In re Caremerica, Inc.
| Decision Date | 23 July 2009 |
| Docket Number | Bankruptcy No. 06-02913-8-JRL.,Adversary No. L-08-00174-8-JRL. |
| Citation | 409 B.R. 737 |
| Court | U.S. Bankruptcy Court — Eastern District of North Carolina |
| Parties | In re CAREMERICA, INC., Debtor. James B. Angell, Trustee, Plaintiff v. Ber Care, Inc., f/k/a PPS, Inc., Adcar, Inc., Ann H. Day, Antonia P. Elliott f/k/a Antonia Ferrara, Joseph Alex Cannon Jr., Cher Cannon, Diversified Enterprise, Inc., d/b/a Cannon Construction, Cape Associates, LLC, Capital Resource Solutions, LLC, Carolina Long Term Care, LLC, d/b/a Carolina Care, LLC, City of Kinston, City of Wilson, Crescent State Bank, DeltaCom, Inc., Dona H. Burrell, First Eastern, LLC, GEMSA Loan Services, LP, Institution Food House, Inc., Institutional Services, LLC, Jette Ferrell, John F. Smith, III, Joshua Houghton, National Assisted Living Risk Retention Group and/or Rinklin-Shuttleworth of Georgia, LLC, Opesnet Corporation, Pachki, Inc., d/b/a Andy Anderson Agency, Pinewood Associates, a General Partnership and/or Pinewood of Pink Hill, LLC, Powell Properties of Durham County, LLC, Red Mortgage Capital, Inc., Robert D. Shelley, Dawn O. Rowland and/or Walter D. Rowland, Saundra Etheridge, Stanley E. Brunson, Jr., Susan W. Simms, WFY, LLC, Robert D. Shelley d/b/a WYC, LLC, and/or Ed Prince d/b/a WYC, LLC, Defendants. |
James B. Angell, Raleigh, NC, pro se.
Philip W. Paine, Howard, Stallings, From & Hutson, P.A., Raleigh, NC, for Plaintiff.
C. Christopher Smith, C. Christopher Smith, P.A., Lumberton, NC, David W. Long, Poyner & Spruill, Jason L. Hendren, Hendren & Malone, PLLC, William P. Janvier, Everett Gaskins Hancock & Stevens, LLP, Christopher T. Graebe, Douglas Hanna, Mark R. Sigmon, Graebe Hanna & Welborn, PLLC, Terri L. Gardner, Nelson Mullins Riley & Scarborough, LLP, Robert K. Imperial, Williams Mullen Maupin Taylor, William E. Brewer, Jr., The Brewer Law Firm, Bettie Kelley Sousa, Smith Debnam, Gerald A Jeutter, Jr., Raleigh, NC, Patrick Donovan Riley, Rose Rand Attorneys, P.A., Michael P. Peavey, Stephen L. Beaman, Stephen L. Beaman, PLLC, Wilson, NC, Emily C. Weatherford, John A. Northen, Northen Blue LLP, Chapel Hill, NC, Edwin L. West, III, Rountree Losee & Baldwin, LLP, Algernon L. Butler, Jr., Butler & Butler, L.L.P., David L. Ray, Fletcher, Ray & Satterfield, LLP, Wilmington, NC, John S. Williford, Jr., Fields & Cooper, PLLC, A. Scott McKellar, Battle, Winslow, Scott & Wiley, PA, Rocky Mount, NC, J. Samuel Gorham, III, Gorham, Crone, Green & Steele, LLP, Hickory, NC, Travis Sasser, Cary, NC, Paul A. Fanning, Ward and Smith, P.A., Greenville, NC, Stephen G. Inman, Fayetteville, NC, for Defendants.
Antonia P. Elliott, pro se.
CAPE Associates, LLC, pro se.
Capital Resource Solutions, LLC, pro se.
Crescent State Bank, pro se.
Institutional Services, L.L.C., pro se.
National Assisted Living Risk Retention Group, pro se.
Rinklin-Shuttleworth of Georgia, LLC, pro se.
The matters before the court are the motions to dismiss the adversary proceeding by First Eastern, LLC, Powell Properties of Durham County, LLC, Susan Simms, DeltaCom, Inc., Carolina Long Term Care, LLC, GEMSA Loan Services, Limited Partnership, Red Mortgage Capital, Inc., Stanley Brunson, Jr., Pachki, Inc. d/b/a Andy Anderson Agency, Dona H. Burrell, Cher Cannon, Joseph Alex Cannon Jr., Diversified Enterprise, Inc., John F. Smith III, OPESNET Corp., BER Care., Inc., Antonia P. Elliott, and Saundra Etheridge, the motion to amend complaint by the trustee, and the motion for severance of claims by First Eastern, LLC and Powell Properties of Durham County, LLC. The court held a hearing on these matters on May 21, 2009 in Raleigh, North Carolina.
