IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Norfolk Division

In re: Chapter 7

FLOYD M. MARTIN, JR. Case No.: 14-74037-FJS

Debtor.

CAROLYN L CAMARDO,

CHAPTER 7 TRUSTEE

Plaintiff, 

v. 

 Adversary Proceeding No. __________

VINCENT J. MASTRACCO

Serve: 305 Brook Avenue, Apt. 405

Norfolk, Virginia 23510

BRUCE C. HOLBROOK

Serve: 1107 Botetourt Gardens

Norfolk, Virginia 23407

WELLS FARGO BANK, NA

Serve: East Business Banking

600 Thimble Shoals Blvd. 

Newport News, VA 23606

TRSTE, INC.,

Serve: 7711 Plantation Road

Roanoke, VA 24019

JEFFREY M. STEDFAST, Deed of Trust Trustee

DENNIS T. LEWANDOWSKI, Deed of Trust Trustee

150 West Main Street, Suite 2100

Post Office Box 3037

Norfolk, Virginia 23514

Defendants. 

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COMPLAINT

Carolyn L. Camardo, in her capacity as Chapter 7 Trustee for the estate of the Debtor (the 

“Trustee”), by her undersigned counsel, and for her complaint (the “Complaint”) against the 

above-captioned Defendants (each, a “Defendant” and together, the “Defendants”) states as 

follows:

I. JURISDICTION AND VENUE

1. On November 5, 2014 (the “Petition Date”), the Debtor commenced this case 

by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code.

2. On February 5, 2016, this case was converted to a proceeding under chapter 7.

3. Following conversion of the case, the Trustee was appointed to serve as 

chapter 7 trustee in this case and continues to serve in that capacity. 

4. This Court has jurisdiction over this adversary proceeding pursuant to 28 

U.S.C. §§ 157 and 1334. 

5. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. 

II. INTERESTED PARTIES AND BACKGROUND

6. The Trustee is the chapter 7 trustee for the bankruptcy estate of In re Floyd M. 

Martin, Jr., Case No. 14-74037. 

7. Defendant Vincent J. Mastracco (“Mastracco”) is a resident of Virginia and a 

1% owner and member of FBV, LLC (“FBV”). 

8. Defendant Bruce C. Holbrook (“Holbrook,” and together with Mastracco, the 

“Minority Members”) is a resident of Virginia and a 1% owner and member of FBV.

9. FBV is a Virginia limited liability company with its principal place of business 

at 150 West Main Street, Suite 2100, Norfolk, Virginia. 

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10. As of the Petition Date, the Debtor owned an undivided 98% interest in FBV, 

which property became part of the Debtor’s bankruptcy estate upon the filing of the Debtor’s 

voluntary bankruptcy petition in this Court. 

11. As chapter 7 trustee, the Trustee is charged with administering the Debtor’s 

estate and his assets, including the Debtor’s 98% undivided interest in FBV. 

12. The Debtor’s and the Minority Members’ respective ownership interests are 

set forth in that certain Operating Agreement dated December 27, 2012, and attached hereto as 

Exhibit A (the “Operating Agreement”). The Debtor and the Minority Members own FBV as 

joint tenants or as tenants in common. 

13. The Operating Agreement does not require the Debtor to take any action in 

order to receive distributions from FBV.

14. As a result, the Operating Agreement is not an executory contract. 

15. FBV owns certain real property located at 4388 Nansemond Parkway, Suffolk, 

Virginia (the “Property”), which Property is more particularly described as follows:

16. Wells Fargo Bank, N.A. (“Wells Fargo”) is a national banking association 

existing under the laws of the United States of America and is authorized to do business in the 

Commonwealth of Virginia. 

17. Defendant TRSTE, Inc. is trustee under that certain Deed of Trust dated 

December 26, 2012, duly recorded in the Circuit Court for the City of Suffolk and attached 

hereto as Exhibit B (the “Deed of Trust”).

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18. The Deed of Trust pledges the Property as security for FBV’s obligations to 

Wells Fargo under a promissory note dated December 26, 2012 (the “Promissory Note”).

19. The Promissory Note is attached hereto as Exhibit C.

20. The current amount outstanding under the Promissory Note is approximately 

$1.8 million. No default has occurred under the Promissory Note. 

