Francis Clifford Tucker

THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
IN RE: )
)
FRANCIS C. TUCKER ) Case No. 5:09-bk-914
)
Debtor. )
MEMORANDUM OPINION
Francis C. Tucker (the “Debtor”) filed a “Second Motion to Dismiss” (Doc. No. 74) in
the above-styled involuntary Chapter 7 case. The Debtor asserts two grounds for dismissal: (1)
that the petitioners’ failure to provide a witness under Fed. R. Civ. P. 30(b) is sanctionable by
dismissal under Rule 37(d); and (2) that one of the named petitioners did not actually authorize
the petition.1
The court will deny the Debtor’s Second Motion to Dismiss.
I. BACKGROUND
On April 27, 2009, two entities and one individual joined an involuntary Chapter 7
petition against the Debtor. The petitioners include Ohio Valley Amusement Company
(“OVA”), Alexas Intertainment, LLC (“Alexas”), and Al Hart. Service of the petition and
summons was made on the Debtor on April 30, 2009, by mail pursuant to Fed. Bankr. R.P.
7004(b)(1).
Paragraph 3 of the Debtor’s motion asserts as a reason for dismissal that Donald Zavolta,1
an employee of OVA, was served with a subpoena and notice of deposition but failed to attend
the deposition. Mr. Zavolta, however, is not identified as “a party or a party’s officer, director,
or managing agent – or a person designated under Rule 30(b)(6) or 31(a)(4),” and, thus, Rule
37(d) does not apply. Fed. R. Civ. P. 37(d)(3). In addition, the Debtor has provided no reason
why Mr. Zavolta’s failure to attend a deposition should result in dismissal. Therefore, the court
will not address Paragraph 3 as a grounds for dismissal.
1
Dated: Friday, May 28, 2010 1:19:04 PM
Case 5:09-bk-00914 Doc 89 Filed 05/28/10 Entered 05/28/10 13:42:03 Desc Main
Document Page 1 of 5

On May 19, 2009, the Debtor filed an answer and motion to dismiss (“First Motion to
Dismiss”) the involuntary petition, asserting, among other things, that the petitioners hold claims
that do not entitle them to relief under 11 U.S.C. § 303(b), and that because OVA and Alexas are
related entities and should be counted as a single creditor, an insufficient number of claim
holders joined the petition. Because each of the Debtor’s legal conclusions required the court to
consider evidence outside the pleadings, the court converted the Debtor’s First Motion to
Dismiss to one for summary judgment. The court provided the parties additional time to conduct
discovery and provide supplemental briefing. Based upon the evidence presented in the parties
briefs, genuine issues of material fact remained as to whether the petition meets the elements
under § 303(b), and, thus, the court denied the Debtor’s First Motion to Dismiss. In particular,
the Debtor’s First Motion to Dismiss and his supplemental briefing failed to show that at least 12
creditors qualify under § 303(b) such that the three-petitioner requirement is implicated under §
303(b)(1).
The court’s order denying the First Motion to Dismiss allowed the Debtor to submit a list
of creditors as described under Fed. R. Bankr. P. 1003(b) in order to give any other potentially
qualified creditors an opportunity to join the petition, and to allow all parties an opportunity to
conduct additional discovery on whether § 303(b)(1) applies in this case. The order also
scheduled a final pre-trial conference date for May 18, 2010, and set the final hearing on the
petition for June 2, 2010.
On the morning of May 18, 2010, the same day the court held the final pre-trial
conference, the Debtor filed his Second Motion to Dismiss.
II. DISCUSSION
A. Dismissal as a Sanction under Rule 37(d)
The Debtor asserts that upon request for OVA to designate a person under Rule 30(b)(6)
to testify at a April 17, 2010 deposition, OVA designated Rod Berry, who, according to the
Debtor was unprepared to testify as to matters described in the deposition notice.
Rule 30(b)(6) provides that a notice to a corporation to attend a deposition, requires the
corporation to designate a person to testify as to the matters described in the deposition notice.
Rule 37(d)(1)(A)(i) provides that the court may “order sanctions if . . . a person designated under
2
Case 5:09-bk-00914 Doc 89 Filed 05/28/10 Entered 05/28/10 13:42:03 Desc Main
Document Page 2 of 5

Rule 30(b)(6) . . . fails . . . to appear for that person’s deposition.” Dismissal of a proceeding is a
permissible sanction under Rule 37(b)(2)(A)(v). But Rule 37(d)(3) provides:
Sanctions may include any of the orders listed in Rule 37(b)(2)(A)(i)-(vi). Instead
of or in addition to these sanctions, the court must require the party failing to act,
the attorney advising that party, or both to pay the reasonable expenses, including
attorney's fees, caused by the failure, unless the failure was substantially justified
or other circumstances make an award of expenses unjust.
Fed. R. Civ. P. 37(d)(3). A corporation’s complete failure to educate its designee as to the
matters described in the deposition notice, is sanctionable under Rule 37(d) as if the corporation
failed to attend its own deposition. See Int'l Ass'n of Machinists & Aero. Workers v.
Werner-Matsuda, 390 F. Supp. 2d 479, 489 (D. Md. 2005) (“Monetary sanctions are mandatory
under Rule 37(d) for failure to appear by means of wholly failing to educate a Rule 30(b)(6)
witness, unless the conduct was substantially justified.”).
At the final pre-trial conference, Kevin Coleman, counsel for OVA, admitted that he
failed to prepare Mr. Berry for his Rule 30(b)(6) deposition. Mr. Coleman explained, however,
that he had suffered the loss of his father just days before the April 17 deposition, and wasth
unavailable to properly prepare Mr. Berry. He arranged for Mr. Berry to obtain some supporting
documents, and although Mr. Thomas was able to fill in for Mr. Coleman at the deposition, Mr.
Coleman was unable to have Mr. Berry properly educated on such short notice. The court is
compelled to deny the imposition of sanctions against either Mr. Coleman or OVA given that
Mr. Coleman’s loss is a substantial justification for failing to educate Mr. Berry in preparation
for his deposition.
Moreover, any insufficiency in Mr. Berry’s preparation was known to the Debtor on
April 17, 2010. Nevertheless, the Debtor waited until May 18, 2010, the day of the final pre-trial
conference, to seek sanctions. Such a delay is unwarranted, and leads the court to believe that
the request is not based upon a compelling or substantive need for discovery, which further
justifies denial of the Debtor’s request for sanctions.
B. Dismissal for Failure to Join a Sufficient Number of Petitioners
The Debtor asserts that OVA and Alexas tricked Al Hart into signing the petition. Thus,
according to the Debtor, without Al Hart as a petitioner, an insufficient number of petitioners
joined the petition.
3
Case 5:09-bk-00914 Doc 89 Filed 05/28/10 Entered 05/28/10 13:42:03 Desc Main
Document Page 3 of 5

