Furr v. TD Bank, N.A. (In re Rollaguard Sec., LLC)

• Citation: 570 B.R. 859
• Decision Date: 27 July 2017
• Docket Number: Adv. Proc. No. 16–01756–EPK,Case No. 14–38071–EPK (Substantively Consolidated),Adv. Proc. No. 16–01755–EPK, Adv. Proc. No. 16–01757–EPK
• Parties: IN RE: ROLLAGUARD SECURITY, LLC, Shamrock Jewelers, Inc., and Shamrock Jewelers Loan & Guarantee, LLC, Debtors. Robert C. Furr not individually but as Chapter 7 Trustee of the estate of the Debtors, Rollaguard Security, LLC, et al., Plaintiff, v. TD Bank, N.A., Defendant. Robert C. Furr not individually but as Chapter 7 Trustee of the estate of the Debtors, Rollaguard Security, LLC, et al., Plaintiff, v. PNC Bank, N.A., Defendant. Robert C. Furr not individually but as Chapter 7 Trustee of the estate of the Debtors, Rollaguard Security, LLC, et al., Plaintiff, v. JPMorgan Chase Bank, N.A. d/b/a Chase Bank, Defendant.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Southern District of Florida

570 B.R. 859

IN RE: ROLLAGUARD SECURITY, LLC, Shamrock Jewelers, Inc., and Shamrock Jewelers Loan & Guarantee, LLC, Debtors.

Robert C. Furr not individually but as Chapter 7 Trustee of the estate of the Debtors, Rollaguard Security, LLC, et al., Plaintiff,

v.TD Bank, N.A., Defendant.

Robert C. Furr not individually but as Chapter 7 Trustee of the estate of the Debtors, Rollaguard Security, LLC, et al., Plaintiff,

v.PNC Bank, N.A., Defendant.

Robert C. Furr not individually but as Chapter 7 Trustee of the estate of the Debtors, Rollaguard Security, LLC, et al., Plaintiff,

v.JPMorgan Chase Bank, N.A. d/b/a Chase Bank, Defendant.

Case No. 14–38071–EPK (Substantively Consolidated)

Adv. Proc. No. 16–01755–EPK

Adv. Proc. No. 16–01756–EPK

Adv. Proc. No. 16–01757–EPK

United States Bankruptcy Court, S.D. Florida, WEST PALM BEACH DIVISION.

Signed July 27, 2017

Jesus M. Suarez, Miami, FL, for Plaintiff.

Jamie Z. Isani, Miami, FL, for Defendant.

Matthew J. Feeley, Buchanan Ingersoll & Rooney, P.C., Miami, FL, for TD Bank, N.A.

CONSOLIDATED ORDER GRANTING MOTIONS TO DISMISS

Erik P. Kimball, Judge, United States Bankruptcy Court

In the above-captioned adversary proceedings, Robert C. Furr, as chapter 7 trustee (the "Trustee") of the bankruptcy estates of Rollaguard Security, LLC ("Rollaguard") and the substantively consolidated debtors, Shamrock Jewelers, Inc. and Shamrock Jewelers Loan & Guarantee, LLC (together, the "Shamrock Entities" and, with Rollaguard, the "Debtors"), sues TD Bank, N.A. ("TD Bank") (Adv. Proc. No. 16–01755 –EPK), PNC Bank, N.A. ("PNC Bank") (Adv. Proc. No. 16–01756 –EPK), and JPMorgan Chase Bank, N.A. d/b/a Chase Bank ("JPMC Bank") (Adv. Proc. No. 16–01757 –EPK) (collectively, the "Defendants") to avoid and recover alleged fraudulent transfers made by the Debtors to the Defendants and to recover monetary damages for the Defendants' alleged aiding and abetting of conversions and negligence (the "Complaints"). Each of the Complaints in these adversary proceedings allege the same facts, except where noted below, and present the same five requests for relief.¹ In response, TD Bank filed the Defendant's Motion to Dismiss the Complaint and Memorandum of Law in Support [ECF No. 26, Adv. Proc. No. 16–01755 –EPK], PNC Bank filed PNC Bank , National Association's Amended Motion to Dismiss the Trustee's Complaint for Failure to State a Claim Upon Which Relief Can Be Granted [ECF No. 26, Adv. Proc. No. 16–01756 –EPK], and JPMC Bank filed JP Morgan Chase Bank, N.A.'s Motion to Dismiss Adversary Complaint to Avoid and to Recover Avoidable Transfers, for Aiding and Abetting Conversion and for Other Relief [ECF No. 21, Adv. Proc. No. 16–01757 –EPK] (collectively, the Motions to Dismiss").

In the Motions to Dismiss, the Defendants raise substantially similar arguments in opposition to the Complaints. Indeed, in each of the Motions to Dismiss, the Defendants indicate that they join in the arguments raised by the other Defendants. Having considered the Complaints, the Motions to Dismiss, and the responses and replies filed in connection therewith [ECF Nos. 38 and 39, Adv. Proc. No. 16–01755 –EPK; ECF Nos. 42 and 43, Adv. Proc. No. 16–01756 –EPK; and ECF Nos. 30 and 31, Adv. Proc. No. 16–01757 –EPK], the Court finds it appropriate to issue this consolidated order addressing all of the Motions to Dismiss.

For the reasons discussed in more detail below, the Court grants the Defendants' Motions to Dismiss and dismisses, with prejudice, the Trustee's Complaints.

