Tardif v. Nunez Litig. Assistance Corp. (In re LTG, LLC)

In re: LTG, LLC, Debtor.

Robert E. Tardif, Jr., as Chapter 7 Trustee of the bankruptcy estate of LTG, LLC, Plaintiff, v. Nunez Litigation Assistance Corp., a Florida corporation, Defendant.

Case No. 9:18-bk-01936-FMD

Adv. Pro. No. 9:18-ap-195-FMD

UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION

August 4, 2020

Chapter 7

ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

THIS PROCEEDING came before the Court to consider Plaintiff's Motion for Partial Summary Judgment on Counts I (Declaratory Judgment), II (Turnover of Property of the Estate), and III (Avoidance and Recovery of Post-Petition Transfers) of Supplemental Amended Complaint against Defendant, Nunez Litigation Assistance Corp. (the "Summary Judgment Motion"),¹ Plaintiff's affidavit filed in support of the Summary Judgment Motion,² Defendant's Memorandum of Law in Opposition to the Summary Judgment Motion,³ the Affidavit of Rafael Nunez,⁴ the testimony of Rafael Nunez and Jay Bisson offered on Defendant's behalf at the December 4, 2018 hearing on Plaintiff's motion for temporary injunction,⁵ and Plaintiff's Reply to Defendant's Opposition.⁶

A. The Facts

Debtor is a Florida limited liability company headquartered in Fort Myers, Florida, doing business as Ace Rent A Car. Debtor operated short-term car rental businesses in three locations: the Orlando International Airport, the Southwest Florida International Airport in Fort Myers, and the Denver International Airport. Patrick Lewis ("Mr. Lewis") was Debtor's manager, president, and chief operating officer.⁷

The Acquisition of the Vessel

In April, May, and June 2017, Debtor made a series of six payments totaling $455,381.75 to MarineMax East, Inc. ("MarineMax") in connection with the purchase of a 35-foot Boston Whaler (the "Vessel").⁸ On June 9, 2017 (the "Closing Date"), Debtor made the final payment, and Mr. Lewis signed a "Purchase and Sale Agreement"⁹ and an "Acceptance of Vessel."¹⁰ Both documents named Mr. Lewis as the buyer of the Vessel.

In addition, Mr. Lewis signed, on his own behalf and on behalf of Debtor, a document titled "MarineMax, Inc. Assignment" (the "Assignment"). The Assignment states as follows:

The undersigned hereby assigns to PATRICK ALLEN LEWIS all it [sic] rights, title and interest in and to that certain assigned Purchase agreement dated June 9, 2017 between PATRICK ALLEN LEWIS and MarineMax, Inc. for the purchase of the boat mentioned below.

I LTG LLC, give my permission for the funds paid by WIRES in the amount of 455,381.75 that shows LTG LLC as the remitter to be used as Purchase for a 2017 Boston Whaler Inc 350OR. I also give my permission for the above mentioned boat, to be in the name of PATRICK ALLEN LEWIS and LTG LLC will hold no claim or interest.¹¹

Additional documents were prepared on or around the Closing Date: a "Product Registration" form showing Mr. Lewis as the owner of the Vessel;¹² an "Engine Service Log Entry" showing Mr. Lewis as the customer,¹³ a "Boat Registration" that appears to have been issued by Brunswick Boat Group showing Mr. Lewis as the customer;¹⁴ and a "Notice of Pending Documentation" and "Request for Coast Guard Documentation from Newcoast Financial Services" identifying Mr. Lewis as the buyer.¹⁵

After its purchase, the Vessel was docked at 6120 Tarpon Estates Boulevard, Cape Coral, Florida (the "Residence").¹⁶ Mr. Lewis lived in the Residence, but the Residence was owned by Debtor.¹⁷

Debtor's Loan Transaction with Defendant

Rafael Nunez ("Mr. Nunez") is an attorney admitted to practice law in the State of Florida. He owns and operates Defendant Nunez Litigation Assistance Corp ("Defendant"), a Florida corporation.¹⁸ Mr. Nunez resides in the Orlando area.

On November 24, 2017, approximately six months after the Vessel was purchased, Debtor entered into a Revenue Purchase Agreement with Defendant (the "Revenue Agreement").¹⁹ Under the Revenue Agreement, Debtor agreed to "sell" its accounts receivable to Defendant for $270,000.00; Defendant agreed to provide a "capital investment" of $200,000.00; and, Debtor agreed to make daily payments of $1,088.70 to Defendant until the $270,000.00 was paid in full.²⁰

To secure Debtor's obligations under the Revenue Agreement, Mr. Lewis, on Debtor's behalf, signed an "Additional Collateral Security Agreement" (the "Security Agreement"). In the Security Agreement, Debtor granted Defendant a security interest in the Vessel and warranted that Debtor was the owner of the Vessel free from any adverse liens or encumbrances.²¹

Mr. Nunez testified in court at a December 4, 2018 preliminary injunction hearing that he examined the title to the Vessel prior to entering into the agreement with Debtor and confirmed that Mr. Lewis was the owner of the Vessel.²² However, there is no certificate of title in evidence before the Court.

