United States District Court, M.D. Florida, Tampa Division
IN RE THOMAS SALVADOR MARTINO, Debtor.
THOMAS SALVADOR MARTINO, Appellee. SAVANNAH CAPITAL, LLC, Appellant, Bankr. No. 8:14-bk-13452-KRM Adversary No. 8:15-ap-418-KRM
VIRGINIA M. HERNANDEZ COVINGTON, JUDGE
appeal arises from a Chapter 7 bankruptcy and a related
adversary proceeding. Appellant Savannah Capital, LLC filed
its brief on January 20, 2017. (Doc. # 14). Appellee Thomas
Salvador Martino filed his responsive brief on March 7, 2017.
(Doc. # 20). The bankruptcy trustee joined in the
Appellee's brief. (Doc. # 21). Savannah filed its reply
brief on March 21, 2017.
Thomas Salvador Martino, the Debtor and defendant in the
bankruptcy and adversary proceedings below, was married to
Pam Martino, a stepchild of Robinson Callen. (Doc. # 8-63 at
¶¶ 1, 7-9). Pam Martino and her fifteen siblings
own Savannah, which has been managed by Callen since 2012.
(Id. at ¶ 8). Before him, Tanya Glaize, also a
child of Callen, managed Savannah. (Doc. # 8-51 at 3, ¶
2). Pam Martino and her siblings go by the moniker of the
“Callen Group.” (Doc. # 8-63 at ¶ 8).
unspecified point, the Callen Group agreed with the Debtor to
form a new corporation, DeVille Corp. (Id. at ¶
9). As part of this venture, it was agreed the Callen Group
would own fifty percent of DeVille via a separate corporate
entity and the Debtor and Pam Martino would own the other
fifty percent. (Id.). The Debtor was to have ongoing
control of DeVille. (Id.).
October of 2012, the Debtor, in his capacity as president of
DeVille, emailed Callen to request Savannah's consent for
DeVille to file Chapter 11 bankruptcy. (Doc. # 8-66 at ¶
4). The Debtor's email initiated a series of events that
culminated in August of 2014, when Savannah filed suit
against DeVille in state court for declaratory judgment and
for court-ordered inspection of DeVille's records. (Doc.
# 8-63 at ¶ 16; Doc. # 8-66). That state-court action
led to the entry of a judgment declaring that Savannah owned
fifty percent of DeVille. (Doc. # 14 at 18; Doc. # 20 at 10
the state-court action was pending, on November 14, 2014, the
Debtor filed his voluntary petition for Chapter 7 bankruptcy,
thereby initiating the underlying bankruptcy case. (Doc. #
8-6). Among his Schedules, the Debtor listed Savannah as a
creditor, noting the “[c]laim [was] for monies owed
and mismanagement.” (Doc. # 8-7 at 17). The amount of
the claim was listed as “[u]nknown” and the claim
itself was marked as contingent, unliquidated, and disputed.
Savannah filed a proof of claim and a complaint objecting to
the dischargeability of debt, which initiated the underlying
adversary proceeding. (Doc. ## 8-63; 8-19 at 43-49). The
bankruptcy court deemed the proof of claim and the complaint
to be timely filed, and entered orders documenting the same.
(Doc. ## 8-26; 8-28); see also (Doc. # 8-27). The
complaint in the adversary proceeding brought suit against
the Debtor and DeVille. (Doc. # 8-63). Through it, Savannah
asserted three counts: objection to dischargeability of debt,
judicial dissolution of DeVille, and accounting.
(Id.). The Debtor moved to dismiss on the grounds
that Savannah lacked standing (Doc. # 8-70), and DeVille
moved to be dismissed on the grounds that the bankruptcy
court lacked subject-matter jurisdiction (Doc. # 8-71).
bankruptcy court held a hearing on June 11, 2015, during
which it heard arguments on the two motions to dismiss. (Doc.
# 8-76). The bankruptcy court orally granted DeVille's
motion to dismiss stating, “I will grant in part the
motion to dismiss all claims against De[V]ille Corp.
De[V]ille Corp. is not under my jurisdiction.”
