Howell v. U.S. Foods, Inc. (In re Bilbo)
| Decision Date | 05 February 2014 |
| Docket Number | ADVERSARY PROCEEDING NO. 13-1054,BANKRUPTCY CASE NO. 11-13160-WHD |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
| Parties | IN THE MATTER OF: JOHN ANDREW BILBO, Debtor. GRIFFIN E. HOWELL, III, Chapter 7 Trustee for the Estate of John Andrew Bilbo, Plaintiff, v. US FOODS, INC., Defendant. |
IT IS ORDERED as set forth below:
__________
W. Homer Drake
The above-styled adversary case comes before the Court on a Motion to DismissComplaint (hereinafter the "Motion") filed by US Foods, Inc. (hereinafter the "Defendant"), requesting that the Court dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6),1 the Complaint to Set Aside and Recover Preferential Transfers filed by Griffin E. Howell, III (hereinafter the "Trustee"), in his capacity as Chapter 7 Trustee of the bankruptcy estate of John Andrew Bilbo (hereinafter the "Debtor"). The Trustee opposes the dismissal of the complaint. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 157(b)(1), as a core proceeding defined under 28 U.S.C. §§ 157(b)(2)(A) & (F). See also 11 U.S.C. § 1334.
On September 23, 2011, the Debtor filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code2 (hereinafter the "Code") in the United States Bankruptcy Court for the Northern District of Georgia. Thereafter, Griffin Howell, III was appointed as the Chapter 7 Trustee. On September 23, 2013, the Trustee filed his two-count complaint, seeking (1) to avoid preference payments allegedly made to US Foods, Inc. and recover their value pursuant to Sections 547(b) and 550(a) of the Code, respectfully, and (2) an award of attorney's fees and expenses pursuant to the Official Code of Georgia Annotated (hereinafter the "O.C.G.A.") § 13-6-11.
The complaint's first count sets forth that the Debtor, an individual, owns andmanages a restaurant business incorporated as "Bilbo's Bar-B-Que, Inc." The complaint proffers, however, that the Debtor operated the business as a sole proprietorship, known as "Bilbo's BBQ," and identified the business as a sole proprietorship on his individual tax returns until the corporation was administratively dissolved by Georgia's Secretary of State on the date of August 22, 2011.3 According to the complaint, the Trustee contends that within the 90-day preference period,4 the Debtor made a series of payments to the Defendant, totaling no less than $53,073.00. The remainder of the first count recites the six elements necessary for a finding of a preferential transfer under Section 547(b).5 The complaint's first count does not provide the manner in which these alleged preferential transfers were made or the source from which the funds were drawn. The complaint,however, was supplemented by documents presented by both parties, which the Court finds integral to this cause of action and will assimilate into its analysis.
The alleged preference payments were made by checks, all of which identify the drawer as "Bilbo's BBQ," endorsed by "John Bilbo." The account information associated with the checks provides that the "Account Title & Address" is:
JOHN A BILBO
BILBO'S BBQ
Under the account agreement's "Ownership of Account" tab, the box identifying "Corporation - For Profit" is checked. Additionally, an individual named "Amanda Arp" is identified in the account information as the "Owner/Signer" and "John Bilbo" is identified as the "Non-Individual Owner." According to the account agreement, both are authorized signatories.
The complaint's second count simply proclaims that the Defendant has been "stubbornly litigious," thereby entitling the Trustee to costs and expenses associated with this action under O.C.G.A. § 13-6-11. There are, however, no factual allegations setting forth in what manner the Defendant has caused any unjustifiable difficulties.
On November 26, 2013, the Defendant filed the instant Motion, which asserts that the complaint's first count should be dismissed because it fails to plead adequately two of the required elements for a finding of a preferential transfer: "(1) that the payments were a transfer of an 'interest of the debtor in property'; and (2) that the transfer was made 'for oron account of an antecedent debt owed by the debtor.'" Def.'s Br. 4 (emphasis in the original). The Motion contends that the corporation is distinct and separate from the Debtor and that the complaint is "devoid" of any justification for attributing the corporation's debts and asset transfers to the Debtor.
