Fifth Third Bank, in. v. Edgar County Bank & Trust

• Decision Date: 15 March 2007
• Docket Number: No. 06-3238.,06-3238.
• Citation: 482 F.3d 904
• Parties: FIFTH THIRD BANK, INDIANA, Plaintiff, v. EDGAR COUNTY BANK & TRUST, et al., Defendants-Appellees. Appeal of Garzolini Tire & Fuel, Inc., Debtor in Possession.
• Court: U.S. Court of Appeals — Seventh Circuit

482 F.3d 904

FIFTH THIRD BANK, INDIANA, Plaintiff, v. EDGAR COUNTY BANK & TRUST, et al., Defendants-Appellees.

Appeal of Garzolini Tire & Fuel, Inc., Debtor in Possession.

No. 06-3238.

United States Court of Appeals, Seventh Circuit.

Argued February 21, 2007.

Decided March 15, 2007.

Mark R. Galliher (argued), Doyle & Friedmeyer, Indianapolis, IN, for Defendants-Appellees.

Kelvin L. Roots (argued), Wilkinson, Goeller, Modesitt, Wilkinson & Drummy, Terre Haute, IN, for Debtor.

Before EASTERBROOK, Chief Judge, and FLAUM and SYKES, Circuit Judges.

EASTERBROOK, Chief Judge.

Garzolini Tire & Fuel borrowed money from Edgar County Bank & Trust on the security of a mortgage in what the parties call the Clinton Property. During Garzolini Tire's bankruptcy, Fifth Third Bank filed an adversary proceeding in which it argued that it held an interest superior to Edgar County Bank's. Eventually Fifth Third Bank conceded—but Garzolini Tire made its own claim to the proceeds of the Clinton Property, which has been sold. (The purchase price is being held in escrow.) According to Garzolini Tire, the mortgage was not properly signed and attested, so the proceeds of the Clinton Property should be distributed to unsecured creditors (including Edgar County Bank) under the terms of the plan of reorganization.

Neither side's brief complied with Circuit Rule 28(a)(3), which requires details on how the matters appealed in a bankruptcy case relate to any part of the litigation still under way in the bankruptcy court or the district court. An order issued before oral argument achieved only partial compliance, so at oral argument we directed the parties to try again. Their filings have revealed that (a) the adversary proceeding has been fully resolved (Fifth Third Bank made several claims in addition to the one about the Clinton Property), and (b) the bankruptcy itself has produced an approved plan of reorganization, a final decision by any standard.

A final resolution of any adversary proceeding is appealable, as it is equivalent to a stand-alone lawsuit. See In re Forty-Eight Insulations, Inc., 115 F.3d 1294 (7th Cir.1997); In re Morse Electric Co., 805 F.2d 262 (7th Cir.1986). Counsel were mistaken to treat each separate claim in an adversary proceeding as appealable independently while the adversary proceeding as a whole is ongoing. In bankruptcy litigation, as in other civil cases, it takes a separate judgment under Fed.R.Civ.P. 54(b) to allow an immediate appeal of one claim in a larger proceeding. See Fed. R. Bankr.P. 7054(a) (applying Rule 54(b) to bankruptcy litigation). But the misunderstanding turned out not to matter. Counsel could have saved both themselves and the judges valuable time by studying the jurisdictional rules and supplying all material information at the outset.

When Garzolini Tire borrowed from Edgar County Bank & Trust ("the Bank" for short), its president was Bruno Garzolini, Jr., and its vice president was Robert D. Garzolini. Both Bruno and Robert borrowed from the Bank in the same transaction, though only Garzolini Tire gave a security interest in real property. The signature block on the mortgage reads (with manuscript signatures in italic):

THE BORROWERS HEREBY DECLARE AND ACKNOWLEDGE THAT THE BORROWERS HAVE RECEIVED, WITHOUT CHARGE, A TRUE COPY OF THIS MORTGAGE.

                GARZOLINI TIRE & FUEL,            Bruno Garzolini, Jr
                INC
                                                  BRUNO GARZOLINI, Jr
                By: Bruno Garzolini, Jr
                ATTEST:                           Robert D. Garzolini
                

                Robert D. Garzolini, V.P.         ROBERT D. GARZOLINI
                

The next page contains a notary public's declaration that these signatures are genuine.

Garzolini Tire maintains that these signatures are inadequate, because the Garzolinis may have been signing exclusively in their personal capacities. The notary's attestation does not reveal in which capacity they signed, so the document is ineffective under Ind.Code § 32-21-2-3. Although Ind.Code § 32-21-2-3 and its predecessors deal with the recording of mortgages rather than with the rights of the parties to...