21. The Debtor and each of the Minority Members executed an absolute and 

unconditional commercial guaranty of full and punctual payment and satisfaction of FVB’s 

obligations to Wells Fargo. True and correct copies of both commercial Guaranties (each a 

“Guaranty” and together, the “Guaranties”) are attached hereto as Exhibit D. 

22. The Minority Members purport to have obtained an interest in certain real 

property owned by the Debtor and the Debtor’s wife, Mrs. Anita F. Martin (“Mrs. Martin”) as

tenants by the entireties and located at 3885 Bruce Road, Chesapeake VA (“Parcel C”).

23. Parcel C is more particularly described on a deed of trust dated December 1, 

2012 and but not recorded in the Circuit Court for the City of Chesapeake until July 25, 2013 

(the “Mastracco Deed of Trust”). A true and correct copy of the Mastracco Deed of Trust, 

which was prepared by Charles Land, an attorney and member of Kaufman & Canoles, is 

attached hereto as Exhibit E. 

24. According to the Mastracco Deed of Trust, Parcel C was pledged to Jeffrey M. 

Stedfast and Dennis T. Lewandowski(the “Mastracco Trustees”), both of whom are attorneys 

and members of Kaufman & Canoles, as collateral for the benefit of the Minority Members to 

secure 

the repayment of any and all loans, liabilities, obligations, advances, re-advances, and 

extensions or renewals of credit, whether absolute, obligatory, or contingent, made from 

time to time, due and owing by the Grantor and/or any entity of which the Grantor (or 

either of them) own more than 50% of the ownership interests to Vincent J. Mastracco, 

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Jr. and/or Bruce C. Holbrook (collectively, the “Noteholder”).

Mastracco Deed of Trust, p. 1.

25. At no relevant time was any repayment “due and owing” from either grantor 

to Mastracco or Holbrook.

26. As of the date the Mastracco Deed of Trust was granted by its grantors, no 

obligations were due and owing from the Debtor or Mrs. Martin to Mastracco or Holbrook. 

27. As of the Petition Date, no obligations were due and owing from the Debtor or 

Mrs. Martin to Mastracco or Holbrook. 

28. As of the date of the filing of this Complaint, no obligations are due and owing 

from the Debtor or Mrs. Martin to Mastracco or Holbrook. 

29. There is no ‘Note’ or other written obligation that is held by the parties 

indicated as Noteholder beneficiaries under the Mastracco Deed of Trust.

30. The Mastracco Deed of Trust secures no valid or enforceable repayment 

obligation.

31. Therefore, the Mastracco Deed of Trust creates no valid or enforceable lien. 

32. The Minority Members acted inequitably in taking the Mastracco Deed of 

Trust where no valid or enforceable repayment obligation existed any relevant time. 

33. The Minority Members’ inequitable conduct in taking the Mastracco Deed of 

Trust has injured creditors of the Debtor and confers an unfair advantage to the Minority 

Members. 

34. In giving the Mastracco Deed of Trust, the Debtor intended to hinder, delay or 

defraud his creditors, including Southern Bank (“Southern”). 

35. The Debtor retained interests, including a possessory interest, in Parcel C after 

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giving the Mastracco Deed of Trust. The Debtor gave the Mastracco Deed of Trust during a 

time when the Debtor was being pursued, or expected to be pursued, by creditors, including 

Southern. The Debtor gave the Mastracco Deed of Trust for grossly inadequate consideration, 

or no consideration at all. 

36. On March 11, 2015, proof of claim number 17-1 (the “Mastracco Claim”) 

was executed and filed by Michelle Bolton, who, at all relevant times, has been employed by 

Kaufman & Canoles as its Records Supervisor. The Mastracco Claim asserts a right to payment 

in the secured amount of $1,985,000 and appends the Mastracco Deed of Trust as its underlying 

basis.

37. The Minority Members acted inequitably by causing the Mastracco Claim to 

be filed asserting a right to payment, where no right to payment existed at any relevant time. 

38. The Minority Members acted inequitably by filing a false proof of claim 

asserting a right to payment in an amount that could never, under any theory, be due. 

