Dillworth v. Amerant Bank, N.A. (In re Bal Harbour Quarzo, LLC)

623 B.R. 903

IN RE: BAL HARBOUR QUARZO, LLC, a/k/a Synergy Capital Group, LLC, a/k/a Synergy Investments Group, LLC, Debtor.

Drew M. Dillworth, as Trustee, Plaintiff,

v.Amerant Bank, N.A., f/k/a Mercantil Bank, N.A., a National Association, Defendant.

Case No. 18-11793-SMG

Adv. Pro. No. 20-01072-SMG

United States Bankruptcy Court, S.D. Florida.

Signed October 8, 2020

Eric J. Silver, Miami, FL, for Debtor.

ORDER DISMISSING AMENDED COMPLAINT WITH PREJUDICE

Scott M. Grossman, United States Bankruptcy Judge

Perhaps frustrated by an onslaught of litigation that seemed to follow Bal Harbour Quarzo, LLC ("BHQ") and its principals at every turn, Amerant Bank, N.A., f/k/a Mercantil Bank, N.A. ("Amerant") clearly lost confidence in BHQ's ability to repay its debts. Indeed, Amerant may have even known (or at least suspected) that BHQ and its principals were defrauding other creditors. Amerant therefore exerted its leverage as a secured creditor to exit its relationship with BHQ and maximize recovery (or minimize losses) on its claims. According to Drew Dillworth, as Liquidating Trustee for BHQ (the "Trustee"), Amerant was "motivated by greed, and its urgent desire to exit its relationship"¹ with BHQ. But is that alleged motivation actionable? Or was Amerant acting within its legal and contractual rights in exerting its leverage as a secured creditor to maximize its recovery or minimize its losses?

According to the Trustee, Amerant is liable to repay certain transfers in connection with a distressed sale of BHQ's assets to a third party; for aiding and abetting BHQ's principals' breaches of their fiduciary duties; and for a conspiracy to breach the principals' fiduciary duties. The Trustee certainly tells a troubling tale of how BHQ's principals allegedly defrauded its non-bank investors, and went to great lengths to avoid paying their claims and judgments. Despite the concerning allegations, however, nothing in the Trustee's Amended Complaint plausibly alleges that any of the actual transfers to Amerant were made for any reason other than that BHQ had a legal obligation to make those payments. Nor does anything in the Amended Complaint plausibly suggest that Amerant aided and abetted, or conspired with, BHQ's principals to breach their fiduciary duties. The allegations show only that Amerant – even if it knew of its borrower's distress, insolvency, or even potential fraud – did nothing more than seek to minimize its losses, maximize its recovery, and extricate itself from a troubled lending relationship. That these actions may have resulted in many unsecured creditor investors recovering little on their claims is unfortunate; but it is not actionable against the bank.

I. Overview.

BHQ was a failed real estate development in South Florida. The Trustee sued Amerant to avoid and recover alleged fraudulent transfers, and for tort damages for alleged aiding and abetting breach of fiduciary duty and for an alleged conspiracy to commit breach of fiduciary duty. Count I of the Amended Complaint² alleges that certain payments made to (or for the alleged benefit of) Amerant in connection with BHQ's sale of its property to Beach Haus Bal Harbour, LLC ("Beach Haus") are avoidable as fraudulent transfers under Bankruptcy Code § 548(a)(1)(A) and recoverable under Bankruptcy Code § 550. Count II asserts substantially the same allegations, but under Florida Statute § 726.105(1)(a) and Bankruptcy Code § 544. Count III seeks damages for alleged aiding and abetting breach of fiduciary duty, and Count IV seeks damages for alleged conspiracy to breach fiduciary duty. Each count also included a request for attorneys' fees and costs.

Amerant moved to dismiss³ the Amended Complaint under Federal Rule of Civil Procedure 12(b)(6)⁴ for failure to state a claim upon which relief may be granted, asserting four principal arguments. First, Amerant argues the challenged transactions were not "transfers" by BHQ that can be avoided. Second, Amerant argues that the challenged transactions were not avoidable because Amerant held a fully secured claim and was not repaid more than it was owed, BHQ's estate was not diminished by the payments to Amerant, and the Amended Complaint failed to allege any facts that would show an intent to defraud other creditors.⁵ Third, Amerant argues the Trustee failed to plausibly allege aiding and abetting liability. And fourth, Amerant argues the Trustee failed to plausibly allege a conspiracy. Amerant also argues that there is no basis for the Trustee's request for attorneys' fees and costs.

