Dollar Corp., In re, s. 92-1944
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
| Writing for the Court | ENGEL |
| Citation | 25 F.3d 1320 |
| Parties | In re DOLLAR CORPORATION; Bra-Con Industries, Inc., Debtors. DOLLAR CORPORATION; Bra-Con Industries, Inc., Plaintiffs-Appellees, Cross-Appellants, v. William Z. ZEBEDEE, Defendant-Appellant, Cross-Appellee. |
| Docket Number | Nos. 92-1944,92-2027,s. 92-1944 |
| Decision Date | 13 June 1994 |
Page 1320
DOLLAR CORPORATION; Bra-Con Industries, Inc.,
Plaintiffs-Appellees, Cross-Appellants,
v.
William Z. ZEBEDEE, Defendant-Appellant, Cross-Appellee.
Sixth Circuit.
Decided June 13, 1994.
Page 1321
Raymond L. Morrow (briefed), Irwin Alterman (argued), Kemp, Klein, Umphrey & Endelman, Troy, MI, for plaintiffs-appellees cross-appellants.
James A. Newhard (briefed), Clark, Klein & Beaumont, Detroit, MI, Michael V. Kell (argued and briefed), Birmingham, MI, for defendant-appellant cross-appellee.
Before KENNEDY and NORRIS, Circuit Judges; and ENGEL, Senior Circuit Judge.
ENGEL, Senior Circuit Judge.
I.
Defendant William Zebedee, at all times relevant to this appeal, was the president, chairman of the board of directors, and largest single shareholder of plaintiff Dollar Corporation. Beginning in January, 1987, Zebedee began taking advances from Dollar for personal use. These advances were recorded by Dollar as accounts receivable, in the same manner that advances for business expenses to salespeople, a common occurrence, were recorded. Advances were repaid in one of two ways: (1) if the employee was a salesman, the advances would be offset against reimbursable expenses, (2) if the employee was an executive, such as Zebedee, the advances would be deducted from the employee's year-end bonus. In 1987 and 1988, Zebedee took advances of $115,296.64.
Page 1322
In 1986, Dollar elected to become a subchapter S corporation, which meant that Dollar would no longer be paying year-end bonuses. The parties, according to Zebedee, understood that any advances to executives would, from that point on, be deducted from the employee's share of earnings based on corporate profits. Dollar, however, never again earned a profit.
In 1987, Dollar sought to acquire Bra-Con Industries. Because the tax code prohibits subchapter S corporations from owning more than eighty percent of the stock of another corporation, Dollar orchestrated a transaction whereunder the company purchased seventy-five percent of Bra-Con's stock and Zebedee and two other Dollar shareholders acquired the remaining twenty-five percent. Dollar financed the purchase of the shares issued in the name of William Zebedee and the two other individuals. Dollar recorded these transactions as accounts receivable in amounts corresponding to the number of shares issued. When the transaction was completed, Zebedee owed Dollar, according to Dollar's books, $60,900 for his stake in Bra-Con.
On May 31, 1988, Dollar fired Zebedee. In December, 1988, Dollar and Bra-Con filed Chapter 11 bankruptcy petitions. In October, 1990, Dollar brought this adversary proceeding against Zebedee to recover the $115,296.64 representing his advances and the $60,900 representing the Bra-Con share purchases. Dollar premised its complaint upon several alternate legal theories, including breach of contract, breach of fiduciary duty, and conversion. Zebedee requested a jury trial and the case was accordingly withdrawn from bankruptcy court. The district court subsequently granted Dollar's summary judgment motion on its breach of contract claims and dismissed the remainder of the claims as moot.
Zebedee appeals, claiming that there remain genuine issues of material fact as to whether the parties intended Zebedee to repay the advances in the absence of any corporate earnings, and whether the parties intended Zebedee to pay for the Bra-Con shares issued in his name. Dollar cross-appeals the district court's dismissal of its counts alleging breach of fiduciary duty and conversion. Dollar seeks to litigate these claims in order to preserve a final judgment in the event Zebedee declares bankruptcy, because recovery under those counts will be nondischargeable in bankruptcy, unlike recovery under a breach of contract claim.
Because Zebedee has failed to rebut Dollar's summary judgment motion regarding Zebedee's liability for both the advances and the share purchase, and because we reject Dollar's contention that certain potentially nondischargeable claims must be litigated at the district court level at this time, we affirm, in part, the decision of the district court. We reverse only the district court's decision not to accord Zebedee credit for a $27,757 partial repayment of his Bra-Con share purchase debt.
II.
Zebedee argues that the $115,296.64 in advances from Dollar was only to have been offset against year-end corporate earnings in the same way that prior advances were only offset against year-end bonuses. He contends that the board of directors never discussed what would happen in years in which profits were not made. For this reason, he asserts that a factual issue exists whether he had an obligation to repay the money out of personal funds if the company was unable to funnel profits back to the shareholders.
Summary judgment is appropriate when the moving party shows 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). There is no genuine issue of material fact when "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party (Zebedee)." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Zebedee "must present affirmative evidence in order to defeat a properly supported motion for summary judgment," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986) (emphasis added), and, in
Page 1323
so doing, he must "do more than simply show that there is some metaphysical doubt as to...To continue reading
Request your trial
-
White v. Tamlyn, Civil Action No. 96-CV-40097.
...to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." In re Dollar Corp., 25 F.3d 1320, 1323 (6th Cir.1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986)). "The mere existe......
-
Woodard v. Erp Operating Ltd. Partnership, 04-70050.
...require submission to a [trier of fact] or whether it is so one-sided that one party must prevail as a matter of law." In re Dollar Corp., 25 F.3d 1320, 1323 (6th Cir.1994) (quoting Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505). The Court "must view the evidence in the light most favorable ......
-
Allmand Associates, Inc. v. Hercules Inc., Civil Action No. 93-40524.
...to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." In re Dollar Corp., 25 F.3d 1320, 1323 (6th Cir.1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986)). "The mere existe......
-
In re Rapp, Bankruptcy No. 06-52794.
...debts described in § 523(a)(2), (4) and (6) of the Bankruptcy Code. See 11 U.S.C. § 523(c); Dollar Corp. v. Zebedee (In re Dollar Corp.), 25 F.3d 1320, 1325 (6th Cir.1994) ("Congress intended `to take the determinations governed by 11 U.S.C. § 523(c) away from state courts and grant exclusi......