Opinion
Case No 12-47626-705 Adv. Proc. No. 12-4241-705 Related to Doc. No. 1
06-19-2013
In re: Joey D. Dorman & Tracy R. Dorman, Debtors. Salma Ahmad, Plaintiff, v. Joey D. Dorman & Tracy R. Dorman, Defendants.
Chapter 7
MEMORANDUM OPINION
On September 10, 2012, the Plaintiff filed a Complaint [Docket No. 1] against the Debtor-Defendants (the "Defendants"), seeking a determination of exception to the discharge is proper under § 523(a) of title 11 of the United States Code (the "Bankruptcy Code"). On October 24, 2012, the Defendants filed an Answer [Docket No. 15]. On February 4, 2013, the Defendants filed an Amended Answer [Docket No. 33]. On May 1, 2013, the matter came for trial. Upon consideration of the evidence, arguments, and applicable law, the Court finds that the Plaintiff did not meet her burden under § 523(a) and holds that it is proper to render judgment in favor of the Defendants, as set forth herein.
Hereinafter, any reference to "section[s]" or "§[§]" refers to the indicated section(s) of the Bankruptcy Code.
I. FACTS
On June 2008, the Plaintiff and J&T Landscaping and Nursery, L.L.C. ("J&T"), which was owned and operated by the Defendants, entered into a contract (the "Contract"), pursuant to which J&T agreed to provide certain services to the Plaintiff, for which the Plaintiff agreed to pay more than $40,000.00. The Plaintiff alleges that, after performance was completed, she became aware of sub-standard performance and incurred damages (the "Debt"). The Plaintiff now argues that the Defendants are liable for the Debt because they are "indistinct" from J&T, and that she is entitled to a determination that the Debt is excepted from discharge pursuant to § 523(a)(2)(A), (a)(4), and (a)(6).
II. ANALYSIS
It is axiomatic that a debtor must, in fact, owe a debt in order for the creditor owed that debt to be entitled to a determination that such debt is excepted from discharge pursuant to § 523(a). Here, there is no legal basis upon which to find that the Defendants owe the Debt to the Plaintiff. J&T was the only party to the Contract with the Plaintiff. The checks issued for payment under the Contract were made payable to J&T. The lien waiver issued was signed in the name of J&T. No document indicates that the Defendants performed services in their personal capacities or were personally liable for J&T's performance under the Contract. The Plaintiff's theory that the Defendants and J&T are "indistinct" is unpersuasive. It is a well-established that individuals—even individuals who are the sole shareholders of a closely held corporation and who are the only agents of that corporation—are separate legal entities from the corporation. In signing and performing under the Contract, the Defendants acted in an agency capacity. They acted on behalf of J&T, not individually. If any breach of contract or other actionable act was committed, such act was committed by J&T through the Defendants, not by the Defendants.
There was no evidence that piercing of the corporate veil or other similar relief is proper. There was no evidence that the Plaintiffs acted outside the scope of their role as agents of J&T.
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III. CONCLUSION
Therefore, the Court FINDS that the Debt is not owed by the Defendants, and HOLDS that, because the Plaintiff has not established all elements of a cause of action under § 523(a), it is proper to enter judgment in favor of the Defendants. An Order of Judgment will be issued forthwith. DATED: June 19, 2013
St. Louis, Missouri 63102
mtc
______________________
CHARLES E. RENDLEN, III
U.S. Bankruptcy Judge
Copy Mailed To: Randall Gusdorf
Gusdorf Law Firm, LLC
225 S. Meramec
Suite 1220
Clayton, MO 63105
Michael A. Becker
Waltrip & Schmidt
8151 Clayton Road
Suite 200
Clayton, MO 63117