39. The Minority Members’ inequitable conduct in filing the Mastracco Claim has 

injured creditors of the Debtor and confers an unfair advantage to the Minority Members. 

40. According to the schedules and statements filed herein on behalf of the Debtor, 

the Mastracco Claim is contingent and liquidated in the amount of 1,985,000.00.

41. According to the schedules and statements filed herein on behalf of the Debtor, 

the value of Parcel C as of the Petition Date was $1,075,200.00. 

42. Parcel C is allegedly encumbered a first deed of trust in favor of Kaufman & 

Canoles, securing an obligation in the stated amount of $200,000.

43. Parcel C is also subject to a lien in favor of the City of Chesapeake in the 

amount of $16,519. 

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44. Southern is the largest unsecured creditor of the Debtor.

45. Southern’s unsecured claims against the Debtor constitute joint claims against 

the Debtor and Mrs. Martin, as Southern has obtained a federal court judgment liquidating its 

claims against Mrs. Martin and has filed a proof of claim herein to which no objection has been 

made.

46. As of the Petition Date, Southern’s joint claims against the Debtor and Mrs. 

Martin exceeded $2,297,587. 

Count I

(Approval to Sell Co-Owned Property Pursuant to 11 U.S.C. § 363(h))

47. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint.

48. As of the Petition Date, the Debtor held an ownership interest in FBV. 

49. The Trustee is entitled to the benefit of all right, title, and interest of the Debtor 

in property including the Debtor’s ownership interest in FBV. 

50. Partition of FBV among the estate and the Minority Members is impracticable. 

51. Sale of the estate’s undivided interest in FBV would realize significantly less 

for the estate than sale of FBV free of the interests of the Minority Members. 

52. The benefit to the estate of a sale of FBV free of the interests of the Minority 

Members outweighs the detriment, if any, to the Minority Members. 

53. FBV is not used in the production, transmission, or distribution for sale of 

electric energy or natural or synthetic gas for heat, light, or power. 

WHEREFORE, the Trustee respectfully requests entry of an order authorizing the 

Trustee to sell the interests of the bankruptcy estate and any and all co-owners of FBV pursuant 

to 11 U.S.C. § 363(h), subject to co-owner rights provided by 11 U.S.C. §§ 363(i) and (j), and 

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subject to this Court’s subsequent confirmation and approval of the resulting contract of sale, 

free and clear of all liens, claims, encumbrances, and interests, with such liens, claims, 

encumbrances and interests to attach to the proceeds of such sale to the same extent, and in the 

same priority, and that the Court grant the Trustee such other and further relief as is just and 

proper. 

Count II

(Turnover)

54. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint.

55. The Debtor’s interest in FBV is property of the bankruptcy estate. 

56. The Debtor’s interest in FBV is not of inconsequential value to the estate, and 

constitutes property that the Trustee may use, sell, or lease under 11 U.S.C. § 363. 

57. The Minority Members may be in possession, custody, or control of property 

of FBV that is necessary to the Trustee’s efforts to market or sell FBV. 

WHEREFORE, the Trustee respectfully requests entry of an order pursuant to 11 

U.S.C. § 542 ordering the Minority Members to grant to the Trustee and her agents access to all 

property of FBV, including books and records of FBV, as may be in the possession or control 

of either or both of the Minority Members.

Count III

(Declaration of Lien, Claims, Encumbrances, and Interests)

58. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint.

59. The Court has the authority to determine the nature, extent, and validity of 

liens, claims, encumbrances and interests, if any, against the assets of FBV, including the 

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Property, and the proceeds from the sale thereof. 

60. The Court has the authority to determine the nature, extent, and validity of 

liens, claims, and encumbrances against assets of the Debtor, including Parcel C. 

WHEREFORE, the Trustee respectfully requests entry of an order determining the 

nature, extent, and validity of (i) liens, claims, encumbrances and interests, if any, against the 

assets of FBV, including the Property, and the proceeds from the sale thereof; and (ii) the 

Mastracco Deed of Trust. The Trustee further requests that the Court grant the Trustee such 

other and further relief as is just and proper. 

Count IV

(Avoidance and Recovery of Fraudulent Transfers

Pursuant to 11 U.S.C. §§ 548(a)(1)(B) and 550)

61. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint.

