United States District Court, D. South Carolina, Florence Division
FOSTER O. MCDONALD, as Personal Representative of the Estate of Sidney L McDonald, deceased Plaintiff,
NIXON ENERGY SOLUTIONS; GREEN ENERGY SOLUTIONS, INC., ARBORONE ACA, Defendants. NIXON ENERGY SOLUTIONS, Cross-Claim Plaintiff,
ARBORONE, ACA, Cross-Claim Defendant.
Bryan Harwell United States District Judge
Defendant ArborOne, ACA (“ArborOne”) filed a
Motion for Judgment on the Pleadings or for Summary Judgment
on the cross-claims brought by Nixon Energy Solutions on
December 28, 2016. [ECF #113-1]. On January 11, 2017,
Plaintiff filed a response to and joinder in ArborOne's
Motion, explaining that both the fraudulent transfer and
intentional interference with contractual relations
cross-claims that are the subject of this motion are based
upon the same contentions by Nixon Energy Solutions in its
counterclaims against Plaintiff. [ECF #115]. Plaintiff
requested this Court render summary judgment in favor of
Plaintiff on Nixon Energy Solutions's counterclaims
against Plaintiff, as well. On January 23, 2017, Nixon Energy
Solutions (“Nixon”) filed its response in
opposition to Defendant's Motion. [ECF 117]. Defendant
filed its reply in support of its motion on January 30, 2017.
[ECF #120]. This Court has considered all of the pleadings
filed in this case, and this matter is now before the Court
for review[1" name="FN1" id=
brings this motion as one for judgment on the pleadings, or
in the alternative, for summary judgment. Under Rule 12 of
the Federal Rules of Civil Procedure, a party may move for
judgment on the pleadings after the pleadings are closed, but
early enough so as not to delay trial. Fed.R.Civ.P. 12(c). A
party may seek judgment in its favor on certain claims on the
ground that none of the claims, here the cross-claims, state
a claim upon which relief may be granted. Fed.R.Civ.P.
12(h)(2)(B). When ruling on a motion under Rule 12, the court
“must accept as true all of the factual allegations
contained in the complaint.” Erickson v.
Pardus, 1 U.S. 89');">551 U.S. 89, 94 (2007). In considering such a
motion, the factual allegations in a complaint are accepted
as true, and the plaintiff is afforded the benefit of all
reasonable inferences to be drawn from the allegations
contained within the complaint. Mylan Laboratories, Inc.
v. Matkari, 1130');">7 F.3d 1130, 1134 (4th Cir. 1993). In
considering motions made pursuant to Rule 12(c), Courts
follow a restrictive standard to avoid “hasty or
imprudent use” of the procedure. Fitzhenry v.
Independent Order of Foresters, No. 2:14-cv-3690, 2015
WL 3711287, at *1 (D.S.C. June 15, 2015).
judgment “shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.”
Fed.R.Civ.P. 56(c). The moving party has the burden of
proving that summary judgment is appropriate. Once the moving
party makes the showing, however, the opposing party must
respond to the motion with “specific facts showing
there is a genuine issue for trial.” Fed.R.Civ.P.
genuine issue of any material fact exists, summary judgment
is appropriate. Shealy v. Winston, 29 F.2d 1009');">929 F.2d 1009,
1011 (4th Cir. 1991). The facts and inferences to be drawn
from the evidence must be viewed in the light most favorable
to the non-moving party. Id. However, “the
mere existence of some alleged factual dispute between the
parties will not defeat an otherwise properly supported
motion for summary judgment; the requirement is that there be
no genuine issue of material fact.” Id.
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 247-48 (1986)).
case, Defendant “bears the initial burden of pointing
to the absence of a genuine issue of material fact.”
Temkin v. Frederick Cnty. Comm'rs, 2d 716');">845 F.2d 716,
718 (4th Cir. 1991) (citing Celotex Corp. v.
Catrett, 17');">477 U.S. 317, 322 (1986)). If Defendant carries
this burden, “the burden then shifts to the non-moving
party to come forward with fact sufficient to create a
triable issue of fact.” Id. at 718-19 (citing
Anderson, 477 U.S. at 247-48).
“once the moving party has met its burden, the
nonmoving party must come forward with some evidence beyond
the mere allegations contained in the pleadings to show there
is a genuine issue for trial.” Baber v. Hosp. Corp.
of Am., 2d 872');">977 F.2d 872, 874-75 (4th Cir. 1992). The
nonmoving party may not rely on beliefs, conjecture,
speculation, of conclusory allegations to defeat a motion for
summary judgment. See id; Doyle v. Sentry,
Inc., 1002');">877 F.Supp. 1002, 1005 (E.D. Va. 1995). Rather,
the nonmoving party is required to submit evidence of
specific facts by way of affidavits, depositions,
interrogatories, or admissions to demonstrate the existence
of a genuine and material factual issue for trial.
See Fed. R. Civ. P. 56(c), (e); Baber, 977
F.2d at 875 (citing Celotex, 477 U.S. at 324)). The
nonmovant's proof must meet “the substantive
evidentiary standard of proof that would apply at a trial on
the merits.” Mitchell v. Data Gen. Corp., 12
F.3d 1310, 1316 (4th Cir. 1993); DeLeon v. St. Joseph
Hosp., Inc., 1 F.2d 1229');">871 F.2d 1229, 1223 n.7 (4th Cir. 1989).
