In re Podwinski
| Decision Date | 02 February 2021 |
| Docket Number | CASE NO. BK19-41937-TLS |
| Parties | IN THE MATTER OF: BRIAN C. PODWINSKI, Debtor(s). |
| Court | U.S. Bankruptcy Court — District of Nebraska |
This matter is before the court on the amended motion by creditors Charles S. Tomek and Tadd Delozier to extend time to object to discharge, challenge the dischargeability of specific debts, and file an adversary proceeding (Fil. No. 48) and objection by the debtor (Fil. No. 57), and on Tomek and Delozier's motion to approve compromise and enforce settlement (Fil. No. 52) and objection by the debtor (Fil. No. 58). John A. Lentz represents the debtor, and Michael W. Milone, David J. Koukol, and Tyler A. Masterson represent Tomek and Delozier. Instead of holding a trial on the motions, the parties submitted them on stipulated facts and written arguments. All of the materials have been received and the matter is now ready for decision.
For the reasons stated below, the motions are denied.
The debts at issue stem from loans made by Tomek and Delozier to Barrel Aged Labs, Inc., and guaranteed by the debtor. Tomek filed a claim in the debtor's bankruptcy case for $141,017.90 based on a stipulated judgment against Barrel Aged Labs and the debtor in the amount of $134,125.00 plus post-judgment interest. The judgment was entered in the District Court of Lancaster County on August 16, 2019. The debt owed to Delozier has not been reduced to judgment, but he filed a claim for $269,064.00, based on a loan agreement dated April 20, 2018, for $250,000.00 plus interest at 6.5 percent.
The debtor filed this Chapter 7 petition in November 2019, and the deadline for objecting to discharge or challenging the dischargeability of a debt was set for March 23, 2020. Because the parties were negotiating terms to settle the Tomek and Delozier claims as the March 23rd deadline approached, Tomek and Delozier filed an unopposed motion requesting a 90-day extension of the discharge/dischargeability deadline, which was granted and gave them until June 21, 2020, to file such an action.
In the meantime, the parties continued to discuss a settlement. The parties have different perspectives on the result of those discussions. According to Tomek and Delozier, a settlement was reached and they relied to their detriment on this fact to let the dischargeability deadline pass without filing an adversary proceeding. According to the debtor, the finer points of the settlement terms were still being discussed as of the dischargeability deadline and nothing had been finalized. When counsel for the debtor realized the deadline had passed, he informed counsel for Tomek and Delozier and ended settlement negotiations. That news blindsided Tomek and Delozier's attorneys and prompted the immediate filing of the motions to extend the discharge/dischargeability deadline once again and to approve the settlement purportedly reached by the parties.
At the court's direction, the parties filed a joint preliminary pretrial statement. However, the court noticed that the parties did not include any substantive uncontroverted facts and they listed each other's attorneys as potential witnesses. Before scheduling a pretrial conference, the court directed the parties to meet and confer as to whether the listed attorneys were indeed necessary witnesses and, if so, whether that could lead to disqualification of the attorneys, as well as to come up with a list of relevant facts they all could agree to. The debtor then filed a motion for judgment on the pleadings and alternative request for determination as to equitable tolling of Rule 4007(c) or Rule 4004(a) deadlines. The court denied the debtor's motion, noting that the creditors' reliance on equitable grounds for extending the filing deadline requires evidence of facts that prevented the creditors from timely requesting an extension. The parties then opted to submit the matter for decision on stipulated facts and briefs.
Specifically, the parties have agreed to the following stipulated summary of facts (Fil. No. 79):
1. The parties engaged in a series of settlement negotiations, primarily by e-mail, from approximately January 24, 2020, through approximately June 24, 2020.
2. The parties' settlement negotiations focused on whether Tomek and Delozier's claims against Podwinski would be determined non-dischargeable and repayment of those claims over time through a voluntary payment plan.
3. On April 22, 2020, Tomek and Delozier reduced to writing an outline compiling the settlement terms the parties discussed during negotiations and submitted the compilation to Podwinski through his counsel for approval.
4. On May 14, 2020, Podwinski's counsel e-mailed Tomek and Delozier's counsel stating that he was still waiting on final approval of the compiled settlement terms, but believed "the terms have all been agreed to through months of emails but I want to get his approval prior to telling you that we have a deal and let's do a stip."
5. On June 16, 2020, Podwinski's counsel e-mailed Tomek and Delozier's counsel stating: "Sounds like Brian's good with the terms as outlined . . ." and mentioned "just a few considerations/suggestions for stip[.]"
6. The "considerations/suggestions" Podwinski requested involved a repayment start date, Podwinski's confirmation that he had obtained a life insurance policy under the outlined settlement terms, default triggers/terms, and transfer of any shares held by Tomek and Delozier in Barrel Aged Labs, LLC, back to Podwinski "after all payments contemplated are made."
7. Regarding these "considerations/suggestions":
8. On June 24, 2020, Podwinski's counsel e-mailed Tomek and Delozier's counsel and inquired as to whether Tomek and Delozier had accepted the new terms tentatively in the context of timing relative to a hearing on Podwinski's motion to avoid lien.
9. Tomek and Delozier's counsel replied by e-mail on June 24, 2020, confirmed the parties were tentatively settled, and stated the parties should inform the court of their settlement and ask for additional time for "finishing touches." At this time, no draft of an actual settlement agreement had occurred.
10. On June 24, 2020, Podwinski's counsel sent an e-mail to Tomek and Delozier's counsel stating Podwinski was no longer interested in settling the matter with Delozier or Tomek.
11. Debtor discovered the creditors had missed their deadline on June 24, 2020, and notified their counsel that the debtor did not desire to continue settlement negotiations.
12. The parties then filed the following pleadings:
13. Creditors prepared and emailed a "Stipulated Settlement Document" on July 15, 2020, based on what creditors' counsel understood the parties had agreed upon, but this was after the June 24, 2020, notice from Podwinski's counsel that the debtor was no longer interested in settling the matter.
14. The parties agree the compiled e-mails, pleadings, and other documents attached as Exhibit A shall be offered and received without objection for purposes of resolving the pending motions to extend adversary deadline, motion to approve and enforce compromise, and objections thereto.
Tomek and Delozier believe these facts establish that the parties had reached an enforceable agreement to settle the treatment and payment of the debts at issue and the debtor reneged. They argue that waiver, equitable estoppel, promissory estoppel, and tolling prevent the debtor from walking away from the agreement because they relied to their detriment on the debtor's repeated representations that the matter was essentially settled, and his attempt to take advantage of an inequitable situation that he created should not be condoned.
Under Federal Rule of Bankruptcy Procedure 9019(a), the court may approve a settlement on motion by the trustee after notice and a hearing. "[T]he standard for evaluation is whether the settlement is fair and equitable and in the best interests of the estate." Ritchie Capital Mgmt., L.L.C. v. Kelley, 785 F.3d 273, 278 (8th Cir. 2015) (internal citations omitted). When assessing the reasonableness of a settlement, the court must consider:
(A) the probability of success in the litigation; (B) the difficulties, if any to be encountered in the matter of collection; (C) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; and (D) the paramount interest of the creditors and a proper deference to their reasonable views in the...
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