In re Prop. Ventures, LLC

624 B.R. 210

In the MATTER OF PROPERTY VENTURES, LLC, Debtor.

Case No. BK20-80750

United States Bankruptcy Court, D. Nebraska.

Signed December 9, 2020

Filed December 11, 2020

Patrick Raymond Turner, Turner Legal Group, LLC, Omaha, NE, for Debtor.

Donald L. Swanson, Koley Jessen P.C., L.L.O., Omaha, NE, for Trustee.

Order Granting Debtor's Objection to Claim No. 1

Brian S. Kruse, Bankruptcy Judge

This matter is before the court on the objection filed by Debtor Property Ventures, LLC to Proof Claim No. 1 of John Murante. Patrick Turner appeared for Debtor. Regina Schneider appeared for John Murante. Michael Milone and Tyler Masterson appeared for Guaranty Solutions LLC. Other appearances included Donald L. Swanson, Subchapter V Trustee, Ryan Kunhart for The Gloria A. Murante Intervivos Revocable Trust, and Craig Knickrehm for First Westroads Bank. Filings #83, 84, 85 and 86, and Proof of Claim #1 were offered and received without objection.

During the hearing, the court expressed concern that the volume of evidence was slim given the factual and legal issues raised. The court inquired whether the parties desired a full evidentiary hearing with live witness testimony. Debtor's counsel suggested the court bifurcate the issues and address only whether John Murante's claim is secured, saving for another day whether the indebtedness exists and if so, its amount. John Murante's counsel desired to proceed on the affidavits that were filed. The court will address all issues raised in the objection.

Proof of Claim No. 1 includes an opinion of the Nebraska Court of Appeals captioned John Murante v. Sam Murante, Sr. , which John contends is preclusive of the issues raised in the claim objection. The court questioned whether it was appropriate to consider the facts stated in the opinion even if it was not preclusive. Both Debtor and John Murante's counsel indicated it was appropriate to do so. Given the otherwise slim evidence, and because the opinion is attached to the claim as the factual basis for the claim, the court will consider the facts therein.

Findings of Fact

1. John Murante filed Proof Claim No. 1 ("POC #1") in in the amount of $391,228.81 as secured by Debtor's real estate.

2. Debtor Property Ventures, LLC, is a Nebraska limited liability company. Its sole member is The Gloria Murante Intervivos Revocable Trust. (Fil. #1). Gloria Murante is deceased. She was married to John's brother, Sam Murante. They divorced in 2011. (POC #1, pp. 12 & 19).

3. John contends that in 2002, he paid Debtor $50,213 for a 12.5% interest in the South Omaha City Hall ("SOCH") building, with funds he withdrew from 5622 Ames, LLC. (Fil. #84, ¶ 4). Debtor asserts John never received funds from 5622 Ames, LLC, and never paid Debtor $50,213. (Fil. #86, ¶ 16).

4. John supports his claim with a "Conveyance Agreement", which conveys a 25% undivided interest in the SOCH building for $100,000 "in hand paid." The agreement is signed by Sam Murante Sr. and Bob Pelshaw, each as Manager of Debtor, and as "Grantors", and by John Murante and Sam Murante Jr., as "Grantees". (Fil. #84, ¶ 6 & p. 6).

5. Unresolved questions regarding the Conveyance Agreement abound.

a. When and under what circumstances was it signed? John Everroad, Debtor's financial manager since 2005, first learned of the Conveyance Agreement no earlier than 2013. (Fil. #86, ¶¶ 14 & 18). It is not dated, but it contains a provision allowing Grantors to "buy back" the interest within 24 months of August 5, 2002. (Fil. #84, p. 6). John states only that it was signed. He does not state when. (Fil. #84, ¶ 5).

b. John asserts he "never received a memorialized ownership interest" in the SOCH building. (Fil. #84, ¶ 6). Why does the Conveyance Agreement, which grants John a 25% undivided interest, not constitute a memorialized ownership interest?

c. Why did John pay Debtor $50,213 when, per the Agreement, a 12.5% interest would cost $50,000? (Fil. #84, ¶ 4 & p. 6).

d. Is the one-page document the complete agreement? The footer contains the words "(last page) Page 4 of 4". (Fil. #84, p. 6). Are there other pages, terms, or conditions precedent?

6. John testified he received an email from Sam on July 9, 2007. The document does not contain typical email headers and appears to be an unsigned memo. Therein Sam states that Debtor cannot transfer title to the SOCH, but "the attached equity accounting shall be ledgered as a payable of Property Ventures and for the benefit of the investors as a receivable or payment in full or partial payment to the investors." (Fil. #84, p. 8). The exact meaning of this is not clear, but John's interpretation is. John calls it a promise that "a receivable was owed to me as a result of the 2002 Conveyance Agreement." (Fil. #84, ¶ 6 and p. 8).

