Johnson v. Allied Recycling, Inc.
323 Ga. App. 427
Ga. Ct. App.2013Background
- Allied Recycling obtained consent orders and later judgments against Demon Demo for unpaid supplies/services (totaling judgments from 2007–2009).
- Demon Demo’s principal, Donald Wayne Johnson, formed DDI Companies, LLC, and Demon Demo was later administratively dissolved. Allied alleged DDI operated as Demon Demo’s successor.
- Allied sued DDI, Donald, and later added Demon Demo and Dana Johnson, alleging asset transfers, conversion, alter-ego, and conspiracy to defeat Allied’s judgments.
- Donald filed Chapter 7 bankruptcy; Allied later sued Dana alleging she received or converted Demon Demo assets to defeat Allied’s collection rights. Demon Demo then filed Chapter 7 and its case was later closed.
- Dana moved to dismiss, arguing fraudulent-transfer claims belonged exclusively to Demon Demo’s bankruptcy trustee; the trial court denied the motion and certified the order for interlocutory appeal. Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Allied) | Defendant's Argument (Dana) | Held |
|---|---|---|---|
| Whether fraudulent-transfer claims (to avoid transfers of Demon Demo assets) are now prosecutable by Allied after Demon Demo’s bankruptcy closed | Allied: Once Demon Demo’s bankruptcy closed and trustee did not pursue the claim, Allied regained standing to bring state-law fraudulent-transfer claims | Dana: The fraudulent-transfer claims remain property of the bankruptcy estate and only the trustee may pursue them absent formal abandonment | Held: Trustee had exclusive pre-closing avoidance power, but after the Chapter 7 case closed and trustee did not pursue the claim, Allied regained the right to assert the fraudulent-transfer claims |
| Whether Allied’s claims to hold Dana personally liable (conversion, alter-ego, conspiracy to defeat Allied’s specific judgments) are property of the bankruptcy estate | Allied: Claims are personal to Allied because they allege a scheme targeted at defeating Allied’s specific judgments and loss, not a general creditor claim | Dana: Those claims derive from Demon Demo’s rights and thus are estate property for the trustee to pursue | Held: Pleadings and record support that the tort/alter-ego/conversion claims are personal to Allied (not common to all creditors); they are not estate property at this stage, so Allied may proceed |
Key Cases Cited
- Unisys Corp. v. Dataware Prods., 848 F.2d 311 (1st Cir.) (bankruptcy stay and trustee avoidance powers explained)
- In re Integrated Agri, 313 B.R. 419 (Bankr. C.D. Ill.) (creditor regains standing to sue fraudulent conveyances after trustee’s avoidance period lapses)
- In re Tessmer, 329 B.R. 776 (Bankr. M.D. Ga.) (trustee’s failure to pursue fraudulent-transfer claim restores creditor’s right to sue)
- In re Icarus Holding, 391 F.3d 1315 (11th Cir.) (distinguishing causes of action that are general to creditors from those personal to a creditor)
- St. Paul Fire & Marine Ins. Co. v. PepsiCo, 884 F.2d 688 (2d Cir.) (only trustee may pursue causes of action that are property of the estate)
- Baillie Lumber Co. v. Thompson, 279 Ga. 288 (Ga.) (Georgia law on alter-ego claims and recognition that some causes may be personal to a creditor)