Pettie v. Ringo (In re White)
| Decision Date | 02 August 2016 |
| Docket Number | CASE NO. 14–65320–WLH,ADVERSARY PROCEEDING NO. 15–05421–WLH |
| Citation | 555 B.R. 883 |
| Parties | In re: Rocky Rene White, Debtor. Jason Pettie, as Chapter 7 Trustee for the Estate of Rocky Rene White, Plaintiff, v. Kevin Ringo and Shechem Industries, Inc., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
Jason L. Pettie, Decatur, GA, pro se.
Terrence Shannon, Terrence Shannon, P.C., Porterdale, GA, for Plaintiff.
Robert Jackson Wilson, Robert Jackson Wilson, P.C., Lawrenceville, GA, J. Michael Lamberth, Lamberth, Cifelli, Ellis & Nason, P.A., Atlanta, GA, for Defendants.
This matter is before the Court on Shechem's Motion for Partial Summary Judgment (“Motion”) (Docket No. 42). The Court finds this matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(E), and the Court has jurisdiction over this proceeding under 28 U.S.C. §§ 157 and 1334.
Debtor Rocky White (“Debtor”) filed his voluntary petition under Chapter 7 of the Bankruptcy Code on August 5, 2014. Plaintiff Jason Pettie, as Chapter 7 trustee for the estate of Debtor (“Plaintiff”), filed this Adversary Proceeding on October 30, 2015 against Shechem Industries, Inc. (“Shechem”) and Kevin Ringo (“Ringo”) (“Complaint”). In the Complaint, Plaintiff sought to avoid Debtor's transfer of his interest in certain business entities and real property, and sought the payment of a two million dollar debt allegedly owed to Debtor by Shechem. The Complaint alleges the debt should be paid under the theories of turnover, open account and unjust enrichment.
Shechem filed the Motion on June 6, 2016 seeking summary judgment on Counts 7, 8, and 9 of the Complaint, which are the claims for turnover, open account, and unjust enrichment, respectively (Docket No. 42). Plaintiff filed a response on June 27, 2016, arguing that certain agreements created obligations owed by Shechem to Debtor that survived the execution of the subsequent agreements (Docket No. 48). Shechem filed a reply on July 8, 2016 (Docket No. 58).
The Debtor was involved in the development of a technology to treat wastewater which is referred to by the parties as the NJUN System. Joe Forrester (“Forrester”) had experience in product manufacturing and had an interest in learning about wastewater treatment technology. Through his acquaintance with Keith Moore, Forrester became aware that Ringo was involved with the NJUN System. After being exposed to the NJUN System, Forrester formed Shechem with the intention of monetizing the value of the NJUN System. On December 22, 2009, Shechem and NJUN–One LLC (“NJUN–One”) entered into a contract that granted Shechem rights to install NJUN Systems throughout the state of Georgia for a fee of $600,000.
In the spring of 2010, Shechem had made its last payment under the agreement with NJUN–One. However, the NJUN System was not yet ready for market. The NJUN System needed additional development, and regulatory approval still needed to be obtained. Ringo requested additional funds, and further negotiations took place between Shechem, Ringo, and NJUN–Southeast (“NJUN–SE”). On June 3, 2010, Shechem negotiated a second agreement with NJUN–SE and Ringo that provided Shechem with the right to supply products associated with the NJUN wastewater system throughout six other states in the southeast (“Six States Agreement”). In exchange for the rights to supply these products, Shechem would pay NJUN–SE a Territory Fee of thirty million dollars. The Territory Fee would be paid in part in monthly installments. For the first year, the payments were at least $50,000 per month, and thereafter the payments were based on monthly sales.
The Territory Fee was also partially satisfied by Shechem purchasing real property located at 1390 Hillside Drive, Grayson, Georgia (“Hillside Property”) and leasing the property “to [Debtor] at the express direction of NJUN–SE.” The Six States Agreement further provided that Shechem had obtained a mortgage “in connection with the purchase of the property” and that Shechem “shall be responsible for satisfying the terms of the [mortgage] in full”. Under the Six States Agreement, Shechem could retain $250 of each monthly payment based on sales to pay on the mortgage. The Six States Agreement also provided that Shechem “shall transfer ownership of the property to [Debtor] within sixty (60) days of the [mortgage] having been satisfied in full”, at which time Shechem would be entitled to a two million dollar credit towards the fee Shechem owed NJUN–SE under the Six States Agreement. A lease was entered on June 3, 2010 between Shechem and Debtor, providing that Debtor would live in the property rent free while Shechem paid the mortgage on the property and that Debtor would pay taxes, insurance, and any homeowner association fees on the Hillside Property during the term of the lease (“Lease Agreement”).
