Dana Johnson (“Dana”)
“Because this appeal involves a question of law, we review both the record and the decision of the court below de novo.” (Citation omitted.) Outlaw v. Rye,
Taking all of the allegations in the сomplaint as true, the record shows that in 2006 Allied Recycling sued Demon Demo in DeKalb County Superior Court, seeking to recover for certain supplies and services it had provided to Demon Demo. On August 15, 2007, the DeKalb County court entered a consent order under which Demon Demo agreed to pay Allied $81,869.16, payable in monthly installments. After Demon Demo defaulted on these payments, Allied obtained a judgment against Demon Demo on May 22, 2009, in the amount of $60,119.16.
In 2008, Allied filed suit against Demon Demo in Gwinnett County State Court, again seeking to recover payment for supplies and services it had provided to Demon Demo. On February 26, 2009, the Gwinnett County court entered a consent order under which Demon Demo agreed to pay Allied $33,000, payable in monthly installments. Demon Demo also defaulted on these payments, and on May 27, 2009, Allied obtained a judgment against Dеmon Demo in Gwinnett County in the amount of $31,750.
On August 9, 2011, Allied filed the current lawsuit in Hall County Superior Court against DDI, Donald Wayne Johnson, and an alleged co-conspirator identified only as Jane Doe. According to the complaint, DDI provides the exact same services as Demon Demo
Allied filed an amended complaint on November 8,2011, naming Demon Demo as an additional defendant and alleging that it had conspired with the other named defendants to transfer the company’s assets and avoid its liability to Allied. On February 7, 2012, Donald Wayne Johnson filed a voluntary petition under Chapter 7 of the Bankruptcy Code. Approximately two weeks later, Allied filed a notice of substitution, naming Donald Johnson’s wifе, Dana, as a defendant in lieu of Jane Doe. Allied then filed a second amended complaint, alleging that Dana had conspired with her husband, DDI, and Demon Demo to avoid Demon Demo’s liability to Allied by having some of the corporate assets of Demon Demo transferred to her personally, and by otherwise unlawfully converting the corporate assets of Demon Demo and DDI to her personal use.
One mоnth after Allied named Dana as a defendant, Demon Demo filed a Chapter 7 petition in bankruptcy. Dana filed a motion to dismiss Allied’s claims against her, arguing that Allied was not the real party in interest as to any claim alleging fraudulent transfer of Demon Demo’s property, as that claim belonged solely to Demon Demo’s bankruptcy trustee. The trial court denied that motion, but granted Dana a certificate of immediate review. Dana then filed an application for an interlocutory appeal, which we granted. This appeal followed. After the case was docketed in this Court, Demon Demo’s bankruptcy case was closed by order of the bankruptcy court.
The question before us is whether the claims against Dana may be brought by Allied, or whether those claims are the property of the bankruptcy estate, mеaning that only the bankruptcy trustee may assert them. As noted above, the complaint asserts claims against Dana for conspiracy to defraud Allied, so as to prevent it from recovering on the judgments Allied obtained against Demon Demo. Allied seeks to recover for this fraud by requiring Dana to pay to Allied, in satisfaction of Allied’s judgments against Demon
The Fraudulent Transfer Claims
1. Under Sections 544 and 548 of the Bankruptcy Code, the trustee has the exclusive right to pursue any claim that a creditor might have for the fraudulent or improper transfer of the debtor’s property away from the debtor. See 11 USC § 544 (b) (1) (“the trustee may avoid any transfer of an interest of the debtor in property... that is voidable under applicable law by a creditor holding an unsecured claim”); 11 USC § 548 (a) (1) (A) (“[t]he trustee may avoid any transfer ... of an interest of the debtor in property . . . that was made ... on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily . . . made such transfer ... 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 . . . , indebted”). See also In re Adam Furniture Industries,
Here, Demon Demo’s bankruptcy case began with the filing of its bankruptcy petition on April 3, 2012, and ended with the entry of the October 2, 2012 order closing that case. During that time, the bankruptcy trustee had the exclusive right to pursue an action seeking to recover fraudulently conveyed assets of the company, and Allied was stayed from pursuing such a claim on its own bеhalf. See, e.g., Unisys Corp. v. Dataware Products, 848 F2d 311, 313-314 (1st Cir. 1988); In re Vandevort,
In an attempt to avoid this result, Dana argues that the fraudulent conveyance claim remains with the bankruptcy estate because the trustee did not abandon that claim under section 554 of the Bаnkruptcy Code. This argument is unavailing.
Section 554 provides:
(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section 521 (a) (1)[7 ] of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.
11 USC § 554. Here, Dana argues that because the fraudulent conveyance claim was not scheduled by Demon Demo as an asset, and because the property was not otherwise administered, it remains with the estate. We disagree.
