              Case: 12-15604   Date Filed: 04/16/2013   Page: 1 of 7


                                                        [DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                         ________________________

                                No. 12-15604
                            Non-Argument Calendar
                          ________________________

          D.C. Docket Nos. 8:11-cv-02649-EAK; 8:08-bk-14131-CED

In Re: NORTHLAKE FOODS, INC.,
       a.k.a. North Lake Foods, Inc.,

                    Debtor.
_______________________________________

DAVID H. CRUMPTON,

                                                        Plaintiff - Appellant,


                                        versus


A. DOUGLAS MCGARRITY,

                                                        Defendant - Appellee.

                          ________________________

                  Appeal from the United States District Court
                      for the Middle District of Florida
                        ________________________

                                (April 16, 2013)
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Before TJOFLAT, MARCUS, and WILSON, Circuit Judges.

PER CURIAM:

      Northlake Foods, Inc. (“Northlake”) is a Georgia corporation that owned

approximately 150 Waffle House restaurants in Georgia, Florida, and Virginia. On

March 1, 1991, A. Douglas McGarrity, a shareholder of Northlake, executed a

Shareholders Agreement. Section 5.01 of the agreement contained the following

provision:

      If the Corporation’s income ever becomes taxable to the Shareholders,
      rather than to the Corporation, the Corporation shall pay a dividend at
      least annually in an amount and at a time sufficient for each
      Shareholder to pay out of the dividend all income tax, state and
      federal, attributable to that portion of the Corporation’s income
      included in such Shareholder’s income in the year preceding the year
      of payment of the dividend.

Record, No. 1-5, at 16. 1

      In 2005, Northlake designated itself an S corporation. Accordingly, its

shareholders were responsible for paying the taxes owed on Northlake’s income.

The amount of McGarrity’s personal income tax attributable to his share of

Northlake’s 2005 taxable income was $94,429.00. In 2006, citing § 5.01 of the

Shareholders Agreement, the board of directors authorized a dividend for

McGarrity and made a cash payment to him for $94,429.00 (“2006 Transfer”).


      1
          The Shareholders Agreement was attached as an exhibit to the complaint.
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      On September 15, 2008, Northlake filed for bankruptcy under Chapter 11 of

the Bankruptcy Code in the United States Bankruptcy Court for the Middle District

of Florida. On January 28, 2009, the Bankruptcy Court appointed David Crumpton

as bankruptcy trustee for Northlake. On August 3, 2010, Crumpton filed a

complaint in the Bankruptcy Court, claiming (1) that the 2006 Transfer was a

fraudulent transfer subject to avoidance and recovery by Crumpton under 11

U.S.C. §§ 544, 548, 550, and 551 and the Georgia Uniform Fraudulent Transfer

Act, § 18-2-70 et seq. and (2) seeking disallowance and equitable subordination of

McGarrity’s claims brought in Northlake’s bankruptcy under 11 U.S.C. §§ 502(d)

and 510(c). McGarrity moved for judgment on the pleadings.

      The Bankruptcy Court granted the motion, ruling that the complaint

reflected that Northlake received reasonably equivalent value for the 2006

Transfer. The court reached this conclusion on two grounds: first, it determined

that the 2006 Transfer satisfied an antecedent debt created by the Shareholders

Agreement, see 11 U.S.C. § 548(d)(2)(A); second, the court determined that

Northlake received reasonably equivalent value for the 2006 Transfer “by virtue of

the Debtor’s Subchapter S election for federal income tax purposes.” Record, No.

1-12, at 3. In an order issued on February 9, 2011, the court dismissed the

complaint without prejudice. Crumpton filed an amended complaint; it alleged

that the 2006 Transfer constituted an illegal dividend under Georgia law, O.C.G.A.


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§ 14-2-640(c) and again sought disallowance and equitable subordination of

McGarrity’s claims under 11 U.S.C. §§ 502(d) and 510(c). McGarrity moved the

court to dismiss. In an order issued on September 9, 2011, the court granted the

motion, ruling that O.C.G.A. § 14-2-640 only applies to directors, and McGarrity

was not a Northlake director.

