Sommers v. Letterbox Hospitality, LLC et al

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE:
1100 RESTAURANT GROUP, LP,
Debtor.
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CASE NO: 24-32285
CHAPTER 7
RONALD J. SOMMERS,
Plaintiff,
VS. ADVERSARY NO. 25-3319
LETTERBOX HOSPITALITY, LLC
and
STEVEN FLIPPO
and
BARSENAL, LLC
and
TODD MASON,
Defendants.
REPORT AND RECOMMENDATION
Ronald Sommers, Chapter 7 Trustee, the plaintiff (“Plaintiff” or “Sommers”), has filed a
Motion for Default Judgment Against Letterbox Hospitality, LLC f/k/a Underbelly Hospitality,
LLC seeking avoidance of and damages for a fraudulent transfer claim (ECF No. 33). There has
been no response filed. For the following reasons the motion is granted.
The plaintiff is requesting default judgment in this case because Letterbox Hospitality, LLC
f/k/a Underbelly Hospitality, LLC (“Letterbox”) failed to file an answer to the complaint. The
complaint was filed on May 5, 2025. On May 7, 2025, the summons and the complaint were
served on Letterbox through its registered agent, Todd Mason at 7026 Old Katy Rd, Suite 201,
Houston, TX 77024 via first class mail pursuant to Bankruptcy Rule 7004(b).1 This address is the
address listed with the Texas Secretary of State as Letterbox’ registered office mailing address
1 ECF No. 6.
United States Bankruptcy Court
Southern District of Texas
ENTERED
May 08, 2026
Nathan Ochsner, Clerk
United States District Court
Southern District of Texas
ENTERED
May 19, 2026
Nathan Ochsner, Clerk
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Federal Rule of Bankruptcy Procedure 7012 requires an answer to be filed within 30 days
of the issuance of a summons. Letterbox has not responded nor answered this adversary
proceeding. A Clerk’s Entry of Default has been entered against Letterbox as authorized by Fed.
R. Bakr. P. 7055(a).2
BACKGROUND
The Complaint states that Letterbox was the operator of several restaurant concepts
affiliated with Chris Shepherd, including 1100 Restaurant Group, LP (the “Debtor”)’s restaurants.
Letterbox, which was formerly known as Underbelly Hospitality, was owned 50% by Chris
Shepherd Ventures and an unrelated third party. In 2018, co-defendant Todd Mason and his
company MLB Hospitality, LLC (“MLB”) loaned the Debtor almost $2 million dollars to complete
construction at a project located at 1100 Westheimer. After MLB’s loan, MLB became a 50-50
owner of Letterbox with Chris Shepherd Ventures. The Debtor stopped operating as of December
31, 2021.
As a result of the COVID-19 pandemic, the Debtor applied for employee retention tax
credit (“ERC”) from the Internal Revenue Service. After Debtor’s operations shut down, it
received approximately $800,000.00 in ERCs. The Debtor then distributed the money it received
to Letterbox, and co-defendants Flippo and Barsental. Letterbox received $168,750.00 on June
16, 2022, $149,000.00 on March 30, 2023, and $188,325.00 on April 19, 2023 totaling
$506,075.00. After the first distribution was made on June 16, 2022, the Debtor was sued in
multiple lawsuits.
Sommers filed a Complaint against Letterbox for fraudulent transfer as to the third
distribution only in the amount of $188,325.00 under 11 U.S.C. §§ 548(a)(1)(A), and 548(a)(1)(B).
In addition, Plaintiff brings claims under the Texas Uniform Fraudulent Transfer Act (“TUFTA”)
§§ 24.005(a)(1) and 24.006.
JURISDICTION
This Court has jurisdiction pursuant to 28 U.S.C. §§ 141, 157(a) and 1334(b). This is a
core proceeding arising under Title 11 of the United States Code as defined in 28 U.S.C. §
157(b)(2)(H). The motion for default and supporting affidavit filed by Plaintiff requests that the
Court enter a default judgment pursuant to Federal Rule of Bankruptcy Procedure (“Fed. R. Bank.
P.”) 7055(b).
2 ECF No. 31.
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A valid service of process gives a defendant notice that failure to file an answer puts him
at risk of default judgment.3 Fed. R. Bank. P 7004 governs proper service of the summons and
complaint. Fed. R. Bank. P 7004(b)(9) allows for mailing a copy of the summons and complaint
to “the debtor at the address shown in the petition or to such other address as the debtor may
designate in a filed writing.” Plaintiff complied with the Rule 7004 provisions, and the Court finds
that service was proper.
“[P]roper service of process is a jurisdictional prerequisite to the entry of a default
judgment,”4 However, a motion for default due to the defendant’s failure to plead is not in and of
itself conclusive of the defendant’s liability. The Court must find a sufficient basis for liability in
the pleadings submitted and examine Letterbox’s liability under the causes of action set forth in
the Complaint.5 Whether or not the motion for default is granted is within the Court’s discretion.6
LEGAL STANDARD
Courts have developed a three-part analysis to determine if a default judgment is proper.
