United States District Court, W.D. Tennessee, Western Division
H. MAYS, JR. UNITED STATES DISTRICT JUDGE.
the Court are the parties' pretrial memoranda and
responses. On December 16, 2016, Plaintiff Church Joint
Venture, a Limited Partnership (“Church JV”)
filed its Memorandum Addressing Issues Remaining for Trial.
(ECF No. 198 (“Church JV Mem.”).) On January 6,
2017, Defendants Earl Benard Blasingame (“EBB”);
Margaret Gooch Blasingame (“MGB”); Earl Benard
“Ben” Blasingame, Jr. (“EBB Jr.”);
Fiberzone Technologies, Inc. (“Fiberzone”);
Blasingame Family Residence Generation Skipping Trust
(“BFRGST”); and Blasingame Family Business
Investment Trust (“BFBIT”) -- collectively,
“Defendants” -- filed their Memorandum in Response
to Plaintiff's Memorandum Addressing Issues Remaining for
Trial. (ECF No. 201 (“Defs.' Resp.”).)
December 16, 2016, Defendants filed their Memorandum
Concerning Remaining Claims to be Tried. (ECF No. 199
(“Defs.' Mem.”).) On January 6, 2017, Church
JV filed its Response to Defendants' Memorandum
Concerning Remaining Claims to be Tried. (ECF No. 200
(“Church JV Resp.”).)
before the Court is the November 22, 2016 Motion and
Memorandum of BFBIT and EBB Jr. to Strike [Certain
Allegations] of Amendment to Paragraph 7 of Complaint. (ECF
No. 191 (“Mot. to Strike”).) Church JV did not
file a response to the Motion to Strike, and the deadline for
doing so has passed. L.R. 7.2(a)(2). The Church JV Memorandum
and Church JV Response contain pertinent material that the
Court has considered. (See Church JV Mem.
¶¶ 4-8 & n.3; Church JV Resp. 5-10.)
following reasons, the Motion to Strike is DENIED. Two issues
remain for trial. The first is whether (and to what extent)
MGB's deposits -- between January 1, 2007, and July 31,
2008 -- of annuity and paycheck payments into a BFRGST bank
account are fraudulent transfers. The second is whether (and
to what extent) Debtors' transfer to BFBIT of the real
property listed in a quitclaim deed dated January 14, 2005,
is a fraudulent transfer. No claims remain for trial as to
EBB Jr. or Fiberzone. Both are dismissed from this action.
I of the Court's Order dated November 17, 2016 -- the
“November 2016 Order” -- recounts the history of
this matter. Church Joint Venture, a Ltd. P'ship v.
Blasingame, No. 2:12-CV-02999, 2016 WL 6810873, at *2-5
(W.D. Tenn. Nov. 17, 2016). This Background section addresses
only the November 2016 Order and the proceedings that have
November 2016 Order addressed, inter alia, five
motions. First, it addressed the Motion to Dismiss [First]
Amended Complaint Pursuant to Federal Rule of Civil Procedure
Rule 12(b)(6) filed by EBB Jr. and Katherine Blasingame
Church (“KBC”) on June 29, 2016. (ECF No. 155
(“KBC/EBB Jr. Mot.”).) The Court granted the
motion. (November 2016 Order at *10-11.)
Court also granted Church JV leave to “amend the
Amended Complaint to state that EBB Jr. is Debtors'
son.” (Id. at *12; see id. at *12
n.6.) The Amended Complaint contained “several
allegations that suggest transfers to Debtors'
son.” (Id. at *10; see Am. Compl.
¶¶ 81(a), 84(a), 91.) The Court concluded that an
amendment stating that EBB Jr. is Debtors' son would
permit claims based on those allegations to proceed.
(Id. at *10.)
the November 2016 Order addressed the Motion for Summary
Judgment as to Counts II, III, IV, and V of the Complaint
filed by Fiberzone on June 29, 2016. (ECF No. 156
(“Fiberzone Mot.”).) The Court considered four
Fiberzone-related fraudulent-transfer claims, one of which
was that MGB performed a fraudulent transfer by incurring
obligations to credit-card companies for charges made on her
credit card for Fiberzone's benefit (the
“Credit-Card Claim”). The Court granted the
Fiberzone Motion on all claims but the Credit-Card Claim,
concluding that the Credit-Card Claim “is the only
Fiberzone-related fraudulent-transfer claim remaining for
trial.” (November 2016 Order at *16.)
the November 2016 Order addressed Debtors' Motion to
Dismiss First Amended Complaint Pursuant to Fed.R.Civ.P.
12(b)(6) and, in the Alternative, Motion for Summary
Judgment, filed on July 11, 2016. (ECF No. 158
(“Debtors' Mot.”). The Court decided that
“[t]he Amended Complaint lacks any allegations
specifying transfers to either Debtor (as opposed to
transfers from the Debtors).” (November 2016 Order at
*17.) The Court granted Debtors' Motion that the Court
dismiss any claims based on fraudulent transfers to Debtors.
