Demory v. Martin (In re Martin)

• Decision Date: 27 April 2021
• Docket Number: Adv. Proc. No. 20-00008-NPO,Case No. 19-03585-NPO
• Citation: 630 B.R. 766
• Court: U.S. Bankruptcy Court — Southern District of Mississippi
• Parties: IN RE: Earnie MARTIN and Sandra Martin, Debtors. Donald Demory, Plaintiff v. Earnie Martin, Defendant

630 B.R. 766

IN RE: Earnie MARTIN and Sandra Martin, Debtors.

Donald Demory, Plaintiff

v.Earnie Martin, Defendant

Case No. 19-03585-NPO

Adv. Proc. No. 20-00008-NPO

United States Bankruptcy Court, S.D. Mississippi.

Signed April 27, 2021

Stacey Moore Buchanan, Adam Stone, Jones Walker LLP, Jackson, MS, for Plaintiff.

Richard Finis Dean, Vicksburg, MS, Gregory John Faries, Brandon, MS, for Defendant.

MEMORANDUM OPINION AND ORDER ON AMENDED COMPLAINT TO DETERMINE THE DISCHARGEABILITY OF A DEBT PURSUANT TO11 U.S.C. § 523

Neil P. Olack, United States Bankruptcy Judge

This matter came before the Court for virtual trial on March 15-16, 2021(the "Trial"), on the Amended Complaint to Determine the Dischargeability of a Debt Pursuant to 11 U.S.C. § 523(the "Complaint")(Adv. Dkt. 7)¹ filed by Donald Demory("Demory") and the Answer & Response to Amended Complaint to Determine Dischargeability of a Debt Pursuant to 11 U.S.C. § 523(the "Answer")(Adv. Dkt. 14) filed by the debtor, Earnie Martin a/k/a Earnest L. Martin Jr.("Martin"), in the Adversary.The Court entered the Pretrial Order (the "PTO")(Adv. Dkt. 35) on December 22, 2020.The Trial originally was set to begin on January 7, 2021 but was cancelled because of COVID-19-related concerns.The parties thereafter engaged in virtual mediation.(Adv. Dkt. 39, 40).The mediation was unsuccessful, and the Trial was rescheduled.

At the Trial, Adam Stone and Stacey M. Buchanan represented Demory, and Richard F. Dean and Gregory J. Faries represented Martin.Demory submitted Plaintiff's Proposed Findings of Fact and Conclusions of Law (Adv. Dkt. 50) on the morning of the first day of the Trial, and Martin submitted Defendant's Proposed Findings of Fact and Conclusions of Law (Adv. Dkt. 52) late at the end of the second day of the Trial.During the Trial, Demory introduced into evidence sixteen (16) exhibits.²In his case in chief, Demory testified on his own behalf and called Martin as an adverse witness.Martin testified on his own behalf in his case in chief and also presented the testimony of his father, Earnest L. Martin, Sr.("Earnest Sr."); his nephew, Jessie Martin("Jessie"); his wife, Sandra E. Martin("Sandra" or together with Martin, the "Martins"); and Mark Atkinson("Atkinson").³Demory testified on his own behalf in rebuttal.The Court ruled from the bench at Trial that the debt Martin owed Demory is excepted from discharge pursuant to 11 U.S.C. § 523(a)(2)(A).This Opinion memorializes and supplements the Court's bench ruling.⁴

Jurisdiction

This Court has jurisdiction over the parties to and the subject matter of this Adversary pursuant to 28 U.S.C. § 1334.This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (I), and (O).Notice of the Trial was proper under the circumstances.

Facts

Demory is an eighty-two (82) year-old retired executive of a utility company in Fairfax County, Virginia who resides with his wife in Culpeper, Virginia.(Adv. Dkt. 58at 16-17).Demory has had a lifelong interest in vintage cars and, in particular, 1957 Chevrolet Bel Air convertibles and 1959 Chevrolet two (2)-door Impalas.

Demory first met Martin in December 2008.Demory and his wife were driving home from a family vacation when Demory spotted a 1957 Chevrolet Bel Air convertible parked in front of Earnest Sr.’s house in Edwards, Mississippi.(Adv. Dkt. 58at 17).The house sits on the frontage road near a major interstate highway.Demory stopped and spoke with Martin who gave him a tour of the automotive body shop (the "Shop") located behind the house.Martin's father, Earnest Sr., owns the Shop where he operates "EL Martin Restoration."(Adv. Dkt. 58at 104, 149).Although Martin performs restoration work on antique cars at the Shop, he does not hold any ownership interest in EL Martin Restoration.Martin testified that he had attempted to start his own automotive body shop but the business had failed.⁵Demory and Earnest Sr. exchanged introductions, but Demory talked mostly with Martin.(Adv. Dkt. 58at 19).

Martin gave Demory his business card.(Ex. 1;Adv. Dkt. 58at 18).The card reads in large type "Classic & Antiques" and off to the side, "Complete Restoration Service."(Ex. 1).The name "E.L. Martin" appears at the bottom of the card along with the address of the Shop.Martin wrote his telephone number above a blank line near the center of the card.(Ex. 1;Adv. Dkt. 58at 95).

