Arvest Bank v. Byrd et al, No. 2:2010cv02004 - Document 137 (W.D. Tenn. 2011)
Court Description: ORDER denying 124 Motion for Reconsideration. Signed by Judge Samuel H. Mays, Jr on 12/8/2011.
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THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION ARVEST BANK, Plaintiff, v. PRESTON E. BYRD, DONETTE L. BYRD, and PRESTON E. BYRD IRREVOCABLE INSURANCE TRUST, Defendants. ) ) ) ) ) ) ) ) ) ) ) No. 10-02004 ORDER DENYING MOTION TO RECONSIDER Before the Court is Defendants Preston E. Byrd (“Preston Byrd”) and Donette L. Byrd s (“Donette Byrd”) (collectively, the “Byrds”) November 30, 2011 Motion to Reconsider. (Defs. Preston E. Byrd and Donette L. Byrd s Mot. to Reconsider Order on Mot. for Summ. J. as to Conversion, Money Had and Received, Unjust Enrichment and Restitution, Fraud, Fraudulent Conveyance, and Fraud in the Inducement and Intentional Misrepresentation, ECF No. 124 (“Mot. to Reconsider”).) Defendants argue that Court s (ECF Order”)) Order on should Summary have Judgment dismissed No. Plaintiff 107 (“Summ. Arvest the J. Bank s (“Arvest”) claims of conversion, money had and received, unjust enrichment, restitution, fraud, fraudulent conveyance, fraud in the inducement, and intentional misrepresentation. (Id. 1.) For the following reasons, this Court DENIES the Defendants Motion. I. Background The relevant factual background for this case is set forth the Court s Summary Judgment Order. (Summ. J. Order 3-12.) Arvest Company, Holding contends that Company”) Horizon sought Holding funding for the LLC (“Horizon construction of multifamily low and moderate income housing to be known as the Lamar Crossing Project”). in Apartments project (the “Lamar Crossing The Lamar Crossing Project was funded by $8,100,000 Multifamily Housing Revenue Bonds issued by the Health, Educational, and Housing Facility Board of the City of Memphis. Preston Byrd served as the agent and chief manager for Horizon Holding Company and was an undisclosed owner. Arvest contends that Preston Byrd defrauded Arvest by using its funds for his personal benefit instead of for the construction of the Lamar Crossing Project. Arvest filed a complaint against the Byrds on January 5, 2010. (Compl., ECF No. 1.) Arvest filed an amended complaint on April 1, 2010 (Am. Compl., ECF No. 11), and a second amended complaint on June 3, 2010. (Second Am. Compl., ECF No. 24.) Arvest contends that the Byrds are liable for (1) conversion, (2) money had and received, unjust enrichment, and restitution, (3) fraud, (4) fraudulent conveyance, and (5) common law fraud 2 in the inducement and intentional misrepresentation. Second Am. Compl. ¶¶ 34-45, 49-73.) On August 26, 2011, the Court denied the Byrds Motion for Summary Judgment. Order.) The Byrds now move for (See reconsideration. (Summ. J. (Mot. to Reconsider.) II. Jurisdiction and Choice of Law Arvest Bank is an Arkansas corporation with its principal place of citizens. 28.) business in Arkansas.1 The Byrds are Tennessee (Defs. Ans. to Second Am. Compl. ¶¶ 3-4, ECF No. The trustee of the Byrd Trustee is Preston E. Byrd, a resident citizen of the State of Tennessee. ¶ 5, ECF No. 24.) (Second Am. Compl. “[F]or diversity purposes a trust is a citizen of whatever state the trustee is a citizen of.” May Dep t Stores Co. v. Fed. Ins. Co., 305 F.3d 597, 599 (7th Cir. 2002). Arvest demands compensatory and punitive damages “in an amount not to exceed $15,000,000.00.” (Second Am. Compl. 13.) That demand satisfies the amount-in-controversy requirement. U.S.C. § 1332(a)(1). Arvest s claims. 28 This Court has diversity jurisdiction over 28 U.S.C. § 1332(a). The Court applied Tennessee law in its Summary Judgment Order, and no party contests that application. (Summ. J. Order 20-24.) 1 The Court took judicial notice of Arvest s status as an Arkansas corporation with its principal place of business in Arkansas in its Summary Judgment Order. (Summ. J. Order 15.) 