Katz v. Anderson (In re Anderson)

• Citation: 623 B.R. 199
• Decision Date: 27 August 2020
• Docket Number: Case No.: 15-30458 (AMN),A.P. Case No.: 17-03008 (AMN)
• Parties: IN RE: William M. ANDERSON, Debtor Barbara M. Katz, Chapter 7 Trustee, Plaintiff v. William M. Anderson and Mary Ann Anderson, Defendants
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut

623 B.R. 199

IN RE: William M. ANDERSON, DebtorBarbara M. Katz, Chapter 7 Trustee, Plaintiff

v.William M. Anderson and Mary Ann Anderson, Defendants

Case No.: 15-30458 (AMN)

A.P. Case No.: 17-03008 (AMN)

United States Bankruptcy Court, D. Connecticut, New Haven Division.

Signed August 27, 2020

Barbara H. Katz, Plaintif, C. Donald Neville, Esq., Kroll, McNamara, Evans & Delehanty, LLP, 65 Memorial Road, Suite 300, West Hartford, CT 06107.

Mary Ann Anderson, Defendant, Timothy D. Miltenberger, Esq., Coan Lewendon Gulliver & Miltenberger, 495 Orange Street, New Haven, CT 06405.

William M. Anderson, Pro Se Litigant, Defendant, 21 Quentin Street, Waterbury, CT 06706.

RE: AP-ECF Nos. 40, 44

MEMORANDUM OF DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AMENDED COMPLAINT

Ann M. Nevins, United States Bankruptcy

Before the court is Mary Ann Anderson's ("Ms. Anderson") motion seeking to dismiss portions of an amended complaint (the "Amended Complaint") filed by Barbara Katz, Chapter 7 Trustee ("Trustee"), or alternatively, a more definite statement (the "Motion").¹ AP-ECF Nos. 40, 44.² The Amended Complaint was filed in response to the Court's Memorandum of Decision and Order Requiring a More Definite Statement that granted partial relief in response to Ms. Anderson's first motion to dismiss the claims against her. AP-ECF No. 32. Now, Ms. Anderson asserts that the Trustee's second attempt to allege actionable claims that purported transfers of property by the debtor William M. Anderson ("Debtor") to Ms. Anderson should be avoided for the benefit of creditors continue to lack sufficient specificity, and, that certain allegations fail to state a claim upon which relief may be granted pursuant to Fed.R.Civ.P. 12(b)(6), made applicable here pursuant to Fed.R.Bankr.P. 7012. See , AP-ECF No. 44.

After a comprehensive review of the pleadings and after discussion of the parties' positions during oral argument, the Motion is GRANTED in part and DENIED in part.

I. JURISDICTION AND VENUE

The United States District Court for the District of Connecticut has jurisdiction over this adversary proceeding by virtue of 28 U.S.C. § 1334(b). This court derives its authority to hear and determine this matter on reference from the District Court pursuant to 28 U.S.C. §§ 157(a), (b)(1), and the District Court's General Order of Reference dated September 21, 1984. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A), (E), (H), and (O), and the bankruptcy court has the power to enter a final judgment in this adversary proceeding, subject to traditional rights of appeal. This adversary proceeding arises under the Main Case pending in this District, and venue is proper pursuant to 28 U.S.C. § 1409.

II. PROCEDURAL HISTORY

Familiarity with the procedural posture of this matter and the Memorandum of Decision and Order Requiring a More Definite Statement ("Prior Decision") is assumed.³ See , AP-ECF No. 32. Consistent with the Prior Decision permitting the plaintiff time to amend her complaint, the Trustee filed the Amended Complaint discussed here, again alleging that over decades the Debtor and Ms. Anderson had engaged in numerous fraudulent schemes to the detriment of the Debtor's creditors. AP-ECF No. 40.

The Debtor failed to file an answer. See , AP-ECF Nos. 41, 72. Plaintiff has not sought a default against the Debtor, and he is a non-appearing pro se litigant in this adversary proceeding.⁴

Ms. Anderson filed the instant Motion seeking dismissal of the complaint because it fails to state a claim upon which relief may be granted pursuant to Fed.R.Civ.P. 12(b)(6) and Fed.R.Bankr.P. 7012, or, seeking the filing of a more definite statement pursuant to Fed.R.Civ.P. 12(e) and Fed.R.Bankr.P. 7012. AP-ECF No. 44. The Trustee objected to the Motion. AP-ECF No. 56.

During oral argument on the Motion, the Trustee suggested a court could not dismiss a portion of a count within a pleading as a matter of law, and the court ordered briefing on this additional issue. See , AP-ECF No. 67. On December 19, 2019, the Trustee filed a memorandum of law, and on January 10, 2020, Ms. Anderson filed a responsive memorandum of law. See , AP-ECF Nos. 70, 71.

III. THE PLEADINGS AND ORAL ARGUMENT

a. The Amended Complaint

The Amended Complaint sets forth the following seven counts:

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[Editor's Note: The preceding image contains the reference for footnote⁵ ].

The Trustee adds, generally, that all applicable statutes of limitations should be tolled both pursuant to Conn.Gen.Stat. § 52-595, and, pursuant to unspecified equitable principles. See , AP-ECF No. 40, ¶ 171-181.

i. The Subjects of the Counts

In the Amended Complaint, the Trustee identifies the assets she seeks to recover for the estate as follows:⁶

1. The Debtor's one-half (1/2) interest in "real property located at 2 Silver Pond, Wolcott, Connecticut (the "Home")." AP-ECF No. 40, ¶ 129.