Debtor's Bankruptcy Filing and the Sale of the Vessel to Defendant

On March 14, 2018 (the "Petition Date"), Debtor filed a Chapter 11 case. According to Debtor's Case Management Summary, Debtor's financial problems were the result of its expansion to the Denver, Colorado, airport location, and the interruption to Florida's travel and tourist industry caused by Hurricane Irma and the resulting impact on the income generated at Debtor's Fort Myers, Florida location.²³

On March 20, 2018, less than a week after the Petition Date—and almost four months after Defendant entered into the Revenue Agreement and obtained the Security Agreement signed by Mr.Lewis on Debtor's behalf—Defendant filed a UCC-1 Financing Statement in the Florida Secured Transaction Registry.²⁴ The UCC-1 identified Mr. Lewis as the debtor, Defendant as the secured party, and the Vessel as the collateral.

On April 6, 2018, Debtor filed a motion to convert its Chapter 11 case to a Chapter 7 case. The motion was granted the same day.²⁵ Plaintiff Robert Tardif was appointed as the Chapter 7 trustee (the "Trustee").²⁶

Within days of the conversion of Debtor's bankruptcy case to a Chapter 7 case, Mr. Lewis agreed to sell the Vessel to Defendant in exchange for a cash payment of $130,000.00 and the satisfaction of Debtor's unpaid balance on the Revenue Agreement of approximately $170,000.00.²⁷ On April 16, 2018, Mr. Nunez withdrew $30,000.00 in cash from his account at Chase Bank in Orlando. He also wired $60,000.00 from the same Chase account to his friend Jay Bisson. Jay Bisson had a social and business relationship with Mr. Lewis and, apparently, with Mr. Nunez.

Mr. Nunez then travelled to Fort Myers where, on the morning of April 17, 2018, Jay Bisson and another friend, Matt Wykes, picked up him up. The three men drove to Sanibel Captiva Community Bank, where Jay Bisson withdrew—in cash—the $60,000.00 that Mr. Nunez had wired to him the day before. The three men then travelled to another branch of Sanibel Captiva Community Bank where Mr. Nunez withdrew an additional $40,000.00 from his own account (apparently the first bank branch did not have sufficient funds on hand). While he was there, Mr. Nunez withdrew the balance in his Sanibel Captiva bank account, with the bank issuing him a cashier's check for approximately $3,200.00.²⁸

Mr. Nunez placed the $130,000.00 in cash—and the $3,200.00 cashier's check—in a backpack and the three men drove to MarineMax, where they met Mr. Lewis. After Mr. Lewis confirmed that the backpack contained the $130,000.00,²⁹ he signed a "Department of Homeland Security U.S. Coast Guard Bill of Sale" transferring the Vessel to Defendant.³⁰

Mr. Nunez testified that he reviewed the title to the Vessel and confirmed that Mr. Lewis was its owner.³¹ He then signed, on Defendant's behalf, a "Satisfaction or Release of Mortgage, Claim of Lien or Preferred Mortgage" that listed Mr. Lewis as the mortgagor³² and a State of Florida Department of Highway Safety and Motor Vehicles Division of Motorist Services "Lien Satisfaction" that listed Mr. Lewis as the registered owner.³³ The Lien Satisfaction form has a space for "title number." This space was left blank.

The four men then went their separate ways, with Matt Wykes piloting the Vessel to another location. Mr. Lewis left in his own car; he removed the $130,000.00 from the backpack and tossed the backpack out the window of his car.³⁴ Unfortunately, Mr. Nunez had forgotten that he had left his $3,200.00 cashier's check in the backpack and he was compelled to have the bank reissue the check.³⁵

On May 18, 2018—a month after Mr. Lewis sold the Vessel to Defendant—Debtor filed its bankruptcy schedules. The schedules, which Mr. Lewis signed under penalty of perjury, listed Debtor's ownership of "Two Boston Whalers (book value of $786,621.48 as of 12/31/17)" and the value of Debtor's interest as "unknown."³⁶

B. Procedural History

On April 25, 2018, the Trustee filed his initial complaint against Defendant, Mr. Lewis, and Mr.Lewis's father, for turnover of the Vessel and a second Boston Whaler, for an accounting, and for a preliminary and permanent injunction.³⁷ The Trustee also filed a motion for temporary restraining order and preliminary injunction.³⁸ On April 26, 2018, the Court entered a temporary restraining order (the "TRO"), directing inter alia, the Defendants to preserve the Vessels and any proceeds thereof until a hearing on the Trustee's motion for preliminary injunction.³⁹

On August 14, 2018, the Court entered an order modifying the TRO to permit Defendant to sell the Vessel, with the proceeds of the sale to be held by Defendant's attorney until agreement with the Trustee or further order of the Court.⁴⁰ The Vessel was later sold for $350,000.00; the proceeds are currently held in Defendant's attorney's trust account.⁴¹

On October 22, 2018, the Trustee filed his Supplemental Amended Complaint (the "Complaint") against Defendant.⁴² The Trustee seeks a declaratory judgment to establish that the sale proceeds of the Vessel constitute property of Debtor's estate; the turnover of the sale proceeds and a demand for an...