Scarver v. Ellis (In re McKeever)

567 B.R. 652, 2017 Bankr. LEXIS 435
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedFebruary 14, 2017
DocketCASE NO. 10-92243-WLH; ADVERSARY PROCEEDING NO. 15-5336-WLH
StatusPublished
Cited by3 cases

This text of 567 B.R. 652 (Scarver v. Ellis (In re McKeever)) 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
Scarver v. Ellis (In re McKeever), 567 B.R. 652, 2017 Bankr. LEXIS 435 (Ga. 2017).

Opinion

ORDER ON PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Wendy L. Hagenau, U.S. Bankruptcy Court Judge

This matter is before the Court on Plaintiff Cathy L. Scarver’s (“Plaintiff’ or “Trustee”) Motion for Partial Summary Judgment (“Motion”) (Docket No. 28). The Court finds this matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(K), and the Court has jurisdiction over this proceeding under 28 U.S.C. §§ 157 and 1334.

PROCEDURAL HISTORY1

Debtor Alfonza McKeever (“Mr. McKeever”) filed a voluntary petition under Chapter 13 of the United States Bankruptcy Code on October 29,2010. The case was converted to one under Chapter 11 on July 13, 2011. The Court appointed Plaintiff as Chapter 11 Trustee on February 6, 2013. The court subsequently converted the case to one under Chapter 7 on April 25, 2013. Plaintiff continued in her role as trustee following the conversion of the case.

Trustee filed the instant adversary proceeding on August 27, 2015 against Mr. McKeever and his uncle Robert Ellis (“Ellis”), as well as McKeever Paint & Body (“MP & B”) and Viaduct Group, LLC (¡“Viaduct”). The complaint consists of eleven counts, seeking an order: 1) avoiding certain post-petition liens pursuant to 11 U.S.C. § 549 (Counts One through Three); 2) finding that the same liens are void in violation of the stay pursuant to 11 U.S.C. § 362 (Counts Four through Six); 3) awarding the Trustee damages for violation of the automatic stay related to the disposition of certain insurance proceeds (Count Seven); 4) awarding the Trustee damages for violation of the automatic stay related to Defendants’ continued occupancy of certain real property (Count Eight); 5) requiring turnover of the same property and an accounting of any monies earned from operations on the property during the case and turnover of the insurance proceeds at issue (Counts Nine and Ten); and 6) disallowing claims filed by Mr. McKeever’s family members and busi[656]*656nesses (Count Eleven) (“Complaint”) (Docket No. 1). In response, Defendants filed one answer on behalf of all Defendants, and an amended answer shortly thereafter asking for Viaduct to be dismissed from the adversary proceeding (Docket Nos. 7 & 9). Mr. McKeever and Ellis signed both documents as individuals, and Joe Ann McKeever signed on behalf of MP & B and Viaduct, and as power of attorney for Mr. McKeever.2

The Court set down for trial Count Seven of Trustee’s Complaint in conjunction with the trial of the United States Trustee’s complaint to deny Mr. McKeever his discharge. The Court entered an order after trial denying Mr. McKeever’s discharge, and also finding that the Trustee was not entitled to damages for the stay violation related to the insurance proceeds. The Trustee now seeks summary judgment on Counts One through Six and Eight through Nine and requests the Court use its equitable powers under 11 U.S.C. § 105 to avoid a newly filed mechanic’s lien encumbering certain real property. None of the Defendants responded to the Motion.

UNDISPUTED FACTS3

At all times during his bankruptcy case, Mr. McKeever has been the owner of certain business property located at 5361 Cov-ington Highway, Decatur, Georgia (“Property”). Since its purchase, the Property has been used by Mr. McKeever and his family — a group of up to twenty-three different people — -to operate various car related businesses. Mr. McKeever purchased the Property in 1995 and used the property to operate MP & B, a family-owned body shop business.

MP & B was a corporation in existence in 1995. Mr. McKeever was the principal operator of the business until suffering a serious injury in 1998 that left him incapacitated and unable to operate MP & B. The corporate registration of MP & B lapsed and the company was administratively dissolved on July 4, 1998, after which MP & B conducted no further business. As of the* petition date, MP & B remained dissolved, was conducting no business, and had not filed tax returns in a number of years. Mr. McKeever continued to use MP & B as a trade name, and his schedules indicated that he owned 100% of MP & B. After the petition date, Mr. McKeever incorporated another MP & B in the State of Georgia on April 17, 2013 (“New MP & B”) to open a bank account for the company in order to deposit the insurance proceeds that were the subject of the previous trial. The New MP & B used the same tax identification number as the original MP & B, and opened a bank account with Wells Fargo Bank. However, the original MP & B was not properly reinstated under Georgia law and did not regain status as a separate legal entity, instead remaining a trade name used by Mr. McKeever. The New MP & B was a corporation separate from the original MP & B.

[657]*657In addition to MP & B, Ellis and Mr. McKeever’s aunt, Delores Ellis, operated Viaduct as a body shop on the Property. Mr. McKeever stated in his Statement of Financial Affairs that he is an officer, director, self-employee or sole proprietor of Viaduct, which has been operating on the Property since at least 2004. The original and/or New MP & B and Viaduct have continued to do business on the Property throughout Mr. McKeever’s case. Since the Trustee’s appointment February 6, 2013, both MP & B (original and/or new) and Viaduct have continued to operate on the property but have not paid any rent to the Trustee since February 2014. In addition, since Trustee’s appointment the Property has been encumbered by four liens:

• Ellis executed a mechanic’s lien that was recorded'on August 28, 2013 in the amount of $225,000 (“First Ellis Mechanic’s Lien”). A document titled “Summary of Investments” is attached to the mechanic’s lien, and shows a total investment of $225,000. The dates included on the summary are handwritten and indicate work done between March 2008 and August 12, 2013. The description of the work done simply reads “Interior”.
• A deed to secure debt was executed between Mr. McKeever and Ellis (“Ellis DSD”) that stated Mr. McKeever borrowed $40,000 from Ellis and repayment was secured by a lien on the Property. The deed was filed on October 23, 2013, and contemplated a final payment date of June 15 of an illegible year. The Ellis DSD was signed by Mr. McKeever as grantor, a notary public and an unofficial witness whose signature is illegible.
• A deed to secure debt was executed between Mr. McKeever and MP & B (“MP & B DSD”) that stated Mr. McKeever borrowed $400,000 from
MP & B and repayment was secured by a lien against the Property. The deed was filed on December 26, 2013 and contemplated a final payment date of January 25,2014. The MP & B DSD was signed by Mr.

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567 B.R. 652, 2017 Bankr. LEXIS 435, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scarver-v-ellis-in-re-mckeever-ganb-2017.