Guffy v. Brown (In re Brown Medical Center, Inc.)

578 B.R. 590
CourtUnited States Bankruptcy Court, S.D. Texas
DecidedJanuary 7, 2016
DocketCase No. 13-36405; Adversary No. 15-3229
StatusPublished
Cited by3 cases

This text of 578 B.R. 590 (Guffy v. Brown (In re Brown Medical Center, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Guffy v. Brown (In re Brown Medical Center, Inc.), 578 B.R. 590 (Tex. 2016).

Opinion

REPORT AND RECOMMENDATION TO THE UNITED STATES DISTRICT COURT RECOMMENDING: (1) THE WITHDRAWAL OF THE REFERENCE OF THIS ADVERSARY PROCEEDING; AND (2) THE REFERRAL BACK TO THIS BANKRUPTCY COURT FOR HANDLING PRETRIAL MATTERS

Jeff Bohm, United States Bankruptcy Judge

I. Introduction

In the above-referenced adversary proceeding (the “Adversary Proceeding”), the plaintiff, Elizabeth M, Guffy, who is the [592]*592plan agent (the “Plan Agent”) under the confirmed Chapter 11 plan of liquidation in the main case, has asserted claims against the following defendants: (1) Marshall Davis Brown, Jr.; (2) Pavlas Brown & York, L.L.P.; (3) Pavlas & Brown, L.L.P.; (4) Jedediah D. Moffet; (5) Jedediah D. Moffett, P.C.; (6) Robert S. Hoffman; (7) the Law Office of Robert S. Hoffman, P.L.L.C.; (8) Joseph Indelicate, Jr.; (9) the Law Office of Joseph Indelicate, Jr., P.C.; (10) Claudia Canales; and (11) the Law Office of Claudia Canales, P.C. (collectively, the “Defendants”). Specifically, the Plan Agent seeks to avoid certain payments in the total amount of at least $6.4 million made by Brown Medical Center, Inc. (“BMC”) to or for the benefit of the Defendants.1 The Plan Agent brings this claim pursuant to 11 U.S.C. §§ 548 and 550(a).2 Further, the Plan Agent, invoking § 544, seeks money damages against the Defendants pursuant to sections 24.005 and 24.006 of the Texas Business and Commercial Code (“Tex. Bus. & Com. Code”).3 The Defendants have demanded a jury trial, [Adv. Doc. Nos. 38, 44, 46 & 50], and have moved to withdraw the reference of the Adversary Proceeding, [Adv. Doc. Nos. 39, 43, 47 & 51].

The Plan Agent, in the first instance, opposes withdrawal of the reference; alternatively, if the reference is withdrawn, the Plan Agent requests that the District Court immediately refer the Adversary Proceeding to the undersigned judge for adjudication of all pretrial matters. The Defendants oppose the Plan Agent’s alternative request that the undersigned judge adjudicate all pretrial motions. For the reasons set forth below, this Court recommends that the reference be immediately withdrawn, but that the District Court then refer the Adversary Proceeding to the undersigned judge for adjudication of all pretrial matters, with the undersigned judge thereafter notifying the District Court when the dispute is ready to be tried.

II. Factual Background op Dr. Michael Brown and His Company, Brown Medical Center, Inc.

The late Dr. Michael Brown (“Dr. Brown”) was a noted hand surgeon who practiced in Houston for several years. Over his career, he formed several corporations for the many hand surgical centers he established in other locations outside of Houston, including locations in other states. One of the companies that Dr. Brown established, and over which he had virtually complete control, was BMC.

The undersigned judge has presided over both Dr. Brown’s individual bankruptcy case as well as BMC’s bankruptcy case. From the many hearings that this Court has held in both Dr, Brown’s individual case and BMC’s corporate case, this Court has observed a substantially intertwined relationship between these two cases, particularly because Dr. Brown treated BMC’s operating account—to use the Plan Agent’s phrase—“as a personal piggy-bank.” [Hr’g Tr. 29:5-6, Dec. 16, 2015]. Indeed, sometimes the converse was true, where Dr. Brown used his personal funds to pay the debts of BMC. Because of these circumstances, there have been overlapping claims in these two cases, which [593]*593has necessarily caused the Plan Agent in BMC’s Chapter 11 case and the trustee in Dr. Brown’s Chapter 7 case to spend time analyzing these claims to fulfill their fiduciary duties.

