Boyington Capital Grp., LLC v. Haler (In re Randall Lee Haler XXX-Xx-3747 751 Majestic Oaks), Case No. 10-42052

• Decision Date: 02 March 2016
• Docket Number: Adversary No. 10-4217,Case No. 10-42052
• Parties: IN RE: RANDALL LEE HALER xxx-xx-3747 751 Majestic Oaks, Oak Point, TX 75068 Debtor BOYINGTON CAPITAL GROUP, LLC Plaintiff v. RANDALL LEE HALER Defendant
• Court: U.S. Bankruptcy Court — Eastern District of Texas

IN RE: RANDALL LEE HALER xxx-xx-3747 751 Majestic Oaks, Oak Point, TX 75068 DebtorBOYINGTON CAPITAL GROUP, LLC Plaintiff v. RANDALL LEE HALER Defendant

Case No. 10-42052

Adversary No. 10-4217

UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

March 2, 2016

Chapter 7

MEMORANDUM OF DECISION¹

ON THIS DATE the Court considered the Motion for Partial Summary Judgment (the "Motion") filed by the Plaintiff, Boyington Capital Group, LLC ("Plaintiff") in the above referenced adversary proceeding. Plaintiff filed its "Complaint to Determine the Dischargeability of Debtor Randall Lee Haler" on September 21, 2010,² seeking to have the debt owed to it by the Debtor-Defendant, Randall Haler ("Haler," "Defendant," or "Debtor"), declared nondischargeable under alternative theories presented by 11 U.S.C.§§ 523(a)(2)(A), (a)(2)(B), (a)(4), and (a)(6).³

Upon due consideration of the pleadings and the proper summary judgment evidence submitted by the parties, and the relevant legal authorities, the Court concludes that the Plaintiff's Motion should be granted in part and that judgment as a matter of law should be granted for the Plaintiff on its claim under § 523(a)(2)(A) and that a particular component of the state court indebtedness should be declared nondischargeable as a debt obtained by the false representations of the Defendant.⁴

Factual and Procedural Background⁵

In March 2006, Greg Morse ("Morse") on behalf of the Plaintiff, contacted McKinney Aerospace, L.P. ("MALP") to inquire whether it was capable of performing work on the Plaintiff's Hawker BH-125-600A business jet. Morse communicated and negotiated with the Debtor-Defendant Haler, who served as the Executive Vice President of MALP, as well as with Andrew Eros with Aeros Aviation, LLC. Aeros Aviation served as the general partner of MALP and Haler and Eros, individually, were limitedpartners of MALP.⁶

After Morse spent significant time with Haler and Eros, the Plaintiff entered into a series of four contracts whereby MALP would repair and restore the Plaintiff's jet. Each contract dealt with a specific portion of the aircraft — (1) an engine renovation contract;⁷ (2) an interior refurbishment contract;⁸ (3) a new Terrain Awareness and Warning System (TAWS);⁹ and (4) a new Reduced Vertical Separation Minimum (RVSM) system.¹⁰ Each contract was executed by Dean Murray, Vice-President of Sales, on behalf of MALP and by Morse on behalf of the Plaintiff.¹¹ In early April 2006, the Plaintiff tendered its first payment of $337,205.00 to MALP.¹² Following delivery of the jet for repair, the parties agreed upon a subsequent change order, and the Plaintiff tendered an additional $60,000 to MALP on June 6, 2006. Later the same day, however, the Plaintiff sent a letter to MALP, instructing it to forego any further work on the jet and the Plaintiff requested a "refund [of] all monies paid but not yet spent, including all avionics and hardwarepurchased but not yet installed."¹³ In response, Haler created a chart for the Plaintiff which listed the amounts deposited by the Plaintiff for each contract and the amounts remaining due. The available cash to be returned was $258,021.73.¹⁴ Later that month, MALP reduced that amount to $158,000, and "proposed a pay-out schedule."¹⁵ At no time, however, did MALP actually refund any money to the Plaintiff.

Having not received its refund, the Plaintiff sued MALP, Haler, Aeros Aviation, Eros, and other parties in the 429th Judicial District Court of Collin County, Texas on July 6, 2006 (the "State Court Litigation").¹⁶ Soon after, MALP shut down its operations and began a self-directed liquidation. The state district court subsequently appointed a receiver for MALP on September 20, 2006, and the receiver reported that MALP had previously terminated its employees at the end of July 2006, and had sold its operating equipment before August 15, 2006.¹⁷

The State Court Litigation was tried to a jury and the jury issued factual findings pursuant to the charge in favor of the Plaintiff.¹⁸ The jury findings, in relevant part, are as follows:

QUESTION 4:

In answering the following questions, consider whether Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC used McKinney Aerospace, L.P. for the purpose of perpetuating and did perpetuate an actual fraud on Boyington Capital Group, LLC primarily for the direct personal benefit of Randall Haler, Andrew Eros, McKinney Aerospace, LP and/or Aeros Aviation, LLC.

