Gonzales v. Saul Ewing, LLP (In re Vaughan), Bankruptcy No. 7–10–10763 SA.

• Citation: 471 B.R. 263
• Decision Date: 30 April 2012
• Docket Number: Bankruptcy No. 7–10–10763 SA.
• Parties: In re Douglas F. VAUGHAN, Debtor. Yvette Gonzales, Trustee, Plaintiff, v. Saul Ewing, LLP, John Doe , and Judith A. Wagner, Chapter 11 Trustee of the bankruptcy estate of the Vaughan Company, Realtors, Defendants. John Doe, Counter–Plaintiff, v. Yvette Gonzales, Trustee, Counter–Defendant. John Doe, Cross–Plaintiff, v. Judith A. Wagner, Chapter 11 Trustee of the bankruptcy estate of the Vaughan Company, Realtors, and Saul Ewing, LLP, Cross–Defendants. Judith A. Wagner, Chapter 11 Trustee of the bankruptcy estate of the Vaughan Company, Realtors, Cross–Plaintiff, v. John Doe, and Saul Ewing, LLP, Cross–Defendants.
• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of New Mexico

471 B.R. 263

In re Douglas F. VAUGHAN, Debtor.

Yvette Gonzales, Trustee, Plaintiff,

v.Saul Ewing, LLP, John Doe ¹, and Judith A. Wagner, Chapter 11 Trustee of the bankruptcy estate of the Vaughan Company, Realtors, Defendants.

John Doe, Counter–Plaintiff,

v.Yvette Gonzales, Trustee, Counter–Defendant.

John Doe, Cross–Plaintiff,

v.Judith A. Wagner, Chapter 11 Trustee of the bankruptcy estate of the Vaughan Company, Realtors, and Saul Ewing, LLP, Cross–Defendants.

Judith A. Wagner, Chapter 11 Trustee of the bankruptcy estate of the Vaughan Company, Realtors, Cross–Plaintiff,

v.John Doe,andSaul Ewing, LLP, Cross–Defendants.

Bankruptcy No. 7–10–10763 SA.

United States Bankruptcy Court,

D. New Mexico.

April 30, 2012.

George M. Moore, Moore, Berkson & Gandarilla, P.C., Albuquerque, NM, for Yvette Gonzales.

Christopher P. Bauman, Bauman, Down & Leon, PC, Albuquerque, NM, for John Doe.

Edward Alexander Mazel, Arland & Associates, LLC, Albuquerque, NM, for Judith A. Wagner.

MEMORANDUM OPINION ON MOTIONS FOR SUMMARY JUDGMENT—REDACTED PUBLIC VERSION

JAMES S. STARZYNSKI, Bankruptcy Judge.

This matter is before the Court on competing Motions for Summary Judgment to determine ownership of funds now on deposit in the Court Registry. This adversary proceeding started with Trustee Gonzales (“Gonzales”) filing suit against attorney Saul Ewing, LLP (“Ewing”) and John Doe (“Doe”) for a turnover of funds on deposit in Saul Ewing, LLP's attorney trust account held on behalf of Douglas Vaughan (the Debtor in this bankruptcy). The suit named Doe as the alleged source of the funds. Trustee Wagner (“Wagner”), Chapter 11 trustee of “The Vaughan Company, Realtors” case, also claiming the funds, sought to intervene, but was then named as a defendant in Trustee Gonzales' First Amended Complaint ² (“Complaint”) (doc. 4). Ewing participated by answering the complaint and cross-claims filed against it, and then was allowed to interplead the $162,680.70 held in trust. It was then dismissed as to claims against that amount by all other parties. (Doc. 27; Receipt of Registry Funds 9/28/10). Therefore, the Court will drop all further references to Ewing and its pleadings.

The active pleadings are therefore: Gonzales First Amended Complaint (doc. 4) ³, which was answered by Wagner (doc. 11) and Doe (doc. 19); Wagner's Cross–Claim against Doe ⁴ (doc. 11) and Doe's answer (doc. 19); Doe's Amended Cross–Claim against Wagner and Cross—[sic; should be Counter] Claim against Gonzales ⁵ (doc. 19) and Wagner's answer (doc. 30). The Counter–Claim against Gonzales remains unanswered.

Before the final pretrial conference Doe filed a Motion for Summary Judgment against Gonzales and Wagner (doc. 41). At the pretrial conference the parties all agreed that this matter could be disposed of through motions for summary judgment. This matter is before the Court on 1) Doe's Motion for Summary Judgment ⁶ (doc. 41) and the response by Wagner (doc. 45) and Doe's reply (doc. 54, errata doc. 56) and the response by Gonzales (doc. 47) and Doe's reply (doc. 58); 2) Gonzales' Motion for Summary Judgment ⁷ (doc. 47) and the response by Doe (doc. 58) and the response by Wagner (doc. 61); Gonzales did not reply to either response; and 3) Wagner's Motion for Summary Judgment against Doe ⁸ (doc. 67, with brief doc. 65 and supplement to brief doc. 69), Doe's response (doc. 71) and Wagner's Reply (doc. 73).

