1 UNITED STATES BANKRUPTCY COURT 2 SOUTHERN …...31 2. Defendant/Debtor, Patrick R. Murphy, Jr., (“Murphy”) is an individual residing in the state 32 of Alabama. Case 20-11714

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UNITED STATES BANKRUPTCY COURT 1 SOUTHERN DISTRICT OF ALABAMA 2

MOBILE DIVISION 3 4

IN RE: § CASE NO. 20-11714 5 § 6 PATRICK REILY MURPHY, JR., § 7 § 8 Debtor, § 9 10 INLAND & COSTAL PREMIUM § 11 FINANCE COMPANY, LLC § 12 § 13 Plaintiff/Creditor § COMPLAINT TO DETERMINE NON- 14 § DISCHARGEABILITY OF A DEBT 15 Vs. § UNDER 11 U.S.C. § 523(a)2, §523(a)4, and 16 § 523(a)6 17 PATRICK REILY MURPHY, JR.; POINT § 18 CLEAR INSURANCE SERVICES, LLC, § 19 20 21

AMENDED COMPLAINT 22

Plaintiff, Inland & Coastal Premium Finance Company, LLC, by and through its 23

undersigned counsel, and, pursuant to FRBP 7001(1), FRBP 7001(6), 11 U.S.C. § 542, 11 U.S.C. 24

§ 523(a)2, §523(a)4, and §523(a)6, and pursuant to Fed. R. Civ. P. 15, files this Amended 25

Complaint and alleges the following in support of the requested relief: 26

PARTIES 27

1. Plaintiff/Creditor Inland & Coastal Premium Finance Company, LLC (“Plaintiff”) is an 28

Alabama Corporation organized and established under the laws of the state of Alabama, 29

with its principal place of business in Fairhope, Alabama. 30

2. Defendant/Debtor, Patrick R. Murphy, Jr., (“Murphy”) is an individual residing in the state 31

of Alabama. 32

Case 20-11714 Doc 78 Filed 12/04/20 Entered 12/04/20 20:58:01 Desc MainDocument Page 1 of 12

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3. Defendant, Point Clear Insurance Services, Inc., (“PCIS”) is an Alabama corporation 33

organized and established under the laws of the state of Alabama, managed by Sean 34

Renfrow, with its principal place of business in Fairhope, Alabama. 35

4. Murphy, using PCIS, received and wrongfully detained monies, via returned pre-paid 36

insurance premiums, due and owing to Plaintiff and illegally used said monies for personal 37

gain, to pay off insurance premiums for other PCIS clients and/or to pay business debt 38

and/or his personal debt. 39

5. Upon information and belief, Murphy used the corporate entity, PCIS, to fraudulently 40

acquire and exploit a loan from Plaintiff through making false statements and/or 41

representations regarding Murphy’s ability to repay said loans as well as his ability to 42

perform certain duties and/or contractual obligations under the loan agreements. 43

6. Upon information and belief, Murphy knowingly accepted the benefit of a loan provided 44

by Plaintiff, with the knowledge that Plaintiff would have a reasonable expectation of being 45

paid back, and that Murphy’s retention of the benefit was unjust as he acted unconscionably 46

by obtaining the loan by fraud. 47

48 JURISDICTION 49

7. This Court has jurisdiction pursuant to 28 U.S.C. §§ 157 and 1334. 50

8. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I) and 11 U.S.C. § 523. 51

FACTUAL BACKGROUND 52

9. Plaintiff is a premium financing company in the business of lending funds to a person or 53

company to cover the cost of an insurance premium, as well as the business of extending 54

business loans. 55


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10. PCIS is an independent insurance agency whose agents would often refer their clientele, 56

many of whom were in the marine and transportation industry, to Plaintiff for the purpose 57

of financing their annual insurance premium(s). 58

11. After PCIS’s clients obtained financing, Plaintiff would then forward the full premium 59

amount to PCIS. 60

12. PCIS would then forward those funds to an insurance broker/underwriter who would send 61

it to the insurer/carrier, or PCIS would send it to the actual insurer/carrier. 62

