Horvath v. Waite (In re Waite)

• Decision Date: 27 September 2019
• Docket Number: Case No.: 18-31471,Adv. Pro. No. 18-3061
• Citation: Horvath v. Waite (In re Waite), Adv. Pro. No. 18-3061, Case No.: 18-31471 (Bankr. N.D. Ohio Sep 27, 2019)
• Parties: In Re: Jeremy N. Waite, Debtor. Charles Horvath, Plaintiff, v. Jeremy N. Waite, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

In Re: Jeremy N. Waite, Debtor.

Charles Horvath, Plaintiff, v. Jeremy N. Waite, Defendant.

Case No.: 18-31471

Adv. Pro. No. 18-3061

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO WESTERN DIVISION

September 27, 2019

The court incorporates by reference in this paragraph and adopts as the findings and analysis of this court the document set forth below. This document has been entered electronically in the record of the United States Bankruptcy Court for the Northern District of Ohio.

Chapter 7

Hon. Mary Ann Whipple

MEMORANDUM OF DECISION

This adversary proceeding is before the court for decision after trial on Plaintiff Charles Horvath's ("Plaintiff" or "Horvath") complaint to determine the dischargeability of a state court judgment debt owed to him by Defendant Jeremy Waite ("Defendant" or Waite"). Defendant is the debtor in the underlying Chapter 7 case, in which he has received his discharge. Plaintiff contends that Defendant owes him a debt resulting from fraudulent representations and willful and malicious conduct around replacement of the roof on Plaintiff's home, and that the debt should be excepted from Defendant's Chapter 7 discharge under 11 U.S.C. § 523(a)(2)(A) and (a)(6).

The district court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1334(b) as a civil proceeding arising under Title 11. This proceeding has been referred to this court by the district court under its general order of reference. 28 U.S.C. § 157(a); General Order 2012-7 of the United States District Court for the Northern District of Ohio. Proceedings to determine dischargeability of debts are core proceedings that this court may hear and decide. 28 U.S.C. § 157(b)(1) and (b)(2)(I).

This memorandum of decision constitutes the court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, applicable to this adversary proceeding under Rule 7052 of the Federal Rules of Bankruptcy Procedure. Regardless of whether specifically referred to in this Memorandum of Decision, the court has examined the submitted materials, weighed the credibility of the three witnesses, considered all the evidence, and reviewed the entire record of the case. Based upon that review, and for the reasons discussed below, the court finds that Defendant is entitled to judgment in his favor.

FINDINGS OF FACT

Jeremy Waite was a salesperson for Rock Roofing, LLC ("Rock Roofing"). Waite began working for Rock Roofing in 2014. Rocky Conley, owner of Rock Roofing, paid Waite a flat salary of $1,500.00 a week and supplied him a vehicle. Waite testified that Rock Roofing did not deduct taxes from his pay nor did it provide him with a W-2 or 1099 for income tax purposes. Rock Roofing was located at 3726 Lincolnshire Boulevard, Toledo, Ohio. Waite was provided with potential customer addresses by the company, and he then met with customers, provided job estimates, and secured customer contracts. Waite did not report to work at the Lincolnshire address unless he was picking up paperwork or supplies.

In January 2016, Horvath contacted Rock Roofing regarding replacement of the roof on his home. Rock Roofing sent Waite to Horvath's home to discuss installation of a new roof. After his discussions with Waite, on January 4, 2016, Horvath entered into a contract ("Contract") [Pl. Exhibit B, Attachment A] with Rock Roofing for the replacement of his roof. The Contract provided for removal of the old roof, replacing bad wood, and preparing and installing a new roof. A lifetime warranty on shingles by Owens Corning was included, as was a warranty on the workmanship. The Contract also provided for removal and reinstallation of the existing Gutter Helmet system. The contract amount was $7,500.

The work began and was completed by Rock Roofing on January 6, 2016. Waite did not himself do the work on the roofing job. Horvath subsequently contacted Waite to inform him of tar marks left on three pieces of siding. A crew was sent to Horvath's home and used citrus shine to remove the tar marks. But a sheen remained on the siding where the tar had been removed. Waite, at the direction ofRocky Conley, then wrote up another work order, which specified that Rock Roofing would have American Power Clean power wash the house to remove the sheen on the siding at no additional cost to Horvath. [Pl. Ex. B, Attach. A, p. 3]. Horvath was also given a $500 credit off the total contract price for that inconvenience. Additionally, the work order stated that if the power washing was unsuccessful, Rock Roofing would look at other avenues to address the mess. The power washing was not successful and thereafter, Horvath wanted only to deal with Rocky Conley and not Waite anymore. Rock Roofing took no additional measures to correct the problem with the siding on Horvath's house.

