Schindler v. Milliron (In re Milliron)
| Decision Date | 30 September 2021 |
| Docket Number | Adversary Proceeding 19-90001-GS,18-00358-GS,Bankruptcy 18-00357-GS,19-90002-GS |
| Parties | In re: GARTH and KIMBERLY MILLIRON, Debtors. v. GARTH MILLIRON and KIMBERLY MILLIRON, Defendants. JAY SCHINDLER and JEANNE SCHINDLER, Plaintiffs, In re: JARRED and JENNIFER MILLIRON, Debtors. JAY SCHINDLER and JEANNE SCHINDLER, Plaintiffs, v. JARRED MILLIRON and JENNIFER MILLIRON, Defendants. |
| Court | United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Alaska |
In re: GARTH and KIMBERLY MILLIRON, Debtors.
JAY SCHINDLER and JEANNE SCHINDLER, Plaintiffs,
v.
GARTH MILLIRON and KIMBERLY MILLIRON, Defendants.
In re: JARRED and JENNIFER MILLIRON, Debtors.
JAY SCHINDLER and JEANNE SCHINDLER, Plaintiffs,
v.
JARRED MILLIRON and JENNIFER MILLIRON, Defendants.
Bankruptcy Nos. 18-00357-GS, 18-00358-GS
Adversary Proceeding Nos. 19-90001-GS, 19-90002-GS
United States Bankruptcy Court, D. Alaska
September 30, 2021
NOT FOR PUBLICATION
J. Gazewood, Esq.
E. LeRoy, Esq.
MEMORANDUM DECISION RE: § 523 ACTION AND RELATED CLAIMS
GARY SPRAKER UNITED STATES BANKRUPTCY JUDGE
Plaintiffs Jay and Jeanne Schindler (Schindlers) hired Dry Creek Construction, LLC (DCC) to build their farm house and barn in Delta Junction, Alaska. Defendants Garth Milliron and his son Jarred Milliron own DCC and ran the project. It did not go well. The Millirons and DCC subsequently filed bankruptcy after the Schindlers sued them in state court. The Schindlers now sue the Millirons under 11 U.S.C. § 523(a)(2)(A) for fraud and claim that the resulting damages are nondischargeable. The Millirons do not deny liability for the costs the Schindlers have incurred to redo much of their construction, but they deny committing fraud.
A. BACKGROUND
Prior to relocating to Alaska, the Schindlers lived on a farm in South Dakota with hay fields, pasture land, and a farmstead.[1] The Schindlers enjoyed farm life, having moved from a smaller farm in Minnesota.[2] Dr. Schindler worked as a neurosurgeon until he was diagnosed with a degenerative neurological condition in 2010.[3] Due to complications from his condition, the Schindlers sought to relocate to a colder climate than that provided by their location in South Dakota.[4]
In 2011, the Schindlers began looking for property in Alaska to approximate their South Dakota farm. They focused their search in the Delta Junction area because of its agricultural opportunities.[5] The Schindlers purchased a parcel of raw land in Delta Junction (the Property)
in January 2012, with the intent to build a farm with structures to house and support their livestock and other animals.[6] Though they had no prior experience constructing a new farmstead "from scratch," the Schindlers decided to hire a local contractor to develop the Property.[7] Realizing that construction would take a considerable amount of time, the Schindlers had decided to stay in South Dakota until the Property was developed, while visiting Delta Junction as needed.
In February 2012, Ms. Schindler spoke to a realtor who gave her a list of potential contractors to contact to erect a farmstead on the Property.[8] Ms. Schindler contacted a number of local contractors including Garth Milliron and his company, DCC.[9] Ms. Schindler testified that she selected DCC to do the job because Garth was responsive in his correspondence and assured the Schindlers that he could build the type of barn the Schindlers wanted built.[10]
