A/C Supply, Inc. v. Botsay (In re Botsay)

CHAPTER 7

OPINION AND ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

KATHARINE M. SAMSON UNITED STATES BANKRUPTCY JUDGE

This matter is before the Court on Debtor-Defendant Earl J. Botsay's Motion for Summary Judgment, ECF No. 16, with Response in Opposition by Plaintiff A/C Supply Inc., ECF No. 21. The Complaint objects to discharge under 11 U.S.C. § 727(a)(4)(A) and to the discharge of a particular debt under 11 U.S.C. § 523(a)(2)(A) and (a)(4). Botsay incurred the debt eight years ago when he executed a promissory note to A/C Supply individually and on behalf of his heating and air conditioning business. A/C Supply is now a judgment creditor. This proceeding is core under 28 U.S.C. § 157(b)(2)(I) and (J). Botsay is entitled to summary judgment on all counts.

SUMMARY JUDGMENT STANDARD

"[A]t the summary judgment stage the judge's function is not . . . to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial."

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Summary judgment is appropriate "if the movant shows 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) (made applicable by Fed.R.Bankr.P. 7056). "A fact is 'material' if its resolution in favor of one party might affect the outcome of the lawsuit under governing law. An issue is 'genuine' if the evidence is sufficient for a reasonable [fact-finder] to return a verdict for the non-moving party." Ginsberg 1985 Real Estate P'ship v. Cadle Co., 39 F.3d 528, 531 (5th Cir. 1994) (citations omitted).

The moving party bears the initial responsibility of apprising the court of the basis for its motion and the parts of the record that indicate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "Once the moving party presents the . . . court with a properly supported summary judgment motion, the burden shifts to the nonmoving party to show that summary judgment is inappropriate." Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255. "If the [non-movant's] evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted).

The non-movant must "go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp., 477 U.S. at 324 (internal quotation marks omitted). When the non-movant "fails to properly address [the movant's] assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed . . . [or] grant summary judgment if the motion and supporting materials-including the facts considered undisputed- show that the movant is entitled to it." Fed.R.Civ.P. 56(e).

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UNDISPUTED MATERIAL FACTS

Nearly all the following facts are from the Declaration of Earl J. Botsay ("Declaration"), ECF No. 16-1. These facts generally align with A/C Supply's version of events, ECF No. 22 at 1-5, except as to Botsay's intent and as to the accuracy of his Statement of Financial Affairs ("SOFA"). A/C Supply failed to submit any evidence addressing Botsay's assertions. Consequently, Botsay's version of events is considered undisputed.

I. The Debt

Botsay owned and operated Assured Comfort Air Conditioning & Heating LLC ("Assured Comfort") from its inception in 1995 until it effectively ceased operations in 2018. Decl. ¶ 1, ECF No. 16-1. Botsay is the 100% owner and sole member of Assured Comfort. Id. A/C Supply extended credit to Botsay for goods and supplies purchased for Assured Comfort from at least 1997 through 2018. Id. ¶ 2; Appl. for Credit, ECF No. 16-2. Botsay's only relationship with A/C Supply was as a customer to whom A/C Supply extended credit. Decl. ¶ 14. He has never had any interest in A/C Supply or held any position of trust or acted as its officer, director, or agent. Id.

Assured Comfort suffered a large uninsured loss in Hurricane Katrina in 2005 and consequently fell behind in paying A/C Supply. Id. ¶ 3. In September 2013, A/C Supply requested that the debt be reduced to a note, and Botsay executed the requested note ("Note") individually and on behalf of Assured Comfort in the amount of $161, 396.12. Id. ¶¶ 4, 5; Promissory Note, ECF No. 16-3. After execution of the Note, A/C Supply continued to extend credit to Assured Comfort until sometime in 2018, and Assured Comfort paid A/C Supply more than $345, 000 from September 2013 through February 2019. Decl. ¶¶ 2, 6.

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In 2016, Botsay suffered a serious heart attack and became unable to accept big jobs because he was physically unable to do the work. Id. ¶ 7. Assured Comfort's financial situation deteriorated, and it was unable to make full payments on the Note when due. Id. ¶¶ 7, 8.

On October 14, 2019, A/C Supply filed a collection suit against Botsay in the Circuit Court of Hancock County, Mississippi. Id. ¶ 9. Botsay's defense was that the amount he owed A/C Supply was less than the amount alleged because A/C Supply should have reduced the balance of the Note by a substantial part of the $345, 000 that Botsay paid from 2013 through 2019. Id. ¶ 9.

On July 23, 2020, the circuit court entered summary judgment against Botsay in the amount of $192, 458.81 plus 8% annual interest ("Judgment"). Id. ¶ 10; Final J., ECF No. 21-4. Botsay filed a motion to reconsider, which is still pending, but was financially unable to continue with the litigation and filed the underlying chapter 7 case on September 25, 2020. Decl. ¶ 10.

II. The Tenancy by the Entirety Deed

On May 29, 2019, before the collection suit, Botsay and his wife executed a warranty deed to themselves that changed how...