Miller v. Durand (In re Cain)

524 B.R. 898
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedDecember 4, 2014
DocketCASE NO. 13-50208-BEM; ADVERSARY PROCEEDING NO. 14-5236-BEM
StatusPublished

This text of 524 B.R. 898 (Miller v. Durand (In re Cain)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Miller v. Durand (In re Cain), 524 B.R. 898 (Ga. 2014).

Opinion

ORDER

Barbara Ellis-Monro, U.S. Bankruptcy Court Judge

This adversary proceeding is before the Court on Defendant Rudy C. Durand's (“Defendant” or “Durand”) Notice of Motion and Motion to Dismiss (the “Motion”). [Doc. No. 14]. In the Motion, Durand requests that the adversary proceeding be dismissed, contending that the complaint fails to state any cause of action upon which relief can be granted and that it fails to allege with particularity the circumstances and facts supporting any claim for avoidance and/or recovery of transfer(s) to Durand.

I. FINDINGS OF FACT

In the Complaint [Doc. No. 1], Plaintiff, Chapter 7 Trustee Martha Miller (“Plaintiff or “Trustee”), alleges as follows: Debt- or, Edward Cain, (“Debtor”), filed a complaint in the Northern District of Georgia for damages against H & R Block, Inc. on December 17, 2004 (the “First H & R Block Matter”). [Complaint ¶ 13]. On December 20, 2004, Debtor signed a document that purportedly granted Durand an interest and lien in any proceeds arising from the First H & R Block Matter. [Complaint ¶¶ 14, 16]. Durand filed a “Notice of Lien in Proceeds of Pending Action” in the First H & R Block- Matter on September 1, 2005. [Complaint ¶ 17]. Debtor filed a chapter 11 bankruptcy case on June 20, 2006, in which he listed an aggregate value of assets as $1,500,000 and an aggregate principal balance of liabilities as $2,613,758.73. [Complaint ¶¶ 19, 20]. The First H & R Block Matter was referred to the Bankruptcy Court by the District Court on October 18, 2006, which initiated an adversary proceeding styled as Cain v. H & R Block, Inc., et al. [Complaint ¶¶21, 22], In July, 2008, Durand filed a UCC Financing Statement in the Superior Court of Fulton County lien records for collateral described as twenty percent (20%) of any proceeds related to the First H & R Block Matter. [Complaint ¶¶ 23, 25]. The Bankruptcy Court dismissed Debtor's first bankruptcy case on August 18, 2008 and, at that time, requested that the District Court withdraw the reference in the First H & R Block Matter. [Complaint ¶¶ 26-28].

On October 30, 2008, the District Court entered a consent order proposed by certain parties which withdrew the reference and dismissed, without prejudice, the First H & R Block matter [Complaint ¶¶ 32, 33]. Prior to entry of the order dismissing the First H & R Block Matter, Durand filed a second UCC Financing Statement for collateral described as twenty percent (20%) of any proceeds related to the First H & R Block Matter. [Complaint ¶¶ 29, 31]. Debtor received no money at all from the First H & R Block Matter. [Complaint ¶ 34].

In January 2009, Debtor filed a new cause of action against H & R Block in the Superior Court of Fulton County, State of Georgia (the “Second H & R Block Matter”). [Complaint ¶ 35]. In April, or May [900]*900of 2010, the Second H & R Block Matter was settled and the proceeds of the settlement (the “Settlement Proceeds”) were transferred to Debtor's counsel's trust account. [Complaint ¶¶ 46, 47]. A portion of the Settlement Proceeds were disbursed. [Complaint ¶ 56], And, on January 26, 2011, Debtor's filed an interpleader action regarding the remaining Settlement Proceeds in the amount of $640,000 (the “Remaining Settlement Proceeds”), in the District Court (the “Interpleader Action”). [Complaint ¶ 56]. Debtor, and two other parties, not including Durand, were the original defendants in the Interpleader Action. [Complaint ¶¶ 58, 59], In August, 2011, the District Court entered an order accepting the Interpleader Action and authorizing payment of the Remaining Settlement Proceeds into the registry of the court. [Complaint ¶ 62]. There were several parties that filed motions to intervene in the Interpleader Action, however Du-rand did not participate in the Interpleader Action. [Complaint ¶¶ 60-71].

On December 20, 2012, a judgment in favor of Victor & Victor APC, a defendant in this proceeding, was entered in the In-terpleader Action. [Complaint ¶ 72], Debtor filed his second bankruptcy ease on January 3, 2013, and thus, on January 3, 2013, the District Court entered an order in the Interpleader Action ordering that the Remaining Settlement Proceeds be held until further order of the District Court. [Complaint ¶4, 73]. Debtor disclosed assets with an aggregate value of $325,410 and liabilities with an aggregate balance of $1,909,172.32 in the papers filed in his second bankruptcy case. [Complaint ¶ 74]. These disclosures show that Debtor was insolvent on the Petition Date. [Complaint ¶ 75]. In July, 2013, the District Court stayed the Interpleader Action pending Debtor's second bankruptcy case. [Complaint ¶ 76].

In her Complaint, the Trustee enumerates eighteen counts against various Defendants relating to the validity of any interests in the Settlement Proceeds. Five of these counts, specifically Counts VI, VII, VIII, IX, and X, are asserted against Durand. [Complaint ¶¶ 100-119]. The Trustee claims that Durand has no interest in the Settlement Proceeds (Count VI), or that, in the alternative, any transfer of the Settlement Proceeds to Durand may be avoided and recovered by the Trustee for the benefit of the estate (Counts VII-X).

In the Motion, Durand requests that the Complaint be dismissed pursuant to Federal Rule of Civil Procedure 8(a)(2), because the Trustee has not adequately pled each element of a preference or fraudulent transfer claim.

II. STANDARD

Under Fed.R.Civ.P. 8(a)(2), made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7008(a), Plaintiff need only provide, “a short and plain statement of the claim showing that the pleader is entitled to relief,” enough to give the Defendant adequate notice of the claim, “and the grounds upon which it rests.” Erickson v. Parous, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

“The pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the defendant-unlawfully harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 672, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly).

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its [901]*901face.” A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a “probability requirement,” but it asks for more -than a sheer possibility that a defendant has acted unlawfully.

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Related

Erickson v. Pardus
551 U.S. 89 (Supreme Court, 2007)
Bell Atlantic Corp. v. Twombly
550 U.S. 544 (Supreme Court, 2007)
Ashcroft v. Iqbal
556 U.S. 662 (Supreme Court, 2009)
In Re Wr Grace & Co.
468 B.R. 81 (D. Delaware, 2012)

Cite This Page — Counsel Stack

Bluebook (online)
524 B.R. 898, Counsel Stack Legal Research, https://law.counselstack.com/opinion/miller-v-durand-in-re-cain-ganb-2014.