Matter of Mickler, Bankruptcy No. 80-1226
| Decision Date | 14 June 1985 |
| Docket Number | Adv. No. 81-92.,Bankruptcy No. 80-1226 |
| Citation | 50 BR 818 |
| Parties | In the Matter of Bartley L. & Elaine MICKLER, Debtor. Bartley L. MICKLER, Plaintiff, v. MARANATHA REALTY ASSOC., INC., Defendant. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
COPYRIGHT MATERIAL OMITTED
Don M. Stichter, Tampa, Fla., for plaintiff.
Neil Butler, Tallahassee, Fla., for defendant.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND MEMORANDUM OPINION
THIS IS a Chapter 11 reorganization case and the immediate matter under consideration involves a civil action originally filed by Bartley L. Mickler against Maranatha Realty Associates (Maranatha) and Stanley E. Kreimer (Kreimer) in the Circuit Court of the Sixth Judicial Circuit, Pasco County. The action was removed on Motion of the Defendants to the United States District Court for the Middle District of Florida, Case No. 79-1171-Civ.-T-GC.
On August 20, 1980, Bartley L. Mickler and his wife, Elaine Mickler, filed their joint Voluntary Petition for Relief pursuant to Chapter 11 of the Bankruptcy Code. On February 20, 1981, the civil suit which was then pending in the District Court was removed to this Court. Maranatha and Kreimer filed several claims in this Chapter 11 case. In due course, the Micklers objected to the allowance of these claims. In addition, they also filed an adversary proceeding against Maranatha and Kreimer which involved the same issues as the civil suit in the District Court. The adversary proceeding and the objections to claims were consolidated for trial.
The original complaint, as amended, set forth three claims in separate Counts. The claim asserted in Count I is based on the theory of slander of title and seeks compensatory damages in the amount of $900,000 plus punitive damages. In support of this claim, Mickler alleges that on August 7, 1979, Maranatha and Kreimer, without Mickler's consent, re-recorded a mortgage, previously executed by the Micklers and recorded in the Public Record, and that the re-recorded mortgage contained a legal description different from that in the original mortgage and purported to encumber a substantially larger tract of land than which was encumbered by the original mortgage.
The claim in Count II seeks to cancel a promissory note, mortgages and an option and also seeks a determination of the validity and extent of the Defendant's interest in property owned by the Micklers. In support of this claim, Mickler alleges that he was induced by one Earl Strother to execute (1) a promissory note in the amount of $400,000 in favor of Maranatha and Kreimer; (2) a mortgage recorded February 6, 1979 and re-recorded on August 7, 1979; and (3) an option dated January 31, 1979 for which he received no consideration.
Count III seeks cancellation of a promissory note and mortgage, and a determination of the validity and extent of the Defendants' interest in the property. The relief sought is based on the contention that Mickler did not execute or authorize the execution of a promissory note in favor of Maranatha in the amount of $400,000 and a mortgage, both dated July 15, 1978. Further, Mickler alleges that he did not receive any consideration in exchange for the execution of these instruments.
In response to Mickler's complaint, Maranatha and Kreimer each filed a counterclaim in which they essentially seek either validation of the re-recorded mortgage based on mutual mistake as to the legal description in the original mortgage, or in the alternative, damages for fraudulent inducement to lend money. Maranatha and Kreimer seek to recover the monies claimed to be due as evidenced by the promissory note dated January 31, 1979. The Micklers filed an "answer" (sic) to the counterclaims and asserted affirmative defenses of total failure of consideration for the note and mortgage and usury.
On March 5, 1982, Maranatha and Kreimer filed a Motion for Partial Summary Judgment on two issues relating to Mickler's defense of usury contending that the transaction was controlled by the laws of Georgia, therefore, based on the laws of Georgia, the transaction was not usurious. On May 3, 1982, this Court entered a Partial Summary Judgment in favor of Mickler having concluded that, ". . . the loan transaction shall be governed by the laws of Florida as existed prior to July 1, 1979 . . ." and that the maximum allowable rate of interest is 10% per annum. This determination was affirmed on appeal by order of United States District Court on March 31, 1983. Thus, there is no doubt that the transaction is civilly usurious on its face simply because the promissory note executed on January 31, 1979 carried an interest rate of 12% per annum.
