Risk v. Hunter (In re Hunter)

• Decision Date: 03 August 2015
• Docket Number: Case No. 14–32350,Adv. Pro. No. 14–3131
• Citation: 535 B.R. 203
• Parties: In re: Piaj E. Hunter, Debtor. James Risk, Plaintiff, v. Piaj E. Hunter, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

535 B.R. 203

In re: Piaj E. Hunter, Debtor.

James Risk, Plaintiff

v.Piaj E. Hunter, Defendant.

Case No. 14–32350

Adv. Pro. No. 14–3131

United States Bankruptcy Court, N.D. Ohio, Western Division.

Signed August 3, 2015

William H. Smith, Jr., Smith & Lehrer Co., L.P.A., Sandusky, OH, for Plaintiff.

Fredric M. Boyk, Toledo, OH, for Defendant.

MEMORANDUM OF DECISION AND ORDER REGARDING CROSS–MOTIONS FOR SUMMARY JUDGMENT

John P. Gustafson, United States Bankruptcy Judge

Plaintiff James Risk (“Plaintiff”) is an unsecured creditor in the underlying Chapter 7 case. On October 16, 2014, Plaintiff commenced this adversary proceeding, seeking a determination of the dischargeability of a debt owed to him by Defendant Piaj E. Hunter (“Defendant” or “Debtor”), the Chapter 7 debtor. Plaintiff asserts that the debt should be excepted from discharge under 11 U.S.C. §§ 523(a)(2), (a)(6), and (a)(11). [Doc. # 1]. Additionally, Plaintiff requests that the court enter an order “denying [Defendant] a discharge” pursuant to 11 U.S.C. §§ 727(a)(2), (a)(4), and (a)(5). [Doc. # 1, p. 4].

Plaintiff obtained a judgment against Defendant in a breach of contract action, based upon an agreement wherein Plaintiff was to sell a house to Defendant and move the structure to lots owned by Defendant (collectively “the Property”). The breach of this contract created a debt in the amount of $16,458.07 that Plaintiff contends should be excepted from Defendant's discharge. Plaintiff further maintains that Defendant's actions, including the transferring of the title of the Property to his father, which his father then transferred back to the Defendant five days before the filing of his petition, and statements made by Defendant regarding his residing within the property, should prevent Defendant from being granted a discharge. [Doc. # 1, ¶¶ 29–32].

This proceeding is now before the court on Defendant's Motion for Summary Judgment Including Affidavit in Support (“Defendant's Motion”) [Doc. # 13], Plaintiff's Motion for Summary Judgment and Memorandum in Support (“Plaintiff's Motion”) [Doc. # 16], Defendant's Response to Plaintiff's Motion (“Defendant's Response”) [Doc. # 19], and Plaintiff's Reply to Defendant's Response (“Plaintiff's Reply”) [Doc. # 21].

Having considered the parties' respective arguments, for the reasons that follow, Plaintiff's Motion will be denied, and Defendant's Motion will be granted in part and denied in part.

FACTUAL BACKGROUND

Unless otherwise noted, the following facts are not in dispute. On March 3, 2009, Defendant obtained title, via quit claim deed, to Lots No. 69, 70, and 71 on Hancock Street, Sandusky, OH. [Doc. # 1, ¶ 10]. According to Defendant's Affidavit, the property was, and still is, encumbered by “several judgment liens and a real estate tax liability ...” [Doc. # 13, p. 10]. Shortly after acquiring the Hancock Street real estate, Defendant entered into a contract with Plaintiff, whereby Plaintiff agreed to sell a house to Defendant and move the house to Defendant's lots. Defendant was to pay Plaintiff $25,000.00 for the relocation of the house to Defendant's lots, the installation of concrete footers for the foundation of the house, and for the house to be placed on the foundation. [Doc. # 16].

Pursuant to the signed hand-written contract, the survey work and building permits were to be obtained by Plaintiff. [Doc. 13–1, Def. Ex. A]. The contract also set forth a payment schedule, in which Defendant was to pay Plaintiff a cash deposit of $4,000.00 on March 11, 2009, and an additional $6,000.00 by May 30, 2009. Defendant would then pay Plaintiff $500.00 per month at a 0% interest rate until the balance of the $25,000 was paid off. [Id. ].

According to Defendant's Affidavit, Plaintiff did not obtain the necessary permits to move the house to Defendant's land, so Defendant was forced to obtain the permits from the Erie County Engineer by paying $2,000.00 for them on his own. [Doc. # 13, p. 9, ¶ 7; Doc. # 13–1, Def. Ex. B]. Defendant also averred that he paid $280.00 for Plaintiff's insurance. [Doc. # 13, p. 9, ¶ 7]. After the house was moved to Defendant's property, Defendant alleges that Plaintiff did not complete the work set forth in the contract. Defendant claims, and the state court appears to have found, that Defendant had to pay a third party to lower the house and to move it to the foundation. [Doc. 13–1, Def. Ex. C, p. 10, ¶¶ 8 & 9]. Additionally, he asserts that Plaintiff failed to build the foundation walls, forcing Defendant to pay a third party to build the walls. [Doc. # 13, p. 9, ¶ 8]. These alleged breaches of the contract by Plaintiff were what Defendant claims caused him to stop making payments. [Id. ].