This court has jurisdiction over the parties and the subject matter of this proceeding pursuant to 28 U.S.C. §§ 151, 157, and 1334, and the General Order of Reference entered by the United States District Court for the Eastern District of North Carolina on August 3, 1984. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), which this court may hear and determine.
1. On September 15, 2006, Caremerica, Inc., Caremerica Adult Care, Inc., The Meadows of Hermitage, Inc., The Meadows of Fayetteville Inc., and The Meadows of Wilmington, Inc. each filed a petition for relief under chapter 11 of the Bankruptcy Code. These cases were subsequently converted to cases under chapter 7. On February 4, 2008, the court entered an order allowing the substantive consolidation of the debtors and the appointment of a trustee. These consolidated cases are administered under the case of Caremerica, Inc., 06-02913-8-JRL.
2. On the date of petition, the debtors operated adult care homes in eastern North Carolina. The debtors leased the buildings used to operate these adult care homes.
3. Ronald E. Burrell, Michael R. Elliott, and Susan Simms are shareholders and officers of the debtors.
4. Ronald E. Burrell, Michael R. Elliott, and John Smith were the principal owners of BER Care, Inc. on the date of filing of this adversary proceeding. BER Care, Inc. was formerly known as PPS, Inc.
5. The trustee filed an adversary proceeding in this court on September 15, 2008. The trustee sought in his complaint to avoid and recover certain alleged preferential and fraudulent transfers made by the debtors to BER Care, Inc and subsequently transferred to the defendants. The complaint contained a list of the total amounts of preferential and fraudulent transfers alleged to have been received by each defendant. In addition, each defendant was listed as either an insider or non-insider.
6. On December 15, 2008, the trustee filed an amended and restated complaint to avoid and recover preferential and fraudulent transfers (the "Amended Complaint"). Attached to the Amended Complaint was a bank statement from a bank account in the name of PPS Inc. for the period between February 1, 2006 and February 28, 2006.
7. On December 23, 2008, the trustee filed a motion for leave to amend his complaint.
8. On February 5, 2009, the trustee filed an amended and restated motion to amend complaint. Attached to this motion to amend was a new Exhibit B. Exhibit B contained a list of each alleged transfer and included specific amounts, dates, check numbers, payee reference numbers, names of payees, account numbers and account names corresponding to each transfer. In addition, Exhibit B included bank statements from the account of PPS, Inc. for the months of September 2005 through March 2006.
9. Between November 4, 2008 and April 23, 2009, various defendants filed motions to dismiss for failure to state a claim upon which relief can be granted, including First Eastern, LLC, Powell Properties of Durham County, LLC, Susan Simms, DeltaCom, Inc., Carolina Long Term Care, LLC, GEMSA Loan Services, Limited Partnership, Red Mortgage Capital, Inc., Stanley Brunson, Jr., Pachki, Inc. d/b/a Andy Anderson Agency, Dona H. Burrell, Cher Cannon, Joseph Alex Cannon Jr., Diversified Enterprise, Inc., John F. Smith III, OPESNET Corp., BER Care., Inc., Antonia P. Elliott, and Saundra Etheridge (collectively, the "Movants"). On July 6, 2009, Pinewood Associates and Pinewood of Pink Hill, LLC also filed a motion to dismiss.
10. On March 5, 2009, First Eastern, LLC and Powell Properties of Durham County, LLC filed a motion for severance of claims.
A pleading which states a claim for relief must contain "a short and plain statement of the claim showing that the pleader is entitled to relief...." FED. R.CIV.P. 8(a)(2); FED. R. BANKR.P. 7008. A statement showing entitlement to relief under Rule 8(a)(2) must include "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. FED.R.CIV.P. 12(b)(6); FED. R. BANKR.P. 7012(b). In order to survive a motion to dismiss, a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. at 1965 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).
The Movants contend that the Amended Complaint fails to state a claim upon which relief can be granted and therefore should be dismissed pursuant to Rule 12(b)(6). Specifically, the Movants assert that the Amended Complaint fails to allege facts sufficient to show why the Trustee is entitled to avoid alleged preferential transfers under § 547 of the Bankruptcy Code. The Supreme Court recently adopted a heightened pleading standard for claims for relief under Rule 8(a)(2) and the requirements for claims to survive a motion to dismiss under 12(b)(6). Thus, the court will examine the new pleading standard for claims for relief as set forth in two recent decisions by the Supreme Court. Next, the court will apply the new pleading requirements to the trustee's preference claims in determining whether to allow the defendants' motions to dismiss.
Prior to Bell Atl. Corp. v. Twombly, the standard for determining the sufficiency of a complaint under Rule 8(a)(2) was found in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The Supreme Court articulated in Conley that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46, 78 S.Ct. at 102. Until recently, courts had generally embraced the liberal...
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