Origin Bank v. Barrett (In re World Health Jets LLC)
Decision Date | 21 October 2019 |
Docket Number | ADV. PROC. 19-00026-NPO,CASE NO. 16-00296-NPO |
Citation | 610 B.R. 118 |
Parties | IN RE: WORLD HEALTH JETS LLC, Debtor. Origin Bank, Plaintiff v. Mitchell Chad Barrett, Defendant |
Court | U.S. Bankruptcy Court — Southern District of Mississippi |
Shauncey Hunter Ridgeway, Sarah Beth Wilson, Christian & Small, LLP, Christopher H. Meredith, Copeland Cook Taylor & Bush, Ridgeland, MS, William H. Leech, Wise Carter Child & Caraway, P.A., Jackson, MS, for Plaintiff.
John D. Moore, Ridgeland, MS, for Defendant.
This matter came before the Court on the Order issued by Judge Carlton W. Reeves of the U.S. District Court for the Southern District of Mississippi, Northern Division (the "District Court") in Origin Bank, formerly known as Community Trust Bank v. Mitchell Chad Barrett , No. 3:17-cv-00920-CWR-LRA (S.D. Miss. June 11, 2019) (the "Referral Order") (Adv. Dkt. 1),1 referring the Adversary to this Court for final adjudication pursuant to 28 U.S.C. § 157(a). Presently before the Court are cross-motions for summary judgment as well as related responses, briefs, and a motion, all filed originally in the District Court, referred by Judge Reeves to this Court, and docketed in the Adversary as follows: (1) the Motion for Summary Judgment (the "Barrett Summary Judgment Motion") (Adv. Dkt. 65) filed by Mitchell Chad Barrett ("Barrett"); the Memorandum in Support of Motion for Summary Judgment (the "Barrett Summary Judgment Brief") (Adv. Dkt. 66) filed by Barrett; Origin Bank's Response to Defendant's Motion for Summary Judgment (the "Origin Response to Barrett Summary Judgment Motion") (Adv. Dkt. 82) filed by Origin Bank; the Memorandum Brief in Support of Origin Bank's Response to Defendant's Motion for Summary Judgment (the "Origin Brief in Support of Response to Barrett Summary Judgment Motion") (Adv. Dkt. 83) filed by Origin Bank; Mitchell Chad Barrett's Rebuttal to Origin's Response to Motion for Summary Judgment (the "Barrett Rebuttal") (Adv. Dkt. 84) filed by Barrett; the Memorandum in Support of Mitchell Chad Barrett's Rebuttal to Origin's Response to Motion for Summary Judgment (the "Barrett Rebuttal Brief") (Adv. Dkt. 85) filed by Barrett; (2) Origin Bank's Motion for Summary Judgment (the "Origin Summary Judgment Motion" or, together with the Barrett Summary Judgment Motion, the "Cross-Motions for Summary Judgment") (Adv. Dkt. 69) filed by Origin Bank; the Memorandum Brief in Support of Origin Bank's Motion for Summary Judgment (the "Origin Summary Judgment Brief") (Adv. Dkt. 70) filed by Origin Bank; Mitchell Chad Barrett's Response to Origin Bank's Motion for Summary Judgment (the "Barrett Response to Origin Summary Judgment Motion") (Adv. Dkt. 80) filed by Barrett; Mitchell Chad Barrett's Memorandum in Support of Response to Origin Bank's Motion for Summary Judgment (the "Barrett Brief in Support of Response to Origin Summary Judgment Motion") (Adv. Dkt. 81) filed by Barrett; the Rebuttal Memorandum in Support of Origin Bank's Motion for Summary Judgment (the "Origin Rebuttal Brief") (Adv. Dkt. 86) filed by Origin Bank; (3) the Motion to Strike Affidavit of Randy Impson Attached to Origin Bank's Motion for Summary Judgment (the "Motion to Strike") (Adv. Dkt. 78) filed by Barrett; the Memorandum in Support of Motion to Strike Affidavit of Randy Impson Attached to Origin Bank's Motion for Summary Judgment (the "Brief in Support of Motion to Strike") (Adv. Dkt. 79) filed by Barrett; Origin Bank's Response and Objection to Defendant's Motion to Strike the Affidavit of Randy Impson Attached to Origin Bank's Motion for Summary Judgment (the "Origin Response to Motion to Strike") (Adv. Dkt. 90) filed by Origin Bank; and the Memorandum Brief in Support of Origin Bank's Response and Objection to Defendant's Motion to Strike the Affidavit of Randy Impson Attached to Origin Bank's Motion for Summary Judgment (the "Origin Brief in Support of Response to Motion to Strike") (Adv. Dkt. 91) filed by Origin Bank.
