Trauner v. Delta Air Lines, Inc. (In re Think Retail Sols., LLC)
| Decision Date | 05 July 2019 |
| Docket Number | ADVERSARY PROCEEDING NO. 17-5078-BEM,CASE NO. 15-56153-BEM |
| Parties | IN RE: THINK RETAIL SOLUTIONS, LLC, Debtor. ROBERT TRAUNER, as Plaintiff for the Estate of Think Retail Solutions, LLC Under Chapter 7 of the Bankruptcy Code; and as applicable as Plaintiff for the Estate of Tammy P. Simpson Under Chapter 7 of the Bankruptcy Code, Plaintiff, v. DELTA AIR LINES, INC., Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
IT IS ORDERED as set forth below:
On March 30, 2017, Robert Trauner ("Plaintiff") filed a complaint (the "Complaint" or "Comp.") against Delta Air Lines, Inc. ("Defendant") for recovery of fraudulent transfers and unjust enrichment. [Doc. 1]. Plaintiff filed the Complaint in his capacity as Chapter 7 Trustee for the separate bankruptcy estates of Think Retail Solutions, LLC ("TRS") and its principal Tammy P. Simpson ("Simpson" and with TRS, the "Debtors"). Defendant filed an answer on May 30, 2017 (the "Answer" or "Ans."). [Doc. 6]. The Complaint consists of five counts: (1) recovery for the benefit of TRS's estate pursuant 11 U.S.C. §§ 544, 550 and O.C.G.A. § 18-2-74, -75 of fraudulent transfers made by TRS; (2) alternatively to Count 1, recovery for the benefit of Simpson's estate pursuant to 11 U.S.C. §§ 544, 550 and O.C.G.A. § 18-2-74, -75 of fraudulent transfers made by Simpson; (3) recovery for the benefit of TRS's estate pursuant 11 U.S.C. §§ 548 and 550 of fraudulent transfers made by TRS; (4) alternatively to Count 3, recovery for the benefit of Simpson's estate pursuant to 11 U.S.C. §§ 548 and 550 of fraudulent transfers made by Simpson; and (5) liability for unjust enrichment.
The transfers at issue are the purchase of airline tickets from Defendant for Simpson, her friends and family for both personal and business travel. The Complaint seeks to avoid transfers in the total amount of $181,336.63. Plaintiff filed a Motion for Partial Summary Judgment seeking summary judgment with respect to some of the alleged fraudulent transfers in the amount of $90,656.38, such transfers being for tickets to locations where Simpson engaged in gambling activities or to other locations that had no business purpose for TRS or Simpson ("Plaintiff's Motion"). [Docs. 70, 76, 102 ¶ 3]. Defendant filed a Motion for Summary Judgment seeking summary judgment on all counts of the Complaint and as to all transfers ("Defendant's Motion" and with Plaintiff's Motion, the "Motions"). [Doc. 77].
The Court has jurisdiction in this proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (E), (H) and (O). The parties consent to entry of final orders and judgments by the Bankruptcy Court on the cross motions for summary judgment. [Comp. ¶ 14; Doc. 89-2 ¶ 11].
As an initial matter, the question arises whether Plaintiff can pursue claims against Defendant for the benefit of Simpson's bankruptcy estate in this proceeding when the bankruptcy estates of TRS and Simpson are neither jointly administered nor consolidated. Plaintiff argues that he can pursue claims as trustee for Simpson's estate1 and on behalf of her creditors in this proceeding and to hold otherwise would be impractical and inefficient because it would require Plaintiff to file an adversary proceeding before a different judge.
At a hearing held on November 1, 2018, Plaintiff argued that permissive joinder would allow joinder of the trustees of both estates as plaintiffs. Defendant argues that Plaintiff cannot bring claims to benefit Simpson's estate without joint administration or consolidation of the two cases because Simpson, as the sole member of TRS, is separate from TRS and likewise the bankruptcy estates are separate. Defendant argues further that Plaintiff, as trustee for Simpson's bankruptcy estate, is barred from bringing claims by the statute of limitations of 11 U.S.C. § 546.
