Roof Tech. Partners v. Queen (In re Queen))
| Decision Date | 29 March 2023 |
| Docket Number | 21-11003-PMB,ADVERSARY PROCEEDING 22-1005 |
| Parties | In re: BENARD QUEEN, JR., and NICHOLE JONES QUEEN, Debtors. v. BENARD QUEEN, JR., and NICHOLE JONES QUEEN, Defendants. ROOF TECHNOLOGY PARTNERS, LLC, Plaintiff, |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
Subchapter V
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS COUNT I OF PLAINTIFF'S FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
PAUL BAISIER, U.S. BANKRUPTCY COURT JUDGE.
Roof Technology Partners, LLC, the Plaintiff named above (the "Plaintiff"), initiated this Adversary Proceeding (the "Adversary Proceeding") against Defendant-Debtors Benard Queen, Jr. and Nichole Jones Queen (the "Debtors" or "Defendants")[1] through the filing of a three (3) count Complaint on May 5, 2022 (Docket No 1)(the "Original Complaint"). The Original Complaint was amended by the Plaintiff's First Amended Complaint filed on June 17, 2022 (Docket No 5)(the "Amended Complaint").
Before the Court is Defendants' Motion to Dismiss Plaintiff's First Amended Complaint for Failure to State a Claim Upon Which Relief Can Be Granted (the "Motion") and Brief in Support (the "Defendants' Brief")(Docket No 7)(Defendants' Brief, collectively with the Motion, the "Motion to Dismiss"), filed by the Defendants on June 30, 2022. The Motion to Dismiss was filed under Federal Rule of Civil Procedure ("Rule") 12(b)(6), applicable in this case through Federal Rule of Bankruptcy Procedure ("Bankruptcy Rule") 7012(b). In the Motion to Dismiss, the Defendants seek a dismissal of all counts of the Amended Complaint.[2] This Order addresses the Motion to Dismiss as it relates to Count I of the Amended Complaint. The Motion to Dismiss as it relates to Counts II and III will be addressed by separate Order.
In response to the Motion to Dismiss, the Plaintiff filed its Brief in Opposition to Defendants' Motion to Dismiss Plaintiff's First Amended Complaint for Failure to State a Claim Upon Which Relief Can Be Granted on July 14 2022 (Docket No. 8)(the "Response"). In turn, the Defendants filed their Reply of Defendants to Plaintiff's Response to Defendants' Motion to Dismiss Plaintiff's First Amended Complaint for Failure to State a Claim Upon Which Relief Can Be Granted on July 27, 2022 (Docket No. 10)(the "Reply").
On September 30, 2022, the Court entered its Order Requiring Supplemental Briefing On 11 U.S.C. § 523(a)(2)(A) Issue (Docket No. 11)(the "Supplementation Order"), requiring supplemental briefs from the parties on an issue related to Count I of the Amended Complaint. In response to the Supplementation Order, the Defendants filed their Supplemental Brief Of Defendants In Further Support Of Defendants' Motion To Dismiss Plaintiff's First Amended Complaint For Failure To State A Claim Upon Which Relief Can Be Granted (Docket No. 14) on October 21, 2022, and their Amendment to Supplemental Brief Of Defendants In Further Support Of Defendants' Motion To Dismiss Plaintiff's First Amended Complaint For Failure To State A Claim Upon Which Relief Can Be Granted (Docket No. 15)[3] on October 22, 2022 (collectively, the "Defendants' Supplement"). The Plaintiff filed its Supplemental Brief In Opposition To Defendants' Motion To Dismiss Plaintiff's First Amended Complaint For Failure To State A Claim Upon Which Relief Can Be Granted (Docket No. 16)("Plaintiff's Supplement") and its Motion to Amend First Amended Complaint (Docket No. 17)(the "Motion to Amend") on November 4, 2022. On November 17, 2022, Defendants filed their Response of Defendants In Opposition to Plaintiff's Motion to Amend First Amended Complaint (Docket No. 18)(the "Response to Motion to Amend"). On December 12, 2022, the Plaintiff filed Plaintiff's Reply Brief in Support of Motion to Amend First Amended Complaint (Docket No. 20)(the "Amendment Reply").
