In Re Frank A. Amelung

• Citation: 436 B.R. 806
• Decision Date: 17 September 2010
• Docket Number: Bankruptcy Nos. 09-90004-DD, 07-15492-PGH.,Adversary No. 09-80182-DD.
• Court: United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — District of South Carolina
• Parties: In re Frank A. AMELUNG and Eugenia Marie Amelung, Debtors. Michael R. Bakst, Plaintiff, v. Robert J. Probst, Defendant.

436 B.R. 806

In re Frank A. AMELUNG and Eugenia Marie Amelung, Debtors.
Michael R. Bakst, Plaintiff,
v.
Robert J. Probst, Defendant.

Bankruptcy Nos. 09-90004-DD, 07-15492-PGH.
Adversary No. 09-80182-DD.

United States Bankruptcy Court,D. South Carolina.

Sept. 17, 2010.

436 B.R. 807

Frank A. Amelung, pro se.

Eugenia Marie Amelung, pro se.

Robert Frank Anderson, Columbia, SC, for Plaintiff.

Gene Trotter, Columbia, SC, for Defendant.

JUDGMENTDAVID R. DUNCAN, Bankruptcy Judge.

Based on the findings of fact and conclusions of law set forth in this Court's Order, Plaintiff is awarded Judgment against Defendant. The Court sets aside the transfer by Debtor to Defendant and holds that Plaintiff should recover the transfer.

ORDER

The relief set forth on the following pages, for a total of 8 pages including this page, is hereby ORDERED.

436 B.R. 808

ORDER

This matter is before the Court on Chapter 7 Trustee Michael R. Bakst's (“Plaintiff”) Complaint against Robert J. Probst (“Defendant”) to recover a $10,000 payment made by Frank A. Amelung (“Debtor”) to Defendant. Plaintiff filed his Complaint on November 16, 2009 and an Amended Complaint on February 9, 2010. Defendant filed his Answer on February 12, 2010. A trial was held on September 9, 2010. The Court makes the following Findings of Fact and Conclusions of Law pursuant to Fed.R.Civ.P. 52, made applicable to this matter by Fed. R. Bankr.P. 7052.

FINDINGS OF FACT

Debtors Frank and Eugenia Amelung filed a Chapter 7 bankruptcy on July 13, 2007 in the Southern District of Florida. Debtors' schedules and the proofs of claim filed in the bankruptcy case reflect over $100 million in debt. The assets of these Debtors are worth significantly less. Two of the proofs of claim filed in this case reflect debts that date back to early 2003 (claim # 1 by SunTrust approximating $93,000 and claim # 2 by BB & T approximating $111,000). An adversary proceeding was commenced in that district by Plaintiff on November 16, 2009, and the proceeding was transferred to this Court on October 30, 2009. Plaintiff Bakst is the appointed Chapter 7 trustee.

Debtor was involved in a planned renovation project on Richland Fashion Mall in 2004-05 which ultimately failed. The bankruptcy schedules disclose an unspecified interest of Debtor in Richland Mall, LLC (“Richland Mall”). Defendant Probst is a licensed South Carolina architect. In December 2004, Defendant Probst was hired and entered into an oral contract to perform architectural design work for the Richland Fashion Mall project, which he completed. Defendant's contact for the project was Mike Lester, an agent for undisclosed principals. Defendant, at the direction of Mr. Lester, addressed invoices for his services to Richland Mall, LLC. He received payments from several different sources throughout his involvement with the Richland Mall project. Defendant had little to no contact with Debtor during his work on the project, but received from Mr. Lester a $10,000 payment for his services drawn on Debtor's personal bank account on January 24, 2005.

Plaintiff brought this proceeding to avoid the January 24, 2005 transfer by Debtor as a fraudulent transfer pursuant to 11 U.S.C. § 544 and S.C.Code § 27-23-10.

CONCLUSIONS OF LAW

Plaintiff asserts that the transfer by Debtor was a voidable transfer under South Carolina's Statute of Elizabeth and therefore is subject to avoidance pursuant to 11 U.S.C. § 544(b). Plaintiff has the burden of proof on all issues. Defendant responds that he provided professional services to Debtors and that all value he received was in exchange for professional services of equal value rendered by him. Defendant's answer asserted the statute of limitations as a bar to this action; however, the defense was not pressed at trial and is deemed abandoned. ¹

I.

11 U.S.C. § 544(b)(1), the relevant provision here, states:

[T]he trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor

436 B.R. 809

that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502 of this title or that is not allowable only under section 502(e) of this title.

Section 544 does not establish any substantive provisions for avoiding transfers but merely gives the trustee the status of a creditor under state law. In re Derivium Capital, LLC, 396 B.R. 184, 192 (Bankr.D.S.C.2008) (quoting In re J.R. Deans, 249 B.R. 121, 129 (Bankr.D.S.C.2000)). The burden of demonstrating the existence of an actual creditor with a viable, allowed claim is on the trustee. Collier on Bankruptcy ¶ 544.06, p. 544-18 (16th ed. 2010).

In the present case, Plaintiff has met the requirements of 11 U.S.C. § 544(b)(1). In his testimony, Plaintiff identified two creditors who were owed money by Debtor at the time of Debtor's payment to Defendant. These creditors are currently in existence and, based on Plaintiff's testimony, have allowed claims in the bankruptcy case. As a result, Plaintiff can step into either of these creditors' shoes to attempt to avoid the transfer by Debtor to Defendant under South Carolina state law.

II.

Once the trustee meets his burden under Section 544(b) he can assert the unsecured creditor's rights under South Carolina's Statute of...