Espy v. Stevens (In re Stevens)

Decision Date25 October 2022
Docket NumberCase No. 21-50219-SCS,APN 21-05003-SCS
Citation647 B.R. 299
Parties IN RE: Michael A. STEVENS, Jr., Kristy L. Stevens, Debtors. Tina Espy, Plaintiff, v. Michael A. Stevens, Jr., Defendant.
CourtU.S. Bankruptcy Court — Eastern District of Virginia

Irving B. Goldstein, Newport News, VA, for Plaintiff.

Nathaniel Webb, Upright Law, LLC, Newport News, VA, for Defendant.

MEMORANDUM OPINION
STEPHEN C. ST. JOHN, United States Bankruptcy Judge

This matter came before the Court for trial on February 16, 2022 (the "Trial"), upon the Complaint to Determine Dischargeability of Debt filed on June 7, 2021, by the Plaintiff, Tina Espy ("Ms. Espy"), by counsel, and the Answer thereto timely filed on July 8, 2021, by the Defendant, Michael A. Stevens, Jr. ("Mr. Stevens"), by counsel. The parties and their respective counsel appeared at the Trial and presented their evidence and arguments. At the conclusion of the Trial, the Court took the matter under advisement. This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 157(b)(2) and 1334(b). Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409(a). This Memorandum Opinion constitutes the Court's findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.

I. PROCEDURAL HISTORY

Michael A. Stevens, Jr., and Kristy L. Stevens (collectively, the "Debtors"), by counsel, filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code on March 17, 2021. David R. Ruby, Esquire, was appointed to serve as the Chapter 7 Trustee. The Debtors each received their Chapter 7 discharge on June 30, 2021.

A. The Complaint

On June 7, 2021, Ms. Espy, by counsel, timely filed the Complaint to determine dischargeability of debt owed to her by Mr. Stevens. Adv. Proc. No. 21-05003-SCS, ECF No. 1 (hereinafter, "Complaint").1 The Complaint contains no express counts but seeks exception to discharge on the basis of false pretenses, false representations, and actual fraud pursuant to 11 U.S.C. § 523(a)(2)(A). Id . at 1, 4-5. The Complaint also alludes to violations of the Virginia Consumer Protection Act. Id . at 4, 6.

Ms. Espy alleges that she obtained a quote for $12,000.00 from Mr. Stevens in June 2020 to convert her garage into a bedroom suite. Id . at 2. Ms. Espy believed the quoted price included all labor and materials to construct a floor in the garage equal in level to that of the rest of her home; install flooring, drywall, siding, lighting, and electrical items; and replace the garage door with a wall and window. Id . at 2-3. Ms. Espy paid a deposit of $7,640.00 on June 29, 2020, and one week later paid Mr. Stevens $1,300.00 to purchase flooring, which was delivered to her home. Id . at 3. Ms. Espy also separately paid an electrician $800.00, even though she thought this work was included in the initial $12,000.00 quote. Id . Ms. Espy apparently also wanted a half bathroom installed in the space, which Mr. Stevens quoted her an additional $3,725.00 to complete beyond the initial amount quoted. Id .

Ms. Espy asserts that approximately two weeks into the project, she discovered Mr. Stevens had not obtained a permit for the project from the City of Hampton, Virginia. Id . The next day, when Mr. Stevens demanded additional payment of $5,625.00, she terminated their agreement because she believed Mr. Stevens was engaging in fraudulent behavior. Id. at 3-4. Ms. Espy alleges Mr. Stevens took building materials that she purchased with him when he was terminated, thus converting them. Id . at 5. Ms. Espy contends that the work Mr. Stevens performed neither complied with city code requirements and building standards nor was it completed to her satisfaction. Id .

According to Ms. Espy, she did not receive a written document memorializing her agreement with Mr. Stevens; as a result, she did not understand the scope of work to be performed or the work for which Mr. Stevens demanded payment following the initial deposit and flooring outlays. Id . at 3-4. Ms. Espy claims she relied on Mr. Stevens's false representations on his business card and Facebook page that he was an insured and licensed contractor and that such representations fraudulently induced her to hire him. Id . at 2, 4. Ms. Espy subsequently learned Mr. Stevens was not "appropriately licensed," and thus he would have been unable to secure a proper permit for the work at her home. Id . at 4. Ms. Espy claims that Mr. Stevens had previously held an appropriate contractor's license with the Commonwealth of Virginia, leading her to conclude that he understood the requirement to possess such license. Id . at 4, 6.

Ms. Espy obtained a judgment against Mr. Stevens from the General District Court for the City of Hampton, Virginia on January 14, 2021, for $25,000.00 in damages, $76.00 in costs, and $6,250.00 in attorney fees, all accruing 6.00% interest from the judgment date. Id . at 2. The Complaint requests that the debt arising from this judgment be deemed nondischargeable under 11 U.S.C. § 523(a)(2)(A). Id . at 6.

