C-T of Virginia, Inc. v. Euroshoe Associates Ltd. Partnership, C-T

• Decision Date: 29 January 1992
• Docket Number: No. 91-1578,C-T,91-1578
• Citation: 953 F.2d 637
• Parties: NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. OF VIRGINIA, INCORPORATED, formerly known as Craddock-Terry Shoe Corporation, Plaintiff-Appellant, v. EUROSHOE ASSOCIATES LIMITED PARTNERSHIP; N.V. Euro Shoe Unie; Hecco Ventures; Cinerama, Incorporated; James J. Cotter, Limited; Michael R. Forman; Bartlett & Company; Michael J. Gade; Lewis B. Goode, Jr.; Edward F. Haley, III; W. Edwin Masencup, Jr.; G. Bruce Miller; Roland K. Peters; Elias Richards, III; Kenneth S. White; Alan L. Wurtzel; Cede & Company; Louise Aronson; Margot Aronson; Mary G. Aronson; Samuel B. Aronson; Ruth B. Cohn; Commercial Medical Company; The Edgar L. and Vera B. Dehner Living Trust; Edgar L. Dehner; Vera B. Dehner; Jonathan D. Dehner Company; The Fisher Trust; Kenneth L. Fisher; Sherilynn A. Fisher; C. Burton Gerhardt; Edgar T. Harris; Georgia K. Harris; Philip B. Herol D Trust; Philip B. Herold; Mary M. Hunt; W. Martin Johnson; Kray & Company; Wood W. Lay; Leslie S. Mayne; Dorothy L. Mondell; Philadep & Company; Schewel Furniture Company, Incorporated; Harold O. Walls; Karl D. Walls, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 637

953 F.2d 637

NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.

C-T OF VIRGINIA, INCORPORATED, formerly known as Craddock-Terry Shoe Corporation, Plaintiff-Appellant, v. EUROSHOE ASSOCIATES LIMITED PARTNERSHIP; N.V. Euro Shoe Unie; Hecco Ventures; Cinerama, Incorporated; James J Cotter, Limited; Michael R. Forman; Bartlett & Company Michael J. Gade; Lewis B. Goode, Jr.; Edward F. Haley III; W. Edwin Masencup, Jr.; G. Bruce Miller; Roland K Peters; Elias Richards, III; Kenneth S. White; Alan L. Wurtzel; Cede & Company; Louise Aronson; Margot Aronson; Mary G. Aronson; Samuel B. Aronson; Ruth B. Cohn; Commercial Medical Company; The Edgar L. and Vera B. Dehner Living Trust; Edgar L. Dehner; Vera B. Dehner; Jonathan D. Dehner Company; The Fisher Trust; Kenneth L. Fisher; Sherilynn A. Fisher; C. Burton Gerhardt; Edgar T. Harris; Georgia K. Harris; Philip B. Herol D Trust; Philip B. Herold; Mary M. Hunt; W. Martin Johnson; Kray & Company; Wood W. Lay; Leslie S. Mayne; Dorothy L. Mondell; Philadep & Company; Schewel Furniture Company, Incorporated; Harold O. Walls; Karl D. Walls, Defendants-Appellees.

No. 91-1578.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 30, 1991.

Decided Jan. 29, 1992.

Appeal from the United States District Court for the Western District of Virginia, at Lynchburg. Jackson L. Kiser, District Judge. (CA-90-43-L)

Argued: Harold Frank Bonacquist, Jr., Traub, Bonacquist, Yellen & Fox, New York City, for appellant; Virginia W. Powell, Hunton & Williams, Richmond, Va., Mitchell A. Karlan, Gibson, Dunn & Crutcher, New York City, for appellees.

On Brief: Paul Traub, Frederick J. Levy, Traub, Bonacquist, Yellen & Fox, New York City, Edward B. Lowry, Michie, Hamlett, Lowry, Rasmussen & Tweel, P.C., Charlottesville, Va., for appellant; Tyler P. Brown, Hunton & Williams, Richmond, Va., Stuart D. Karle, Gibson, Dunn & Crutcher, New York City, for appellees.

W.D.Va., 762 F.Supp. 675.

AFFIRMED.

Before MURNAGHAN and WILKINSON, Circuit Judges, and JOSEPH H. YOUNG, Senior United States District Judge for the District of Maryland, sitting by designation.

OPINION

PER CURIAM:

Plaintiff C-T of Virginia, Inc. ("C-T") appeals from an order of the district court granting summary judgment for the defendants on C-T's claims under 11 U.S.C. § 544(b) (1988). For the reasons stated more fully below, we affirm the judgment of the district court.

C-T is a Virginia corporation currently undergoing a Chapter 11 bankruptcy reorganization. The defendants are all former shareholders of C-T's corporate predecessor, Craddock-Terry Shoe Corporation ("Craddock-Terry"). In 1986, a leveraged buyout of Craddock-Terry took place at which time a Delaware corporation, HH Holdings ("Holdings"), created a wholly-owned subsidiary, HH Acquisitions ("Acquisitions"), for the sole purpose of completing this transaction. Acquisitions then purchased 100% of the stock in Craddock-Terry from the defendants and merged into C-T. Some two years later, C-T filed for bankruptcy under Chapter 11.

C-T, through the official Committee of Unsecured Creditors, subsequently filed the present action under § 544(b) seeking to have the buyout set aside and to have the defendants return the payments received so that the proceeds might be used to pay off C-T's creditors. C-T pursued two theories of recovery: 1) that the buyout was a voluntary conveyance under Va.Code Ann. § 55-81 (Michie 1986), and 2) that the buyout had unjustly enriched the defendants and that they should be forced to disgorge the proceeds. C-T also sought a ruling from the district court that, should it prevail, any claims against the estate brought by the defendants were to be subordinated to the claims of the unsecured general creditors.

The defendants moved for summary judgment. The district court held that C-T had failed to establish that the transfer at issue was not based upon "consideration deemed valuable in law" as required by the state statute. Because such a showing was a prerequisite to recovery under both C-T's theories, the court denied all relief. Because it denied C-T recovery, the court did not rule upon the subordination claim. C-T subsequently filed a timely notice of appeal.

This Court reviews a grant of summary judgment de novo applying the same standards employed by the district court. Felty v. GravesHumphreys Co., 818 F.2d 1126, 1127-28 (4th Cir.1987).

Virginia Code § 55-81 states, in part: "Every gift, conveyance, assignment, transfer or charge which is not upon consideration deemed valuable in law ... shall be void as to creditors whose debts have been contracted at the time it was made." To prevail under this statute, the plaintiff must show that there were existing creditors of C-T at the time the buyout took place and that the transfer was not upon "consideration deemed valuable in law." See ...