Edwards Specialties, Inc. v. Olive Props., Inc. (In re Edwards)
| Decision Date | 06 July 2016 |
| Docket Number | CASE NO. 15–81961–CRJ–7,A.P. No. 15–80083–CRJ–7,CASE NO. 15–81172–CRJ–7 |
| Parties | In the Matter of: Alden R. Edwards, SSN: XXX–XX–XXXX In the Matter of: Edwards Specialties, Inc., Debtor(s). Edwards Specialties, Inc., Plaintiff(s), v. Olive Properties, Inc. and Dennis Olive, Defendant(s). |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama |
Michael Paul Killian, Harrison, Gammons, & Rawlinson, PC, Tazewell Shepard, Tazewell Shepard, P.C., Huntsville, AL, for Plaintiff.
Michael P. Huff, Bradley Arant Boult Cummings LLP, Huntsville, AL, for Defendants.
Clifton R. Jessup, Jr.
On February 16, 2016, this Adversary Proceeding came before the Court for Telephonic Status Conference on Plaintiff's Motion to Compel and Motion to Continue. After the Status Conference, the Court entered an Order granting the Plaintiff's Motion to Compel and Motion to Continue, vacating the deadline to file Motions for Summary Judgment, and directing the parties to file briefs addressing the setoff issues discussed in open court.
This Adversary Proceeding is now before the Court on the Plaintiff's Motion for Summary Judgment, the Plaintiff's Brief in Support of Motion for Summary Judgment, and the Defendants' Brief on Issue of Setoff. The Court having reviewed the pleadings and the applicable law, and for the reasons set forth below, finds that Dennis Olive (“Olive”) is entitled to setoff the judgment Edwards Specialties, Inc. holds against Olive Properties, Inc. and Olive by the face value of the judgments Olive holds against Edwards Specialties, Inc. and Alden R. Edwards. Olive is not entitled to setoff the amount of the judgments he obtained against Alden R. Edwards as the guarantor for My Son's Land Company, Inc., Stillwater–Whitt, LLC, and Land Specialties, Inc. because these judgments lack mutuality for purposes of 11 U.S.C. § 553
.
In deciding a Motion for Summary Judgment pursuant to Fed. R. Civ. P. 56
, as made applicable to Adversary Proceedings pursuant to Fed. R. Bankr. P. 9014 and 7056, the Court must determine whether “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; See also
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585–86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1185 (11th Cir.2002).
In determining whether there is a genuine issue of material fact, the evidence and all factual inferences must be viewed by the Court in the light most favorable to the party opposing summary judgment, and all reasonable doubts about the facts must be resolved in favor of the nonmoving party. Acevedo v. First Union Nat. Bank, 476 F.3d 861, 865 (11th Cir.2007)
The moving party bears the initial burden of showing that there is no genuine issue of material fact to be decided at trial. Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548
. When the moving party has satisfied its burden, the nonmoving party cannot rest upon the pleadings. Instead, the nonmoving party must go beyond the pleadings and demonstrate by affidavit or other appropriate means that there is a genuine issue of material fact for trial. Marathon Petroleum Co., LLC v. Cohen (In re Delco Oil, Inc.), 599 F.3d 1255, 1257 (11th Cir.2010). Further, “[a] moving party is entitled to summary judgment if the nonmoving party has ‘failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.’ ” In re Delco Oil, Inc., 599 F.3d at 1257 (quoting In re Walker, 48 F.3d 1161, 1163 (11th Cir.1995) ).
The findings and conclusions set forth herein constitute the Court's findings of fact and conclusions of law pursuant to Fed. R. Bankr. P. 7052
. To the extent any of the findings of fact constitute conclusions of law, they are adopted as such. Further, to the extent any of the conclusions of law constitute findings of fact, they are adopted as such.
