Lou v. Ochello (In re Ochello)
| Docket Number | 20-00717-KMS,Adv. Proc. 20-00027-KMS |
| Decision Date | 30 March 2022 |
| Parties | IN RE: KIMBERLY WALKER OCHELLO DEBTOR v. KIMBERLY WALKER OCHELLO and GOLDEN WALKER HOMES LLC DEFENDANTS LELAND LOU PLAINTIFF |
| Court | U.S. Bankruptcy Court — Southern District of Mississippi |
OPINION ON NONDISCHARGEABILITY
This matter came on for trial on Plaintiff Leland Lou's complaint against Debtor-Defendant Kimberly Walker Ochello [1] objecting to the dischargeability of a debt under 11 U.S.C § 523(a)(2)(A), (a)(4), and (a)(6).[2] This proceeding is core under 28 U.S.C. § 157(b)(2)(I).
This dispute resulted predictably when both parties ignored the maxim to never mix business with pleasure. Lou, a physician became romantically involved with Ochello, a nurse he had met a couple of years earlier when she and a co-worker called on his office to market the services of their employer, a local home health care company.
After the romance began, Ochello and her co-worker, Lucy Barnes, approached Lou with the idea of opening and operating a personal care home. Lou agreed, and he supplied all the funding for Golden Walker Homes LLC ("Golden Walker"), the limited liability company that Ochello and Lucy created one evening from a computer at Lucy's home. Golden Walker bought real property for the planned personal care home and began paying for its renovation and furnishings.
Soon, the romantic relationship soured, and on its heels, the business relationship. The personal care home never opened, both Ochello and Golden Walker filed chapter 7 bankruptcy cases, and Lou ultimately bought the real property from Ochello's bankruptcy estate.
Now Lou wants $155, 560 of the $258, 000 he says he invested in Golden Walker and the $7000 he says he loaned Ochello held nondischargeable in Ochello's bankruptcy case. Based on the evidence adduced at trial and the arguments in the post-trial briefs, Ochello owes Lou a nondischargeable debt of $14, 739.64.
Four witnesses testified: Lou; Ochello; Lucy; and Lucy's husband, Damon Barnes. Lucy mostly described her participation and the division of duties in Golden Walker and what she knew of Lou and Ochello's personal relationship. Although she and Ochello had been "besties, good friends," they were estranged by the time of the trial. Tr. 2, ECF No. 41 at 7. [3] Her testimony about Ochello was neutral to hostile. Damon spoke as a mostly uninvolved observer of some of the meetings in which Lucy, Lou, and Ochello discussed their business plans. Whereas Lucy's and Damon's testimony was limited in scope, Lou's and Ochello's was wide-ranging, veering more than occasionally into irrelevance to the issues.
Ochello was believable; Lou was not. Though her answers were often disorganized and her demeanor discomposed, Ochello's testimony about her personal relationship with Lou and about what became of his money was mostly consistent and seemingly guileless. For example, she unabashedly admitted using Golden Walker money to pay her personal expenses. See Tr. 1, ECF No. 40 at 162 . In contrast, Lou was often evasive, as when presented with a check written on Golden Walker's account for his apartment rent. See Tr. 1 at 62. Also, Lou minimized how deeply involved he was with Ochello. For example, when asked at what point in time he was "cohabitating" with Ochello, he answered, Tr. 1 at 13. And later, when asked whether there was a period when he stayed at Ochello's house more than one night at a time, he denied ever staying twenty-four hours except for "several times maybe" when he house-sat. Tr. 1 at 76.
A. Friends, Lovers, and Business Partners Long before Lou entered the picture, Ochello and Lucy were friends. At the time the following events occurred, they had worked together at the home health care company, Deaconess HomeCare, for approximately six years. Tr. 2 at 9. Ochello had an associate's degree in nursing and did marketing and sales. Tr. 1 at 98, 99. Lucy was working toward her post-graduate nurse practitioner's degree, Tr. 1 at 16, and was a clinical liaison, Tr. 2 at 6.
Sometime in 2014 or 2015 during discussions they had in the car, Lucy and Ochello "just kind of stumbled upon the idea" of opening a personal care home. Tr. 2 at 8-9. At about this same time, they became acquainted with Lou, an anesthesiologist with a subspecialty in pain management, when they visited his office to market Deaconess's services. Tr. 1 at 12, 13. For the first couple of years Lou and Ochello knew each other, their relationship apparently was purely professional.