2. Equity in the Home derived from mortgage payments paid using "significant value and income" obtained as a result of the other transfers. AP-ECF No. 40, ¶ 91, 142–146.

3. A sum of money used to pay a $50,000.00 down payment and to finance the purchase of "real property located at 1058 Wolcott Street, Waterbury, Connecticut which is the location of the [Classic Car Company and the Haunted House Business] (the "Commercial Property")." AP-ECF No. 40, ¶ 97.

4. Equity in the Commercial Property derived from mortgage payments paid using "significant value and income" obtained as a result of the other transfers. AP-ECF No. 40, ¶ 91, 142–146.

5. A sum of money used to purchase "real property located at 206 East Washington Street, Deland, Florida (the "Florida Property")." AP-ECF No. 40, ¶ 115.

6. Equity in the Florida Property derived from mortgage payments paid using "significant value and income" obtained as a result of the other transfers. AP-ECF No. 40, ¶ 91, 142–146.

7. A sole proprietorship "called Classic Car Restoration which is in the business of restoring classic and/or vintage cars for eventual resale and/or for specific customers (the "Classic Car Company")." AP-ECF No. 40, ¶¶ 17–18.

8. A sole proprietorship "known as Nightmare on Wolcott Street which is in the business of running a haunted house in Wolcott, Connecticut (the "Haunted House Business")." AP-ECF No. 40, ¶¶ 42–43.

9. The value of "significant personal services" provided by the Debtor during the four (4) years preceding the Petition Date "to or for the benefit of the Classic Car Company and the Haunted House Business ... for which the Debtor was not properly compensated (the "Company-Related Services Transfers")." AP-ECF No. 40, ¶ 70.

10. "[P]ersonal property in Connecticut, Florida, and elsewhere (the "Personal Property")." AP-ECF No. 40, ¶ 151.

During oral argument on the Motion, counsel for the Trustee clarified that the Trustee intends to proceed only under Count 1 (Unjust Enrichment) with respect to the alleged transfers of the Home, the Commercial Property, the Florida Property, and Personal Property acquired before 2011. AP-ECF No. 65, 00:28:10–00:30:33. Ms. Anderson conceded the Amended Complaint states a claim for unjust enrichment regarding the Company-Related Services Transfers. AP-ECF No. 65, 01:04:53–01:06:06. Accordingly, I do not address the portion of Count One relating to the Company-Related Services Transfers, and it proceeds.

ii. Factual Allegations

The Debtor and Ms. Anderson married in 1972, but initiated divorce proceedings on or about February 20, 1990. AP-ECF No. 40, ¶¶ 9–10. Despite dissolving their marriage, the Debtor and Ms. Anderson maintain a marriage-like relationship and hold themselves out as married. AP-ECF No. 40, ¶ 11.

Prior to the dissolution of their marriage, the Debtor and Ms. Anderson purchased the Home. AP-ECF No. 40, ¶ 130. On or about January 9, 1990, prior to or amid a police investigation,⁷ the Debtor transferred his one-half (1/2) interest in the Home to Ms. Anderson without receiving anything of value in return. AP-ECF No. 40, ¶¶ 132, 134-36. Concurrently with the transfer of the Debtor's interest in the Home, a loan guaranteed by the Debtor in the amount of $4,000,000.00 went into default. AP-ECF No. 40, ¶ 133. Despite transferring the Home to Ms. Anderson, the Debtor has resided at the Home, received mail there, and indicated on a credit application that he owns the Home and pays the mortgage. AP-ECF No. 40, ¶¶ 139–40.

On or about August 1, 2003, Ms. Anderson acquired the Commercial Property for a down payment of $50,000.00 and financing of $250,000.00, for a total purchase price of $300,000.00. AP-ECF No. 40, ¶¶ 98–99. The Debtor provided the funds used to make the down payment and obtain financing. AP-ECF No. 40, ¶¶ 100–02. Alternatively, Ms. Anderson used funds resulting from other transfers to acquire the Commercial Property. AP-ECF No. 40, ¶ 109.

In February 2010, Ms. Anderson purchased the Florida Property using funds provided by the Debtor or using funds derived from other transfers from the Debtor. AP-ECF No. 40, ¶¶ 116–18.

Ms. Anderson continues to own the Home, the Commercial Property, and the Florida Property; makes mortgage payments on the three properties; and has acquired equity in the properties. AP-ECF No. 40, ¶¶ 97, 115, 129, 142–46. Ms. Anderson uses value derived from the other transfers to make the mortgage payments and build equity in the properties. AP-ECF No. 40, ¶¶ 144–46.

In 2012, the Debtor stated on a credit application that he owned the Classic Car Company. AP-ECF No. 40, ¶ 20–21. In addition, the Debtor represented on the credit application that he earned hundreds of thousands of dollars per year operating the Classic Car Company during the ten (10) years preceding the application. AP-ECF No. 40, ¶ 21. Between 2012 and the Petition Date in 2015, the Debtor transferred the Classic Car Company to Ms. Anderson without receiving anything in exchange, rendering the Debtor insolvent. AP-ECF No. 40, ¶¶ 23, 29–30, 69. The ...