Phx. Corp. Recovery Servs. v. Astrachan (In re Beaulieu Grp.)

Decision Date29 September 2021
Docket Number17-41677-BEM,ADVERSARY PROCEEDING No 18-4027-BEM
CourtUnited States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia


Barbara Ellis-Monro U.S. Bankruptcy Court Judge

This matter is before the Court on Defendants' Motion to Dismiss (the "Motion"). [Doc. 142]. The Motion requests dismissal of Plaintiff's Amended Complaint (the "AC") [Doc. 122] with prejudice. The AC, filed by Plaintiff, the Liquidating Trustee for Debtors Beaulieu Group, LLC ("Beaulieu") and Beaulieu Trucking, LLC (together "Debtors"), asserts claims for Breach of Fiduciary Duties and Breach of Duty to Creditors (Counts 1, 10), Waste of Corporate Assets (Count 12), Avoidable Transfers (Counts 2-6), Unjust Enrichment (Counts 7, 9), Breach of Contract (Count 8), Recovery of Unlawful Distributions (Count 11), and Objections to Claims (Counts 13-28). Defendants are managers and officers of Beaulieu and entities affiliated with Beaulieu or its managers and officers.[1]

Defendants filed a joint brief in support of the Motion (the "Master Brief") [Doc. 143], as well as filing individual supplemental briefs. Plaintiff filed responses and Defendants filed replies. The Motion is now ripe for decision. For the reasons explained herein, the Court will grant the Motion in part and deny the Motion in part.

I. Preliminary Matters
A. The AC Was Filed in Compliance With Rule 15

Defendants contend the AC was filed in violation of Federal Rule of Civil Procedure 15, made applicable in this proceeding by Federal Rule of Bankruptcy Procedure 7015, [2]because Plaintiff obtained neither leave of Court nor written consent from Defendants prior to filing the AC. Rule 15(a)(1) permits a party to amend its pleading once as a matter of course if, among other things, "the pleading is one to which a responsive pleading is required … 21 days after service of a motion under 12(b)[.]" Fed.R.Civ.P. 15(a)(1)(B). Otherwise, "a party may amend its pleading only with the opposing party's written consent or the court's leave." Id. 15(a)(2). The original complaint was filed on August 29, 2018. [Doc. 1]. Defendants filed a motion to dismiss the original complaint on January 7, 2019 [Doc. 75], such that the deadline for amending by right would have expired on January 28, 2019.

Plaintiff argues that the parties' multiple consent orders extending deadlines in this proceeding, including a consent order extending the "Deadline for Plaintiff to Respond to Any Motions filed in Response to the Complaint" to May 24, 2019 (the "Consent Order") [Doc. 120], extended the time for it to file an amended complaint by right or constituted written consent for Plaintiff to file an amended complaint. The AC was filed within the extended deadline on May 23, 2019. To the extent the Court requires a motion to amend, Plaintiff made such motion in its response to the Master Brief. [Doc. 170 at 17 n.11].

The Court agrees that the AC meets the requirements of Rule 15. The Consent Order did not limit the type of response Plaintiff could file to the prior motion to dismiss, and therefore the extension in the Consent Order applied to filing an amended complaint. But even if the Consent Order were not sufficient to extend the deadline in Rule 15(a)(1)(B), the Court finds it appropriate to allow the AC in light of the fact that the Motion to Dismiss has been fully briefed to the tune of more than 60 total briefs, responses, and replies.

B. The AC Is Not a Shotgun Pleading

Defendants argue that the AC should be dismissed as an impermissible shotgun pleading. Such pleadings violate the requirement in Rule 8(a)(2) that a complaint include "a short and plain statement of the claim showing the pleader is entitled to relief" and/or the requirement in Rule 10(b) to state claims in numbered paragraphs limited to a single set of circumstances, and stating each claim founded on a separate transaction in a separate count if doing so would promote clarity. Weiland v. Palm Beach County Sheriff's Office, 792 F.3d 1313, 1320 (11th Cir. 2015). "The unifying characteristic of all types of shotgun pleadings is that they fail to one degree or another, and in one way or another, to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests." Id. at 1323.