Then, in February 2017, Ochello and her husband divorced. Tr. 1 at 96. In June, she and Lou began texting, and by the end of July, they were romantically involved. Tr. 1 at 171. "Very quickly," Lou began staying overnight at her house. Id. By the time the relationship ended in October 2018, his belongings filled a walk-in closet. Tr. 1 at 172. And his office nurse, Morgan, would call Ochello to get Lou up in the morning for work. Tr. 1 at 147.
Early on, Lou gave Ochello non-trivial amounts of money. In late-August 2017, she asked him for help with "medical expenses." Tr. 1 at 18-19. He wrote her a check for $750, noting "medical" in the memo line. See Lou Ex. 1, ECF No. 27 at 4. Ochello testified that the money "[c]ould have been [for] my Botox," but she was not sure. Tr. 1 at 187. According to Lou, he did not expect Ochello to repay him. Tr. 1 at 19. Two days later, he wrote her a check for $3500, noting "ring purchase" in the memo line. See Lou Ex. 2, ECF No. 27. Lou testified that he knew Ochello was trying to sell her wedding ring because she needed money, and he collected jewelry, so he bought it from her. Tr. 1 at 20. Lou "believe[s]" he took possession of the ring that day. Tr. 1 at 82. But Ochello credibly testified that the ring did not leave her house until the couple's breakup more than a year later. Tr. 1 at 172.
Sometime after Lou and Ochello became romantically involved, Ochello and Lucy approached Lou with their personal care home idea. Tr. 1 at 14. Lou was intrigued. With Lucy in the process of obtaining a mid-level nursing degree and himself as a physician who would work hands on, he thought they could "make it a little more of a higher end type of personal care home." Tr. 1 at 16. In November 2017, Ochello and Lucy began looking for a suitable piece of real property. Tr. 1 at 105.
Meanwhile, Lou's generosity toward Ochello continued. According to Ochello, he treated her "like a queen." Tr. 1 at 146. They traveled; he bought her gifts. Tr. 1 at 146, 203.
On Christmas morning 2017, Lou gave Ochello an engagement ring. Tr. 1 at 102-03. A month later, Ochello lost her job. Tr. 1 at 198.
After Ochello became unemployed, Lou's generosity increased. See Tr. 1 at 203 (). They flew "multiple times" to Dallas. Tr. 1 at 108. In February 2018, he took her to Miami for ten days in conjunction with a pain treatment conference. Tr. 1 at 189. He also flew Lucy there for the weekend so Ochello would not be lonely while he was in meetings. Id. He also helped significantly with her ongoing expenses, paying her daughter's school tuition for the year, her house note, some of her car note, and several months of her $600 health insurance premiums. Tr. 1 at 197-98.
Ochello's job loss accelerated the plan to open a personal care home. Tr. 1 at 16. Because she was not otherwise occupied, Ochello took responsibility for most of the day-to-day tasks necessary to get the business up and running. Tr. 1 at 17 (Lou: "We expected her basically to [do] the leg work for us while we were both working."). A spare room in Ochello's home became the office. Tr. 1 at 21-22. Lou, Ochello, and Lucy would meet there to discuss the business and "stay on top of things." Tr. 1 at 23-24.
Lou's role was to provide financing. See, e.g., Tr. 2 at 30 (). But in February 2018, the business that would become Golden Walker had no bank account. So Lou began writing checks for Golden Walker to Ochello.
B. Golden Walker
The first ostensibly business-related check, written a little more than a week after Lou and Ochello's return from Miami, was for $4000 with the notation "working capital" in the memo line. Stip. Fact No. 1, Pretrial Order, ECF No. 29 at 3. According to Lou, this money was for routine start-up expenses. Tr. 1 at 21 (). Ochello did not take the "working capital" notation seriously. Tr. 1 at 109 ( ).
By early-April 2018, Lucy and Ochello had found two pieces of real property, either of which they thought would be suitable. Tr. 1 at 24. Lou, Lucy, and Ochello, decided on the property at 1725 24th Avenue ("the Home"). Tr. 1 at 25.
At this point, spending began in earnest. And although Ochello would be writing most of the checks, Lucy was with her every step of the way. Tr. 2 at 13 ...
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