62. By giving the Mastracco Deed of Trust, the Debtor granted a security interest 

in Parcel C to the Mastracco Trustees, and thereby made a transfer (the “Transfer”) of the 

Debtor’s interest in property to the Mastracco Trustees, for the benefit of Mastracco and 

Holbrook. 

63. In exchange for the Transfer, the Debtor received less than reasonably 

equivalent value. 

64. At the time of the Transfer, the Debtor was insolvent or became insolvent as a 

result thereof. 

65. At the time of the Transfer, the Debtor intended to incur, or believed that the 

Debtor would incur, debts that would be beyond the Debtor’s ability to pay as such debts 

matured. 

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66. The Transfer constitutes an avoidable transfer pursuant to 11 U.S.C. § 

548(a)(1)(B). 

67. The Mastracco Trustees are the initial transferees of the Transfer, which 

Transfer was made for the benefit of Mastracco and Holbrook.

68. The Transfer is recoverable from the Mastracco Trustees, Mastracco and 

Holbrook pursuant to 11 U.S.C. § 550, to be preserved for the benefit of the estate under 11 

U.S.C. § 551. 

WHEREFORE, the Trustee requests that judgment be entered avoiding the Transfer as 

a fraudulent transfer pursuant to 11 U.S.C. § 548(a)(1)(B); preserving its value for the benefit 

of the estate pursuant to 11 U.S.C. 551; and granting judgment against Mastracco and Holbrook 

pursuant to 11 U.S.C. § 550, plus attorneys’ fees and costs.

Count V

(Avoidance and Recovery of Fraudulent Transfers Pursuant to

11 U.S.C. § 544(b) and Va. Code § 55-81)

69. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint. 

70. At all times relevant to the Transfer, there have been one or more creditors 

who have held and still hold matured or unmatured unsecured claims against the Debtor that

were and are allowable claims.

71. The Transfer was made without any consideration and at a time when the 

Debtor was insolvent or rendered insolvent thereby.

72. The Mastracco Trustees are the initial transferees of the Transfer, which 

Transfer was made for the benefit of Mastracco and Holbrook.

73. The Transfer is recoverable from the Mastracco Trustees, Mastracco and 

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Holbrook pursuant to 11 U.S.C. § 550, to be preserved for the benefit of the estate under 11 

U.S.C. § 551. 

WHEREFORE, and pursuant to Virginia Code § 55-81 and 11 U.S.C. §§ 544(b), 550(a) 

and 551 of the Bankruptcy Code, the Trustee requests that judgment be entered avoiding the 

Transfer, or the value thereof, for the benefit of the estate and granting judgment against 

Mastracco and Holbrook pursuant to 11 U.S.C. § 550, plus attorneys’ fees and costs.

Count VI

(Avoidance and Recovery of Fraudulent Transfers

Pursuant to 11 U.S.C. §§ 548(a)(1)(A) and 550)

74. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint. 

75. The Transfer was a transfer of the Debtor’s interest in property, made to the 

Mastracco Trustees, for the benefit of Mastracco and Holbrook.

76. The Transfer was made by the Debtor with actual intent of the Debtor to 

hinder, defraud, or delay his existing and/or subsequent creditors, including but not limited to, 

Southern.

77. The Transfer is avoidable pursuant to 11 U.S.C. § 548(a)(1)(A). 

78. The Mastracco Trustees are the initial transferees of the Transfer, which 

Transfer was made for the benefit of Mastracco and Holbrook.

79. The Transfer is recoverable from the Mastracco Trustees, Mastracco and 

Holbrook pursuant to 11 U.S.C. § 550, to be preserved for the benefit of the estate under 11 

U.S.C 551. 

WHEREFORE, the Trustee requests that judgment be entered avoiding the 

Transfer as fraudulent transfers pursuant to 11 U.S.C. § 548(a)(1)(A); preserving its value for 

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the benefit of the estate pursuant to 11 U.S.C. § 551; and granting judgment against Mastracco 

and Holbrook pursuant to 11 U.S.C. § 550, plus attorneys’ fees and costs.

Count VII

(Avoidance and Recovery of Fraudulent Transfers Pursuant to 11 U.S.C. § 

544(b) and Va. Code § 55-80

80. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint. 

