Howell, III, Trustee v. Auto-Owners Insurance CompanyHowell, III, Trustee v. Auto-Owners Insurance Company
IT IS ORDERED as set forth below:
Paul Baisier
U.S. Bankruptcy Court Judge
Date: July 6, 2026
I. Background
As alleged in the Complaint, the Trustee seeks to set aside and recover various transfers (the “Transfers“) of money received by the Defendant and voidable and recoverable as follows: (i) as preferential transfers under
After the Motion was filed on July 17, 2025, on August 29, 2025, the parties filed a Stipulation (Docket No. 22)(the “Stipulation“) in which they agreed that the Motion would be set aside and held in abeyance pending a request on notice by the Defendant that it be considered. The Stipulation further provided that if such a request was made, the Trustee would have ten (10) days to respond to the Motion. Subsequently, on December 29, 2025, the Defendant filed and served Defendant Auto-Owners Insurance Company‘s Notice Requesting Consideration of Motion for Summary Judgment (Docket No. 23)(the “Notice Requesting Consideration“). The Trustee subsequently filed the Trustee‘s Response to Motion for Summary Judgment by Defendant on January 28, 2026 (Docket No. 24)(the “Trustee‘s Response“).4 On February 10, 2026, Defendant filed Auto-Owners Insurance Company‘s Reply Brief in Support of Motion for Summary Judgment (Docket No. 25) (“Defendant‘s Reply“). The Trustee then filed Plaintiff‘s Sur-Reply to Defendant‘s Brief on Motion for Summary Judgment on March 6, 2026 (Docket No. 30)(the “Trustee‘s Sur-Reply“).5
As a preliminary matter, the Defendant asserts that the Trustee effectively admitted the facts the Defendant relies upon in the Motion since he did not file a response to the Motion within twenty-one (21) days of its filing. See Defendant‘s Reply, pp. 2-3, citing BLR 7007-1(c). As noted above, the Stipulation later provided that the Trustee would have ten (10) days to respond once the Defendant filed a Notice Requesting Consideration of the Motion, which it did on December 29, 2025. Although the Trustee did file the Trustee‘s Response, it was filed after the ten-day period referenced in the Stipulation expired on January 13, 2026.6 The Defendant further contends that the Trustee may not rely on his tardily filed Trustee‘s Response to create issues of fact without evidence or seek to revive theories of recovery not preserved in the Scheduling Order.7 Consequently, it urges the Court to treat the Defendant‘s Statement of Undisputed Material Facts as not properly controverted, disregard any late-raised theories and argument by the Trustee, and grant the Motion. See BLR 7056-1(a)(2).
The Trustee counters that the Trustee‘s Response should be considered by the Court under the doctrine of excusable neglect. He states that his delay in responding resulted primarily from the fact that during the 10-day response period triggered by the filing of the Notice Requesting Consideration, Trustee‘s counsel‘s entire legal office was incapacitated and unable to work for several weeks due to an outbreak of bacterial pneumonia. The Trustee maintains that he has proceeded in good faith throughout this litigation in conducting his affairs and never sought an
As an initial matter, it is not clear for several reasons that there was an operative deadline for the Trustee‘s response to the Motion. First, by agreeing to the Stipulation asking that the Motion be held in abeyance at a time when the Plaintiff‘s response was already overdue under the applicable rules, the Defendant in no way preserved its right to assert the failure of the Trustee‘s to respond timely prior to that time. Instead, the Defendant agreed that the Trustee could have additional time, after it filed a notice, to file a response. In those circumstances, any argument that the response was already untimely and thus facts could not be controverted in a subsequent response was waived. Further, as to the purported new deadline so established, the parties requested in the Stipulation that it be made an Order of the Court, presumably to render the deadline meaningful. However, that request was never followed up on, and the Stipulation was never made an Order of the Court, such that the deadline was not one ordered by this Court.
Finally, even if the January 13, 2026, deadline was an operative deadline, the Trustee‘s failure to meet it will be excused for the reasons that follow. As authorized by
The Court set forth an analysis guided by equitable concerns and a consideration of the circumstances in connection with an omission or failure to act timely. The factors to be weighed include the following: “‘the danger of prejudice to the [opposing party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.‘” Pioneer, supra, 507 U.S. at 395, quoted in Cheney v. Anchor Glass Container Corp., 71 F.3d 848, 850 (11th Cir. 1996).
