Butler v. Wojtkun (In re Wojtkun)
| Citation | 534 B.R. 435 |
| Decision Date | 20 July 2015 |
| Docket Number | Adversary Proceeding Case No. 15–1016,Case No. 13–12719–WCH |
| Parties | In re: Peter Wojtkun, Debtor. Joseph G. Butler, Chapter 7 Trustee, Plaintiff, v. Peter Wojtkun, Susan Wojtkun, Individually and as Trustee of the Susan R. Wojtkun Living Trust, and S.R.W. Realty Corp., Defendants. |
| Court | United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of Massachusetts |
James M. Liston, Hackett, Feinberg, P.C., Boston, MA, for the Chapter 7 TrusteeJohn W. Moran, LeClairRyan, P.C., Boston, MA, for Susan Wojtkun, Individually and as Trustee of the Susan R. Wojtkun Living Trust, and S.R.W. Realty Corp.
John F. Sommerstein, Law Offices of John F. Sommerstein, Boston, MA, for Peter Wojtkun
The matter before the Court is the “Defendants' Motion to Dismiss” (the “Motion to Dismiss”) filed by the debtor, Peter Wojtkun (the “Debtor”), his wife, Susan Wojtkun (“Susan”), individually and as trustee of the Susan R. Wojtkun Living Trust (the “Living Trust”), and S.R.W. Realty Corp. (collectively, the “Defendants”), and the “Opposition of the Chapter 7 Trustee to Defendants' Motion to Dismiss” (the “Opposition”), filed by the Chapter 7 trustee (the “Trustee”). Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Defendants have asked me to dismiss 13 counts of the Trustee's complaint (the “Complaint”), through which he is seeking: (1) a declaration that a resulting trust exists for an interest in the sale proceeds of real property in Georgetown, Massachusetts (the “Georgetown Property”) that Susan sold in 2014; (2) a declaration that a constructive trust exists for an interest in the sale proceeds of the Georgetown Property; (3) a declaration that a resulting trust exists in a condominium S.R.W. Realty Corp. holds title to in Puerto Rico (the “Condominium”); (4) a declaration that a constructive trust exists in the Condominium; (5) avoidance of transfers of income from the Debtor to Susan as actual fraud pursuant to 11 U.S.C. § 548(a)(1)(A) ; (6) avoidance of transfers of income from the Debtor to Susan as constructive fraud pursuant to 11 U.S.C. § 548(a)(1)(B)(ii)(I) ;1 (7) avoidance of transfers of income from the Debtor to Susan as constructive fraud pursuant to 11 U.S.C. § 548(a)(1)(B)(ii)(IV) ; (8) avoidance of transfers of income from the Debtor to Susan pursuant to Mass. Gen Laws ch. 109A, § 5(a)(1) ; (9) avoidance of transfers of income from the Debtor to Susan pursuant to Mass. Gen. Laws ch. 109A, § 6(a) ; (10) avoidance of transfers of income from the Debtor to Susan pursuant to Mass. Gen. Laws ch. 109A, § 6(b) ; (11 ) avoidance of transfers of income from the Debtor to Susan pursuant to 11 U.S.C. § 547(b) ; (12) equitable reach and apply of the Debtor's interest in the Condominium and the Georgetown Property or their sale proceeds; and (13) damages for grossly excessive compensation through a shareholder derivative action on behalf of Peter Wojtkun DMD P.C. (the “Corporation”) against Susan for aiding and abetting a breach of fiduciary duty and unjust enrichment. For the reasons set forth below, I will grant in part and deny in part the Motion to Dismiss.
For purposes of this motion, I must assume the truth of all well-pleaded facts set forth in the Complaint.2
In 1993, the Debtor owned and operated at least two business entities, the purpose of which was to own and operate a golf club located at 258 Andover Street, Georgetown, Massachusetts (the “Golf Course”).3 The Trustee states that the Debtor has owned, at various times, Georgetown Golf Club, Inc., New England Golf Partners, Inc., and Georgetown Links, LLC (collectively, the “Golf Entities”).4 In 1993, the Debtor also apparently “substantially owned and managed” Beta Leasing, LLC (“Beta Leasing”), an affiliate of the Golf Entities.5 Since 1994, the Debtor has owned and controlled the Corporation, a dental practice with a place of business at 351 North Main Street in Andover.6 The Debtor works as a dentist at the Corporation and Susan, who is his wife, is also an employee of the Corporation.7 Susan initially was a nurse at the Corporation and is now an office manager.8
In 1994, the Debtor confirmed a plan in an individual Chapter 11 bankruptcy case and the case closed.9 The confirmed Chapter 11 plan provided for payments of liabilities exceeding $3 million related to the development of the Golf Course.10 Some of the Golf Entities were formed while that case was pending.11
On August 30, 1999, the Debtor and Susan sold a home they owned in Andover for $349,000.12 On October 1, 1999, the Georgetown Property was purchased in the name of Susan as trustee of the 300 Andover Street Realty Trust (the “Realty Trust”) for $120,000.13 The Trustee was not provided with a schedule of beneficiaries prior to filing his Complaint.14 The Debtor and Susan demolished an existing house on the property to build a new house.15 Documents Susan produced to the Trustee indicate an additional $375,000 was spent on contractors and material suppliers for the renovations.16 The construction of the new house was financed with a mortgage Susan granted as trustee of the Realty Trust, dated October 1, 1999.17 Between 1999 and 2011, the Debtor, Susan, the Realty Trust, and the Living Trust executed numerous mortgages on the Georgetown Property, and it is not always clear whether the new mortgages refinanced and discharged prior existing mortgages or resulted in additional obligations.18
