In re Williams, 03-70974.
| Decision Date | 08 December 2003 |
| Docket Number | No. 03-71461.,No. 03-70974.,03-70974.,03-71461. |
| Citation | 302 B.R. 923 |
| Parties | In re Jackie G. WILLIAMS, Patricia A. Williams, Debtors, Circle B Enterprises, Inc., Debtor. Samuel P. Scott, Movant, v. Jackie G. Williams, Patricia A. Williams, Respondents, Circle B Enterprises, Inc., Respondent. |
| Court | U.S. Bankruptcy Court — Middle District of Georgia |
David E. Mullis, Valdosta, GA, for Debtors.
On November 24, 2003, the Court held the final day of a multi-day hearing on two Motions of Samuel P. Scott ("Movant") for Relief from the Automatic Stay. The main issue was whether Movant should be granted relief from the stay for cause to pursue his state court action against Jackie and Patricia Williams and Circle B Enterprises, Inc. ("Circle B") (collectively "Respondents"). At the conclusion of the hearing, the Court took the matter under advisement. The Court has considered the evidence, the parties' briefs and oral arguments, as well as applicable statutory and case law. Under the test set out in In re South Oakes Furniture, Inc., 167 B.R. 307 (Bankr.M.D.Ga.1994) (J. Walker), the Court finds that cause has been shown and Movant should be granted relief from the stay. Id. at 309 (citing In re Pro Football Weekly, Inc., 60 B.R. 824, 826 (N.D.Ill.1986)).
Movant contends that relief should be granted because all three prongs of the South Oakes Furniture test favor granting the relief sought. Id. Movant urges that no great prejudice will occur to Respondents' and their bankruptcy estates if the case is allowed to proceed in state court. Further, Movant contends that the hardship to Movant of starting over again in Bankruptcy Court would considerably outweigh any hardship suffered by Respondents if the case proceeds in state court. Finally, Movant argues based on the record that he has a probability of prevailing on the merits of his case.
Respondents contend that the debtors and the two bankruptcy estates will suffer great hardship if the case continues in state court. Not only do Respondents contend that the costs will be higher in Atlanta, Respondents allege they will not receive fair treatment in Fulton County Superior Court ("Superior Court"). Respondents cite the special setting of the trial, which they contend took their litigation attorney by surprise, as an example of the potential for unfair treatment. Further, Respondents contend they were not ready for trial because Movant had not returned Respondents' business documents in time for Respondents' expert witness to review them adequately. Respondents contend that the hardship to Movant if the matter is moved to the Bankruptcy Court will not outweigh the burden on Respondents if the matter is left in state court. Respondents argue that the Bankruptcy Court would provide an efficient and orderly forum to litigate and liquidate all claims against the bankruptcy estates, including alleged additional lawsuits that may or may not have already been filed against Respondents. Last, Respondents argue, based on a number of legal arguments, that Movant does not have a probability of prevailing on the merits.
Jackie and Patricia Williams have been involved with companies doing business in the mobile home and/or manufactured home industry since the late 1950's. While the specifics are disputed, a series of events took place during the years 2000 and 2001 involving Jackie Williams and actions he preformed as a principal in two companies named Sweetwater and Apple Valley, as well as transfers that Jackie Williams personally made to Patricia Williams. Movant was a minority shareholder in Sweetwater. A legal merger of the Sweetwater and Apple Valley entities never occurred. However, the accounting of the two companies were combined under the name Sweetwater at the end of 1999 and/or the beginning of 2000. Subsequent to the accounting merger, all assets were transferred out of Sweetwater and eventually ended up as assets of Circle B, a corporation later formed by Jackie Williams.
These events led to Movant filing suit against Jackie and Patricia Williams in Superior Court, located in Atlanta, Georgia. At a later date, Circle B was added as a defendant to the action. Pre-trial activities were conducted for over one and a half years in the state court action. Without argument by Respondents' litigation attorney, the matter was specially set for trial in June 2003. Counsel for Movant has agreed to seek a final pretrial order from the Superior Court before proceeding to set the case for trial if this Court grants his request for relief from the stay.
Jackie and Patricia Williams filed for relief under Chapter 11 of the United States Bankruptcy Code ("Code") on June 17, 2003 in the Middle District of Georgia, Valdosta Division. The filing of the petition instituted an automatic stay, which prohibited the trial from proceeding in Superior Court on the assigned date. Movant filed a motion for relief from the stay in Jackie and Patricia Williams' bankruptcy case on July 24, 2003 and asked this Court to determine that the automatic stay did not apply to Circle B. On September 12, 2003, the day Movant's motion was set for hearing in this Court, Circle B filed for relief under Chapter 11 of the Code in the same district and division as Jackie and Patricia Williams. The hearing was continued until a later date so Movant could file a motion for relief from the stay in the Circle B case, allowing for both motions to be heard at the same time. The Court held the hearing over a number of days, which concluded with closing arguments on November 24, 2003.
As an initial matter, the party opposing a motion for relief from the stay bears the burden of persuasion on all issues except as to equity. See 11 U.S.C. § 362(g) (1993 & Supp.2002). Therefore, Responden...
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...advisement at the November 6 hearing on the motions. While researching the matter, the Court came across Scott v. Williams (In re Williams), 302 B.R. 923 (Bankr.M.D.Ga.2003) (Laney, J.), in which this Court adopted a test to determine when the Court should lift the stay to allow a movant to......
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