HLNT/NIR/Ribotsky/Humphries/Walters/PWC Lawsuits Update 09/21/2012:
Another set back for Humphries.
HLNT filed a complaint against Humphries in his current bankruptcy case, which was made an Adversarial Proceeding on June 8th with a formal filing in the court (See Case #12-04095, Bankruptcy Court, Eastern District of Texas, Document #1. This can be viewed on the PACER system, but costs .10 per page.)
The filing was to prevent Humphries from being able to discharge any judgement that had been or could be entered against Humphries in the New York case. Paragraph #6 states the basis for HLNT's complaint as follows, 'Section 523(a)(2)(a) of the Bankruptcy Code provides that an individual debtor is not discharged from a debt "... for money, property, services, or an extension, renewal or refinancing of credit, to the extent obtained by ... (A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition..."'. As HLNT has alleged that Humphries has committed fraud, then the Adversarial Proceeding was required.
Humphries, through his lawyer, Espinoza, filed a response (document #5 in the case) on July 9th, and most of it consists of denials to HLNT's complaint. But in Section 2, Affirmative Defenses, Humphries lists 8 reasons for dismissing the complaint. Beginning with #A, Humphries cites that he will be discharged in bankruptcy (Like he told the New York Judge he had an automatic stay, when he really didn't.). Reasons B, C and D are very much the same thing, saying that Mel and Charlie illegally took over the company and forced him out. Reasons E and F relate to the Release and Settlement agreement, which he stated was valid due to the cases Mel and Charlie filed against him (Mel and Charlie each filed against him in the state of Arkansas for failing to comply with the agreement, but the cases were dismissed due to a lack of venue, the cases were not refiled in Texas because of the NIR suit and subsequent counterclaims filed by HLNT, naming Humphries in the Counterclaim action.) and he says that he complied with that Release agreement. In Reason G, Humphries states that he believes that HLNT failed to state any cause of Action, and in Reasons H (the last one), he cites a technicality that HLNT didn't file two copies of the complaint.
On September 17th (Monday of this week), an initial case management conference was held, and on Tuesday, the Jugdge, Bill Parker, issued the order contained in document #9 in the case, where the judge acknowledges the pre-existence of the New York case, and that discovery has been nearly completed there (just waiting on Humphries to comply, apparently), that Humphries had not been given an automatic stay, and that there isn't any reason for the New York case not to have precedence. In so acknowledging these facts, the Judge ordered the Adversarial Proceeding abated (delayed) pending the outcome of the New York case, and that HLNT must provide the Bankruptcy court with a finding in the New York case of Humphries Fraud in order to prevent the discharge sought by Humphries.
Interpretation:
Humphries lost big on this round. Yes, HLNT has to prove the fraud, but now Humphries has no choice but to participate in the New York case. Furthermore, as he has not previosly filed any Counter Claims to HLNT's 3rd Party Action against him, he cannot file one now as he did not do so timely. His attempts to manipulate the legal system have now totally backfired against him. Regarding his accusations against Mel and Charlie (which PD likes to make an important issue of) they have no relevancy with respect to the fraud he committed, and that in no way will exonerate him. The thing that he has feared the most is what has actually happened, that he must deal with HLNT in the New York case. This has an impact of Humphries BK case in that it cannot be truly settled until either the case in New York is concluded, or Humphries withdraws his current Bankruptcy filing.
Other Issues:
Yesterday, Walters new attorney filed a stipulation in the New York case. Basically, this was just clerical work, but an acknowledgement that certain information in the discovery process is confidential. A necessary filing to bring Walters attorney up to speed in the case. The next conference in that case is the 11th of October, not leaving Walters attorney much time to play with.
AI
