Renfrow v. Grogan (In re Renfrow)

• Decision Date: 23 April 2019
• Docket Number: Case No. 17-10385-R,Adv. No. 17-1027-R
• Parties: IN RE RENFROW, MIRANDA KRISTIN, Debtor. MIRANDA KRISTIN RENFROW Plaintiff, v. COURTNEY GROGAN, SUCCESSOR TRUSTEE OF THE JOE C. COLE REVOCABLE TRUST, UNDER TRUST AGREEMENT DATED MARCH 28, 2002, and ATKINSON, HASKINS, NELLIS, BRITTINGHAM, GLASS & FIASCO, P.C., Defendants.
• Court: U.S. Bankruptcy Court — Northern District of Oklahoma

IN RE RENFROW, MIRANDA KRISTIN, Debtor.MIRANDA KRISTIN RENFROW Plaintiff, v. COURTNEY GROGAN, SUCCESSOR TRUSTEE OF THEJOE C. COLE REVOCABLE TRUST,UNDER TRUST AGREEMENT DATED MARCH 28, 2002,and ATKINSON, HASKINS, NELLIS,BRITTINGHAM, GLASS & FIASCO, P.C., Defendants.

Case No. 17-10385-R

Adv. No. 17-1027-R

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OKLAHOMA

April 23, 2019

Chapter 7

MEMORANDUM OPINION

Before the Court is the Amended Complaint for Violation of the Permanent Discharge Injunction ("Complaint") asserted by Plaintiff Miranda Renfrow ("Renfrow") against Defendants Courtney Grogan, Successor Trustee of The Joe C. Cole Revocable Trust, under Trust Agreement dated March 28, 2002 ("Grogan"), and Atkinson, Haskins, Nellis, Brittingham, Glass & Fiasco, an Oklahoma Professional Corporation ("AHN") (collectively, "Defendants"). Renfrow alleges that Defendants, among other things, continued to prosecute a prepetition action against her in Tulsa County District Court and obtained a jury verdict and judgment imposing in personam liability against her for prepetition debts in violation of the Court's discharge order and the discharge injunction imposed by 11 U.S.C § 524(a)(2).¹ Renfrow requests that this Court find Defendants in civil contempt under § 105(a), and sanction Defendants accordingly.

Trial on the merits was held on November 29 and 30, 2018. Upon consideration of the testimony offered and exhibits admitted at trial, oral and written arguments of counsel, and the record in this Adversary Proceeding and in Renfrow's underlying bankruptcy case, the Court makes the following findings of fact and conclusions of law.

I. Jurisdiction

The Court has jurisdiction of this proceeding pursuant to 28 U.S.C. §§ 1334, 157(a), and 157(b)(1) and (2), and Local Civil Rule 84.1(a) of the United States District Court for the Northern District of Oklahoma. As explained below, the Rooker-Feldman doctrine does not deprive this Court of jurisdiction over this Adversary Proceeding.

II. Findings of fact

Renfrow is an ophthalmologist. Prior to 2013, she practiced eye medicine and surgery in McAlester, Oklahoma, through her wholly-owned professional corporation, Envision Medical & Surgical Eye Care, P.C. ("Envision"). At all relevant times, Renfrow was the sole owner and officer of Envision.

Grogan's father, Joe C. Cole, was also an ophthalmologist ("Cole"). Cole's practice was managed by and through Associated Ophthalmology of Tulsa, Inc. ("AO"). The Joe C. Cole Revocable Trust ("Trust") was AO's sole shareholder.

In November 2012, Cole passed away, and the Trust decided to sell AO's assets, which consisted of obsolete equipment, dated furnishings, and "All Patient Files and Business Goodwill."² In order to maintain the practice as a going concern pending a sale, the Trust employed Renfrow to continue caring for AO's patients. In late February of 2013, Envision and Renfrow entered into an agreement with the Trust to purchase AO's assets for $100,000, payable pursuant to a $100,000 promissory note secured by a lien on certain assets.³ Renfrow admits that she and Envision signed an agreement and a $100,000 promissory note in favor of the Trust ("Purchase Money Loan").

In January 2013, prior to Renfrow's execution of the purchase agreement, the Trust deposited $50,000 into AO's bank account to keep the practice afloat until a sale could be consummated. AO's office manager, Carrie Pettigrew, booked the transaction as a loan to Envision and Renfrow ("Bridge Loan"). Renfrow denied executing any agreement to accept or repay the Bridge Loan.⁴

In April 2013, Renfrow and Envision refurbished the office and replaced AO's obsolete ophthalmology equipment with modern equipment they leased from the McAlester hospital where Renfrow had previously practiced. In May 2013, AO was reopened under the name of Envision.

