Litzler v. Cooper (In re Margaux Tex. Ventures, Inc.)

Decision Date22 May 2014
Docket NumberCASE NO. 10–31786–SGJ–7,Adversary No. 13–03221
Citation545 B.R. 506
Parties In re : Margaux Texas Ventures, Inc., Debtor. John H. Litzler, Chapter 7 Trustee for Margaux Texas Ventures, Inc., Plaintiff, v. Suzan Cooper, Defendant.
CourtU.S. Bankruptcy Court — Northern District of Texas

Kathryn Gillian Reid, Rochelle McCullough LLP, Dallas, TX, for Plaintiff.

Doug D. Skierski, Skierski Law PLLC, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER PARTIALLY GRANTING AND PARTIALLY DENYING THE MOTION TO DISMISS FILED BY DEFENDANT, SUZAN COOPER [DE # 5]

STACEY G. JERNIGAN, United States Bankruptcy Judge

A. Introduction

This Memorandum Opinion and Order primarily addresses the following question: Is a claim objection, brought pursuant to section 502(d) of the Bankruptcy Code(i.e., premised upon the notion that the claimant received an avoidable/recoverable transfer of property that has not yet been returned), time-barred if not brought within the same time frame required for an avoidance action, under section 546 of the Bankruptcy Code? Restated, if a successfully asserted affirmative defense of statute of limitations precludes a trustee from avoiding or recovering a transfer, does this also preclude the transferee's claim from being disallowed under section 502(d)? These questions (riveting to bankruptcy practitioners, but likely no others) now arise in the context of a six-count adversary proceeding (not a mere contested claim objection). Thus, there are other pending issues but, at bottom, these are the predominant questions.

Now pending before the court is a Motion to Dismiss and Memorandum in Support Thereof (the "Motion to Dismiss"), filed by a creditor, Suzan Cooper (the "Defendant" or "Ms. Cooper"), in the above-referenced adversary proceeding (the "Adversary Proceeding"), regarding the Trustee's Original Adversary Complaint Against Claimant Suzan Cooper (the "Complaint"),1 filed on October 14, 2013, by John H. Litzler, chapter 7 trustee for Margaux Texas Ventures, Inc. (the "Trustee" or the "Plaintiff"). By way of background, the Debtor, Margaux Texas Ventures, Inc. (the "Debtor"), filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code on March 12, 2010. On July 28, 2010, the Defendant filed Proof of Claim No. 5 (the "Claim") against the Debtor's estate, alleging a secured claim in the amount of $503,998.10. The Trustee filed the Complaint on October 14, 2013, which asserted six causes of action:

• Count 1 seeks a declaratory judgment that the Claim is not secured;
• Count 2 seeks avoidance of a transfer of a security interest (i.e., a pledge of collateral that was made to the Defendant) under 11 U.S.C. § 547;
• Count 3 seeks avoidance of a transfer of a security interest (i.e., a pledge of collateral that was made to the Defendant) under 11 U.S.C. § 548;
• Count 4 seeks avoidance of a transfer of a security interest (i.e., a pledge of collateral that was made to the Defendant) under Tex. Bus. & Comm. Code §§ 24.005and 24.006and 11 U.S.C. § 544;
• Count 5 seeks disallowance of the Claim under 11 U.S.C. § 502(d); and
• Count 6 seeks subordination of the Claim under 11 U.S.C. § 510(c).2

In the Motion to Dismiss, the Defendant has sought to dismiss the entire Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), which is made applicable in this proceeding pursuant to Bankruptcy Rule 7012. First, the Defendant has argued that the avoidance actions that are articulated in Counts 2, 3 and 4 of the Complaint are time-barred under section 546 of the Bankruptcy Code. Furthermore, because the Defendant's security interest cannot timely be avoided under sections 544, 547or 548 of the Bankruptcy Code, the Defendant has argued that the Claim is not subject to disallowance under section 502(d) of the Bankruptcy Codeand, thus, Count 5 should also be dismissed. Finally, the Defendant has argued that Counts 1 and 6 are merely disguised attempts to obtain the avoidance relief that is otherwise time-barred by section 546 of the Bankruptcy Code, and, consequently, the entire Complaint must be dismissed.

Specifically, with regard to the Motion to Dismiss, the court refers to: (1) the Motion to Dismiss [DE # 5 in the AP], and (2) the Trustee's Response to the Motion to Dismiss and Brief in Support [DE ## 7 & 8 in the AP] (collectively, the "Response"). Based upon the facts as alleged in the Complaint and the arguments presented, this court finds that the Motion to Dismiss Counts 1–4 and 6 shall be granted, but the Motion to Dismiss Count 5 shall be denied. However, as to Count 6, dismissal is granted without prejudice to the Trustee amending the Complaint, within 30 days of the entry of this Memorandum Opinion and Order, to allege further specific facts that might support a plausible claim.

