CARYL E. DELANO, Bankruptcy Judge.
THIS PROCEEDING came on for consideration, without a hearing, of the Motion for Rehearing, Reconsideration and/or to Alter or Amend Summary Judgment Order filed by Plaintiffs, Regions Bank and the Chapter 7 Trustee (the "Motion").
In April 2009, Regions Bank ("Regions") filed a lawsuit against Debtor in Florida state court,
On January 29, 2014, Debtor filed for a Chapter 7 bankruptcy. He received a discharge.
Under § 56.29, judgment creditors are entitled to examine the judgment debtor and third parties about the location and disposition of the judgment debtor's property. The statute provides for three separate remedies.
First, under § 56.29(5), the court may order any property of the judgment debtor that is not exempt from execution and that is in the hands of any other person to be turned over to the judgment creditor to apply to the judgment debt. The court may also entertain fraudulent transfer claims that the judgment creditor has brought under Chapter 726 of the Florida Statutes
Second, under § 56.29(6), if the defendant held title to personal property within one year before service of process upon him but, at the time of the examination, the defendant's spouse, relative, or any other person on confidential terms with him claims title or a right of possession to the property, the defendant has the burden of proof to establish that the transfer to the recipient was not made to delay, hinder, or defraud creditors. If the court finds that the transfer was made to delay, hinder, or defraud creditors, the court shall order the transfer to be void and direct the sheriff to take the property to satisfy the execution.
It is important to note that relief under § 56.29(6) differs from the fraudulent transfer provisions of Chapter 726 because (i) the look back period is limited to one year before the defendant was served with process in the underlying lawsuit rather than the four-year look back period afforded by § 726.110; and (ii) unlike § 726.105, where the burden is on the creditor to establish that the transfer was made to hinder, delay, or defraud, the burden of proof is on the defendant to establish that the transfer was not made to delay, hinder, or defraud.
Last, under § 56.29(9), the court may enter any orders, judgments, or writs required to carry out the purpose of § 56.29, including the entry of money judgments against any impleaded defendant irrespective of whether such a defendant has retained the property transferred.
The Complaint does not identify the specific provision of § 56.29 under which Plaintiffs seek relief. Rather, Plaintiffs allege Debtor made certain transfers with the intent to hinder, delay, or defraud Regions' judgment collection efforts.
Plaintiffs prayed that any property owned or belonging to Debtor be turned over to the Trustee, that the Impleaded Defendants be ordered to turn over the assets transferred to them by Debtor, and for judgment to be entered against the Impleaded Defendants, regardless of whether they had retained the transferred assets.
Summary judgment is appropriate when the moving party shows that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law.
After a period of discovery and several discovery skirmishes,
Although the Court made numerous rulings, the following summary addresses only those rulings that Regions asserts are subject to reconsideration as being clear error.
The parties do not dispute that Debtor's three Brown Accounts were maintained at Brown Investment and Advisory Trust Company, which is located outside the state of Florida, in Maryland. The Court, following recent Florida appellate court rulings in Sargeant v. Al-Saleh
The Court held that although a bankruptcy court has in rem jurisdiction in the bankruptcy case extending to all the debtor's assets, wherever located,
In addition to its lack of jurisdiction over the Brown Accounts, the Court found that two of the Brown Accounts were fully pledged by Debtor to SunTrust Bank as collateral for loans from SunTrust before Debtor retitled the accounts as tenants by the entirety. Under Florida law, property pledged as collateral for a loan cannot be levied upon by a judgment creditor.
In order for Plaintiffs to prevail on their § 56.29(6)(a) claims with respect to Debtor's transfer of his interests in Little Harpers, LLC ("Little Harpers") and Lakefront North Investors Limited Partnership ("Lakefront"), Plaintiffs must establish that the transfers took place within the year preceding service of process on Debtor in the underlying state court action. As Debtor was served on April 13, 2009, the transfers must have taken place after April 13, 2008.
Although Debtor testified at deposition that he did not recall when he signed the Assignments, the Court relied upon the deposition testimony of Debtor's accountant, Ira Sugar, who stated:
In other words, although Mr. Sugar did not identify the specific date on which the Assignments were executed, he testified that he received copies of the Assignments in 2007. Regardless of whether the Assignments were actually signed on November 1, 2007, or some later date in 2007, the testimony establishes that the Assignments were executed in 2007 and prior to April 13, 2008. Therefore, the Court held that the Impleaded Defendants had met their burden of proof on summary judgment and that the burden then shifted to Plaintiffs to prove that the Assignments were executed after April 13, 2008.
