In re Outboard Marine Corp.

• Citation: 304 B.R. 844
• Decision Date: 29 January 2004
• Docket Number: Bankruptcy No. 00-B-37405.,Adversary No. 01-A-00471.
• Parties: In re OUTBOARD MARINE CORPORATION, et al., Debtors. Bank of America, N.A., successor in interest to Bank of America, N.A., formerly Nationsbank, N.A., in its capacity as Prepetition Agent Dip Agent, Plaintiff, v. Outboard Marine Corporation, et al., Defendants. Federal-Mogul Corporation, Counter-Plaintiff, v. Bank of America, N.A., successor in interest to Bank of America, N.A., formerly Nationsbank, N.A., in its capacity as Prepetition Agent Dip Agent, Counter-Defendant.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois

304 B.R. 844

In re OUTBOARD MARINE CORPORATION, et al., Debtors.

Bank of America, N.A., successor in interest to Bank of America, N.A., formerly Nationsbank, N.A., in its capacity as Prepetition Agent Dip Agent, Plaintiff, v. Outboard Marine Corporation, et al., Defendants.

Federal-Mogul Corporation, Counter-Plaintiff, v. Bank of America, N.A., successor in interest to Bank of America, N.A., formerly Nationsbank, N.A., in its capacity as Prepetition Agent Dip Agent, Counter-Defendant.

Bankruptcy No. 00-B-37405.

Adversary No. 01-A-00471.

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

January 29, 2004.

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Charles B. Leuin, Jenkens & Gilchrist, PC, Chicago, IL, for Plaintiff.

Julie C. Keller, Dykema Gossett PLLC, Chicago, IL, Margaret A. Costello, Detroit, MI, for Defendant.

Kathleen H. Klaus, Janice Alwin, Shaw Gussis, Fishman, Glantz, Wolfson & Towbin, LLC, Chicago, IL, for Trustee.

MEMORANDUM OPINION

JOHN H. SQUIRES, Bankruptcy Judge.

These matters come before the Court on two motions. First, Counter-Plaintiff Federal-Mogul Corporation ("Federal-Mogul") has moved for partial summary judgment pursuant to Federal Rule of Bankruptcy Procedure 7056 and Federal Rule of Civil Procedure 56 on the complaint filed by Counter-Defendant Bank of America, N.A. (the "Bank"), seeking a determination of the validity and priority of a lien in the proceeds of certain tooling that Outboard Marine Corporation and its related debtor entities (collectively, "OMC") sold to Bombardier Motor Corporation of America ("Bombardier"). In addition, the Bank has moved to strike portions of the affidavit of Richard Harvey, which was submitted in support of Federal-Mogul's motion for partial summary judgment.

For the reasons stated herein, the Court finds that Federal-Mogul failed to assert its lien according to the notice requirement set forth in the relevant Indiana Fabricator's Lien Statute and that, therefore, Federal-Mogul is not entitled to judgment in its favor as a matter of law. Accordingly, the Court denies Federal-Mogul's motion, and its third affirmative defense is dismissed. Further, the Court grants the Bank's motion to strike portions of Harvey's affidavit. In so doing, the Court strikes the last sentence of paragraph 7 of the affidavit, the corresponding assertion in paragraph 7 of Federal-Mogul's 7056-1 statement, and the language in paragraph 10 of the affidavit which refers to "the customs in Federal-Mogul's industry."

I. JURISDICTION AND PROCEDURE

The Court has jurisdiction to entertain these matters pursuant to 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. They are core proceedings under 28 U.S.C. § 157(b)(2)(A), (K), and (O).

II. APPLICABLE STANDARDS

A. Summary Judgment

In order to prevail on a motion for summary judgment, the movant must meet the statutory criteria set forth in Rule 56 of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7056. Rule 56(c) reads in part:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Fed.R.Civ.P. 56(c). See also Dugan v. Smerwick Sewerage Co., 142 F.3d 398, 402 (7th Cir.1998).

The primary purpose for granting a summary judgment motion is to avoid unnecessary trials when there is no genuine issue of material fact in dispute. Trautvetter v. Quick, 916 F.2d 1140, 1147 (7th Cir.1990); Farries v. Stanadyne/Chi. Div., 832 F.2d 374, 378 (7th Cir.1987) (quoting Wainwright Bank & Trust Co. v. Railroadmens Fed. Sav. & Loan Ass'n of Indianapolis, 806 F.2d 146, 149 (7th Cir.1986)). Where the material facts are not in dispute, the sole issue is whether the moving party is entitled to a judgment as a matter of law. ANR Advance Transp. Co. v. Int'l Bhd. of Teamsters, Local 710, 153 F.3d 774, 777 (7th Cir.1998). In 1986, the United States Supreme Court decided a trilogy of cases which encourages the use of summary judgment as a means to dispose of factually unsupported claims. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The burden is on the moving party to show that no genuine issue of material fact is in dispute. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Celotex, 477 U.S. at 322, 106 S.Ct. 2548; Matsushita, 475 U.S. at 585-86, 106 S.Ct. 1348.

