Res-Ga Diamond Meadows, LLC v. Robertson (In re Robertson)

• Decision Date: 28 September 2017
• Docket Number: CASE NO. 15–53700–WLH,ADV. PROC. NO. 15–05436
• Parties: IN RE: Brenda Kay ROBERTSON, Debtor. RES–GA Diamond Meadows, LLC, Plaintiff, v. Brenda Kay Robertson, Defendant.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia

576 B.R. 684

IN RE: Brenda Kay ROBERTSON, Debtor.RES–GA Diamond Meadows, LLC, Plaintiff,

v.Brenda Kay Robertson, Defendant.

CASE NO. 15–53700–WLH

ADV. PROC. NO. 15–05436

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

Signed September 28, 2017

Beth E. Rogers, Rogers Law Offices, Atlanta, GA, for Plaintiff.

George M. Geeslin, Atlanta, GA, for Defendant.

ORDER ON CROSS–MOTIONS FOR SUMMARY JUDGMENT

Wendy L. Hagenau U.S. Bankruptcy Court Judge

This adversary proceeding under Sections 727 and 523 of the Bankruptcy Code comes before the Court on Plaintiff RES–GA Diamond Meadows, LLC's Motion for Summary Judgment [Docket No. 78] and Defendant Brenda Kay Robertson's Motion for Summary Judgment [Docket No. 76]. The adversary proceeding objects to the Defendant's discharge and to the dischargeability of Plaintiff's claims on numerous grounds. The cross-motions for summary judgment touch on most, but not all, of the grounds alleged in the Complaint. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I) & (J), and the Court has jurisdiction over this proceeding under 28 U.S.C. §§ 157 and 1334.

UNDISPUTED FACTS

Brenda K. Robertson's ("Robertson" or "Defendant") history with Plaintiff's claim began on February 3, 2006, when she guaranteed a promissory note made by HBC Communities, LLC ("HBC") to FirstCity Bank in the amount of $4,162,500 ("FirstCity Loan"). In connection with the FirstCity Loan, Robertson signed a document titled "Agreement to Provide Financial Information" dated March 27, 2008; the parties dispute Robertson's obligations under this document. The FirstCity Loan had an original maturity date of February 5, 2007. The maturity date was extended three times, with the final maturity date being March 1, 2009. FirstCity Bank was eventually placed into receivership by the FDIC, and on February 9, 2010 the FDIC assigned the loan documents (and all rights thereunder) to Multibank 2009–1 RES–ADC Venture, LLC ("Multibank"). In April 2010, while Multibank held the loan, Robertson provided Multibank with a financial disclosure statement that Plaintiff alleges omitted material financial information. On February 17, 2011 Multibank assigned the loan to Plaintiff RES–GA Diamond Meadows, LLC ("RGDM" or "Plaintiff"). Multibank is the sole member of RGDM. On August 28, 2012, RGDM filed a complaint against Robertson in the superior court of Clayton County. Judgment was subsequently entered in RGDM's favor and against Robertson on May 13, 2014, in the amount of $5,489,997, plus post-judgment interest ("RGDM Judgment"). RGDM initiated garnishment proceedings in January 2015 seeking to collect on the RGDM Judgment. The garnishment prompted Robertson to file this bankruptcy case on February 27, 2015.

RGDM's adversary proceeding is based in large part on numerous transfers made by Robertson. In May 2009, prior to RGDM becoming the holder of the FirstCity Loan, Robertson created four limited liability companies in Georgia: Woodmond Ventures, LLC ("Woodmond"), Gilbert Ventures, LLC ("Gilbert"), Mykassi Ventures, LLC ("Mykassi") and Bice Ventures, LLC ("Bice") (collectively, "Robertson LLCs"). Approximately one month later, on June 3, 2009, Robertson transferred certain real property identified below ("Transferred Properties")¹ that Robertson owned individually to the Robertson LLCs. The property transfers included the following² :

Recipient Entity Transferred Property Address
                Woodmond Ventures, LLC     171 Bay Court, Stockbridge, GA
                                           7966 Wright Circle, Jonesboro, GA
                                           7958 Wright Circle, Jonesboro, GA
                                           3265 Walt Stevens Rd., Jonesboro, GA
                Mykassi Ventures, LLC      196 Hemlock Dr., Clarkesville, GA
                                           8.736 acres, Highway 197, Habersham County, GA
                Gilbert Ventures, LLC      Lots 1-7, Boulder Estates, Clayton County, GA
                

On March 19, 2010, United Community Bank ("United"), which held an unrelated obligation from Robertson, filed a complaint against Robertson and the Robertson LLCs seeking to avoid the transfers to the Robertson LLCs under the Georgia Uniform Fraudulent Transfer Act ("UFTA Suit"). On August 9, 2011, the court granted United's partial summary judgment motion in the UFTA Suit, finding that Robertson's transfer of the Transferred Properties and other properties located in Georgia was fraudulent under the Georgia UFTA ("United UFTA Order"). Robertson and United then settled the matter in December 2011, resulting in the transfer of certain properties to United in exchange for a release of claims against Robertson.