This argument, made by Dana in the supplemental brief she filed after the bankruptcy estate was closed, ignores the law holding that a fraudulent conveyance claim remains with the bankruptcy trustee only so long as the trustee has a viable cause of action, at which point the creditor regains the right to bring that claim.
As the foregoing demonstrates, the concept of abandoning estate property back to the debtor “is inapplicable to” actions to recover fraudulently conveyed estate property. In re Integrated Agri, supra at 422, n. 2. Indeed, Dana’s argument that sections 548 and 554 must be read together would render the statute of limitation imposed against bankruptcy trustees under section 548 meaningless. Under Dana’s reasoning, a trustee could retain a fraudulent transfer action in perpetuity, and he could choose to assert it at any time by petitioning to reopen the estate. That simply is not the law. Instead, sectiоn 548 makes clear that fraudulent transfer actions are automatically available to the trustee for a certain period of time, after which they revert to the creditor, as opposed to the debtor. And section 554 does not provide any mechanism which allows a trustee to interfere with the operation of section 548. Accordingly, because Demon Demo’s bankruptcy has closed, the right to assert the fraudulent transfer claims at issue has reverted to Allied, and the trial court properly denied Dana’s motion to dismiss.
The Personal Liability Claims
2. Under section 541 of the Bankruptcy Code, the bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 USC § 541 (a) (1). And such property includes any legal cause of action the debtor might have. In re Icarus Holdings,
In this case, the allegations of the complaint, together with the documents from the Bankruptcy Court, indicate that the tort claims asserted by Allied against Dana are personal to Allied; they are not general to all creditors. Allied is alleging that Dana acted in concert with her co-defendants to assist Demon Demo in avoiding its contractual liability (which had been reduced to money judgments) to Allied. The record shows that shortly after Demon Demo entered into two separate consent judgments with Allied, its principal formed DDI; following the formation of DDI, Demon Demo began winding down its operations and transferred its assets to Dana, Donald Johnson, and/or DDI; when Allied sued Donald Johnson and DDI, Donald Johnson responded by filing bankruptcy, in an apparent attempt to avoid personal liability; when Allied then named Demon Demo and Dana as defendants, Donald (and perhaps Dana) had Demon Demo file for bankruptcy (approximately 19 months after
Furthermore, there is no evidence anywhere in the recоrd, including in the documents from the Bankruptcy Court, showing that the Johnsons, DDI, or Demon Demo was being actively pursued for payment by any other creditor of Demon Demo. Under these particular circumstances, we find that the claims asserted by Allied against Dana, seeking to hold Dana liable for Demon Demo’s debt to Allied, are personal to Allied, rather than general to all creditors. Accordingly, given the current evidenсe of record, we find that these claims are not the property of the bankruptcy estate, and Allied is the proper party to bring them. The trial court, therefore, did not err in denying Dana’s motion to dismiss.
Judgment affirmed.
Notes
To avoid any confusion with her husband, Donald Wayne Johnson, who is also a named defendant below, we refer to Mrs. Johnson as “Dana.”
DDI advertises itself as providing “Exterior and Interior Dеmolition, Abatements, Concrete Cutting and Removal, Building and Site Clearing.” Demon Demo previously advertised itself as providing identical services.
Allied filed relevant documents from the bankruptcy court in the court below, and we granted Allied’s motion to supplement the appellate record in this case with those documents. This Court may take judicial notice “of public records from other proceedings.” (Punctuation andfootnote omitted.) Mosera v. Davis,
To establish an alter ego cause of action in Georgia, or an action to “pierce the corporate veil,” it must be shown that the shareholders of a cоrporation “disregarded the corporate entity and made it a mere instrumentality for the transaction of their own affairs; that there is such unity of interest and ownership that the separate personalities of the corporation and the owners no longer exist.” (Citations and punctuation omitted.) Baillie Lumber Co. v. Thompson,
Although not pled speсifically, it appears that Allied is asserting these claims under Georgia’s Uniform Fraudulent Transfers Act, OCGA § 18-2-70 et seq.
Although the personal liability claims appear to involve a taking or misuse of Demon Demo’s assets for Dana’s personal use, they do not necessarily involve an actual transfer of those assets to Dana. See Maryland Cas. Ins. Co. v. Welchel,
That statute requires the debtor to file “a schedule of assets and liabilities.” 11 USC § 521 (a) (1) (B) (i).
Notably, Dana acknowledged this law in her opening brief, filed while the bankruptcy case was still pending.
In Baillie Lumber Co., the Supreme Court of Georgia answered a certified question from the United States Court of Appeals for thе Eleventh Circuit: whether Georgia law would allow a corporation to bring an alter ego action against itself?
We note, howevеr, that because we are reviewing this case at the pleadings stage, Dana may still come forward with evidence that these claims are not personal to Allied. Should additional evidence be developed, the question of whether that evidence refutes the conclusion that the claims are personal to Allied, rather than common to all creditors, would be for the trial court to determine.