Post-Confirmation Comm. for Small Loans, Inc. v. Martin

POST-CONFIRMATION COMMITTEE FOR SMALL LOANS, INC., et al., Plaintiff, v. W. DEREK MARTIN, as Executor of the Estate of Vance R. Martin, et al., Defendants.

CASE NO.: 1:13-CV-195 (WLS)

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA ALBANY DIVISION

June 13, 2016

ORDER

Present before the Court is Plaintiff Post-Confirmation Committee for Small Loans, Inc., et al.'s Motion for Summary Judgment. (Doc. 170.) Therein, the Committee requests summary judgment as to Count III of the Amended Complaint against Defendant Jefferey V. Martin and final, executable judgment in the amount of $8,923,188.68, or any lesser amount deemed appropriate by the Court, post-judgment interest at the legal rate, and such other and further relief deemed just and proper. For the reasons stated herein, Plaintiff's Motion for Summary Judgment (Doc. 170) is DENIED.

PROCEDURAL HISTORY

The Post-Confirmation Committee for Small Loans, Inc., et al. ("the Committee") filed suit against the above-captioned Defendants on December 14, 2013. (Doc. 1.) Jefferey V. Martin ("Jeff Martin") is one of those Defendants. Jeff Martin answered the Complaint on January 29, 2014. (Doc. 38.) After this Court granted leave to amend (see Doc. 112), the Committee filed their Amended Complaint on November 7, 2014. (Doc. 113.) Jeff Martin answered the Amended Complaint on November 21, 2014. (Doc. 121.)

On May 15, 2015, the Committee filed the instant motion for summary judgment as to Count III of the Amended Complaint. (Doc. 170.) After receiving an extension of time to respond (see Doc. 187), Jeff Martin timely responded on June 12, 2015. (Doc. 195.) The Committee timely replied thereto on June 26, 2015. (Doc. 205.) As the movants for summary judgment, the Committee have complied with M.D. Ga. L.R. 56 by attaching separate and concise statements of material fact to their motion (see Doc. 167), and Jeff Martin has complied as well by responding to each statement of material fact. (See Doc. 193-1.) As such, the Court finds that the Committee's Motion for Summary Judgment (Doc. 170) is ripe for review.

FACTUAL HISTORY

I. Introduction

The following facts are derived from the Complaint (Doc. 1), as amended (Doc. 113), the Amended Answer (Doc. 121), the Committee's Statement of Undisputed Material Facts (Doc. 167), and Jeff Martin's Response to the Committee's Statement of Undisputed Material Facts (Doc. 193-1), all of which were submitted in compliance with M.D. Ga. L.R. 56, and the record in this case. Where relevant, the factual summary also contains undisputed and disputed facts derived from the pleadings, the discovery and disclosure materials on file, and any affidavits submitted, all of which are construed in a light most favorable to the nonmoving party. See Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

II. Relevant Facts

A. The Money Tree and its Affiliates

The Money Tree of Georgia, Inc. ("TMG"), Small Loans, Inc. ("SLI"), The Money Tree, Inc. ("TMT"), The Money Tree of Florida, Inc. ("TMF"), and The Money Tree of Louisiana, Inc. ("TML", collectively "the Debtors" or "The Money Tree"), were engaged in the consumer finance business in Georgia, Alabama, Florida, and Louisiana, respectively. (Doc. 167 at ¶ 5.) Specifically, TMT and TMG raised money by selling debt instruments to the public. (Doc. 167 at ¶ 2.) TMG was founded by Vance "Rudy" Martin in 1987 originally under the name "The Money Tree, Inc." (Doc. 193-1 at ¶ 4.) By 1995, its name was changed to "The Money Tree of Georgia, Inc." and the present company named "The Money Tree, Inc." was formed. (Doc. 113 at ¶ 44 n.2.) Over time, Rudy Martin organized various affiliates of the Debtors as their corporate operations expanded throughout the Southeast. (Id. at ¶ 44.) Those affiliates included Martin Family Group, LLLP ("MartinFamily Group"), Martin Sublease, LLC ("Martin Sublease"), Martin Investments, Inc., and the Interstate Motor Club ("the Motor Club"). (Doc. 113 at ¶ 65.) Rudy Martin ran the Money Tree alongside his sons, W. Derek Martin ("Derek Martin") and Jeff Martin, until his resignation in 2006. (Docs. 113 at ¶ 51; 167 at ¶¶ 9, 13.)

Martin Family Group is an entity formed prior to Rudy Martin's death in order to take title to various properties which had been owned by Rudy Martin. (Doc. 167 at ¶ 63.) Martin Family Group leased properties to the Debtors from 2006 through December 16, 2011 ("the Petition Date"). (Id. at ¶¶ 64, 82.) Martin Sublease was started by Rudy Martin, who originally leased properties in his name, and then subleased to the Money Tree or its affiliates, many properties for amounts greater than were paid under the underlying leases. (Id. at ¶ 69.) Similarly, Martin Sublease leased from third-party landlords, and then subleased to the Money Tree or its affiliates, 54 branch office locations and two used car lots for amounts greater than were paid to the landlords under the underlying leases. (Id. at ¶ 62.) The Motor Club was created in 1990 by Rudy Martin to provide membership services to consumer loan customers of the Debtors. (Doc. 113 at ¶ 79.) These services included "bail bonds, emergency road service, wrecker service, emergency ambulance expense, lock and key service, emergency travel expenses, and legal fees." (Id.)