1. On April 29, 2015, Alden R. Edwards (“Edwards”) filed his individual petition for relief under Chapter 7 of the Bankruptcy Code. Edwards listed “Dennis Olive, as Assignee of N Al Bank” as a secured creditor in the amount of $4,150,420.03. ECF No. 15. On October 26, 2015, Dennis Olive filed a secured proof of claim in Edwards' case in the amount of $4,253,900.86.
2. Edwards is the sole shareholder and owner of Edwards Specialties, Inc. (Edwards Specialties). On July 23, 2015, the Chapter 7 Trustee in his personal case filed a Chapter 7 petition on behalf of Edwards Specialties.
3. On July 28, 2015, the Trustee filed a Motion for Joint Administration of Two Related Bankruptcy Cases. The Trustee reported that the vast majority of the liabilities listed in Edwards' schedules were business related debts. The Trustee sought joint administration of the cases, in part, because Edwards Specialties' assets were subject to garnishment or seizure by individual creditors without bankruptcy protection. On August 6, 2015, the Court entered an Order approving the Trustee's Motion for Joint Administration of the bankruptcy cases, but not the substantive consolidation of the cases.
4. On October 2, 2015, the Trustee filed a Notice of Removal pursuant to 28 U.S.C. § 1452
and Rule 9027 of the Federal Rules of Bankruptcy Procedure of a Complaint filed by Edwards Specialties on October 9, 2007 in an action styled Edwards Specialties, Inc. v. Olive Properties, Inc. and Dennis Olive, in the Circuit Court of Madison County, Alabama, case number CV–2007–900609–MGG in which the issue of setoff under Alabama law was pending.
5. In the Circuit Court action, Edwards Specialties alleged the Defendants breached a contract that obligated Olive Properties, Inc. (“Olive Properties”) to purchase residential lots developed by Edwards Specialties. Olive personally guaranteed the contract. On January 14, 2013, the Circuit Court entered summary judgment in favor of Edwards Specialties and against the Defendants in the amount of $1,243,589.48. The Circuit Court subsequently entered an Order on Plaintiff's Motion for Approval of Attorney's Fees increasing the judgment to the total amount of $1,735,944.24. ECF No. 19, Ex. A.
6. On May 30, 2014, Olive filed a Motion for Set–Off Judgment in the Circuit Court action seeking to setoff judgments he obtained against Edwards Specialties and Edwards dated July 22, 2010 in the original total amount of $796,589.98. Olive obtained the judgments from North Alabama Bank by Assignment dated May 29, 2014.
7. On July 22, 2010, North Alabama Bank obtained a judgment in an action styled North Alabama Bank v. My Son's Land Company Inc., Stillwater–Whitt, LLC, Land Specialties, Inc., Edwards Specialties, Inc. and Alden Edwards, in the Circuit Court of Madison County, Alabama, case number 47–CV–2010–900270. The bank sought to collect deficiencies owed on various notes executed by the defendants. Edwards personally guaranteed each of the notes. ECF No. 19, Ex. D.
8. The Circuit Court entered summary judgment in favor of North Alabama Bank and against the various Defendants as follows:
9. On August 6, 2010, North Alabama Bank recorded two Certificates of Judgment against Edwards Specialties in the total amount of $796,589.98. ECF No. 18, Ex. 2.
10. Aspen Homes, LLC (“Aspen Homes”) is an Alabama limited liability company solely owned by Olive through which Olive constructs residential houses. On May 14, 2014, Aspen Homes entered into a Financed Sales Contract (“Purchase Contract”) with North Alabama Bank for the purchase of multiple lots owned by the bank for $450,000. The Financed Sales Contract provides that the contract is contingent “upon a partial assignment of judgment(s) for $2,200,000 held by North Alabama Bank against Edwards Specialties and/or related debtor for the benefit of Dennis Olive.” ECF No. 19, Ex. E.
11. On May 29, 2014, North Alabama Bank and Olive executed two documents, an Agreement for the assignment of North Alabama Bank's judgment and an Assignment of Judgment Without Recourse assigning North Alabama Bank's judgment against Alden Edwards and related entities to Olive.
12. The Assignment of Judgment Without Recourse provides as follows:
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