Mangan v. Daigle (In re Quiroga)
| Decision Date | 12 August 2022 |
| Docket Number | 20-21444 (JJT),Adv. Pro. 22-02005 |
| Court | U.S. Bankruptcy Court — District of Connecticut |
| Parties | IN RE: CHRISTOPHER QUIROGA, Debtor. v. SHAWN DAIGLE & 376 NM SOUTH, LLC Defendants. BONNIE C. MANGAN, Chapter 7 Trustee, Plaintiff RE ECF Nos. 11, 12, 19, 22 |
On February 2, 2022, Bonnie Mangan, the Chapter 7 Trustee for the Debtor in the above-captioned case, filed a seven count Adversarial Complaint against Shawn Daigle ("Daigle") and 376 NM South, LLC ("376 NM" and, together with Daigle, the "Defendants"), seeking to avoid and recover one or more alleged fraudulent transfers of the Debtor's property made to or for the benefit of the Defendants, and to collect damages for alleged violations of the automatic stay and the Barton Doctrine. ECF No. 1, (the "Complaint"). Count I of the Complaint sounds in Intentional Fraudulent Conveyance pursuant to 11 U.S.C § 548(a)(1)(A); Count II sounds in Constructive Fraudulent Conveyance under 11 U.S.C. § 548(a)(1)(B); Count III seeks to invalidate the transfer from Daigle to 376 NM pursuant to 11 U.S.C. § 550(a)(2); Count IV seeks recovery for Unjust Enrichment; and Count V seeks a turnover order for the Debtor's equitable interest in the transfer as an asset of this bankruptcy estate pursuant to 11 U.S.C § 542. The Complaint also alleges violations of the automatic stay and the Barton Doctrine in Counts VI and VII, respectively.
The Defendants filed their Answer and Affirmative Defenses on March 7, 2022, (ECF No. 9), which was subsequently amended to assert a counterclaim for setoff and/or recoupment from any recovery that the Trustee may obtain in this proceeding. See ECF No. 10. Shortly thereafter, the Defendants filed a Motion for Summary Judgment as to Counts I-V of the Trustee's Complaint. ECF No. 11, ("Motion").[1] That Motion is now pending before the Court.
In their Motion, the Defendants argue that there are no genuine issues of material fact present, because the transfers that are the subject of the Trustee's Complaint were made for fair and adequate consideration. As such, the Defendants argue that they are entitled to summary judgment as a matter of law because the Trustee has not, and cannot, make a sufficient showing on an essential element of her case with respect to which she would have the burden of proof at trial.
The Trustee objected to the Motion, arguing that there are, indeed, several genuine issues of material facts in dispute, including whether the Debtor's property was transferred to Daigle with the actual intent to hinder, delay, and defraud creditors, and whether adequate consideration was given for the transfer of the Debtor's real property. ECF No. 12, (the "Objection"). The Trustee also assails the quality of the Defendants' evidence submitted in support of the Motion, including two supporting affidavits that the Trustee contends rely solely on inadmissible hearsay.
During a Pre-Trial Conference on April 7, 2022, the Court suspended the May 3, 2022 trial date held for the Trustee's Complaint, and in lieu thereof, indicated that it would instead hear oral argument on the Defendants' Motion and the Trustee's Objection thereto. See ECF No. 15.
Thereafter, the Court entered a Scheduling Order on the Motion, reserving May 20, 2022 for oral argument, but directing that if neither party requested a hearing for argument, the Court would address the Motion on the papers. ECF No. 21. No such request was filed. Accordingly, the Court's decision herein is based upon a review of the Motion, the Objection, the docket, the parties' supporting Local Rule 56 Statements and related Responses, and all attachments thereto.
For the reasons set forth herein, the Court concludes that the evidence in this record demonstrates that there are triable issues of material fact in genuine dispute that preclude the entry of summary judgment on Counts I-V. Accordingly, the Defendants' Motion is hereby DENIED, and the Trustee's Objection is hereby SUSTAINED.
The United States District Court for the District of Connecticut has jurisdiction over the instant proceeding under 28 U.S.C. § 1334(b), and the Bankruptcy Court derives its authority to hear and determine this matter on reference from the District Court under 28 U.S.C. §§ 157(a) and (b)(1) and the General Order of Reference of the United States District Court for the District of Connecticut dated September 21, 1984. This Adversary Proceeding constitutes a core proceeding under 28 U.S.C. §§ 157(b)(2)(H).
Federal Rule of Civil Procedure 56, made applicable to these proceedings by Federal Rule of Bankruptcy Procedure 7056, directs that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Bankr.P. 7056; Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A dispute is "genuine" when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and a fact is "material" if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In the Second Circuit, "only when reasonable minds could not differ as to the import of the evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir. 1991).
"The moving party bears the initial burden of informing the court of the basis for its motion and identifying the admissible evidence it believes demonstrates the absence of a genuine issue of material fact." Boland v. Wilkins, 2020 WL 4195740, at *1 (D. Conn. 2020) (citing Celotex, 477 U.S. at 323). "How the movant meets this burden and how the respondent may rebut the movant's showing is affected by the allocation of the evidentiary burden of persuasion if the dispute were to proceed to trial." In re Polichuk, 506 B.R. 405, 421 (Bankr. E.D. Pa. 2014). "[W]hen moving for summary judgment against a party who will bear the ultimate burden of proof at trial, the movant can satisfy its burden of establishing that there is no genuine material fact in dispute by pointing to an absence of evidence to support an essential element of the non-moving party's claim." Barry v. New Britain Bd of Educ., 2006 WL 3791388 at *2 (D. Conn. 2006) (citing Celotex, 477 U.S. at 322-23). Parker v. Sony Pictures Entm't, Inc., 260 F.3d 100, 111 (2d Cir. 2001) (quoting Celotex, 477 U.S. at 324).
Summary judgment must enter "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. In such a situation, "there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 322- 23.
"In cases like the instant one, where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the 'pleadings, depositions, answers to interrogatories, and admissions on file.'" Id. The nonmoving party must therefore "go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial." Id.
When ruling on motions for summary judgment, "the judge's function is not . . . to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249. In making this assessment, "all reasonable inferences are to be drawn, and all ambiguities resolved, in favor of the non-moving party." In re Bak, 2013 WL 653073 at *3 (Bankr. D. Conn. 2013) (citations omitted).
Local Rule 56(a)(1) of the Local Rules of Civil Procedure of the United States District Court for the District of Connecticut requires that a party moving for summary judgment file a Local Rule 56(a)(1) Statement of Undisputed Material Facts. D. Conn. L. R. 56(a)(1). Local Rule 56(a)(2) requires that a party opposing a motion for summary judgment file a Local Rule 52(a)(2) Statement of Facts in Opposition to Summary Judgment. D. Conn. L. R. 56(a)(2). Each material fact set forth in a movant's statement and supported by the evidence "will be deemed to be admitted (solely for the purposes of the motion) unless such fact is controverted by the Local Rule 56(a)(2) Statement required to be filed and served by the opposing party in accordance with this Local Rule . . ." See D. Conn. L. R. 56(a)(1); see also Parris v. Delaney (In re Delaney), 504 B.R. 738, 746-47 (Bankr. D. Conn. 2014).
Based upon a review of the parties' summary judgment submissions, in addition to the relevant pleadings in this Adversary Proceeding and the main bankruptcy case, and this Court's independent examination of those records, the Court finds the following material facts to which there is no genuine dispute:
1. The Defendant, Shawn Daigle ("Daigle"), is an individual residing in Glastonbury, Connecticut.
2. 376 NM South, LLC is a Connecticut Limited...
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