The Motion further asserts that the complaint's second count should be dismissed because, among the absence of any factual allegations relating to the claim, there is no state law basis for relief where the cause of action arises solely from federal bankruptcy law and where there is no underlying state law claim. Additionally, the Defendant contends that any recovery under O.C.G.A. § 13-6-11 is predicated on the Trustee's prevailing in the underlying cause of action.
Accompanying the Defendant's Motion and Brief were copies of the 10 checks in question, and attached to the Trustee's Response Brief was the corresponding account agreement for the checking account. See Def.'s Br., Ex. A. (Adv. Docket No. 7); See also Trustee's Br., Ex. A. (Adv. Docket No. 8). Ordinarily, the attachment of evidence or other documentation to the pleadings would require the Court to examine this motion under summary judgment standards, in accordance with Rule 12(d):
If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.
FED. R. CIV. P. 12(d). Despite the language of Rule 12(d), the Eleventh Circuit has adoptedthe "incorporated by reference" doctrine. See Day v. Taylor, 400 F.3d 1272, 1274 (11th Cir. 2005); see also Horsey v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002). Under this doctrine, a court may consider any integral document attached to a motion to dismiss without converting the motion into one for summary judgment, but only if the document in question "is: (1) central to the plaintiff's claim; and (2) undisputed." Horsey, 304 F.3d at 1134. "Undisputed," in this context means that the "authenticity of the document is not challenged." Id.; see also In re Clower, 463 B.R. 573, 576 (Bankr. N.D.Ga. 2011) (Drake, B.J.).
In this case, the Trustee's underlying claim is ultimately dependent on who was responsible for and whose funds satisfied the debt to US Foods, Inc. during the preference period. Therefore, the checks and account agreement are central to the Trustee's claim and to this adversary proceeding in general. The authenticity of the attached documents are not disputed. The Court, therefore, finds that the Motion satisfies the elements of the "incorporation by reference doctrine" and does not require conversion into one for summary judgment.
The Defendant seeks dismissal of the Trustee's complaint for failure to state a claim upon which relief can be granted. Rule 8 of the Federal Rules of Civil Procedure, made applicable to this proceeding by Rule 7008 of the Federal Rules of Bankruptcy Procedure, requires that a complaint contain only "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2); See also FED. R. BANKR. P. 7008.The Court shall dismiss a proceeding under Rule 12(b)(6) only where that short and plain statement fails "to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6).
When considering a Rule 12(b)(6) motion to dismiss, the Court must accept as true all factual allegations set forth in the complaint and, on the basis of those facts, determine whether the plaintiff is entitled to the relief requested and, in the process, must draw all reasonable inferences in the light most favorable to the non-moving party. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-56 (2007); Daewoo Motor Americ, Inc. v. General Motors Corp., 459 F.3d 1249, 1271 (11th Cir. 2007); Hill v. White 321 F.3d 1334, 1335 (11th Cir. 2003); Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000); Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n.1 (11th Cir. 1999). However, the Court is authorized to reject a plaintiff's legal conclusions, labels, and unsupportable assertions of fact. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).
A Rule 12(b)(6) motion tests the legal sufficiency of a complaint. See Coggins v. Abbett, 2008 WL 2476759 at *4 (M.D.Al. 2008). Prior to the Supreme Court's decision in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-56 (2007), a motion to dismiss could only be granted if the claim established "no set of facts . . . which would entitle [the plaintiff] to relief." See Coggins v. Abbett, 2008 WL 2476759 at *4 (M.D.Al. 2008) (). In Twombly, however, the Supreme Court imbued the sufficiency of the complaint with a plausibility standard, holding that the Court must dismiss a case where the well pledfacts do not state a claim that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (discussing Twombly). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged" or that the plaintiff can establish the necessary elements of the cause of action. Id.; see also In re Clower, 463 B.R. 573, 576 (Bankr. N.D.Ga. 2011) (Drake, B.J.). The factual allegations in the complaint need not be fully developed, but they must include...
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