NG Sols., LLC v. Senturk (In re Senturk)

660 B.R. 726

IN RE: Haldun SENTURK, Debtor.

NG Solutions, LLC, Plaintiff, v. Haldun Senturk, Defendant.

Case No.: 6:23-bk-01525-TPG

Adv. Pro. No. 6:23-ap-00110-TPG

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

Signed April 11, 2024

James J. Webb, Mitrani, Rynor, Adamsky & Toland, PA, Weston, FL, for Plaintiff.

Christine S. Hansley, C.S. Hansley Law Firm, LLC, Rockledge, FL, for Defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY FINAL JUDGMENT

Tiffany P. Geyer, United States Bankruptcy Judge

THIS PROCEEDING is before the Court upon the Motion for Summary Final Judgment (the "Motion") filed by Plaintiff, NG Solutions, LLC. (Adv. No. 6:23-ap-00110-TPG, Doc. No. 11.)¹ Pursuant to Local Rule 7001-1(k)(4)(F), the Plaintiff served the Motion by negative notice, informing the Defendant/Debtor, Haldun Senturk (the "Debtor"), that if he objects to the relief requested, he must file a response to the Motion within 21 days of service. (Id. at 1.) The Debtor did not file a response to the Motion. After reviewing the Motion, the Debtor's schedules, the Debtor's initial and amended statements of financial affairs, and the transcript from the Debtor's 2004 examination,² the Court grants the Motion.

I. FACTS AND PROCEDURAL HISTORY

The Plaintiff holds a judgment arising from a deficiency claim against the Debtor in connection with the Debtor's guaranty of a commercial loan obligation associated with Rockwood Enterprises, Inc. ("Rockwood") (Adv. No. 6:23-ap-00110-TPG, Doc. No. 1 ¶¶ 2-4; Doc. No. 1-1) after Rockwood's property was sold at a foreclosure sale for an amount less than the debt. The Plaintiff acquired the judgment against the Debtor for the deficiency by assignment on or about April 22, 2022. (Adv. No. 6:23-ap-00110-TPG, Doc. No. 1-1 at 1-2.) Plaintiff commenced post-judgment discovery, which was stayed when the Debtor filed his Chapter 7 case in this Court on April 24, 2023. (No. 6:23-bk-01525-TPG, Doc. No. 1.)

When the Debtor filed his schedules and statement of financial affairs ("SOFA"), he did not initially disclose his ownership of a credit union account (the "7991 Account"), a Robinhood³ investment account, a sum of cash kept in his home (the "Cash Reserves"), or any connection to or ownership of interests in Golden Star Food, Inc. ("GSFI"). (No. 6:23-bk-01525-TPG, Doc. No. 4 at 5-7, 29, Part 11.) However, on May 23, 2023, the day the Chapter 7 trustee conducted the Debtor's Section 341 meeting of creditors, the Debtor filed an amended SOFA, disclosing he served as an officer, director, or managing executive of GSFI, a grocery store/gas station, and that GSFI was administratively dissolved on September 23, 2022. (No. 6:23-bk-01525-TPG, Doc. No. 8 at 6, Part 11.) At no time did the Debtor amend his schedules or SOFA to disclose the 7991 Account, the Robinhood account, or the Cash Reserves.

On August 10, 2023, Plaintiff conducted a 2004 examination of the Debtor during which the Debtor testified to or otherwise made clear the following information.

• The Debtor transferred money into the 7991 Account one month pre-petition in March 2023 and out of the 7991 Account one month post-petition in May 2023. (No. 6:23-bk-01525-TPG, Doc. No. 30-1 at 102.)

• He opened the Robinhood account in January 2019 (id. at 54); the account still existed on the petition date and the Debtor regularly received account statements and had the Robinhood application on his cellular phone at the time of his 2004 examination (id. at 54-57, 107).

• He has no records reflecting the amount of Cash Reserves he held at various times in his home. (Id. at 91-95.)

• He did not disclose the Cash Reserves on his schedules. (Id. at 95.)

• On the petition date he did not recall the amount of Cash Reserves in his home; it could be between "5-, $600" or also "maybe none[;]" he did not know because he did not check. (Id. at 95-96.)

• Of the Cash Reserves left on the date of the 2004 examination, he testified there was "[p]retty much none" but also "[m]aybe 500 bucks that I know." (Id. at 95.)

• In March 2023, he deposited $3,000 of the Cash Reserves into one of his accounts. (Id. at 91-96, 105.)

• He transferred his interests in GSFI to his cousin but there are no records evidencing the transaction (id. at 29, 40), he was a signatory on GSFI's operating account but has no bank account statements (id. at 37-38) and does not recall when he closed GSFI's accounts (id. at 38) or his last involvement with GSFI (id. at 39), and there were no written operating agreements relating to GSFI (id. at 39-41).

• He transferred a piece of property to his brother, but the terms of the transaction were not disclosed. (Id. at 63-66.)

