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Likos of Tennessee Corp. v. Bavelis

United States District Court, E.D. Tennessee

February 22, 2017

LIKOS OF TENNESSEE CORP., TED DOUKAS, ATHENA OF S.C., LLC, and FZA NOTE BUYERS, LLC, Plaintiffs,
v.
GEORGE A. BAVELIS, Defendant.

          MEMORANDUM OPINION

          Thomas A. Varlan CHIEF UNITED STATES DISTRICT JUDGE

         This civil case is before the Court on defendant's Motion to Dismiss [Doc 9], to which plaintiffs responded [Doc. 18], and defendant replied [Doc. 20]. Also before the Court is plaintiffs' Motion for Summary Judgment [Doc. 13], and Motion for Judicial Notice [Doc. 15]. For the reasons discussed herein, the Court will grant defendant's motion to dismiss, and deny plaintiffs' motion for summary judgment and motion to take judicial notice as moot.

         I. Background

         This case arises due to a pending proceeding in Knox County Chancery Court, and follows other related litigations previously before this Court.

         A. Stooksbury Litigation and Settlement

         On March 6, 2012, Robert T. Stooksbury was awarded a judgment against Michael L. Ross, as well as several of Ross's business entities, in the proceeding Stooksbury v. Ross, et al., No. 3:09-cv-498 (“Stooksbury I”) [Doc. 1 p. 3] Prior to the entry of judgment in Stooksbury I, plaintiff Ted Doukas, through his entity Athena of S.C., LLC (“Athena”), acquired two notes from Sun Trust Bank secured by collateral at a Ross property development known as Rarity Bay [Id. at 4]. In addition, Doukas, through his entity Likos, acquired ownership from Ross of a 24-unit apartment complex known as Vonore Apartments [Id.].

         On November 30, 2011, Athena filed two complaints in Knox County Circuit Court against Ross and two of his entities, with each complaint based on one of the notes acquired from Sun Trust Bank [Id.]. Also on November 30, 2011, agreed judgments were entered in each Knox County Circuit Court case [Id. at 5]. Subsequent to the entry of these agreed judgments, on December 15, 2011, Ross and Doukas entered into a “Forbearance Agreement, ” in which Athena agreed to forbear collecting on the agreed judgments for ninety days, in exchange for Ross granting Athena a security interest in all of his assets [Id.].

         Following the entry of judgment in Stooksbury I, this Court appointed Sterling Owen, IV, to serve as the Receiver over the Ross assets [Id.]. Upon being appointed, the Receiver identified as Receivership Assets a number of properties in which Doukas entities, but not Doukas himself, claimed an interest [Id. at 5-6]. As such, Athena, Likos, and American Harper (another Doukas entity) all asserted claims against Receivership Assets [Id. at 6].

         While the Receivership was in progress, Stooksbury filed a second lawsuit, Stooksbury v. Ross et al., No. 3:12-cv-548 (“Stooksbury II”) [Id.]. In addition to naming Ross and a number of his entities as defendants, Stooksbury also named Doukas, American Harper, Athena, and Likos as defendants [Id.].

         On November 23-24, 2014, Doukas participated in a Judicially Hosted Settlement Conference, as a result of which Doukas and his entities agreed to settle their claims against Receivership Assets [Id. at 6-7]. In exchange, plaintiffs submit that the parties agreed that one or more of the Doukas entities, would be given free and clear ownership of two real properties, specifically a 24-unit and 48-unit apartment complex [Id.]. The terms of the settlement agreement, which were incorporated into a Report and Recommendation, indicated that Ted Doukas was to receive a 100% interest in the properties [Stooksbury I, Doc. 1423]. No party filed an objection to the terms of the settlement agreement as described in the Report and Recommendation, and the Court accepted the terms in full [Stooksbury I, Doc. 1437].

         Subsequently, on August 17, 2015, the Receiver transferred the 24-unit and 48-unit apartment complexes via a quitclaim deed [Doc. 1 p. 7]. The Receiver executed the deeds to grantees: “Ted Doukas and/or Assigns” [Id.]. Shortly thereafter, on August 21, 2015, Doukas executed a document entitled “Assignment of Receiver's Quitclaim Deeds, ” in which he assigned the deeds to Likos [Id. at 7-8].

         In 2016, Likos sought a loan from Pinnacle Bank of Nashville for $1, 400, 000 [Id. at 8]. As part of the closing of the loan, the Bank and/or the Title Company responsible for closing the loan requested that Doukas execute quitclaim deeds to Likos for the 24-unit and 48-unit apartment complexes [Id.]. On April 20, 2016, Doukas did as requested and executed and filed two quitclaim deeds to Likos [Id.]. On May 5, 2016, Likos closed on the loan with Pinnacle Bank, granting Pinnacle Bank a security interest in the two apartment complexes [Id.].

         B. Ohio Bankruptcy Litigation

         Defendant currently has a Chapter 11 bankruptcy case pending in the United States Bankruptcy Court for the Southern District of Ohio [Id. at 9]. As part of that case, defendant has an adversary proceeding pending against Doukas [Id.]. Plaintiffs submit that that the case has been pending since October 2010, and has not resulted in any monetary judgment against Doukas or any of his business entities to date [Id.].

         On May 16, 2016, defendant filed a complaint in Knox County Chancery Court, Bavelis v. Doukas and Likos of Tennessee Corp., Case No. 191625-2, asserting that the April 20, 2016, execution of the quitclaim deeds from Doukas to Likos was a fraudulent conveyance, and requesting that the Chancery Court set aside the transfer [Id. at 2, 9]. In this Chancery Court proceeding, defendant also sought a temporary restraining order and preliminary injunction by the Chancery Court, which the Chancery Court granted [Id. at 9]. Defendant contended that he was entitled to this relief due to his pending claim in the Ohio bankruptcy proceeding [Id.].

         Plaintiffs subsequently filed the present lawsuit, asking the Court to issue a writ to the Chancery Court of Knox County, enjoining the litigation between the parties in that court, and instructing the Chancery Court to dismiss that case [Doc. 1]. Alternately, plaintiffs ask that the Court reform the Receiver's deed, making the ...


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