Merchandise v. Hill (In re Hill)
| Decision Date | 16 September 2013 |
| Docket Number | Case No.: 05-12590-BGC-7,A. P. No.: 12-00043 |
| Parties | In re: Clarence R. Hill, Jr. and Emily Hill, Debtors. Terry Lynn Merchant, Brenda Merchant, Kevin Cosby, and Vickie Cosby, Plaintiffs, v. Clarence R. Hill, Jr. and Emily P. Hill, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
The matter before the Court is the Complaint filed on March 12, 2012, by Terry Lynn Merchant, Brenda Merchant, Kevin Cosby, and Vickie Cosby.1
After notice, a trial was held on October 25, 2012. Appearing were Clarence Hill, one of the defendant-debtors; his attorney, Henry Lagman; Terry Lynn Merchant, one of the plaintiffs; and his attorney, Roderick Graham.2
The matter was submitted on testimony; exhibits; the records in the debtors' Chapter 7 case and this adversary proceeding; and arguments and briefs of counsel.
Based on the evidence, the Court finds:
Mr. Hill owned a travel agency through which he booked cruises and trips. In regard to cruises, his procedure was that a customer would ask to book a cruise then pay a small deposit, which Mr. Hill would send to the cruise company to hold a spot on a particular cruise. In this case, the cruise company was Carnival.
Sixty days prior to departure, the customer would be required to pay the balance owed on the cruise to Mr. Hill who would then forward those fund to the cruise company. If the balance was not paid by the customer to Mr. Hill or remitted by Mr. Hill to Carnival by the 60-day deadline, the customer's order would be cancelled and he or she would forfeit the spot on the cruise.
According to Mr. Merchant's testimony and Mr. Hill's own admission, in February 2005, Mr. Merchant purchased a Carnival cruise from Mr. Hill for his wife and him for about $3,600. The scheduled departure was May 18, 2005. Mr. Merchant paid Mr. Hill the required deposit of $300 ($150 for each person) when he booked the trip and also paid the balance prior to the 60-day deadline. That deadline was about March 18, 2005.
Mr. Hill did not remit the balance he received from Mr. Merchant to Carnival; consequently, the Merchants' place on the cruise was cancelled. Mr. Hill did not inform Mr. Merchant that the payment-balance had not been remitted to Carnival or that hisplace on the cruise had been cancelled until Mr. Merchant, who, having not received his tickets and other material, confronted Mr. Hill in person several days before the scheduled departure of the cruise.
The evidence shows that rather than paying Mr. Merchant's balance to Carnival as he should have, Mr. Hill used the money for who-knows-what, that is either for personal purposes or in the conduct of his business, which he admits was, at the time, floundering.
Not only did Mr. Hill not tell Mr. Merchant at the time the balance was not paid, in fact, Mr. Hill had a conversation with Mr. Merchant in March about a minor change Mr. Merchant requested to his trip itinerary. But even then, Mr Hill did not inform Mr. Merchant that the balance for his reservation had not been, and would not be, paid to Carnival as required.
After learning from Mr. Hill that his wife's and his cruise reservation had been cancelled, Mr. Merchant scrambled and booked a non-cruise trip for the same week for about $2,400, a substantial amount for Mr. Merchant, especially considering he had already paid Mr. Hill about $3,600.
Mr. Merchant testified that he was mad and distressed about Mr. Hill's defalcation, and disappointed that he and his wife would, because of that defalcation, be unable to go on the cruise they originally planned, paid for, and anticipated.
It turns out that Mr. Hill had, in the same manner, mistreated many other customers, including the other plaintiff Mr. Cosby. In regard to those other individuals, Mr. Hill took either their deposits or the balances due on these other customers' trips and used them for his own purposes rather than submitting them to other travel providers to whom they were supposed to be remitted.
