Home New Cases MBM Sand Company Urges Court to Rule in its Favor, Says Debt Were Wrongfully Owed to the Debtor

MBM Sand Company Urges Court to Rule in its Favor, Says Debt Were Wrongfully Owed to the Debtor

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March 3, 2021, Southern District of Texas – Debtor MBM Sand Company, LLC (“MBM”) owned a property at the bank of the San Jacinto River. According to the papers filed with the court, MBM purchased the property for its sand mining operations and contracted with Skilled International, LLC ( “Defendant”) to mine sand from the property. MBM supposedly entered into an earnest money contract with Somaiah Kurre to sell the property. As per the facts alleged in the complaint, the contract was subsequently assigned to an entity named, Rohini Enterprises, Inc. Rohini Enterprises and Defendant allegedly entered into a lease agreement. Under the terms of the agreement, Defendant was allegedly required to deposit $500,000 with the title company, which would represent part of the cash portion of Rohini Enterprises’ payment to MBM at the eventual closing.

As per the complaint, the Defendant never made any payment to the title company, and Rohini Enterprises never closed on the sale. Allegedly, despite this, Defendant continued to occupy the property, constructed a concrete pad, moved in, and installed sand sorting and mixing equipment. During its occupancy of the property, Defendant apparently contracted with some vendors for the purchase of materials and labor for an amount aggregating to $130,688.40. The complaint stated that the Defendant did not pay these vendors’ invoices and, they filed mechanic’s lien affidavits creating encumbrances on the property. Adding further, the complaint asserts that although MBM was never a party to any of these contracts between Defendant and the respective vendors, due to Defendants’ conduct, MBM’s property could also be subject to execution, if the vendors obtain any eventual judgment against Defendant. 

The Plaintiff-Debtor sued Defendant, alleging that Defendant is liable to MBM for the amount outlined in the mechanic’ s lien affidavits filed by the vendors. The Plaintiff-Debtor asserts that since MBM neither contracted with any of Defendant’s vendors that filed mechanic’s lien affidavits nor directed Defendant to enter into any of these contracts, MBM should not be required to pay Defendant’s debts to third parties. Further, if MBM or its property becomes liable for any such payment, Defendant should reimburse MBM all amounts paid to satisfy its debts.

The Plaintiff also asserts that since Defendant is occupying the property without any benefit of a lease agreement, MBM is unable to have any other party operate on the property, or sell the property. Thus, Plaintiff requests the court that Defendant must compensate MBM for the fair rental value of the property during its continued occupancy and should also compensate for the cost of dismantling and removing the sand sorting and mixing equipment.

The case is In re MBM Sand Company, LLC in the United States Bankruptcy Court for the Southern District of Texas, case number: 20-32883. Bankruptcy Judge Eduardo V Rodriguez is overseeing the case. The Debtor is represented by William P Haddock from Pendergraft & Simon, LLP.

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