Nagot et al v. Suncoast Credit Union

1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
In re: 	)
)
ROSS E. NAGOT, 	) 	Case No. 18-bk-754
)
Debtor. 	) 	Chapter 7
___________________________________ 	)
)
ROSS E. NAGOT and 	)
MARTIN P. SHEEHAN, Chapter 7 Trustee, 	)
)
Plaintiffs, 	)
)
v. 	) 	Adversary No. 19-ap-04
)
SUNCOAST CREDIT UNION f/k/a 	)
SUNCOAST SCHOOLS FEDERAL 	)
CREDIT UNION, 	)
)
Defendant. 	)
___________________________________ 	)
MEMORANDUM OPINION
Suncoast Credit Union seeks the dismissal of Counts II, III, and V of the complaint filed
against it by Ross E. Nagot (the “Debtor”) and Martin P. Sheehan, the Chapter 7 trustee
administering Mr. Nagot’s bankruptcy estate. Specifically, Suncoast contends that the Plaintiffs
failed to adequately plead facts supporting their contention that Suncoast violated the West
Virginia Consumer Credit Protection Act (“WVCCPA”) (Count II), that it engaged in the
intentional infliction of emotional distress (Count III), and that it violated the automatic stay by
exercising control over property of the bankruptcy estate.
The Plaintiffs contend that they adequately pleaded causes of action. 	Specifically, Mr.
Nagot contends that he pleaded a cause of action under the WVCCPA because his allegations
regarding Suncoast’s failure to comply with the Uniform Enforcement of Foreign Judgments Act
No. 1:19-ap-00004 Doc 32 Filed 12/19/19 Entered 12/19/19 09:48:44 Page 1 of 4

2
(“UEFJA”) qualify as prohibited conduct under the WVCCPA. He, therefore, asserts that Count
II must survive the motion to dismiss. 	Additionally, he contends that he adequately pleaded a
cause of action for intentional infliction of emotional distress because Suncoast’s conduct was
intentional and so “outrageous and extreme” that it caused him significant emotional distress. He
therefore contends that Count III of the complaint is plausible. Finally, he contends that the court
should deny Suncoast’s motion to dismiss Count V because it admitted that it has not refunded
Mr. Nagot’s wages that it garnished within the ninety days prepetition.
I. 	STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(b)(6), a party may seek to dismiss a complaint
against it when the complaint fails “to state a claim upon which relief can be granted." Fed. R. Civ.
P. 12(b)(6); Fed. R. Bankr. P. 7012(b). When evaluating a motion to dismiss, the court must (1)
construe the complaint in a light favorable to the non-movant, (2) accept the factual allegations in
the complaint as true, and (3) draw all reasonable inferences in favor of the plaintiff. 2 Moore’s
Federal Practice – Civil § 12.34 (2018). After undertaking these steps, the claim for relief must
be “‘plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007)). In determining a motion to dismiss, the court is not
adjudicating whether a plaintiff will ultimately prevail on the merits of the complaint; it is only
determining if the plaintiff is entitled to offer evidence to support the claims. Skinner v. Switzer,
562 U.S. 521, 529-30 (2011).
II. BACKGROUND
On June 26, 2012, Suncoast obtained a judgment against Mr. Nagot in the Circuit Court of
the Twentieth Judicial Circuit in and for Lee County, Florida. Suncoast subsequently garnished
Mr. Nagot’s wages, including $1,284.48 during the ninety days before he filed his voluntary
petition for Chapter 7 relief. Notably, Mr. Nagot resided in West Virginia during that period. On
January 24, 2019, the Plaintiffs filed this adversary proceeding, to which Suncoast responded with
the extant motion to dismiss in May 2019.
In September 2019, the court convened a telephonic hearing in this proceeding to discuss
its status. Among things discussed was that the court had at that time resolved a motion to dismiss
a nearly identical complaint in another proceeding. The court recognized, however, that the motion
to dismiss here is not as broad as what the court faced in the other adversary proceeding.
Additionally, the Plaintiffs informed the court that they likely needed to amend Count II, but the
No. 1:19-ap-00004 Doc 32 Filed 12/19/19 Entered 12/19/19 09:48:44 Page 2 of 4

