Renasant Bank v. Harrell (In re Harrell)
| Decision Date | 28 March 2019 |
| Docket Number | CASE NO. 18-53081-BEM,ADVERSARY PROCEEDING NO. 18-5115-BEM |
| Parties | IN RE: Gary Buford Harrell and Gloria Jean Harrell, Debtors. Renasant Bank f/k/a Merchants and Farmers Bank, Plaintiff, v. Gloria Jean Harrell, Defendant. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia |
IT IS ORDERED as set forth below:
This matter comes before the Court on Plaintiff Renasant Bank's Motion for Summary Judgment (the "Motion") [Doc. 7], filed November 20, 2018. In the Motion, Plaintiff seeks a determination that a debt owed to it by Defendant Gloria Jean Harrell is nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (a)(6). This Court has jurisdiction pursuant to 28 U.S.C. § 157(b)(2)(I). For the reasons set forth below, the Motion will be granted as to the § 523(a)(6) claim and denied as to the § 523(a)(2)(A) claim.
Summary judgment is governed by Fed. R. Bankr. P. 7056 and Fed. R. Civ. P. 56, which provides that the "court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The substantive law applicable to the case determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986).
The moving party has the burden of establishing its entitlement to summary judgment. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). The moving party must identify the pleadings, discovery materials, or affidavits that show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553 (1986). Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings to defeat summary judgment. Anderson, 477 U.S. at 249, 106 S. Ct. at 2510 (citations omitted); see Fed. R. Civ. P. 56(c)(1).
In deciding a motion for summary judgment, the Court views the evidence and reasonable inferences in favor of the nonmoving party. Gray v. Manklow (In re Optical Tech., Inc.), 246 F.3d 1332, 1334 (11th Cir. 2001). Material facts contained in the moving party'sstatement of material facts that are not specifically controverted by the nonmoving party will be deemed admitted. BLR N.D. Ga. 7056-1(a)(2). In a dischargeability action, the objecting creditor must prove its case by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 291, 111 S. Ct. 654, 661 (1991).
A. The Statement of Material Facts
BLR ("Local Rule") 7056-1 provides, in relevant part:
The respondent to a motion for summary judgment shall attach to the response a separate and concise statement of material facts, numbered separately, as to which the respondent contends a genuine issue exists to be tried. Response should be made to each of the movant's numbered material facts. All material facts contained in the moving party's statement that are not specifically controverted in respondent's statement shall be deemed admitted.
BLR 7056-1(a)(2). Plaintiff filed its Statement of Material Undisputed Facts (the "SMF") with the Motion. [Doc. 7-1]. Defendant has not filed a response to the SMF that complies with BLR 7056-1(a)(2). Accordingly, all material facts in the SMF are deemed admitted. They are reproduced below, along with allegations from the complaint that Defendant admitted in her answer.1
Defendant's debt obligations to Plaintiff arise from four separate lawsuits in Georgia and Florida that Plaintiff, by way of its predecessor in interest, Merchants & Farmers Bank, filed against Defendant and certain family members and associated companies. [Doc. 1 ¶ 5; Doc. 6 ¶ 5]. In total, those lawsuits sought to collect on a debt owed by Defendant as a result of certain unpaid loan obligations, together totaling more than $3 million. [Doc. 1 ¶ 6; Doc. 6 ¶ 5].
On February 4, 2011, Plaintiff filed suit against Defendant in Fulton County Superior Court, in an action entitled Merchants & Farmers Bank v. Gloria Jean Harrell, Rhonda Lee Barney, Gloria Whitney Harrell a/k/a Whitney Harrell, Gloria's House of Hope, Inc., and Furniture Consignment Boutique Corporation, Civil Action File No.: 2011CV196112 (the "Superior Court Case"). [SMF ¶ 1]. In the Superior Court Case, Plaintiff asserted claims of fraudulent transfer and fraudulent conveyance pursuant to O.C.G.A. §§ 18-2-74(a) and 18-2-75(a)-(b). [SMF ¶ 2]. The Superior Court Case was filed in the name of Plaintiff's predecessor-in-interest, Merchants & Farmers Bank. [SMF n.1]. During the pendency of the Superior Court Case, Merchants & Farmers Bank merged with Plaintiff.2 [Id.].
