In re Canoe Mfg. Co.

• Citation: 466 B.R. 251
• Decision Date: 06 March 2012
• Docket Number: No. 87–04169.,87–04169.
• Parties: In re CANOE MANUFACTURING CO., INC., Debtor.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania

466 B.R. 251

In re CANOE MANUFACTURING CO., INC., Debtor.

No. 87–04169.

United States Bankruptcy Court, E.D. Pennsylvania.

Feb. 1, 2012.Order Denying Reconsideration March 6, 2012.

Adrienne N. Roth, Ciardi, Ciardi & Astin, Philadelphia, PA, for Debtor.

MEMORANDUM

BRUCE FOX, Bankruptcy Judge.

Before me is a motion filed by Mr. M. Robert Ullman, acting pro se and purportedly on behalf of the debtor, to reopen this closed chapter 7 case. The motion is opposed by Joseph H. Jones, Esq. and the law firm of Williamson, Friedberg and Jones. The objectors, who would be defendants in an adversary proceeding that Mr. Ullman intends to bring in this court were his motion granted, argue that no valid purpose would be achieved by reopening this bankruptcy case that was closed on March 3, 1995—almost 17 years ago.

To the extent that it is the corporate debtor that purports to seek reopening, it can only act through counsel. As Mr. Ullman is not an attorney engaged to act on behalf of the corporate debtor, he may not properly seek relief in this federal court on behalf of Canoe. See, e.g., Rowland v. California Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194, 201–02, 113 S.Ct. 716, 121 L.Ed.2d 656 (1993); United States v. Cocivera, 104 F.3d 566, 572 (3d Cir.1996); Simbraw, Inc. v. United States, 367 F.2d 373 (3d Cir.1966); In re Earle Indus., Inc., 67 B.R. 822 (Bankr.E.D.Pa.1986); see also Fed. R. Bankr.P. 9010(a), Advisory Committee Note 1983 (“[t]his rule ... does not purport to change prior holdings prohibiting a corporation from appearing pro se ”).

Recognizing that a non-debtor may seek to reopen a closed case, see Fed. R. Bankr.P. 5010 (“A case may be reopened on motion of the debtor or other party in interest pursuant to § 350(b) of the Code.”), and that Mr. Ullman was, or still is, a shareholder of the debtor, I believe it appropriate, particularly given Mr. Ullman's numerous litigation activities in various state and federal courts, to explain the reasons why—even if the debtor were represented by counsel, or to the extent Mr. Ullman is seeking relief in his shareholder capacity—it would be an inappropriate exercise of discretion to reopen this case. This bankruptcy court has no power now to grant Mr. Ullman the relief he hopes to achieve by reopening this case.

I.

Upon review of the numerous documents submitted by Mr. Ullman and the objectors, various reported decisions, as well as the docket entries in this case, the following facts are relevant to this contested matter and are not subject to dispute.

Canoe Manufacturing Co., Inc. filed a voluntary petition in bankruptcy under chapter 11 on August 20, 1987. Mr. Ullman was the debtor's “Chief Executive Officer and sole shareholder” at the time of its bankruptcy filing. Ullman v. Meridian Bank, 1993 WL 15644, at *2 (E.D.Pa.1993). Prior to this bankruptcy petition, Mr. Ullman and his spouse guaranteed one or more outstanding loans to the debtor made by Meridian Bank.

For reasons (not clear on the record before me but) not relevant, Canoe's chapter 11 case was converted to chapter 7 effective March 6, 1989. See docket entry # 103. Upon conversion, Michael Seltzer became the chapter 7 trustee and he engaged Charles Phillips, Esq. to represent him.

By July 1989, the bankruptcy trustee had begun to liquidate assets of Canoe, and apparently all physical assets were sold at public auction in August 1989 for $1.2 million. See Ullman v. Meridian Bank, 1993 WL 15644, at *1. These proceeds were not enough to repay the claim of Meridian Bank and other creditors.

Mr. Ullman then urged the chapter 7 trustee to bring a lender liability claim against Meridian Bank. See Ullman v. Meridian Bank, 1993 WL 15644, at *2. After investigation, the trustee did not believe such litigation could be brought in good faith and so moved to abandon any such claim under 11 U.S.C. § 554(a) in May 1990, as well as claims against Mr. Lawrence Pugh (an officer of VF Corporation) and VF Corporation (whom Mr. Ullman believed tortiously interfered in Canoe's prepetition dealings with Meridian Bank). Despite Mr. Ullman's opposition thereto, the trustee's motion to abandon was granted on July 24, 1990. See docket entry # 169; Ullman v. Meridian Bank, 1993 WL 15644, at *2.