Mr. Hill's actions spawned several criminal actions against him. Specifically, in regard to Mr. Merchant and Mr. Cosby, Mr. Hill was indicted by the Jefferson County grand jury on March 31, 2006, for "knowingly obtain[ing] or exert[ing] unauthorized control over, by deception ... $3,246.00 ... the property of Terry Merchant with the intent to deprive the owner of said property, in violation of section 13A-8-3 of the Alabama Criminal Code," and " "knowingly obtain[ing] or exert[ing] unauthorized control over, by deception... $3,246.00... the property of Kevin Cosby with the intent to deprive the owner of said property, in violation of section 13A-8-3 of the Alabama Criminal Code...." Plaintiffs' Exhibit 6 (parentheticals added).
Seventeen other victims were listed in that indictment. The wording relating to the crimes committed against them by Mr. Hill is essentially the same as that in regard to Mr. Merchant and Mr. Cosby, that is, Mr. Hill knowingly obtained or exerted unauthorized control over, by deception, a specified amount of money from each of the named individuals with the intent to deprive the owner of that money.
Each charge against Mr. Hill was for theft by deception, although the statute violated varied depending on the amount of money taken. Some of the counts, like those involving Mr. Merchant and Mr. Cosby, fell under Code of Ala., 1975, § 13A-8-3, which makes it a felony to steal $2,500 or more. As to victims from whom Mr. Hill stole less than $2,500 but more than $500, he was charged under Code of Ala., 1975, § 13A-8-4, likewise a felony. And in counts charging him with stealing less than $500 from particular individuals, he was charged with violating Code of Ala., 1975, § 13A-8-5, which is a class A misdemeanor.
The group of cases listed in this indictment was assigned Case No. CC06-1544. Mr. Hill ultimately pled guilty on August 7, 2007. He received a split sentence of 10 years with 2 to serve, although the latter was suspended. He was placed on probation and ordered to pay restitution to the victims in that case.
It is apparent from the case action summary in the criminal case that Mr. Hill was also the subject of several other criminal cases, to-wit: CC06-1545, CC06-1546, CC06-1547, CC06-1548, CC06-1549 and CC06-1550. The sentence imposed on him in CC06-1544 was ordered to run concurrently with the sentences imposed on him in those other cases. Those cases involved many other victims whose money he had, by his own admission at trial, spent on himself or his business after promising them that he would use the same to pay for trips and cruises that they had paid him to arrange. Plaintiffs' Exhibit 8.
In total, Mr. Hill was ordered to pay $127,000 in restitution to 82 victims. Defendant's Exhibit 2. He was ordered to pay Mr. Merchant and Mr. Cosby restitution of the amounts listed in the indictment, that is, $3,246 each. That order directed him to pay the money into court, and for the court to send the money to the victims as the court received it. Mr. Hill testified that as of the date of the trial, he had paid $20,715 of the restitution to the state court.
Mr. Hill's obligation to make restitution as part of his criminal sentence is, of course, nondischargeable. Colton v. Verola (In re Verola), 446 F.3d 1206, 1208 (11th Cir. 2006). Mr. Merchant and Mr. Cosby, however, seek civil judgments against him for not only the amounts he stole from them, but also for mental anguish damages and punitive damages.
Mr. Merchant and Mr. Cosby contend that the debts owed to them by Mr. Hill are nondischargeable pursuant to section 523(a)(2)(A) of the Bankruptcy Code. That section makes nondischargeable debts for, "money, property, services or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition ...." 11 U.S.C. § 523(a)(2)(A).
Before a debt may be declared nondischargeable pursuant to 523(a)(2)(A), a creditor must prove, "the debtor made a false statement with the purpose and intention of deceiving the creditor; the creditor relied on such false statement; the creditor's reliance on the false statement was justifiably founded; and the creditor sustained damage as a result of the false statement." Fuller v. Johannessen (In re Johannessen), 76 F.3d 347, 350 (11th Cir. 1996).
The crime for which Mr. Hill was indicted, and which he pled guilty to, was based on the same conduct complained of by Mr. Merchant and Mr. Cosby in this case. Under Alabama law, it is also one that is statutorily established in Code of Ala., 1975, § 13A-8-3, entitled "Theft of property in the first degree." That section provides, "The theft of property which exceeds two thousand five hundred dollars ($2,500) in value, or property of any value taken from the person of another, constitutes theft of property in the first degree." Code of Ala., 1975, § 13A-8-3(a). Theft of property in the first degree is a felony....
To continue reading
Request your trial