not have cured the default because the bank account had insufficient funds.

30. Mr. Hamm asked Mr. Wynter on November 13, 2009 where Plaintiff was. Mr. Wynter responded that he was unaware of Plaintiff's whereabouts. At trial, Plaintiff expressed surprise at this answer, because Mr. Wynter did know where she was.

31. It appears that Plaintiff and/or Mr. Wynter sought to avoid Defendants' attempts to cure the payment default.

32. The evidence before the Court is that Plaintiff at some point became committed to getting the Shares back, rather than collecting the remaining $250,000. This desire may explain why she, her daughter, and/or Mr. Wynter misread the cure period in the Agreement, refused to correct their error once it became known, and apparently made efforts to thwart Defendants' cure attempts.

33. Ms. Boehm has been involved in litigation over the Club Comanche hotel for years. Her 1992 Property Settlement and Separation Agreement with her husband, the late Richard Boehm, refers to a case involving the hotel. The McDonnell Judgment (which concerned the hotel and Corporation stock) refers to at least three other hotel-related suits involving Ms. Boehm. The estate of Mr. Boehm sued Plaintiff and others in 2008, seeking declaratory and other relief. In a brief filed in that case, Plaintiff referred to a case filed in 1996 by Mr. Boehm against Plaintiff, Civil no. 327/96. Thus, this adversary proceeding appears to be at least the ninth civil action Ms. Boehm has been a party to concerning the Club Comanche hotel.⁶

34. Debtor testified he spent about $1,900,000 repairing and improving the hotel and restaurant after the Agreement was signed, in addition to the amounts paid by AVIC for the Shares and Ms. McDowell's shares.

35. Defendant testified that, in his opinion, Club Comanche was worth about $2,000,000–$2,500,000 when AVIC signed the Agreement in 2007, and was worth about $5,000,000–$5,500,000 in November, 2009 when Plaintiff...