Yaquinto v. Amanda Ward, Glenn Props. Corp. (In re Ward)

558 B.R. 771

In re: Lloyd Eugene Ward, Debtor.

Robert Yaquinto, Trustee, Plaintiff,

v.Amanda Ward, Glenn Properties Corp. a/k/a Glenn Properties Inc., Best Account Receivables Management Solutions, LLC, and Lloyd Ward, Defendants.

CASE NO. 14-32939-BJH

ADV. PROC. NO. 15-3037-BJH

United States Bankruptcy Court, N.D. Texas, Dallas Division.

Signed September 7, 2016

Charles W. Branham, III, Dean Omar & Branham, L.L.P., Dallas, TX, for Plaintiff.

Aden L. Vickers, Lloyd E. Ward, Lloyd Ward & Associates, P.C., James Sanford Brouner, The Law Office of Mark A. Weisbart, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

Barbara J. Houser, United States Bankruptcy Judge

Before the Court are the Motion for Summary Judgment [AP No. 141]¹ and brief in support [AP No. 142] (the “Motion for Summary Judgment ”) filed by defendants Amanda Ward (“Amanda ”), Glenn Properties Corp. a/k/a Glenn Properties, Inc. (“GPC ”), and Best Account Receivables Management Solutions, LLC (“BRM ” and, collectively with Amanda and GPC, the “Movants ”), the Response to Defendants' Motion for Summary Judgment [AP No. 152] and brief in support [AP No. 153] (“Plaintiff's Brief ”) filed by Robert Yaquinto, Chapter 7 trustee of the bankruptcy estate of debtor-defendant Lloyd Ward (“Lloyd ”),² Movants' reply and evidentiary objections [AP No. 156] (“Movants' Evidentiary Objections ”), and Plaintiff's response to Movants' Evidentiary Objections [AP No. 159] (“Plaintiff's Response to Movants' Evidentiary Objections ”). A hearing on the Motion for Summary Judgment was held and concluded on August 3, 2016 (the “Hearing ”), and the Motion for Summary Judgment and the Movants' Evidentiary Objections are now ripe for ruling.

I. SUMMARY JUDGMENT STANDARD

In deciding a motion for summary judgment, a court must determine whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56, as made applicable by FED. R. BANKR. P. 7056. In deciding whether a fact issue has been raised, the facts and inferences to be drawn from the evidence must be viewed in the light most favorable to the non-moving party. Berquist v. Washington Mut. Bank , 500 F.3d 344, 349 (5th Cir.2007). A court's role at the summary judgment stage is not to weigh the evidence or determine the truth of the matter, but rather to determine only whether a genuine issue of material fact exists for trial. Peel & Co., Inc. v. The Rug Market , 238 F.3d 391, 394 (5th Cir.2001) (“the court must review all of the evidence in the record, but make no credibility determinations or weigh any evidence”) (citing Reeves v. Sanderson Plumbing Prods, Inc. , 530 U.S. 133, 135, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ); see also U.S. v. An Article of Food Consisting of 345/50 Pound Bags , 622 F.2d 768, 773 (5th Cir.1980) (the court “should not proceed to assess the probative value of any of the evidence....”). While courts must consider the evidence with all reasonable inferences in the light most favorable to the non-movant, “the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’ ” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp ., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing FED. R. CIV. P. 56(e) ). “A genuine issue of material fact exists ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ ” Pylant v. Hartford Life and Acc. Ins. Co. , 497 F.3d 536, 538 (5th Cir.2007) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ).

“After the movant has presented a properly supported motion for summary judgment, the burden shifts to the nonmoving party to show with ‘significant probative evidence’ that there exists a genuine issue of material fact.” Hamilton v. Segue Software Inc. , 232 F.3d 473, 477 (5th Cir.2000) (internal citation omitted). However, where “the burden at trial rests on the non-movant, the movant must merely demonstrate an absence of evidentiary support in the record for the non-movant's case.” Miss. River Basin Alliance v. Westphal , 230 F.3d 170, 174 (5th Cir.2000) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ).

II. JURISDICTION, VENUE, AND STATUTORY AND CONSTITUTIONAL AUTHORITY

Without citing any case law or other supporting authority, the Movants allege that this Court lacks “jurisdiction” over (1) defendants GPC and BRM and may not enter a final order resolving Count VIII of the Complaint, which requests substantive consolidation of these entities into Lloyd's bankruptcy estate, and (2) non-defendants Lloyd Ward & Associates (“LWA ”), Lloyd Ward P.C. (“LWPC ”), and Ward Family Trust (“WFT ”) and may not enter a final order resolving any count in the Complaint in which the Plaintiff seeks a ruling that LWA, LWPC, and/or WFT are Lloyd's alter egos.³ For the reasons set forth below, the Court disagrees and finds that it has both jurisdiction and the statutory and constitutional authority to enter a final judgment fully resolving all counts in the Complaint.