BACKGROUND

In counts I and II of the Complaints, the Trustee sues the Defendants to avoid alleged fraudulent transfers made by the Debtors to the Defendants under the actual and constructive fraud provisions of section² 548(a)(1)(A)–(B) and under the actual and constructive fraud provisions of section 544 incorporating Florida Statutes § 726.105(1)(a)–(b), and to recover the alleged fraudulent transfers from the Defendants pursuant to section 550. In counts III, IV, and V of the Complaints, the Trustee sues the Defendants for monetary damages for the Defendants' alleged aiding and abetting of conversions and for their alleged negligence.

Because these are motions to dismiss, the Court accepts as true the allegations in the Complaints [ECF No. 1, Adv. Proc. No. 16–01755 –EPK; ECF No. 1, Adv. Proc. No. 16–01756 –EPK; and ECF No. 1, Adv. Proc. No. 16–01757 –EPK]. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

At all times relevant to the claims presented here, Anthony T. Simpson was the Managing Member of Rollaguard and David Tabony was the Chief Financial Officer and Vice President of Rollaguard. Mr. Tabony caused Rollaguard to file the chapter 7 petition commencing this case on December 30, 2014. Mr. Simpson was the President of Shamrock Jewelers, Inc. and his spouse, Debra Simpson, was the Vice President of Shamrock Jewelers, Inc. Mr. Simpson was the sole member of Shamrock Jewelers Loan & Guarantee, LLC.

Rollaguard represented itself as a manufacturer of traceable security cases used to transport valuable items, such as jewelry, and sensitive documents. Rollaguard, at the direction of Mr. Simpson, engaged investors and raised substantial capital in order to finance the manufacture, marketing, and sale of security cases.³ However, at the time Rollaguard filed its chapter 7 petition, Rollaguard was not engaged in a viable business venture. Indeed, it appears Rollaguard never manufactured a single security case.

The Shamrock Entities operated a jewelry store in Florida from approximately 1965 to 2015, purporting to sell, purchase, and repair jewelry. The Shamrock Entities also claimed to operate a pawn brokerage business, consisting of a series of pawn-loan transactions where the Shamrock Entities would provide short-term, high interest loans to customers in exchange for jewelry. The Shamrock Entities, at the direction of Mr. Simpson, engaged investors and raised capital in order to finance the purported pawn brokerage business. However, the Shamrock Entities did not in fact engage in any pawn brokerage.

The financial affairs of Rollaguard and the Shamrock Entities were substantially intertwined. Capital investments raised by Mr. Simpson on behalf of Rollaguard were routinely used by the Shamrock Entities. While the Shamrock Entities engaged in some legitimate business, in particular the operation of the long-standing jewelry store, they retained only a modest inventory, small in comparison to the amount of capital they received from Rollaguard. On top of this, the Shamrock Entities failed to maintain adequate books and records.

Mr. Simpson manipulated Rollaguard and the Shamrock Entities to defraud investors and siphon funds for himself. Prior to filing these adversary proceedings against the Defendants, the Trustee obtained, among other relief, a final default judgment of $2,208,407.60 against Mr. Simpson and his spouse for pre-petition transfers from Rollaguard. ECF No. 70, Adv. Proc. No. 15–01311 –EPK. It appears that Mr. Tabony and Ms. Simpson were each without knowledge of any wrongdoing by Mr. Simpson.

The Debtors maintained four bank accounts at TD Bank from December 2010 through November 2013, three bank accounts at PNC Bank from December 2010 through November 2013, and three bank accounts at JPMC Bank from July 2014 through March 2015. During the four-year period before the commencement of this chapter 7 case, the Debtors deposited monies into and withdrew monies from the various bank accounts maintained at TD Bank, PNC Bank, and JPMC Bank.⁴ The Debtors also freely transferred monies between the various accounts maintained at TD Bank, PNC Bank, and JPMC Bank, but always within the respective banking institution.⁵

Each of the subject bank accounts was a typical demand deposit account. There is nothing in the Complaints that would lead the Court to conclude that the Debtors ever gave up complete autonomy over the various accounts. Indeed, the Complaints make it clear that the Debtors in fact exercised unfettered discretion with the various accounts, depositing and withdrawing funds, transferring funds, and making payments from the accounts, whenever, in whatever amounts, and however they liked. From the facts alleged in the Complaints, when this bankruptcy case was filed the Debtors' accounts at TD Bank had, in the aggregate, a small overdraft, the Debtors' accounts at PNC Bank had, in the aggregate, a very small balance, and the Debtors' accounts at JPMC Bank had, in the aggregate, a small overdraft. On the date each Debtor became subject to this case, the Debtors had, in effect, no funds on deposit at TD Bank, PNC Bank, or JPMC Bank. The Debtors had abandoned their banking relationships with TD Bank and PNC Bank more than a year prior to the filing of this case. The Shamrock Entities' use of accounts at JPMC Bank continued through March 2015, about six months prior to their substantive consolidation with Rollaguard in September 2015. ECF No. 126; Case No. 14–38071–EPK. In other words, the Debtors had used the various accounts for several years and then left them empty, in each case months before the relevant Debtor became part of this case.

The Trustee argues that the Debtors' regular deposits to the various bank accounts maintained at TD Bank, PNC Bank, and JPMC Bank constitute actual and/or constructive fraudulent transfers avoidable under section 548 or under section 544 incorporating Florida law. In other words, the Trustee argues that each time one of the Debtors deposited funds into one of its own unrestricted accounts at TD Bank, PNC Bank, or JPMC Bank, that deposit constituted a fraudulent transfer to the relevant Defendant that the Trustee may avoid under applicable law. The Trustee seeks a judgment avoiding each such transfer and a money judgment against each of the Defendants equal to the total deposits made by the Debtors to each of the...