White v. White (In re White)
| Decision Date | 15 April 2016 |
| Docket Number | CASE NO. 14–65320–WLH,ADV. PROC. NO. 14–5331 |
| Citation | 550 B.R. 615 |
| Parties | In re: Rocky Rene White, Debtor. Robbie White, Phyllis White, Individually and as Administrator for the Estate of Thelma Brownlee, Plaintiffs, v. Rocky René White, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
Rocky Rene White, pro se.
Terrence Shannon, Terrence Shannon, P.C., Porterdale, GA, for Plaintiff.
Karen Scott Greene, Karen Scott Greene, PC, Lawrenceville, GA, for Debtor/Defendant.
This dischargeability dispute between brothers comes before the Court on Defendant's Motion for Summary Judgment (“Motion”) [Docket No. 132]. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I), and the Court has jurisdiction over this proceeding under 28 U.S.C. §§ 157 and 1334.
Rocky White, the Debtor (“Defendant”), was involved in the design, manufacturing and marketing of a waste water treatment system going back as far as the 1990's. His brother Robbie White, one of the Plaintiffs, contends he was a partner with Rocky White in that project, even though Robbie White acknowledges there is no written partnership agreement. The Defendant borrowed money from Robbie White. Robbie and his wife, Phyllis White, took out a mortgage on their home in the approximate amount of $108,000, all or most of which was provided to Rocky White. Plaintiffs Robbie and Phyllis White contend the Defendant promised them the intellectual property rights in the waste water treatment project in Georgia in return for this loan. On July 30, 2003, Robbie and Rocky White signed an agreement entitled “Acknowledgement of Debt Agreement” (“ADA”). In the ADA, Defendant acknowledged he borrowed $150,000 from Plaintiff Robbie White in September 2001 and owed $20,000 in interest. The ADA also included release language whereby Plaintiff Robbie White ostensibly released the Defendant from any claims regarding intellectual property and any claims against the business entities created to operate the waste water disposal business. The scope and enforceability of the release remains disputed by the parties. The parties agreed that the loan from Robbie White to Defendant was due and payable on or before January 2004. Defendant defaulted on the loan, and in April 2012 Plaintiff Robbie White filed a civil action in Gwinnett County State Court against the Defendant. When Defendant failed to answer, a default judgment was entered against the Defendant in favor of Plaintiff Robbie White for $142,074.72 plus $20,000 in interest for a total judgment of $162,074.72 (“Judgment”).
Thelma Brownlee (“Brownlee”) was Phyllis White's mother. In 1992, Brownlee provided the Defendant with approximately $95,000. The Plaintiffs contend the funds were an initial investment in the waste water project, while the Defendant contends the monies were a loan. In 2002, Defendant and Brownlee signed a document entitled “Unsecured Promissory Note” (“Brownlee Note”). Plaintiffs claim Brownlee was fraudulently induced into signing the Brownlee Note. Nevertheless, Defendant did not make the payments required under the Brownlee Note. Phyllis White, as administrator of the Estate of Thelma Brownlee, now makes a claim for the unpaid funds of $60,000 plus an interest in the business into which the waste water treatment project was ultimately placed.
Over the course of the operation of the waste water business, assets were transferred and ultimately the Defendant's interest in the business was transferred. Because Plaintiff Robbie White claims that the waste water project business was a partnership, he claims the Defendant embezzled assets of the partnership and that Plaintiff Robbie White is entitled to one-half of the value of all the assets transferred. Additionally, the intellectual property rights for the waste water treatment project in Georgia were transferred to a third party. Robbie and Phyllis White claim the transfer of intellectual property rights was wrongful.
Defendant filed his voluntary bankruptcy petition under Chapter 7 of the United States Bankruptcy Code on August 5, 2014. Robbie White and Phyllis White, individually and as administrator for the Estate of Thelma Brownlee, (“Plaintiffs”) filed this adversary proceeding on October 20, 2014, seeking a denial of Defendant's discharge, a determination of the dischargeability of their claims, and to set aside certain fraudulent conveyances. The complaint is divided into three counts: Count I sets out objections to discharge under 11 U.S.C. §§ 727(a)(2)(A), (a)(3), (a)(4)(A) and (D), and (a)(5) ; Count II seeks a determination that all of the Plaintiffs' claims are non-dischargeable under 11 U.S.C. §§ 523(a)(2), (a)(4) and (a)(6) ; and Count III seeks to set aside the transfer of certain real property and shares of Defendant's business to third parties under state fraudulent transfer law.
On March 21, 2015, Defendant filed a motion seeking summary judgment on all claims in Plaintiffs' complaint. Following a status conference held on April 9, 2015, the Court denied the motion for summary judgment and directed Plaintiffs to amend the complaint to strike the fraudulent conveyance claims. Plaintiffs amended the complaint to dismiss Count III and to remove the request to set aside fraudulent transfers from the prayer for relief, leaving only the objections to discharge under Section 727 listed in Count I and the dischargeability determinations under Sections 523(a)(2), (a)(4) and (a)(6) listed in Count II. After further discovery, Defendant has now filed this motion for summary judgment. In this motion, Defendant states he is seeking summary judgment on all claims, but the substance of the motion seeks summary judgment only as to the following items:
As related above, only one of the Plaintiffs' claims has been liquidated, the Judgment. All other claims of the Plaintiffs remain unliquidated and disputed. Plaintiffs' Complaint seeks a determination that the Debtor is not entitled to a discharge under Section 727. If the Court finds, after trial, that the Defendant is not entitled to a discharge, then further litigation as to the dischargeability of a specific debt is unnecessary. If the Court grants the Debtor a discharge under Section 727, the Court would then need to decide in what forum Plaintiffs' unliquidated claims should be liquidated before determining their non-dischargeability. Since it is possible that the liquidation of the claims will take place in state court, the Court will refrain from ruling on any elements of the Motion that may ultimately be properly decided by the state court. Instead, the Court will limit its ruling here to issues related to Section 523.
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, 91 L.Ed.2d 265 (1986) ; Fed.R.Civ.P. 56(c) ; Fed. R. Bankr. P. 7056(c). “The substantive law [applicable to the case] will identify which facts are material.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party moving for summary judgment has the burden of proving there are no disputes as to any material facts. Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 918 (11th Cir.1993). A factual dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The party moving for summary judgment has “the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any’ which it believes demonstrate the absence of a genuine issue of material fact.” United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir.1991) (citing Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2553 ). What is required of the moving party, however, varies depending on whether the moving party has the ultimate burden of proof on the issue at trial.
When the nonmoving party has the burden of proof at trial, the moving party is not required to ‘support its motion with affidavits or other similar material negating the opponent's claim’ (cites omitted) in order to discharge this ‘initial responsibility’. Instead, the moving party simply may ‘show—that is, point out to the ... court—that there is an absence of evidence to support the nonmoving party's case. (cites omitted). Alternatively, the moving party may support its motion for summary judgment with affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial.
Four Parcels of Real Prop., 941 F.2d at 1437 (citing Celotex, 477 U.S. at 323–31, 106 S.Ct. at 2553–57 ).
Once this burden is met, the nonmoving party cannot merely rely on allegations or denials...
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