The first factor is whether the entry of the default judgment is procedurally warranted. Courts then
need to assess the substantive merits of the plaintiff’s claims and determine if there is a sufficient
basis in the pleadings for the default judgment. Lastly, the court determines what form of relief the
plaintiff should receive.7
ANALYSIS
After reviewing Plaintiff’s motion, the Court concludes that a default judgment is
procedurally warranted. The Fifth Circuit has set out six factors to consider.8 First, since Letterbox
has failed to file an answer, there are no material facts in dispute and the failure to respond
prejudices the Plaintiff. There is no evidence that the silence of Letterbox is the result of a “good
faith mistake or excusable neglect.”9 The summons was served a year ago, and this motion for
default was served upon Letterbox as well. The failure to respond to either has been noted by the
3 SUA Ins. Co. v. Buras, 421 F. App’x 384 (5th Cir. 2011).
4 Avdeef v. Royal Bank of Scotland, P.L.C., 616 F. App’x 665, 672 (5th Cir. 2015) (unpublished).
5 DirectTV, Inc. v. Huynh (In re Huynh), 318 F. Sup.2d 1122, 1127 (M.D. Ala. 2005).
6 Alvarado Martinez v. Eltman Law, P.C., 444 F. Supp.3d 748 (N.D, Tex, 2020) (citing United States v. 1998
Freightliner Vin # 1FUYCZYB3WP886986, 548 F. Supp.2d 381 (W.D. Tex. 2008).
7 Id. at 752; see also Shinsho Am. Corp. v. HyQuality Alloys, LLC, 694 F.Supp.3d 805, 816-817 (S.D. Tex 2023)
(three issues to be determined for a default judgment are 1) if a default judgment is procedurally appropriate; 2) if
the plaintiff presented a colorable claim; and 3) how to calculate damages or equitable relief.
8 Lindsey v. Prive Corp., 161 F.3d 886 (5th Cir. 1998).
9 Id. at 893.
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Court. Finally, the Court is unaware of any circumstance that might be a reason to set aside the
default judgment. Therefore, Sommers has met the procedural requirements for default judgment.
The Plaintiff bears the burden of establishing by a preponderance of the evidence, that the
transfer was fraudulent under 11 U.S.C. § 548. Letterbox is not held to admit facts that are not
well pleaded or to admit conclusions of law.10 Sommers has sufficiently alleged his causes of
action for the avoidance and recovery of fraudulent transfers under Section 548(a)((1) that the
Debtor made to Letterbox as the transfer was made with the intent to hinder, delay, or defraud
creditors, at the time of the transfer the Debtor received less than a reasonably equivalent value in
exchange for the transfer, and the Debtor was insolvent.
Similarly, Sommers has sufficiently alleged a fraudulent transfer under TUFTA Section
24.005 that the transfer was made with the intent to hinder, delay or defraud creditors, and that the
Debtor did not receive a reasonably equivalent value. Further in determining actual intent under
TUFTA, Sommers has alleged the following facts showing that Section 24.005(b)(4), (5) and (9)
applies as before the transfer was made, the Debtor had been sued, the transfer was of substantially
all the Debtor’s assets, and the Debtor was insolvent at the time of the transfer. Further, the
Complaint alleges that the transfer was fraudulent as to present creditors as a creditor exists whose
claim arose before the occurrence of the third distribution as required by Section 24.006.
The Complaint argues that Sommers may avoid the transfer under Section 550(a) of the
Code, and that he is entitled to a judgment in the amount of the transfer in the amount of
$188,325.00 plus pre and post judgment interest. Sommers’ claims are supported by the factual
allegations in the Complaint and the Trustee’s Affidavit attached to the Motion for Default
Judgment.11 The Court finds that Sommers has met the requirements for default judgment on its
claims against Letterbox on the causes of action under 11 U.S.C. §§ 548(a)(1)(A), and
548(a)(1)(B), TUFTA §§ 24.005(a)(1) and 24.006.
ACCORDINGLY, IT IS ORDERED that Ronald Sommers, Chapter 7 Trustee is
awarded judgment against Letterbox Hospitality LLC f/k/a Underbelly Hospitality, LLC in the
amount of $188,325.00.
IT IS FURTHER ORDERED that post-judgment interest is awarded at the federal
judgment interest rate of 3.72% from the date of entry of this judgment until paid.
10 Nishimatsu Constr. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200 (5th Cir. 1975).
11 ECF No. 33-1.
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IT IS FURTHER ORDERED that this Order constitutes a final judgment against
Letterbox Hospitality LLC f/k/a Underbelly Hospitality, LLC. The Trustee shall be entitled to all
writs and processes as may be necessary in the enforcement and collection of this judgment.
SIGNED 05/07/2026
___________________________________
Jeffrey Norman
United States Bankruptcy Judge
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