Barrett attached four (4) exhibits, marked as Exhibits "A" through "D" (Adv. Dkt. 65-1 to 65-4), to the Barrett Summary Judgment Motion and five (5) exhibits, marked as Exhibits "A" through "E" (Adv. Dkt. 80-1 to 80-5), to the Barrett Response to Origin Summary Judgment Motion. Origin Bank attached three (3) exhibits, marked as Exhibits "1" through "3" (Adv. Dkt. 69-1 to 69-11), to the Origin Summary Judgment Motion and five (5) exhibits, marked as Exhibits "1" through "5" (Adv. Dkt. 82-1 to 82-12), to the Origin Response to Barrett Summary Judgment Motion. Barrett attached four (4) exhibits, marked as Exhibits "A" through "D" (Adv. Dkt. 78-1 to 78-4), to the Motion to Strike, and Origin Bank attached one (1) exhibit, marked as Exhibit "1" (Adv. Dkt. 90-1 to 90-8), to the Origin Response to Motion to Strike. Many of the exhibits are redundant. For clarity and ease of reference, citations to exhibits are to the docket number where that exhibit first appears in the record.
The Court has jurisdiction over the subject matter of and the party to this proceeding pursuant to 28 U.S.C. § 1334. This matter constitutes a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). The parties have agreed that this Court has the statutory power and constitutional authority to adjudicate and finally dispose of all claims in the Adversary. (Adv. Dkt. 94, 99). Notice of the Cross-Motions for Summary Judgment, the Motion to Strike, and the related responses and briefs was proper under the circumstances.
At a status conference held on August 6, 2019, the Court expressed its concern that the docket in the Adversary may not include all documents filed in the District Court related to the Cross-Motions for Summary Judgment and the Motion to Strike. (Adv. Dkt. 102). The Court, therefore, ordered the parties from the bench to file a stipulation either confirming that the docket was complete or specifying those documents that were missing from the docket. On August 9, 2019, the parties filed the Joint Stipulation Regarding Record Transfer (Adv. Dkt. 107) confirming that the docket in the Adversary is accurate and complete.
1. Barrett is a pharmacist who in 2013 formed World Health Jets, LLC ("WHJ") under the laws of Mississippi. (Adv. Dkt. 69-10 at 5). WHJ was one of several companies operating under the umbrella of World Health Industries, Inc. ("WHI"), a management consultant pharmaceutical company purchased by Barrett in 2008. (Adv. Dkt. 69-10 at 6). All WHI-affiliated companies were retail pharmacies with the exception of WHJ, which was formed as an asset-holding company.
2. On November 27, 2013, WHJ obtained a commercial loan from Origin Bank, formerly known as Community Trust Bank,3 in the original principal amount of $3,150,000.00 (the "WHJ Loan") to finance the purchase of a jet aircraft, or more specifically a 2013 Embraer Phenom 100 EMB 500 (the "Airplane"). Five days before Origin Bank extended the WHJ Loan, Origin Bank sent Barrett a letter dated November 22, 2013 proposing the terms of the WHJ Loan "subject to customary due diligence" (the "Terms Letter") (Adv. Dkt. 82-12). The Terms Letter identified Barrett, James L. Bennett ("Bennett"), David Jason Rutland ("Rutland"), and WHI as guarantors of the WHJ Loan. (Adv. Dkt. 69-10 at 14; Adv. Dkt. 82-12 at 1). In connection with the WHJ Loan and thereafter Barrett provided personal financial statements to Origin Bank for the years of 2013, 2014, and 2015. (Adv. Dkt. 69-1, ¶ 11).
3. The WHJ Loan is evidenced by a Promissory Note (the "WHJ Note") (Adv. Dkt. 69-2 at 1-2), a Business Loan Agreement (the "WHJ Loan Agreement") (Adv. Dkt. 69-2 at 3-8), and a Notice of Final Agreement (the "Notice of Final Agreement") (Adv. Dkt. 69-2 at 9-10) (collectively, the "WHJ Loan Documents"). The WHJ Loan Agreement and the Notice of Final Agreement listed the same guarantors that were identified in the Terms Letter: Barrett, WHI, Rutland, and Bennett (Adv. Dkt. 69-2 at 5, 9). The WHJ Loan Documents are signed on behalf of WHJ by Rutland, its then managing member. (Adv. Dkt. 69-10 at 10). The Notice of Final Agreement also is signed by Barrett, Bennett, and WHI. (Adv. Dkt. 69-2 at 10).
4. Pursuant to the terms of the WHJ Loan Documents, WHJ agreed to repay the WHJ Loan in monthly installments of $23,793.70 beginning December 27, 2013 (the "WHJ Debt") (Adv. Dkt. 69-2 at 1). The last payment became due on November 27, 2018.
5. As security for the repayment of the WHJ Debt:
6. After WHJ provided Origin Bank with the executed WHJ Note, the WHJ Loan Agreement, the Aircraft Security Agreement, and the WHJ Guaranty, Origin Bank funded the WHJ Loan, which WHJ used to purchase the Airplane.
7. WHJ operated the Airplane from the Jackson-Evers International Airport in Jackson, Mississippi, on behalf of WHI so that Barrett could call on doctors and other prescribers of medical prescriptions from California to the northeastern part of the United States on behalf of WHI's affiliated pharmacies. (Case No....
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...Co., 671 F.3d 512, 516 (5th Cir. 2012) (internal quotation marks and citations omitted). 79. Id. 80. In re World Health Jets LLC, 610 B.R. 118, 136 (Bankr. S.D. Miss. 2019) (citing Fed. R. Evid. 803(6) & Love v. Nat'l Med. Enters., 230 F.3d 765, 776 (5th Cir. 2000)). 81. Dkt. No. 26-1 at 6,......