Trustmark Nat'l Bank v. Tegeler (In re Tegeler)

Decision Date08 June 2018
Docket NumberAdversary No. 17–03043,Case No. 16–35634–H4–7
Citation586 B.R. 598
Parties IN RE: Curtis G. TEGELER and Sandy R. Tegeler, also known as Sandra Lynn Tegeler, Debtors. Trustmark National Bank, Plaintiff, v. Curtis G. Tegeler and Sandy R. Tegeler, also known as Sandra Lynn Tegeler, Defendants.
CourtU.S. Bankruptcy Court — Southern District of Texas

Vickilyn Wilkinson Hart, Devlin Naylor, Donald L. Turbyfill, Devlin Naylor & Turbyfill, PLLC, Houston, TX, for Plaintiff.

Brad Christopher Bedwell, Donato Minx Brown & Pool, PC, Houston, TX, for Defendants.

MEMORANDUM OPINION REGARDING PLAINTIFF'S COMPLAINT TO DETERMINE DISCHARGEABILITY

[This Order Relates to Adv. Doc. No. 1]

Jeff Bohm, United States Bankruptcy Judge

I. INTRODUCTION

Sandy Tegeler ("Ms. Tegeler") and Curtis Tegeler ("Mr. Tegeler") filed a Chapter 7 petition on November 7, 2016, thereby becoming the debtors in the main case (hereinafter, they are sometimes referred to as "the Debtors"). On February 9, 2017, Trustmark National Bank ("Trustmark") initiated the pending adversary proceeding against the Debtors. Prior to the Debtors' filing of their Chapter 7 petition, Trustmark had extended a $230,000.00 loan to the Debtors' 100%–owned company, a debt that the Debtors had personally guaranteed. Trustmark requests this Court to enter a judgment for the amount of this unpaid loan, plus attorneys' fees and costs, as a nondischargeable debt for which the Debtors, jointly and severally, are liable under 11 U.S.C. § 523(a)(2)(A) or, alternatively, under § 523(a)(6).1

This Court held a multi-day trial in this adversary proceeding that concluded on December 8, 2017. The Court then took the matter under advisement. On March 29, 2018, this Court held a brief hearing to announce orally on the record that it had decided to grant the relief sought by Trustmark. The Court indicated that it would eventually issue written Findings of Fact and Conclusions of Law, together with a judgment, explaining its decision. However, the Court informed the parties that it would refrain from entering its written findings and conclusions, plus the judgment, until after Trustmark had proven up its reasonable attorneys' fees and expenses. The Court instructed Trustmark's counsel to submit his fee bills to counsel for the Debtors by no later than April 6, 2018, and also instructed the Debtors' counsel to file a certificate by no later than April 20, 2018, setting forth whether the Debtors objected to the amount of the fees and expenses requested by Trustmark.

Trustmark's counsel did, in fact, timely submit his fee bills [Adv. Doc. No. 52]; and counsel for the Debtors did, in fact, timely submit a certificate objecting to a portion of the fees and expenses requested by Trustmark. [Adv. Doc. No. 53]. The Court then scheduled a hearing on this discrete dispute for May 15, 2018. However, the parties filed an agreed motion to continue the hearing, which this Court granted. [Adv. Doc. Nos. 55–56]. The hearing was actually held on May 31, 2018, and after receiving the evidence (which consisted of exhibits of Trustmark, namely the fee bills of its counsel) and listening to oral arguments of the attorneys, the Court determined that the amount of Trustmark's reasonable fees and reasonable expenses for which the Debtors are jointly and severally liable (and which amounts are nondischargeable) total $91,728.00 and $6,503.84, respectively, for a total amount of $98,231.84.2

In the wake of this Court's holding the hearing to determine Trustmark's reasonable fees and expenses, the Court now issues these written Findings of Fact and Conclusions of Law pursuant to Rule 7052 explaining why it has decided to grant the relief requested by Trustmark and enter a judgment declaring that $371,565.88, the outstanding amount owed under the loan documents (including attorneys' fees and costs) is a nondischargeable obligation owed by the Debtors, jointly and severally. To the extent that any finding of fact is construed as a conclusion of law, it is adopted as such; and to the extent that any conclusion of law is construed as a finding of fact, it is adopted as such. The Court reserves the right to make additional findings and conclusions as this Court deems appropriate or as may be requested by either of the parties.

II. FINDINGS OF FACT
A. Background of the Debtors

1. Ms. Tegeler met Mr. Tegeler in 1991, and they were married in 1994. Ms. Tegeler went to Texas A & M University–Kingsville and graduated with a bachelor's degree in human science and nutrition. She also pursued a master's degree in English, but did not graduate. [Nov. 7, 2017 Tr. 136:20–138:3].

2. Mr. Tegeler, at age thirteen, began working in a machine shop in Corpus Christi, Texas. [Oct. 25, 2017 Tr. 6:4–13]. He graduated from high school. [Oct. 25, 2017 Tr. 7:10–12]. He also attended Tyler Junior College as well as Texas A & M University–Kingsville, but did not graduate from either school. [Oct. 25, 2017 Tr. 7:10–8:3]. After college, Mr. Tegeler spent the next sixteen years working for various drill pipe manufacturers in the oil and gas industry. [Oct. 25, 2017 Tr. 8:15–11:25]. Mr. Tegeler claims he was diagnosed with dyslexia when he was in third grade. [Nov. 6, 2017 Tr. 80:11–12]. He claims that he still presently suffers from dyslexia. [Nov. 6, 2017 Tr. 84:19–20]. He also claims that he instructs Ms. Tegeler to read his e-mails to him. [Nov. 6, 2017 Tr. 84:21–25].

