In re Jennings, Case No. 03-04937-3F7 (Bankr.M.D.Fla. 1/7/2010), Case No. 03-04937-3F7.
| Decision Date | 07 January 2010 |
| Docket Number | Case No. 03-04937-3F7.,Adversary No. 07-308. |
| Parties | In re: JANICE K. JENNINGS, Debtor. BRANDON JAMES MAXFIELD, Plaintiff. v. JANICE K. JENNINGS, Defendant. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Richard R. Thames, Attorney for Plaintiff.
Raymond R. Magley, Attorney for Defendant.
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This proceeding came before the Court upon Plaintiff's Motion for Summary Judgment, Defendant's Motion for Summary Judgment, and Defendant's Memorandum in Opposition to Plaintiff's Motion for Summary Judgment and in Support of Defendant's Motion for Summary Judgment. Upon a review of the pleadings, the Court finds there is no genuine issue as to any material fact and Defendant is entitled to judgment in her favor as a matter of law. The Court will deny Plaintiff's Motion for Summary Judgment and grant Defendant's Motion for Summary Judgment.
Plaintiff is an individual who was injured when a handgun designed by Bruce Jennings, manufactured by Bryco Arms, Inc. ("Bryco"), a firearms manufacturer, and distributed by B.L. Jennings, Inc. ("B.L. Jennings"), a firearms distributor, accidentally discharged and injured him. Defendant is Bruce Jennings' former wife (whom he divorced in 1984) and the mother of two of Bruce Jennings' children, Kimberly Jennings and Bradley Jennings. Bruce Jennings and Defendant were co-trustees of three trusts established for the benefit of their two children and Rhonda Jennings, Bruce Jennings' daughter from a previous marriage (the "California Trusts"). The California Trusts in turn owned the partnership interests in RKB Investments ("RKB"), a partnership, which was the record owner of a home in Newport Beach, California known as the "Shoreview Property."2 Although Bruce Jennings and Defendant testified that they "managed" RKB together as "co-trustees", Bruce Jennings managed RKB and Defendant's management of RKB was limited to Bruce Jennings' instruction.
In 1986 Bruce Jennings married Anna Leah Jennings. The parties divorced in 1995. The divorce agreement between the parties did not mention any property by name and provided no specification as to what belonged to Bruce Jennings and what belonged to Anna Leah Jennings.
In May 2001 Plaintiff commenced an action in California Superior Court against Bryco, and B.L. Jennings to recover for the personal injuries he suffered (the "Maxfield personal injury case"). Bruce Jennings was joined as a defendant in September 2001 for his role in designing, manufacturing and distributing the firearm, which injured Plaintiff.
An amended complaint was filed in the Maxfield personal injury case in December of 2001. The amended complaint added RKB, the California Trusts and Defendant as parties, and sought to impose liability upon them under a variety of legal theories, including joint enterprise, fraudulent transfer, and alter ego. RKB was served with the amended complaint in December of 2001.
On February 4, 2002, upon the advice of an attorney, Bruce Jennings ordered an appraisal of the Shoreview Property. The Shoreview Property was appraised at $3.9 million. On February 23, 2002 Bruce Jennings sent the deed to the Shoreview Property to Defendant in Texas. Acting on instructions from Bruce Jennings, Defendant, on behalf of RKB, executed a deed transferring the Shoreview Property from RKB to Anna Leah Jennings. On February 27, 2002 Bruce Jennings recorded the deed. The deed recited that it replaced a deed purportedly issued in May of 1995 in connection with the Anna Leah Jennings divorce, although no one produced a copy of the prior deed.
In June of 2000 Bruce Jennings and Defendant testified in unrelated litigation that the Shoreview Property was owned by RKB, that it was strictly a profit-making investment, that Anna Leah Jennings had no financial interest in the property, and that she was permitted to stay there because she took care of the property. From its purchase in 1991 through February, 2002 RKB alone held title to the Shoreview Property, paid all of the property taxes, paid the homeowner's association dues, paid for all the construction, and carried the property as an asset on its income tax returns even though Anna Leah Jennings purportedly owned it since 1995.
Bryco, B.L. Jennings and Bruce Jennings were sued several times for serious injuries resulting from accidental shootings prior to the filing of the complaint in the Maxfield personal injury case. In two of those lawsuits, the respective plaintiffs, who were rendered quadriplegic and paraplegic, alleged that the guns were defectively designed and sought large damages. Bruce Jennings, Bryco and B.L. Jennings prevailed in one of the lawsuits and the other one was not being actively pursued at the time of the transfer of the Shoreview Property. Bryco and B.L. Jennings, Inc. had also been sued numerous times for non-serious injuries. Only one of those lawsuits resulted in a judgment and that judgment was satisfied. At the time Defendant signed the deed transferring the Shoreview Property from RKB to Anna Leah Jennings there were no outstanding judgments against Bruce Jennings, Bryco or B.L. Jennings. No judgments were ever entered against RKB.
