BnP Ventures, LLC v. G-Force Sportfishing, Inc.
| Citation | 499 F.Supp.3d 175 |
| Decision Date | 06 November 2020 |
| Docket Number | Case No.: DLB-19-192 |
| Parties | BNP VENTURES, LLC, Plaintiff, v. G-FORCE SPORTFISHING, INC. et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Eugene Samarin, Todd DeLear Lochner, Lochner Law Firm P.C., Annapolis, MD, for Plaintiff.
J. Stephen Simms, Simms Showers LLP, Baltimore, MD, for Defendants.
On July 9, 2018, BnP Ventures, LLC ("BnP") purchased a 2006 Caison 64-foot yacht ("vessel") from defendant G-Force Sportfishing, Inc. ("G-Force") for $1.7 million. Three months later, it was alleged in an adversary proceeding in bankruptcy court that G-Force and its shareholders, defendants Melissa and Seth Obetz, had purchased and improved the vessel with funds that were fraudulently transferred to them.1 In response, BnP filed this action seeking a declaratory judgment that it is a good faith purchaser of the vessel (Count I) and claiming defendants breached the express warranty of title (Count II). Compl., ECF 1.
Pending is plaintiff's motion for summary judgment as to Count I. ECF 24. Defendants oppose BnP's motion and seek summary judgment on both of plaintiff's claims. ECF 29. The parties fully briefed their motions. ECF 24-1, 30, 34 & 36. A hearing is not necessary. See Loc. R. 105.6. Because there is no need for a declaratory judgment to settle the parties’ legal relationship or terminate any controversy regarding BnP's position as a good faith purchaser, BnP's motion is denied and defendants’ motion is granted as to Count I. Additionally, BnP cannot establish on the record before the Court that defendants breached the express warranty they provided when they sold vessel to BnP. Therefore, defendants’ motion is granted as to Count II as well.
On June 6, 2018, Worley & Obetz, Inc. and related entities ("the debtors") filed Chapter 7 bankruptcy petitions that were consolidated, In re Worley & Obetz, Inc., Case No. 18-13774-REF, in the United States Bankruptcy Court for the Eastern District of Pennsylvania. Pl.’s Mem. 1; Bankr. Pet., ECF 24-7. Seth Obetz was a 100% shareholder in one of the debtors, Worley & Obetz, Inc. Am. Bankr. Compl., ECF 24-11. He and his wife Melissa Obetz were shareholders in G-Force. Pl.’s Mem. 1; Bankr. Compl., ECF 24-10; Am. Bankr. Compl. Neither G-Force nor the Obetzes were debtors in the bankruptcy petition. Bankr. Pet.
One month after the bankruptcy petition was filed, on July 6, 2018, Melissa Obetz, on behalf of G-Force, signed a Bill of Sale to sell BnP a 2006 Caison 64-foot yacht for $1.7 million. Bill of Sale, ECF 24-4; Keller Aff. ¶¶ 2–3, ECF 24-1.
The same day, as part of the sale of the vessel, defendants signed a Warranty of Title and Indemnification Agreement ("warranty") in which they "represent[ed] and warrant[ed] that Seller has, and will transfer to BNP VENTURES, LLC ... good, valid and marketable title to the Vessel and the Vessel is free and clear of all mortgages, liens, taxes, charges, encumbrances, judgements and claims during the ownership of Seller." Warranty ¶ 2, ECF 24-5. The warranty stated that "[n]o individual or entity is owed for any outstanding services, dockage, supplies, labors, repairs or materials rendered to, or for the benefit of, the Vessel, during the ownership of Seller, unless ordered by Buyer." Id. ¶ 5. Additionally, it stated that "Seller is in sole possession of the Vessel and there are no other parties with a claim of possession to the Vessel ... including claims for future use or charter of the Vessel." Id. ¶ 7.
Also on July 6, 2018, counsel for G-Force provided a letter to BnP's managing member, William Keller. ECF 1-8. The letter stated that the sale had been "duly authorized by all necessary corporate action of G-Force" and that no other consent was necessary except for the satisfaction or release of Branch Banking and Trust Company's lien. Id. at 2. It also stated that, to the best of counsel's knowledge, there was "no action, litigation or other proceeding pending or threatened against G-Force or any of G-Force's officers or shareholders before any court, arbitrator or administrative agency, which might result in any material adverse effect on the assets, business, financial condition or operations of G-Force to perform under the Agreement." Id. The parties closed on the sale on July 9, 2018. First Am. to Purchase and Sale Agr., ECF 1-4; Keller Aff. ¶ 8.
