In re B.L. Jennings, Inc., Bankruptcy No. 03-4928-3F1.

• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida
• Citation: 373 B.R. 742
• Docket Number: Bankruptcy No. 03-4928-3F1.,Adversary No. 03-345.,Adversary No. 03-473.,Bankruptcy No. 03-4937-3F1,,Adversary No. 03-203.,Adversary No. 04-107.
• Parties: In re B.L. JENNINGS, INC., et al., Debtors. RKB Investments, et al., Plaintiffs, v. Brandon James Maxfield, et al., Defendants. Janice K. Jennings, Plaintiff, v. Brandon James Maxfield, et al., Defendants. Brandon James Maxfield, Plaintiff, v. Bryco Arms, et al., Defendants. Brandon James Maxfield, Plaintiff, v. Bryco Arms, et al., Defendants.
• Decision Date: 12 June 2007

373 B.R. 742 In re B.L. JENNINGS, INC., et al., Debtors.
RKB Investments, et al., Plaintiffs,
v.
Brandon James Maxfield, et al., Defendants.
Janice K. Jennings, Plaintiff,
v.
Brandon James Maxfield, et al., Defendants.
Brandon James Maxfield, Plaintiff,
v.
Bryco Arms, et al., Defendants.
Brandon James Maxfield, Plaintiff,
v.
Bryco Arms, et al., Defendants. Bankruptcy No. 03-4928-3F1. Bankruptcy No. 03-4937-3F1, Adversary No. 03-203. Adversary No. 03-345. Adversary No. 03-473. Adversary No. 04-107. United States Bankruptcy Court, M.D. Florida, Jacksonville Division. June 12, 2007.

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FINDINGS OF FACT AND CONCLUSIONS OF LAW

JERRY A. FUNK, Bankruptcy Judge.

This proceeding came before the Court for a trial on January 24, 2006, January 25, 2006, January 26, 2006, January 31, 2006, and February 1, 2006. In view of the voluminous exhibits (approximately 3,000) and the record before the Court, the. Court elected to take the matter under advisement and directed the parties to file post-trial memoranda. Upon the evidence and the arguments of the parties, the Court makes the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

Brandon James Maxfield ("Maxfield") is an individual who was injured when a handgun designed by Bruce Jennings, manufactured by Bryco Arms, Inc. ("Bryco"), a firearms manufacturer, and distributed by B.L. Jennings, Inc. ("B.L.Jennings"), a firearms distributor, accidentally discharged and injured him. Maxfield obtained a judgment against Bruce Jennings, Bryco, and B.L. Jennings. Linda Bullard is the mother of William O. Bullard, III, who was allegedly killed by a Bryco handgun. Bullard's claim has not been determined as to either liability or damages. Gary and Deborah Kramer are the parents of Jacob Kramer who was allegedly injured by a Bryco handgun. Kramer's claim has likewise not been determined as to liability or

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damages. The Court classified these three sets of parties as plaintiffs for ease of reference although they are technically defendants in two of the adversary proceedings. In addition to Maxfield, Bullard, and Kramer, there are approximately eleven other parties who were named as defendants in the two declaratory actions filed by the debtors. These parties all alleged damages from firearms manufactured by Bryco and distributed by B.L. Jennings. All of these parties have either been defaulted or otherwise elected not to participate in the trial.

Bruce Jennings was the sole shareholder of B.L. Jennings. Although he was not technically an officer of Bryco, Bruce Jennings was involved in its day-to-day operations, In re Jennings, 332 B.R. 465, 466 (Bankr.M.D.Fla.2005), and' served as a "consultant" to the company since its inception. (Tr. at 935:10-13; 596:16-597:1.) Bryco sold its handguns mainly to B.L. Jennings. (Id.)

Janice Jennings was Bruce Jennings' second wife. Bruce Jennings and Janice Jennings were married in March 1975 and divorced in December 1984. (Maxfield's Exs. 697, 699.) Bruce Jennings' divorce from Janice Jennings incorporated a detailed Marital Settlement Agreement. (Tr. at 99:8-14.) Bruce Jennings and Janice Jennings had two children of the marriage, Kimberly Jennings and Bradley Jennings. (Maxfield's Ex. 697.) Bruce Jennings also has a daughter from a previous marriage, Rhonda Jennings. (Tr. at 98:23-25.) Bryan Miller was Bruce Jennings' stepson (Tr. at 55:8-9), who passed away on April 24, 1987.¹ (Tr. at 57:13-15.)

California Trusts

In May 1981, Bruce Jennings and Janice Jennings established the Rhonda D. Jennings California Trust and the Kimberly K. Jennings California Trust, and in February 1983, Bruce Jennings and Janice Jennings established the Bradley A. Jennings California Trust (collectively the "California Trusts"). (Debtors' Exs. 782-784.) Bruce Jennings and Janice Jennings were co-trustees of the California Trusts. (Id.) The respective beneficiaries of the California Trusts were Rhonda Jennings, Kimberly Jennings, and Bradley Jennings. The California Trusts, by their terms, call for the distribution of the trust res to the beneficiary upon his or her twenty-fifth birthday. (Debtors' Exs. 782-784.) In June 1992, the Rhonda D. Jennings California Trust matured and was distributed to Rhonda Jennings pursuant to the terms of the trust instrument. (Tr. at 474:12-24.)

The California Trusts filed separate tax returns from their inception up to and including their filing for bankruptcy. (Debtors' Exs. 16-51, 68-101, 103-121.) The California Trusts kept separate books and records from the other defendants in these adversary proceedings. (Debtors' Exs. 1-121.)