81. At all times relevant to the Transfer, there have been one or more creditors 

who have held and still hold matured or unmatured unsecured claims against the Debtor that 

were and are allowable claims. 

82. The Transfer was made by the Debtor with actual intent to hinder, delay, or 

defraud creditors of the Debtor, including but not limited to, Southern. 

83. The Mastracco Trustees are the initial transferees of the Transfer, which 

Transfer was made for the benefit of Mastracco and Holbrook

84. The Transfers are recoverable from the Mastracco Trustees, Mastracco and 

Holbrook pursuant to 11 U.S.C. § 550, to be preserved for the benefit of the estate under 11 

U.S.C § 551. 

WHEREFORE, and pursuant to Virginia Code § 55-80 and 11 U.S.C §§ 544(b), 550(a) 

and 551 of the Bankruptcy Code, the Trustee requests that judgment be entered avoiding the 

Transfer, or the value thereof, for the benefit of the estate and granting judgment against 

Mastracco and Holbrook pursuant to 11 U.S.C. § 550, plus attorneys’ fees and costs.

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Count VIII

(Disallowance of Claim Pursuant to 11 U.S.C. § 502(d))

85. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint.

86. The Transfer referenced in the counts above is avoidable and recoverable as 

set forth therein pursuant to the applicable statutes alleged. 

87. Neither Mastracco nor Holbrook has paid the amount asserted or turned over 

the property sought to be avoided and recovered by the Trustee. 

88. The Mastracco Claim should be disallowed pursuant to 11 U.S.C. § 502(d).

WHEREFORE, the Trustee requests that an Order be entered disallowing any claims by 

Mastracco and Holbrook, including the Mastracco Claim, pursuant to 11 U.S.C. § 502(d).

Count IX

(Determination and Disallowance of Claim Pursuant to 11 U.S.C. § 502)

89. The Trustee incorporates by reference, as if fully restated herein, the preceding 

allegations contained in all prior paragraphs of this Complaint.

90. Pursuant to 11 U.S.C. § 502, this Court is vested with authority to determine 

the amount and character of claims against the estate. 

91. The Mastracco Claim should be disallowed in its entirety to the extent it asserts 

a secured obligation pursuant to 11 U.S.C. § 502(b) and (e).

92. The Mastracco Claim should be disallowed in its entirety to the extent it asserts 

an unsecured obligation pursuant to 11 U.S.C. § 502(b) and (e). 

93. To the extent the Mastracco Claim constitutes a contingent obligation, this 

Court should estimate that the amount of such obligation is $0, pursuant to 11 U.S.C. § 502(c). 

WHEREFORE, the Trustee requests that an Order be entered disallowing the Mastracco 

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Claim in its entirety, or in the alternative, estimating that the amount of the contingent Mastracco 

Claim is $0, pursuant to 11 U.S.C. § 502.

Count X

(Subordination of Claim Pursuant to 11 U.S.C. § 510)

94. The Trustee incorporates by reference, as if fully restated herein, the 

preceding allegations contained in all prior paragraphs of this Complaint. 

95. The Minority Members acted inequitably in taking the Mastracco Deed of 

Trust and in causing the Mastracco Claim to be filed. 

96. The Minority Members’ inequitable conduct has injured creditors of the 

Debtor and confers an unfair advantage to the Minority Members. 

97. Subordination of the Mastracco Claim is not inconsistent with the provisions 

of the Bankruptcy Code. 

98. The Mastracco Claim should be subordinated pursuant to 11 U.S.C. § 510. 

WHEREFORE, the Trustee requests that an Order be entered subordinating the 

Mastracco Claim in its entirety pursuant to 11 U.S.C. § 510.

Respectfully submitted, 

/s/ Cullen D. Speckhart

Cullen D. Speckhart (VSB No. 79096)

WOLCOTT RIVERS GATES

919 E. Main Street, Richmond, VA 23219

200 Bendix Road, Ste. 300 Virginia Beach, VA 23452

Telephone: (757) 497-6633

Direct: (757) 470-5566

Email: cspeckhart@wolriv.com

Counsel to Carolyn Camardo

Chapter 7 Trustee

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