3. Even though he does not have a college degree, Mr. Tegeler is a sophisticated businessman; indeed, he testified that he is sophisticated and experienced. [Oct. 26, 2017 Tr. 40:11–22]. His significant sophistication and business acumen are underscored by the fact that he borrowed $2.7 million from John Lindley ("Lindley"), his business associate of thirty-five years, without the assistance of counsel. [Nov. 7, 2017 Tr. 88:8–17]. Mr. Tegeler testified that the purpose of borrowing $2.7 million from Lindley was to "buy the Stuteses out and merge in with FWM."3 [Nov. 7, 2017 Tr. 127:7–9]. Additionally, the Asset Purchase Agreement4 that is the subject of the suit at bar, which Mr. Tegeler signed and is subsequently described in greater detail, describes his level of sophistication as follows:

[Mr. Tegeler] is an 'accredited investor' within the meaning of Rule 501 of Regulation D [the definition of this term is found in 17 C.F.R. § 230.501 ] promulgated under the Securities Act, has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of the transactions contemplated by this Agreement.

[Pl.'s Ex. No. 10 at 16, ¶ 4.16].

B. Background of BC Gulf Coast Machine & Supply, Inc.

4. In September 2008, Mr. Tegeler formed BC Gulf Coast Machine & Supply, Inc. ("BCGC"). [Oct. 25, 2017 Tr. 11:22–25]. In the same year, Ms. Tegeler began working for BCGC. [Nov. 7, 2017 Tr. 138:14–16]. Ms. Tegeler served as the Vice President of BCGC. [November 27, 2017 Tr. 118:24–119:7]. Her duties included:

a. Performing data entry [Nov. 7, 2017 Tr. 138:22–24];
b. Setting up BCGC's bank accounts [Nov. 7, 2017 Tr. 139:6];c. Managing BCGC's finances and documenting the transactions in QuickBooks [Nov. 7, 2017 Tr. 139:8];
d. Managing BCGC's accounts payable and accounts receivable [Nov. 7, 2017 Tr. 141:18–25];
e. Sending invoices to BCGC's clients [Nov. 7, 2017 Tr. 139:8–9];
f. Paying BCGC's operational expenses [Nov. 7, 2017 Tr. 139:5–9];
g. Answering the telephone calls [Nov. 7, 2017 Tr. 139:13–14]; and
h. Facilitating various human resource functions, including payroll [Nov. 7, 2017 Tr. 140:24–141:2].

5. In January of 2009, BCGC began its operations and engaged in the business of manufacturing, selling, and machining of drill pipe, collars, and other tubulars used in the oil and gas industry. [Oct. 26, 2017 Tr. 20:23–21:7]. BCGC's headquarters and yard were located in Spring, Texas. [Nov. 7, 2017 Tr. 122:13–17].

6. Mr. Tegeler served as the President of BCGC. [Oct. 25, 2017 Tr. 60:12–20]. His duties included:

a. Replacing damaged machinery for BCGC [Oct. 25, 2017 Tr. 12:11–13];
b. Purchasing new machinery for BCGC [Oct. 25, 2017 Tr. 15:15–20];
c. Improving the profitability of BCGC [Oct. 25, 2017 Tr. 12:10–15]; and
d. Maintaining the growth of BCGC's facilities and operations [Oct. 25, 2017 Tr. 12:18–13:13].

7. Initially, BCGC's shareholders included not only the Debtors, but also Brad Stutes ("Mr. Stutes") and Anita Stutes ("Ms. Stutes") (collectively, the "Stuteses"), each of whom owned a 25% interest in the company. [Nov. 7, 2017 120:14–22]. Eventually, Mr. Tegeler came to mistrust Mr. Stutes, concluding that Mr. Stutes was, among other alleged improper practices, unethically steering business away from BCGC to his own 100%–owned company in Louisiana. [Nov. 7, 2017 Tr. 121:2–11, 121:19–126:24]. Thus, Mr. Tegeler decided to buy out the 50% interest owned by the Stuteses. [Id. ]. In order to effectuate the buyout of the 50% interest owned by Mr. and Ms. Stutes, Ms. Tegeler conveyed all of her interest in BCGC to Mr. Tegeler. [Nov. 28, 2017 Tr. 27:6–9]. Mr. Tegeler thereafter paid $2.7 million to buy out the interest held by the Stuteses. [Nov. 7, 2017 Tr. 119:12–120:22]. As a condition of this buyout, the Debtors were required to relocate BCGC's operations to another facility by the end of August 2014, as the Stuteses owned the real property in Spring, Texas, on which BCGC's headquarters and yard were located. [Nov. 7, 2017 Tr. 100:5–15]. For the Debtors, time was very much of the essence to find a new location to run BCGC's operations.

C. The Debtors Enter into Negotiations to Physically Move BCGC's Operations and Also Seek to Obtain a Line of Credit for BCGC

8. Having obtained 100% ownership of BCGC, and knowing that he had to quickly and physically move BCGC's operations and assets to a different location, Mr. Tegeler began negotiations with David Rayne ("Rayne"), the CFO of FWM Tubular & Equipment Corporation ("FWM"), and William Huebel ("Huebel"), FWM's 100% owner. [Nov. 7,...

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