III. Factual and Procedural Background op The Adversary Proceeding at Bar

1. On September 18, 2015, the Plan Agent filed her original complaint against the Defendants, thereby initiating the Adversary Proceeding. [Adv. Doc. No. 1]. In her original complaint, the Plan Agent asserted fraudulent transfer claims based on 11 U.S.C. §§ 548 and 550(a), [Id. at ¶ 39-42], and Tex. Bus. & Com. Code §§ 24.005, 24.006 (the “TUFTA claims”). [Id, at ¶ 44-46].
2. On September 23, 2015, this Court issued its Comprehensive Scheduling, Pretrial, and Trial Order (the “Scheduling Order”). [Adv. Doc. No. 4].
3. On October 6, 2015, the Plan Agent filed her amended complaint against the Defendants (the “Amended Complaint”). [Adv. Doc. No. 18].
4. On October 26, 2015, Defendants Robert S. Hoffman, the Law Office of Robert S. Hoffman, P.L.L.C., Jedediah D. Moffett, and Jedediah D. Moffett P.L.L.C. filed their Motion to Dismiss Plan Agent’s First Amended Complaint. [Adv. Doc. No. 37].
5. On November 3, 2015, Defendants Robert S. Hoffman, the Law Office of Robert S. Hoffman, P.L.L.C., Je-dediah D. Moffett, and Jedediah D. Moffett P.L.L.C. filed their Demand for Jury Trial, [Adv. Doc. No. 38], and their Motion to Withdraw the Reference, [Adv. Doc. No. 39].
6. Additionally, on November 3, 2015, Defendants Marshall Davis Brown, Jr., Pavlas Brown & York L.L.P., and Pavlas & Brown L.L.P. filed their Motion to Dismiss Plan Agent’s First Amended Complaint Pursuant to Fed. R. Civ. P. 12(B)(6) Incorporated by Fed. R. Bankr. P. 7012, [Adv. Doc. No. 42], their Motion to Withdraw the Reference, [Adv. Doc. No. 43], and their Demand for Jury Demand, [Adv. Doc. No. 44].
7. On November 4, 2015, this Court held an initial status conference at which the attorney for the Plan Agent and attorneys for Defendants Marshall Davis Brown, Jr., Pavlas Brown & York, L.L.P., Pav-las & Brown, L.L.P., Jedediah D. Moffet, Jedediah D. Moffett, P.C., Robert S. Hoffman, Law Office of Robert S. Hoffman, P.L.L.C., Joseph Indelicate, Jr., and the Law Office of Joseph Indelicate, Jr., P.C. appeared. Neither Defendants Claudia Canales and Claudia Ca-nales, P.C. nor counsel for these two defendants appeared at this hearing. Based upon the discussion held on the record at this hearing, during which the Court learned that most, if not all of the Defendants, would soon be Filing motions to withdraw the reference, this Court decided to: (a) abate the Scheduling Order; (b) impose deadlines for filing the motions to withdraw reference; (c) impose a deadline on the Plan Agent for filing responses to these motions; and (d) schedule a hearing on December 16, 2015 for all motions to withdraw the reference.
8. On November 6, 2015, Defendants Joseph Indelicate, Jr. and the Law [594]*594Office of Joseph Indelicato, Jr„ P.C. filed their Motion to Dismiss Plan Agent’s First Amended Complaint, [Adv. Doc. No. 45], their Demand for Jury Trial, [Adv. Doc. No.

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578 B.R. 590, Counsel Stack Legal Research, https://law.counselstack.com/opinion/guffy-v-brown-in-re-brown-medical-center-inc-txsb-2016.