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In re Maness

United States Bankruptcy Appellate Panel of the Eighth Circuit

August 29, 2013

In re Wendell Otis MANESS, also known as MO Housing Corporation, also known as Top Shop North; Carolyn Hope Maness, Debtors.
v.
Wendell Otis Maness; Carolyn Hope Maness, Defendants-Appellants. Legendary Stone Arts, LLC, Plaintiff-Appellee

Submitted: July 25, 2013.

Bradley David McCormack, argued and on the brief, Neil S. Sader, on the brief, Kansas City, MO, for appellant.

Paul K. Hentzen, argued and on the brief, Kansas City, MO, for appellee.

Page 327

Before KRESSEL, SALADINO and SHODEEN, Bankruptcy Judges.

SALADINO, Bankruptcy Judge.

The Defendants, Wendell O. Maness and Carolyn H. Maness, appeal from a June 3, 2013, judgment of the bankruptcy court [1] dismissing their counterclaim against the Plaintiff, Legendary Stone Arts, LLC (" Legendary Stone" ). The judgment was entered pursuant to an order of the bankruptcy court [2] granting Legendary Stone's motion for summary judgment on the counterclaim dated May 1, 2012. We have jurisdiction over this appeal from the final order of the bankruptcy court. See 28 U.S.C. § 158(b). For the reasons set forth below, we affirm.

FACTUAL BACKGROUND

The pertinent facts are, for the most part, uncontroverted. Prior to bankruptcy filing, Mr. and Mrs. Maness owned MO Housing Corporation, d/b/a Top Shop North (" Top Shop" ), which was involved in the business of customizing and installing granite countertops in homes. Over a number of years, the company obtained the raw material for the construction of countertops from Legendary Stone. All of the orders were placed in the name of Top Shop.

In the latter part of 2010, Top Shop had a severe downturn in business, which led Mr. and Mrs. Maness to close the business and file bankruptcy. Their voluntary Chapter 7 bankruptcy petition was filed on February 17, 2011. Legendary Stone filed the adversary proceeding from which this appeal arose on April 29, 2011. The adversary proceeding asserted that Legendary Stone supplied material and labor to Top Shop on 37 projects totaling more than $66,000.00, which went unpaid despite Top Shop receiving payment from the homeowner or contractor. Legendary Stone sought a determination from the bankruptcy court that the indebtedness due from Top Shop was nondischargeable under 11 U.S.C. § 523(a)(2)(A) and that Mr. and Mrs. Maness were liable for such amounts under Missouri's lien fraud statute. MO. REV. STAT. § 429.014. The lien fraud statute makes it a felony under certain circumstances for a defendant to receive payment on a construction project and fail to pay a supplier.

The owners of Legendary Stone are Jeff Williams and Aaron Toney. In early 2011, before Mr. and Mrs. Maness filed their bankruptcy petition, Mr. Williams contacted the Jackson County prosecutor's office to relay facts of his dealings with Mr. Maness. During that conversation, he apparently brought to the attention of the prosecutor's office the Missouri lien fraud statute. Subsequently, on February 15, 2011, Messrs. Williams and Toney went to the Independence, Missouri, police department and filed a criminal complaint against Mr. Maness. Two days later, the bankruptcy petition was filed by Mr. Maness.

After the criminal complaint was filed with the police department, neither Mr. Williams nor Mr. Toney had any further contact with the Jackson County prosecutor's office. On August 25, 2011, Mr. Maness was charged with theft under the lien fraud statute and a warrant for his arrest was issued. He was arrested on September 9, 2011, booked, and released on a $5,000.00 signature bond.

The criminal case was handled by Maj. Terry Storey and Det. Steve Breshears of

Page 328

the Independence police department. Maj. Storey was an acquaintance of Mr. Williams but testified that his familiarity with Mr. Williams had no effect on the criminal case against Mr. Maness, and that the case was not handled any differently than any other case. Maj. Storey also testified in his deposition that no one from Legendary Stone ever brought up ...


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