13. When an insured no longer needs insurance coverage (e.g. the sale of the company, sale of 63

an insured vehicle, reduction in work force, etc.) an insurer is obligated to return paid 64

premium to the finance company. 65

14. Under these circumstances, PCIS would receive the returned premium amounts from the 66

insurance broker/underwriter or from the insurer/carrier and then forward the monies to 67

Plaintiff. 68

15. At all relevant times Murphy was the only individual who had access to, and thus the ability 69

to issue payment from, PCIS’s financial account(s). 70

16. At all relevant times Murphy’s control over PCIS was so dominant and complete as to 71

render PCIS without a separate mind, will and existence. 72

17. On November 29, 2017, Plaintiff entered into a premium financing agreement in the 73

amount of $131,058.05 with PCIS’s client Henry Marine Services, LLC (“HMS”), to 74

finance annual premiums for three insurance policies from XL Catlin and one from Safe 75

Harbor Pollution Insurance (“SHPI”). (See Exhibit A). 76

18. On or about September 29, 2018, all four of the HMS insurance policies were canceled, 77

resulting in a total returned premium of $31,271.26. 78


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19. Based upon information and belief, PCIS received the returned premium due to Plaintiff 79

from XL Catlin and SHPI. 80

20. Despite requests for the remittance of the monies, Plaintiff has yet to receive the full 81

returned premium amount of $31,271.26 from Murphy or PCIS. 82

21. On August 23, 2018, Plaintiff entered into a premium financing agreement in the amount 83

of $132,042.88 with PCIS’s client Tom’s Marine and Salvage, LLC (“TMS”) to finance 84

annual insurance premium owed to Liberty Mutual Insurance Company via Southern 85

Insurance Underwriter’s Inc. (“SIU”) who operated as the insurance broker. (See Exhibit 86

B). 87

22. On or about December 12, 2018, TMS’s insurance coverage with Liberty Mutual was 88

canceled, resulting in a returned premium of $96,502.10 to SIU. 89

23. Based upon information and belief, PCIS owed SIU $40,081.00 in unpaid premiums on 90

other insurance policies, and therefore SIU credited PCIS this amount on the premium to 91

be returned. 92

24. On April 15, 2018, a check in the amount of $56,421.06, the remaining returned premium 93

amount, was issued by SIU to PCIS. 94

25. Despite requests for the remittance of the monies, Plaintiff never received the full returned 95

premium amount of $96,502.06 from Murphy and/or PCIS, nor the $13,632.35 in accrued 96

interest and returned commission on the account. 97

26. On August 24, 2018, Plaintiff entered into a premium financing agreement in the amount 98

of $10,377.00 with PCIS’s client Pierce Marine to finance annual insurance premiums 99

owed to The Hartford and Safe Harbor Pollution Insurance (“SHPI”). (See Exhibit C). 100


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27. On or about May 1, 2019, Pierce Marine’s Insurance coverage with The Hartford and SHPI 101

was canceled, resulting in a returned premium of $4,209.25 to PCIS. 102

28. In July of 2019, a check(s) in the amount of $4,209.25, was/were issued to PCIS for the 103

returned premium. 104

29. Despite requests for the remittance of the monies, Plaintiff has not received the fully 105

returned premium amount of $4,209.25 from Murphy/PCIS. 106

30. On November 6, 2018, Plaintiff entered into a premium financing agreement in the amount 107

of $8,568.00 with PCIS’s client 1st Crane and Logistics to finance annual insurance 108

premium owed to Atlantic Specialty Insurance Company (“ASIC”) via International 109

Marine Underwriters (“IMU”) who operated as the insurance broker. (See Exhibit D). 110

31. On or about March 11, 2019, 1st Crane and Logistics’s insurance coverage with ASIC was 111

canceled, resulting in a returned premium of $6,308.00 to IMU. 112

32. On April 15, 2019, a check in the amount of $6,308.00 premium was issued by IMU to 113

PCIS. 114

33. Despite requests for the remittance of the monies, Plaintiff has not received the returned 115

premium amount of $6,308.00 from Murphy/PCIS. 116

34. On September 24, 2018, Plaintiff entered into a Guaranty Agreement (“Agreement”) with 117

Murphy as the Guarantor, to extend a $100,000.00 loan to Murphy. (See Exhibit E). 118

