Blanchard v. Gulf Coast Premium Seafoods, LLC (In re Blanchard)
| Decision Date | 19 November 2021 |
| Docket Number | 19-12440,ADVERSARY 20-1054 |
| Parties | IN RE: ANDREW AND CHRISTINE BLANCHARD, DEBTORS. v. GULF COAST PREMIUM SEAFOODS, LLC AND GREGORY JONES, DEFENDANTS. ANDREW AND CHRISTINE BLANCHARD, PLAINTIFFS, |
| Court | U.S. Bankruptcy Court — Eastern District of Louisiana |
This Court conducted a one-day trial on August 26, 2021, (the "Trial"), to resolve the breach-of-contract and fraud claims asserted in the Adversary Complaint filed by Andrew and Christine Blanchard (the "Complaint"), [ECF Doc. 1] and the Answer to Adversary Complaint filed by Gregory Jones, [ECF Doc. 12], filed in the above-captioned adversary. At the Trial, the Court heard testimony from Plaintiffs Andrew and Christine Blanchard and Defendant Gregory Jones on his own behalf.[1] The Court admitted into evidence the following exhibits: Blanchard Exhibits 1-80.
At the close of the Trial, the Court took the matter under submission. The Court now makes the following findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure, made applicable to these proceedings by Rule 7052 of the Federal Rules of Bankruptcy Procedure.[2]
Federal district courts enjoy "original but not exclusive jurisdiction of all civil proceedings arising under title 11 or arising in or related to cases under title 11." 28 U.S.C. § 1334(b). But "[e]ach district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 . . . be referred to the bankruptcy judges for the district." 28 U.S.C. § 157(a).
Those are proceedings that a bankruptcy judge may hear and decide on a final basis, subject to appellate review by the district court. 28 U.S.C. § 157(b); Wellness Int'l Network, Ltd. v. Sharif, 575 U.S. 665, 671 (2015). Section 157 provides a nonexclusive list of matters considered to be "[c]ore proceedings." 28 U.S.C § 157(b)(2); see also Wood v. Wood (In re Wood), 825 F.2d 90, 97 (5th Cir. 1987) ( ).
But a matter is considered to be "non-core" if it is merely "related to" a case under title 11. See 28 U.S.C. § 157(c)(1). "[B]ankruptcy courts [possess] more limited authority in non-core proceedings: They may 'hear and determine' such proceedings, and 'enter appropriate orders and judgments,' only 'with the consent of all parties to the proceeding.'" Wellness Int'l Network, Ltd., 575 U.S. at 671 (quoting 28 U.S.C. § 157(c)(2)). "Absent consent, bankruptcy courts in non-core proceedings may only 'submit proposed findings of fact and conclusions of law,' which the district courts review de novo." Id. (quoting 28 U.S.C. § 157(c)(1)).
Here, the parties consented to the Court entering a final judgment on non-core claims. [ECF Doc. 17]. Therefore, this Court has jurisdiction to grant the relief provided for herein on a final basis pursuant to 28 U.S.C. §§ 1334 and 157(c)(2). The venue of the Debtors' chapter 11 case is proper under 28 U.S.C. §§ 1408 and 1409(a).
This dispute centers on a short-lived business relationship between the Blanchards and Jones. The Blanchards filed this adversary proceeding against Jones and his corporation, Gulf Coast Premium Seafoods, LLC, [3] to recover damages for fraud and breach of an April 2018 agreement whereby the Blanchards quitclaimed their business', Pearl, Inc., assets in exchange for Jones's promise to pay the obligations of the business and salaries to each of the Blanchards for continuing to oversee day- to-day operations. See Hr'g at Min. 9:50-:53; 10:58-:59. Jones contends that no binding agreement between the parties exists because "no contract was signed." See Hr'g at Min. 9:21-: 23.
Upon listening to the testimony and observing the countenance of each witness, the Court finds Andrew and Christine Blanchard to be earnest witnesses and affords considerable weight to the testimony of each of them. The Court particularly found Christine Blanchard's testimony to be most reliable because of her extensive involvement in the daily operations and finances of Pearl, Inc. and because she personally exchanged the majority of e-mails with Jones. See Blanchard Exs. 2-18, 20-21 & 23-80. Based on the testimony and documentary evidence before the Court, and for the reasons discussed below, the Court enters judgment in favor of the Blanchards.
The Blanchards are both residents of Terrebonne Parish, Louisiana, and are married. See Hr'g at Min. 9:41, 11:05. Andrew Blanchard has worked in shrimp-processing his whole life and has operated his own processing plant since 1995. See Hr'g at Min. 9:40. The Blanchards incorporated Pearl, Inc. in 2000 to process seafood in three processing plants near Houma, Louisiana. See Hr'g at Min. 9:41; 10:01; 11:05.