(Id.) The Court concluded that “[n]o claims of
fraudulent conveyances to Debtors survive for trial.”
(Id. at *18.)
Motion also asked that Debtors be dismissed because they are
neither necessary nor permitted parties. (Debtors' Mot.
3.) The Court denied that part of Debtors' Motion,
holding that Debtors are required parties under Rule
19(a)(1)(A) or, alternatively, permitted parties under Rule
20(a)(2)(B). (November 2016 Order at *17-18.)
the November 2016 Order addressed BFRGST's July 11, 2016
Motion for Summary Judgment as to Counts II, III, IV, and V
of the Complaint and for Partial Dismissal Pursuant to Rule
12(b)(1) as to Paragraph 24(a) of the Complaint. (ECF No. 159
(“BFRGST Mot.”).) The Order analyzed three
potential fraudulent-transfer claims against BFRGST. The
first arose from a certificate of deposit (CD) purchased by
MGB. The Court granted the BFRGST Motion on that claim.
(November 2016 Order at *21.) The second claim arose from
MGB's deposits of annuity and paycheck payments into a
BFRGST bank account. The Court denied the BFRGST Motion on
that claim. (Id. at *23.) The third claim was stated
in Paragraph 25(a) of the Amended Complaint. Paragraph 25(a)
alleged that MGB had collected proceeds from the sale of
property left to her by her mother and then transferred those
proceeds to BFRGST. (Am. Compl. ¶ 25(a).) The Court
granted the BFRGST Motion on the Paragraph 25(a) claim.
(November 2016 Order at *25.)
the November 2016 Order addressed BFBIT's July 11, 2016
Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1) and, in
the Alternative, for Summary Judgment as to Counts II, III,
IV, and V of the Complaint. (ECF No. 160 (“BFBIT
Mot.”).) The Court denied the BFBIT Motion. (November
2016 Order at *27.)
time of the November 2016 Order, this matter was set for
trial on November 28, 2016. (Scheduling Order 1, ECF No.
154.) On November 18, 2016, the Court held a pretrial
conference. (Minute Entry, ECF No. 187.) Counsel for the
parties sought a continuance of the trial to review the
November 2016 Order. (Id.) The Court denied that
November 21, 2016, Church JV filed its Partial Amendment to
Original Complaint. (ECF No. 189 (“Church JV Partial
Amend.”).) The amended Paragraph 7 of the Amended
Complaint reads, in relevant part, as follows:
Defendant EARL BENARD “BEN” BLASINGAME, JR.
(“Ben” or “Ben Jr.”) is an adult
resident and citizen of the State of Tennessee . . . . Ben
Jr. is the son of EBB and MGB. . . . As further alleged
below, EBB and MGB established a “clearing
account” in the name of Ben Jr. and using his Social
Security Number, into which they deposited hundreds of
thousands of dollars between the time it was opened and the
time EBB and MGB filed bankruptcy on August 15, 2008. Ben Jr.
did not use this account. The ostensible purpose of the
account was so that Joyce Long could write checks for various
trusts controlled by EBB and MGB, yet she wrote and signed
checks for those trusts on many occasions. Ms. Long,
[Debtors'] long time bookkeeper, used the “clearing
account, ” which was part of the BIT (defined herein)
to pay bills of and loan money to EBB and MGB. The
“clearing account” was concealed from EBB and
MGB's creditors. Its use enabled EBB and MGB, who had no
personal or real property in their name after December 1993,
to maintain their lifestyle while at the same time
concealing, hindering, delaying and defrauding their
creditors from gaining access to the funds in the account.
(Id. at 1-2 (emphasis removed).)
November 22, 2016, EBB Jr. filed his Answer to Church
JV's Partial Amendment. (ECF No. 190.) EBB Jr. admitted
being Debtors' son, but denied the remaining substantive
allegations in Paragraph 7. (Id. at 1-2.) The same
day, EBB Jr. and BFBIT filed the Motion to Strike.
November 23, 2016, the Court held a status conference.
(Minutes, ECF No. 192.) After discussion with counsel, the
Court continued the trial “to allow for clarification
of claims.” (Id.) The Court set a status
conference on November 28, 2016, to reschedule the trial.
November 28 status conference, the Court set a new trial
Dated: March 20, 2017. (Minutes, ECF No. 194.) The Court also
ordered the parties to file memoranda addressing the
remaining issues for trial by December 16, 2016, and to file
responses by January 6, 2017. (Id.)
December 16, 2016, Church JV filed the Church JV Memorandum
and Defendants filed Defendants' Memorandum. On January
16, 2017, Church JV filed the Church JV Response and
Defendants filed Defendants' Response.
Motion to Strike
Motion to Strike asks the Court to “strike those
portions of [Church JV's] amendment to paragraph 7 which
go beyond Plaintiff's allegation that [EBB Jr.] is the
son of [Debtors], ” and to “prohibit [Church JV]
from attempting to introduce evidence in support of such
claims at trial.” (Mot. to Strike 3-4.) Defendants cite
no rule to support their Motion to Strike. (Church JV Mem. 7
n.3; see generally Mot. to Strike.) Rule 12(f)
provides that a court “may strike from a pleading . . .
any redundant, immaterial, impertinent, or scandalous
matter.” The Court construes the Motion to Strike
to be based on Rule 12(f).