All reasonable inferences drawn from the underlying facts must be viewed in a light most favorable to the party opposing the motion. Parkins v. Civil Constructors of Ill., Inc., 163 F.3d 1027, 1032 (7th Cir.1998). The existence of a material factual dispute is sufficient only if the disputed fact is determinative of the outcome under applicable law. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Frey v. Fraser Yachts, 29 F.3d 1153, 1156 (7th Cir.1994). "[S]ummary judgment is not an appropriate occasion for weighing the evidence; rather, the inquiry is limited to determining if there is a genuine issue for trial." Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.1990). The Seventh Circuit has noted that trial courts must remain sensitive to fact issues where they are actually demonstrated to warrant denial of summary judgment. Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060, 1065-66 (7th Cir.2000); Szymanski v. Rite-Way Maint. Co., 231 F.3d 360, 364 (7th Cir.2000).

The party seeking summary judgment always bears the initial responsibility of informing the court of the basis for its motion, identifying those portions of the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once the motion is supported by a prima facie showing that the moving party is entitled to judgment as a matter of law, a party opposing the motion may not rest upon the mere allegations or denials in its pleadings; rather, its response must show that there is a genuine issue for trial. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Matsushita, 475 U.S. at 587, 106 S.Ct. 1348; Patrick v. Jasper County, 901 F.2d 561, 565 (7th Cir.1990). The manner in which this showing can be made depends upon which party will bear the burden of persuasion at trial. If the burden of persuasion at trial would be on the non-moving party, the party moving for summary judgment may satisfy Rule 56's burden of production either by submitting affirmative evidence that negates an essential element of the non-moving party's claim or by demonstrating that the non-moving party's evidence is insufficient to establish an essential element of the non-moving party's claim. See Union Nat'l Bank of Marseilles v. Leigh (In re Leigh), 165 B.R. 203, 213 (Bankr.N.D.Ill.1993) (citation omitted).

Rule 56(d) provides for the situation when judgment is not rendered upon the whole case, but only a portion thereof. The relief sought pursuant to subsection (d) is styled partial summary judgment. Partial summary judgment is available to dispose of one or more counts of the complaint in their entirety. Commonwealth Ins. Co. of N.Y. v. O. Henry Tent & Awning Co., 266 F.2d 200, 201 (7th Cir.1959); Biggins v. Oltmer Iron Works, 154 F.2d 214, 216-17 (7th Cir.1946); Quintana v. Byrd, 669 F.Supp. 849, 850 (N.D.Ill.1987); Arado v. Gen. Fire Extinguisher Corp., 626 F.Supp. 506, 509 (N.D.Ill.1985); Capitol Records, Inc. v. Progress Record Distrib., Inc., 106 F.R.D. 25, 28 (N.D.Ill.1985); Strandell v. Jackson County, Ill., 648 F.Supp. 126, 136 (S.D.Ill.1986); In re Network 90 Degrees, Inc., 98 B.R. 821, 831 (Bankr.N.D.Ill.1989). Rule 56(d) provides a method whereby a court can narrow issues and facts for trial after denying in whole or in part a motion properly brought under Rule 56. Capitol Records, 106 F.R.D. at 29. In the case at bar, Federal-Mogul seeks partial summary judgment as its motion relates only to the third affirmative defense asserted in its answer.

Local Bankruptcy Rule 7056-1 of the Local Bankruptcy Rules for the United States Bankruptcy Court for the Northern District of Illinois, which deals with summary judgment motions, was modeled after LR56.1 of the Local Rules of the United States District Court for the Northern District of Illinois. Hence, the case law construing LR56.1 and its predecessor Local Rule 12 applies to Local Bankruptcy Rule 7056-1.

Pursuant to Local Bankruptcy Rule 7056-1, a motion for summary judgment imposes special procedural burdens on the parties. Specifically, the Rule requires the moving party to supplement its motion and supporting memorandum with a statement of undisputed material facts ("7056-1 statement"). The 7056-1 statement "shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph. Failure to submit such a statement constitutes grounds for denial of the motion." Local Bankr.R. 7056-1B.

Federal-Mogul filed a 7056-1 statement that fully complies with the Rule. It includes numbered paragraphs establishing undisputed facts with specific references to accompanying exhibits, as well as the affidavit of Richard Harvey ("Harvey"). Harvey is the technical director at Federal-Mogul's technical center in Logansport, Indiana. Harvey Aff. at ¶ 1. He claims to have personal knowledge about the...