Since a “determination of excusable neglect is an equitable one,” an evaluation of each factor is appropriate. Valdez v. Feltman (In re Worldwide Web Sys., Inc.), 328 F.3d 1291, 1297 (11th Cir. 2003).9 Thus, it is “a flexible standard that takes ‘into account all the relevant circumstances’ and is not a mechanical test.” Petite v. MedCross Imaging, LLC (MedCross
Applying these standards, the Court concludes that although the Trustee‘s Response was filed fifteen (15) days after the purported due date and thirty (30) days after the Defendant filed its Notice Requesting Consideration, this late-filed pleading will be allowed and considered. The Defendant has not shown any prejudice that it has endured based on the delayed response. Although not insignificant, a two (2) week delay in this matter is not overly concerning, especially in view of the reason for the delay and the length of time that this matter has been pending overall.10 As represented in the Trustee‘s Sur-Reply, the delay was based on a debilitating illness contracted by counsel and attorney error, which the Court finds to be adequate as a reason in the
III. Defendant‘s Motion for Summary Judgment
A. Defendant‘s Statement of Facts
Among other things, the Defendant asserts in the Defendant‘s Statement of Undisputed Facts that the premium payments constituting part of the Transfers in the amount of $78,166.33 were made more than ninety (90) days before the Petition Date. The Defendant also states that it issued various insurance policies to the Debtor, including commercial general liability coverage for which the Debtor paid premiums in the course of operations of its construction business. This insurance coverage, however, did not include any automobile policies. Instead, the Defendant asserts that Owners Insurance Company (“Owners“), which the Defendant claims is a separate subsidiary insurer of the Defendant, issued the commercial automobile policies for which the Debtor paid $47,216.21 in premiums (as part of the Transfers).
The Defendant adds that these premiums were paid in the ordinary course of business and were made for new value received. It also states that Tony Harris, Sr. (“Mr. Harris“), the Debtor‘s principal, testified at the Section 341 Meeting of Creditors in this case that the insured vehicles were used in the Debtor‘s business.11 Further, in responding to the Defendant‘s Interrogatories,
B. Trustee‘s Response
The Trustee relies on the detailed factual allegations offered in the Complaint and the statements of Mr. Albretsen in the Albretsen Declaration. As summarized (see Trustee‘s Response, pp. 2-3), the Trustee contends that the only undisputed facts are that the Debtor made certain insurance premium payments to the Defendant as initial transferee for automobile insurance and that the Debtor did not own any vehicles. Instead, the insured vehicles were owned by Mr. Harris individually. It is otherwise apparent from the history of this case that Mr. Harris caused the Debtor to use its funds to pay various expenses for the benefit of Mr. Harris’ family members (the “Insiders“) and his other affiliate businesses. Based on his assessment of the facts previously established in this case, witness testimony, and available business records, the Trustee states that Mr. Albretsen would testify, as stated in his Declaration, that there is no basis to relate or connect Mr. Harris’ personal use of these vehicles with any corporate purpose of the Debtor. Trustee‘s Response, p. 2 & p. 9, citing Albretsen Declaration, ¶¶ 9-19.
The Trustee also asserts that any statements by Mr. Harris that the vehicles were used in the Debtor‘s business lack supporting detail. Further, the Trustee contends that the Defendant‘s sole reliance upon Mr. Harris’ testimony during his Section 341 Meeting to establish Debtor
in bringing an action for recovery of assets for the benefit of the bankruptcy estate and creditors whose interests the trustee represents.
The Trustee also states that he will amend his Complaint to abandon all claims premised upon payments for insurance policies other than those pertaining to automobile insurance coverage maintained on personal vehicles of insiders of the Debtor and paid for by the Debtor. Trustee‘s Response, p. 4.13 The Trustee acknowledges that the Defendant maintains this amount totals $47,216.21 in premiums paid by the Debtor through Defendant to Owners on the commercial automobile insurance policies, but he does not concede that this amount is correct and asserts it is subject to evidence of payment allocation among all the policies. Trustee‘s Response, p. 7, ¶ 9; Trustee‘s Sur-Reply, p. 5. See also Defendant‘s Brief in Support, p. 7; Jason Declaration, ¶¶ 10
Without offering contrary evidence, the Trustee takes issue with the Defendant‘s contention that the subject auto policies were issued by Owners, which as noted above the Defendant asserts is a separate corporate entity. As for its argument that Owners should have been, but was not, timely added to this action as the true party in interest and may not be added now, the Trustee maintains that he still may amend the Complaint to do so.15
On review, however, because the Defendant allegedly first received the payments constituting the Transfers, it would be an “initial transferee,” and it would not be necessary to add Owners as a defendant herein as the party “for whose benefit” the Transfers were made.16 Section 550(a) governs the scope of recovery regarding the transferee(s) of an avoided transfer, and it provides as follows:
(a) Except as otherwise provided in this section, to the extent that a transfer is avoided under section 544, 545, 547, 548, 549, 553(b), or 724(a) of this title, the trustee may recover, for the benefit of the estate, the
property transferred, or, if the court so orders, the value of such property, from—
(1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or
(2) any immediate or mediate transferee of such initial transferee.