      Crumpton appealed the Bankruptcy Court’s February 9, 2011, order and

September 9, 2011, order to the United States District Court for the Middle District

of Florida. The District Court affirmed the February 9, 2011, order, holding that

the 2006 Transfer satisfied an antecedent debt created by the Shareholders

Agreement. The District Court also affirmed the September 9, 2011, order, holding

that Georgia’s illegal dividend statute could not be applied to Stephens because he

was not a Northlake director.2

      Crumpton now appeals the District Court’s judgment.

                                                II.

      We review legal determinations made by either the bankruptcy court or the

district court de novo. In re JLJ Inc., 988 F.2d 1112, 1116 (11th Cir. 1993). We

review the bankruptcy court’s findings of fact for clear error. Id. When reviewing

a ruling on a motion for judgment on the pleadings under Federal Rule of Civil

Procedure 12(c), we accept as true all allegations in the complaint and construe


      2
          Crumpton does not contest this ruling in the instant appeal.
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them in the light most favorable to the nonmoving party. Hawthorne v. Mac

Adjustment, Inc., 140 F.3d 1367, 1370 (11th Cir. 1998). Because there are no

findings of fact to be made from a judgment on the pleadings, we review the legal

significance accorded to the facts de novo. Elston v. Talladega Cnty. Bd. of Educ.,

997 F.2d 1394, 1405 (11th Cir. 1993).

       A fraudulent transfer occurs when (1) a debtor was insolvent on the date that

the transfer was made or became insolvent as a result of the transfer; (2) the debtor

received less than a reasonably equivalent value in exchange for the transfer; and

(3) the transfer was made on or within two years before the date the debtor filed

the petition for bankruptcy. See 11 U.S.C. § 548(a)(1). The only question before

us is whether the District Court erred when it ruled that the 2006 Transfer was

made in exchange for reasonably equivalent value.

       A debtor has not made a fraudulent transfer if the transfer confers an

economic benefit on the debtor. In re Rodriguez, 895 F.2d 725, 727 (11th Cir.

1990). The complaint shows that the Shareholders Agreement provides Northlake

with valuable benefits by virtue of its S-corporation election. We hold that these

benefits constitute a reasonably equivalent exchange for the 2006 Transfer and

affirm on that basis.3

       3
          We therefore do not address whether the 2006 Transfer satisfied an antecedent debt.
Krutzig v. Pulte Home Corp., 602 F.3d 1231, 1234 (11th Cir.2010) (“This court may affirm a
decision of the district court on any ground supported by the record.”).

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      Taking the allegations in the complaint as true, it is clear that Northlake

received valuable benefits under the Shareholders Agreement in exchange for the

2006 Transfer. The exchange contemplated by the agreement is simple enough:

McGarrity agreed to pay his share of Northlake’s taxes if it ever decided to be

treated as an S corporation. In exchange, Northlake would reimburse McGarrity

the following year for the tax liability he incurred that was attributable to

Northlake’s income. This agreement benefitted Northlake because it enabled the

company to shift to S-corporation status whenever it determined it was

advantageous to do so. When Northlake elected this status, it enjoyed the added

benefit of freeing up cash that otherwise would have been dedicated to paying its

tax liability—though it would have to reimburse its shareholders the following year

for taking on this liability. Thus, the agreement provided Northlake with two

valuable benefits: flexibility and time.

      The facts in the complaint and its exhibits are sufficient to conclude that this

was an exchange of reasonably equivalent value. Though the complaint alleges

that no consideration was given for the 2006 Transfer, no additional facts are

alleged describing the lack or inadequacy of the consideration. Moreover, this bald

allegation is plainly contradicted by the Shareholders Agreement attached to the

complaint. We therefore afford it no weight. See Griffin Indus., Inc. v. Irvin, 496

F.3d 1189, 1205–06 (11th Cir. 2007) (“Our duty to accept the facts in the


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complaint as true does not require us to ignore specific factual details of the

pleading in favor of general or conclusory allegations. Indeed, when the exhibits

contradict the general and conclusory allegations of the pleading, the exhibits

govern.”).

      The concept of reasonably equivalent value does not require a dollar-for-

dollar transaction. In re Advanced Telecomm. Network, Inc., 490 F.3d 1325, 1336

(11th Cir. 2007). Because the complaint contains no allegations indicating why

these benefits do not constitute a reasonably equivalent exchange for the 2006

Transfer, we have no grounds to conclude they do not. Accordingly, the District

Court’s judgment is

      AFFIRMED.




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