In re Canyon Systems Corp., Bankruptcy No. 97-33774.
Citation | 343 B.R. 615 |
Decision Date | 31 March 2006 |
Docket Number | Adversary No. 03-2605. [DO Adversary No. 03-2606. [DO Adversary No. 03-2607. [DO Adversary No. 03-2609. [DO Adversary No. 03-2610. [DO Adversary No. 03-2611. [DO Adversary No. 03-2612. [DO Adversary No. 03-2613. [DO Adversary No. 03-2614. [DO Adversary No. 03-2615. [DO Adversary No. 03-2616.,Bankruptcy No. 97-33774. |
Parties | In re CANYON SYSTEMS CORPORATION, Debtor. John Paul Rieser, Trustee, Plaintiff, v. Dennis Hayslip, et al., Ron Piljay, et al., Camden Enterprises, Lynn A. Kubal, Rose Kubal, Gail D. Mayes, Gregory N. Mayes, Gregory McCollum, Gerald L. Wendling, Mary A. Wilkie, and Nena Grant, Defendants. |
Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Southern District of Ohio |
John Paul Rieser, Patricia Friesinger, Dayton, OH, for Plaintiff.
Thomas R. Noland, Tina Woods, Dayton, OH, for Defendants Huffman, Marohl, Osier, Piljay, Camden Enterprises, Lynn A. Kubal, Rose Kubal, McCollum, Wendling, Wilkie and Grant.
Gary C. Schaengold, Dayton, OH, for Defendant Scott Johnson.
Melissa K. Schindler, Dayton, OH, Richard B. Reiling, Springboro, OH, for Defendants Schraeder, Withrow, Julia Carmack and Jeffrey Carmack.
Barry S. Galen, Dayton, OH, for Debtor.
Pending before the Court in these adversary proceedings are identical motions for partial summary judgment (collectively, "Motion") filed by the Plaintiff, John Paul Rieser, Chapter 7 Trustee ("Rieser" or "Trustee"), against all remaining defendants ("Defendants") in all remaining adversary proceedings in the bankruptcy case of Canyon Systems Corporation ("Canyon" or "Debtor"). For the reasons explained below, the Motion is granted in part and denied in part.
The Court has jurisdiction to hear and determine these adversary proceedings pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. These are core proceedings. 28 U.S.C. § 157(b)(2).
Canyon filed a voluntary Chapter 11 petition on July 7, 1997 ("Petition Date"), following the collapse of its gold coin sales programs.1 These programs promised participants large profits from purchasing and selling gold bullion coins. Less than a month after the Chapter 11 case was filed, and after the United States Trustee had moved to convert the case to a Chapter 7 liquidation proceeding, or in the alternative to appoint a Chapter 11 trustee, Canyon agreed to convert to Chapter 7. Rieser was appointed Chapter 7 Trustee.
On July 6, 1999, the Trustee filed in excess of 400 adversary proceedings to recover money from individuals and companies who had bought or sold gold coins through one of Canyon's programs. The complaints contain multiple federal and state law causes of action, but the gravamen of each is that prepetition transfers of cash and gold coins made to participants in Canyon's gold coin sales programs — which the Trustee alleges constituted a Ponzi scheme — are subject to avoidance and recovery. On March 29, 2000, Judge William A. Clark, the judge originally assigned to the Canyon case, entered an order reassigning the case and all related adversary proceedings to Judge Hoffman.
After his appointment as Trustee, Rieser pursued a strategy of negotiating settlements with all investors in the alleged Ponzi scheme before forging ahead with the litigation against the Defendants, each of whom he asserts played a larger role in Canyon than being a mere investor in the scheme — some were officers, directors and/or key employees of Canyon, while others were relatives of Jackson Johnson ("Jack Johnson"), the founder, President and CEO of Canyon. Thus, the Trustee asked that trial on the complaints naming the Defendants ("Complaints") be deferred until the other nearly 400 adversary proceedings had been resolved. Counsel for the Defendants did not challenge the Trustee's decision to defer a day of reckoning. In fact, counsel for most of the Defendants sought, and received, multiple extensions of time to answer, move or otherwise plead (some spanning more than a year) in response to the Complaints. Over the ensuing several years, Rieser settled or dismissed his claims against all parties to the Canyon adversary proceedings except the Defendants identified below:2
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