Ziegler v. Hood (In re Hood), Case No.: 11-13704-JDW
| Decision Date | 03 September 2013 |
| Docket Number | Case No.: 11-13704-JDW,A.P. No.: 11-01203-JDW |
| Parties | In re: KENNETH GREGORY HOOD, Debtor. CHARLES D. ZIEGLER, Plaintiff/Counter-Defendant. v. KENNETH GREGORY HOOD, Defendant/Counter-Plaintiff. |
| Court | U.S. Bankruptcy Court — Northern District of Mississippi |
Chapter: 13
This matter is before the Court on the Motion for Summary Judgment (the "Motion")(Dkt. #101) filed by Plaintiff/Cross-Defendant Charles D. Ziegler (the "Plaintiff") in the above-styled adversary proceeding. The Motion was filed, along with Plaintiff's Brief in Support of Motion for Summary Judgment, on June 21, 2013, and on July 17, 2013, Defendant/Counter-Plaintiff Kenneth Gregory Hood filed a response thereto (the "Response")(Dkt. # 105). A reply by the Plaintiff was filed on August 6, 2013 (the "Reply")(Dkt. # 114). This Court has jurisdiction pursuant to 28 U.S.C. § 151, 157(a) and 1334(b) and the United States District Court for the Northern District of Mississippi's Order of Reference dated August 6, 1984. This is a core proceeding arising under Title 11 of the UnitedStates Code as defined in 28 U.S.C. § 157(b)(2)(A), (B), (C), (H), (K) and (O).1 The Court must decide whether the summary judgment is due to be granted as to Defendant's liability on certain promissory notes executed by the Defendant in favor of Covenant Bank and later purchased by, and assigned to, Plaintiff. Further, this Court must decide whether Plaintiff's Motion is due to be granted with regard to Defendant's counterclaims of fraud, misrepresentation, breach of contract and fraudulent conveyance. No hearing on the Motion is necessary. The Court has considered the pleadings, evidence, briefs and the law, and finds and concludes as follows.
Rule 56 of the Federal Rules of Civil Procedure2 provides in pertinent part:
(e) If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may:
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FED. R. CIV. P. 56. In the case before the Court, the non-moving party - the Defendant - has submitted to the Court a Response to the Motion wherein the Defendant fails to address all of the facts, assertions, and allegations put forth in the Plaintiff's Motion. Therefore, in regard to facts asserted by the Plaintiff (and supported by proper evidence) to which the Defendant is silent andhas submitted no evidence, the Court may deem those facts as undisputed. Id. Nevertheless, the Court must still judge the reliability, correctness and relevance of the evidence submitted by the Plaintiff. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). For purposes of this Motion, the following facts are undisputed.
Defendant operated a Mississippi company, Southern Game Calls, Inc. ("SGCI"), which manufactured and sold bird hunting game calls. From 2004 to 2009, Defendant executed various promissory notes payable to Covenant Bank (the "Bank"). The notes were periodically renewed and were secured by collateral owned by SGCI, including inventory, equipment, accounts receivable and chattel paper. As shown in the evidentiary submissions, all three notes at issue in this case were executed by SGCI through its principal, the Defendant. Id. The notes were also personally guaranteed by Defendant and on July 14, 2003, Defendant executed Irrevocable Powers of Attorney for Transfer of Stock in favor of the Bank to transfer two (2) Coahoma County Conservation League, Inc. stock certificates held by the Defendant and identified as certificates 203 and 204 (the "Certificates" and collectively with the promissory notes, the security agreements, and the guaranty executed by the Defendant, the "Loan Documents") to secure the debt. The parties agree that the Certificates are worth $33,000.00 each.
The Plaintiff subsequently purchased the Loans and Loan Documents from the Bank, and on January 19, 2010, the Bank assigned to Plaintiff all of its right, title and interest in the Loan Documents. In his deposition, Defendant admitted to being told of the assignment and understanding that Plaintiff was the new holder of the notes. Defendant further admitted in deposition that he told the Bank that he understood that future payments would be due to Plaintiff and not to the Bank. Id. The three notes purchased by Plaintiff from the Bank are in default.
