Witt et al v. Nolan et al

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILSON DIVISION
IN RE:
MONICA M. WITT,
Debtor. 	CASE NO. 08-05397-JRL
CHAPTER 11
MONICA M. WITT and
ISLAND LAND COMPANY, LLC,
PLAINTIFFS
ADVERSARY PROCEEDING
v. 	NO. 09-00061-8-JRL
MICHAEL P. NOLAN, MICHAEL B.
BURNETTE, GEORGE E. GOODRICH,
MBB, INC., and BERKLEY CLUB, LLC.,
DEFENDANTS.
______________________________________________________________________________
ORDER
This case is before the court on defendant George E. Goodrich’s (“Goodrich”) motion to
dismiss the claims made against him and defendant Berkley Club LLC’s (“Berkley Club”) motion
for partial summary judgment on the lis pendens issue. On August 17, 2010, the court conducted
SO ORDERED.
SIGNED this 24 day of August, 2010.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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a hearing on this matter in Raleigh, North Carolina. This order confirms the ruling provided at the
conclusion of the hearing.
A pleading which states a claim for relief must contain “a short and plain statement of the
claim showing that the pleader is entitled to relief . . . .” F ED . R. CIV . P. 8(a)(2); FED R. BANKR . P.
7008. In determining whether the plaintiff has stated a claim upon which relief can be granted, the
court must accept as true all pleaded allegations and view the complaint in the light most favorable
to the plaintiff. Hatfill v. New York Times Co., 416 F.3d 320, 329 (4th Cir. 2005); see Papasan v.
Allain, 478 U.S. 265, 283 (1986) (holding court is bound to take the well-pleaded factual allegations
in the complaint as true). Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, as adopted
by the Federal Rules of Bankruptcy Procedure, a party may move to dismiss a complaint for failure
to state a claim upon which relief can be granted. F ED . R. CIV . P. 12(b)(6); FED R. BANKR . P.
7012(b). To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain “sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, (2007)).
Heightening pleading requirements under the Federal Rules of Civil Procedure, the Supreme Court
held that a statement showing entitlement to relief “demands more than an unadorned, the-
defendant-unlawfully-harmed-me accusation.” Id.. 	A claim is facially plausible when the facts
alleged in the complaint allow the court to draw a “reasonable inference” that the defendant is liable
for the alleged misconduct. Id. “[W]here the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged - but it has not ‘show[n]’ - ‘that
the pleader is entitled to relief.’ ” Id. at 1950 (citation omitted).
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This court finds that there are sufficient facts pleaded to plausibly find that Goodrich
participated in a scheme to deprive Island Land Company (“Island Land”) of the maximum value
of the Berkley Manor property. In so doing, it is sufficiently alleged that Michael Nolan (“Nolan”)
breached his fiduciary duty to his corporation, and Goodrich aided and abetted him. The amended
complaint supports its conclusion that Goodrich participated in a scheme with Nolan by alleging
facts, that if true, would support a finding of civil conspiracy to deprive Island Land of its rights in
the Berkley Manor property. The most telling facts regarding Goodrich’s involvement can be found
in paragraph 64 and its subsections. After reviewing the facts alleged in the amended complaint in
the light most favorable to the moving party, the motion to dismiss the adversary proceeding is
denied.
Bankruptcy Rule 7056 adopts Rule 56 of the Federal Rules of Civil Procedure. Under Rule
56, "[summary] judgment is proper if the pleadings, depositions, answers to interrogatories and
admission on file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law." Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). In making the determination, conflicts are resolved by viewing
all facts and inferences to be drawn from the facts in the light most favorable to the non-moving
party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). "When a motion for summary
judgment is properly made and supported, an opposing party may not rely merely on allegations or
denials in its own pleading; rather, its response must - by affidavits or as otherwise provided in this
rule - set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). "If the
opposing party does not so respond, summary judgment should, if appropriate, be entered against
that party." Id. "Where the record taken as a whole could not lead a rational trier of fact to find for
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the non-moving party, there is no ‘genuine issue for trial.’ " Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986). Conversely, a genuine issue for trial exists if there
is evidence to support a reasonable jury finding a verdict for the non-moving party. Shaw v. Stroud,
13 F.3d 791, 798 (4th Cir. 1994) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
After review of the pleadings and the extensive evidentiary material provided, this court
finds that there is sufficient evidence of disputed material facts that Nolan breached his fiduciary
duty to Island Land, and that the breach gave rise to a constructive trust being formed in favor of
Island Land. Berkely Club is the successor in interest of Nolan in the Berkley Manor property due
to his assignment of his high bid after the foreclosure sale. 	The amended complaint provides
sufficient facts to conclude that Berkley Club is a properly named defendant and that the lis pendens
was properly placed on the Berkley Club property to protect Island Land’s interest. For the
aforementioned reasons, Berkley Club’s motion for partial summary judgment is denied.
END OF DOCUMENT
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