In re Bath
| Decision Date | 19 October 2010 |
| Docket Number | Bankruptcy No. 09–14724.,Adversary No. 09–0304. |
| Citation | 442 B.R. 377 |
| Parties | In re Thomas A. BATH, d/b/a Infinia Builders LLC, Debtor.Monarch Capital Corp., Plaintiffv.Thomas A. Bath, d/b/a Infinia Builders LLC, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
OPINION TEXT STARTS HERE
Gabriel H. Halpern, Pinilis Halpern LLP, Morristown, NJ, for Plaintiff.James W. Zerillo, Gultanoff & Associates, Norristown, PA, for Defendant.
Presently before me is the motion filed by plaintiff Monarch Capital Corp. for partial summary judgment against the debtor/defendant Thomas A. Bath.
Monarch filed a three count complaint against the debtor. In Count I, Monarch asserts that it holds a nondischargeable debt against the debtor pursuant to 11 U.S.C. § 523(a)(2). In Count II, it seeks a determination of nondischargeability under 11 U.S.C. § 523(a)(6). And in Count III, Monarch objects to the debtor's chapter 7 discharge under 11 U.S.C. § 727(a)(2), (a)(4), and/or (a)(7).
After the debtor filed a timely answer in opposition to all three counts, Monarch filed a motion for summary judgment as to Count I only. The debtor then filed an answer opposing such relief.
Upon consideration of the oral arguments of counsel, as well as the memoranda, declarations and exhibits filed in support of their respective positions, I conclude, for the following reasons, that Monarch's motion for summary judgment as to Count I must be granted.
The following material facts (with one exception noted below) are not in dispute.
Monarch is a New Jersey corporation with offices located in West Caldwell, New Jersey. Complaint and Answer, ¶ 4. Infinia Builders, LLC is a limited liability company located in Norristown, Pennsylvania. Debtor Thomas Bath is the president and sole owner or member of Infinia. Complaint and Answer, ¶¶ 5–6.1 Infinia occasionally would hire employees. Otherwise, the sole employee was Mr. Bath. Debtor's Answer in Opposition to Summary Judgment, ex. B (Bath Deposition, at 9). Infinia is no longer doing business. Id., Bath Deposition, at 37.
Charles Alario is the “principal” of CPA of New Jersey, Inc., as well as another entity known as Buffets of New Jersey, Inc. Bath Declaration, ¶ 2. Mr. Alario, on behalf of CPA, engaged Infinia to construct a Golden Corral restaurant in Howell, New Jersey. Bath Declaration, ¶ 1. In connection with the construction of this restaurant, Infinia was to obtain and install all necessary restaurant equipment. Bath Declaration, ¶ 3; Bath Deposition, at 31.
On or about September 13, 2007, Infinia prepared and sent to Mr. Alario a nine-page invoice, signed by Mr. Bath, itemizing in detail each and every item of equipment that was to be purchased and installed in the Howell restaurant. Motion, ex. A. The invoice, with installation costs included, totaled $804,126. Id. On October 10, 2007, Infinia prepared a revised invoice. Id. This revised invoice, signed by Mr. Bath, stated:
+--------------------------------------------+
¦ ¦Total Amount of Order: ¦$804,126.00¦
+--+-----------------------------+-----------¦
¦ ¦Amount received from owner ¦$204,126.00¦
+--+-----------------------------+-----------¦
¦ ¦Net Balance ¦$600,000.00¦
+--+-----------------------------+-----------¦
¦ ¦Deposit ¦$300,000.00¦
+--+-----------------------------+-----------¦
¦ ¦upon delivery ¦$150,000.00¦
+--+-----------------------------+-----------¦
¦ ¦upon installation ¦$150,000.00¦
+--+-----------------------------+-----------¦
¦ ¦ ¦ ¦
+--+-----------------------------+-----------¦
¦ ¦Total Net Balance ¦$600,000.00¦
+--------------------------------------------+
Motion, ex. A.
Monarch, which lends money for the purchase and leasing of equipment, James Jenco Declaration, ¶ 2, entered into a purchase money security agreement with CPA which was signed by CPA on October 3, 2007 and accepted by Monarch on October 11, 2007. Complaint and Answer, ¶ 7; Jenco Declaration, ¶ 4; Motion, ex. B. The collateral is described as “[v]arious restaurant and food service equipment ...” located at Golden Corral in Howell, New Jersey.
In connection with this agreement, Monarch agreed to lend to CPA the sum of $600,000 in order for CPA to purchase equipment to be installed in a Golden Corral restaurant owned by CPA and located in Howell, New Jersey. Jenco Declaration, ¶ 4. In the security agreement, CPA consented to be sued in New Jersey. Motion, ex. B, ¶ 15.