On June 14, 2013 Shechem entered into a Patent License Agreement (“PLA”) with NJUN, LLC, NJUN Holding, LLC, NJUN–One, NJUN–SE, and Ringo. The PLA included a provision stating explicitly that the PLA was intended to supersede the Six States Agreement. On the same day, NJUN, LLC, NJUN–SE, Ringo, Shechem, and Debtor entered into an agreement terminating the Lease Agreement between Shechem and Debtor (“Lease Termination Agreement”). On December 27, 2013, the same parties entered into a revised lease termination agreement (“Revised Agreement”) that acknowledged the termination of the lease provided for in the Six States Agreement and also provided for the sale of the property. The language of the Revised Agreement expressly superseded the previous Lease Termination Agreement while affirming that the Lease Agreement was terminated as of June 14, 2013.
Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law”. Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Fed.R.Civ.P. 56(c) ; Fed. R. Bankr.P. 7056(c). “The substantive law [applicable to the case] will identify which facts are material.” Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party moving for summary judgment has the burden of proving there are no disputes as to any material facts. Hairston v. Gainesville Sun Pub. Co. , 9 F.3d 913, 918 (11th Cir.1993). A factual dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson , 477 U.S. at 248, 106 S.Ct. 2505.
The party moving for summary judgment has “the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any’ which it believes demonstrate the absence of a genuine issue of material fact.” United States v. Four Parcels of Real Prop. , 941 F.2d 1428, 1437 (11th Cir.1991) (citing Celotex Corp. , 477 U.S. at 323, 106 S.Ct. at 2553 ). What is required of the moving party, however, varies depending on whether the moving party has the ultimate burden of proof on the issue at trial.
When the nonmoving party has the burden of proof at trial, the moving party is not required to ‘support its motion with affidavits or other similar material negating the opponent's claim’ (cites omitted) in order to discharge this ‘initial responsibility’. Instead, the moving party simply may ‘show—that is, point out to the ... court—that there is an absence of evidence to support the nonmoving party's case, (cites omitted). Alternatively, the moving party may support its motion for summary judgment with affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial.
Four Parcels of Real Prop. , 941 F.2d at 1437 (citing Celotex , 477 U.S. at 323–31, 106 S.Ct. at 2553–57 ).
Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings. Fed.R.Civ.P. 56(e). Rather, the nonmoving party must present specific facts that demonstrate there is a genuine dispute over material facts. Hairston , 9 F.3d at 918. When reviewing a motion for summary judgment, a court must examine the evidence in the light most favorable to the nonmoving party and all reasonable doubts and inferences should be resolved in favor of the nonmoving party. Id.
An action for turnover related to a debt requires a showing that (a) the debt “is property of the estate” and (b) “is matured, payable on demand, or payable on order.” 11 U.S.C. § 542(b). As to the first prong, property is defined broadly to encompass “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541 ; Howell v. Bank of Am., N.A. (In re Dorsey) , 497 B.R. 374, 383 (Bankr.N.D.Ga.2013). As to the second element, a debt that is “presently payable,” i.e., “where payment is not subject to any condition precedent” is matured, payable on demand, or payable on order. Miller v. Jannetta (In re Irwin) , 509 B.R. 808 (Bankr.E.D.Pa.2014). Courts in the Eleventh Circuit generally follow the majority rule that a debt must be undisputed to be subject to turnover. See, e.g. , In re Fontainebleau Las Vegas Holdings, LLC , 417 B.R. 651, 666 (S.D.Fla.2009) aff'd sub nom. Ave. CLO Fund Ltd. v. Bank of Am., NA , 709 F.3d 1072 (11th Cir.2013) () (emphasis in original).
The debt here is clearly in dispute. Plaintiff alleges that the Six States Agreement resulted...
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