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Pasley v. Biggs (In re Pasley)

Name
IN RE: Jeffrey W. PASLEY, Debtor(s) Jeffrey W. Pasley, Plaintiff v. Gary Franklin Biggs and Judith A. Rosenberg and Michael R. Gosnell and Weber & Rose Professional Service Corporation, Defendants
Attorney(s)
John W. Bauman, Louisville, KY, for Plaintiff., Michael R. Gosnell, Louisville, KY, for Defendant., Alan C. Stout, United States Bankruptcy Judge This adversary proceeding came before the Court for an evidentiary hearing on December 4, 2018, on the Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6) (the "Motion") filed by the Defendants, Gary Franklin Biggs, Judith A. Rosenberg, Michael R. Gosnell, and Weber & Rose, Professional Service Corporation (hereinafter collectively referred to as the "Defendants"). The Plaintiff, Jeffrey W. Pasley, appeared pro se . The Defendants also appeared, and were represented by counsel. Upon consideration of the Motion, the response filed by the Plaintiff, the evidence presented at the evidentiary hearing, and the post hearing briefs, the Court will grant the Motion in part., Beginning in 2004, the Defendant Gary Biggs ("Biggs") and the Plaintiff were associates engaged in transactions involving real estate and investment contracting. Numerous loans were made by Biggs to the Plaintiff and to corporate entities controlled by the Plaintiff. The first loan, dated June 7, 2004, was entered into by Biggs and J P Properties, LLC, a Kentucky Limited Liability Company, by Jeffrey W. Pasley, Member and Jeffrey W. Pasley, individually. With this loan and mortgage, the Plaintiff signed a Residency Certification stating that the real property collateral for the loan was not his primary residence., The same parties from the second transaction entered into a third transaction, dated March 4, 2005. The collateral for this loan consisted on equipment for the operation of a laundry (washers, dryers, change machine, laundry carts, water heater, and other items)., Due to the threat of foreclosure, Plaintiff filed for Chapter 7 Bankruptcy protection, on December 19, 2016. That bankruptcy case is still ongoing., On the same date of the filing of the complaint, December 13, 2017, the Clerk of Court issued a Summons and Scheduling Order. On January 8, 2018, the Plaintiff filed a Certificate of Service indicating that the Defendants were served with the Summons and Scheduling Order on December 26, 2017. The date of service, December 26, 2017, was thirteen (13) days after the issuance of the Summons and Scheduling Order, and six (6) days after the time allowed for service in Fed. R. Bankr. P. 7004(e)., On January 20, 2018, the Defendants filed a Motion to Quash Summons, arguing that the Plaintiff did not timely serve the summons and complaint as required by Fed. R. Bankr. P. 7004(e). On January 30, 2018, the Court entered an order granting the Motion to Quash, and further ordered that the Clerk of Court issue a new summons for service by the Plaintiff. A new summons was issued on January 30, 2018, and served upon the Defendants on January 31, 2018., Defendants did not answer, but instead filed the Motion currently before the Court. In the Motion, the Defendants sought dismissal pursuant to Fed.R. Civ. P. 12(b)(1) and (6). In their Motion, the Defendants asserted three separate grounds for dismissal. First, the Defendants argued that the Court lacked subject matter jurisdiction because these claims belonged to the Chapter 7 Trustee rather than to the Plaintiff. Second, the Defendants argued that the Plaintiff's claims failed to state any claim against the Defendants. Specifically, the Defendants argue that "all the claims involved in the within proceeding filed by [Plaintiff] have a one year statute of limitations." Finally, the Defendants also argue the claim based upon the FDCPA is not available to the Plaintiff because the debts involved were not consumer related., A motion to dismiss under Fed. R. Bankr. P. 12(b)(1) challenges the court's subject matter jurisdiction. "A Rule 12(b)(1) motion can either attack the claim of jurisdiction on its face, in which case all allegations of the plaintiff must be considered as true, or it can attack the factual basis for jurisdiction, in which case the trial court must weigh the evidence and the plaintiff bears the burden of proving that jurisdiction exits." DLX, Inc. v. Kentucky , 381 F.3d 511, 516 (6th Cir.2004), citing, RMI Titanium Co. v. Westinghouse Elec. Corp. , 78 F.3d 1125, 1133-35 (6th Cir.1996)., As noted above, a motion to dismiss pursuant to Fed. R. Bankr. P. 12(b)(1) for lack of subject matter jurisdiction may refer to the evidence without converting the motion into one for summary judgment. League of Women Voters v. Brunner , 548 F.3d 463, 475, fn. 15 (6th Cir.2008) (internal citation omitted). In addition, on a Fed. R. Bankr. P. 12(b)(1) motion, the court is empowered to resolve factual disputes. Ernst v. Rising , 427 F.3d 351, 372 (6th Cir.2005), citing Rogers v. Stratton Indus., Inc. , 798 F.2d 913, 915 (6th Cir.1986) ("[W]here subject matter jurisdiction is challenged under Rule 12(b)(1), as it was here, the plaintiff has the burden of proving jurisdiction in order to survive the motion. Perhaps even more importantly, when a Rule 12(b)(6) motion is converted to a Rule 56 motion for summary judgment, the court, upon finding genuine issues as to material facts, must deny the motion; whereas on a Rule 12(b)(1) challenge to subject matter jurisdiction, the court is empowered to resolve factual disputes.")., The first ground for dismissal cited by the Defendants was that the Plaintiff lacked standing to bring these claims. At the evidentiary hearing, the Defendants acknowledged that this was no longer a viable argument in light of the fact that the Chapter 7 Trustee had abandoned all of these claims. With the abandonment, the claims reverted back to the Plaintiff, thereby conferring standing back to the Plaintiff to bring these claims.

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