On May 13, 2003 the court in the Maxfield personal injury case entered a judgment in favor of Maxfield and against Bruce Jennings, Bryco, and B.L. Jennings in the amount of $21,250,650.31. On May 14, 2003 Bruce Jennings, Defendant, Bryco, B.L. Jennings, RKB, and the California Trusts filed Chapter 11 bankruptcy petitions. Within weeks of the Chapter 11 filings, the pending California litigation, including the claims against Defendant, was removed to this Court and was consolidated with the Dec. Relief Action in which RKB and the California Trusts sought a determination that they were not liable to creditors such as Plaintiff for any of the debts owed by Bruce Jennings, Bryco or B.L. Jennings. A third adversary proceeding initiated by Defendant sought similar declaratory relief as to her liability and was likewise consolidated for trial with the Dec. Relief Action.2
In a Declaration in Support of Petition for Attorney's Fees dated July 8, 2003 Richard Ruggieri, Plaintiff's attorney in the Maxfield personal injury case, made the following declaration:
This was an extremely risky case to prosecute. The case was rejected by one of the Bay Area's top plaintiff's firms, the Boccardo Firm, in 1995, and plaintiff was unable to find other counsel willing to take his case. Prior to the trial of this action, I am informed and believe that no plaintiff had successfully tried a products liability claim against a gun manufacturer. Finally, the risk was increased by Congressional action promising a retroactive immunity for gun manufacturers, which is pending and may still affect plaintiff's recovery from non-settling defendants.
(Defendant's Notice of Filing Petition for Withdrawal of Funds from Blocked Account and Declaration of Richard Ruggeri in Support of Petition for Attorney's Fees).
In its June 12, 2007 Findings of Fact and Conclusions of Law in the Dec. Relief Action the Court found that RKB, through Bruce Jennings, transferred the Shoreview Property to Anna Leah Jennings with the actual intent to hinder, delay, or defraud creditors. Additionally, the Court found that the circumstantial evidence established that Defendant knew that RKB, through Bruce Jennings, intended to transfer the Shoreview Property to keep it out of the hands of creditors, and that by signing the deed on behalf of RKB to transfer the Shoreview Property in exchange for no consideration, Defendant aided in the transfer. The Court found that Defendant participated in a conspiracy with Bruce Jennings/RKB to fraudulently transfer the Shoreview Property to Anna Leah Jennings in order to keep it out of the hands of Bruce Jennings' creditors and was therefore jointly and severally liable to the creditors of Bruce Jennings' bankruptcy estate for the value of the Shoreview Property. The Court also found in the Dec. Relief Action that Defendant was a participant in a joint venture with Bruce Jennings, Bryco, and B.L. Jennings and was therefore jointly and severally liable for the injuries resulting in Plaintiff's judgment.
On September 27, 2007 Defendant's bankruptcy case was converted to Chapter 7. On December 19, 2007 Plaintiff instituted this adversary proceeding seeking to have the judgment against Defendant for her participation in the conspiracy to fraudulently transfer the Shoreview Property excepted from her discharge pursuant to 11 U.S.C. § 523(a)(2)(A) or alternatively, under 11 U.S.C. § 523(a)(6) as a "willful and malicious injury." On March 12, 2008, the Court entered its Order Granting Motion to Dismiss Complaint (the "Dismissal Order"), holding that with respect to Count I Plaintiff had failed to allege and could not allege facts establishing the elements of a claim of actual fraud. With respect to Count II, the Court held that "a conspiracy claim [is] not the sort of intentional tort, which is required to render a debt nondischargeable under § 523(a)(6)." (Dismissal Order, p. 5). Plaintiff appealed the Dismissal Order to the District Court. On June 11, 2009, the District Court entered its order (the "District Court Order"), in which it affirmed dismissal of Count I of the Complaint but reversed this Court's dismissal of Count II and remanded for further proceedings. The District Court held that the "Eleventh Circuit has never created a broad rule that a conspiracy claim may not qualify as the sort of intentional tort covered by Section 523(a)(6)" (Dist. Ct. Order at 7).
Pursuant to Federal Rule of Civil Procedure 56, incorporated by Federal Rules of Bankruptcy Procedure 7056 and 9014, "summary judgment is proper if the pleadings, depositions, answers to...
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