He also represented to his counsel that the 7991 Account was closed, but then produced bank statements for the 7991 Account demonstrating that it was not closed, after being pressed by Plaintiff's counsel who discovered the account in examining statements the Debtor produced for another account, which reflected transfers involving the 7991 Account. (Adv. No. 6:23-ap-00110-TPG, Doc. No. 11-4 at 2, 6, 10-11, 15.) And when the Debtor did produce statements, production was incomplete requiring further follow up. (Id. at 2.)

On September 6, 2023, Plaintiff filed a Complaint initiating this adversary proceeding against the Debtor, asserting four claims seeking to deny the Debtor a discharge: Count I, 11 U.S.C. § 727(a)(2) Fraudulent Transfer and Continuing Concealment; Count II, 11 U.S.C. § 727(a)(3) Failure to Maintain Records; Count III, 11 U.S.C. § 727(a)(4) False Statements Under Oath; and Count IV, 11 U.S.C. § 727(a)(5) Failure to Explain Loss of Assets. (Adv. No. 6:23-ap-00110-TPG, Doc. No. 1 at 6-10.)⁴ In the Motion, Plaintiff argues that it is entitled to summary judgment on the first three counts of the Complaint.⁵ (Adv. No. 6:23-ap-00110-TPG, Doc. No. 11.) As noted above, the Debtor did not file a response to the Motion, despite the standard language in the negative notice provision advising that the Motion may be granted in the absence of a response.

II. LAW AND ANALYSIS

Federal Rule of Bankruptcy Procedure 7056 makes Federal Rule of Civil Procedure 56(a) applicable to bankruptcy proceedings. Rule 56(a) states, "The court shall grant summary judgment 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." The party moving for summary judgment has the burden of establishing its right to summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L.Ed. 2d 265 (1986); In re Patel, No. 6:18-BK-00036-KSJ, 2021 WL 4900792, at *2 (Bankr. M.D. Fla. Oct. 20, 2021). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L.Ed. 2d 202 (1986). A genuine issue exists if "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. at 249, 106 S. Ct. at 2511, 91 L.Ed. 2d 202. If the movant meets its burden, then the burden shifts to the opposing party to demonstrate a genuine issue of material fact. Boyle v. City of Pell City, 866 F.3d 1280, 1288 (11th Cir. 2017). "At the summary judgment stage, facts must be viewed in the light most favorable to the nonmoving party only if there is a 'genuine' dispute as to those facts." Scott v. Harris, 550 U.S. 372, 380, 127 S. Ct. 1769, 1776, 167 L.Ed. 2d 686 (2007) (citing Fed. R. Civ. P. 56(c)).

Plaintiff asserts that it is entitled to summary judgment under three subsections of 11 U.S.C. § 727(a). (Adv. No. 6:23-ap-00110-TPG, Doc. No. 11 at 11-18.) The court may deny discharge under § 727(a) upon several bases, even if "the particular debts owed are themselves not the product of fraud or of a type excepted from discharge under § 523." Law Offices of Dominic J. Salfi, P.A. v. Prevatt (In re Prevatt), 261 B.R. 54, 58 (Bankr. M.D. Fla. 2000). The party objecting to discharge has the burden "to bring forward credible evidence establishing that a debtor may be denied discharge by the court based on § 727(a)." Id. If that burden is met, the debtor then must "bring forward enough credible evidence to dissuade the court from exercising its discretion to deny the debtor discharge based on the evidence presented by the objecting party." Id. "A finding . . . under any single subsection of section 727 is sufficient to deny . . . a discharge." Protos v. Silver (In re Protos), 322 F. App'x 930, 932-33 (11th Cir. 2009).⁶

A. 11 U.S.C. § 727(a)(2) - Count I

In Count I, Plaintiff asks that the Debtor be denied discharge under 11 U.S.C. § 727(a)(2) because the Debtor transferred and concealed property, intending to hinder, delay or defraud creditors. (Adv. No. 6:23-ap-00110-TPG, Doc. No. 1 ¶¶ 8-11.) To prevail under Count I, Plaintiff must show "(1) that the act complained of was done within one year prior to the date the petition was filed, (2) with actual intent to hinder, delay, or defraud a creditor, (3) that the act was that of the debtor, and (4) that the act consisted of transferring, removing, destroying, or concealing any of the debtor's property." Jennings v. Maxfield (In re Jennings), 533 F.3d 1333, 1339 (11th Cir. 2008). Plaintiff has the burden of showing actual fraudulent intent. Equitable Bank v. Miller (In re Miller), 39 F.3d 301, 306 (11th Cir. 1994). "Since it is unlikely that a debtor will admit that he intended to hinder, delay, or defraud his creditors, the debtor's intent may be established by circumstantial evidence or inferred from the debtor's course of conduct." In re Jennings, 533 F.3d at 1339.

Here, the Debtor failed to disclose the 7991 Account, the Robinhood account, and the Cash Reserves. (No. 6:23-bk-01525-TPG, Doc. No. 4 at 5-6.) The Debtor made transfers into and out of the 7991 Account shortly before and shortly after filing for...