The matters currently under consideration represent, without a doubt, the most significant and complicated controversy involving the Micklers. The relevant factual background spans a period of approximately three and one-half years. Due to the number of players, the complexity of the transactions and the several claims asserted in this action, it is necessary to trace the factual background in detail.
At the time relevant, the Micklers were, and still are, the owners of a large tract of land located in West Pasco County, Florida. Although Mickler originally held approximately 5,000 acres acquired from his father in the 1940's, his holdings shrunk to 1,600 acres by 1978. As early as 1976 the Micklers began to experience financial difficulties and Mr. Mickler began to pursue alternative methods to produce income. As part of this endeavor, on August 7, 1976, Mr. Mickler entered into a six month agreement with W.E. Strother, Jr. (Strother) and John Barry Allen (Allen) who agreed to prepare a detailed master plan for the development of approximately 2,000 acres owned by the Micklers fronting on Highway 19, Pasco County, Florida (Pl's Exh. No. 30). The first phase of the Master Plan was to be designed in large part to include the development of (1) a retirement village; (2) a commercial shopping center and (3) an entertainment complex including a dinner theatre. The agreement with Strother and Allen provided, in part, that neither Allen nor Strother were granted any authority to contract for services on behalf of Mickler or to bind Mickler contractually without express written authority by Mickler.
On August 20, 1976, approximately two weeks after the Allen-Strother agreement, Mickler borrowed $1.8 million from Community Bank of West Pasco. This loan was secured by a mortgage encumbering his real properties located in Pasco County. In the summer of 1977, Mickler borrowed an additional sum of money from Ranon & Jiminez, Inc., a local construction company. This loan was obtained by Mickler in connection with the proposed shopping center project to be built by Ranon & Jiminez. To secure this loan, Mickler executed a mortgage in favor of Ranon & Jiminez on part of his real property (Dep. of Bartley Mickler, Df's Exh. No. 4, p. 14 1. 6-7).
In May, 1978, Mickler was sued by Anclote Psychiatric Center, Inc., a psychiatric hospital and ultimately suffered a judgment in the amount of $48,913.04. The judgment was duly recorded and thus became a lien on his real estate located in Pasco County. In addition to these borrowings, Mickler sold off some of his acreage and also dabbled in other business ventures such as a restaurant, albeit unsuccessfully. Needless to say, the financial condition of the Debtor continued to deteriorate and he was constantly in dire need of funds. The project undertaken by Strother and Allen failed to produce anything concrete under the "Master Plan" and at the expiration of the six months, Allen departed.
Despite the expiration of the six month term of the 1976 "Master Plan" agreement between Mickler, Strother and Allen, Strother remained on the scene and continued to pursue the shopping center-dinner theatre project well into 1979. Particularly, Strother sought to obtain "seed money", that is, money needed to generate additional funding, construction financing and permanent, or "take-out" financing. It is without serious doubt that Strother exercised rather wide latitude with regard to Mickler's financial affairs or at least with regard to the use of Mickler's money although there is no evidence in the record that Mickler ever expressly authorized Strother to do so. Strother was never granted a Power of Attorney by Mickler and it is clear that Strother frequently acted without Mickler's knowledge and consent. There is no doubt that Mickler relied heavily on others to monitor and execute his business affairs, however, it appears that his primary advisor was his attorney, Joe McClain, in whom Mickler placed total confidence.
This is the basic factual background which sets the stage for the entrance of Maranatha and ultimately Kreimer. Maranatha is a Georgia corporation formed in November, 1977 (Dep. of Hamilton, Pl's Exh. No. 29, p. 5-6). The business of the corporation was operated from the Marietta, Georgia residence of Herbert M. Hamilton, Jr. (Hamilton) who was the President of Maranatha, as well as a 60% stockholder. He also served as its director. Other stockholders in the corporation were Barbara Price (20%) and John Stone (20%), residents of Sarasota County, Florida, neither of whom were active in the day to day operations of Maranatha. Hamilton, prior to forming Maranatha was an insurance man who later on became an ordained minister and then re-entered the business world in the areas of real estate and insurance.
Hamilton was introduced to Strother by George Foote, an architect who was performing some architectural services for Mickler in Holiday, Florida. Strother, who was anxious to procure financing for the shopping center-dinner theater project, began to pursue Maranatha via Hamilton in order to obtain the required "seed money." In June, 1978, Hamilton arranged for a meeting to be held in Sarasota so that Strother could present his shopping...
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