7. Over six years later, on August 1, 2013, Sam executed two affidavits to encumber Debtor's real estate. (Fil. #83, pp. 24-27; Fil. #84, ¶¶ 8-11 & pp. 13-18; Fil. #85, pp. 4-14). On August 1, 2013, Sam was not a member or owner of Debtor, and "possessed no authority to act on behalf of Debtor." (Fil. #86, ¶ 18). Debtor does not dispute this and offers no evidence to the contrary. It is not clear how long before August 1, 2013, Sam's membership, management, and authority terminated or whether it was part of Sam and Gloria's divorce in 2011.

8. The Affidavits are signed by Sam only in his individual capacity, not on behalf of Debtor. (POC #1, p. 13; Fil. #84, ¶¶ 8-11 & pp. 13-18; Fil. #85, pp. 4-14).

9. The Affidavits were separately filed with applicable register of deeds. Except for the real estate descriptions, the affidavits are substantively identical. They provide:

2. I am the borrower in the attached promissory note and certify that it is true and accurate and that at the time the note was signed in 06/01/06, I was the managing member of Property Ventures, LLC and recognize that Property Ventures did borrow $101,768.12 and is then responsible to John M. Murante (Holder) for the repayment of that debt of money borrowed.

(Fil. #84, ¶¶ 8-11 & pp. 13-18; Fil. #85, pp. 4-14) (emphasis added).

10. The copy of the promissory note attached to the affidavits is dated June 1, 2006, and provides:

For value received the undersigned, Sam Murante Sr. (herein called "Borrower") promises to pay John M. Murante, or assignee herein called "Holder") ... the principal sum of $101,768.12[.]

...

In this Note, the singular shall include the plural and this Note shall be the joint and several obligation of each Borrower.

(Fil. #84, pp. 19-20) (emphasis added).

11. Sam signed the note individually. Although Property Ventures is not listed as a "Borrower" in the body of the note, Sam also signed the note "Property Ventures LLC by Managing Member." Per a handwritten note dated May 5, 2010, Sam extended the obligation to December 31, 2013. Sam signed the extension individually and as "Managing Member of PVLLC". (Fil. #84, pp. 19-20).

12. John believed "the note was ‘essentially’ a buyout of his ownership and also factored in the tax credits promised to him under the Conveyance Agreement." (POC #1, p. 13). The Nebraska Court of Appeals found, "According to John (and not disputed by Sam), the promissory note was related to Sam buying out John's interest in the SOCH property." (POC #1, p. 19). It also noted, "Sam also said the note regarded ‘monies owed from the loan repayment from Property Ventures’." (POC #1, p. 13).

13. Sam "crafted" the note contemporaneously with the 2013 affidavit, adding the handwritten revisions to make it "look better." His goal was to prevent a potential judgment lienholder from acquiring Debtor's real estate. (POC #1, p. 13). No further details were offered into evidence.

14. John first received the note and the affidavit in August 2013. (See POC #1, p. 12) ("Sam presented him an affidavit with an attached promissory note in 2013."). In his affidavit, John confirms, "I received a signed document from Sam Murante, Sr. entitled ‘AFFIDAVIT to include promissory note,’ and dated August 1, 2013. Accompanying this affidavit was a promissory note dated June 1, 2006." (Fil. #84, ¶¶ 8-13 & pp. 19-20).

15. On January 18, 2017, John filed suit against Sam and Debtor in the District Court of Douglas County, Nebraska, at Case No. CI17-419, asserting claims for breach of promissory note and unjust enrichment. (Fil. #85, pp. 15-24). In the lawsuit, John alleged:

a. The promissory note "was given by Defendants, as makers, to the Plaintiff, as holder. Defendants acknowledged their obligation to Plaintiff in an affidavit filed with the Register of Deeds of Douglas County, dated August l, 2013." (Fil. #85, p. 16, ¶ 7).

b. "On June l, 2006 , Plaintiff loaned Defendants ... $101,768.12." (Id. , ¶ 8) (emphasis added).

c. "On August 1,2013, Sam Murante signed and filed the Affidavit to secure repayment of the Note to Plaintiff. In the affidavit, Sam pledged the properties[.]" (Id. , ¶ 10) (emphasis added).

16. Sam and Debtor retained the same legal counsel and filed a single Answer on February 20, 2017. Sam and Debtor denied the foregoing allegations. (Fil. #85, pp. 25-28, ¶¶ 7-10). They affirmatively alleged lack of consideration, that the note was not enforceable, and "Defendants lacked authority to obligate." (Id. , p. 26, ¶¶ 2 & 11).

17. On December 13, 2017, Debtor filed its first Chapter 11 case in this court at Case No. BK17-81762. Debtor filed a suggestion in bankruptcy with the Douglas County District Court the next day. (Fil. #85, Pg. 30).

18. Because no one obtained relief from stay, the district court considered only John's claim against Sam. In March 2019, John was granted summary judgment on his claim for default of promissory note. The Court of Appeals noted that "Property Ventures was in bankruptcy and was not part of the motions." (POC #1, p. 14).

19. Sam did not contest the validity of the promissory note or its terms as part of the summary judgment motion. Likewise, on appeal Sam did not dispute that the promissory note was a valid contract between Sam and John....