The Clerk of Court issued a Summons and Notice of Pretrial Conference, as well as an Initial Scheduling Order, on June 9, 2021, setting a responsive pleading deadline of July 9, 2021, and scheduling an Initial Pretrial Conference for August 8, 2021. ECF No. 4.2 Counsel for Ms. Espy filed a Motion to Continue the Pretrial Conference on June 30, 2021, and a corrected motion on July 6, 2021. ECF Nos. 11, 14. The Court granted the corrected Motion to Continue by order entered on July 27, 2021. ECF No. 20. The Clerk of Court issued an Alias Summons on July 27, 2021, rescheduling the Initial Pretrial Conference to October 1, 2021, at 9:30 a.m. ECF No. 21.

B. The Answer

Mr. Stevens, by counsel, filed his Answer to the Complaint (the "Answer") timely on July 8, 2021. ECF No. 18 (hereinafter, "Answer"). The Answer fails, generally, to admit or deny each of the allegations asserted in the Complaint, as required by Federal Rule of Civil Procedure 8(b)(1), as incorporated into the Federal Rules of Bankruptcy Procedure by Rule 7008. Mr. Stevens does specifically deny Ms. Espy's allegations that he engaged in false pretenses; made false representations regarding the work requested by Ms. Espy; and committed actual fraud. Id . at 1-2. He further denies that he intended to deceive Ms. Espy and that his work was of an inadequate quality. Id . at 2.

Mr. Stevens admits that Ms. Espy obtained judgment in state court against him, elaborating that such judgment was obtained by default. Id. at 1. Mr. Stevens confirms that he "performed certain home improvement work" as requested by Ms. Espy but fails to describe either specific or general tasks. Id . at 2. Mr. Stevens believed Ms. Espy was satisfied with his work, and once the project was underway, she requested additional tasks to be performed. Id . When Mr. Stevens requested payment toward the work performed, Ms. Espy did not have the funds to pay him. Id . Mr. Stevens represents that he intended to complete the desired work until Ms. Espy informed him of her inability to pay. Id .

C. Pretrial Conference

The Court conducted the Initial Pretrial Conference on October 1, 2021, at which counsel for both parties appeared. ECF No. 22. The parties requested approximately eight weeks for discovery and contemplated a single day trial. The Court established February 16, 2022, as the trial date. Id . The Court issued a Pretrial Order on October 1, 2021, setting discovery and motions deadlines of January 18, 2022, and indicating that the February 16, 2022 trial would be conducted via the ZoomGov platform. ECF No. 24.3

D. Discovery Issues

Counsel for Mr. Stevens issued interrogatories and a request for the production of documents on October 1, 2021, to which counsel for Ms. Espy filed a response on October 28, 2021.4 ECF Nos. 23, 25. Counsel for Ms. Espy then issued requests for admission, as well as interrogatories and requests for the production of documents, on December 8, 2021.5 ECF Nos. 26-27. Ms. Espy received no responses to her discovery requests, and her counsel filed a Motion to Compel on January 28, 2022, in which she sought to have the unanswered requests for admission deemed admitted and to compel Mr. Stevens's responses to the remaining propounded discovery. ECF No. 29. Attached to the Motion to Compel as Exhibit A were the requests for admission (hereinafter, the "Requests for Admission"), as well as the requests for the production of documents and interrogatories. ECF No. 29-1, at 1-19 (Requests for Admission); id. at 20-25 (interrogatories and requests for production of documents). The Court heard the Motion to Compel on February 3, 2022; counsel for Ms. Espy, counsel for Mr. Stevens, and Mr. Stevens appeared at the hearing. ECF No. 37. The Court orally ruled that the matters set forth in Ms. Espy's Requests for Admission were deemed admitted; ordered Mr. Stevens to respond to Ms. Espy's interrogatories and requests for the production of documents by February 7, 2022; and extended Ms. Espy's time to file her lists of witnesses and exhibits to February 8, 2022. Id . The Court's ruling was memorialized by order entered February 24, 2022.6 ECF No. 41.

E. Trial Proceedings

On February 1, 2022, prior to the hearing on the Motion to Compel, counsel for Ms. Espy filed lists of witnesses and exhibits, as provided for by the Amended Pretrial Order. ECF Nos. 33-34. Counsel for Mr. Stevens filed separate witness and exhibit lists on February 7, 2022. ECF Nos. 35-36. The Court conducted the Trial as scheduled on February 16, 2022. ECF No. 40. At the commencement of the Trial, the Court reminded the parties of the earlier ruling deeming the Requests for Admission as admitted. ECF No. 43, Feb. 16, 2022 Trial Transcript (hereinafter, "Transcript"), at 3. Further, finding that no objections had been filed to the exhibits, the Court deemed all exhibits to be admitted. Id . at 3. Counsel for Ms. Espy made an oral motion for summary judgment based on the...

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