Butler v. Anderson (In re C.R. Stone Concrete Contractors, Inc.)

• Court: U.S. Bankruptcy Court — District of Massachusetts
• Writing for the Court: WILLIAM C. HILLMAN
• Citation: 462 B.R. 6
• Parties: In re C.R. STONE CONCRETE CONTRACTORS, INC., Debtor.Joseph Butler, Chapter 7 Trustee of the Estate of C.R. Stone Concrete Contractors, Inc., Plaintiff, v. Richard Anderson, Gillian Welby, John Marini, Plumb House, Inc., Dalton Builders, Inc., John Marini Management Company, Lenox–Norwood LLC, and The Framing Company, Inc., Defendants.
• Decision Date: 19 December 2011
• Docket Number: Adversary No. 05–1307.,Bankruptcy No. 05–11119–WCH.

462 B.R. 6

In re C.R. STONE CONCRETE CONTRACTORS, INC., Debtor.Joseph Butler, Chapter 7 Trustee of the Estate of C.R. Stone Concrete Contractors, Inc., Plaintiff,
v.
Richard Anderson, Gillian Welby, John Marini, Plumb House, Inc., Dalton Builders, Inc., John Marini Management Company, Lenox–Norwood LLC, and The Framing Company, Inc., Defendants.

Bankruptcy No. 05–11119–WCH.

Adversary No. 05–1307.

United States Bankruptcy Court, D. Massachusetts,Eastern Division.

Dec. 19, 2011.

[462 B.R. 9]

Alan L. Braunstein, Mark W. Corner, Paul S. Samson, Riemer & Braunstein, LLP, Boston, MA, for Joseph G. Butler, the Chapter 7 trustee.

Anthony J. Cichello, Hugh Dun Rappaport, Vincent J. Pisegna, Krokidas & Bluestein, LLP, Newton, MA, for the Charles G. Krattenmacher, Jr.

[462 B.R. 10]

MEMORANDUM OF DECISION WILLIAM C. HILLMAN, Bankruptcy Judge.I. INTRODUCTION

The matter before the Court is the Plaintiff's Renewed Motion to Substitute (the “Motion to Substitute”) filed by the plaintiff, Joseph Butler (the “Trustee”), Chapter 7 trustee of the estate of C.R. Stone Concrete Contractors, Inc. (the “Debtor”), and the Memorandum of Charles G. Krattenmacher, Jr. in Opposition to Plaintiff's Renewed Motion to Substitute (the “Opposition”) filed by Charles G. Krattenmacher, Jr. (“Krattenmacher”), the executor of the estate of Richard Anderson, and assented to by defendants Plumb House, Inc. (“Plumb House”), Dalton Builders, Inc. (“Dalton”), John Marini (“Marini”), John Marini Management Company (“Marini Management”), Lenox–Norwood LLC (“Lenox”), The Framing Company, Inc. (the “Framing Co.,” collectively with Marini, Marini Management, and Lenox, the “Marini Defendants”),¹ and Gillian Welby (“Welby”). In light of the passing of the defendant Richard Anderson (“Anderson”), the Trustee moves to substitute Krattenmacher as a party defendant in this proceeding pursuant to Fed.R.Civ.P. 25(a), made applicable to adversary proceedings by Fed. R. Bankr.P. 7025. Krattenmacher opposes on the basis that the Motion to Substitute is untimely and that the Trustee's claims against Anderson were extinguished upon his death. For the reasons set forth below, I will grant the Motion to Substitute in part and deny it in part.

II. BACKGROUND

Because a detailed account of the complex procedural history and factual allegations underlying the present adversary proceeding are set forth in my prior decisions, which I incorporate herein by reference, I will limit my recitation to those necessary to understand the present dispute.²

The Debtor was formerly a duly organized Massachusetts corporation that operated a business performing concrete contracting, design, and installation in all phases of construction.³ Christopher Stone (“Stone”), the former president and principal of the Debtor, incorporated the Debtor in 2000, and operated it with increasing profitability between the years of 2001 and 2004.⁴ By 2004, the Debtor “was the largest non-union cast in place concrete contractor in Massachusetts, with 140 employees during peak periods, and was on track to achieve its highest net profit ever.” ⁵

Anderson was the principal and “primary decision maker” of Plumb House and

[462 B.R. 11]

Dalton.⁶ Plumb House and Dalton are Massachusetts corporations engaged in the business of general contracting.⁷ The Debtor was a subcontractor for Plumb House on projects located in Quincy and Waltham, Massachusetts (the “Quincy Project” and the “Waltham Project,” respectively). ⁸ Anderson had attempted to enter the cast in place concrete business many years before with a company known as Advance Concrete, Inc., but the business was unsuccessful and Advance Concrete, Inc. was dissolved in 1998. ⁹

Welby was employed by the Debtor as a project manager between December 18, 2003, and January 7, 2005.¹⁰ To effectuate her employment, she entered into an employment agreement and a non-compete agreement with the Debtor. ¹¹ As a project manager, Welby was responsible for the Debtor's project accounting, billing, and change order submissions on the various projects for which the Debtor was a subcontractor.¹² Welby, who the Trustee alleges was also the “former significant other of ... Stone,” ¹³ was not authorized to sign certain job documents, such as requisitions and lien waivers.¹⁴

