Ashmore v. Dodds

262 F.Supp.3d 341

Beattie B. ASHMORE, in his capacity as court-appointed receiver FOR Ronnie Gene WILSON and Atlantic Bullion and Coin, Inc., Plaintiff,

v.Jim DODDS, Defendant.

Civil Action No.: 8:15–cv–00561–JMC

United States District Court, D. South Carolina, Anderson Division, Anderson/Greenwood Division.

Signed July 5, 2017

Lewis Walter Tollison, III, Lauren S. Price, Tollison Law Firm, Greenville, SC, for Plaintiff.

Bradford Neal Martin, Ann Marie Thompson Howell, Evan Brook Bristow, Laura W.H. Teer, Bradford Neal Martin and Associates, Greenville, SC, for Defendant.

ORDER AND OPINION

J. Michelle Childs, United States District Court Judge

Plaintiff Beattie B. Ashmore ("the Receiver"), in his capacity as court-appointed receiver for Ronnie Gene Wilson ("Wilson") and Atlantic Bullion and Coin, Inc. ("AB & C"), filed the instant action against Defendant Jim Dodds ("Defendant") to recover grossly excessive payments received by Defendant as a return on his investment in the Wilson–AB & C Ponzi scheme.¹ Before the court are the parties' cross-motions for summary judgment (ECF Nos. 70, 71) and the accompanying responses and replies (ECF Nos. 73, 74, 77, 79). For the reasons that follow, the court DENIES IN PART Defendant's motion for summary judgment (ECF No. 71), disposing of seven arguments he raises in support of a ruling in his favor. As explained more thoroughly below, the court determines that it should certify to the Supreme Court of South Carolina questions regarding whether the substantive law of Florida or of South Carolina should apply to the claims brought by the Receiver. As a result, the court reserves ruling on the remainder of Defendant's motion and on the Receiver's motion for summary judgment until after the Supreme Court answers or otherwise disposes of the certified questions.

I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

A full recitation of the relevant factual and procedural background, customary for most orders addressing summary judgment motions, is unnecessary. Accordingly, the court provides an abridged version of the general posture of this matter here and provides further details where necessary in its analysis below.

The Receiver is the court appointed receiver in In Re: Receiver for Ronnie Gene Wilson and Atlantic Bullion & Coin, Inc. , No. 8:12–cv–02078–JMC, ECF No. 1 (D.S.C. July 25, 2012), a case related to the instant matter. The Receiver alleges that "[o]n February 29, 1996, Defendant made an initial ‘investment’ [in the Wilson–AB & C Ponzi scheme] of $28,300.00." (ECF No. 1 ¶ 24.) "Subsequently, Defendant made eight additional ‘investments' totaling $306,500.00 between December 2000 and April 2009, for a total investment of $334,800.00." (Id. ¶ 27.) Plaintiff further alleges that "Defendant received $1,532,983.00 in returns [from the Wilson–AB & C Ponzi scheme] between March 2004 and December 2011, resulting in a profit of $1,198,183.00." (Id. ¶ 26.)

Based on his appointment as the receiver tasked with "locating, managing, recouping, and distributing the assets of the Wilson–AB & C investment scheme," the Receiver commenced the instant action against Defendant on February 6, 2015, asserting claims for fraudulent conveyance (in violation of the Statute of Elizabeth, S.C. Code Ann. § 27–23–10 (2014) and/or the Florida Uniform Fraudulent Transfer Act ("FUFTA"), Fla. Stat. Ann. §§ 726.101 – 726.201 ) and unjust enrichment. (ECF No. 1 ¶¶ 1, 38–52.)

Pursuant to the court's fifth amended scheduling order, absent an exception described in the order, discovery was to be completed by April 25, 2017, and motions for summary judgment were to be filed by May 15, 2017. (See ECF No. 67 at 1.) On May 19, 2017, the parties filed their motions for summary judgment.² As relevant here, the Receiver argues that, under South Carolina choice of law rules, South Carolina law applies to both his claim for fraudulent conveyance and his claim for unjust enrichment and that Florida law does not apply to these claims (see ECF No. 73 at 6–9; see also ECF No. 70 at 6–12 (applying only South Carolina law to claims)) while Defendant argues that, under South Carolina choice of law rules, Florida law governs both claims and that South Carolina law is inapplicable (see ECF No. 71 at 6–8; ECF No. 74 at 4; ECF No. 77 at 3–5). Also relevant here, the court perceives in Defendant's arguments seven issues that may be decided without first deciding the choice of law issue.

