F.D.I.C. v. Anchor Properties

• Decision Date: 03 November 1993
• Docket Number: No. 93-1542,93-1542
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Bank of New England, Plaintiff, Appellee, v. ANCHOR PROPERTIES, et al., Defendants. Richard Gleicher, Individually, and as he is Trustee of Grosvenor Park Realty Trust, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 27

13 F.3d 27

FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Bank

of New England, Plaintiff, Appellee, v. ANCHOR PROPERTIES, et al., Defendants.

Richard Gleicher, Individually, and as he is Trustee of

Grosvenor Park Realty Trust, Defendant, Appellant.

No. 93-1542.

United States Court of Appeals, First Circuit.

Heard Nov. 3, 1993.

Decided Jan. 5, 1994.

Peter R. Beatrice, Jr., with whom Beatrice & Beatrice was on brief, for defendant, appellant.

Shannon M. Fitzpatrick, with whom Williams & Grainger was on brief, for plaintiff, appellee F.D.I.C.

Before CYR, Circuit Judge, BOWNES, Senior Circuit Judge, and STAHL, Circuit Judge.

BOWNES, Senior Circuit Judge.

This appeal asks us to review the district court's grant of summary judgment setting aside a conveyance of real property by defendant-appellant, Richard Gleicher, as fraudulent. Gleicher disputes that he intended to commit a fraud, and argues that summary judgment is therefore inappropriate. Plaintiff-appellee, the Federal Deposit Insurance Corporation (FDIC), contends that Gleicher's conclusory remarks are insufficient to overcome the circumstantial evidence of fraud. We affirm.

I. FACTUAL BACKGROUND

The following facts are undisputed. In June 1987, Gleicher borrowed $193,000 from the Bank of New England, N.A. (BNE) in order to buy a three-family home located at 7-9 Beacon Hill Avenue in Lynn, Massachusetts. In return Gleicher executed a demand note (the "Note") in that amount in BNE's favor with an expiration date of May 1, 1990. The Note was secured by a mortgage on the Lynn property.

Gleicher had several other financial dealings with BNE. In 1988 he personally guaranteed two other loans, one for $1.5 million to a realty trust and another for $300,000 to a limited partnership (of which Gleicher was a general partner). The $300,000 loan was in the form of an unsecured line of credit due to expire on December 30, 1989.

On January 23, 1990, Deborah Stein, a loan officer at BNE, requested an updated personal financial statement from Gleicher. Two months later Stein tried to telephone Gleicher because he had not furnished the requested information. On April 11, following a succession of unreturned messages, Stein finally succeeded in contacting Gleicher. Stein informed Gleicher that the $300,000 line of credit was fully drawn and had expired. She told Gleicher that in order to renew the line, it would have to be secured with, among other things, additional real estate. Stein stressed the need for Gleicher to send the bank updated personal financial statements, including tax returns. In connection with the Note, Stein told Gleicher that BNE wanted a recent appraisal of the mortgaged property as well as a current cash flow statement. Finally, Stein reminded Gleicher that the Note was a demand note and would shortly expire, although she reassured him that the bank intended to work with him to resolve any problems that might arise. Similar financial information was requested of Gleicher from a second BNE loan officer with respect to the $1.5 million realty trust loan.

On April 16, 1990, five days after Gleicher's conversation with Stein, he transferred a piece of property, located at 25-27 Grosvenor Park in Lynn, from himself to the Grosvenor Park Realty Trust (the "Trust"). ¹ Gleicher was the trustee of the Trust, and his father was its sole beneficiary. No money changed hands in this transaction. Gleicher's most recent financial statement, dated December 31, 1989, indicated that the property was worth $260,000 and had no outstanding mortgages. Prior to the transfer, the Grosvenor Park property was Gleicher's sole unencumbered asset.

On April 25, 1990, Gleicher, acting in his individual capacity, granted a $175,000 mortgage on the property to Harbor Financial Resources, Inc., a Massachusetts corporation.

Harbor's annual report, completed in September 1990 by Gleicher, indicated that Gleicher was the corporation's president, treasurer, clerk and sole director.

On August 1, 1990, Gleicher defaulted on the Note. On August 31, BNE "called in" the Note, but Gleicher did not pay. By this time Gleicher had also defaulted on his other two obligations to BNE. In September 1990 BNE commenced this action in state court against a number of defendants including Gleicher, both individually and as trustee for the Trust, and Harbor. ² Shortly thereafter, the FDIC became the real party in interest, and the case was removed to the United States District Court for the District of Massachusetts. ³

In February 1991, the FDIC foreclosed on the property that secured the Note, and auctioned it off as required by law. After selling the property to the highest bidder and applying the proceeds to the principal of the Note, a deficiency of $88,000 remained.