3 III. Reconsideration Under Federal Rule of Civil Procedure 54(b), a court may revise any order before it issues an entry of judgment adjudicating all of the claims and all the parties rights and liabilities. Fed. R. Civ. P. 54(b); Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F. App x 949, 959 (6th Cir. 2004) (“District courts have authority both under common law and Rule 54(b) to reconsider interlocutory orders and to reopen any part of a case before entry of final judgment.” (citation omitted)). “Rule 54(b), however, does not expressly provide for . . . motions by parties and does not prescribe any standards or bases for revisions of prior decisions.” Lumpkin v. Farmers Grp., Inc., No. 05-2868 Ma/V, 2007 WL 6996777, at *3 (W.D. Tenn. July 6, 2007) (citation and internal quotation marks omitted). Courts generally revise interlocutory orders only “whe[re] there is 1) an intervening change of controlling law, 2) new evidence available, or 3) a need to correct a clear error or prevent manifest injustice.” That is the standard used to consider motions to amend or alter judgment filed under Federal Rule of Civil Procedure 59(e). Compare Louisville Jefferson Cnty. Metro Govt. v. Hotels.com, L.P., 590 F.3d 381, 389 (6th Cir. 2009) with ACLU of Ky. v. McCreary Cnty., 607 F.3d 439, 450 (6th Cir. 2009). “Motions „may not be used to relitigate old matters, or to raise arguments or present evidence that could have been 4 raised prior to the entry to judgment. ” In re Regions Morgan Keegan Secs., Derivative, and ERISA Litig., No. 07-2784, 2010 U.S. Dist. LEXIS 137853, at *1 (W.D. Tenn. Dec. 30, 2010) (quoting 11 Charles Alan Wright et al., Federal Practice and Procedure § 2810.1 (2d ed. 1995)). IV. Analysis The Byrds move the claims of Arvest Bank s unjust enrichment, fraud in the Court to reconsider conversion, restitution, inducement, and money fraud, its had and fraudulent intentional rulings on received, conveyance, misrepresentation. (Mot. to Reconsider 1.) A. Arvest’s Conversion Claim “Conversion Thompson, (Tenn. No. Ct. plaintiff is intentional E2010-00160-COA-R3-CV, App. must an Dec. show 29, the 2010). tort.” 2010 “To following: (1) Greenbank WL 5549231, prove the v. at *3 conversion, appropriation a of another s property to one s own use and benefit, (2) by the intentional exercise of dominion over it, (3) in defiance of the true owner s rights.” Greenbank, 2010 WL 5549231, at *3 (citing H&M Enters., Inc. v. Murray, No. M1999-02073-COA-R3-CV, 2002 WL 598556, at *3 (Tenn. Ct. App. Apr. 17, 2002); accord Thompson v. Thompson, No. W2008-00489-COA-R3-CV, (Tenn. Ct. App. Mar. 12, 2009). 2009 WL 637289, at *14 The intention necessary to establish conversion “does not necessarily have to be a matter 5 of conscious wrongdoing, but can merely be an exercise of dominion or control over the property in such a way that would be inconsistent with the owner s rights and which results in injury to him.” Thompson, 2009 WL 637289, at *14 (quoting Gen. Electric Credit Corp. of Tenn. v. Kelly & Dearing Aviation, 765 S.W.2d 750, 753 (Tenn. Ct. App. 1988)). The Byrds argue that “Arvest has failed to provide any evidence that establishes any of the requirements necessary to make a claim for conversion against the Defendants” because “Arvest held no control, dominion, or ownership over any of the funds that they allege were converted.” (Mot. to Reconsider 2.) The Byrds raised the same argument in their original motion for Summary Judgment, where they contended that “the property [at issue] was purchased with funds earned by [Horizon Holding Company] prior to the Lamar Crossing development . . . . Arvest has never had entitlement nor have they established that they could ever have any entitlement.” (Byrds Mem 19.) The Court addressed this argument in its Summary Judgment Order, where it observed that “Arvest argues that Preston Byrd converted its money by transferring money Lamar Crossing Apartments, LP erroneously received from the Bank of New York Trust Company to Horizon Holding and then to himself and Donette Bird.” (Order for Summ. J. 29.) Arvest contends that Byrd transferred funds to a bank account that he controlled and then 6 drew on for his own use. (Pl. Arvest Bank s Separate Statement of Material Facts in Supp. of Mot. for Summ. J. Against Def. Preston E. Byrd for Conversion and Fraud in the Inducement, in Opp n to Defs. Mot. for Summ. J. and in Supp. of Mot. for Summ. J. on