In Re Gerald Coley

• Decision Date: 29 July 2010
• Docket Number: Adversary No. 09-0307.,Bankruptcy No. 09-14999 ELF.
• Citation: 433 B.R. 476
• Parties: In re Gerald COLEY, DebtorGMAC Inc., Plaintiff,v.Gerald Coley, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

433 B.R. 476

In re Gerald COLEY, Debtor

GMAC Inc., Plaintiff,

v.Gerald Coley, Defendant.

Bankruptcy No. 09-14999 ELF.

Adversary No. 09-0307.

United States Bankruptcy Court,

E.D. Pennsylvania.

July 29, 2010.

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Warren S. Wolf, Cureton Clark, P.C., Mt. Laurel, NJ, for Debtor and Defendant.

Regina Cohen, Lavin O'Neil Ricci Cedrone & Disipi, Philadelphia, PA, for Plaintiff.

Gerald Coley, West Chester, PA, pro se.

MEMORANDUM OPINION

ERIC L. FRANK, Bankruptcy Judge.

I.

Gerald Coley (“the Debtor”) filed a voluntary petition under chapter 7 of the Bankruptcy Code on July 8, 2009. In his bankruptcy schedules, the Debtor listed forty-six (46) unsecured debts totaling more than $2.3 million. Among the scheduled creditors is GMAC, Inc. (“GMAC”), the plaintiff in this adversary proceeding. GMAC is the Debtor's largest creditor, having obtained an $869,429.97 judgment against him prior to the commencement of the bankruptcy case.

GMAC initiated this adversary proceeding by filing a Complaint on October 6, 2009. In the Complaint, GMAC:

(1) objected to the Debtor's discharge under § 727(a)(2)(A) and 727(a)(5) and

(2) asserted that its claim against the Debtor is nondischargeable under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(2)(B), 523(a)(4) and 523(a)(6).

The Debtor filed a pro se Answer to the Complaint on November 3, 2009. ¹

Before the court is GMAC's Motion for Summary Judgment (“the Motion”), which was filed on April 6, 2010. The Debtor filed a pro se Response to the Motion on May 6, 2010.

As detailed below, while the Debtor has not offered much in the way of evidence in response to the Motion, neither has GMAC offered much evidence in support of the Motion. Based on the summary judgment record, the Motion will denied in its entirety because GMAC has not offered evidence sufficient to meet its burden of proof with respect to at least one element of each of its claims. ²

II.

A.

GMAC styles its Motion as one for summary judgment. However, GMAC did not submit any evidentiary matter in support of the Motion, relying exclusively on admissions in the Debtor's Answer to the Complaint.

In the Motion, GMAC asserts that the following facts are undisputed: ³

1. Exton Motors, Inc. (“Exton Motors”) is an automobile dealership that previously operated in Exton, Pennsylvania. (Complaint ¶ 2; Answer ¶ 2).

2. The Debtor was the owner, president and principal of Exton Motors and controlled its operations. (Complaint ¶ 3; Answer ¶ 3).

3. In connection with and as a condition of GMAC providing Exton Motors with financing for the dealership's inventory of new and certain used motor vehicles, Exton Motors executed and delivered to GMAC an agreement dated April 11, 2001, titled “Wholesale Security Agreement”, and certain amendments thereto (collectively, “the WSA”). The WSA provided, in relevant part, that the dealer agreed that as each vehicle was sold or leased, he would faithfully and promptly remit to GMAC the amount it advanced or became obligated to advance on the dealer's behalf to the manufacturer, distributor or seller, with interest at the designated rate per annum then in effect under the GMAC Wholesale Plan.⁴ (Complaint ¶ 4; Answer ¶ 4).

4. On April 11, 2001, the Debtor executed a Guaranty by which he unconditionally, personally guaranteed the payment of all of Exton Motor's indebtedness to GMAC (the “Guaranty”). (Complaint ¶ 5; Answer ¶ 5).

5. In April 2007, the Debtor provided a personal financial statement to GMAC in consideration for and in connection with: (a) GMAC's continued provision of financing to Exton Motors (“the April 2007 Financial Statement.”) and (b) his personal guarantee of Exton Motors' debt to GMAC. (Complaint ¶ 6; Answer ¶ 6).

6. April 2007 Financial Statement represented, in relevant part, that the Debtor had assets worth $842,800.00 and that the Debtor's sole liability was a mortgage on his personal residence with a present balance of $430,000.00. The statement listed no contingent liabilities. In signing the April 2007 Financial Statement, the Debtor certified that he understood that GMAC was relying on the information provided therein in deciding to grant or continue credit and he represented and warranted that the information provided was true and correct. (Complaint ¶ 6; Answer ¶ 6).