Also on October 11, 2007, Infinia sent by facsimile transmission a letter on CPA letterhead. Motion, ex. C; Bath Deposition, at 54.2 This transmission was addressed to and sent to Monarch, was signed by Mr. Alario and was “agreed to” by Mr. Bath as president of Infinia. Id. This letter stated in full:
Monarch Capital Corporation1120 Bloomfield AvenueWest Caldwall, NJ 07006
Gentlemen:
Contemporaneously herewith, we are furnishing to you an Acceptance Certificate dated ____, 2007 for all of the equipment (the “Equipment”) covered by the Purchase Money Security Agreement No. 094500 dated October 3, 2007 (the “Security Agreement”), between you as Secured Party and us as Debtor. Although said Acceptance Certificate covers all of the Equipment, having a total original cost of $804,126.00, the Equipment has not in fact all been delivered and/or installed. To date, we have provided a deposit on Equipment in the amount of $204,126.00 to Infinia Builders, LLC, 1920 West Marshall Street, Bldg. 1, West Norriton, Pennsylvania 19403 (the “Vendor/Seller”), leaving a balance of $600,000.00 payable to Vendor/Seller.
Notwithstanding such non-delivery of the Equipment, we hereby authorize and request you or your assignee to pay the sum of $300,000.00 to Vendor/Seller as soon as possible. We further authorize you or your assignee to pay the sum of $150,000.00 to Vendor/Seller upon delivery of all of the Equipment, and a final payment of $150,000.00 upon installation and our complete acceptance of the Equipment.
We agree that the Security Agreement shall commence on the date hereof and that our obligations hereunder, including (without limitation) our obligation to make rental payments, shall not be affected in any respect whatsoever by the failure of Vendor/Seller to deliver and/or install any or all of the Equipment satisfactorily to us, and that we shall not assert any claim against you or your assignee as a result of this agreement.
We shall indemnify, defend and hold you and your assignee, jointly and severally, harmless from and against any and all losses, claims, suits, actions, liabilities, damages, costs and expenses (including attorneys' fees) arising directly or indirectly out of any claim by Vendor/Seller as a result of this agreement. Vendor/Seller shall indemnify, defend and hold you and your assignee harmless from and against any and all losses, claims, suits, actions, liabilities, damages, costs and expenses (including attorneys' fees) arising directly or indirectly out of any claim by us for the cost of the Equipment or as a result of this agreement.
Except as modified herein, all of the terms of the Lease shall continue in full force and effect. This agreement shall inure to the benefit of each of you and your respective successors and assigns. By their execution, Vender/Seller agrees to all of the terms and conditions of this agreement.
Very truly yours,
CPA of New Jersey Inc.
Motion, ex. C (emphasis in original).
On October 18, 2010, Monarch sent $300,000 by wire transfer to Infinia's account with Wachovia Bank. Jenco Supplemental Declaration, ex. C. It is also undisputed that CPA provided $204,126 to Infinia. On receipt of these funds, Mr. Bath deposited them into the same Wachovia bank account. Bath Deposition, at 38.
Monarch avers and Mr. Bath does not deny that, before Monarch sent $300,000 to Infinia, Mr. Jenco spoke with him and confirmed that “he was the vendor of the restaurant equipment which was to be installed at the Golden Corral restaurant.” Jenco Declaration, ¶ 6. Also not denied is that Mr. Bath sent to Mr. Jenco copies of the two equipment invoices mentioned above. Jenco Declaration, ¶ 8.3 Mr. Bath further acknowledged that he understood that Monarch was providing “financing for the equipment,” and that CPA was “leasing” 4 that equipment from Monarch. Bath Deposition, at 47. In addition, Mr. Bath admitted that he confirmed with Mr. Jenco “that I had received $204,000 that was to be used ultimately towards equipment purchase.” Bath Deposition, at 57.
Monarch further avers but Mr. Bath does deny that Mr. Bath orally represented to Mr. Jenco that he was in possession of the equipment and would begin delivery to the Howell restaurant upon receipt of $300,000. Jenco Declaration, ¶ 7; Bath Declaration, ¶ 5; Bath Deposition, at 49.
There is no dispute that Infinia actually received and spent the $300,000 wire transfer from Monarch. Nor is there any dispute that Infinia also received $204,026 from CPA of New Jersey and spent those funds as well. Bath Declaration, ¶ 4. The latter were the only funds received by Infinia from CPA or Mr. Alario in connection with the Howell restaurant project. Bath Deposition, at 38.
There is also no dispute that Infinia did not order or purchase any equipment for the Howell, New Jersey restaurant. Instead, Mr. Bath, through Infinia, swears that he used all the Monarch and CPA funds to pay the costs of engineering, architectural drawings, site analysis, necessary permits and other...
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