Def. Byrd s Countercl. ¶¶ 23-24, ECF No. 41-2 (“Arvest s Statement of Facts”).) Arvest s evidence is sufficient for a reasonable jury to find that Preston Byrd converted funds. The Byrds have not offered new evidence, shown that there has been a change in controlling manifest injustice. law, or shown that there has been a Their argument is not well taken. B. Arvest’s Money Had and Received, Unjust Enrichment, and Restitution Claims The Byrds argue that the Court erred in failing to dismiss Arvest s claims for money had and received, unjust enrichment, and restitution because “Arvest is not the true owner of the property that [Arvest] allege[s] Defendants.” (Mot. to Reconsider 3.) Arvest not “has provided any essentially unjust the enrichment same contractual actions.” cause and of claim are: by the that establishes the (Id. 4.) money had action, and being received both are quasi- Bennett v. Visa U.S.A. Inc., 198 S.W.3d 747, 755 (Tenn. Ct. App. 2006). enrichment received The Byrds also argue that evidence Defendants ever received any benefit.” “Both was 1) „[a] 7 “The elements of an unjust benefit conferred upon the defendant by the plaintiff ; 2) „appreciation by the defendant of such benefit ; and 3) „acceptance of such benefit under such circumstances that it would be inequitable for him to retain the benefit without payment of the value thereof. ” LLC v. Eastman Chem. Co., 172 S.W.3d 512, Freeman Indus., 525 (Tenn. 2005) (quoting Paschall s, Inc. v. Dozier, 407 S.W.2d 150, 155 (Tenn. 1966)); accord Hood Land Trust v. Hastings, No. M2009-02625-COAR3-CV, 2010 WL 3928647, at *6 (Tenn. Ct. App. Oct. 5, 2010). The Court concluded that “Arvest has offered evidence that Preston Byrd and Donnette Byrd received money from Arvest and kept the money for themselves.” (Order for Summ. J. 45.) Arvest has provided evidence showing that Preston Byrd diverted money from the Bank of New York to Horizon Holding Company and then to himself. (Arvest s Statement of Facts ¶¶ 20-27.) Arvest has provided ample evidence in support of its contention, including bank records detailing Preston Byrd s transactions. (See Exs. J-M, ECF Nos. 41-13 to 41-16 & Exs. T-V, ECF Nos. 4123 to 41-25.) The Byrds repeat the arguments they raised in their Motion for Summary Judgment. 26.) (See Mot. for Summ. J. 25- Those arguments are unavailing. C. Arvest’s Claims for Fraud, Fraudulent Intentional Misrepresentation The Byrds argue that the Inducement, Court s decision not to and grant summary judgment on Arvest s fraud claims is erroneous because 8 in a related matter, Arvest Bank v. Byrd, No. 10-2007, 2011 U.S. Dist. LEXIS 72144, at *23-24 (W.D. Tenn. July 5, 2011), the Court did not grant summary judgment in favor of Arvest. The Byrds misconstrue the Court s Summary Judgment Order and the standard for summary judgment. granted only if “the movant shows Summary judgment is that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The party moving for summary judgment “bears the burden of clearly and convincingly establishing the nonexistence of any genuine [dispute] of material fact, and the evidence as well as all inferences drawn therefrom must be read favorable to the party opposing the motion.” in a light most Kochins v. Linden- Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir. 1986). Arvest Bank v. Byrd applied this standard when it ruled against Arvest s motion for summary judgment, concluding that “a reasonable jury could find that misrepresentation 72144, at *20. Byrd of did material not make an fact.” 2011 U.S. intentional Dist. LEXIS When the Byrds filed their motion for summary judgment here, they did so as the moving party, and so all reasonable inferences must be drawn against them. Kochins, 799 F.2d at 1133. In concluding that there was an issue of material fact, the Court relied on statements made 9 by Preston Byrd and his colleague Orson Sykes (“Sykes”), a co-owner of Horizon Holding Company, (Arvest s Statement of Facts ¶¶ 1-7) and the Membership Transfer Agreement (“Hutton”), the signed other by Sykes, co-owner. Byrd, (Ex. and Y, ECF James No. Hutton 41-28.) Arvest s evidence establishes a genuine issue of material fact about whether Preston Byrd