In re Caserta, Bankruptcy No. 91-11072-BKC-AJC. Adv. No. 94-0383-AJC-A.
| Decision Date | 11 May 1995 |
| Docket Number | Bankruptcy No. 91-11072-BKC-AJC. Adv. No. 94-0383-AJC-A. |
| Parties | In re Anthony Sestilio CASERTA, Debtor. Gui L.P. GOVAERT, Trustee, Gerald J. Tobin and Caron Balkany, Plaintiffs, v. SOUTHERN NATIONAL BANK OF NORTH CAROLINA and Anthony S. Caserta, debtor, Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
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Myrna D. Bricker, Semet, Lickstein, Morgenstern, Berger, Friend, Brooke & Gordon, P.A., Coral Gables, FL, for plaintiff Gerald J. Tobin.
Irving M. Wolff, Irving M. Wolff, P.A., Miami, FL, for debtor Anthony S. Caserta.
Richard Siegmeister, Miami, FL, for Trustee Gui L.P. Govaert.
Gui L.P. Govaert, Trustee, Miami, FL.
THIS CAUSE came on to be heard on May 4, 1995 upon Plaintiff Gerald J. Tobin's Motion For Summary Judgment and Debtor's Cross Motion For Summary Judgment. The Court having reviewed the motions and having examined the pleadings, memoranda, depositions and answers to interrogatories and the Court being otherwise advised in the premises, hereby determines as follows.
In order to prevail on a motion for summary judgment, the movant must meet the statutory criteria set forth in Rule 56 of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7056. Rule 56(c) reads in part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issues as to any material fact and that the moving party is entitled to a judgment as a matter of law.
The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if it "might affect the outcome of the suit under governing law." Id. at 247, 106 S.Ct. at 2510.
The burden is on the moving party to show that no genuine issue of material fact is in dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). There is no genuine issue for trial if the record, taken as a whole, does not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "If the evidence is merely colorable or is not significantly probative, summary judgment may be granted". Anderson, 477 U.S. at 249-250, 106 S.Ct. at 2511 (citations omitted).
The party seeking summary judgment always bears the initial responsibility of informing the Court of the basis for its motion, identifying those portions of the "pleadings, depositions, answers to interrogatories, and affidavits, if any", which it believes demonstrates the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. Once the motion is supported by a prima face showing that the moving party is entitled to judgment as a matter of law, a party opposing the motion may not rest upon the mere allegations or denials in its pleadings; rather, its response must show that there is a genuine issue for trial. Anderson, 477 U.S. at 247, 106 S.Ct. at 2510; Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. Debtor's Response and Cross Motion For Summary Judgment do not address the substantive issues of fact or law presented in Tobin's motion for summary judgment. Rather, Debtor contends that as a consequence and/or legal effect of prior proceedings, neither Tobin nor either of the other Plaintiffs has a right to prosecute actions to bar Debtor's discharge. The Court will address this argument in the body of its opinion.
In support of his motion for summary judgment, Tobin has submitted the depositions of Carroll Garland, loan officer, and Patricia Vines, loan processor, both of Southern National Bank, the depositions of Caron Balkany, of Debtor's son David T. Caserta and a deposition of Debtor dated January 6, 1995. In addition, Tobin has presented transcripts or portions thereof of Bankruptcy Rule 2004 examinations of Debtor taken on September 6, 1991 and on January 31, 1992; the Schedules and Statement of Financial Affairs of Debtor; and Debtor's Responses to Interrogatories. Tobin has attached to his motion a number of documentary exhibits to which he has referred, where applicable.
Anthony S. Caserta, Debtor herein, filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on March 14, 1991. Debtor is a real estate broker licensed in the State of Florida, who has invested in real estate and has put together real estate investment packages for himself and numerous other associates and investors in Florida and in North Carolina over the past 25 years or so.