The Eleventh Circuit has identified four categories of shotgun pleadings, as follows: (1) "a complaint containing multiple counts where each count adopts the allegations of all preceding counts, causing each successive count to carry all that came before and the last count to be a combination of the entire complaint"; (2) a complaint that is "replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action"; (3) a complaint that fails to separate "into a different count each cause of action or claim for relief"; and (4) a complaint that asserts "multiple claims against multiple defendants without specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against." Id. at 1321-23.

Defendants contend the AC is a shotgun pleading because (1) it asserts multiple claims against multiple defendants without sufficient specificity; (2) it re-alleges all allegations and all preceding counts into each subsequent count; and (3) it is replete with conclusory and vague allegations. [Doc. 143 at 15-20]. Although the AC is burdened with 649 paragraphs over nearly 150 pages and a multiplicity of conclusory statements, the Court cannot conclude that it is a shotgun pleading. The "Parties" section of the AC describes each defendant, including information such as position, dates of service, and relationship to Beaulieu or other defendants. [AC ¶ 6-46]. The "Factual Background" section of the AC identifies specific actions, inaction, and other conduct that form the basis of the various counts of the AC. [AC ¶ 68-365, 370-391]. Each count identifies a specific cause of action and the defendants against which it is asserted. Although each count incorporates all preceding paragraphs, including those of the preceding counts, this is not fatal to the AC as many of the same relevant facts are common to multiple counts. Based on the foregoing, the Court cannot conclude that the AC fails to give Defendants adequate notice of the claims against them or the grounds upon which the claims rest. To the extent Defendants seek either dismissal or a direction for Plaintiff to restate the AC based on violations of Rule 8 and Rule 10, that request will be denied.

C. The CAMI Trust Will Be Dismissed From the Proceeding

Plaintiff names The CAMI Trust as one of the defendants to this action as well as five individuals in their capacity as trustees of The CAMI Trust. Certain of the defendants argue that the Trust is not an entity with the capacity to sue or be sued, and therefore any claims against the Trust must be dismissed. [Doc. 163 n.1]. Plaintiff offered no response to this argument. [Doc. 185].

Rule 17, made applicable by Bankruptcy Rule 7017, requires an action to "be prosecuted in the name of the real party in interest" and provides that the trustee of an express trust may sue in its own name. Fed.R.Civ.P. 17(a)(1)(E). The Rule further provides that capacity to sue or be sued is determined "by the law of the state where the court is located" for parties other than an individual not acting in a representative capacity or a corporation. Id. 17(b)(3).

The Revised Georgia Trust Code of 2010, O.C.G.A. § 53-12-1 et seq., defines a trustee as "the person or persons holding legal title to the property in trust." O.C.G.A. § 53-12-2(16); see also O.C.G.A. § 53-12-200 ("A trustee shall have legal capacity under Georgia law to acquire, hold, and transfer title to property.") With some exceptions not relevant here, "'where the legal title is in a trustee, such trustee is the proper person to maintain or defend actions involving the trust estate.'" Rollins v. Rollins, 338 Ga.App. 308, 318, 790 S.E.2d 157, 165 (2016) (emphasis added). See also O.C.G.A. § 53-12-6 (2010) (setting forth the jurisdiction for suits "by or against a trustee" vs. actions "concerning the construction, administration, or internal affairs of a trust").[3]Here, the claims involve the trust estate rather than the administration of the trust. Therefore, based on the foregoing, the Court concludes the trustees rather than The CAMI Trust are the appropriate defendants for claims against the Trust. Because the trustees have already been made defendants in their representative capacity, the Court will dismiss The CAMI Trust from this proceeding.

D. The Court Lacks Personal Jurisdiction Over Beaulieu International

The AC asserts claims against Defendant Beaulieu International Group NV ("Beaulieu International")[4] for fraudulent transfers (Counts 2 and 3), liability for avoided transfers (Count 6), and unjust enrichment (Count 9). Beaulieu International seeks to dismiss the claims against it for lack of personal jurisdiction pursuant to Rule 12(b)(2), made applicable by Bankruptcy Rule 7012(b). When the summons and complaint are served in accordance with Bankruptcy Rule 7004 or the applicable provisions of Rule 4, then the Court may exercise personal jurisdiction over the defendant if doing so "is consistent with the Constitution and laws of the United States[.]" Fed.R.Bankr.P. 7004(f). Due process is satisfied if the defendant has sufficient minimum contacts with the forum so as not to "offend 'traditional notions of fair play and...

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