In adjudicating a motion to dismiss, a court must accept as true all of the well-pleaded
factual allegations in the complaint as well as the reasonable inferences that can be drawn from
them, “even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007). This principle, however, is inapplicable to
threadbare recitals of a cause of action’s elements, supported by mere conclusory statements.
Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949 (2009). Defeating a motion under Rule
12(b)(6) requires the plaintiff to provide more in the complaint than “mere labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555. The factual allegations in the complaint “must be enough to raise a
right of relief above the speculative level,” id., and be enough to “state a claim to relief that is
plausible on its face.” Ashcroft, 129 S. Ct. at 1949.
“In ruling on a 12(b)(6) motion, the [c]ourt can rely only upon the allegations in the
complaint and those documents attached as exhibits or incorporated by reference.” Norfolk
Fed'n of Bus. Dists. v. HUD, 932 F. Supp. 730, 736 (E.D. Va. 1996), aff’d, 103 F.3d 119 (4th
Cir. 1996) (table decision), 1996 U.S. App. LEXIS 30037, *3 (per curiam). “If, on a motion
under Rule 12(b) or 12(c), matters outside the pleadings are presented to and not excluded by the
court, the motion must be treated as one for summary judgment under Rule 56.” Fed. R. Civ. P.
12(d). When a defendant refers to a document in its motion to dismiss, “a court may consider it
in determining whether to dismiss the complaint if [the document] was integral to and explicitly
relied on in the complaint and if the plaintiffs do not challenge its authenticity.” Am.
Chiropractic v. Trigon Healthcare, 367 F.3d 212, 234 (4th Cir. 2004) (internal quotation marks
omitted).
Here, the Debtor’s motion asserts that Al Hart, one of the named petitioners, did not
consent to the filing of the involuntary petition, which assertion is in direct opposition to the
allegations made on the petition. The petition was submitted on Official Form 5, and contains
what purports to be Al Hart’s signature under the following statements:
Petitioner(s) request that an order for relief be entered against the debtor under the
chapter of title 11, United States Code, specified in this petition.
. . .
4
Case 5:09-bk-00914 Doc 89 Filed 05/28/10 Entered 05/28/10 13:42:03 Desc Main
Document Page 4 of 5

Petitioner(s) declare under penalty of perjury that the foregoing is true and correct
according to the best of their knowledge, information, and belief.
(Petition 2.) Francis C. Tucker is named as the Debtor in the petition. (Petition 1.) The petition
describes three claim holders, including Al Hart whose claim is described as a $10,000 “Loan,”
and alleges that the petitioners hold an aggregate of $1,736,196.38 in claims against the Debtor.
(Petition 3.) Because three petitioners holding at least $13,475 in noncontingent claims that are
not subject to bona fide dispute are entitled to an order for relief under 11 U.S.C. § 303(b)(1), the
petition sets forth facts that show a plausible claim for relief. In particular, the allegation that Al
Hart authorized the petition is a well-pled fact that the court must accept as true.
In support of his Second Motion to Dismiss, the Debtor’s motion purports to quote from
a transcript of a deposition of Al Hart. The Petitioners have offered evidence and affidavits in
rebuttal. The court need not consider, however, these materials, which fall outside the pleadings,
because, even if the court were to accept, without deciding, the truth of the Debtor’s assertion
that Al Hart did not authorize a petition against the Debtor, that fact, alone does not require
dismissal. The Debtor has set forth no facts that invalidate the other two creditors who
authorized the petition. The total number of claim holders who are qualified under 11 U.S.C. §
303(b) has not been established. Thus, under § 303(b)(2), the petitioners, even in the absence of
one of them, may still show that the Debtor has fewer than 12 qualified creditors. The Debtor’s
motion reveals no fact that makes the petitioners’ case under § 303(b)(2) implausible.
III. CONCLUSION
Because the court finds that OVA’s failure to adequately prepare its Rule 30(b)(6)
designee for his deposition is substantially justified, the court will deny the Debtor’s request for
sanctions under Rule 37(d). Further, because the Debtor has not shown that the petition fails to
state a claim for which relief can be granted, the court will deny the Debtor’s motion to dismiss.
Pursuant to Rule 7058, the court will enter a separate order consistent with this
memorandum opinion.
5
Case 5:09-bk-00914 Doc 89 Filed 05/28/10 Entered 05/28/10 13:42:03 Desc Main
Document Page 5 of 5