Three months after the sale, on October 15, 2018, Christine Shubert, who had been appointed as the Chapter 7 trustee of the debtors’ estates, filed an adversary proceeding, Shubert v. Obetz , Adv. No. 18-235-REF, in the bankruptcy court against G-Force, the Obetzes, and others. Pl.’s Mem. 1; Bankr. Compl.; Am. Bankr. Compl. To the Court's knowledge, the proceeding is ongoing. The original and amended complaints in the adversary proceeding allege, inter alia , that G-Force and the Obetzes purchased and improved the vessel using the debtors’ funds and that the use of the debtors’ funds amounted to preferential and/or fraudulent transfers under 11 U.S.C. §§ 547 and 548. Bankr. Compl. ¶¶ 147–50, 684, 685, 697, 698; Am. Bankr. Compl. ¶¶ 158–62, 700, 701, 713, 714. In particular, it is alleged that Worley & Obetz, Inc. paid a $155,000.00 down payment for the vessel. Bankr. Compl. ¶ 148; Am. Bankr. Compl.¶ 159. Additionally, it is alleged that "Seth Obetz directed W&O to pay for ... improvements [to the vessel], which at the Petition Date totaled approximately $780,000.00 in unsecured advances from W&O to Seth and Melissa Obetz's G-Force Sportfishing, Inc. entity." Bankr. Compl. ¶ 149; Am. Bankr. Compl.¶ 160. The trustee asks the bankruptcy court to enter judgment against G-Force, to avoid the preferential and/or fraudulent transfers, and to order G-Force to "return to the Trustee, pursuant to 11 U.S.C. § 550, the full value of" the preferential and/or fraudulent transfers. Bankr. Compl. ¶¶ 147, 150; Am. Bankr. Compl. ¶¶ 151, 154. "It is the Trustee's intention to avoid and recover all transfers of property of the Debtors that were made to or for the benefit of the G-Force Sportfishing, Inc., and its affiliates, insiders, subsidiaries, or any other transferee during the Preference Period [and Fraudulent Transfer Period]." Bankr. Compl. ¶¶ 684, 685, 697, 698; Am. Bankr. Compl. ¶¶ 700, 701, 713, 714.
BnP, concerned about the validity of its title to the vessel in light of the trustee's claims, filed a verified two-count complaint in this Court on January 18, 2019. In Count I, BnP seeks a declaratory judgment that it is a good faith purchaser of the vessel under Maryland Commercial Law § 2-403. Compl. 7; see Md. Code Ann., Com. Law § 2-403. In Count II, BnP claims breach of express warranty in the Warranty of Title and Indemnification Agreement. Compl. 9. Now pending are the parties’ cross-motions for summary judgment.
Summary judgment is appropriate when the moving party establishes that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). To meet its burden, the party must identify "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ... admissions, interrogatory answers, or other materials" in support of its position. Fed. R. Civ. P. 56(c)(1)(A). Then, "[t]o avoid summary judgment, the opposing party must set forth specific facts showing that there is a genuine issue for trial."
Perkins v. Int'l Paper Co. , 936 F.3d 196, 205 (4th Cir. 2019) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). The opposing party must identify more than a "scintilla of evidence" in support of its position to defeat the motion for summary judgment. Anderson , 477 U.S. at 251, 106 S.Ct. 2505. The Court "should not weigh the evidence." Perkins , 936 F.3d at 205 (quoting Anderson , 477 U.S. at 249, 106 S.Ct. 2505 ). However, if "a party fails to establish the existence of an element essential to that party's case" or " ‘the record taken as a whole could not lead a rational trier of fact to find for the non-moving party,’ " then summary judgment is proper. Id. (quoting Teamsters Joint Council No. 83 v. Centra, Inc. , 947 F.2d 115, 119 (4th Cir. 1991) ); see also Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In ruling on cross-motions for summary judgment, this Court must "review each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law." Wheelabrator Baltimore, L.P. v. Mayor & City Council of Baltimore , 449 F.Supp.3d 549, 559 (D. Md. 2020) (quoting Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir. 2003) ).
In Count One, BnP seeks a declaratory judgment that it is a good faith purchaser of the vessel. This Court may issue a declaratory judgment pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. It provides that, "[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. The statute requires the satisfaction of three elements before a court may exercise jurisdiction in a declaratory judgment action:
(1) the complaint alleges an "actual controversy" between the parties "of sufficient immediacy and reality to warrant issuance of a declaratory judgment;" (2) the court possesses an independent basis for jurisdiction over the parties (e.g., federal question or diversity jurisdiction); and (3) the court does not abuse its discretion in its exercise of jurisdiction.
Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co., Inc. , 386 F.3d 581, 592 (4th Cir. 2004) (citing 28 U.S.C. § 2201 ). An actual...
To continue reading
Request your trial