Defendant relies on Spradlin v. Beads & Steeds Inns, LLC (In re Howland), 579 B.R. 411 (E.D. Ky. 2016), to argue that Plaintiff cannot bring claims on behalf of Simpson's estate in TRS's case because the estates of the entity and principal have not been consolidated. The facts in Howland are easily distinguished from the facts in this proceeding. In Howland, the trustee sought to avoid a transfer of property by a non-debtor LLC whose principals were debtors. Id. at 415. The court noted that an LLC and its principals are separate entities such that a transfer by the non-debtor could not be avoided in the debtor's case. Id. at 415-16. Here, both TRS and Simpson are debtors, albeit in separate cases assigned to different bankruptcy judges and Plaintiff is the chapter 7 trustee in each of the separate cases.
The Federal Rules of Civil Procedure allow for permissive joinder of parties as plaintiffs if "they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and ... any question of law or fact common to all plaintiffs will arise in the action." Fed. R. Civ. P. 20(a)(1)(A) and (B); Fed. R. Bankr. P. 7020. In the Eleventh Circuit the test for determining the same transaction or occurrence is whether the claims arise out of the same operative facts. 3 Moore's Federal Practice - Civil § 13.10 ().
The Supreme Court has stated that, "[u]nder the Rules, the impulse is toward entertaining the broadest possible scope of action consistent with fairness to the parties; joinder of claims, parties and remedies is strongly encouraged." United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724, 86 S. Ct. 1130, 1138 (1966). Although the parameters established in Gibbs are broad, those parameters are limited by the Supreme Court's statement that the word "transaction" has flexible meaning and "may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship." Moore v. New York Cotton Exchange, 270 U.S. 593, 610, 46 S. Ct. 367, 371 (1926) (emphasis added). "There are no hard rules for determining what constitutes a single transaction or a series of transactions, but a logical relationship between the existing defendants and the proposed defendants can satisfy this requirement." High-Top Holdings, Inc. v. RREF II BB Acquisitions, LLC (In re High-Top Holdings, Inc.), No. 16-10022, AP 16-1008, 2016 WL 4411278, at *2 (Bankr. N.D. Ga. July 18, 2016) (Drake, J.) . "The logical relation test is a loose standard which permits a 'broad realistic interpretation in the interest of avoiding a multiplicity of suits.'" Plan v. Blazer Fin. Servs., Inc. of Ga., 598 F.2d 1357, 1361 (5th Cir. 1979) (quoting 3 Moore's Federal Practice ¶ 13.13 (1972)).3
Although each of the payments at issue in this proceeding is in a different amount and was made on a different date, the underlying facts relating to the subject matter of the payments, manner of payment, and how the tickets were used is the same for each payment. In addition, questions of fact and law raised in each of TRS's and Simpson's cases are the same with respect to whether the transfers were fraudulent or constructively fraudulent, what value was given and received, and all actions were taken by Simpson either in her individual capacity or through TRS. Further, in two of the four fraudulent conveyance counts, Plaintiff initially seeks recovery on behalf of TRS's estate for all transfers and pleads recovery on behalf of Simpson's estate only in the alternative. Thus, the Court concludes that permissive joinder of the trustees of the two bankruptcy estates as plaintiffs is appropriate4 and does not provide a basis to grant summary judgment to Defendant with regard to transfers by Simpson.
In its argument on this issue, Defendant argues the statute of limitations has run under 11 U.S.C. § 546 with respect to Simpson's estate, i.e., the claims of Simpson's estate cannot be brought in this proceeding, and the time has run to file such claims in the Simpson case. However, because the Court finds that joinder is appropriate, Defendant's statute of limitations argument fails. Section 546 requires that a trustee file a cause of action under § 548 no later than the earlier of (i) two years after the petition date5 or the date the case is closed or dismissed. Here, Simpson's case was filed on April 3, 2015. [Pl. SMF ¶ 3, n.4; Def. Resp. ¶ 3].6 Plaintiff filed this proceeding on March 30, 2017. [Pl. SMF ¶ 6; Def. Resp. ¶ 6]. Thus, Plaintiff filed this proceeding within two years of Simpson's petition date and the action is not barred by § 546.
The parties have presented cross motions for summary judgment. Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986); Fed. R. Civ. P. 56(c); Fed. R. Bankr. P. 7056(c). The Court will only grant summary judgment when the evidence, viewed in the light most favorable to the nonmoving party shows no genuine dispute of material fact. Tippens v. Celotex Corp., 805 F.2d 949, 952 (11th Cir. 1986). A fact is material if it "might affect the outcome of the suit under the governing law ...." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986). A dispute of material...
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