The District Court for the Northern District of Texas has subject matter jurisdiction over the above-captioned adversary proceeding (the “Adversary Proceeding ”) under 28 U.S.C. § 1334. Although bankruptcy courts do not have independent subject matter jurisdiction over bankruptcy cases and proceedings, 28 U.S.C. § 151 grants bankruptcy courts the power to exercise certain “authority conferred” upon the district courts by title 28. Under 28 U.S.C. § 157, the district courts may refer bankruptcy cases and proceedings to the bankruptcy courts for either entry of a final judgment (core proceedings) or proposed findings and conclusions (noncore, related-to proceedings). Thus, this Court exercises authority over Lloyd's underlying bankruptcy case (the “Bankruptcy Case ”) and the Adversary Proceeding pursuant to the Order of Reference of Bankruptcy Cases and Proceedings Nunc Pro Tunc adopted in this district on August 3, 1984.

28 U.S.C. § 1334(b) lists three types of proceedings over which the District Court has jurisdiction—those “arising under title 11,” those “arising in” a case under title 11, and those “related to” a case under title 11. The classification of a proceeding under § 1334 depends on the connection of the proceeding to the underlying bankruptcy case. “ ‘Arising under’ jurisdiction involves causes of action created or determined by a statutory provision of title 11.” Faulkner v. Eagle View Capital Mgt. (In re The Heritage Org., L.L.C.) , 454 B.R. 353, 360 (Bankr.N.D.Tex.2011) (citing Wood v. Wood (In re Wood) , 825 F.2d 90, 96 (5th Cir.1987) ). “ ‘Arising in’ jurisdiction is not based on a right expressly created by title 11, but is based on claims that have no existence outside of bankruptcy.” Faulkner , 454 B.R. at 360 (citing Wood , 825 F.2d at 97 ). “Arising under” and “arising in” proceedings are “core” proceedings. 28 U.S.C. § 157(b) ; Stern v. Marshall , 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) ; U.S. Brass Corp. v. Travelers Ins. Grp., Inc. (In re U.S. Brass Corp.) , 301 F.3d 296, 304 (5th Cir.2002).

In comparison, “related to” jurisdiction exists if “the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy.” Celotex Corp. v. Edwards , 514 U.S. 300, 308 n. 6, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995) (quoting Pacor, Inc. v. Higgins , 743 F.2d 984, 994 (3d Cir.1984) ); see also U.S. Brass , 301 F.3d at 304. “That state law may affect a proceeding's resolution cannot be the sole basis by which a proceeding is excluded from the otherwise large net cast by ‘related to’ jurisdiction.” Hartley v. Wells Fargo Bank, N.A. (In re Talsma) , 509 B.R. 535, 542 (Bankr.N.D.Tex.2014) (citing 28 U.S.C. § 157(b)(3) ). Proceedings that involve merely “related to” jurisdiction and do not otherwise arise under the Bankruptcy Code or arise in a bankruptcy case are “non-core.” Faulkner , 454 B.R. at 360.

A bankruptcy judge's authority in cases and proceedings differs depending on whether the subject matter is “core” or “non-core.” 28 U.S.C. § 157(b) -(c). With certain limitations discussed below, a bankruptcy court may hear and enter a final order in all cases filed under title 11 and all proceedings within a bankruptcy court's “core” authority. Id . § 157(b)(1). Section 157 provides a nonexclusive list of such core proceedings, including as relevant here:

(2) Core proceedings include, but are not limited to—

(A) matters concerning the administration of the estate;

***(E) orders to turn over property of the estate; [and]

***

(O) other proceedings affecting...the adjustment of the debtor-creditor or the equity security holder relationship....

Id . § 157(b)(2)(A), (E), and (O ). In non-core proceedings, the statute limits the bankruptcy court to issuing proposed findings of fact and conclusions of law to the district court, unless the parties otherwise consent. Id . § 157(c)(1).

In Stern v. Marshall , 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), the U.S. Supreme Court held that, notwithstanding the bankruptcy court's statutory authority under 28 U.S.C. § 157(b)(2)(C) to adjudicate an estate's counterclaim against a creditor, the bankruptcy court lacked constitutional authority to enter a final judgment on a state-law counterclaim because such claim would “not [be] resolved in the process of ruling on a creditor's proof of claim.” Id . at 503, 131 S.Ct. 2594 ; see also BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. , 735 F.3d 279, 286 (5th Cir.2013) (“Thus, ‘Congress may not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy itself or...