Solar Innovations, Inc. v. Plevyak (In re Plevyak)
| Decision Date | 08 March 2023 |
| Docket Number | 5:16-00158-MJC,Adv. Proc. 5:20-00088-MJC |
| Parties | In re: J. Michael Plevyak, Debtor. v. J. Michael Plevyak, Robert P. Sheils, Jr., Chapter 7 Trustee, Defendants. Solar Innovations, Inc., Plaintiff, |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Middle District of Pennsylvania |
This adversary proceeding has an extensive history relating to the termination of an employer - employee relationship. Debtor, a former employee of Plaintiff with unique technical skills resigned from his position with Plaintiff in 2011. However prior to resigning, Debtor had embarked on a program of deleting his work product and other information from Plaintiff's computer system, conspiring with a competitor for a new job, and committing other acts in violation of his employment agreement and a confidentiality agreement. Based on this conduct, Plaintiff sued Debtor and obtained a judgment against him in the amount of $1,182,361.31 in State Court.
Plaintiff commenced this adversary action seeking to have the judgment declared non-dischargeable under 11 U.S.C. § 523 and to deny his discharge under 11 U.S.C. § 727. As set forth below, the Court will (i) sustain Plaintiff's objections to discharge under 11 U.S.C. §§ 727(a)(2)(B), 727(a)(3), 727(a)(4) and 727(a)(5) (ii) overrule the objection to discharge under 11 U.S.C § 727(a)(2)(A), and (iii) deny Plaintiff's claim for a determination that the State Court judgment is non-dischargeable under 11 U.S.C. § 523(a)(6).
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Standing Order of Reference of the U.S. District Court for the Middle District of Pennsylvania dated March 11, 2016. These matters are core proceedings pursuant to 28 U.S.C. § 157(b)(2)(A), (I), and (J). Venue is proper pursuant to 28 U.S.C. § 1409(a).
On September 29, 2011, Solar Innovations, Inc. ("Plaintiff" or "Solar") initiated litigation against Debtor J. Michael Plevyak ("Debtor" or "Defendant") in the Court of Common Pleas of Schuylkill County, Pennsylvania (No. S-2072-11) ("State Court Action"). Thereafter, Solar filed a First Amended Complaint on November 9, 2011 and a Second Amended Complaint on July 3, 2013. Adv. Dkt. # 25, Ex. C and D. In the State Court Action, Solar asserted fourteen (14) counts including claims for Replevin, Breach of Contract, Conversion, Trespass to Chattels, violations of the Pennsylvania Uniform Trade Secrets Act, Theft of Trade Secrets, Breach of Fiduciary Duty, and Injunctive Relief.
Pursuant to Solar's request for a preliminary injunction, the State Court entered an Opinion and Order ("Injunction Order") dated May 11, 2012. Ex. SI-5.[2] In its Injunction Order, the State Court made extensive findings of fact and conclusions of law and ordered, inter alia, that the Debtor "abide by the non-compete provisions set forth in the Employee Confidentiality Agreement and is prohibited from working for Acurlite Structural Skylights, Inc. … for a period of two (2) years." Id. at 1. The Debtor was represented by legal counsel and defended the injunction proceeding.
On October 14, 2015, Solar filed a Motion for Summary Judgment in the State Court Action. See Ex SI-2. On March 8, 2016, the State Court entered judgment against Defendant/Debtor in the amount of $1,182,361.31 ("State Court Judgment"). Ex SI-1. The State Court Judgment was entered by default. Although Debtor was represented by counsel in the State Court Action during the injunction proceeding, Debtor did not oppose the Motion for Summary Judgment.[3]
On July 29, 2013, Defendant/Debtor filed a Voluntary Chapter 7 Bankruptcy Petition docketed at Case No. 13-03907 - his first of three bankruptcy cases.[5] The Court dismissed the case by an Order dated September 20, 2013 for failure to file documents, including his Schedules, as required under the Code. Just prior to the dismissal, Solar had filed a Motion for Relief from the Automatic Stay in the main case and commenced an adversary action with the filing of a Complaint to Determine Dischargeability (A13-223). As a result of the main case dismissal, the related adversary proceeding was dismissed as well.
Debtor's second Chapter 7 case was filed on October 25, 2013 docketed at Case No. 13-05500.[6] On January 6, 2014, Solar filed a Motion to Confirm Termination or Absence of the Automatic Stay in the main case and commenced another adversary action by filing a Complaint to Determine Dischargeability (A 14-11). On August 19, 2014, Plaintiff filed a Motion to Dismiss Case for Abuse under 11 U.S.C. § 707(a) and § 707(b)(1). On November 5, 2014, the Court granted Plaintiff's Motion to Dismiss finding that the case was filed not in good faith. On April 8, 2015, the Court denied Debtor's Motion for Reconsideration of the dismissal order.