fraudulently induced Arvest to invest in the Lamar Crossing Project. Summary judgment is inappropriate when there is a disputed issue of material fact. The Byrds argument is not well taken. D. Arvest’s Fraudulent Conveyance Claim The Byrds argue that Arvest is unable to bring a claim for fraudulent conveyance because “Arvest was not a creditor of the Defendants,” because Horizon Holding Company was not rendered insolvent by the transaction, and because “the transfer of the real property was made over two years filing a claim against the Defendants.” prior to Arvest ever (Mot. to Reconsider 8.) The Byrds raised these arguments in their original motion for summary judgment. „may not be used to (See Mot. for Summ. J. 19-21.) relitigate old matters, or “Motions to raise arguments or present evidence that could have been raised prior to the entry to judgment. ” In re Regions Morgan Keegan Secs., Derivative, and ERISA Litig., 2010 U.S. Dist. LEXIS 137853, at *1 (quoting 11 Charles Alan Wright et al., Federal Practice and Procedure § 2810.1 (2d ed. 1995)). 10 Arvest has provided ample evidence that it was the “primary lender and purchaser of the Lamar (Arvest s Statement of Facts ¶ 14.) the bonds. of the (Id.) Lamar Crossing project bonds.” Arvest is the sole owner of The bonds were intended to fund construction Crossing Project, but Arvest has introduced evidence showing that Preston Byrd used the project s money for his own ends. has (Avest s Statement of Facts ¶¶ 14-25.) established sufficient facts for a reasonable Arvest jury to conclude that it was a defrauded creditor. The Byrds argue that the transfer of property from Horizon Holding Company to the Byrds in December 2007 could not have been a fraudulent conveyance because it before Arvest brought suit against them. 20.) was made two years (Mot. to Reconsider They also argue that the transfer of two automobiles to them from Horizon Holding Company, a 2008 S550 Mercedes and a 2007 GL4 Mercdes was made in March 2008, “almost two (2) years prior to Arvest filing a claim against [Preston] Byrd.” 20.) (Id. The statute of limitations for a claim for fraudulent conveyance is four years. Tenn. Code. Ann. § 66-3-310. That the transfer took place two years before Arvest brought a claim does not bar that claim. The evidence Court to concluded support that its Arvest claim of had offered fraudulent sufficient conversion, including Preston Byrd s transfer of the automobiles to Donette 11 Byrd for no consideration fifteen days before a subcontractor stopped work for nonpayment. 42). Preston Byrd s (Arvest s Statement of Facts ¶ decision to transfer a house and automobiles to himself for little or no consideration was a sufficient basis for the Court to conclude that a reasonable jury could find there had been a fraudulent conveyance. A fraudulent conveyance need not leave a party insolvent immediately after the transfer. Tennessee law does not require a party to be insolvent at the time of the conveyance; it is enough that a defendant was “engaged [in] or was about to engage in a business or transaction for which the remaining assets of the debtor were unreasonably small” or “[i]ntended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor s ability to pay as they became due.” Tenn. Code Ann. 66-3-305(a)(1)(2). The conveyance may be set aside so long as “it is made with the actual intent to hinder, Reynolds, delay, No. or defraud creditors.” W2006-01076-COA-R3-CV, 2007 In WL re Estate 2597623, at of *11 (Tenn. Ct. App. Sept. 11, 2007) (citation omitted). The Byrds reconsider. have offered no grounds the court to Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F. App x 949, 959 (6th Cir. 2004). V. for Conclusion 12 The Byrds cite no new law or facts. They have not shown there was a clear error or manifest injustice. offer new evidence. They do not They repeat arguments they raised in their motion for summary judgment, which the Court has considered and denied. For the foregoing reasons, the Byrds Motion Reconsider is DENIED. So ordered this 8th day of December, 2011. /s Samuel H. Mays, Jr. SAMUEL H. MAYS, JR. UNITED STATES DISTRICT JUDGE 13 to
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