Opinion
6:24-bk-03174-GER
10-24-2024
In re Timothy J. McBee, Debtor.
ORDER GRANTING MOTION FOR RELIEF FROM STAY
Grace E. Robson Judge.
THIS CASE came before the Court on October 3, 2024 at 10:30 a.m. (the "Hearing") upon the Motion for Relief from Stay (the "Motion") (Doc. No. 12) filed by Damian Rivera ("Movant"), the Response (Doc. No. 16) filed by Timothy J. McBee ("Debtor"), the Reply (Doc. No. 30) filed by Movant, and the Supplemental Authority (Doc. No. 37) filed by Debtor.
Response to Motion for Relief from Stay (the "Response").
Reply in Support of Motion for Relief from Stay (the "Reply").
Debtor, Timothy J. McBee's Notice of Filing Supplemental Authority in Support of Its Response to Motion for Relief from Stay (the "Supplemental Authority").
Debtor commenced this case by filing a voluntary petition under Chapter 7 on June 25, 2024 (the "Petition Date"). According to Debtor's schedules, Debtor is the 100% owner of an entity called Charleston Roots Management dba CRM Construction Management ("CRM"). Prior to the Petition Date, CRM entered into a contract with Movant for the construction of a residential home (the "Contract"). Debtor holds a license as a Certified Building Contractor.
Doc. No. 1 at 13.
Doc. No. 12, Ex. A.
The name on the license is "Tim McBee" with a dba name of "CRM Construction Management." Debtor's license number is provided in the Motion and the Court was able to verify the license on the Florida Department of Business & Professional Regulation's website. See Fed.R.Evid. 201 (recognizing that a court may take judicial notice on its own or upon a party's request at any stage of a proceeding of a fact that is not subject to reasonable dispute because it can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned).
Debtor, solely in his capacity as president of CRM, executed the Contract with a face value of $597,808.43. According to Movant, he made payments to CRM for construction pursuant to CRM's terms and requests; however, Movant subsequently sent notices of default to CRM on March 28, 2024 and May 30, 2024 for CRM's failure to perform any work on the subject property for thirty days. Movant states that while Debtor and CRM executed affidavits claiming that "all charges or bills for labor or services performed or materials furnished have been paid" and that no liens or notice of intention to claim liens were outstanding between March 1, 2023 and April 17, 2024, these claims were not true as Movant was forced to satisfy a claim of lien, dated October 5, 2023, filed by CRM's subcontractor and he is aware of additional subcontractors that have not been paid by CRM or Debtor. Movant demanded that CRM resume work on the subject property and compensate him for satisfying the lien and then, on July 9, 2024, he sent a Notice of Termination to CRM due to failure to resume construction.
Movant seeks relief from the automatic stay to obtain judgment against Debtor and CRM and then pursue recovery of such judgment from the Florida Homeowners' Construction Recovery Fund established by Chapter 489 of the Florida Statutes (the "Fund"). Debtor argues Movant does not have a pending lawsuit, has made erroneous allegations without documentation and has not included a dollar amount of alleged damages. Debtor argues that lifting the stay would impose a hardship on Debtor because he would have to pay another attorney to represent him in a state court case and leaving the stay in place would not impose a hardship on Movant. Debtor argues that an order denying the Motion is as useful as a judgment for purposes of seeking recovery from the Fund. Debtor also makes an argument that he is not an indispensable party to any lawsuit that might be brought by Movant against CRM in his effort to recover from the Fund.
"Florida homeowners who contract for construction or home improvements, but are wronged by licensed contractors, can recover some of their losses from the recovery fund in certain circumstances." The purpose behind the Fund is:
DeMaria v. Constr. Indus. Licensing Bd., No. 1D20-2306, 2023 WL 2594105, at *1 (Fla. 1st DCA Mar. 22, 2023).
to compensate an aggrieved claimant who contracted for the construction or improvement of the homeowner's residence located within this state and who has obtained a final judgment in a court of competent jurisdiction, was awarded restitution by the Construction Industry Licensing Board, or received an award in arbitration against a licensee on grounds of financial mismanagement or misconduct, abandoning a construction project, or making a false statement with respect to a project.