Domestic shrimp-processing was very lucrative in the 1990s, but the industry took a downturn in late 2000 and, according to Andrew Blanchard, never fully recovered because of the United States' preference for international imports. See Hr'g at Min. 9:44. As of 2018, Pearl, Inc. had accrued approximately $1.5 million in debt and a judgment lien had been recorded against one of its processing plants. See Blanchard Ex. 1; Hr'g at Min. 9:44-:49. As a result, Andrew Blanchard hired a realtor who marketed Pearl, Inc.'s assets for an asking price of approximately $3 million. See Hr'g at Min. 9:49.
Andrew Blanchard met Jones through a fellow member on the Louisiana Shrimp Task Force and trusted figure in the shrimp-processing community. See Hr'g at Min. 9:47-:48. In March 2018, Jones approached the Blanchards with an offer to buy Pearl, Inc., which included the three processing plants and the immovable property upon which the plants were located. See Hr'g at Min. 9:47-:52. When meeting with the Blanchards, Jones painted h i m self as "s u cces sf u l in business," owning twelve to fourteen radio stations, car dealerships, and hotels in Florida. See Hr'g at Min. 9:54-:56; 12:22-:23. He also told the Blanchards he owned a helicopter and a vessel in Louisiana, which he intended to use to operate the shrimp-processing business. See Hr'g at Min. 9:54-:56. But Jones told the Blanchards that Pearl, Inc.'s asking price of $3 million was too steep and suggested an alternative deal: that the Blanchards quitclaim all of Pearl, Inc.'s assets to him in exchange for his promise to pay off Pearl, Inc.'s debt, which at that time totaled $1, 746, 640. See Blanchard Ex. 19; Hr'g at Min. 9:49-:55. Leading up to the closing of the deal, Jones told the Blanchards that he had sufficient financing to pay off the debts in two weeks, and the Blanchards fully disclosed Pearl, Inc.'s financial status, including all of the business's assets and liabilities, as well as past years' profit and loss statements. See Blanchard Exs. 2, 3, 5-9, 13-16 & 23; Hr'g at Min. 9:26-:29; 9:49-:59; 11:06-:13; 11:25-:31.
On April 13, 2018, Jones e-mailed a signed Memorandum of Understanding ("MOU") which he himself had drafted. See Blanchard Exs. 17 & 19; Hr'g at Min. 9:50-:58; 10:53; 10:58; 11:21-:25; 12:24. Christine Blanchard printed the copy of the MOU executed by Jones and Jones traveled from Florida to Chauvin, Louisiana to witness Andrew Blanchard sign the MOU on April 16, 2018. See Blanchard Exs. 17 & 19; Hr'g at Min. 9:50-:58; 10:53; 10:58; 11:21-:25; 12:24.[4]The MOU outlines the terms of the sale of Pearl, Inc.: (i) the Blanchards would each receive a $50, 000 yearly salary for managing the daily operations of the business; (ii) the Blanchards would assign Pearl, Inc.'s existing contracts to Jones; and (iii) upon the Blanchards quitclaiming Pearl, Inc.'s assets to Jones, Jones would pay off $1, 746, 640 of Pearl, Inc.'s debts. See Blanchard Ex. 19.[5] On April 17, 2018, pursuant to the MOU, the Blanchards signed a quitclaim deed-also drafted by Jones-in front of a notary and sent it to Jones via FedEx, thereby quitclaiming all of Pear l, In c.'s assets t o Jones. See Hr'g at Min. 9:58; 10:58; 11:21-:25; 12: 24; B l an ch ard E xs. 20- 22. Jones recorded the quitclaim deed in Houma, Louisiana on April 19, 2018. See Blanchard Ex. 22.
The Blanchards acknowledge that they did not have an attorney review the MOU or the quitclaim deed. See Hr'g at Min. 10:00. In an e-mail to Jones regarding the executed quitclaim deed, Christine Blanchard exclaimed that the parties' execution of the MOU and quitclaim deed meant "new beginnings" for Pearl, Inc. See Hr'g at Min. 11:21-:25; Blanchard Ex. 20. Jones never indicated-and the plain text of the MOU does not state-that the execution or effectiveness of the MOU was contingent on (i) Jones obtaining financing, (ii) the drafting and execution of a second purchase agreement, or (iii) Pearl Inc. satisfying any due diligence. See Blanchard Ex. 19; Hr'g at Min. 11:26-:40. In fact, after signing the MOU, Jones took affirmative steps to perform under the MOU: he continuously asked for updates about the business, including the status of debts and upcoming foreclosure sales; he paid outstanding...
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