In re Antonious

• Citation: 358 B.R. 172
• Decision Date: 27 November 2006
• Docket Number: Bankruptcy No. 05-18809.,Adversary No. 05-575.
• Parties: In re Dennis ANTONIOUS and Peggy Antonious, Debtors. Bryon Stevens and Mayolia Stevens, Plaintiffs, v. Dennis Antonious and Peggy Antonious, Defendants.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania

358 B.R. 172

In re Dennis ANTONIOUS and Peggy Antonious, Debtors Bryon Stevens and Mayolia Stevens, Plaintiffs, v. Dennis Antonious and Peggy Antonious, Defendants.

Bankruptcy No. 05-18809.

Adversary No. 05-575.

United States Bankruptcy Court, E.D. Pennsylvania.

November 27, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Mark Blank, Jr, Paoli, PA, for Debtors.

Jonathan P. Boughrum, Crawford, Wilson & Ryan, LLC, for Plaintiffs.

OPINION

BRUCE FOX, Bankruptcy Judge.

In the above-captioned adversary, proceeding, the plaintiffs Bryon Stevens and Mayolia Stevens assert that the defendants —joint chapter 7 debtors Dennis Antonious and Peggy Antonious—owe them a non-dischargeable debt pursuant to 11 U.S.C. § 523(a)(2) and (a)(6).¹ The defendants maintain that any debt owed is dischargeable.

As will be discussed, the plaintiffs contend that debtors obtained substantial funds from the plaintiffs through fraud, misrepresentations, false pretenses, and willful and malicious conduct in connection with a home repair project. The debtors counter that Mrs. Antonious had no dealings with the plaintiffs and no connection with this project, while Mr. Antonious acted solely as a referral agent who bore no responsibility for the actions or representations of the actual home construction contractor.

Before, considering the evidence presented, I note that this case has been classified by the chapter 7 trustee as a no-asset case, meaning that the trustee could find no non-exempt property for distribution to creditors. The trustee's report to this effect was filed on January 31, 2006. In general, in a no-asset chapter 7 case the amount of any creditor's claim need not be fixed, because the amount is not material to the administration of the bankruptcy case. Indeed, creditors have been instructed that they should not file proofs of claim as the bankruptcy trustee does not intend to make distributions to creditors. Fed. R. Bankr.P.2002(e), 3002(c)(5).

A bankruptcy court does have the power, even in a no-asset case, to fix a claim in connection with non-discharge ability litigation, and in appropriate circumstances may elect to do so. See, e.g., In re McLaren, 3 F.3d 958, 965-66 (6th Cir.1993); Matter of Hallahan, 936 F.2d 1496, 1507-08 (7th Cir.1991). I need not decide whether such circumstances exist in this instance. The parties have expressly agreed at trial that I should not determine the amount of the debt, if any, owed by the defendants. Rather, to the extent the obligation is nondischarge able, the defendants' liability will be fixed by state court, in litigation now pending in that forum (albeit stayed by the debtors' bankruptcy filing). Conversely, if any debt owed by the debtors would be dischargeable, the plaintiffs would be enjoined by 11 U.S.C. § 524(a) from proceeding with their state court litigation.²

Given that understanding, I shall simply focus on the issue of nondischargeability.

I.

After a one day trial that took place on October 20, 2006, and upon consideration of all the testimony and exhibits offered in evidence, as well as upon the parties' joint statement of uncontested facts, I make the following factual findings:³

1. The chapter 7 debtors in these proceedings are Mr. Dennis Antonious, a/k/a Denny Antonious, and Mrs. Peggy Antonious, husband and wife, residing at 124 Hedgerow Lane, West Chester, PA 19380. Statement of Uncontested Facts, # 1.

2. Plaintiffs are Mr. Bryon⁴ Stevens and Mrs. Mayolia Stevens, husband and wife, residing at 419 Harry Road, Coatesville, PA 19320. Statement of Uncontested Facts, # 3.

3. In November 2003, the plaintiffs decided to finance an addition to their residence. They saw an advertisement placed by Mr. Antonious and telephoned the number listed in the advertisement. Statement of Uncontested Facts, # 4; N.T. at 9:40, 9:43.

4. The advertisement seen by the plaintiffs and placed by Mr. Antonious advertises his business as "Your Small Job Specialist(s)." N.T. at 9:40. Mr. Antonious also advertises his business as "A Small and Large Job Specialist" and "A Small Job Specialist." Statement of Uncontested Facts, # 8. The telephone number listed on the advertisement is Mr. Antonious' business telephone number. Id.

5. Mr. Antonious' business is located in the basement of his residence, and this residence is solely owned by Mrs. Antonious. Statement of Uncontested Facts, ## 6, 10 N.T. at 10:41. The business telephone number, 610-695-9840, is different from the telephone number used by Mrs. Antonious and their children. Statement of Uncontested Facts, # 8; N.T. at 10:21.