B. Jurisdiction

Bankruptcy subject matter jurisdiction exists in this Adversary Proceeding, pursuant to 28 U.S.C. § 1334(b). The bankruptcy courts in this district are generally granted authority to exercise bankruptcy subject matter jurisdiction, pursuant to 28 U.S.C. § 157(a)and the Standing Order of Reference of Bankruptcy Cases and Proceedings (Misc. Rule No. 33), for the Northern District of Texas, dated August 3, 1984. The claims at issue in the Complaint are statutory "core" matters, pursuant to 28 U.S.C. § 157(b)(2)(B), (F), and (H). Finally, the court believes it has Constitutional authority to issue dispositive orders in this Adversary Proceeding under Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), and its progeny, as all the claims raised are inextricably intertwined with resolution of a proof of claim.

C. Relevant Facts

1. On March 12, 2010 (the "Petition Date"), the Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division.

2. On March 12, 2010, the Debtor's President and 95% shareholder, Donald Lewis Silverman ("Mr.Silverman"), also filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Silverman Bankruptcy"). The Silverman Bankruptcy is pending as case number 10–31785–HDH–7.

3. Mr. Silverman is a commercial real estate investor and developer, and the Debtor was one of a number of business enterprises owned and operated by Mr. Silverman related to this business.

4. On July 28, 2010, the Defendant filed proof of claim number 5 in the Bankruptcy Case (the "Claim"). The Defendant alleges a secured claim in the amount of $503,998.10. Attached to the Claim are the following documents:

a. A schedule of the amount due to the Defendant after payments and interest;
b. An October 11, 2008 Promissory Note from the Debtor and Mr. Silverman to the Defendant in the principal amount of $324,303.50 (the "Promissory Note");
c. A January 1, 2006 Demand Note from Margaux City Lights Partners, Ltd.3 to the Debtor in the principal amount of $514,289.10 (the "Demand Note"); and
d. An October 15, 2009 Pledge & Assignment from Debtor, which purports to pledge and assign all of Debtor's right, title and interest in the aforementioned Demand Note to the Defendant as collateral for the Promissory Note (the "Pledge").

5. To be clear, the Defendant was originally given an unsecured promissory note by the Debtor on October 11, 2008. The Defendant was then granted a pledge of a demand note payable to the Debtor (as collateral for the Defendant's promissory note) a year later. It is this Pledge that the Trustee finds problematic. The Debtor then filed bankruptcy approximately five months after the Pledge. The Debtor listed the Defendant as a secured creditor on its Schedule D, filed in the Bankruptcy Case at docket number 10. However, the Debtor scheduled the claim in the amount of $324,303.50, of which $74,303.50 is unsecured.

6. At all relevant times, the Defendant was a business partner of Mr. Silverman. She is a licensed real estate broker, and she provided real estate marketing and brokerage services and business management services to Mr. Silverman. The Defendant is also an investor and limited partner in a number of Mr. Silverman's real estate partnerships. In short, the Trustee alleges that the Defendant is an "insider" of the Debtor.

D. Legal Standard Applicable to the Motion to Dismiss

In evaluating a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), which is made applicable in this proceeding pursuant to Bankruptcy Rule 7012, a complaint is to be charitably construed, with all well pleaded factual allegations being accepted as true and with any reasonable inferences from those facts being drawn in favor of the non-moving party, the Trustee.4 Moreover, "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)."5 In 2009, the Supreme Court clarified the Twombly pleading standard and elaborated that, to survive a motion to dismiss, a civil complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face."6 In ruling on a Rule 12(b)(6)Motion, the material to which the court may refer is limited, and the court should not look beyond the pleadings.7 The pleadings include the complaint and any documents attached to it.8

E. Analysis of the Motion to Dismiss
a. Counts 2–4

Counts 2–4 of the Complaint are all avoidance actions—specifically:

• Count 2 seeks avoidance of the Pledge (i.e., the transfer of a security interest to the Defendant) under 11 U.S.C. § 547;
• Count 3 seeks avoidance of the Pledge (i.e., the transfer of a security interest to the Defendant) under 11 U.S.C. § 548; and
• Count 4 seeks avoidance of the Pledge (i.e., the transfer of a security interest to the Defendant) under Tex. Bus. & Comm. Code §§ 24.005and 24.006and 11 U.S.C. § 544.

As to Counts 2–4, section 546(a) of the...

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