Bella Collina Prop. Owner's Ass'n v. Juravin (In re Juravin)

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In re Don Karl Juravin and Must Cure Obesity, Co. Debtors.

Bella Collina Property Owner's Association, Inc., Plaintiff, v. Don Karl Juravin, Defendant.

Nos. 6:18-bk-06821-LVV, 6:20-bk-01801-LVV

Adv. Nos. 6:21-ap-00103-LVV, 6:21-ap-00141-LVV, 6:21-ap-00142-LVV, 6:22-ap-00016-LVV, 6:22-ap-00019-LVV, 6:22-ap-00020-LVV

United States Bankruptcy Court, M.D. Florida, Orlando Division

September 30, 2024

Chapter 7

APPLICABLE PROCEEDINGS: All Proceedings

MEMORANDUM OPINION

Lori V. Vaughan, Judge.

The integrity of the judicial process requires participation and cooperation of all parties. When cooperation does not exist the system breaks down. Various rules of procedure and common law has been developed to provide a mechanism for requiring cooperation. Usually the threat of monetary sanctions works and sometimes it does not. While courts prefer to decide disputes based on the merits there are times when a party's conduct makes that impossible and the court must take drastic action to ensure justice is had. This is one of those times.

Debtor Don Karl Juravin ("Juravin") and his wife, Anna Juravin ("Anna") have repeatedly failed to comply with this Court's orders and directives, have resisted plaintiffs' attempts to take discovery, have filed meritless pleadings and taken frivolous positions thereby delaying resolution of these adversary proceedings. In a final straw, Juravin failed to attend trial-a trial that had already been continued twice, the latter at his request-and Anna appeared for the first few hours of trial but did not return after a lunch recess. Based on their disregard for this Court's orders and the litigation process, the Court has little choice but to strike their pleadings and enter default judgment in favor of plaintiffs.

Juravin & MCO Bankruptcy Cases

On October 31, 2018, Juravin filed a voluntary petition for chapter 7 bankruptcy.^[1] Dennis D. Kennedy was appointed chapter 7 trustee ("Kennedy" or "Trustee"). In his bankruptcy schedules, Juravin disclosed assets valued over $1.7 million, including Juravin's ownership interests in several business entities of which he is an officer (collectively "Juravin Entities").^[2]Juravin's liabilities exceeded $27 million, consisting primarily of a $25 million judgment in favor of the Federal Trade Commission ("FTC Judgment") and a $1.3 million mortgage on his home.^[3] Bella Collina Property Owner's Association, Inc. ("Bella Collina"), is a home owners' association owed approximately $400,000 secured by a lien on Juravin's home, which Juravin disputes.^[4] During the case, Kennedy retained counsel and other professionals to investigate the financial affairs of Juravin and recover assets.^[5]

On January 31, 2020, one of the Juravin Entities-Must Cure Obesity, Co. ("MCO")-filed a voluntary petition for chapter 11 bankruptcy.^[6] MCO was one of the entities through which Juravin operated and subject to the FTC Judgment.^[7] About five months later, the Court converted MCO's bankruptcy case to chapter 7 and Kennedy was appointed chapter 7 trustee.^[8] On its schedules, MCO disclosed assets valued over $1.1 million, consisting primarily of actions against third parties.^[9]MCO's liabilities totaled $27 million, including the $25 million FTC Judgment.^[10] Ultimately, the Juravin and MCO bankruptcy estates were substantively consolidated for all purposes.^[11] Except for the amounts owed to the FTC, on June 26, 2020, Juravin received a discharge under 11 U.S.C. § 727 ("Discharge").^[12]

Trustee's Investigation, Break Order & Abated Sanctions

Kennedy requested Juravin turn over certain estate assets, provide specific documents or information relating to the financial affairs of Juravin or MCO, and attend continued meetings of creditors in his and MCO's bankruptcy cases.^[13] Juravin did not comply and the Court granted Kennedy's motion to compel.^[14] The Court directed Juravin to turn over estate assets, produce specific documents and attend the continued meetings of creditors ("Compel Order").^[15] Juravin failed to comply with the Compel Order and after notice and hearing, the Court found Juravin in contempt ("Contempt Order").^[16]

