Gordon v. Internal Revenue Serv. (In re Johnson), CASE NO. 16-51072-PMB
| Decision Date | 10 August 2018 |
| Docket Number | CASE NO. 16-51072-PMB,ADVERSARY PROCEEDING NO. 16-5349 |
| Citation | 593 B.R. 895 |
| Parties | IN RE: William B. JOHNSON, Jr., Debtor. Neil C. Gordon, Chapter 7 Trustee for the Estate of William B. Johnson, Jr., Plaintiff, v. The Internal Revenue Service, Georgia Department of Revenue, U.S. Department of Justice, Automobile Acceptance Corp., Danco Financial Inc., Synovus Bank, J. Richard Stephens, SunTrust Bank, Amegy Bank, N.A., State Bank, Chatham Hill Association, Inc., and Sandra Thome Johnson, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
593 B.R. 895
IN RE: William B. JOHNSON, Jr., Debtor.
Neil C. Gordon, Chapter 7 Trustee for the Estate of William B. Johnson, Jr., Plaintiff,
v.
The Internal Revenue Service, Georgia Department of Revenue, U.S. Department of Justice, Automobile Acceptance Corp., Danco Financial Inc., Synovus Bank, J. Richard Stephens, SunTrust Bank, Amegy Bank, N.A., State Bank, Chatham Hill Association, Inc., and Sandra Thome Johnson, Defendants.
CASE NO. 16-51072-PMB
ADVERSARY PROCEEDING NO. 16-5349
United States Bankruptcy Court, N.D. Georgia, Atlanta Division.
Signed August 10, 2018
William D. Matthews, Arnall Golden Gregory LLP, Atlanta, GA, for Plaintiff.
Archana Ravindranath, Christopher M. Whitcomb, US Dept. of Justice-Tax Division, Washington, DC, Brooke E. Heinz, The Office of the Attorney General, Paul M. Alexander, William A. DuPre, IV, Megan Taylor, Miller & Martin, PLLC, Robert J. Proctor, Proctor, Felton & Chambers, Theodore N. Stapleton, Theodore N. Stapleton, P.C., Matthew R. Brooks, Troutman Sanders LLP, Todd E. Hennings, Macey, Wilensky & Hennings, LLP, George Koenig, Koenig Law Group, PC, Ron C. Bingham, II, Adams and Reese, LLP, Atlanta, GA, Geoffrey H. Bracken, Charles M. Seely, Gardere Wynne Sewell LLP, Houston, TX, for Defendants.
U.S. Department of Justice, Washington, D.C., pro se.
Automobile Acceptance Corp., McDonough, GA, pro se.
Danco Financial Inc., Smyrna, GA, pro se.
State Bank, Atlanta, GA, pro se.
Chatham Hill Association, Inc., Atlanta, GA, pro se.
ORDER (I) GRANTING IN PART AND DENYING IN PART SYNOVUS BANK'S RENEWED MOTION FOR JUDGMENT ON THE PLEADINGS, (II) DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT, (III) GRANTING UNITED STATES' MOTION FOR PARTIAL SUMMARY JUDGMENT, AND (IV) GRANTING IN PART AND DENYING IN PART DEFENDANT J. RICHARD STEPHENS' MOTION FOR SUMMARY JUDGMENT
Paul Baisier, U.S. Bankruptcy Court Judge
The following matters are now before the Court:1
1) Synovus Bank's Renewed Motion for Judgment on the Pleadings with attached Memorandum in Support , filed by Synovus Bank ("Synovus") on December 12, 2017 (Docket No. 84);
2) Plaintiff's Motion for Partial Summary Judgment , filed by Neil C. Gordon, the duly appointed Chapter 7 Trustee in the underlying Chapter 7 case and the Plaintiff herein (the "Trustee") on December 15, 2017 (Docket No. 85) along with Plaintiff's Statement of Material Facts As To Which There Is No Genuine Issue To Be Tried (Docket No. 86) and the Memorandum of Law in Support of Plaintiff's Motion for Partial Summary Judgment (Docket No. 87);
3) The United States' Motion for Partial Summary Judgment, Statement of Material Facts As To Which There Is No Genuine Issue To Be Tried, and Memorandum in Support of Motion for Partial Summary Judgment , filed by the United States of America, by and through its agency the Internal Revenue Service (the "IRS") concurrently on December 15, 2017 (Docket No. 88);
4) Defendant J. Richard Stephens' Motion for Summary Judgment, Brief in Support of Motion for Summary Judgment , and Documentary Appendix To Motion for Summary Judgment , filed by J. Richard Stephens ("Stephens") on December 15, 2017 (Docket No. 89) along with Defendant J. Richard Stephens' Statement of Material Facts Not In Genuine Dispute In Support of Motion for Summary Judgment (Docket No. 90);
5) Defendant J. Richard Stephens' Omnibus Brief in Response filed by Stephens on January 12, 2018 (Docket No. 94) regarding the above-referenced motions of the IRS, Plaintiff, and Synovus;
6) Defendant J. Richard Stephens' Response to Internal Revenue Service Statement of Material Facts , filed by Stephens on January 12, 2018 (Docket No. 95);
7) Defendant J. Richard Stephens' Response to Trustee's Statement of Material Facts , filed by Stephens on January 12, 2018 (Docket No. 96);
8) Memorandum of Synovus Bank Opposing Motions for Summary Judgment by the Trustee, by J. Richard Stephens, and by The Internal Revenue Service , filed by Synovus on January 12, 2018 (Docket No. 97);
9) Response of Synovus Bank to Defendant J. Richard Stephens' Statement of Material Facts Not In Genuine Dispute In Support of Motion for Summary Judgment , filed by Synovus on January 12, 2018 (Docket No. 98);