35. Plaintiff agreed to enter into the Agreement based upon Murphy’s and/or his agent’s 119

representation to Plaintiff’s managing member, Sean Refrow (“Renfrow”), that he would 120

be able to pay off the loan the next month (October 2018) after outstanding insurance 121

commissions in an amount over and above $200,000.00 were received by PCIS. 122


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36. Murphy made this statement knowing full well that said statement was untrue as 123

Murphy/PCIS already owed more than $200,000.00 in unpaid insurance premiums to 124

numerous insurers. 125

37. Additionally, Murphy made said representations with the intention of deceiving Plaintiff/ 126

Renfrow, as Murphy was in dire need of the loan in order to pay on owed insurance 127

premiums that Murphy had previously stolen/embezzled from PCIS’s clients. 128

38. Plaintiff/Renfrow relied upon Murphy’s representations that he would pay off the loan the 129

following month to extend the loan to Murphy. 130

39. On October 16, 2018, Murphy issued a check via PCIS in the amount of $100,625.00, 131

which was then given by Murphy and/or one of Murphy’s agents to Renfrow, which 132

represented the amount of the loan owed. 133

40. At the time the check was issued by Murphy, Murphy had knowledge that PCIS had 134

insufficient funds to repay the loan. 135

41. Plaintiff, relying upon Murphy’s representation that the check was sufficient, deposited the 136

check. 137

42. Shortly after depositing the check, Renfrow was notified by his bank that the check was 138

insufficient. (See Exhibit F attached to initial Complaint). 139

43. Renfrow then confronted Murphy about the insufficient check only to be told that it was 140

likely a banking error. 141

44. From November of 2018 through July of 2019, Plaintiff/Renfrow repeatedly attempted to 142

collect on the loan from Murphy. 143


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45. On each occasion that Plaintiff/Renfrow spoke with Murphy about the outstanding loan, 144

Murphy told the Plaintiff that payment would be coming shortly after he obtained another 145

loan. 146

46. Murphy was aware that these representations to Plaintiff/Renfrow, to wit; that he would 147

pay Plaintiff upon receipt of the loan, were false as he was delinquent on a number of other 148

personal and business loans, as well as on the payment of previously embezzled insurance 149

premiums, and that any business loan he received would be insufficient to repay the loan. 150

47. Nonetheless, unaware of Murphy’s criminal conduct and that Murphy/PCIS was millions 151

of dollars in debt, Plaintiff/Renfrow relied upon Murphy’s representations and instead, to 152

his later detriment, delayed the legal process of collecting on said loan. 153

48. Plaintiff later became aware that on May 5, 2019, Murphy, as Guarantor, along with PCIS 154

and various other business entities Murphy owned, to wit; Point Clear Insurance Partners, 155

LLC (“PCIP”) and RTR Holdings, LLC (“RTR Holdings, LLC”); obtained a business loan 156

in the amount of $1,848,650.00 from Providence Bank. 157

49. At no time during the loan application process did Murphy disclose his loan with Plaintiff 158

to Providence Bank. 159

50. Of the $1,848,650.00 loan principal obtained from Providence Bank, $1,743,042.04 was 160

used to consolidate the debt load Murphy, PCIS, PCIP and RTR had acquired via other 161

business loans from three other banking institutions. 162

51. Despite representations made by Murphy to Plaintiff/Renfrow that the loan would be 163

satisfied once he obtained a business loan, none of the principal from the Providence Bank 164

loan was used to satisfy the $100,000.00 loaned by Plaintiff to Murphy. 165


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52. Subsequently, Plaintiff/Renfrow became aware that another business entity owned by 166

Murphy, PRM Real Estate, LLC, entered into a promissory note agreement with Century 167