6. The parties agreed as follows: "Dennis Antonious holds himself and his business out to the public as a general contractor engaged in the business of home, repairs and construction of additions and related jobs, and he conducts this business from his wife's .. . home." Statement of Uncontested Facts, # 10.

7. After initially communicating with Mr. Antonious, Mr. and Mrs. Stevens received a written brochure from him promoting an entity called "Your Small Job Specialists" and listing more than 40 different types of work performed. Ex. P-2. Included within this brochure are the following statements:

a. "With over 47 men to do all the basic disciplines—Carpentry, Plumbing, Electrical, HVAC, Drywall, Painting, Masonry, Handyman, etc."

b. "We also do all phases of Tree Work and small to large scale Landscape projects."

c. "37 Years in Business Licensed & Insured"

d. "All checks are to be made out to Denny Antonious. There are no exceptions unless you hear differently from Denny Antonious. Once our tradesmen have reviewed the work to be done at your home with you he [sic] then will write up a proposal for your approval . . . . All proposals and monies may be given to the tradesmen and will be delivered to the office. Should you have any questions in regard to the above kindly contact me at 610-695-9840."

8. Throughout the brochure is the name of the entity "Your Small Job Specialist," and the telephone number 610-695-9840. The address of this entity listed in the brochure is "1316 West Chester Pike, Suite 113, West Chester, Pennsylvania." Ex. P2. As this address is neither the Antonious residence nor the business address of Mr. John Griffith (to be discussed below), it is probable that Mr. Antonious simply picked up mail addressed to Your Small Job Specialist at the West Chester Pike address.

9. It is also likely that Mr. Antonious used an address with a suite number for "Your Small Job Specialists," rather than his home address, to give the impression that the entity was a substantial company.

10. Mr. Antonious acknowledged that "Your Small Job Specialists" (and the variants mentioned above) is a fictitious name he uses in conducting his business. N.T. at 10:45. It is not a corporation, nor a partnership, and it has no employees. N.T. at 10:40-41.

11. Moreover, "Your Small Job Specialists" does not actually perform any of the work listed in its brochure. N.T. at 10:44-45. Mr. Antonious is not licensed as an engineer or architect. N.T. at 10:43. He has not done any construction work for seven or eight years. N.T. at 10:44. He basically functions as a referral agent. N.T. 11:00; 11:02. Upon Your Small Job Specialists receiving an inquiry or request for service from a homeowner, Mr. Antonious communicates with one or more contractors known to him that he believes is appropriate for the proposed job, and has that contractor visit the homeowner and tender a contractual proposal. If the homeowner and the contractor sent by Mr. Antonious enter into an agreement for work on the proposed project, Mr. Antonious is paid by the contractor a portion of the contract price as a finder's fee. N.T. 11:00, 11:02.

12. Mr. Antonious testified that he informed the Stevenses prior to the signing of any contracts that he acted solely as a referral agent. N.T. at 11:54, 12:02. Mrs. Stevens denied this and testified that she believed that Mr. Antonious and his company would be performing all work done, not some third party. N.T. at 12:14. Mr. Stevens testified that had he known about the true nature of Dennis Antonious' business, he would not have hired "Your Small Job Specialists" to construct the addition to his home. N.T. 9:53. The Stevenses' testimony is more credible. As will be discussed, all payment checks tendered on the project were made payable to Mr. Antonious. The contract signed by Mr. Stevens referred to the entity "Your Small Job Specialists." And when problems developed with the contracting work, the Stevenses communicated with Mr. Antonious. Furthermore, the defendants stipulated that Mr. Antonious holds himself out to the public as a general contractor, not as a referral agent.

13. After speaking with the Stevenses, Mr. Antonious referred Mr. John Griffith to meet with Mr. and Mrs. Stevens to propose a contract for the home improvement work they sought. N.T. at 11:05. Mr. Griffith met with Mr. and Mrs. Stevens at their home. N.T. at 11:05. Neither Mr. nor Mrs. Antonious ever met with Mr. or Mrs. Stevens. N.T. at 10:18, 11:03.

14. After meeting with Mr. Griffith, Mr. Stevens ultimately entered into one or more contracts dated November 14, 2003, November 21, 2003, and July 12, 2004. Ex. P-3. Each of these contracts refers to "Your Small Job Specialists," using the West Chester Pike address, but with a different telephone number than mentioned in the brochure. Each of the con, tracts states: "Make all checks payable to Denny. Antonious." Ex. P-3. The documents offered into evidence contain signatures on the July 12 contract of Mr. Stevens and of John Griffith, signing as "Your Small Job Specialist." Ex. P-3. The two other contracts contain the signature of "John Griffith Your Small Job Specialist". Ex. P-3.

15. Mr. Antonious testified that he had not seen the contracts before the commencement of the Stevenses' state court action against him, N.T. 11:30-31, and that these contracts involved...