In re Group Development Corp., Bankruptcy No. 83-2086

• Citation: 43 BR 665
• Decision Date: 26 October 1984
• Docket Number: Adv. No. 84-105.,Bankruptcy No. 83-2086
• Parties: In re GROUP DEVELOPMENT CORPORATION, Debtor. GROUP DEVELOPMENT CORPORATION, Plaintiff, v. E.J. MANAGEMENT CORPORATION, Defendant.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida

43 B.R. 665 (1984)

In re GROUP DEVELOPMENT CORPORATION, Debtor.

GROUP DEVELOPMENT CORPORATION, Plaintiff, v. E.J. MANAGEMENT CORPORATION, Defendant.

Bankruptcy No. 83-2086, Adv. No. 84-105.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

October 26, 1984.

Don Stichtes, Tampa, Fla., for debtor.

ORDER ON MOTION TO DISMISS AND MOTIONS FOR SUMMARY JUDGMENT

ALEXANDER L. PASKAY, Chief Judge.

THIS IS a Chapter 11 Reorganization case and the immediate matters under consideration are (1) a Motion to Dismiss, Debtor's Complaint to Avoid Preferential Transfers and to Invalidate Security Interest, filed by the Defendant, E.J. Management Corporation (E.J. Management), (2) a Motion for Summary Judgment, also filed by E.J. Management, and (3) a Motion for Summary Judgment filed by Group Development Corporation, the Chapter 11 Debtor and Plaintiff in the above-styled adversary proceeding. This adversary proceeding was initiated by a two Count Complaint filed by the Debtor who seeks to invalidate a security interest held by E.J. Management, pursuant to § 544 of the Bankruptcy Code and to avoid a transfer which is alleged to be a voidable preference, pursuant to § 547(b).

E.J. Management filed a Motion to Dismiss. While the Motion is ostensibly directed to the entire Complaint, it appears to address only an alleged infirmity in Count II (preferential transfer). E.J. Management contends that the Complaint fails to state a cause of action because, while the Debtor alleges that E.J. Management obtained a Final Summary Judgment for damages against the Debtor and caused ". . . writs to be delivered to the Sheriff of Pinellas County, commanding him to levy upon the Plaintiff's property . . .," within 90 days of the Petition, the Complaint fails to allege what property was transferred to the Defendant. It is clear that in this state the execution becomes a lien on personal property from the time the writ is delivered to the sheriff, Krauth v. First Continental Dev-Con, Inc., 351 So.2d 1106 (Fla. 4th DCA 1977) citing Bank of Hawthorne v. Shepherd, 330 So.2d 75 (Fla. 1st DCA 1976) and, pursuant to Federal Bankruptcy law, the fixing of a judgment lien upon the property of the Debtor within the 90 days preference period may constitute a transfer within the meaning of §§ 101 (41) and § 547. "It is now clear that not only any form of judgment, but any judicial proceeding that fixes a lien upon the property of the Debtor and that comes within the other requisites of § 547(b) will constitute a preference." 4 Collier on Bankruptcy, Para. 547.12 (15th ed. 1983). While it is true that the Debtor should have specified the property to which the Defendant's lien attached, the failure to do so does not constitute a fatal defect which warrants dismissal of the Complaint. However, in light of the treatment and disposition of the Motions For Summary Judgment, the Motion to Dismiss shall be denied.

As noted above, both the Debtor and E.J. Management filed Motions for Summary Judgment based on the contention that there are no genuine issues of material fact in dispute and the controversy should be resolved as a matter of law. The Court heard argument of counsel, considered the record and finds the following undisputed facts which are relevant and germane to the resolution of the controversy.

On May 1, 1981 E.J. Management (Management) sold to H.F. Martek & Assoc., Inc. (Martek) certain furniture, fixtures and office equipment. As part of this transaction, Martek granted to E.J. Management a security interest in the properties transferred. On May 25, 1982 Martek transferred its interest in the same furniture and equipment to E.B. Salmon Enterprises, Inc. (Salmon), an entity separate and apart from Martek, who assumed Martek's liability from Martek to Management. The record reveals that in connection with the sale to Martek, Management did not file a U.C.C. Financing Statement with the Secretary of State in order to perfect its security interest. It further appears that Management filed a U.C.C. 1 on March 30, 1983 listing Group Development as the Debtor. It is undisputed that neither Salmon nor the Debtor ever signed a financing statement regarding the personal property in which Management claims a security interest.

On or about July 1, 1982, the Debtor failed to make the payment which then became due. As the result of the default, Management elected to accelerate the obligation. Thereafter, E.J. Management filed a civil suit for damages against the Debtor in the Circuit Court for Pinellas County, Florida (E.J. Management Corporation v. Group Development Corporation, Case No. 83-1170-7). On July 13, 1983 E.J. Management obtained a Final Summary Judgment against the Debtor for damages in the total amount of $26,773.78, and on July 26,...