SUMMARY JUDGMENT

In adversary proceedings Summary Judgment is governed by Fed.R.Bankr.P. 7056, which incorporates Fed.R.Civ.P. 56, which in turn provides, in relevant part:

Rule 56. Summary Judgment

(a) Motion for Summary Judgment or Partial Summary Judgment. A party

may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion.

(b) ...

(c) Procedures.

(1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or

(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

(2) Objection That a Fact Is Not Supported by Admissible Evidence. A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.

(3) Materials Not Cited. The court need consider only the cited materials, but it may consider other materials in the record.

(4) Affidavits or Declarations. An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.

(d) ...

(e) Failing to Properly Support or Address a Fact. If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may:

(1) give an opportunity to properly support or address the fact;

(2) consider the fact undisputed for purposes of the motion;

(3) grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is entitled to it; or

(4) issue any other appropriate order.

(f) ...

(g) Failing to Grant All the Requested Relief. If the court does not grant all the relief requested by the motion, it may enter an order stating any material fact—including an item of damages or other relief—that is not genuinely in dispute and treating the fact as established in the case.

Fed.R.Civ.P. 56. Additionally, New Mexico Local Rule 7056–1 regulates the required procedure:

SUMMARY JUDGMENT

(a) Memoranda. The movant shall file with the motion a memorandum containing a concise statement in support of the motion with a list of authorities. A motion for summary judgment filed without a memorandum may be summarily denied. A party opposing the motion shall, within 21 days after service of the motion, file a memorandum containing a concise statement in opposition to the motion with a list of authorities. If no response is filed, the court may grant the motion. The movant may, within 14 days after the service of a response, file a reply memorandum.

(b) Undisputed Facts. The memorandum in support of the motion shall set out as its opening a concise statement of all of the material facts as to which movant contends no genuine issue exists. The facts shall be numbered and shall refer with particularity to those portions of the record upon which movant relies.

(c) Disputed Facts. A memorandum in opposition to the motion shall contain a concise statement of the material facts as to which the party contends a genuine issue does exist. Each fact in dispute shall be numbered, shall refer with particularity to those portions of the record upon which the opposing party relies, and shall state the number of the movant's fact that is disputed. All material facts set forth in movant's statement that are properly supported shall be deemed admitted unless specifically controverted.

NM LBR 7056–1.

The version of Rule 56 quoted above became effective on December 1, 2010. SeeFed.R.Civ.P. 56 (2010 Advisory Committee comments).

In some respects, the 2010 amendment to Rule 56 works a sea change in summary judgment procedure and introduces flexibility (and consequent uncertainty) in place of the bright-line rules that obtained previously. Former Rule 56(e) contained an unequivocal direction that documents presented in connection with a summary judgment motion must be authenticated:

If a paper or part of a paper is referred to in an affidavit, a sworn or certified copy must be attached to or served with the affidavit.

Fed.R.Civ.P. 56(e)(1) (2009 version). Relying on this language, the United States Court of Appeals for the Sixth Circuit routinely held that unauthenticated documents could not be used to support a motion for summary judgment. See, e.g., Moore v. Holbrook, 2 F.3d 697, 698–99 (6th Cir.1993). As recently as 2009, the Court of Appeals stated that unauthenticated documents do not meet the requirements of Rule 56(e) and must be disregarded. Alexander v. CareSource, 576 F.3d 551, 558–59 (6th Cir.2009).

Foreword Magazine, Inc. v. OverDrive, Inc., 2011 WL 5169384 at *1–2 (W.D.Mich.2011). Virtually all other courts agreed. See, e.g.,

Although affidavits are not strictly required by Rule 56 or case law, in practice they are usually necessary to obtain summary judgment.... [I]t makes sense to distinguish between affidavits that primarily give testimony and affidavits that are used primarily to introduce documents so that the court may consider the documents in determining whether material factual matter is genuinely in dispute. A party seeking to rely on material other than affidavits to obtain summary judgment may nonetheless need to use an affidavit to place these materials before the court and into the official record....

In order for documents not yet part of the court record to be considered by a court in support of or in opposition to a summary judgment motion they must meet a two-prong test: (1) the document must be attached to and authenticated by an affidavit which conforms to Rule 56(e); and (2) the affiant must be a competent witness through whom the document can be received into evidence....

Documentary evidence for which a proper foundation has not been laid cannot support a summary...