The parties dispute the remaining facts. In January 2010, in addition to purchasing the Loan Documents from the Bank, Plaintiff established Southern Game Calls, LLC ("SGCL"), an Ohio limited liability corporation. Plaintiff contends that he hired Defendant as a consultant to sell the same products previously sold by Defendant. Defendant was to turn over SGCI's inventory in partial satisfaction of the loan balances. As part of his new employment with the Plaintiff's company, Defendant was paid $21,166.68 from February to June 2010 as an advance against future commissions. As correspondence between the two parties shows, these payments were for "consulting fees." (Dkt. # 101, Ex. "E", pg. 56, 67; Dkt. # 101, Ex. "G"). Plaintiff filed this adversary proceeding seeking money judgment for amounts owed on the three notes, to be declared the owner of the Certificates, and to be allowed to liquidate the remaining collateral securing the notes. (Dkt. # 2).
Conversely, Defendant contends that while he understood that the Plaintiff had purchased the Loan Documents from the Bank, he believed it was part of a larger transaction. In his Answer and Amended Counterclaim (the "Answer")(Dkt. # 70), Defendant contends that Plaintiff - acting with fraud and through misrepresentation - verbally committed to buy SGCI for the combined purchase price of $250,000.00, the release of the three notes executed by SGCI to the Bank, and the release of the Certificates. Id. at 1. In exchange, Plaintiff was to gain possession and ownership of the company's inventory and equipment, and the Defendant was to work as a consultant at five trade shows a year on behalf of the company. Id. at 2; (Dkt. #101, Ex. "A", pg. 34). In short, Defendant contends that Plaintiff agreed to forgive the loans and to pay him $250,000 for the assets of the company. The inventory referenced by Defendant - that he contends was to be included in the sale of the company - was the same inventory Defendant had already pledged to the Bank.
Defendant admits that there exists no written contract evidencing or memorializing the terms of this purported agreement. (Dkt. # 101, Ex. "A", pg. 11)( ). Of the $250,000.00 to be paid by the Plaintiff - purportedly to be paid in $50,000.00 installments over the course of 5 years - Defendant alleges that only about $20,000.00 was paid. (Dkt. # 70, pg. 2). As a result, Defendant claims that he is due the remaining $230,000.00. Id. at pg. 2. Consequently, Defendant also contended that Plaintiff is not entitled to the judgment sought (the loans having been forgiven by the parties' oral agreement) and that the Defendant is entitled to the remaining $230,000 of the contract price and to possession of the Certificates. The Defendant submitted no evidence in support of his assertions or refuting Plaintiff's assertions. In fact, in Defendant's Response, the only defense raised is that the Plaintiff's sale of a portion of the collateral was not commercially reasonable.
For the reasons set forth below, the Court finds that there was no contract between Plaintiff and Defendant, other than the Loan Documents purchased by Plaintiff.
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment is properly granted only if:
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. Cartrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In its deliberations, the Court is to make all inferences in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, All U.S. 242, 106 S.Ct. 2505, 91 L.Ed. 202 (1986). "[A]llreasonable doubt as to the existence of a genuine issue of material fact 'must be resolved against the moving party.'" Kennett-Murray Corp. v. Bone, 622 F.2d 887, 892 (5th Cir. 1980) (quoting Keiser v. Coliseum Properties, Inc., 614 F.2d. 406, 410 (5th Cir. 1980)). The moving party is charged with demonstrating a basis on which summary judgment is due to be granted. Celotex, 477 U.S. at 323. The nonmoving party must then undertake to show that a genuine issue of material fact exists as to that issue. Id. at 324. Although the movant still bears the ultimate burden of proof, the non-movant must provide the court with something more than the party's own pleadings to demonstrate the existence of a genuine issue for trial. "Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials...except the mere pleadings themselves..." Id. Further, summary judgment is properly granted when "the nonmoving party has failed to make a sufficient showing on an essential element of [its] case with respect to which [it] has the burden of proof." Id. at 323; Archie v. Acceptance Indent. Ins. Co., 507 Fed.App'x. 451, 452 (5th Cir. 2013). Plaintiff has moved for summary judgment with respect to all claims asserted in the Complaint, as well as the counterclaims asserted by the Defendant.
In his Answer, Defendant alleges that he and the Plaintiff verbally agreed for the Plaintiff to purchase SGCI. It is admitted by the Defendant that no written...
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