The Court afforded Juravin an opportunity to purge his contempt before April 19, 2021 by complying with the Compel Order.^[17] Before the deadline, Juravin alleged compliance.^[18] The Trustee disagreed and alleged Juravin and Anna were actively concealing information and assets in both estates.^[19] As a result, the Trustee requested, under seal, a break order to obtain access to Juravin's home to recover any business records of the Juravin Entities, recover any electronics devices containing information about Juravin, the Juravin Entities or estate assets, and recover any estate assets.^[20] The Court entered the break order ("Break Order") and on May 5, 2021 the U.S. Marshal executed.^[21] The following items were removed from Juravin's home: eight (8) computers, two (2) iPads, three (3) cell phones, two (2) Samsung tablets, one (1) SanDisk storage device, various electronic power adapters (collectively "Electronic Devices"), three (3) Breitling wristwatches and various documents located throughout the home.^[22] Kennedy sent the Electronic Devices to Online Security Inc. ("Online Security") for analysis and shortly thereafter, Juravin and Kennedy agreed to entry of an order respecting the Electronic Devices and electronically stored information ("ESI Order").^[23] The ESI Order required Juravin to provide Online Security access to the Electronics Devices and accounts held with third-party providers such as Apple, Google, and Facebook, so that Online Security could access emails, files and other data. About two months after entry of the ESI Order, Kennedy requested the Court enter an order to show cause why Juravin should not be held in contempt and sanctioned for violating the ESI Order by allegedly deleting "tens of thousands" of files and interfering with Online Security's access to the information sought in the ESI Order.^[24] The Court granted Kennedy's request, in part, amending the ESI Order to provide Online Security complete and exclusive access to the third-party accounts. The Court scheduled a hearing on Kennedy's remaining requests.^[25] At the hearing, the parties agreed to abate the matter and the Court entered an order abating without prejudice Kennedy's request for an order to show cause why Juravin should not be held in contempt and sanctioned ("Abated Sanction Request").^[26]

The Consolidated Adversary Proceedings

Between 2021 and 2022, Kennedy filed six complaints seeking to avoid and recover transfers made to Juravin, his spouse Anna, the non-bankrupt Juravin Entities consisting of Juravin, Incorporated ("Juravin, Inc. (inactive)") and Roca Labs Nutraceutical USA, Inc. ("Roca Labs"), a newly formed entity also called Juravin, Incorporated ("Juravin, Inc. (active)") and an entity solely held by Anna called United Medical Group International, Inc. ("UMGI"), all relating to either the Juravin or MCO bankruptcy (collectively "Trustee Proceedings").^[27] Bella Collina also filed a complaint against Juravin seeking to revoke the Discharge under 11 U.S.C. §727(d)(1) and (2) ("Bella Collina Proceeding").^[28] The Trustee later intervened as party plaintiff in the Bella Collina Proceeding.^[29] Juravin, Anna, Juravin, Inc., and UMGI, all represented by counsel, filed answers and affirmative defenses in the Trustee Proceedings and Juravin filed an answer and affirmative defenses in the Bella Collina Proceeding.^[30] Roca Labs did not respond to the complaint resulting in the entry of a default and final default judgment in favor of Kennedy, which concluded one of the Trustee Proceedings.^[31] Although the adversary proceedings initially progressed separately, Kennedy requested that certain proceedings be consolidated for discovery and trial, which the Court granted. Eventually, all adversary proceedings-the five remaining Trustee Proceedings and the Bella Collina Proceeding-were consolidated for discovery and trial.^[32]

The First Two Scheduled Trials

In 2022, the Court entered case management orders in the Trustee Proceedings and Bella Collina Proceeding that scheduled two three-day trials in the summer of 2023.^[33] The case management orders provided deadlines to complete discovery and file pretrial disclosures, exhibits and witness lists. After entry of the case management orders however, counsel for Juravin, Anna, UMGI and Juravin, Inc. withdrew.^[34] Juravin, Anna, UMGI and Juravin, Inc. (active) and Juravin, Inc. (inactive) did not obtain new counsel. At Kennedy's request and without opposition by Juravin, the Court then rescheduled the trials and modified the case management orders.^[35]

Two More Scheduled Trials & Discovery Delays

On May 12, 2023, the Court entered orders scheduling a three-day trial beginning November 15, 2023 for the Bella Collina Proceeding and two Trustee Proceedings and a two-day trial beginning November 29, 2023 for three Trustee Proceedings (collectively "November 2023 Trial CMO").^[36] The November 2023 Trial CMO established revised deadlines to complete discovery and file pretrial disclosures, exhibits and witness lists. A final pretrial conference was scheduled for October 5, 2023.

A month before the final pretrial conference, Kennedy filed notices that Juravin and Anna would be deposed on October 11 and 12 2023.^[37] Juravin and Anna did not oppose the deposition notices. A week before the final pretrial conference, Juravin filed a motion requesting that the Court require the parties to meet and confer 14 days before the final pretrial conference which if granted, would have required the Court to continue the October 5^th final pretrial conference ("Meeting Request").^[38] The Court denied the...