Demory told Martin that he owned a 1957 red Chevrolet Bel Air Hardtop (the "Red Bel Air Hardtop") and a red 1959 Chevrolet four (4)-door Impala (the "Red 4-Door Impala") and anticipated someday having both vehicles restored.(Adv. Dkt. 58at 18-19).He also told him he wanted the Red Bel Air Hardtop changed from a hardtop to a convertible.Martin offered to restore the Red Bel Air Hardtop for $50,000.00 and the Red 4-Door Impala for $28,000.00.Demory accepted his offer with a handshake.(Adv. Dkt. 58at 19).Their agreement was never reduced to a writing.Demory assumed a timeline of approximately six (6) months to complete the restoration of the Red Bel Air Convertible, but there was no discussion about how long the restorations would take to complete.(Adv. Dkt. 58at 55).

On May 19, 2009, Martin and Earnest Sr. traveled to Florida to the home of Demory's daughter, Marie Cunningham("Marie"), where Demory and his wife were staying, to take possession of the Red Bel-Air Hardtop.While there, Martin proposed to trade the Red Bel Air Hardtop for another vehicle of the same make and model at the Shop (the "Red Bel Air Convertible").(Adv. Dkt. 58at 20).Martin told Demory that work already had begun on the Red Bel Air Convertible, and Demory readily agreed to the exchange.At this juncture, the Red Bel Air Hardtop now belonged to Martin and the Red Bel Air Convertible to Demory.⁶Martin and Earnest Sr. loaded the Red Bel Air Hardtop onto a trailer but did not take possession of the Red 4-Door Impala during this trip because the trailer was only large enough to hold one vehicle.(Adv. Dkt. 58at 22).

Demory handed Martin the title to the Red Bel Air Hardtop and a $25,500.00 check.(Ex. 2at 3;Adv. Dkt. 58at 23).The check was a deposit for payment of the restoration of the Red Bel Air Convertible ($25,000.00) and reimbursement for the cost of transporting the two vehicles ($500.00) to Mississippi.(Ex. 2at 3).Earnest Sr. endorsed the $25,500.00 check and deposited it into his bank account.(Adv. Dkt. 58at 151).Martin did not hold a personal bank account.(Adv. Dkt. 58at 186).Several weeks later, Martin returned to Marie's house in Florida to transport the Red 4-Door Impala and assorted parts to the Shop.

In July 2009, Martin informed Demory that a black 1959 two-door Chevrolet Impala (the "Black 2-Door Impala") was available for sale.(Adv. Dkt. 58at 23).Demory agreed to buy it and sent Martin a $9,000.00 check dated July 7, 2009.⁷(Ex. 2at 4).Earnest Sr. endorsed the $9,000.00 check and deposited it into his account.(Adv. Dkt. 58at 151).Demory then entered into another oral agreement with Martin to restore the Black 2-Door Impala, which Martin would begin after completing the restorations of the Red Bel Air Convertible and the Red 4-Door Impala.(Adv. Dkt. 58at 24).Payment would be on a time-and-material basis rather than for a fixed price.

In August 2009, Martin informed Demory that he was ready to install the motor in the Red Bel Air Convertible.On August 27, 2009, Demory and his son-in-law, Troy Cunningham("Troy"), delivered the motor for the Red Bel-Air Convertible to the Shop.(Adv. Dkt. 58at 27).

During the next six (6) years, a pattern of conduct emerged between Demory and Martin where Demory would mail a check to Martin, made payable to "E.L. Martin," whenever Martin requested additional funds for parts and labor associated with the restorations.(Adv. Dkt. 58at 5, 25-27).In all, Demory and his wife wrote sixteen (16) checks totaling $76,400.00 from August 27, 2009 to November 11, 2015 for the restoration work on the Red Bel Air Convertible and the Red 4-Door Impala.(Ex. 2).Some of these checks were endorsed by Earnest Sr. and deposited into his bank account and others were endorsed by Martin and either cashed by Martin or deposited by Sandra into her bank account at Regions Bank.Martin and Earnest Sr. share nearly identical names.Martin never provided receipts for the purchase of any parts and never mailed Demory any photographs of the vehicles to show the progress of the restorations despite Demory's requests that he do so.(Adv. Dkt. 58at 26).

From August 27, 2009 to May 4, 2010, Demory mailed Martin four (4) checks for the restorations of the Red Bel-Air Convertible and/or the Red 4-Door Impala, as follows:

Date	Amount	Memo
August 27, 2009	$10,000.00	1957 Chev Restore
November 4, 2009	$14,000.00	Restore 57 & 59 Ch
January 22, 2010	$5,000.00	Restore 1957 & 1959 Chev
May 4, 2010	$6,000.00	Restore 57 & 59 Chev

(Ex. 2at 5-8).Martin cashed the August 27, 2009 and November 4, 2009 checks.(Ex. 2at 5-6;Adv. Dkt. 58at 102).Earnest Sr. endorsed and deposited the other checks into his bank account.

In July 2010, Demory arrived at the Shop in a turquoise 1957 Chevrolet Bel-Air (the "Turquoise Bel Air Hardtop"), which he had paid a restorer in Florida approximately $70,000.00 to restore.Martin pointed out some mistakes in the restoration work, and Demory paid him $7,000.00 to replace the seats and correct the alignment.(Adv. Dkt. 58at 25).All work on the Red Bel Air Convertible stopped while Martin completed the work on the Turquoise Bel Air Hardtop.(Adv. Dkt. 59at 51).Demory does not make any claims related to the work performed by Martin on the Turquoise Bel Air Hardtop in the Adversary.⁸The Turquoise Bel Air Hardtop, nevertheless, is relevant to the parties' dispute because of Martin's allegation that the original agreement as to the scope and extent of the restoration work on the other vehicles changed after July 2020.

Martin viewed the Turquoise Bel Air Hardtop as...