On January 18, 2016, Debtor filed his third bankruptcy case but this time under Chapter 13.[7] On September 2, 2020, after sustaining Solar's objections to the Debtor's Sixth Amended Plan without leave to file an amended plan, the Court converted the case to one under Chapter 7. Dkt. # 173. On December 24, 2020, Plaintiff filed another Motion to Dismiss Case for Abuse under 11 U.S.C. § 707(b) ("Motion to Dismiss Case for Abuse"), Dkt. # 190, and commenced this instant proceeding with the filing of a Complaint to Determine Dischargeability (A 20-88). These matters were consolidated for trial.
Debtor filed a Motion to Dismiss the Adversary Complaint which the Court granted in part and denied in part by the Amended Order dated May 25, 2021, Adv. Dkt. # 22. On June 11, 2021, Plaintiff filed an Amended Complaint under 11 U.S.C. 523(a)(6), 727(a)(2), 727(a)(3), 727(a)(4) and 727(a)(5), which is the operative complaint in this matter.[8] Adv. Dkt. # 25. Debtor filed his Answer on July 14, 2021. Adv. Dkt. # 27. Trial was held on April 18, 2022.[9] Post-trial briefs and proposed findings of fact and conclusions of law have been timely submitted and this matter is ripe for decision.
Based upon the evidence presented at trial[11] and the extensive dockets in Debtor's three (3) Bankruptcy Cases, the Court makes the following findings of fact as required by Fed.R.Civ.P. 52, made applicable to this adversary action by Fed.R.Bankr.P. 7052.
1. Plaintiff Solar is a Pennsylvania corporation that manufactures and designs extrusions that are used like an "erector set" for windows, doors, greenhouses, sunrooms and skylights and glass panels would then be inserted into the extrusions. April 18, 2022 Transcript at 21.[12] Gregory Header was the owner and founder of Solar.[13]
2. In April 2004, Solar hired Debtor as its Vice-President of Engineering, Research & Development. Tr. at 23. Debtor worked as a product design engineer in research and development for approximately 40 years. Id. at 103.
3. At the time of his employment with Solar, Debtor executed an Employee Confidentiality Agreement. Ex. SI-6.
4. Debtor worked approximately 20 hours per week, primarily from his home towards the end of his employment relationship with Solar. Tr. at 23.
5. Solar provided Debtor with a company laptop which had access to Solar's server. All information, including the technical research and development Debtor was working on, was to be kept on the laptop. Id. at 24.
6. Debtor had access to all of Solar's proprietary information as described by Mr. Header. Id. at 22-25.[14]
7. On May 26, 2011, Debtor went to Solar's facility and began packing property and materials into boxes, including property that was owned by Solar, for removal from the premises. Id. at 29-30.
8. After Mr. Header confronted him about these actions, Debtor resigned his employment by way of a letter of resignation, prepared in advance of his arrival at the facility. Id. at 79.
9. Prior to resigning his employment with Solar, Debtor established a relationship with one of Plaintiff's competitors, Acurlite Structural Skylights, Inc. ("Acurlite"), which included two (2) meetings with Ronald Palumbo, Acurlite's President, and its counsel, Frank Kepner.[15] Id. at 84-85.
10. Prior to resigning his employment with Solar, Mr. Palumbo provided Debtor with an Acurlite laptop and Debtor loaded all of the files from his Solar laptop to the Acurlite laptop. Id. at 82.
11. Prior to resigning his employment with Solar, Debtor deleted large amounts of data from the Solar laptop and used a program to conceal his actions. Id. at 8-15.
12. Debtor maintained that he resigned from Solar because of his health issues and wanted to retire. [16] Despite this stated intention and less than a week after his resignation from Solar, Debtor began working for Acurlite on June 1, 2011. Id. at 82.
13. Debtor received compensation from Acurlite of $32,307.80 in 2011 and $23,076.90 in 2012. See Ex. SI-10.
14. Subsequent to Debtor's resignation, Solar's IT department conducted an investigation and determined that Debtor had, for some period of time prior to his resignation, deleted electronically stored data from Solar's computer system, including a majority of the work undertaken by Debtor since his employment in 2004. Tr. at 10. 15. Debtor installed software designed to block the monitoring of his actions by Solar as well as to impair Solar's efforts to detect and restore deleted data. Id. at 12.
16. On September 29, 2011, Solar filed suit against Debtor in the Court of Common Pleas of Schuylkill County, Pennsylvania Civil Action No. S-2072-11 ("State Court Action").
17. Pursuant to Solar's request for a preliminary...
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