While the Canoe bankruptcy case was pending, Meridian Bank commenced a foreclosure action against Mr. Ullman and his spouse in the Pennsylvania Court of Common Pleas. See Ullman v. Meridian Bank, 1993 WL 15644, at *2. In opposing foreclosure, in May 1991 Mr. Ullman obtained through discovery a document that he believed then and probably believes now constituted a prepetition loan commitment from Meridian Bank to Canoe issued in March 1986, which commitment had never been fulfilled. See id.; Movant's Exhibits to Motion to Reopen, ex. 5, pp. 25–32. This document, correspondence signed by an officer of Meridian Bank dated March 31, 1986, and addressed to Mr. Ullman as president of Canoe, see Movant's Exhibits to Motion to Reopen, ex. 5, pp. 31–32, was located in the files of Joseph H. Jones, Esq., an attorney with the firm of Williamson, Friedberg and Jones. Mr. Jones had been counsel to Canoe prior to its bankruptcy filing, and was also on the Board of Directors of Meridian Bank. He withdrew as Canoe counsel in June 1987. Movant's Exhibits to Motion to Reopen, ex. 19, p. 110 (¶ 56).

After reviewing this March 1986 document, in December 1991 the chapter 7 trustee moved to vacate the July 24, 1990 abandonment order. In so moving, the trustee submitted a post-hearing memorandum that argued that the March 1986 document, the existence of which had been unknown to him in 1990, supported a claim against Meridian Bank. He also argued in his memorandum:

Ullman testified [at the hearing on the trustee's motion to vacate] that the commitment letter and minutes of [Meridian Bank] Loan Committee meetings were made available by Attorney Joe Jones, who was counsel for the Debtor during 1986 and was, and is, a member of the Board of Directors of Meridian Bank.

Movant's Exhibits to Motion to Reopen, ex. 1, p.4. Thus, the chapter 7 trustee was then well aware of Mr. Jones's pre-bankruptcy relationships to Meridian Bank and Canoe, as well as Mr. Jones possessing a copy of the March 1986 correspondence.

On March 11, 1992, the bankruptcy court denied the trustee's motion to vacate, ruling that the trustee's earlier decision to abandon was irrevocable. See docket entry # 214; Movant's Exhibits to Motion to Reopen, ex. 12, pp. 71–72. Mr. Ullman then appealed this ruling to the district court, which affirmed on June 18, 1992. See docket entry # 219; Ullman v. Meridian Bank, 1993 WL 15644, at *2.

Shortly thereafter, Mr. Ullman commenced a civil action in the federal district court, naming as defendants Meridian Bank, the chapter 7 trustee, trustee's counsel, Mr. Lawrence Pugh, Mr. Ezekiel Ketchum, and Joseph Jones, Esq. By Memorandum and Order dated January 14, 1993, the district court dismissed that civil action “with prejudice but without prejudice to plaintiff's rights to pursue any derivative rights he may have in state court.” See Ullman v. Meridian Bank, 1993 WL 15644, at *3. This dismissal was affirmed by the Third Circuit Court of Appeals. Ullman v. Meridan Bank, 9 F.3d 1541 (3d Cir.1993) (table).

Mr. Ullman then filed his own motion in bankruptcy court, on April 7, 1993, seeking to vacate the July 1990 abandonment order, to amend the debtor's bankruptcy schedules and to add additional causes of action as listed assets on the debtor's schedules. He also sought to remove Mr. Seltzer as the chapter 7 trustee, and to allow himself to prosecute litigation against Meridian Bank and Messrs. Pugh, Ketchum and Jones, which claims he then valued at $11,000,000, as well as raise claims against the trustee and trustee's counsel. See Movant's Exhibits to Motion to Reopen, ex. 13, pp. 73–79. In this motion, Mr. Ullman wrote “[o]n July 24, 1990 the Court ordered an Abandonment of the Claim of Canoe against Meridian, Pugh and Jones,” Id., p.74 (emphasis added).

Mr. Ullman's motion to vacate was opposed by the chapter 7 trustee, who asserted in his pleading filed in May 1993: “On July 24, 1990 this Court granted the Trustee's motion for abandonment of the Debtor's alleged claims against Meridian Bank, Lawrence Pugh, Ezekiel Ketchum and Joseph Jones.” Movant's Exhibits to Motion to Reopen, ex. 14, p. 80.¹ The trustee also wrote in opposition:

Ullman attempts to argue that “[u]nless the Court orders otherwise, formally unabandoned and unadministered property that was not scheduled, thus remains property of the Estate.” This property, however, was formally abandoned and therefore Ullman's argument is completely inapposite.Movant's Exhibits to Motion to Reopen, ex. 14, p. 81.

Thus, in April and May 1993, both Mr. Ullman and the chapter 7 trustee were arguing to the bankruptcy court that the July 1990 abandonment order had addressed Canoe's potential claims against Meridian, VF, and attorney Jones. Moreover, Mr. Ullman was concerned at that time that his failure to schedule any causes of action might have future implications concerning the property of Canoe that would be considered as abandoned.

By order dated June 9, 1993, Mr. Ullman's April 1993 motion to vacate the July 1990 order and to obtain other relief was denied (with the bankruptcy court noting that Mr. Ullman was improperly attempting to represent the debtor corporation). Movant's Exhibits to Motion to Reopen, ex. 16, pp. 90–93. In denying this motion, the bankruptcy court stated in part:

[M]ovant's motion requesting permission to proceed pro se to recover a debt is DENIED as moot since the debt which movant seeks to recover is precisely the same alleged debt which forms the basis of the abandoned cause of action, which once abandoned, became the property of debtor and movant, as the sole shareholder of debtor was then free to pursue the cause of action without further order of ...