The Trustee disputes the Defendant‘s statement that payments made by the Debtor to Owners total $47,216.21 because this figure is based on an allocation of a larger payment that he does not concede is correct. Defendant‘s Statement of Facts, ¶ 12; Jerome Declaration, ¶ 11. Thus, he disputes any claim that the Defendant did not receive any part of the Transfers or how the Transfers were allocated among the various insurance policies and further contends no evidence has been presented on these issues. Trustee‘s Response, p. 7.
On this point, the Defendant counters that the fact $47,216.21 was paid to Owners is supported by the sworn testimony offered in the Jerome Declaration. Further, it argues that the Trustee cannot create a fact issue based on a “failure of proof” claim when he admits the fact purportedly in issue (the amount attributed to Owners) but presents no countervailing evidence of his own. Defendant‘s Reply, p. 5.
In any event, the Trustee asserts that it is beyond question that the Defendant may be liable as an initial transferee of the Transfers and that they may be recoverable from it by virtue of
The Trustee also challenges the statements offered in the Jerome Declaration on grounds that they are not competent evidence because Mr. Jerome is an attorney with no personal knowledge of the facts or transactions identified therein. See Sitts v. United States, 811 F.2d 736, 742 (2d Cir. 1987), holding modified by Einaugler v. Supreme Ct. of State of N.Y., 109 F.3d 836 (2d Cir. 1997). Mr. Jerome states that he is an employee of the Defendant. The extent to which he reviewed the records and other information presumably prepared by others and on which he based his declarative statements is not disclosed and he has not been offered as an expert.19
C. Legal Standard for Summary Judgment
Summary judgment may be granted pursuant to
The initial burden of proving the absence of dispute as to any material fact rests with the moving party. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). To meet this initial burden, the moving party must identify “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes
Here, because the Defendant will not bear the burden of proof at trial, it can carry its initial burden on its Motion first, by showing that there is insufficient evidence to support the Trustee‘s case as the non-moving party, or second, by offering positive evidence that demonstrates the Trustee will not be able to prove his case at trial. See Standard Fire Ins. Co. v. Knowles, 129 F. Supp. 3d 1271, 1274–75 (N.D. Ala. 2015), citing Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-16 (11th Cir. 1993). When this burden is satisfied, the nonmoving party may not then rely on allegations or denials stated in its own pleadings (
All reasonable doubts should be resolved in favor of the non-moving party, and “[i]f reasonable minds could differ on any inferences arising from undisputed facts, summary judgment should be denied.” Twiss v. Kury, 25 F.3d 1551, 1555 (11th Cir. 1994)(citing Mercantile Bank &Trust v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir. 1985)). In addition, deciding issues of credibility or state of mind or intent are not appropriate in ruling on summary judgment. Atl. Specialty Ins. Co. v. Newson, 672 F. Supp. 3d 1346, 1348 (N.D. Ga. 2023), appeal dismissed sub nom. Newson v. Hernandez, 2023 WL 8316397 (11th Cir. Aug. 9, 2023), citing Stewart v. Booker T. Washington Ins., 232 F.3d 844, 848 (11th Cir. 2000).
D. Analysis
1. Voidable Preferences
To avoid the Transfers as preferential under Section 547(b), the Trustee must show under Count I of the Complaint that they were: (1) “to or for the benefit of a creditor,” (2) “for or on account of an antecedent debt owed by the debtor before such transfer was made,” (3) “made while the debtor was insolvent,” (4) “made on or within 90 days before the date of the filing of the petition,” and (5) enabled the defendant to receive more than it would have received in a hypothetical Chapter 7 liquidation if the transfer had not been made.
