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Magnolia Financial Group LLC v. Antos

United States District Court, E.D. Louisiana

May 11, 2018

MAGNOLIA FINANCIAL GROUP
v.
KENNETH ANTOS, ET AL

         SECTION “H”

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE

         This action on a promissory note was removed from the 29th Judicial District Court for the Parish of St. Charles. On November 11, 2013, KCI Investments, LLC (KCI), Kenneth Antos (Antos) and David .Becklean (Becklean) executed a Secured Promissory Note (Note) with Magnolia Financial Group, LLC (MFG) for the principal sum of $2, 000, 000 with an interest rate of 15% per annum. Defendant Becklean also executed a Pledge and Security Agreement (Security Agreement) in favor of MFG wherein he pledged his interest in the proceeds of a Settlement Agreement dated September 2012 among Twin Towers Trading Site management, LLC (Twin Towers), Becklean, SMG Group and others. The Pledge and Security Agreement was recorded and perfected by filing of the UCC-1. Subsequently, on January 13, 2015, Defendants, Becklean, Antos and KCI entered into an agreement to borrow an additional $100, 000 from MFG (Second Note). No principal payments were made on the notes by the maturity dates and the entire principal amount plus significant interest remained due and owing. On November 20, 2015, MFG filed suit seeking recovery of the amounts .due under the notes.

         This Court granted MFG partial summary judgment in July of 2016, recognizing MFG as “attorney in fact for the purposes of carrying out the provisions of the Security Agreement and establishing plaintiff's rights to collect attorney fees and costs of collection at the termination of the litigation.” ECF 25. Subsequently, this Court granted MFG's partial motion for summary judgment as to amounts due under the promissory notes from Antos, Becklean and KCI. ECF 220.

         Twin Towers Trading Site Management, LLC intervened in this action by filing of Interpleader in August of 2016 with regard to the amounts due MFG from the Settlement Agreement proceeds. MFG responded averring that Twin Towers was not entitled to Interpleader relief and asserted Crossclaims against Twin Towers, Donald Porges, Porges and Eisenberg CPA, LLC, their insurers, and Antos, Becklean and KCI for both contractual and tort-based claims, including fraud. The insurers were dismissed on coverage defenses prior to trial and the insurers all filed for Rule 54(b) dismissals, which were entered.

         This matter came on for trial on March 12, 2018, against the remaining defendants. During the course of the trial, Plaintiff in Cross-Claim, Magnolia Financial Group, LLC and Defendants in Cross-Claim, Donald Porges, Porges and Eisenberg, CPA, LLC and Twin Towers Trading Site Management, LLC settled and resolved all their respective claims. The settlement was entered on the record and accepted by the Court.

         Magnolia Financial Group, LLC, reserved its rights as to the remaining party defendants, Kenneth Antos, David Becklean and KCI and continued to trial as to those remaining claims and parties.

         Kenneth Antos, David Becklean and KCI failed to participate in the preparation of the pre-trial order; failed to appear or participate in the pre-trial conference, and despite service and notice failed to appear for trial. As a result, the court on motion, struck those parties' pleadings and defenses.

         Magnolia Financial Group. LLC entered and admitted into evidence, without objection, documentary evidence, including exhibits Jl through 116; Pl through P45; and Dl through D8. Also, the deposition testimony of Kenneth Antos and David Becklean was entered into evidence without objection, as P46 and P47. Additionally, certain factual stipulations were entered of record, without objection, and accepted by the Court. Finally, the Court· entered oral reasons in support of its acceptance of the factual stipulations based on the evidence and testimony presented.

         Having considered the evidence admitted at trial and the arguments of counsel, this Court makes the following findings of fact and conclusions of law. To the extent a finding of fact constitutes a conclusion of law, and vice versa, the Court adopts it as such.