1. Negotiations Between the Schindlers and Dry Creek Construction.
Ms. Schindler and Garth spoke over the telephone on February 2, 2012, and Ms. Schindler sent him a confirmation email the following day.[11] In that email, Ms. Schindler
confirmed that the Schindlers wanted a garage/shop, barn and livestock shed built in 2012, with a home and other structures to be built "in a subsequent year."[12] In reply, Garth requested that Ms. Schindler forward to him any drawings or plans she had for the structures. He further stated that if no plans had been made, he "would be happy to help" with drafting such plans, requesting "basic idea of size, shape and proximity" of the structures to each other as well as the Schindlers' preferred building materials.[13]
After receiving photos from Ms. Schindler of the structures on the Schindlers' South Dakota farm, in a February 10, 2012 email, Garth represented that DCC could "install the pump, pitless and plumping [sic]" for the Property once a well site was determined.[14] In her February 13, 2012 response she stated that "[a]t this point, it is likely premature for formal bids." Still, Ms. Schindler asked for DCC's "ability/willingness to take on our project," and expressed a desire to "'be up and running' when the building season begins."[15]
Garth responded to Ms. Schindler that same day
We are a licensed general contractor here in the State of Alaska and I also have a residential endorsement from the state for building custom homes. The residential license is something the state requires for contractors building homes… We are qualified to do any of the construction you are requesting… If you would like any references or copies of our licenses I would be happy to send them to you. We live and have been building in the Delta area since 1976.[16]
On March 7, 2012, Garth sent Ms. Schindler a list of three references. Ms. Schindler testified that she contacted two of the three references provided, and was given favorable reviews of Garth's work.[17] Garth also forwarded a list of cost comparisons, representing "costs for materials and labor at current prices."[18] In the comparison, Garth asserted that his estimates took "into account building codes and procedures we are required by state law [sic] even though we have no local enforcement."[19] The comparison concluded with a recommendation that "[a] total property plan should be done so the well and septic can be placed to accommodate all future building that will be connected."[20] Ms. Schindler testified that Garth informed them that no inspector was available, but she admitted that Garth's assurances regarding building to code gave her comfort that things were going to be built "to a certain standard."[21] She also testified, however, that the Schindlers "knew that there was some type of code because we'd been in areas where people were coming in and inspecting and making sure it was meeting up to the code, but we didn't understand…how codes worked in Alaska. We knew that there was HUD, we knew that there was some kind of international code, but we didn't know exactly how everything applied in Alaska with the codes."[22]
On March 11, 2012, Ms. Schindler sent an email to Garth confirming his engagement as the contractor in charge of establishing the farmstead on the Property.[23] Her list of requirements for the 2012 construction on the Property expanded to include road work, a well, and septic in addition to the three structures previously referenced.[24] She confirmed that she and her family would be making multiple trips to and from South Dakota during the summer months, with the final trip with livestock anticipated in September 2012.[25] Ms. Schindler anticipated that she and her husband would be "routinely present to answer any questions or give any direction that is needed in person."[26]
On March 18, 2012, Garth and Ms. Schindler exchanged a number of emails to detail the project and the Schindlers' requirements. Garth again represented that his company could "do the roadwork," "handle all the hookups" for the well, and "handle the septic and all the building tie-ins."[27] Garth also confirmed DCC's desire to do the work, claiming that his company was "planning on this project being our main focus for the summer season."[28]Negotiations continued into late March 2012, with Ms. Schindler saying in a March 23, 2012 email that "we are getting very close to having you make a formal bid on this."[29]
On March 26, 2012, Garth sent Ms. Schindler an email inquiring about the possibility of his son, Jarred, visiting the Schindlers' South Dakota farm in April to see the buildings the Schindlers were planning to dismantle to bring up to Delta Junction.[30] During Jarred's South Dakota visit in April 2012, he walked around the farmstead with the Schindlers and viewed the various structures they had erected there.[31] He discussed the Schindlers' expectations with regard to the construction to be done on the Property, and also viewed plans and diagrams they presented to him.[32]
On or about April 6, 2012, there was another lengthy email exchange between Ms. Schindler and Garth regarding additional construction details. In that exchange, Garth discussed the garage/shop walls and the need for sheeting, which he described as "what gives a building its sheer [sic] strength during high wind and in the event of an earthquake."[33] He informed Ms. Schindler that:
If you were building in an area where codes are required by local government fireguard sheetrock would probably be required on the interior walls or metal… I just want to give you the best structure I can for what you are doing. Whatever you decide on I will make work as long as it is not dangerous or will weaken the structure. In a pole structure like your out buildings [sic] the poles themselves would provide the shear strength. In the barn the post and beam structure is the strength and if done properly sheeting is not needed.[34]
With regard to the recommendations he made in the April 6, 2012 exchange, Garth explained that "[s]ome of these are personal preferences as a builder and others are because there is no engineered plan which makes us the engineers as well as the builders and we want to be sure your buildings will be as structurally sound as possible. We try to be as reasonable as possible with our customers while maintaining a reputation of quality that will pass inspection even if there is no inspector."[35] Later, in an email on November 9, 2012, Jarred assured Ms. Schindler that "[a]s far as a guarantee we are always willing to stand behind our workmanship. Our license also requires us to cover our work for a couple of years."[36]
Ms. Schindler testified that no engineer was employed because Garth told them that DCC could take an existing published structural plan and modify it into what the Schindlers wanted.[37] Ms. Schindler further...
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