Bank for $250,000.00, with Murphy serving once again as the Guarantor. 168

53. Again, despite representations made by Murphy to Plaintiff/Renfrow that the loan would 169

be satisfied once he obtained a business loan, none of the principal from the Century Bank 170

loan was used to satisfy the $100,000.00 loaned by Plaintiff to Murphy. 171

54. Plaintiff alleges that Murphy knew he and PCIS were insolvent and/or that he would be 172

unable to repay the loan the following month or at any time thereafter. 173

55. In mid to late June of 2019, Plaintiff/Renfrow was informed by a third party that PCIS had 174

ceased operations and that Murphy via PCIS had failed to remit well over $1,000,000.00 175

in insurance premiums to various insurers, leaving many of PCIS’s clients without 176

insurance coverage. 177

56. Since that time all attempts to collect on the loan have been rebuffed or otherwise ignored. 178

57. As a direct result of Murphy’s fraudulent misrepresentations, Plaintiff has sustained severe 179

financial loss. 180

58. On or about July 1, 2020, Murphy commenced the Bankruptcy Case by filing a voluntary 181

petition under Chapter 7 of Title 11 of the United States Code (the “Bankruptcy Code”). 182

COUNT I – CONVERSION/LARCENY/WILLFUL AND MALICIOUS INJURY 183

(Determination that debt is Non-Dischargeable Pursuant to 11 U.S.C. § 523(a)(4) and § 523(a)(6)) 184

59. Plaintiff/Creditor incorporates herein by reference the allegations of ¶¶ 1-58, above as though 185

fully set forth herein. 186

60. As set forth above in ¶¶ 17-33, Murphy, on numerous occasions, wrongfully detained monies 187

received by PCIS via returned insurance premiums that were due and owing to Plaintiff. 188


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61. Murphy then illegally assumed ownership of these monies, only to then illegally use those monies 189

to pay insurance premiums owed on other accounts, to pay off personal and/or business debt, and/or 190

for other personal gain. 191

62. Murphy’s conversion/theft of the returned premiums was done unlawfully, willfully, with 192

fraudulent intent, and was without justification or excuse. 193

63. Plaintiff alleges that the total amount converted/stolen by Murphy is approximately $188,403.67. 194

64. Plaintiff is entitled to have its debt determined non-dischargeable pursuant to 11 U.S.C. § 523(a)(4) 195

as Murphy’s conversion of said monies constitutes larceny and/or embezzlement. 196


as Murphy’s willful and malicious actions resulted in injury to Plaintiff and to Plaintiff’s property. 198

COUNT II – FRAUD 199


66. Plaintiff/Creditor incorporates herein by reference the allegations of ¶¶ 1-65, above as though fully 201

set forth herein. 202

67. As set forth in ¶¶ 34-58, Murphy falsely represented to Plaintiff that he would be able to pay his 203

$100,000.00 loan within the month of October 2018 upon PCIS’s receipt of insurance commissions 204

due and owing in an amount of over $200,000.00. 205

68. Plaintiff alleges that Murphy had a duty to disclose to Plaintiff the fact that he owed a large 206

sum of money on other business loans and/or that he owed payment on a number of 207

insurance premiums, as he had embezzled the funds, paid by clients to PCIS, that were 208

intended to pay for insurance coverage. 209

69. In issuing the loan, Plaintiff relied upon Murphy’s misrepresentations that he would be able 210

to satisfy the loan within the following month. 211


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70. By issuing the check with knowledge that he/PCIS did not have the funds sufficient to pay 212

the loan, Murphy represented to Plaintiff that he knew that the payment was due and owing 213

immediately upon his/PCIS’s receipt of the insurance commissions. 214

71. Plaintiff, to its detriment, further relied upon Murphy’s representations that he would 215

satisfy the loan once he obtained an additional business loan. 216

72. Plaintiff alleges that at the time of said misrepresentations, Murphy knew that he and PCIS 217

were insolvent, and thus would be unable to pay the $100,000.00 loan. 218

73. Plaintiff alleges that Murphy had knowledge that the $100,625.00 check issued by PCIS 219

on October 16, 2018 would not clear and/or would return as insufficient. 220

74. Plaintiff is entitled to have its debt determined non-dischargeable pursuant to 11 U.S.C. § 221

523(a)(2)(A) and 11 U.S.C. § 523(a)(2)(B) as Murphy, both verbally and in writing, willfully and 222

fraudulently misrepresented that he would be able to make payment on the loan within thirty days, 223

and that Plaintiff’s reliance on said misrepresentations, resulted in injury to Plaintiff and to 224