At the time of the purchase of the Georgetown Property, the Debtor and Susan were employed by the Corporation.19 According to their 1999 joint tax return, the Debtor earned $81,323 and Susan earned $43,114 that year.20 Their 2000 joint tax return reflects that the Debtor earned $79,300 and Susan earned $44,336.21 The Debtor and Susan refinanced their mortgage on July 26, 2000, in the amount of $450,000 in favor of Wells Fargo Home Mortgage, Inc.22 The mortgage identified Susan, the Debtor, and the Realty Trust as mortgagors and each of those parties executed the mortgage.23
On or around December 31, 2001, the Golf Entities executed promissory notes in the amounts of $5,200,000 and $250,000 and loan agreements with Sovereign Bank as part of that transaction.24 The Debtor executed a limited guaranty.25 A financing statement the Debtor gave to Sovereign Bank in 2001 indicated he had a 50% interest in the Georgetown Property, which was worth $900,000 at the time.26
On February 21, 2002, the Debtor, Susan, and the Realty Trust “replaced” the mortgage on the Georgetown Property by executing a $450,000 mortgage in favor of Sovereign Bank.27 On October 31, 2002, Susan, acting as trustee for the Realty Trust, transferred the Georgetown Property to herself as trustee of the Living Trust.28 Susan is the beneficiary of the Living Trust.29
The Debtor and Susan granted first and second mortgages in the amounts of $440,000 and $150,000 on the Georgetown Property in favor of Citizen's Bank on April 30, 2003.30 The first mortgage secures a $440,000 promissory note executed by the Debtor and Susan, with Susan as trustee of the Living Trust identified as the mortgagor.31 The second mortgage secures a $150,000 home equity line of credit, also executed by the Debtor and Susan and identifying Susan as trustee of the Living Trust as mortgagor.32
In 2007, Beta Leasing executed notes and entered into Loan Agreements with Sovereign Bank, pursuant to which Sovereign Bank loaned Beta Leasing a total of $146,395.33 The Debtor personally guaranteed the loans.34
In 2008, the Debtor's salary from the Corporation had increased to $199,486 and Susan's had increased to $140,300, both after 401(k) contributions.35 In 2009, the Debtor earned $207,447 from the Corporation and Susan earned $106,800 after 401(k) contributions.36
On February 19, 2009, the Debtor and Susan executed a $335,000 mortgage on the Georgetown Property in favor of Sovereign Bank.37 The mortgage identified the borrowers as the Debtor and Susan, individually and as trustee of the Living Trust, and indicated the borrowers executed a promissory note in the amount of $335,000.38 The Trustee states that in addition to the mortgages the Debtor and Susan executed between 1999 and 2009, the Georgetown Property was refinanced four times, in November 2002, November 2009, February 2011, and September 2011.39 Susan executed the November 2009 and September 2011 mortgages as trustee of the Living Trust, and the Debtor executed the February 2011 mortgage.40 Three of the refinancing transactions were used to remove equity from the Georgetown Property.41 At least some of the loan applications related to refinancing the mortgage identified both the Debtor and Susan as borrowers and contained financial information for both of them.42
On May 26, 2009, Sovereign Bank declared the loans to the Golf Entities in default and sent notices of default and acceleration to the Golf Entities and the Debtor.43 On October 22, 2009, Sovereign Bank declared the loans to Beta Leasing in default and sent notices of default and acceleration to Beta Leasing and the Debtor.44 On September 11, 2009, the Debtor caused the Golf Entities to file Chapter 11 petitions in the Bankruptcy Court for the District of Massachusetts.45 The cases were dismissed on September 18, 2009, and the Golf Entities filed Chapter 7 petitions on November 25, 2009.46
Sovereign Bank was granted relief from stay to foreclose on mortgages and security interests it held in relation to the Golf Entities on January 22, 2010.47 On or around April 26, 2010, Sovereign Bank assigned its interest in the Golf Entities and Beta Leasing loans to Black Swan Country Club, LLC (“Black Swan”).48 Black Swan conducted a foreclosure sale on June 11, 2010.49 Subsequently, Black Swan asserted a deficiency claim against the Golf Entities of approximately $1,690,000, plus interest, attorneys' fees, and the cost of collection.50 Additionally, Black Swan asserted a...
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Butler v. Wojtkun (In re Wojtkun)
...534 B.R. 435In re: Peter Wojtkun, Debtor.Joseph G. Butler, Chapter 7 Trustee, Plaintiff,v.Peter Wojtkun, Susan Wojtkun, Individually and as Trustee of the Susan R. Wojtkun Living Trust, and S.R.W. Realty Corp., Defendants.Case No. 13-12719-WCHAdversary Proceeding Case No. 15-1016.United Sta......