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In re Lentz

United States District Court, S.D. Mississippi, Southern Division

July 24, 2015

IN RE HERMAN L. FAIRLEY Debtor
v.
MORGAN DREXEN, INC.; WALTER J. LEDDA; and TAMI L. MUNSCH DEFENDANTS KIMBERLY R. LENTZ, as Trustee for the Estate of Herman L. Fairley PLAINTIFF BANKRUPTCY NO. 13-52526-KMS ADVERSARY. PRO. NO. 14-05006-KMS

ORDER ADOPTING PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT AND AFFIRMING GRANT OF SUMMARY JUDGMENT BY THE UNITED STATES BANKRUPTCY COURT

LOUIS GUIROLA, JR. CHIEF U.S. DISTRICT JUDGE

BEFORE THE COURT is the [1-2] Proposed Findings of Fact and Conclusions of Law in Support of Defendants’ Motion for Summary Judgment by the United States Bankruptcy Court for the Southern District of Mississippi, which were entered in the above-referenced adversary proceeding on March 31, 2015. The adversary proceeding concerns the legal representation of Herman L. Fairley, who filed for bankruptcy in 2013. Plaintiff Kimberly R. Lentz, as Chapter 7 Trustee for the Estate of Mr. Fairley, objected to the Findings of Fact and Conclusions of Law pursuant to Federal Rule of Bankruptcy Procedure 9033. Specifically, Lentz argues that the bankruptcy judge erred in granting Defendant Tami L. Munsch’s Motion for Summary Judgment as to Plaintiff’s “claim for breach of fiduciary duty and related discovery.” (Pl’s. Obj. 1, ECF No. 1-4).

Having conducted the required de novo review, the Court is of the opinion that there are no genuine issues of material fact with respect to Plaintiff’s breach of fiduciary duty claim against Munsch. Accordingly, the Court adopts the Findings of Fact and Conclusion of Law entered by the bankruptcy judge and affirms the grant of summary judgment in favor of all Defendants.

Background

On February 3, 2014, Plaintiff, in her capacity as Chapter 7 Trustee for the Estate of Herman L. Fairley, brought an adversary proceeding against Defendants in the United States Bankruptcy Court for the Southern District of Mississippi. Plaintiff claims that Defendants “collectively operate a debt relief/legal services scheme wherein they prey on desperate consumers despite their duty to serve these consumers/clients.” (Compl. 3 (¶18), Lentz v. Morgan Drexen, Inc. et al., No. 14-05006-KMS (Bankr. S.D.Miss. Feb. 3, 2014), ECF No. 1). According to Plaintiff, prior to filing for bankruptcy, Defendants promised to provide certain debt relief services to Fairley in exchange for monthly payments, but failed to do so. Plaintiff’s Complaint alleged claims for turnover of estate property accounting, bankruptcy claims under 11 U.S.C. §§ 329 and 526, and claims pursuant to Mississippi state law for breach of fiduciary duty and unjust enrichment.

On December 1, 2014, Defendants moved for summary judgment, including as to the state law claims. On March 31, 2015, the bankruptcy judge entered Proposed Findings of Fact and Conclusions of Law recommending to this Court that summary judgment be granted in favor of Defendants on the state law claims. On April 10, 2015, Plaintiff filed her Objections to the Findings of Fact and Conclusions of Law. Plaintiff does not object to the bankruptcy judge’s factual findings or challenge the grant of summary judgment in favor of all Defendants on her unjust enrichment claim or in favor of Defendants Morgan Drexen, Inc. and Walter J. Ledda on the breach of fiduciary duty claim. The only portion of the Findings of Fact and Conclusions of Law with which she takes issue is the bankruptcy judge’s conclusion that there was no genuine issue of material fact with respect to the claim for breach of fiduciary duty and related discovery against Munsch.

The Legal Standard

This Court reviews proposed findings of fact and conclusions of law by a bankruptcy judge de novo with respect to “any portion of the bankruptcy judge’s findings of fact or conclusions of law to which specific written objection has been made . . . .” Fed.R.Bankr.P. 9033. In doing so, the Court “may accept, reject, or modify the proposed findings of fact or conclusions of law, receive further evidence, or recommit the matter to the bankruptcy judge with instructions.” Id.

In conducting its de novo review, the Court applies the summary judgment standard of Federal Rule of Civil Procedure 56, made applicable to bankruptcy adversary proceedings through Federal Rule of Bankruptcy Procedure 7056. A motion for summary judgment shall be granted “if the movant shows 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). In reviewing a motion for summary judgment, the Court views the evidence in the light most favorable to the non- movant. Abarca v. Metro. Transit Auth., 404 F.3d 938, 940 (5th Cir. 2005). The movant bears the initial burden of identifying those portions of the pleadings and discovery on file, together with any affidavits, which she believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). If the movant carries this burden, the burden shifts to the non-movant to show that summary judgment should not be granted. Id.

Discussion

The parties do not dispute that Munsch and Fairley were in an attorney-client relationship and that, as his attorney, Munsch owed Fairley fiduciary duties “of confidentiality and of candor and disclosure.” See Singleton v. Stegall, 580 So.2d 1242, 1245 (Miss. 1991). Plaintiff thus had to establish (1) the acts constituting a violation of Munsch’s fiduciary duty; (2) that the breach of fiduciary duty caused Fairley an injury; and (3) the fact and extent of the injury. See Crist v. Loyacono, 65 So.3d 837, 842-43 (Miss. 2011).

Plaintiff claims that “[a] genuine issue of material fact exists regarding a breach of fiduciary duty by Munsch, based upon, inter alia, Fairley’s testimony that he never spoke to Munsch and did not receive the advice and counseling promised in the [applicable legal services] contract despite paying her $1, 530.00.” (Pl’s. Obj. 1, ECF No. 1-4). Fairley’s testimony that he did not receive the advice and counseling promised him was based on the undisputed fact that he never personally spoke to Munsch, and it is on this fact that Plaintiff hinges her objection.

The bankruptcy judge found that, while Munsch never personally spoke with Fairley, “[i]t is undisputed that Morgan Drexen and attorney Samuel Tucker, [1] while operating under Munsch’s supervision, provided Fairley with all of the pre-petition services he was entitled to under his contract with Munsch prior to her termination of her services.” (Findings of Fact and Conclusions of Law 12, ECF No. 1-2).

Plaintiff objects to this finding based on the language of the applicable Bankruptcy Fee Agreement, ...


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