3
parties asked the court to essentially hold the motion to dismiss in abeyance for a period of time
so that they could explore settlement of the proceeding. Ultimately, the settlement discussions did
not bear fruit, and the parties informed the court during a November 2019 telephonic status
conference that its resolution of the motion to dismiss is necessary.
III.ANALYSIS
Having reviewed the parties’ respective arguments, the court finds it appropriate to grant
Suncoast’s motion to dismiss Counts II, II, and V. Notably, however, the court will dismiss the
counts without prejudice to the Plaintiffs amending their complaint. Regarding Counts II and III,
the court simply finds that the Plaintiffs failed to adequately plead causes of action. Specifically,
the Plaintiffs noted during the September teleconference that they incorrectly pleaded their cause
of action in Count II such that an amendment would be necessary. The court, therefore sees no
reason to undertake a substantive analysis of Count II and will simply dismiss it without prejudice.
Regarding Count III, Suncoast asserts that the Plaintiffs claim is “solely based upon
[Suncoast’s] alleged violation of the UEFJA . . .” such that it is entitled to dismissal of the
complaint because its alleged violation of the UEFJA “is not ‘atrocious, intolerable, and so extreme
and outrageous as to exceed the bounds of decency.’” 	Indeed, Count III contains conclusory
statements regarding the effect of Suncoast’s alleged failure to comply with the UEFJA. 	For
instance, in support of their statement that Suncoast’s conduct is “atrocious, intolerable and
extreme so as to exceed the bounds of decency,” the Plaintiffs contend that Suncoast acted
“willfully” to deny the Debtor statutory rights and that Suncoast “has adopted policies and
procedure [sic] without regard to West Virginia law . . . .” As a result, Mr. Nagot asserts that he
“has been annoyed, inconvenienced, harassed, bothered, upset, angered, harangued and otherwise
caused indignation and distress.” Suncoast, however, flatly denies that its conduct leads to liability
under Count III even if it ultimately is found to have violated the UEFJA. In that regard, it noted
during the court’s October 2019 interim status conference that it did not even know the Debtor left
Florida at the time it acted upon its judgment. The court finds that notion persuasive, particularly
in the absence of any factual statements to support the Plaintiffs’ allegation that Suncoast acted
willfully and in disregard to violate West Virginia law. The court will therefore dismiss Count III.
Like Count II, however, the court’s dismissal will be without prejudice to afford the Plaintiffs an
opportunity to plead additional facts to support their cause of action for intentional infliction of
emotional distress.
No. 1:19-ap-00004 Doc 32 Filed 12/19/19 Entered 12/19/19 09:48:44 Page 3 of 4

4
Finally, the court will dismiss Count V because the Plaintiffs do not adequately allege a
violation of the automatic stay under § 362(k) of the Bankruptcy Code. In that regard, they simply
allege that Suncoast is exercising control over property of the estate, which is prohibited under §
362(a)(3), but they do not specifically reference § 362(k) in support of their contention that
Suncoast willfully violated the automatic stay. In that regard, the Plaintiffs rely upon Exhibit B
attached to the complaint, which they contend is the letter by which they requested the voluntary
turnover of the funds Suncoast garnished prepetition. They therefore assert that Suncoast’s refusal
violates the automatic stay. Notably, however, the fact that the Plaintiffs seek to avoid a “transfer”
under § 547(b) belies the contention that the property to be recovered is property of the bankruptcy
estate. Congress defined “transfer” in the Bankruptcy Code as, among other things not applicable
here, “(C) the foreclosure of a debtor’s equity of redemptions; or (D) each mode . . . of disposing
of or parting with—(i) property; or (ii) and interest in property.” 11 U.S.C. § 101(54). Consistent
with preference theory, a transfer occurred prepetition thus removing the funds sought in the action
from property that comprised the bankruptcy estate and the ambit of § 362(a)(3). The court will
therefore dismiss Count V of the Plaintiffs’ complaint alleging a violation of the automatic stay.
IV. CONCLUSION
Based upon the analysis herein and consistent with Fed. R. Civ. P. 58(a), made applicable
here by Fed. R. Bankr. P. 7058, the court will enter a separate order granting without prejudice
Suncoast’s motion to dismiss Counts II , III, and V.
No. 1:19-ap-00004 Doc 32 Filed 12/19/19 Entered 12/19/19 09:48:44 Page 4 of 4