According to Horvath, there were problems other than just the tar marks on the siding. Horvath ended up hiring and paying a third party to replace the siding. The contractor who replaced the damaged siding pointed out to him damage to the gutter protection system, as well as a wave in the roof over his porch. This turned out to be rotted wood underlayment, which had not been replaced prior to the new roof being installed by Rock Roofing. Finally, Horvath's air conditioner cover was torn by the Rock Roofing work crew. Horvath also paid Gutter Helmet to fix the damage to his gutter protection system.

The Contract provided that a warranty packet would be provided to Horvath following registration of the roof with Owens Corning. Rock Roofing did not register the roof with Owens Corning. Horvath eventually contacted Owens Corning himself to register the roof and to receive the promised warranty packet.

Waite ceased working for Rock Roofing on June 22, 2016, due to disputes with Rocky Conley. One of those disputes involved the job for Horvath, as Defendant explained that he felt Rocky Conley did not want to take care of the Horvath job "properly." Waite and Rocky Conley parted company "on bad terms." Waite turned to truck driving to earn a living after leaving Rock Roofing.

In July 2016, Horvath filed suit in an Ohio state court against Rock Roofing, Rocky Conley and Waite, alleging five claims against them, including one under the Ohio Consumer Sales Practices Act, Horvath v. Rock Roofing, LLC, et al., Case No. CI201603506 (Lucas County). [Pl. Ex. B]. In December 2016, the state court granted a default judgment to Plaintiff as follows:

[T]he Court awards Judgment in favor of Plaintiff Charles Horvath against Defendants Rock Roofing, LLC, Rocky Conley, and Jeremy Waite, jointly and severally, in an amount of $8,008.31 for actual damages which consists of $6,800.00 to re-side plaintiff's house, $608.00 to repair plaintiff's gutter helmet, $300.00 to repair the front porch roof, $150.00 for inspection of the siding, $49.31 to repair the air conditioner cover, and $101.00 for the City of Toledo Building Inspection, with treble damages, for an aggregate amount of $24,024.93 plus $5,000.00 for non-economic damages and attorney fees in the amount of$4,227.50 with interest and court costs.

[See Pl. Ex. C].

The owner of Rock Roofing, Rocky Conley, paid Horvath $16,600 pursuant to a settlement agreement. Horvath filed a notice for a debtor's examination as he sought to collect the judgment balance of $16,652.43 from Waite. [Pl. Ex. H].

Waite credibly testified that he was never served with a copy of the state court complaint. Waite was not aware of the judgment against him until he received in July 2017 a notice of a debtor's examination in aid of execution. [Pl. Ex. H]. The notice of the Debtor's Examination was sent to Waite at 217 Woodland Avenue, Swanton, Ohio, which is his mother's address. At the time of the debtor's examination, Waite's address was 10487 County Road Four, Lot 67, Swanton, Ohio.

The Debtor's examination was held on August 24, 2017, at the Lucas County, Ohio Common Pleas Courthouse. Waite, Horvath, Randy Dixon (state court counsel for Horvath), and April Oglesbee (Waite's mother) attended the session. Waite testified that he advised Horvath and his counsel that he planned to file for bankruptcy as soon as he was able to save up the money to do so. Waite also informed Horvath and his counsel that Rock Roofing did not actually do the work, rather the work was done by a Wagner Roofing crew, a practice sometimes used by Rocky Conley. It was also at this session that Waite first learned of the damage to the Gutter Helmet system and the air conditioner cover.

At the Debtor's exam session, terms of a settlement agreement ("Agreement") [Pl. Ex. D] were discussed. The Agreement set out three terms: Waite would cooperate with a suit by Horvath against Wagner Roofing; Waite would pay the full balance of the judgment when and if he was successful in a claim (for back wages) against Rock Roofing or Rocky Conley; and Waite would pay Horvath $100.00 a month, starting in October 2017, and continue payment until $6,000.00 was paid, at which time Horvath would enter a satisfaction of judgment. Waite testified he was not represented by counsel at the Debtor's Examination and informed Plaintiff, and his counsel, that he did not have sufficient funds to make the payments and intended to file bankruptcy. Waite credibly testified that, at this session, Horvath's counsel examined financial documents Waite brought with him and concluded that Waite did appear to qualify for unspecified bankruptcy relief.

Based on the terms of the proposed Agreement, Horvath ceased formal collection efforts against Waite. Horvath denies that Waite informed him he was intending to file for bankruptcy.

After the debtor's examination, Horvath initiated suit against Wagner Roofing but ultimately dismissed the action because Waite could not be located in order to provide evidence to support theclaims.

Although Waite and his wife in November 2017 bought a used 2005 truck on credit (less a $200 cash down...