PMF Enterprises, Inc. v. SouthCrest Bank (In re PMF Enterprises, Inc.)
517 B.R. 350
Bankr. M.D. Ga.2014Background
- PMF and KPB are related debtors operating a Perry, Georgia convenience store; PMF objects to SouthCrest Bank's unsecured claim.
- KPB borrowed $1,960,000 from Century Security Bank (later SouthCrest) to purchase the store; Beauchamps personally guaranteed the loan.
- PMF obtained an insurance policy from Catawba; Century/SouthCrest was named as lien holder despite Century's loan being to KPB.
- After a 2008 fire, Catawba paid policy limits to PMF and Century and note payments; no further payments were made by PMF or KPB.
- SouthCrest and Catawba settled in 2012 (SouthCrest Settlement); PMF sought to have the Fulton County case settlement release extend to PMF and KPB claims.
- The Chapter 7 trustee moved to substantively consolidate PMF and KPB; after consolidation, the claim objection is ripe for determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did SouthCrest's claim against KPB discharge under the SouthCrest Settlement? | PMF argues Paragraph 9/11 assign and release the mortgage debt to Catawba. | SouthCrest Bank is not bound by PMF/KPB settlement and the mortgage debt was not settled/assigned. | No discharge; SouthCrest's claim against KPB was not settled. |
| Is there an accord and satisfaction disposing the mortgage debt? | PMF contends the SouthCrest Settlement constitutes accord and satisfaction of the mortgage debt. | SouthCrest settlement did not create a direct agreement with KPB; no accord and satisfaction. | No accord and satisfaction. |
| Does judicial estoppel apply to SouthCrest's position? | SouthCrest argues inconsistency in positions should estop. | SouthCrest did not take inconsistent oaths; estoppel does not apply. | Judicial estoppel does not apply. |
| Does promissory estoppel bar SouthCrest from asserting the mortgage debt? | PMF argues reliance on discussions during settlement should estop. | No promise to PMF or KPB; promissory estoppel inapplicable. | Promissory estoppel does not apply. |
| Does res judicata or claim preclusion bar SouthCrest's claim in the bankruptcy cases? | Gwinnett County Suit dismissal could preclude related claims. | Different contracts; not the same cause of action; res judicata does not apply. | Gwinnett County dismissal does not bar the bankruptcy claim. |
Key Cases Cited
- Wright v. Holm (In re Holm), 931 F.2d 620 (9th Cir. 1991) (burden on objector to rebut prima facie claim proof)
- Raleigh v. Illinois Dep’t of Revenue, 530 U.S. 15 (supreme court 2000) (determine burden shift in claim validity under nonbankruptcy law)
- In re LJL Truck Center, Inc., 299 B.R. 663 (Bankr. M.D. Ga. 2003) (ga analysis of defenses to claims)
- First Data POS, Inc. v. Willis, 273 Ga. 792 (Ga. 2001) (contract interpretation governs where plain and unambiguous)
- New Hampshire v. Maine, 532 U.S. 742 (Supreme Court 2001) (factors for judicial estoppel)
- Salomon Smith Barney, Inc. v. Harvey, 260 F.3d 1302 (11th Cir. 2001) (two-factor test for judicial estoppel in Eleventh Circuit)
- Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 2002) (promissory estoppel prerequisites)
- Executive Fitness, LLC v. Healey Bldg. Ltd. Partnership, 290 Ga. App. 613 (Ga. App. 2008) (res judicata and contract-based claim analysis in Georgia)
- LNV Corp. v. Studle, 322 Ga. App. 19 (Ga. App. 2013) (contract construction under Georgia law)
- Horwitz v. Weil, 275 Ga. 467 (Ga. 2002) (ambiguity in contract and contract interpretation standard)
- General Steel, Inc. v. Delta Building Systems, Inc., 297 Ga. App. 136 (Ga. App. 2009) (contractual ambiguity resolved by whole-contract interpretation)