II. LEGAL STANDARD

Summary judgment is appropriate when the materials in the record show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and a fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

When faced with cross-motions for summary judgment, " ‘[courts] consider each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.’ " Defenders of Wildlife v. N.C. Dep't of Transp. , 762 F.3d 374, 392 (4th Cir. 2014) (quoting Bacon v. City of Richmond , 475 F.3d 633, 638 (4th Cir. 2007) ). "In considering each motion, [courts] ‘resolve all factual disputes and any competing, rational inferences in the light most favorable to the party opposing that motion.’ " Id. (quoting Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir. 2003) ).

The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine issue of material fact. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings. Rather, the non-moving party must demonstrate that specific, material facts exist which give rise to a genuine issue. See id. at 324, 106 S.Ct. 2548.

III. ANALYSIS

A. Preliminary Issues

Before turning to the two claims at issue, the court must first address a number of arguments raised by Defendant that do not appear to be specifically directed at either of the claims or that the court believes are appropriate to address preliminarily for other reasons. Specifically, Defendant argues that the court should rule in his favor because (1) the Receiver lacks standing to bring the claims; (2) the Receiver's claims are barred because the Receiver is in pari delicto with Defendant; (3) the Receiver's claims are barred because other investors in the Ponzi scheme are in pari delicto with Defendant; (4) the Receiver should be equitably estopped from pursuing his claims; (5) the recovery the Receiver seeks should be denied because Defendant is protected by the Bankruptcy Code's safe harbor provisions in 11 U.S.C. § 546(e) ; (6) Defendant is entitled to an equitable set-off with respect to investments he made prior to Wilson commencing his Ponzi scheme; and (7) there is no evidence that Defendant received a certain check from AB & C. (See ECF No. 71 at 2–6, 9–11, 13–16, 20–23, 28–29; ECF No. 74 at 6–7, 17–26, 30–31; ECF No. 77 at 2–3, 6, 9–10, 13–15.) The court addresses each of these arguments in turn.

1. Standing

The Fourth Circuit has concisely explained both the constitutional and the prudential dimensions of standing:

The standing doctrine has both constitutional and prudential components. In order to satisfy the constitutional component of standing, a party must meet three requirements:

(1) the party has suffered an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

With regard to the prudential component of standing, courts generally recognize [some] self-imposed constraints[, including that] ... the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.

Bishop v. Bartlett , 575 F.3d 419, 423 (4th Cir. 2009) (internal citations, quotation marks, and brackets omitted) (citing, inter alia , Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc. , 528 U.S. 167, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) ; Allen v. Wright , 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) ; Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc. , 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) ; Warth , 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 ). "In determining whether a party has standing to bring suit, the party invoking the jurisdiction of the court bears the burden of establishing standing." Id. at 424. "The standing requirement applies to each claim that a plaintiff seeks to press." Bostic v. Schaefer , 760 F.3d 352, 370 (4th Cir. 2014) (citing DaimlerChrysler Corp. v. Cuno , 547 U.S. 332, 352, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006) ).

Defendant appears to assert that the Receiver lacks standing to bring the two claims at issue because, in Defendant's view, the Receiver has capacity to bring suit only to recover assets on behalf of AB & C, Wilson, and the Receivership Entities they controlled. (See ECF No. 71 at 2–3, 20–21; ECF No. 74 at 6–7, 30; ECF No. 77 at 6, 11.) The assets that the Receiver seeks to claw-back by bringing the two claims, Defendant argues, never belonged to AB & C, Wilson, or the Receivership Entities because all assets held by AB & C were held in trust for investors and were never assets owned by AB & C, Wilson, or the Receivership Entities. (See ECF No. 71 at 2–3, 20–21; ECF No. 74 at 6–7, 30; ECF No. 77 at 6, 11.) Thus, Defendant asserts, the claims by the...