On review, it does not appear either that the Defendant has shown that there is insufficient evidence to support the Trustee‘s case or that it has offered evidence demonstrating that the Trustee
Further, there appear to be issues of fact regarding Defendant‘s assertion of affirmative defenses. For instance, the Defendant has not shown undisputed facts establishing that the Transfers were made “in payment of a debt incurred by the debtor in the ordinary course of business.” See
As set forth in Count II, the Trustee seeks to avoid the Transfers as fraudulent under several legal theories. The Trustee may seek to void the Transfers as fraudulent conveyances pursuant to
(a)(1) The trustee may avoid any transfer…of an interest of the debtor in property, or any obligation…incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily—
(A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or
(B)(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
(ii)(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation;
(II) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital; [or]
(III) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor‘s ability to pay as such debts matured….
Next, the Trustee seeks to use Georgia‘s Uniform Fraudulent Transfer Act (“UFTA“) as a basis for avoiding the Transfers. See
As further alleged by the Trustee, the Transfers may also be set aside as constructively fraudulent under
With respect to the arguments set forth in the Defendant‘s Reply and rebuttals in the Trustee‘s Sur-Reply, the Defendant has asserted that the Trustee cannot create an issue of fact through his conclusory insistence that the Defendant issued the policies or was the payee on the Transfers. As noted above, the Defendant objects to any attempt by the Trustee to defeat the Motion by attempting to raise an issue regarding allocation of payments. Here, the Defendant states the Trustee has failed to point to any evidence supporting such claim or the rendering of a judgment against the Defendant. It adds this conclusion is especially warranted when the issuer of the policies and payee of the premiums have already been shown by undisputed evidence not to be the Defendant—but a separate insurer and non-party herein. Defendant‘s Reply, pp. 4-5.
As averred in the Jerome Declaration,27 Owners issued the commercial automobile insurance policies, and the Defendant issued the non-automobile related insurance policies. The
Finally, as mentioned above, issues of witness credibility are not appropriate for evaluation on summary judgment. Based on the extensive history of this case and the Court‘s previous opportunities to observe Mr. Harris’ on direct and cross-examination at trial, however, the Trustee is correct that the Court has previously determined Mr. Harris’ testimony not to be credible and its utility in establishing disputed facts unreliable.29
3. Unauthorized Post-Petition Transfers
Finally, in Count III, the Trustee alleges that Insiders of the Debtor caused it to pay to the Defendant the amount of $32,071.74 during the post-petition period as part of the Transfers under
The Defendant has not shown that it is entitled to a defense that these payments were made in the ordinary course of business. Although insurance is obviously valuable, the Defendant has presented no undisputed facts demonstrating that the insurance coverage in issue conferred any benefit upon the Debtor as opposed to Insiders of the Debtor. As alleged by the Trustee, all the post-petition payments were made for automobile coverage. As discussed above, there is no competent evidence showing that the Debtor had an insurable interest in the subject vehicles or that they were used in the Debtor‘s business. Moreover, the Court never approved the making of such payments from property of the Debtor‘s bankruptcy estate for the personal benefit of third-party insiders in connection with their vehicles. See Main Case Docket passim.
Conclusion
Based on the foregoing discussion, it is
ORDERED that the Motion is GRANTED to the extent that the Transfers were made to the Defendant as premium payments on insurance policies that were not automobile insurance policies. It is further
ORDERED that the Motion is DENIED to the extent that the Transfers were made to the Defendant as premium payments on the automobile insurance policies.
The Clerk is directed to serve a copy of this Order upon the Trustee, counsel for the Trustee, Defendant, counsel for the Defendant, and the United States Trustee.
[END OF ORDER]
Notes
Valdez, supra, 328 F.3d at 1297. Therefore, all three (3) factors must be considered.Valdez is correct that in Cheney we acknowledged that the Supreme Court in Pioneer…accorded primary importance to the absence of prejudice and to the interest of efficient judicial administration in determining whether the district court had abused its discretion. Cheney, 71 F.3d at 849–850. While the absence of prejudice to the nonmoving party and to the interest of efficient judicial administration are of “primary importance,” the Pioneer and Cheney decisions do not alter the fact that a determination of excusable neglect is an equitable one that necessarily involves consideration of all three elements—a meritorious defense, prejudice, and a good reason for not responding to the complaint—and not, as Valdez argues, exclusively prejudice.
A cause of action with respect to a fraudulent transfer or obligation under this article is extinguished unless action is brought:
(1) Under paragraph (1) of subsection (a) of Code Section 18-2-74, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;
(2) Under paragraph (2) of subsection (a) of Code Section 18-2-74 or subsection (a) of Code Section 18-2-75, within four years after the transfer was made or the obligation was incurred; or
(3) Under subsection (b) of Code Section 18-2-75, within one year after the transfer was made or the obligation was incurred.