Defendant's payments to Plaintiff totaled $7,000.00. [Doc. 14, p. 16, ¶ 4]. Plaintiff states in his Complaint that Defendant also cut up and sold steel beams belonging to Plaintiff that had a value of $4,000.00 [Doc. # 1, ¶ 14]. The state court held that the beams were cut up and sold by Defendant, and that “the Plaintiff is entitled to compensation for those beams in the amount of $4,000....” [Doc. # 14, p 16, ¶¶ 5–7; Id. at p. 17]. However, Defendant contends that he himself paid $1,200.00 to obtain the steel beams. [Doc. # 13, p. 9, ¶¶ 6, 9].¹

On October 27, 2009, Plaintiff filed suit against Defendant for monetary damages in Erie County Common Pleas Court (Case No.2009 CV 910) alleging breach of contract. [Id. at ¶ 10; Doc. # 13–1, Def. Ex. C, p. 9]. In the Erie County Common Pleas Court's Findings of Fact and Conclusions of Law, the court ruled that it appeared “clear from the testimony as well as the numerous exhibits provided by both parties that both parties [were] in breach of contract.” [Doc. # 13–1, Def. Ex. C, p. 11]. The court ordered, based upon the amount of work completed by Plaintiff and the amount of expenditures paid for by Defendant, that Defendant was to pay Plaintiff $16,458.07 “for services rendered.” [Id. ] On March 28, 2013, a “Judgment Entry Adopting Magistrate's Decision” in the amount of $16,458.07 was entered. [Doc. # 13, p.9, ¶ 10; Doc. # 16, p. 2]. On April 22, 2013, Plaintiff filed a Certificate of Judgment against Defendant in the Erie County, Ohio Clerk of Courts in an attempt to lien the property. [Doc. # 16, Pl.Ex. A].

During the pendency of the civil case in the Erie County Common Pleas Court, Defendant quitclaimed title of the property to his father, Ozeal Hunter, Sr. (or “his Father”) on December 11, 2012. [Doc. # 16]. The deed was recorded on December 12, 2012. Defendant states that the transfer “was made to protect any new investment of labor and materials by [his Father] that would potentially create new equity in the property.” [Doc. # 13, p. 3]. As the judgment lien was against Defendant, the April 22, 2013 lien did not attach to the property that had already been transferred to his Father.

Plaintiff filed suit against Defendant on January 7, 2014, again in the Erie County Court of Common Pleas, seeking to void the transfer of the property from Defendant to his Father. [Doc. # 13–1, Def. Ex. E]. On June 20, 2014, his Father transferred title to the property back to Defendant and five days later, on June 25, Defendant filed his Chapter 7 bankruptcy petition in this court. [Doc. # 1, ¶¶ 19–20].

Plaintiff filed his Complaint in this court on October 16, 2014. In his Complaint, Plaintiff contends that Defendant quitclaimed the property to his Father and then back to him “in order to allegedly gain protection under the Bankruptcy code.” [Doc. # 1, ¶ 21]. Defendant contends that his Father transferred the property back to him in an effort to comply with Plaintiff's January 2014 lawsuit that sought to void the alleged fraudulent transfer. [Doc. # 13, p. 10, ¶ 15].

LAW AND ANALYSIS

I. Summary Judgment Standard

Under Rule 56 of the Federal Rules of Civil Procedure, made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7056, summary judgment is proper only where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). In reviewing a motion for summary judgment, however, all inferences “must be viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

The party moving for summary judgment always bears 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.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the moving party has met its initial burden, the adverse party “may not rest upon the mere allegations or denials of his pleading but ... must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

A genuine issue for trial exists if the evidence is such that a reasonable factfinder could find in favor of the nonmoving party. Id. “The non-moving party, however, must provide more than mere allegations or denials ... without giving any significant probative evidence to support” its position. Berryman v. Rieger, 150 F.3d 561, 566 (6th Cir.1998).

Where the parties have filed cross-motions for summary judgment, the court must consider each motion separately on its merits, since each party, as a movant for summary judgment, bears the burden to establish both the nonexistence of genuine issues of material fact and that party's entitlement to judgment as a matter of law. Lansing Dairy v. Espy, 39 F.3d 1339, 1347 (6th Cir.1994) ; Markowitz v. Campbell (In re Markowitz ), 190 F.3d 455, 463 n. 6 (6th Cir.1999).

The fact that the parties have filed cross-motions for summary...