Creditors v. Lile
Decision Date | 23 March 2018 |
Docket Number | CASE NO. 5:17–cv–1042 |
Parties | SEQUATCHIE MOUNTAIN CREDITORS, Plaintiffs/Appellants, v. Jennifer LILE, Representative of the Estate of Deceased Joseph J. Detweiler, Defendant/Appellee. |
Court | U.S. District Court — Northern District of Ohio |
Peter G. Tsarnas, Goldman & Rosen, Akron, OH, Charles A. Flynn, Marvin B. Berke, Berke, Berke & Berke, Chattanooga, TN, for Plaintiffs/Appellants.
Scott M. Zurakowski, Krugliak, Wilkins, Griffiths & Dougherty, Canton, OH, for Defendant/Appellee.
This matter is before the Court on the appeal pursuant to 28 U.S.C. § 158(a)(1) by plaintiffs/appellants1 Sequatchie Mountain Creditors ("plaintiffs") from the following two orders in favor of defendant/appellee Jennifer Lile ("defendant") entered by the United States Bankruptcy Court, Northern District of Ohio, in plaintiffs' adversary case (No. 09–6118): (1) the order and related memorandum opinion, In re Detweiler , No. 09–6118, 2017 WL 650062 (Bankr. N.D. Ohio Feb. 16, 2017), and (2) the order and related memorandum opinion, In re Detweiler , No. 09–6118, 2017 WL 1483489 (Bankr. N.D. Ohio Apr. 25, 2017). (See Doc. No. 6–1 (Second Amended Notice of Appeal) at 1229–32.)
Both plaintiffs and defendant filed their respective briefs2 and appendices3 thereto, and the appeal is ripe for decision. For the reasons that follow, the bankruptcy court's orders are affirmed.
This case has an extensive factual and procedural history, which is briefly summarized here for context. The Court will provide greater detail later in this opinion as necessary for the Court's analysis.
The adversary case underlying this appeal arose in the chapter 11 bankruptcy proceeding of Joseph Detweiler ("Detweiler"),4 who filed his bankruptcy petition on August 17, 2009.5 Detweiler was the sole owner and director of J.J. Detweiler Enterprises, Inc. ("JJDEI") and Sequatchie Mountain LLC ("Sequatchie LLC"). Sequatchie LLC was established by Detweiler to facilitate the Sequatchie Pointe project ("Sequatchie Pointe"), a planned development of over 6,756 acres of land straddling Marion County Tennessee and Dade County Georgia. Lots were sold between October 2006 and October 2008 by the Sequatchie Pointe sales force. Plaintiffs purchased undeveloped lots at Sequatchie Pointe. In re Detweiler , 2017 WL 650062, at *1–2. They allege that Detweiler's misrepresentations and fraudulent conduct related to their land purchases resulted in $13,500,000.00 of nondischargeable damages under 11 U.S.C. § 523(a)(2)(A), (a)(4) and (a)(6). Id.
The bankruptcy court granted summary judgment in favor of Detweiler on all plaintiffs' adversary claims under § 523(a)(4) and (a)(6), and the § 523(a)(2)(A) claims of plaintiffs Wesley Jinks, Mary Czajka, Ana Rodriguez, William King, Manuel Real, Gene Renz, Joyce Renz, and the Estate of John Hallman. That decision is not on appeal here. The bankruptcy court then conducted a four-day trial on the remaining plaintiffs' § 523(a)(2)(A) claims, and rendered its decision on February 16, 2017.6
The bankruptcy court ruled against defendant and in favor of the § 523(a)(2)(A) claims of plaintiffs George Stone, Susan Stone, Charles McAvoy, Ellen McAvoy, Marvin Ferkinhoff, and Carol Ferkinhoff.7
In so ruling, the bankruptcy court found that Detweiler was responsible for false representations made with an intent to deceive these plaintiffs regarding the existence of bonds covering the roads for lots purchased on the Georgia side of Sequatchie Pointe. See id. at *14, 19, 22. The bankruptcy court rendered judgment in favor of defendant on all other claims, including plaintiffs' claims that Detweiler was responsible for false representations concerning project completion deadlines, which are now at issue here on appeal. Id. at *22.
The losing plaintiffs filed a motion in the adversary case to alter or amend judgment, which was denied. In re Detweiler , 2017 WL 1483489, at *1. Plaintiffs appealed the bankruptcy court's rulings from the trial and upon reconsideration. No cross-appeal was filed. Upon election by defendant/appellee, the appeal was transferred by the Bankruptcy Appellate Panel of the Sixth Circuit to the Northern District of Ohio. (Doc. No. 1–5.)
Plaintiffs identify three items in the statement of issues:
The issues on appeal focus on questions of agency law, and the choice of law applicable thereto. But the underlying premise asserted in the statement of issues regarding Detweiler's liability is that the Sequatchie Pointe sales force made fraudulent representations about project completion deadlines. The bankruptcy court ruled, however, that neither Detweiler nor the Sequatchie Pointe sales force made false representations with an intent to deceive plaintiffs regarding project completion deadlines. See In re Detweiler , 2017 WL 650062, at *15–16.
Although not specifically identified in the statement of issues, plaintiffs challenge the bankruptcy court's rulings on issues of both fact and law concerning the premise underlying their statement of issues—allegedly false representations made to plaintiffs with an intent to deceive about construction timelines. (See e.g. Pls. Br. at 1174 ().) "[A] district court reviewing a bankruptcy court ruling is subject to the same limitations imposed on any appellate tribunal." In re H & S Transp. Co., Inc. , 110 B.R. 827, 830 (M.D. Tenn. 1990), aff'd, 939 F.2d 355 (6th Cir. 1991) (citing In re Caldwell, 851 F.2d 852 (6th Cir. 1988) ). Therefore, the Court will consider alleged errors by the bankruptcy court argued in plaintiffs' and defendant's briefs even though those errors are not specifically identified in the statement of issues. See Union Oil Co. of Cal. v. Prof'l Realty Invs., Inc., 72 F.3d 130 (Table), 1995 WL 717021, at *11 n.4 (6th Cir. 1995) ( ); cf. In re Teal , No. 4:14–CV–15, 2015 WL 1206802, at *2 (E.D. Tenn. Mar. 17, 2015) (quoting In re Am. Cartage, Inc., 656 F.3d 82, 91 (1st Cir. 2011) ).
A federal district court has jurisdiction to hear appeals from "final judgments, orders, and decrees" of the bankruptcy court. 28 U.S.C. § 158(a). Plaintiffs' adversary claims are brought pursuant to 11 U.S.C. § 523, which governs exceptions to the dischargeability of a debt in bankruptcy. " ‘A bankruptcy court's judgment determining dischargeability is a final and appealable order.’ " In re Cottingham , 473 B.R. 703, 705 (6th Cir. BAP 2012) ( ).
In re Cottingham , 473 B.R. at 705 (alteration in original) (internal citations and quotation marks omitted) (further citation omitted).
Id. at 705–06 (internal citations and quotation marks omitted) (further citation omitted). "If two views of the evidence are possible, the trial judge's choice between them cannot be clearly erroneous." Gen. Motors Acceptance Corp. v. Cline , No. 4:07 CV 2576, 2008 WL 2740777, at *3 (N.D. Ohio July 3, 2008) (citing Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573–75, 105 S.Ct. 1504, 84 L.Ed. 2d 518 (1985) ). Moreover, "due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses."
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