On May 9, 2012, the Superior Court of Fulton County (the "Superior Court") entered an order granting Plaintiff's motion for summary judgment (the "Summary Judgment Order" or "SJO") in which it held that Defendant was liable to Plaintiff for certain fraudulent transfers (collectively, the "Transfers"), including the transfer of her residence to her daughters (the "House Transfer"), as well as cash transfers totaling over $500,000.00 to one of her daughters and certain entities held by family members. [SMF ¶ 3; Doc. 1 ¶ 9; Doc. 6 ¶ 7]. In the Summary Judgment Order, the Superior Court found that Defendant's transfer of the house and cash were fraudulent transfers as a matter of law under both O.C.G.A. § 18-2-74(a)(1), actual fraud, and O.C.G.A. § 18-2-75(a)3, constructive fraud. [SMF ¶ 4; Doc. 1 ¶ 9; Doc. 6 ¶ 7]. Accordingly, the Superior Court found that Plaintiff was entitled to relief under Georgia's Uniform Fraudulent Transfer Act, O.C.G.A. § 18-2-70, et seq. [SMF ¶ 5; Doc. 1 ¶ 9; Doc. 6 ¶ 7].
The Georgia Court of Appeals affirmed the Summary Judgment Order and the Georgia Supreme Court denied Defendant's petition for a writ of certiorari. [SMF ¶ 6; Doc. 1 ¶ 11, 12; Doc. 6 ¶ 7]. After Defendant exhausted her appeal options, the Superior Court set the case for a trial on damages. [Doc. 1 ¶ 13; Doc. 6 ¶ 7]. On December 10, 2013, Defendant and her co-defendants in the underlying case entered into a Consent Order and Final Judgment for Equitable Relief (the "Consent Order") by and through their counsel of record. [SMF ¶ 7].4
In the Consent Order, Defendant acknowledged and agreed that the Superior Court previously found that "the House Transfer and the Money Transfers were fraudulent as a matter of law under O.C.G.A. § 18-2-74(a)(1) in that they were completed with the actual intent to hinder, delay, and defraud." [SMF ¶ 8]. Defendant also acknowledged and agreed that "The [Superior Court] also found that the House Transfer and the Money Transfers were the result of willful and malicious conduct and resulted in injury to [Plaintiff]." [SMF ¶ 9]. In the Consent Order, the Court awarded Plaintiff a final monetary judgment against Defendant and her co-defendants in the underlying case, jointly and severally, in the amount of $1 million. [SMF ¶ 10].
On February 23, 2018, Defendant and her husband filed their voluntary petition for Chapter 7 bankruptcy. [SMF ¶ 11]. In her petition, Defendant stated that she was seeking to avoid Plaintiff's judgment lien pursuant to 11 U.S.C. § 522(f).5 [SMF ¶ 12; Case No. 18-53081, Doc. 1 at 54]. On May 29, 2018, Plaintiff filed its Complaint Objecting to Dischargeability of Debt Pursuant to 11 U.S.C. § 523. [Doc. 1].
Plaintiff contends it is entitled to summary judgment based on collateral estoppel. "Collateral estoppel principles apply to dischargeability proceedings." St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 675 (11th Cir. 1993) (citing Grogan v. Garner, 498 U.S. 279, 285 n.11, 111 S. Ct. 654, 658 n.11 (1991)). "If the prior judgment was rendered by a state court, then the collateral estoppel law of that state must be applied to determine the judgment's preclusive effect." Id. at 675-76. See also Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81, 104 S. Ct. 892, 896 (1984) ().
The Supreme Court of Georgia has explained collateral estoppel as follows:
Collateral estoppel precludes the re-adjudication of an issue that has previously been litigated and adjudicated on the merits in another action between the same parties or their privies. Collateral estoppel requires identity of the parties and their privies in both actions. However, collateral estoppel does not require precise identity of the claim—so long as an issue was determined in the previous action and there is identity of the parties or their privies, that issue may not be re-litigated, even as part of a different claim. Collateral estoppel not only precludes those issues that actually were litigated and decided in the previous action, it also precludes issues that necessarily had to be decided in order for the previous judgment to have been rendered.
In re T.M.G., 275 Ga. 543, 544, 570 S.E.2d 327, 329 (2002) (footnotes omitted). Thus, to prevail under a theory of collateral estoppel on any of its claims, Plaintiff must establish identity of the parties or their privies, identity of the issues, and actual litigation and determination of the issues in the Superior Court Case.
Plaintiff has supplied two orders from the Superior Court: the Summary Judgment Order and the Consent Order. The Summary Judgment Order sets forth facts regarding the Defendant's transfer of her residence to her daughters, Defendant's transfer of $250,000 to Furniture Consignment, Defendant's transfer of $100,000 to her non-profit organization, and Defendant's transfer of $155,000 to her daughter.
At the time of all the Transfers, Plaintiff held claims totaling more than $3 million against D...
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