James Alfred Rose, III

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
IN RE:
JAMES A. ROSE, III, 	Case No. 08-00625-8-JRL
Debtor.
____________________________________________________________________________
ORDER
This case is before the court on the trustee’s motion for turnover of property, sanctions
for violating stay, accounting, and to show cause for failing to turnover property, naming as
respondents Jamie Hunt, Traci Gunnell, and any other persons or entities in possession of the
property at issue. On October 1, 2008, the court conducted a hearing on these matters in
Wilmington, North Carolina.
On January 31, 2008, the debtor filed for protection under Chapter 11 of the Bankruptcy
Code. The debtor’s case was converted to Chapter 7 on April 21, 2008. The debtor is the sole
member of Eastern Coastal Investors, LLC (“Eastern Coastal”) which he formed on February 2,
2007. At the time of Eastern Coastal’s formation, the debtor’s primary occupation was to fix up
and sell real property. In practice, the debtor often transferred real property, equipment and
personal funds to Eastern Coastal in order to separate and shield these assets from any personal
SO ORDERED.
SIGNED this 02 day of October, 2008.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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1The debtor admits to these facts. The trustee has filed a pending adversary proceeding
to pierce the corporate veil of Eastern Coastal on the basis that Eastern Coastal is the debtor’s
alter ego and all property purportedly belonging to Eastern Coastal is property of the debtor and
the estate (AP # 08-00056-8-JRL).
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liability.1 In addition to Eastern Coastal, the debtor formed and operated a landscaping company
named Earth Movers Commercial Landscaping, LLC (“Earth Movers”). The debtor employed
Traci Gunnell to perform office work for Earth Movers. In furtherance of his landscaping
business, the debtor acquired various equipment, including a 1996 John Deere backhoe, a Mack
dump truck, a 2007 Hudson trailer, a Bobcat Track Loader, and other equipment for use in Earth
Movers projects. The debtor used personal funds to purchase this equipment but titled the
equipment to Eastern Coastal. The debtor acquired the backhoe by wiring $35,000 from an
Eastern Coastal bank account to the backhoe’s owner at the time, Jamie Hunt. The backhoe was
used in three landscaping jobs while in possession of the debtor. Subsequently, at some point in
February or March, 2008, the backhoe and other equipment disappeared. As of this filing the
debtor has been unsuccessful in locating his missing equipment.
The trustee asserts that Jamie Hunt and Traci Gunnell are unlawfully in possession of the
backhoe, the Mack dump truck, the 2007 Hudson trailer and other related equipment. The
trustee alleges that Mr. Hunt and Ms. Gunnell conspired to and successfully removed this
equipment from Wilmington, NC to Danville, VA in an effort to defraud the debtor and the
trustee of property of the estate. In addition, the trustee believes that Ms. Gunnell removed from
the debtor and deprived the trustee of books and records of the debtor and his business. As a
result, the trustee requests that Mr. Hunt and Ms. Gunnell turnover and provide an accounting of
the backhoe, the truck, the trailer and all other equipment and property owned by the debtor
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pursuant to 11 U.S.C. § 542.
Ms. Gunnell responds to the trustee’s allegations by admitting that she arranged the
transporting of the backhoe to Danville, Virginia, but she denies any wrongdoing. Instead, she
claims that the debtor agreed to lease the backhoe, rather than buy it, and Mr. Hunt is its rightful
owner. Ms. Gunnell also denies removing or possessing any accounting records related to the
debtor’s business.
The court is persuaded by the trustee’s argument and finds that the debtor is the lawful
owner of the backhoe. First, the amount paid to Mr. Hunt by the debtor is consistent with the
fair market value of similar equipment. The court finds it unlikely that the debtor paid market
value up front in return for a lease agreement. In addition, the debtor purchased all of his other
equipment related to the landscaping operations, suggesting a similar business plan for the
backhoe. Although the debtor cannot produce a bill of sale as to the backhoe, the evidence
suggests that this equipment belonged to the debtor and his company. Therefore, upon the filing
of this bankruptcy the equipment belonged to the trustee as property of the estate, and its
removal constituted a violation of the automatic stay.
Based on the foregoing, the court ALLOWS the trustee’s motion for turnover and
accounting. Jamie Hunt and Traci Gunnell have five days from the date of this order to turnover
and provide an accounting for the backhoe, Mack truck, trailer, and all other equipment and
property owned by the debtor that is or was ever in the possession, custody, or control of Mr.
Hunt or Ms. Gunnell. Through an agreement with the trustee, all property must be turned over to
Michael Gurkins with Country Boys Auction and Realty at 1211 W. 5th Street, Washington,
North Carolina 27889. To the extent that Mr. Hunt and Ms. Gunnell fail to turnover the debtor’s
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property by the close of business on October 7, 2008, the court ALLOWS the trustee’s motion
for sanctions for violating the automatic stay in the amount of $500 per day until the property is
turned over.
“END OF DOCUMENT”
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