Debtor owned at the time of his petition in bankruptcy a chalet located on 5 acres of land in Watauga County, North Carolina. Southern National Bank of North Carolina has held a first mortgage on the chalet property since November, 1988. In arranging loans for himself or for members of his immediate family, or in negotiating other banking transactions as a representative of his numerous investment groups in North Carolina, Debtor frequently conducted banking business with Southern National Bank. Carroll Garland was the loan officer who handled Debtor's account. At the time of Debtor's petition in bankruptcy, Debtor owed the Bank approximately $85,000.00 on the first mortgage encumbering the 5 acres and chalet property and an additional $90,000.00 on an unsecured Note dating back to September 10, 1990, a Note which consolidated and renewed two other outstanding unsecured obligations of Debtor. In addition, Debtor was liable on a personal guarantee in the amount of $80,000.00 in connection with loans to Timberlakes Resorts, Inc., one of Debtor's investment projects in North Carolina. Exhibits 6, 7, and 8; Garland and Vines Depositions.
In August 21, 1991, a few months after the bankruptcy petition was filed, Debtor executed a Promissory Note in favor of Southern National Bank and Second Deed of Trust on the 5 acres and chalet property in the amount of $89,502.75, the balance outstanding on the September 10, 1990 unsecured note, thereby granting to the Bank a second mortgage on the property. Garland deposition p. 49; Exhibit 9. The Second Deed of Trust converted Debtor's pre-petition unsecured debt to secured debt and allowed the Bank to extend its mortgage lien to encumber the full value of 5 acres and chalet property. Garland deposition, p. 60-62; Exhibits 14 and 15. Neither Debtor nor the Bank sought Court approval of the transaction or advised the trustee or creditors of the post petition transaction.
In addition, Debtor and the Bank arranged and executed documents for the assignment to the Bank of a Promissory Note made by Ralph A. Federici, Jr. and Lourdes Federici in favor of Debtor in the principal amount of $18,750.00, secured by a Deed of Trust on approximately 4.5 acres of real property in North Carolina, in which Debtor claimed to hold an interest merely as trustee. The assignment of the Federici Deed of Trust dated February 4, 1992 was given by Debtor to the Bank as additional collateral to secure the Second Deed of Trust on the chalet property. Garland deposition p. 49-50; Exhibit 10; Caserta deposition 1/06/95; p. 96-97. Southern National Bank has received payments in the amount of $6,800.00, which the Bank has applied to reduce the second mortgage. Garland deposition p. 50-51. Neither the Court nor the trustee was informed of this transaction.
In April, 1992, Debtor negotiated a loan from Southern National Bank to his son David in the amount of $61,052.75, the entire proceeds of which were applied by the Bank to further reduce the unauthorized second mortgage. This Note was secured by an assignment of 30,000 shares of stock held in the name of Debtor's son in an entity known as NCV, Inc. a real estate development located in Linville, North Carolina. Debtor has repeatedly denied any interest in NCV, Inc., claiming that this property has always belonged exclusively to his son. Garland deposition p. 63-65; Exhibits 11, 12. Debtor did not inform the trustee or seek court authorization for any of these post petition transactions.
Unbeknownst to the trustee, Debtor rented the chalet property to tenants during these proceedings, collecting rent for approximately a year and a half in the amount of $700.00 per month. Garland deposition p. 114; Caserta deposition 1/06/95 p. 108-109; Exhibit 15.
This adversary proceeding was commenced by Gui L.P. Govaert, Trustee, Caron Balkany and Gerald J. Tobin against Southern National Bank of North Carolina and Debtor, in which all three plaintiffs asserted claims against the Bank for willful violation of the automatic stay, equitable subordination and for damages on a number of theories. The five-count complaint included one count against Debtor for denial of discharge pursuant to 11 U.S.C. § 727(a)(2)(B), alleging post petition concealment of assets in connection with certain of Debtor's transactions with the Bank. The claims against the Bank have been resolved by a stipulation of settlement among all three plaintiffs and the Bank. The settlement has been approved by the Court and has resulted in the dismissal of the action against the Bank.
Prior to the commencement of this adversary proceeding, Tobin had pending an adversary proceeding against Debtor, asserting a claim for damages for fraud concerning some pre-petition dealings with Debtor in connection with the now defunct...
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