12(f)'s language is permissive, not mandatory. A motion
to strike serves the purpose of “‘avoid[ing] the
expenditure of time and money that must arise from litigating
spurious issues by dispensing with' them early in the
case.” Operating Eng'rs Local 324 Health Care
Plan v. G&W Const. Co., 783 F.3d 1045, 1050 (6th
Cir. 2015) (quoting Kennedy v. City of Cleveland,
797 F.2d 297, 305 (6th Cir. 1986)). Such a motion, however,
is “a drastic remedy to be resorted to only when
required for the purposes of justice” and when
“the pleading to be stricken has no possible relation
to the controversy.” Brown & Williamson Tobacco
Corp. v. United States, 201 F.2d 819, 822 (6th Cir.
1953); see also Parlak v. U.S. Immigration & Customs
Enf't, No. 05-2003, 2006 WL 3634385, at *1 (6th Cir.
Apr. 27, 2006) (quoting Brown). The Sixth Circuit
has recently stated that Rule 12(f) motions “are viewed
with disfavor and are not frequently granted.”
Operating Eng'rs, 783 F.3d at 1050 (citing
cases). Generally, “‘courts should not tamper
with the pleadings unless there is a strong reason for so
doing.'” Williams v. E.I. du Pont de Nemours
& Co., Inc., No. 2:15-CV-02111-STA-DKV, 2016 WL
7192173, at *2 (W.D. Tenn. Dec. 12, 2016) (quoting City
of New York v. Fedex Ground Package Sys., Inc., 314
F.R.D. 348, 354 (S.D.N.Y. 2016)).
gravamen of Defendants' argument is that Church JV's
amendment goes beyond what the Court contemplated in its
November 2016 Order. (Mot. to Strike ¶¶ 1-2.) In
addition to the allegation that EBB Jr. is Debtors' son,
the new Paragraph 7 includes allegations about a clearing
account that appear neither in the original Amended Complaint
nor in Church JV's discovery responses. (Id.
¶¶ 2-6.) Defendants contend the amendment is
“prejudicial to the Defendants” and
“expands the claims asserted by [Church JV] . . .
.” (Id. ¶ 7.)
JV has not filed a response to the Motion to Strike. The
Church JV Memorandum, however, states that, “[t]o the
extent necessary . . .,  Church JV adopts [the Church JV
Memorandum] as its response to the Motion to Strike.”
(Church JV Mem. ¶ 8 n.3.) Church JV argues that its
Paragraph 7 amendment “satisfies the Court directive in
[the November 2016 Order], tracks the allegations in the
Amended Complaint, and complies with the Court's comments
at the [November 18] Pretrial Conference . . . .”
(Id. ¶ 6.)
material from Paragraph 7 is unnecessary. The purposes of
justice do not require granting the Motion to Strike. The
content added to Paragraph 7 arguably goes beyond what the
November 2016 Order permitted, but the material relates to
the controversy between the parties. More importantly, the
new material does not prejudice Defendants. As discussed
below, even assuming that the new material is properly part
of the Amended Complaint, no claims based on the clearing
account will proceed to trial. The Motion to Strike is
Remaining Issues for Trial
Memoranda and Responses, the parties raise numerous issues
that remain for trial. Church JV asserts that ten issues
1. “Whether and to what extent [EBB] fraudulently
transferred property to Fiberzone?” (Church JV Resp. 3;
see also Church JV Mem. 8.)
2. “Whether and to what extent [MGB] used a credit card
in the name of [Fiberzone] for her personal benefit, which
charges were paid for through the ‘clearing
account' and were not disclosed or known to her creditors
and were, therefore, fraudulent transfers?” (Church JV
Resp. 3; see also Church JV Mem. 8.)
3. “Whether and to what extent [MGB's] transfer of
annuity and employment checks into a bank account of the
[BFRGST] (approximately $38, 000) constituted a fraudulent
transfer from [MGB] to the [BFRGST]?” (Church JV Resp.
4; see also Church JV Mem. 8.)
4. “Whether and to what extent Debtors fraudulently
transferred property to the [BFRGST] directly or indirectly
through the vehicle and use of the ‘clearing
account'?” (Church JV Resp. 4; cf. Church
JV Mem. 8 (“Whether and to what extent Debtors
fraudulently transferred property to the . . .
5. “Whether and to what extent Debtors fraudulently
transferred property to the [BFBIT]?” (Church JV Resp.
10; see also Church JV Mem. 8.)
6. “Whether and to what extent the transfer of certain
real property by Debtors by Quitclaim Deed dated January 14,
2005, to the [BFBIT] constituted a fraudulent transfer from
Debtors to the [BFBIT]?” ...