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Rainsford v. Apex Bank

United States District Court, D. South Carolina, Anderson/Greenwood Division

August 3, 2017

BETTIS C. RAINSFORD, Appellant,
v.
APEX BANK, Appellee.

          MEMORANDUM OPINION AND ORDER REVERSING THE DECISION OF THE BANKRUPTCY COURT AND REMANDING FOR FURTHER PROCEEDINGS

          MARY GEIGER LEWIS UNITED STATE DISTRICT JUDGE

         I. INTRODUCTION

         This is a bankruptcy appeal. The Court reviews this appeal pursuant to 28 U.S.C. § 158(a)(1) and Rule 8001(a) of the Federal Rules of Bankruptcy Procedure. Having carefully considered the briefs, the record, and the applicable law, it is the judgment of the Court the decision by the Bankruptcy Court will be reversed and the matter will be remanded for further proceedings.

         II. FACTUAL AND PROCEDURAL HISTORY

         The Court takes the facts for purposes of this appeal from the order of the highly esteemed Bankruptcy Court granting Appellee Apex Bank's (Apex) motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure and dismissing the amended complaint with prejudice (Dismissal Order). The Bankruptcy Court drew the facts from Appellant Bettis C. Rainsford's (Rainsford) amended complaint. The facts are as follows:

August 18, 2015 - Gup's Hill Plantation, LLC's chapter 11 bankruptcy case was filed. Rainsford is the sole member of the debtor.
Summer 2015 - Rainsford was approached by Kevin Molony, an attorney who represented himself to Rainsford as an attorney for Apex. Molony was attempting to obtain information about two of Rainsford's former business partners in connection with Apex's attempts to collect unrelated debts owed by those individuals to Apex.
Early October 2015 - Rainsford again met with Molony. During that meeting, Molony advised Rainsford that Apex was considering the purchase of the judgment at issue here, and intended to pursue collection against Rainsford's former business partner. Rainsford raised the issue he was also obligated on that judgment. Rainsford and Molony discussed the possibility of Apex agreeing to forbear from pursuing Rainsford and his companies if that judgment was acquired, in exchange for Rainsford providing information to Apex regarding his former business partner's assets and executing deeds in lieu of foreclosure to Apex on two lots owned by one of Rainsford's companies and subject to a mortgage lien held by Apex. Rainsford provided information regarding his former business partner's assets to Molony during this conversation. Molony suggested that Rainsford draft documents to memorialize these discussions for execution by an officer of Apex.
October 7, 2015 - Rainsford sent an email to Molony providing a draft settlement agreement and proposed deed in lieu of foreclosure. Molony responded on the same date, requesting a change to the documents. He stated, “If you are satisfied with adding that language, I'll get it to the bank and try to have this done by tomorrow. . . . [T]hat sentence would allow us to knock this out in my opinion.”
Mid-October 2015 - Rainsford made the requested change to the documents and sent them back to Molony. Rainsford followed up with Molony on several occasions, and in each conversation Molony stated the executed documents would soon be returned. Rainsford alleges Molony repeatedly advised he had authority to bind Apex to their agreement.
October 28, 2015 - Molony advised Rainsford “the bank's CEO has become involved and that he's in charge now.” The agreement and the deed in lieu of foreclosure were never signed by Apex.
October 29, 2015 - Apex completed the acquisition of the judgment at issue from SunTrust Bank.
May 10, 2016 - Apex filed its proof of claim in Gup's Hill Plantation, LLC's bankruptcy case. Apex asserts a claim in the amount of $1, 439, 286.39, based on the SunTrust judgment against Rainsford and his former business partner. The judgment attached to real property that Rainsford later transferred to Gup's Hill Plantation, LLC.
May 31, 2016 - Rainsford commenced the underlying action in the Edgefield County Court of Common Pleas, asserting causes of action for breach of contract and ...

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