10) Response of Defendant Synovus Bank to Plaintiff's Statement of Material Facts As To Which There Is No Genuine Issue To Be Tried filed by Synovus on January 12, 2018 (Docket No. 99);
11) Response of Defendant Synovus Bank to Internal Revenue Service's Statement of Material Facts As To Which There Is No Genuine Issue To Be Tried , filed by Synovus on January 12, 2018 (Docket No. 100);
12) Memorandum of Law in Response to the United States' Motion for Partial Summary Judgment, to J. Richard Stephens' Motion for Summary Judgment, and to Synovus Bank's Motion for Judgment on the Pleadings , filed by the Trustee on January 12, 2018 (Docket No. 101);
13) Synovus Bank's Reply In Support of Renewed Motion for Judgment on the Pleadings , filed by Synovus on January 26, 2018 (Docket No. 102);
14) Defendant J. Richard Stephens' Brief in Reply to Memorandum of Synovus Bank Opposing Motions and Memorandum in Response by Plaintiff , filed by Stephens on January 26, 2018 (Docket No. 103); and,
15) Reply Brief in Support of Trustee's Motion for Partial Summary Judgment , filed by the Plaintiff on January 26, 2018 (Docket No. 104).2
Summary of Facts
The material facts in this case are not in dispute. At the heart of this Adversary Proceeding is a residence located at No. 3, 3000 Andrews Drive, Atlanta, Georgia (the "Property"). At the beginning of 2011, the Property was jointly owned by William B. Johnson, Jr. (the "Debtor") and his spouse, Sandra Thome Johnson ("Sandra Johnson").3 The Debtor then executed a Limited
Warranty Deed (the "Deed"), dated April 7, 2011.4 The Deed was recorded on April 11, 2011 in the real property records of the Superior Court of Fulton County, Georgia (the "Superior Court"). Through the Deed, the Debtor sought to convey his undivided one-half interest in the Property to Sandra Johnson (the "Transfer"). The Transfer was made for "love and affection," the Debtor received no monetary consideration for the Transfer, and no transfer tax was paid on the Transfer.5
Subsequent to the Transfer, Synovus obtained a judgment against the Debtor and others on a defaulted commercial loan and recorded its judgment lien through the filing with the Superior Court of a Writ of Fieri Facias on December 1, 2011 (amended on February 6, 2012), in the amount of $6,008,349.22 (the "Synovus Lien"). Stephens obtained an Amended Final Judgment against the Debtor and others following entry of a consent order and recorded a judgment lien by filing a Writ of Fieri Facias with the Superior Court on February 21, 2012 in the amount of $4,600,000.00 (the "Stephens Lien"). Finally, on January 9, 2012, the IRS assessed a federal income tax liability against the Debtor and Sandra Johnson for the tax year 2010 in the amount of $5,099,897.04 and recorded its Notice of Federal Tax Lien on October 2, 2012 (the "Tax Lien")(all of the foregoing liens referred to collectively hereafter as the "Liens").6
On May 1, 2014, Stephens filed an action in the Superior Court under the Georgia Uniform Fraudulent Transfers Act ( O.C.G.A. §§ 18-2-70 et seq. ) to avoid the Transfer, styled J. Richard Stephens v. William B. Johnson, Jr. and Sandra T. Johnson , Civil Action File No. 2014-CV-245803 (the "Superior Court Action")(see Exhibit "G," Documentary Appendix).7 On November 6, 2015, the Superior Court entered an Order and Judgment , ordering and decreeing that the Deed "is NULL AND VOID and was NULL AND VOID ab initio pursuant to O.C.G.A. §§ 18-2-70 et seq. and O.C.G.A. § 44-5-88" (emphasis in original)(the "Superior Court Judgment")(see Exhibit "K").8 The Superior Court Judgment also stated that a jury had found in favor of Stephens on the issue of insolvency, finding that the Debtor was
insolvent on the date of the Transfer (see Exhibit "J").
As Stephens pressed forward to enforce the Superior Court Judgment, the Debtor filed this Chapter 7 case, Case No. 16-51072-PMB (the "Main Case"), on January 19, 2016 (the "Petition Date"). The Superior Court Action was still pending on the Petition Date, but was stayed by the filing. 11 U.S.C. § 362(a). The Trustee was subsequently duly appointed as interim Chapter 7 Trustee (see Notice of Chapter 7 Bankruptcy Case, filed January 20, 2016 (Main Case Docket No. 6) ), and then became the permanent Chapter 7 Trustee in this case at the conclusion of the Section 341 meeting of creditors. See Main Case Docket Entry of February 22, 2016; 11 U.S.C. § 702(d).
The Trustee subsequently moved to sell the Property to third party buyers. See generally Main Case Docket Nos. 25, 26, 32, 34, and 43. Sandra Johnson consented to the sale of her interest in the Property. See Main Case Docket Nos. 36, 38, and 45. No party...
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