         FINDINGS OF FACT

         1. The previous facts and findings of law as set forth in previous Orders of this Court particularly ECF 25 and ECF 220, are adopted and incorporated into the final judgment of the Court. Those findings include that Becklean, Antos and KCI were in default as of October 21, 2015; the Notes are valid and enforceable as written; and MFG is due the amount of $2, 947, 518.81 as of June 13, 2017 from David Becklean, Kenneth Antos and KCI, in solido, together with legal interest from date of judicial demand; plus attorney fees and costs. The Court will refer the calculation of attorney's fees and costs to the Magistrate Judge, which amount will be included as part of the final judgment rendered in this matter.

         2. At all times material, Porges was a manager of Twin Towers; a member of KCI and member of the Board of Directors of KCI; a member/manager of Porges and Eisenberg CPA, LLC; the accountant for KCI; and an accountant for Antos.

         3. At all times material, Antos was a member/manager of KCI and was signatory to the loans entered with MFG on behalf of himself personally and on behalf of KCI and his actions are attributable to himself personally and to KCI.

         4. At all times material, Antos, Becklean, KCI, Porges and Twin Towers: (a) knew of the Notes entered with MFG; (b) knew of the Pledge and Security Agreement by and between Becklean and MFG; (c) knew of the Settlement Agreement; and (d) knew of the Release and Indemnity Agreement.

         5. At all times material, MFG had a contractual relationship with Antos, KCI and Becklean arising from the notes. Additionally, MFG had a contractual relationship with Becklean arising from the Pledge and Security Agreement.

         6. At all times material, Twin Towers held the "settlement payment" funds to be paid to MFG under the terms of the Pledge and Security Agreement; 7. On or about November 11, 2013, defendants KCI Investments, LLC ("KCI"), Kenneth Antos ("Antos") and David Becklean ("Becklean") entered into a Secured Promissory Note ("Note") with plaintiff Magnolia Financial Group, LLC ("Magnolia") for the principal sum of TWO MILLION Dollars ($2, 000, 000.000) with an interest rate of fifteen percent (15.00%) per annum.

         8. The Note(s) also provided for payment of attorney fees and all expenses incurred in collection.

         9. Pursuant to the Note, defendant Becklean executed a Pledge and Security Agreement ("Pledge" or "Security Agreement") in favor of Magnolia (See, Exhibit J3) pledging Becklean's interest in the proceeds of a Settlement Agreement of September 22, 2012 between Twin Towers Trading Site Management, LLC ("Twin Towers"), Becklean, Antos and others.

         10. The Pledge and Security Agreement was recorded by filing of the UCC-1 which perfected MFG's security interest in the settlement proceeds.

         11. The Pledge and Security Agreement is valid and enforceable per its terms and conditions. ECF 220.

         12. In connection with the execution of the Pledge by Becklean, in November of 2013 correspondence was forwarded to MFG from Donald Porges at the request and direction of Antos confirming that Twin Towers was authorized by both Becklean and Antos to make settlement payments to Magnolia in case of default.[1]

         13. The representations and agreements set forth in the Porges Letters, which were made at the urging and behest of Antos, were material to MFG making the loan to KCI, Antos and Becklean.

         14. Porges, manager of Twin Towers, was also a member of the board of KCI, an investor/stockholder in KCI and provided accounting services to KCI, Antos and Twin Towers.

         15. Becklean, Antos and KCI did not disclose their business relationship with Mr. Porges to MFG at the time of entering the notes with MFG in November of 2013.

         16. MFG made the loan (which was used to fund KCI) to Becklean, Antos and KCI based on the fact that MFG reasonably believed and relied on the security and could be repaid from the settlement funds in the event of default. MFG was not repaid upon default as promised.

         17. The monies provided by MFG under the notes was used to fund KCI and PRBI 18. In connection with the entering the Notes, and as inducement and consideration to fund the loans, MFG was also given shares of stock in KCI and was given position on the board of directors of KCI.

         19. MFG never had any business relationship with Antos, Becklean, KCI, Porges or Twin Towers prior to entering the notes with ...


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