Plaintiffs argued that Debtor's deposition testimony that he did not know when he had signed the Assignments was designed to avoid his perjuring himself. In furtherance of their "backdating" argument, Plaintiffs offered (i) the "Resolution(s) to Change Principal Office or Resident Agent" signed by Debtor on behalf of Little Harpers and Lakefront that were filed with the Maryland State Department of Assessments and Taxation on October 7, 2008;
Plaintiffs argued these documents evidence that, as late as 2011, Debtor, by signing documents on behalf of Little Harpers and Lakefront, was acting in a manner inconsistent with the purported Assignments of his interests. However, the Assignments themselves reflect that Debtor was the general manager of McCuan Family, LLC. As the general manager of the recipient and new owner of the Little Harpers and Lakefront interests, Debtor would have had the authority to sign corporate documents on their behalf.
Further, the Court concluded that the deeds and tax exemption forms are irrelevant to this issue because, by February 2009, Regions had notice of the Assignments. Although Debtor's personal financial statement dated October 31, 2007, reflected his interests in Little Harpers and Lakefront,
The Court concluded that, as a matter of law, the documents on which Plaintiffs rely do not refute Mr. Sugar's testimony that he had received the Assignments in November 2007 and thus did not show the existence of a genuine dispute of material fact. Further noting that Debtor's signatures on the Assignments were witnessed by a third party, Christine Richards, and that Plaintiffs had taken no steps to depose her on this issue, the Court found that Plaintiffs had not met their burden and that summary judgment on this issue was appropriate.
A motion for reconsideration may be filed under Federal Rules of Civil Procedure 59(e) or 60(b), as incorporated by Federal Rules of Bankruptcy Procedure 9023 and 9024, respectively.
Plaintiffs correctly state that a Rule 59 motion permits the Court to reconsider an order when it learns of "(1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or manifest injustice."
Rule 60(b) enumerates specific grounds for reconsideration, including mistake under 60(b)(1) and a catch-all provision for "any other reason that justifies relief" under 60(b)(6). Plaintiffs appear to argue that the Court should reconsider its ruling for an (unstated) "other reason" that justifies relief.
Courts have substantial discretion in whether to grant a motion for reconsideration. Reconsideration has been characterized as "an extraordinary remedy to be employed sparingly."
Plaintiffs argue that the Court erred in applying the holding of Sargeant v. Al-Saleh (that a Florida court in proceedings supplementary does not have jurisdiction over out-of-state assets) to this adversary proceeding. In its summary judgment ruling, the Court considered and rejected this argument. Plaintiffs' argument that the Court ruled incorrectly is not grounds for the Court to reconsider its ruling.
Plaintiffs assert that the Court erred in finding that the Brown Accounts had been fully pledged as collateral to SunTrust, so as to render them unavailable for execution by Regions. In so ruling, the Court relied upon record evidence that two of the Brown Accounts were pledged to SunTrust as collateral, thereby placing those two accounts beyond Regions' reach as a judgment creditor under the rational set forth in Stengel v. Biggar.
The Impleaded Defendants pointed to Plaintiffs' failure to address this issue in their reply brief.
In Griswold v. U.S.,
Plaintiffs argue that the date of Debtor's transfers of his ownership interests in Little Harpers and Lakefront is a disputed material fact. If this case were to proceed to trial, Plaintiffs would have the burden of proof to establish that the Assignments occurred on or after the one-year look back period under § 56.29(6)(a), which ended on April 13, 2008. But as set forth above, the record evidence is that the Assignments, dated "as of November 1, 2007," were transmitted to Debtor's accountant prior to April 13, 2008, in 2007. Accordingly, the Impleaded Defendants satisfied their summary judgment burden; the burden then shifted to Plaintiffs to establish the existence of a genuine dispute of material fact regarding the date of the Assignments.
As explained above, the evidence offered by Plaintiffs—the corporate resolutions and deeds signed by Debtor on behalf of Little Harpers and Lakefront—is not sufficient to create a genuine dispute of material fact. A mere scintilla of evidence in support of Plaintiffs' position is insufficient to defeat an otherwise proper motion.
Accordingly, for the foregoing reasons, it is