RKB Investments

In 1987, Bruce Jennings and Janice Jennings, as co-trustees of the California Trusts, created RKB Investments ("RKB"), a California General Partnership, the three general partners of which were the California Trusts. (Debtors' Ex. 224.) RKB's purpose was to develop real estate in California. Bruce Jennings managed RKB's real estate portfolio. (Tr. at 162:7 — 13). Janice Jennings' duties with RKB were to manage its checkbooks and business records. (Tr. at 862.) Janice Jennings also signed RKB's tax returns. (Tr.

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at 978:3-4.) The Statement of Partnership for RKB, which was recorded in the public records, designated Janice Jennings as the agent of the partnership authorized to sign any documents necessary to transact partnership business. (Debtors' Ex. 265.) Although Bruce Jennings and Janice Jennings testified that they "managed" RKB together as "co-trustees" (Tr. at 862:4-11; 977:25-978:1), the Court finds that Bruce Jennings managed RKB and that Janice Jennings' management of RKB was limited to Bruce Jennings' instruction. RKB has always maintained separate bank accounts from all of the other debtors in these proceedings. (Debtors' Exs. 225-263, 274.)

The following discussion centers on evidence which was presented to the Court in the form of a chart. That chart has been duplicated as follows, with unnecessary evidence having been deleted. The chart references financial transactions which occurred between Bruce Jennings, RKB and the California Trusts beginning in 1987 and ending in 2004.²

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                 A B C D E F G H I
                -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                 Bruce
                 Bruce CA Trusts RKB CA Trusts Jennings
                RKB investments/CA Trusts' Debt To Jennings Take Income Tax Investments Bruce Cumulative Investment
                Bruce Jennings' Bankruptcy Estate Date Takings in/out in/out Paid by CA Profits Jennings In/Out with
                 of RKB of RKB Trusts Net of Cumulative (With Credit Proportional
                Activity Investments Investments Income Tax in/out For All Share RKB
                 and Income Tax Investments
                 Expense Payments) Net Profits
                 (no interest)
                -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                 Initial RKB contribution claimed on behalf of CA
                1 Trusts 08/25/87 93,000 0 93,000 0
                2 Purchase of Crestview property 09/08/87 2,350,000 2,350,000 93,000 2,350,000
                3 Year End 12/31/87 8,290 33,321 2,350,000 101,290 2,371,944
                 Bruce Jennings transfers Carter Court to RKB
                4 Investments 02/17/88 361,500 2,711.500 101,290 2,743,444
                5 Funds added for Carter/Cowan 1031 Exchange 03/02/88 938,939 3,650,000 101,290 3,682,383
                6 Year End 1988 12/31/88 25,455 67,220 3,650,000 126,745 3,747,348
                7 Year End 1889 12/31/89 -90,000 61,359 74,240 3,650,000 98,104 3,819,645
                8 Year End 1990 12/31/90 -362,724 80,106 82,116 3,650,000 -184,514 3,901,761
                9 Deposit for Shoreview lot purchase 08/29/91 50,000 3,700,439 -184,514 3,951,761
                10 Balance for Shoreview lot purchase 12/18/91 900,000 4,600,439 -184,514 4,951,761
                11 Year End 1991 12/31/91 -78,000 45,257 102,565 4,600,439 -217,257 4,954,326
                12 Deposit for Clinton property purchase 01/07/92 200,000 4,800,439 -217,257 5,154,326
                13 Purchase of Harbor Island property 01/07/92 1,752.640 6,553,079 -217,257 6,906,966
                14 Balance for Clinton crooertv purchase 01/28/92 1,649,600 8,202,679 -217,257 8,556,566
                15 RKB Investments cash-out of Rhonda CA Trust 04/12/92 -75,500 8,202,679 -292,757 8,556,566
                

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16 Year End 1992 12/31/92 -45,000 21,863 69,707 8,202,679 -315,894 8,626,273
                17 Year End 1993 12/31/93 37,650 59,550 8,202,679 -278,244 8,685,823
                18 Bruce Jennings Cash Deposit 04/14/94 500,000 8,702,679 -278,244 9,185,823
                19 Purchases of Corte Portofino 08/16/94 415,000 9,117,679 -278,244 9,600,823
                20 Year End 1994 12/31/94 -15,562 122,060 174,649 9,117,679 -171,746 9,775,472
                21 Bruce Jennings Cash Deposit 04/01/95 200,000 9,317,679 -171,746 9,975,472
                 Corte Portofino transferred to Anna Leah
                22 Jennings 05/05/95 -265,000 9,052,679 -171,746 9,710,47223 Ferentz Trust Deed to Anna Leash Jennings 05/24/95 -155,000 8,897,679 -171,746 9,555,472
                24 Bruce Jennings Cash Deposit 09/06/95 200,000 9,097,679 -171,746 9,755,472
                25 Year End 1995 12/31/95 -90,958 5,070 -43,457 9,097,679 -257,634 9,712,015
                26 Year End 1996 12/31/96 100,000 -11,317 65,560 146,818 9,197,679 -203,391 9,958,833
                27 Year End 1997 — Gail Davis deposit 12/31/97 165,000 -62,000 13,280 -179,069 9,362,679 -252,111 9,944,764
                28 Year End 1998 12/31/98 -6,452 133,304 186,912 9,362,679 -125,259 10,131,676
                29 Year End 1999 12/31/99 -1,079,494 86,617 152,982 9,362,679 -1,118,136 10,284,658
                30 Year End 2000 12/31/00 -111,693 48,012 118,181 9,362,679 -1,181,817 10,402,839
                31 Year End 2001 12/31/01 -17,734 123,482 220,742 9,362,679 -1,076,069 10,623,581
                32 Year End 2002 12/31/02 -3,925,860 624,261 1,285,395 9,362,679 -4,377,668 11,908,976
                33 Year End 2003

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