Marini is the principal and “primary decision maker” of Marini Management, Framing Co., and Lenox.¹⁵ Marini Management is a Massachusetts corporation in the business of general contracting.¹⁶ Lenox is a Massachusetts corporation which owns a construction site in Norwood, Massachusetts (the “Norwood Project”).¹⁷ The Norwood Project is managed by Framing Co. and Marini Management is the general contractor on that site.¹⁸ The Debtor was subcontracted to perform concrete work for the Norwood Project.¹⁹ The Trustee alleges that Marini and Anderson were friends and business associates.²⁰

The Trustee asserts that the Debtor delivered “substantial amounts of expensive equipment, materials and tools” to each of the three projects to perform the subcontracts.²¹ During the fall and winter of 2004, while the Debtor was working on the Norwood, Quincy and Waltham Projects, Welby and Anderson, with “substantial assistance” from Marini, allegedly “joined together to strip [the Debtor's] lucrative business away from it and transfer it to Anderson.” ²² To this end, the Trustee alleges that Welby substantially under billed the Debtor's work on the projects and forged Stone's signature on lien releases

[462 B.R. 12]

and requisition orders.²³ At the same time, Anderson allegedly directed Plumb House to withhold payments to the Debtor.²⁴ The Trustee further alleges that all the defendants communicated with the Debtor's suppliers and convinced them to begin demanding payment before such payments were due under their respective agreements. ²⁵ As a result of these actions, the Debtor's cash flow was effectively choked off by January, 2005.²⁶

On January 7, 2005, Anderson gave the Debtor a Notice of Termination which terminated the Debtor's subcontracts for the Quincy and Waltham Projects, citing the Debtor's failure to pay its suppliers.²⁷ Thereafter, “Anderson, with Welby's and Marini's active participation and assistance, in furtherance of the Defendant's conspiracy, either hired or drove away virtually all of [the Debtor's] employees, seized all of [the Debtor's] property at the three projects in question, took over [the Debtor's] subcontracts with Plumb House and Marini Management and ... commenced work at all three projects in place of [the Debtor] (and with [the Debtor's] employees, equipment and with the cash owed to [the Debtor] ).” ²⁸

As a direct result of these actions, the Debtor was compelled to file a voluntary Chapter 11 petition on February 18, 2005.²⁹ On March 7, 2005, the Debtor, while acting as a debtor-in-possession, filed a complaint for turnover against the Anderson Defendants and the Marini Defendants.³⁰ On the eve of a hearing on the matter, Anderson informed Debtor's counsel that Plumb House would voluntarily return all of the Debtor's property that the Anderson Defendants had seized.³¹ On March 23 and 24, 2005, Plumb House returned property which had been converted by Anderson Defendants. Nonetheless, the Trustee alleges that much of the property returned was damaged, while other property, including tools, “poles, brackets, shores, MEP shores, panels, corners, hardware, whaling, and staging brackets,” was never returned at all.³²

The present adversary proceeding, which was subsequently consolidated with several other adversary proceedings against the same defendants and designated as the lead case, was commenced on April 15, 2005. On August 17, 2005, however, the Debtor's case was converted to one under Chapter 7 and prosecution of the adversary proceedings fell to the Trustee. Since that time, the parties have unsuccessfully attempted to settle the dispute.³³ After a period of inactivity ³⁴ and several attempts by the defendants to dismiss the adversary proceedings, the Trustee filed a further amended complaint on July 14, 2010, asserting the following causes of action against Anderson: Count I—Damages for Failure and Refusal to

[462 B.R. 13]

Turnover CR Stone's Business and Property in Accordance with 11 U.S.C. § 542; Count II—Unauthorized Post–Petition Use of the Debtor's Property Without Compensation Pursuant to 11 U.S.C. § 549; Count III—Fraudulent Transfer Pursuant to 11 U.S.C. § 548; Count IV—Conversion of CR Stone's Property; Count V—Civil Conspiracy; Count X—Interference with Advantageous Contractual Relationships; Count XI—Violations of Massachusetts General Law Chapter 93A; Count XII—Equitable Subordination Pursuant to 11 U.S.C. § 510; Count XIV—Violations of the Automatic Stay; Count XVII—Interference with Contract Rights; Count XVIII—Interference with Advantageous Business Relations; Count XIX—Equitable Estoppel; and Count XX—Constructive Trust and An Accounting. ³⁵

On November 17, 2010, Anderson passed away. The Trustee filed a Suggestion of Death and Motion for Stay of Case Deadlines with the assent of the defendants on December 6, 2010. I granted the motion the following day. On March 18, 2011, the parties filed a Joint Motion to Establish New Case Deadlines (the “Joint Motion”) which included, inter alia, a deadline of April 15, 2011 for the Trustee to file a motion to substitute executor of Anderson's estate as a party defendant.³⁶ I granted the Joint Motion on March 25, 2011, expressly approving the deadlines set forth therein.

As expressly contemplated by the Joint Motion, the Trustee filed his first motion to substitute on April 15, 2011. On April 29, 2011, however, Plumb House and Dalton Builders, with the assent of Welby and the Marini Defendants, filed an opposition, asserting that the Motion to Substitute was untimely or that the claims against Anderson did not survive his death pursuant to Mass. Gen. Laws ch. 223, § 1. I heard the matter on May 18, 2011, and at the conclusion of...