Answer "Yes" or "No."

Randall Haler yes

Andrew Eros yes

McKinney Aerospace, L.P. yes

Aeros Aviation, LLC yes

QUESTION 7:

Do you find from a preponderance of the evidence that Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC committed the offense of theft of property from Boyington Capital Group, LLC?

"Theft" is defined as follows:

The unlawful appropriation of property with intent to deprive the owner of same without the consent of the owner's effective consent (sic).

"Deprive" means to withhold property from the owner permanently or for so extended a period of time that a major portion of the value or enjoyment of the property is lost to the owner.

"Effective consent" includes consent by a person legally authorized to act for the owner. Consent is not effective if induced by deception or coercion.

"Appropriate" means to acquire or otherwise exercise control over property other than real property.

"Property" means a document, including money, that represents or embodies anything of value.

Answer "Yes" or "No."

Randall Haler yes

Andrew Eros yes

McKinney Aerospace, L.P. yes

Aeros Aviation, LLC yes If you answered the question above "Yes," as to Randall Haler, then answer the following question. If you answered the question above "No," as to Randall Haler, do not answer the following and move to Question 8.

Please state in dollars and cents the damages, if any, sustained by Boyington Capital Group, LLC as [a] result of the conduct described in Question 7.

Answer: $258,021.73

QUESTION 8:

Do you find from a preponderance of the evidence that Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC converted property of Boyington Capital Group, LLC?

To constitute "Conversion," you must find that:

(a) Boyington Capital Group, LLC owned, possessed or had the right to immediate possession of the funds it deposited with McKinney Aerospace, LP;

(b) The Deposits¹⁹ were personal property (as opposed to real property);

(c) Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC wrongfully exercised dominion or control over the Deposits; and

(d) Boyington Capital Group, LLC suffered injury as a result of such conversion.

Answer "Yes" or "No."

Randall Haler yes

Andrew Eros yes

McKinney Aerospace, L.P. yes

Aeros Aviation, LLC yes

If you answered the question above "Yes," as to Randall Haler, then answer the following question. If you answered the question above "No," as to Randall Haler, do not answer the following and move to Question 9.

Please state in dollars and cents the damages, if any, sustained by Boyington CapitalGroup, LLC as [a] result of the conduct described in Question 8.

Answer: $258,021.73

QUESTION 9:

Do you find from a preponderance of the evidence that Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC fraudulently induced Boyington Capital Group, LLC into entering into the contracts and making the Deposits?²⁰

To constitute fraudulent inducement, you must find that:

(a) Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC made a representation to Boyington Capital Group, LLC;

(b) The representation was material;

(c) The representation was false when made;

(d) When Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC made the representation, Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC

(i) knew the representation was false; or

(ii) made the representation recklessly, as a positive assertion, and without knowledge of its truth;

(e) Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC made the representation with the intent that Boyington Capital Group, LLC rely on it;

(f) Boyington Capital Group, LLC did rely on it; and

(g) The representation caused Boyington Capital Group, LLC to suffer an injury.

Answer "Yes" or "No."

Randall Haler yes

Andrew Eros yes

McKinney Aerospace, L.P. yes

Aeros Aviation, LLC yes If you answered the question above "Yes," as to Randall Haler, then answer the following question. If you answered the question above "No," as to Randall Haler, do not answer the following and move to Question 10.

Please state in dollars and cents the damages, if any, sustained by Boyington Capital Group, LLC as [a] result of the conduct described in Question 9.

Answer: $258,021.73

QUESTION 10:

Did Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC violate the Texas Deceptive Trade Practices Act ("DTPA")?

To constitute a violation of the DTPA, you must find that:

(a) Boyington Capital Group, LLC is a consumer;

(b) Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC can be sued under the DTPA;

A plaintiff can bring an action against any person who uses or employs false, misleading or deceptive acts or practices;

A person is defined as an individual, partnership, corporation, association, or other group, however organized;

Agents and directors can be held liable if, by their own actions, they violate the DTPA;

(c-1) Randall Haler and/or Andrew Eros and/or McKinney Aerospace, L.P. and/or Aeros Aviation, LLC committed one or more of the following acts:

(i) represented that goods or services had characteristics or benefits which they did not have;

(ii) represented that goods or services were of a particular standard, quality or grade if they

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