Since the entry of the United UFTA Order, Robertson has continued to manage and occasionally use some of the Transferred Properties. Robertson and her family continue to use the property located at 196 Hemlock Drive ("Hemlock Property") as a vacation home, consistent with its use prior to its transfer to Mykassi. She also uses her own funds to pay the expenses on the Hemlock Property. Robertson's brother lives rent-free at the property located at 7966 Wright Circle ("Wright Circle Property"). Robertson continues to collect rents from the Rental Properties, and pay expenses related to some of the Transferred Properties. Robertson also holds insurance policies in her name for the Transferred Properties, and has executed leases in her name for certain of the Rental Properties. Mykassi continues to own the Highway 197 property and Gilbert continues to own the Boulder lots.³

A second transaction at issue in this adversary proceeding involves property located at 3448 South Bay Drive, Jonesboro, Georgia ("South Bay Property"). Robertson purchased the property in July 2004 for $1,274,500 and a mortgage on it was granted to RBC Centura Bank. Approximately one month after purchasing the South Bay Property, Robertson transferred the South Bay Property to her son, Clay Robertson. The parties dispute the consideration received for the transfer. The RBC loan was refinanced, but on September 28, 2008, Washington Mutual Bank foreclosed on the South Bay Property. In November 2008, Robertson caused funds in the total amount of $600,000 to be transferred to an entity known as ASG Properties, Inc. ("ASG"), which was owned at least in part by Cory Graydon. The parties dispute the nature of this transfer. ASG used these funds, in part, to purchase the South Bay Property from Washington Mutual's successor. Robertson, her son Brandon and her daughter-in-law Marisa then had a dispute with Graydon regarding the ownership and management of ASG. On April 8, 2009, the South Bay Property was transferred back to Robertson. The parties dispute both the nature of and consideration for this transfer. Robertson, Brandon and Marisa ultimately settled the dispute with Graydon in April 2009, and Marisa Robertson became the sole owner of ASG.

In June 2009, Robertson transferred the South Bay Property back to ASG, and ASG then transferred it on the same day to an entity known as Bang Investments, LLC ("Bang Investments"), owned by Brandon Robertson, his wife Marissa and their three children. Again the parties dispute the consideration for the transfer and the reasons for the transfer. Brandon, Marisa and their children lived at the South Bay Property beginning in 2009 through at least 2012, and Robertson occasionally visited the property. In April 2012, Bang Investments sold the South Bay Property to a third party purchaser for $930,000. Bang then transferred funds to another Robertson company which transferred funds to Brand Properties, LLC, which Plaintiff contends was owned by Robertson's grandchildren. In 2012, Brand Properties, LLC purchased property located at 3300 Running Springs Court, Franklin, Tennessee ("Tennessee Property"). Robertson visits her family at the property occasionally. Plaintiff contends the proceeds from the sale of the South Bay Property were used, at least in part, to purchase the Tennessee Property.

On June 23, 2006—approximately two years after the purchase of the South Bay Property—Robertson purchased a vacant lot known in this proceeding as "Lot 2A" that was located adjacent to the South Bay Property. In July 2010, approximately one year after the transfer of the South Bay Property to Bang Investments, Robertson transferred Lot 2A to an entity known as JAMMIC, Inc. ("JAMMIC"), which was owned by Mike McCune, a childhood acquaintance of Brandon Robertson. In April 2011, Lot 2A was transferred to Branch Group, LLC ("Branch Group"), of which Robertson's daughter Ivy Lowrey was and is the sole member. The consideration for this transfer is disputed by the parties. Branch sold Lot 2A to a third party in August 2013 for net proceeds of over $272,000. In 2010, Branch Group received total transfers of $537,658 from Robertson or a related company. The reason for these deposits is disputed by the parties. RGDM alleges that in early February 2014, Branch transferred $70,000 to a company owned by the Defendant's husband which paid household expenses of the Defendant and her husband, and in March 2015, Branch transferred $250,000 to a company owned by Brandon Robertson. During the period January 2014—February 2015, Brandon paid over $40,000 toward American Express bills on Robertson's card. Robertson claims the payment was for Brandon's own expenses. In March 2015, Robertson's daughter, Ivy, added an additional card to her America Express account for Robertson's use.

In February 2011, Robertson's husband became the sole owner of property at 78 Wall Street (the "Wall Street Property ") when he purchased it from the estate of Robertson's father. The Court notes the Wall Street Property is identified as Robertson's home address in her bankruptcy filing. Robertson's husband has had separate income and accounts for the duration of his marriage to Robertson.

ANALYSIS

I. Summary Judgment

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the...