Plaintiff’s property. 225


as Murphy’s willful and malicious actions resulted in injury to Plaintiff and to Plaintiff’s property. 227

COUNT III – UNJUST ENRICHMENT 228


76. Plaintiff/Creditor incorporates herein by reference the allegations of ¶¶ 1-75, above as though fully 230

set forth herein. 231

77. Plaintiff/Creditor alleges that Murphy knowingly accepted the benefit of the $100,000.00 loan that 232

was provided by Plaintiff who had a reasonable expectation of being paid on the loan. 233

78. Plaintiff alleges that Murphy’s retention of the benefit provided by the loan was unjust as Plaintiff 234

acted under a mistake of fact, to wit; that Murphy/PCIS would be able to remit full payment on the 235


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loan within thirty (30) days of issuance and/or that Murphy’s retention of the benefit was obtained 236

by fraud. 237

79. Plaintiff is entitled to have its debt determined non-dischargeable pursuant to 11 U.S.C. § 238

523(a)(2)(A) and 11 U.S.C. § 523(a)(2)(B) as Murphy unjustly retained the benefit of the loan with 239

knowledge that he would be unable to pay the loan and/or fraudulently misrepresented the fact that 240

he would be able to make payment on the loan within thirty (30) days of issuance. 241

PRAYER FOR RELIEF 242

WHEREFORE, for all the foregoing reasons, Plaintiff respectfully requests relief as 243

follows: 244

1. An Order granting Plaintiff the value of the monies converted; and enjoining 245

Murphy to return to Plaintiff/Creditor the property illegally converted; 246

2. An Order granting Plaintiff the value of the $100,000.00 loan obtained by Murphy’s 247

fraudulent conduct; and enjoining Murphy to return to Plaintiff/Creditor the full 248

loan amount; 249

3. An Order determining that the Murphy’s debt to Plaintiff/Creditor in the amount of 250

$288,403.67 is non-dischargeable pursuant to Pursuant to 11 U.S.C. § 523(a)(2) and § 251

523(a)(6); 252

4. An Order seeking the payment of any and all attorney’s fees and costs incurred in bringing 253

this action; 254

5. Such other, further and different relief the Court deems appropriate. 255

256

Respectfully submitted, 257

/s John R. Cox 258 JOHN R. COX, Esq. 259 (AL Bar # Cox030) 260


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Attorney for Inland & Coastal Premium 261 Financing Company, LLC 262 JOHN R. COX, PLLC 263 30941 Mill Ln. 264 Suite G-334 265 Spanish Fort, AL 36527 266 267 268

CERTIFICATE OF SERVICE 269

I hereby certify that a copy of the foregoing Amended Complaint has been served upon the 270 following electronically or by first class United States mail, properly addressed with postage 271 prepaid, on this the 2nd day of October, 2020: 272

Alexandra K. Garrett, Esq. D. Parker Sweet, Trustee 273 Email: [email protected] Email: [email protected] 274 275 Jason R. Watkins, Esq. 276 Email: [email protected] 277 278 279 280 281 /s/ John R. Cox 282 Attorney for Inland & Coastal 283 Premium Financing Company, LLC 284


EXHIBIT A

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EXHIBIT B

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EXHIBIT C

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EXHIBIT D

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EXHIBIT E

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EXHIBIT F

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Documents

1 UNITED STATES BANKRUPTCY COURT 2 SOUTHERN …...31 2. Defendant/Debtor, Patrick R. Murphy, Jr., (“Murphy”) is an individual residing in the state 32 of Alabama. Case 20-11714