Pettigrew continued in the role of office manager during and after the practice transitioned from AO to Envision. Pettigrew took control over Envision's billing, banking, accounting, and bill-paying, all to the exclusion of Renfrow. Renfrow felt intimidated by Pettigrew, and Pettigrew denied Renfrow access to Envision's banking and financial records. Eventually, Renfrow discovered that Envision was not paying its bills or maintaining its debt service in a timely manner. She also discovered that Pettigrew, who had signatory authority on the Trust's checking accounts, had caused the Trust to transfer funds to Envision to cover revenue shortfalls. Pettigrew recorded the transfers, which totaled more than $75,000, as loans from the Trust to Envision and Renfrow ("Operational Loans," which together with the Purchase Money Loan and the Bridge Loan, will be referred to as the "Loans").

When Renfrow discovered that Envision was inexplicably broke and mired in debt, she terminated Pettigrew's employment, and caused Envision to sue Pettigrew for alleged embezzlement. In response, Pettigrew sued Envision and Renfrow for alleged defamation and intentional infliction of emotional distress (the "Intentional Tort Claims").

In May 2016, Grogan, on behalf of the Trust, filed a petition in Tulsa County District Court against Envision and Renfrow, alleging they breached the Asset Purchase and Sale Agreement and defaulted on the Loans (the "Grogan Action").⁵ Grogan also asked to recover the furniture and equipment that served as collateral. During discovery, the parties learned that no one was able to produce executed copies of any of the final transactiondocuments. Accordingly, in December 2016, Grogan amended the petition to claim that Envision and Renfrow were unjustly enriched by the Loans ("First Amended Petition").⁶

At that point, Renfrow was not only defending against claims asserted in the Grogan Action, and the Intentional Tort Claims asserted by Pettigrew (which actions were eventually consolidated for discovery), but also she was embroiled in a bitter divorce and custody battle, wherein she sought and obtained a five-year protective order against her husband, Erin. Renfrow was diverted from her ophthalmology practice, and ability to earn a living, by legal maneuvering, discovery demands, custody evaluations, and court appearances in multiple venues.⁷ To maintain Envision's very existence required a sizable infusion of cash from Renfrow's personal tax refunds.⁸ Envision was not sustainable as a going concern; its 2016 net income (and therefore Renfrow's net income) was less than $7,600.⁹

So in January 2017, Renfrow began the process of closing Envision. She stopped seeing patients, referred certain patients to doctors they had seen previously, and delivered charts of the remaining patients to an ophthalmologist who agreed to house and maintain the records and insure continuity of care.¹⁰ Renfrow's decision to place patient records withanother provider was consistent with guidelines promulgated by the Oklahoma State Board of Medical Licensure and Supervision.¹¹

Also in January 2017, Envision's billing software license subscription expired, so Envision could no longer track outstanding charges, insurance payments, insurance write-offs, or patient co-payments.¹² With its limited funds, Envision was able to renew the license on a month-to-month basis until the end of February.

In mid-February 2017, the following occurred: Envision vacated its leased office space;¹³ the McAlester hospital repossessed all the leased medical equipment; and Renfrow moved Envision's furnishings, consisting of old computers, a copy machine, and office chairs, into a garage. (The obsolete equipment Envision purchased from AO was already stored in Renfrow's garage.)¹⁴ By the end of February 2017, Envision had no employees other than Renfrow,¹⁵ no medical equipment, no physical location, and no patients or patient files.

Renfrow filed a petition under Chapter 7 of the Bankruptcy Code on March 10, 2017 (the "Petition Date"). Renfrow scheduled Grogan as a creditor holding contingent,unliquidated, and disputed claims. Renfrow disclosed her professional corporation, Envision, as an asset of her bankruptcy estate, and assigned it a value of zero because it had never been profitable and because its liabilities exceeded its assets.¹⁶ Grogan received notice of the commencement of Renfrow's bankruptcy case, individually, and through AHN, the law firm that represented her in the Grogan Action. An AHN lawyer attended the meeting of creditors.

After filing bankruptcy, Renfrow earned income on a temporary per-service basis by performing risk assessments for private health care contractors.

On May 4, 2017, the Trustee of Renfrow's Chapter 7 estate filed a Report of No Distribution. Thereafter, Renfrow sold on eBay a fluorescein camera that she personally owned and deposited the proceeds ($4,200) into her personal checking account.¹⁷

Over two days in late May 2017, AHN attorney Clark Phipps, on behalf of Grogan, conducted Rule 2004 examinations of Renfrow and her friend, Mark Davis, who assisted her in shutting down the practice. Both testified that Envision's patients were referred, and patient charts were delivered, to other practitioners in January 2017. When Phipps asked Renfrow why Envision did not sell the patient charts, she testified that Envision was out of money and could not continue to maintain an office, so it was necessary to place patients, and their charts, with a practitioner that could immediately take over their care.¹⁸ Phipps alsoquestioned the deponents about the status of Envision's final accounts receivable. They testified consistently as follows: Davis downloaded and printed out a list of raw data from the discontinued billing software, which data was broken down into various categories of payors and aging. Patients who owed co-payments or deductibles, which represented a small fraction of the entire receivables list, were sent final billing statements. Envision collected some receivables postpetition, and Renfrow withdrew those funds from Envision's...