7. On or about November 3, 2008, in the course of a routine audit, GMAC discovered that Exton Motors had sold a substantial number of vehicles “floor planned” by GMAC,⁵ converted the proceeds and failed to pay GMAC. (Complaint ¶ 7; Answer ¶ 7).

8. On or about November 7, 2008, Exton Motors, the Debtor and GMAC entered into a forbearance agreement (the “Forbearance Agreement”). In the Forbearance Agreement, GMAC agreed to forbear from exercising its rights for an agreed period of time, while Exton Motors acknowledged that it was in default under the WSA for failure to pay GMAC for vehicles sold out of trust (Complaint ¶ 8; Answer ¶ 8).⁶

9. Later, GMAC extended the term of the Forbearance Agreement and in consideration thereof, in December 2008, the Debtor provided GMAC with another signed, personal financial statement (“the December 2008 Financial Statement”). In the December 2008 Financial Statement, the Debtor listed personal assets in the amount of $957,300.00, including $200,000.00 in furniture. The Debtor stated that his only liability was a mortgage on his personal residence in the amount of $635,000.00. The Debtor listed no contingent liabilities. The Debtor also certified that the information therein was a true and correct showing of his financial condition. (Complaint ¶ 9; Answer ¶ 9).

10. The Forbearance Agreement contained a warrant of attorney. (Complaint ¶ 10; Answer ¶ 10).

11. On April 27, 2009, GMAC confessed judgment against Exton Motors and the Debtor in the amount of $869,427.97. (Complaint ¶ 10; Answer ¶ 10).

12. On July 8, 2009, the Debtor filed a petition under Chapter 7 of Bankruptcy Code. (Complaint ¶ 11; Answer ¶ 11).

13. In his bankruptcy schedules, the Debtor listed as assets his personal residence, with a value of $670,000.00, as well as various items of personal property valued at a total of $11,158.75. This figure included furniture, electronics and kitchen items valued at $3,050.00. (Complaint ¶ 12; Answer ¶ 12).

14. The Debtor scheduled total liabilities in the amount of $3,455,669.70. That total included GMAC's confessed judgment in the amount of $869,427.97. (Complaint ¶ 13; Answer ¶ 13).

B.

In his Response to the Motion, the Debtor admits all of the above allegations, except for Paragraph Nos. 6, 7 and 8.⁷ However, his denials of Paragraphs 6-8 are inconsistent with the earlier admissions in his Answer to the Complaint. For purposes of resolving the Motion, I will assume arguendo that the Debtor is bound by the admissions in the Answer to the Complaint.⁸

In his Response to the Motion, the Debtor also states that he “did not defraud nor intend to defraud GMAC at any time during their relationship-especially upon filling out the GMAC credit statement” and that:

At the time of the filling out of the GMAC statement, some of the property/furniture was brand new and was insured for FULL RETAIL VALUE-NOT Fair Market Value nor Bankruptcy Distressed Value.

At the time of filling out the Bankruptcy Petition, at least 10-20% of the same property as listed in the prior GMAC statement was damaged and discarded. The balance of the property was now 17 months older and was in “worn condition”. I was instructed in my Bankruptcy Petition to reduce the value to a “distressed bankruptcy value”-which-upon my research, was to value this property at 5% to 10% of its FULL RETAIL VALUE-the remaining furniture/property at the time of Bankruptcy Petition was $150,000 and 10% of that value is what I stated.

Finally, the Debtor contends that he signed the Forbearance Agreement “under duress [and] without legal counsel.”

III.

The standard for evaluating a summary judgment motion is well established and has been stated in numerous written opinions in this district.⁹ Pursuant to Fed.R.Civ.P. 56(c), summary judgment should be granted when the “pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). ¹⁰

Before a motion for summary judgment may be granted, the court must find that the motion alleges facts that, if proven at trial, would require a directed verdict in favor of the movant. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993). If the movant meets this initial burden, the responding party may not rest on his or her pleadings, but must designate specific factual averments through the use of affidavits or other permissible evidentiary material that demonstrate a triable factual dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Such evidence must be sufficient to support a factfinder's factual determination in favor of the nonmoving party. Anderson, 477 U.S. at 250, 106 S.Ct. 2505. Evidence that merely raises some metaphysical doubt regarding the validity of a material facts is insufficient. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

In considering the evidentiary matter submitted in support of and in opposition to a summary judgment motion, the court's role is not to weigh the evidence, but only to determine whether there is a disputed, material fact for determination at trial. Anderson, 477 U.S. at 247-50, 106 S.Ct. 2505. A dispute about a “material” fact is “genuine” only if the evidence is such that a reasonable factfinder could return a verdict for the non-moving party. Id. at 248, 106 S.Ct. 2505. All reasonable inferences...