(Id. at 22:16-18). As to the Debtor's motion to
dismiss, the hearing was continued. (Id. at
35:14-24). The order dismissing DeVille from the adversary
proceeding was entered on June 16, 2015. (Doc. # 8-75).
August 18, 2015, the bankruptcy court held its continued
hearing on the Debtor's motion to dismiss. (Doc. # 8-85
at 28:15-44:4). The Debtor again argued Savannah lacked
standing to sue in its own right because its claim was a
derivative of DeVille's. (Id. at 30:14-22). For
its part, Savannah focused its arguments on whether it had
pled enough to give rise to a plausible claim for relief.
(Id. at 35:20-21:13). After hearing argument, the
bankruptcy court denied the Debtor's motion to dismiss,
stating: “[i]t seems to me that in a closely-held
corporation . . . one shareholder . . . who has his hands on
the control of the corporation could directly injure the
other shareholder by mismanaging the corporation.”
(Id. at 40:7-12). The bankruptcy court stated
[t]he question, really, is whether under the Bankruptcy Code
there is a debt that's owed for an injury to . . .
Savannah . . . . [t]hat is distinct from the debts owed to
[DeVille]. And there's an overlay here of a closely-held
corporation. [Counsel for Savannah] has alleged and has
suggested there's an overlay behind the scenes of a
family nature. I'm not sure if that's alleged, but
you've argued that.
And so for this purpose, I think that's sufficient to at
least get past a motion to dismiss. Can one shareholder of a
privately-held fifty-fifty corporation who has his hands on
the management of a company manage that company in such a
way as to directly prejudice his other shareholders? And I
think that's -- I think that can happen.
(Id. at 40:22-41:14). The order denying the
Debtor's motion to dismiss was entered on September 4,
2015. (Doc. # 8-77).
Debtor subsequently filed his answer and again asserted
Savannah lacked standing. (Doc. # 8-78 at ¶ 55).
adversary proceeding continued and on May 17, 2016, the
Debtor filed a motion for summary judgment as to all counts
of the complaint and the allowance of Savannah's proof of
claim. (Doc. # 8-82). The thrust of the Debtor's motion
for summary judgment was that Savannah's claim was a
derivative of DeVille's; in other words, it was DeVille-
rather than Savannah-that had suffered an injury due to the
Debtor's alleged actions. (Id.). Savannah
responded by arguing summary judgment was premature. (Doc. #
8-84). The bankruptcy court held a hearing on the motion for
summary judgment on June 9, 2016. (Doc. # 8-87). In making
its ruling, the bankruptcy court explained:
There are only three parties in the room -- the two
shareholders and the entity. And the cases that you've
cited support the proposition that (a) you look to the four
corners of the complaint and see what's alleged as the
claims -- see what claims are alleged.
Secondly, you analyze them as to whether the losses are
direct to the Plaintiff or they're indirect to the
Plaintiff through the losses to the corporation.
And I'm going to grant your motion. . . . I'm going
to grant your motion for summary judgment.
it seems to me the only damages that have been alleged are
that assets, the one asset, the property, was allowed to be
foreclosed on and that property is now gone, and that the
corporation lost the equity in that property. On the merits,
it would be whether there was any equity or not.
And secondly, that the company's treasury was diminished,
the assets of the company were diminished by making a
personal loan of a million -- I don't know, over a
million dollars to Mr. Martino. And those are assets of the
corporation. And the damages you've alleged are the
shareholder's -- your client's interest is as a
shareholder in the value of the corporation's assets, and
the damages alleged are the shareholder losses.
So four corners of the complaint, the claims are direct as to
Deville, derivative as to Savannah Capital. And under the
case law that I have seen, that would mean that this
particular Plaintiff does not have standing to make this
claim, even though we've all acknowledged that it's
the only party who could have done it, but after all these
months and all this time, has not. And that's where we
(Id. at 26:18-31:23). The written order entered by
the bankruptcy court conforms to the reasons stated during
the hearing; namely, that “[l]ike the claimant in
[White v. Whittle, 449 B.R. 427, 430 (Bankr. M.D.
Fla. 2011)], [Savannah] ha[d] no standing to recover directly
any damages ...