Dismissal of a complaint is appropriate under Rule 12(b)(6) if it fails "to state a claim upon which relief can be granted." Rule 12(b)(6) is viewed through Rule 8(a), which requires that a pleading set forth a "short and plain statement of the claim showing that the pleader is entitled to relief." See Fed.R.Civ.P. 8(a)(2) and Fed.R.Bankr.P. 7008. Under this standard, "to survive a motion to dismiss, a complaint must now contain factual allegations that are 'enough to raise a right to relief above the speculative level.'"[5] In addition, pursuant to Rule 9(b), applicable in this case through Bankruptcy Rule 7009, fraud must be pled with particularity and, although malice and intent may be alleged generally, facts regarding time, place, and content of any alleged misrepresentations must be provided.[6]
In evaluating a motion to dismiss, the inquiry is limited "to the legal feasibility of the complaint and whether it contains facts and not just labels or conclusory statements." In re Lafayette, 561 B.R. 917, 922 (Bankr. N.D.Ga. 2016). The Court "must take the factual allegations of the complaint as true and make all reasonable inferences from those facts to determine whether the complaint states a claim that is plausible on its face." In re American Berber, Inc., 625 B.R. 125, 128 (Bankr. N.D.Ga. 2020)(citations omitted); see also In re Adetayo, 2020 WL 2175659, *1 , citing Ashcroft, supra, 556 U.S. at 678, quoting Twombly, supra, 550 U.S. at 570. "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft, supra, 556 U.S. at 679. A claim has "facial plausibility" when the facts alleged permit a reasonable inference that the defendant is liable on the grounds asserted. Bank of Am. v. Seligman (In re Seligman), 478 B.R. 497, 501 (Bankr. N.D.Ga. 2012)(citations omitted).
In cases "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief.'" Ashcroft, supra, 556 U.S. at 679, quoting Fed.R.Civ.P. 8(a)(2). In addition, dismissal is proper "when, on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action." Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993).
First Infinity Construction, Inc. ("First Infinity"), an entity owned, operated, and controlled by the Debtors, was the prime contractor under a contract (the "Contract") awarded to it by the United States of America (the "Government") to complete various hanger roofing projects at Fort Stewart, Georgia (collectively, the "Hanger Project"). The original Contract price for the Hangar Project was $2,136,908.58. The Plaintiff entered into a teaming agreement (the "Teaming Agreement") with First Infinity in connection with the Hanger Project, under which the Plaintiff was a subcontractor/supplier. In addition, the Plaintiff in the Teaming Agreement also agreed for a fee (the "Bond Fee") to acquire (and thus be liable on) certain bonds (the "Bonds") First Infinity needed to move forward on the Hanger Project but could not procure on its own. The Plaintiff contends it provided goods and/or services to First Infinity in the approximate sum of $745,000 under the Teaming Agreement. The Debtors personally guaranteed payment of the sums First Infinity owed to the Plaintiff (the "Guaranty") (Amended Complaint, ¶¶ 8, 10, 15, & 18-20).
To receive progress payments on the Hanger Project under the Contract ("Project Payments"), the Debtors were required to submit certain documents to the Government, including a certification that: (1) amounts requested were based on work properly performed under the Contract, (2) "prior payments received had been utilized to pay the subcontractors and suppliers on the project and that the amounts requested therein would be timely paid to subcontractors…", and (3) the request did not contain amounts to be withheld or retained from a subcontractor or supplier. (Amended Complaint, ¶¶ 22-24). First Infinity received over $2.2 million in Project Payments under the Contract during 2018 and 2019 (Amended Complaint, ¶ 31 and Exhibit "A", see also ¶¶ 57-58, & 62).[7]
When the Plaintiff failed to receive full payment for the goods and services it provided on the Hanger Project and inquired about the status of its invoices, the Debtors allegedly misrepresented that First Infinity had not received payment and that First Infinity needed to resubmit its payment requests. Amended Complaint, ¶¶ 33-39. Further, the Debtors allegedly made misrepresentations to the Government regarding their certification that subcontractors were being paid when they were not. Amended Complaint, ¶¶ 45-46. For example, First Infinity used the Project Payments it received on its August 2018 payment request in the amount of $259,881.73 to pay other debts not related to the Hanger Project, as well to pay as personal expenses of the Debtors, while it continued to misrepresent to the Plaintiff that no payments had been received. (Amended Complaint, ¶¶ 47-54 and Exhibits "B" & "C").
During 2018 and 2019, the Debtors used at least $169,122.40 of the Project Payments received on the Hanger Project intended for the Plaintiff to fund the Debtors' own payroll expense in addition to causing First Infinity to transfer $429,000 either to the Debtors, members of their family, or for their benefit (Amended Complaint, ¶¶ 66-69 and Exhibit "D")(collectively, the "Personal Expense Transfers").[8] Further, other payments were diverted to pay other vendors on unrelated jobs as well as to pay general operating expenses. Amended...
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