In response,⁶ the Trustee contends that the challenged transactions were transfers of property of the debtor subject to avoidance; that the transfer of a secured asset may be avoided; that the transferred property was not subject to a "valid" lien;⁷ and that he pleaded sufficient facts to plausibly allege aiding and abetting and conspiracy claims. His Response also includes a "request" (but not a separate motion) to replead his Amended Complaint, in which he claimed that he "can plead additional factual detail regarding the Transfers, the Sale Transaction, and the Defendant's knowledge and wrongful involvement, but has endeavored to plead ‘a short and plain statement’ of the claim showing he is entitled to relief, in accordance with the Rules. See F.R.C.P. 8(a)(2)."⁸ Upon consideration of the Amended Complaint, the Motion to Dismiss, the Response, and the Reply, and for the reasons discussed below, the Court will grant Amerant's Motion to Dismiss and dismiss the Trustee's Amended Complaint with prejudice.

II. A Complaint Must Plausibly State a Claim for Relief.

To avoid dismissal, a complaint must state a claim for relief that is "plausible on its face."⁹ The plaintiff must plead sufficient facts – which the court must accept as true at this stage¹⁰ – to allow the court "to draw the reasonable inference"¹¹ of a defendant's liability. But allegations containing only " ‘labels and conclusions’ or ‘a formalistic recitation of the elements of a cause of action,"¹² and "conclusory allegations, unwarranted deductions of fact or legal conclusions masquerading as facts,"¹³ will not suffice. If the "well-pleaded facts do not permit the court to infer more than the mere possibility" of liability, the complaint must be dismissed.¹⁴

Thus, in evaluating a motion to dismiss, the court must determine, based on "judicial experience and common sense," whether the well-pleaded facts in the complaint present a plausible claim for relief.¹⁵ Allegations that give rise to an "obvious alternative explanation,"¹⁶ however, will not meet the plausibility test.¹⁷ Making the plausibility determination is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense."¹⁸ Where the complaint's allegations fail to "nudge" the claims "across the line from conceivable to plausible," the court must dismiss the complaint.¹⁹

III. Facts.²⁰

Juan Arcila and Carlos Mahecha²¹ owned and controlled BHQ.²² In late 2007, BHQ purchased real property consisting of twenty co-operative parcels (hotel units) in a small boutique hotel, a building that operated an apartment complex, and another vacant building (the "Property"),²³ for $22,422,000.²⁴ BHQ financed this purchase with a $15.5 million term loan from Amerant (the "Term Loan"), plus seller financing of $3 million,²⁵ and funded the balance with loans (the "Investor Loans") from individual investors (the "Investors"), most of whom were Colombian residents or entities owned or controlled by Colombian residents.²⁶ The Term Loan was secured by a mortgage in favor of Amerant.²⁷ BHQ later borrowed "millions of dollars" more from Amerant for construction on the Property (the "Construction Loan," and together with the Term Loan, the "Bank Loans").²⁸

BHQ defaulted on many of the Investor Loans, and from 2010 through 2017, Investors filed approximately forty lawsuits against BHQ.²⁹ By 2015, certain of these Investors had obtained judgments against BHQ, and began collection proceedings.³⁰ Although BHQ was not able to pay these judgments,³¹ it still continued to solicit new Investors³² without disclosing these defaults, lawsuits, and related judgments and garnishments against BHQ.³³ Once BHQ received funds from new Investors, it would use a portion of those funds to make payments to earlier Investors (without disclosing this to the new Investors).³⁴

In an alleged effort to hinder and delay Investors' collection efforts, BHQ sometimes moved money between and among bank accounts.³⁵ BHQ also undertook other actions to avoid paying its Investors, including implementing a sham sale of personal property to an affiliated entity³⁶ and filing false and misleading pleadings and affidavits in state court.³⁷ From at least July 2017, BHQ was insolvent and was unable to pay its debts as they came due, including the Bank Loans and the Investor Loans.³⁸

BHQ was not Mr. Arcila and Mr. Mahecha's only real estate project, however. They also owned and controlled another entity, Luna Developments Group, LLC ("Luna").³⁹ In October 2012, Hemphill Financial, Ltd. ("Hemphill") obtained a $768,464.44 judgment against Luna, after Luna failed to repay a loan Hemphill made to it.⁴⁰ In post-judgment proceedings to collect on that judgment, Hemphill alleged that Mr. Arcila and Mr. Mahecha used Luna to run a "classic Ponzi/pyramid scheme" and that they were perpetrating a "massive fraud."⁴¹ As part of its collection efforts, Hemphill sued Amerant to avoid and recover an alleged $5 million transfer from Luna to Amerant, which Hemphill alleged was made with actual intent to hinder, delay or defraud Luna's creditors.⁴²

By early 2017, BHQ was in "severe financial distress,"⁴³ and Mr. Arcila and Mr. Mahecha considered several options for BHQ, including engaging a commercial real estate firm to market and sell the Property⁴⁴ or filing a chapter 11 bankruptcy case for BHQ.⁴⁵ According to an appraisal obtained by Amerant, the Property...