Defendant Alleges Trustee’s Complaint Does Not Meet Higher Pleading Standards of “Actual Fraud” Claim

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August 16, 2022, US Bankruptcy Court for Middle District of Florida – Defendant, Center for Aging and Rehabilitation Davenport, Inc. (“CARD”), pursuant to Federal Rules of Civil Procedure 12(b)(6) and (f), moves to dismiss the complaint filed by Douglas N. Menchise, the Chapter 7 trustee (“Trustee”) for the estate of 206 Golden, LLC (“Debtor”) to avoid and recover alleged “preferences”, “fraudulent transfers” and “post-petition transfers”. The Trustee seeks to avoid and recover $667,382.17 through this adversary proceeding.

Defendant CARD claims that each count in the Trustee’s complaint is a “mere recitation” of elements. The motion alleges that the complaint does not allegedly identify creditors who could have been harmed due to the alleged transfer.

The operations transfer agreement mentioned in the complaint allegedly allowed CARD to succeed the Debtor and allegedly assume all the liabilities of the Debtor owed to the Florida Agency for Health Care Administration (“AHCA”). Defendant claims that the agreement itself demonstrates that the monies paid to Defendant were allegedly pursuant to an obligation for any revenues derived from activities and receivables incurred after May 2, 2021.

Defendant alleges that the complaint lacks any factual support for its claims that Defendant provided no services to benefit the Debtor under the said agreement.

Defendant claims that the Trustee’s complaint does not plead a single badge of fraud. Defendant argues that an actual fraud claim requires higher pleading standards and claims that the complaint lacks factual content beyond “labels and conclusions”. The complaint allegedly does not deal with any aspect of Debtor’s operations, pre or post-operations transfer agreement, for purposes of alleging insolvency at the time of the alleged transfer.

Defendant CARD moves the Court to dismiss the Trustee’s complaint for failure to state the claim for voidable transfers.

Menchise v. Center for Aging and Rehabilitation of Davenport (In re 206 Golden, LLC), AP No. 22-00107, US Bankruptcy Court for Middle District of Florida

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