II. PROCEDURAL HISTORY

On January 14, 1993, the FDIC moved for summary judgment on the remaining counts of its amended complaint. Count V alleged that Gleicher was personally liable for the amount of the deficiency plus accrued interest. Count VI alleged that Gleicher's conveyance of the property located at 25-27 Grosvenor Park to the Trust, along with the subsequent mortgage granted to Harbor, should be set aside as fraudulent. Gleicher did not submit a statement of disputed facts or an opposition to the motion.

On March 17, 1993, a hearing was held on the FDIC's motion for summary judgment. At that time, Gleicher, appearing on his own behalf, handed the court an affidavit in opposition to the FDIC's motion. After entertaining argument from both parties, the court held:

I can't find any material issue of fact in dispute in this case, summary judgment is granted to the plaintiff on the deficiency as of today.... [T]here is no material issue of fact as far as this Court can tell as to the transfer of that property of the Grosvenor address. And the Court finds that it was done to avoid creditors and, therefore, fraudulent. And it is set aside.

The court also ordered that the mortgage to Harbor be set aside. On April 8, final judgment was entered consistent with the court's ruling. Because it failed to appear at the hearing, a default judgment was entered against Harbor. This appeal ensued. ⁴

On May 6, 1993, Gleicher filed his notice of appeal. On June 18 the FDIC moved for sanctions and dismissal against Gleicher based on his failure to comply with four separate deadlines, including the one governing the filing of his appellate brief. Rather than respond to this motion, Gleicher moved for an extension of time to file his brief and to serve his appendix. This motion was filed on July 7, eight days after his brief was originally due. The FDIC opposed the motion and renewed its motion to dismiss.

On July 30, 1993, we granted Gleicher's motion for an extension and awarded costs to the FDIC in connection with its preparation of a counter-appendix. Our order explicitly warned Gleicher and his counsel that "no further extensions [would] be granted" beyond August 6, 1993. Moreover, we warned them "that any continued inattention to the In an unopposed motion dated October 8, the FDIC once again moved for sanctions and dismissal. Gleicher had allegedly failed to comply with either prong of our July 30 order: his brief was not filed until August 9, and he had not reimbursed the FDIC for the costs of preparing the counter-appendix despite repeated requests. On November 2, one day before oral argument, Gleicher paid the FDIC's costs. Further, Gleicher did not attend a scheduled CAMP ⁵ settlement hearing in this case despite repeated efforts to secure his participation by both the FDIC and the CAMP staff. ⁶

procedural requirements on appeal may result in harsher sanctions."

Under Fed.R.App.P. 3(a) the failure of a party "to take any step other than the filing of a timely appeal ... is ground ... for such action as the court of appeals deems appropriate, which may include dismissal." Of course, dismissal is a drastic step, and financial sanctions are the more common course of action. See, e.g., Christopher W. v. Portsmouth Sch. Comm., 877 F.2d 1089, 1099 (1st Cir.1989) (appellees held responsible for costs as sanction for untimely filing of brief). Dismissal under Rule 3(a) has recently been discussed by the Third Circuit:

Dismissal of an appeal for failure to comply with procedural rules is not favored, although Rule 3(a) does authorize it in the exercise of a sound discretion. That discretion should be sparingly used unless the party who suffers it has had an opportunity to cure the default and failed to do so. Moreover, before dismissing an appeal, we believe that a court should consider and weigh such factors as whether the defaulting party's action is willful or merely inadvertent, whether a lesser sanction can bring about compliance and the degree of prejudice the opposing party has suffered because of the default.

Horner Equip. Int'l, Inc. v. Seascape Pool Ctr., Inc., 884 F.2d 89, 93 (3d Cir.1989).

In our estimation, Gleicher's conduct at least approaches the level of behavior which would warrant dismissal. First, our July 30 order clearly placed Gleicher and his counsel on notice of the necessity of adhering to the rules of this court. Second, in light of this notice we find it difficult to believe that Gleicher's intransigence has been inadvertent. Nevertheless, because the FDIC has not suffered any prejudice as a result of Gleicher's failure to follow required procedures, apart from being inconvenienced, we have allowed the appeal to go forward.

III. THE MERITS

The sole issue raised by Gleicher is whether his affidavit raises a triable issue as to his intent.

Our review of summary judgment decisions is plenary. Levy v. FDIC, 7 F.3d 1054, 1056 (1st Cir.1993). Summary judgment is appropriate when, based upon the pleadings, affidavits, and depositions, "there is no genuine issue as to any material fact," and where "the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see ...