"The Legislature makes perfectly clear that a key criterion for recovery from the fund is that the amount of the claimant's damages has already been reduced to a civil judgment, arbitration award, or restitution order." The filing of a bankruptcy petition by a licensee does not automatically relieve claimants from the obligation to obtain a final judgment against a licensee. Rather, where a licensee files a bankruptcy petition, the party alleging wrongful conduct must seek "to have assets involving the transaction that gave rise to the claim removed from the bankruptcy proceedings so that the matter might be heard in a court of competent jurisdiction."
DeMaria, 2023 WL 2594105, at *2 (citing Fla. Stat. § 489.141(1)(a), (d)).
See White v. Weatherford (In re Abrass), 268 B.R. 665, 686 (Bankr. M.D. Fla. 2001) (addressing the Florida Real Estate Recovery Fund). The Court notes that the operative language for eligibility to the Homeowners' Construction Recovery Fund and the Real Estate Recovery Fund is identical.
The Court finds that there are no assets to remove from this bankruptcy case. The asset at issue is money paid to CRM, which is not property of Debtor's bankruptcy estate, and for which this Court does not have the ability to set aside for the benefit of Movant. Furthermore, creditors are not receiving any distribution from Debtor's bankruptcy estate as reflected on the Trustee's report of no distribution filed on September 30, 2024.
At this time, Movant has not filed an adversary proceeding seeking to except the claim from discharge. Movant has, however, filed a Motion to Extend Deadline to File a Motion to Dismiss Case and to File a Complaint Pursuant to 11 U.S.C. §§ 523 and 727 (Doc. No. 31); the Court has not yet ruled upon the motion.
"The automatic stay can be lifted if an interested party demonstrates 'cause.' Cause is not defined in the Bankruptcy Code. Therefore, courts must determine 'cause' by examining the totality of the circumstances in each particular case."
In re Abrass, 268 B.R. at 687 (citations omitted) (first citing 11 U.S.C. § 362(d)(1); and then citing Egwineke v. Robertson (In re Robertson), 244 B.R. 880, 882 (Bankr. N.D.Ga. 2000)).
In this case, cause exists to lift the automatic stay. Movant will not recover any property or receive any distribution from this bankruptcy case. The Fund is designed to reimburse aggrieved parties, such as Movant, who contracted for the construction or improvement of his residence and the licensee abandoned the construction project. Arguably, Movant can only pursue recovery from the Fund if the stay is lifted. Therefore, the Court, having considered the Motion and the positions of interested parties, finds it appropriate to grant Movant relief from the automatic stay for the limited purpose of taking the necessary steps to seek payment from the Fund. Accordingly, it is
Fla. Stat. § 489.1401(2). The Court is not making any finding that Movant is entitled to reimbursement from the Fund.
See In re Abrass, 268 B.R. at 688.
ORDERED:
1. The Motion (Doc. No. 12) is GRANTED as set forth herein.
2. Movant may seek payment from the Florida Homeowners' Construction Recovery Fund; however, no recovery may be sought against Debtor, Debtor's property, or the bankruptcy estate.
3. To the extent necessary, Movant may proceed against Debtor in the state court for the limited purpose of obtaining a judgment so that Movant may seek payment from the Florida Homeowners' Construction Recovery Fund; provided, however, that any judgment obtained against Debtor shall not be collectible from Debtor's property or the bankruptcy estate. Further, any judgment against Debtor shall not be recorded by Movant and Movant shall request that the state court not record any judgment against Debtor.
4. The relief granted herein is without prejudice to any defenses that Debtor may have in proceedings before the applicable state court or governmental unit, including discharge of the debt.
5. Movant's request to waive the 14-day stay period pursuant to Federal Rule of Bankruptcy Procedure 4001(a)(3) is GRANTED.
Attorney Andrew S. Ballentine is directed to serve a copy of this Order on interested parties who do not receive service by CM/ECF and file a proof of service within three days of entry of this Order.
ORDERED.