The parties have had the opportunity to conduct discovery in
this case. This Court will analyze this Motion under the
applicable standard for summary judgment.
Background and Procedural History
about December 17, 2010, ArborOne made a loan in the amount
of $300, 000.00 to provide necessary funds to James Lamar
Collins and Cynthia W. Collins to enable their business
associate, Green Energy Solutions, Inc. to commence work on
the construction of a biogas facility. Nixon was an entity
which furnished materials for the construction of the
facility pursuant to a contract with Green Energy Solutions,
Inc. [ECF #113-1, 2');">p. 2]. Nixon furnished said materials on
credit and on an unsecured basis, except to the extent of its
rights under South Carolina law to assert a mechanic's
lien. [ECF #113-1, 2');">p. 2]. Defendant states that Mr. and Mrs.
Collins represented to ArborOne that commencement of this
project would enable Green Energy Solutions, Inc.
(“GES”), to qualify for a grant from the U.S.
Department of the Treasury under Section 1603 of Division B
of the American Recovery and Reinvestment Act of 2009
(“Section 1603”). This loan was apparently
evidenced by a Nonrevolving Variable Rate Note, dated
December 17, 2010, in the principal amount of $300, 000.00,
payable to the order of ArborOne, and signed by Mr. and Mrs.
Collins (the “Initial ArborOne Note”). [ECF
#113-2, Ex. A]. GES guaranteed the payment of the Initial
ArborOne Note by signing a Continuing Guaranty, dated
December 17, 2010. [ECF #113-2, Ex. A, Declaration of Mr.
ArborOne states that it made additional loans for the
construction of the biogas facility at the request of Mr. and
Mrs. Collins and in reliance upon the Continuing Guaranty.
These additional loans were evidenced by new promissory
notes, modifications of earlier promissory notes, or new
notes that evidenced both new loans and a refinancing of
earlier loans. [ECF #113-2, Ex. A]. Then, on June 27, 2011,
Mr. and Mrs. Collins executed a Nonrevolving Variable Rate
Note in the principal amount of $2, 165, 000.00, with a final
maturity date of March 1, 2012 (the “ArborOne
Note”). Proceeds from this, and other, loans were used
to pay contractors, such as Nixon, who supplied materials for
the biogas facility. [ECF #113-1, 2');">p. 2].
also states that Mr. and Mrs. Collins and GES signed and
delivered a Security Agreement dated June 27, 2011 and
created in favor of ArborOne to induce ArborOne to make
available the loan amount of $2, 165, 000.00, which included
the additional $567, 037.70, for the construction of the
biogas facility. [ECF #113-2, Ex. A]. This document reflects
a security interest on behalf of ArborOne in all respective
“general intangibles” as defined by the South
Carolina Uniform Commercial Code (the “UCC”) as
revised and effective as of July 1, 2001, and “rights
to payment, now or hereafter owing, to the Debtor from
entitlement programs of every kind, both federal and
state.” This is ArborOne's basis for proving it has
a security interest in the Section 1603 Program grant funds
that are the subject of Nixon's cross claims. Nixon does
not allege that on June 27, 2011, the date of the execution
of the Security Agreement that GES was insolvent.
to ArborOne, on March 1, 2012, Mr. and Mrs. Collins and GES
became unable to pay ArborOne pursuant to the ArborOne Note.
Meanwhile, on April 25, 2013, Nixon filed a mechanic's
lien against the property. Thereafter, on or around May 14,
2013, ArborOne filed a UCC-1 financing statement with the
Secretary of State of Nevada, thereby
“perfecting” its existing Security Agreement.
[ECF #113-2, Ex. A].[2" name="FN2" id=
"FN2">2] Although ArborOne had a valid Security
Agreement on any payments due GES from federal programs, the
Security Agreement was not “perfected” until
after GES and Mr. and Mrs. Collins became unable to pay the
loan. GES completed its application for a grant under the
Section 1603 Program, and after using those proceeds to
satisfy the ArborOne Note, a balance was left owing on the
ArborOne Note in the amount of $112, 356.18. For its part,
Defendant Nixon asserts that GES failed to pay $79, 172.90
under its contract with Nixon to supply a generator for the
biogas facility. For this reason, Nixon filed a
mechanic's lien on April 25, 2013 against the property
and on June 5, 2013, filed a lis pendens and a lawsuit
seeking to foreclose on this lien. However, Mr. and Mrs.
Collins and GES's indebtedness to Nixon did not arise
until sometime after the execution of the Security Agreement.
does not dispute that Nixon was among the contractors and/or
subcontractors who provided labor and materials for the
biogas facility. However, ArborOne submits that it disbursed
to Nixon the amount of $692, 811.10 of the proceeds of the
loan, leaving behind an unpaid balance of $79, 192.90 (an
amount ArborOne does not dispute for purposes of this
Motion). Nixon is now seeking to collect as a creditor of
GES, by virtue of a cross-claim against ArborOne and
counterclaims against Plaintiff, to recover its unpaid
balance, on a theory of fraudulent conveyance and tortious
interference with contract. Nixon ...