B. Jeff Martin

Jeff Martin was employed by TMT as a loan approver from October 19, 1998 until September 28, 2012. (Doc. 167 at ¶ 14.) He eventually became director of the Debtors from February 2008 through April 2012. (Id.) Prior to Rudy Martin's death, he organized trusts for each of his three children, Derek Martin, Jeff Martin, and Grace Elizabeth Martin Johnston. (Id. at ¶¶ 8, 19.) These trusts are known as the Vance R. Martin GST Exempt Family Trust F/B/O W. Derek Martin, the Vance R. Martin GST Exempt Family Trust F/B/O Jefferey V. Martin ("Jeff Martin Trust"), and the Vance R. Martin GST Exempt Family Trust F/B/O Grace Elizabeth Martin Johnston (collectively, "Martin Siblings' Trusts"). (Id. at ¶ 20.) Among other assets owned by the Martin Siblings' Trusts were the equity interests in TMT. (Id. at ¶ 24.) Rudy Martin was the original trustee of all three trusts,and upon his death, Derek Martin and John Dowdy¹ served as co-trustees of all three trusts. (Doc. 193-1 at ¶ 22.) In 2010, Jeff Martin was named trustee of the Jeff Martin Trust and remains the named trustee to date. (Id. at ¶ 15.)

The Jeff Martin Trust owned a 33% interest in Martin Family Group at all times relevant to this litigation. (Doc. 193-1 at ¶ 65.) However, Jeff Martin stated that the Jeff Martin Trust had no managerial voting interest or control as to Martin Family Group, which he contends were held instead by Martin Investments, Inc. (Id.) The Parties also dispute whether Jeff Martin was aware that he was receiving distributions from Martin Family Group while he was a director of the Debtors. (Id. at ¶ 83.) Jeff Martin stated that the Jeff Martin Trust received payments which he believed came from Martin Family Group. (Id.) However, Jeff Martin refutes any implication of his involvement or participation in connection with the initiation or transfer of any distributions from Martin Family Group to the Jeff Martin Trust or any implications that the Martin Family Group distributions were at any time improper, unreasonable, or otherwise contrary to Georgia law. (Id.)

Martin Family Group purportedly received $2,351,150.00 in rental payments from the Debtors between January 1, 2008 and the Petition Date. (Doc. 167 at ¶ 86.) The Committee contends that not less than $980,799.75 was transferred to the Jeff Martin Trust during his directorship. While he was a director of the Debtors, Jeff Martin was generally aware that TMT had leases with Martin Family Group. (Doc. 193-1 at ¶ 84.) However, Jeff Martin testified that he had no involvement in the operation, management or control of Martin Family Group, was never employed by Martin Family Group as an officer or director, nor was he involved with any of Martin Family Group's leasing arrangements with the Debtors. (Id.) Martin Family Group also invested in TMT's debt instruments and received approximately $2,170,000.00 in withdrawal payments from TMT between May 2009 and January 2011. (Docs. 164-7 at 35-38; 167 at ¶ 87.) These payments were made at the direction of Derek Martin. (Doc. 164-7 at 38.) Similarly, Jeff Martin invested in TMT's debt instruments and received approximately $31,225.00 in withdrawal payments from TMT during his directorship. (Doc. 188-6 at 209-213.)

Martin Sublease purportedly received $4,264,225.68 in rental payments from the Debtors during Jeff Martin's tenure as director of the Debtors. (See Doc. 172-3.) The Committee contends that not less than $740,399.99 was later distributed to the Martin Siblings' Trusts, as well as the Estate of Rudy Martin and Martin Investments, Inc., and not less than $208,950.63 was transferred to the Jeff Martin Trust through Vance R. Martin Holdings, LLLP. (Doc. 167 at ¶¶ 76, 77.) Though not the subject of this motion, Jeff Martin (as well as other Defendants) disputes the amounts transferred to the Jeff Martin Trust. (Doc. 193-1 at ¶ 77; see also Doc. 166.) However, as noted above, Jeff Martin maintains that he had no involvement in the operation, management, or control of Martin Sublease, was never employed by Martin Sublease as an officer or director, nor did he have any involvement with Martin Sublease's subleasing arrangements with the Debtors. (Doc. 193-1 at ¶ 84.)

Jeff Martin also served as a director of the Motor Club. (Doc. 167 at ¶ 68 n.2.) The Motor Club received various transfers from TMT which were in turn paid to members of the Martin family, including Jeff Martin, as shareholders of the Motor Club. (Id. at ¶ 67.) During his tenure, Jeff Martin received approximately $106,588.00 in distributions from the Motor Club. (Id. at ¶ 68; see also Doc. 174-13.) Jeff Martin disputed this assertion, but provided no rebuttal stating otherwise. (Doc....