In re Davis, Bankruptcy No. 88-00049

• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court —District of Vermont
• Citation: 109 BR 633
• Decision Date: 15 June 1989
• Docket Number: Bankruptcy No. 88-00049,Adv. No. 89-00001A.
• Parties: In re James T. DAVIS, d/b/a George Davis & Sons, d/b/a Quality Construction, d/b/a Quality Carpentry, d/b/a J & G Trucking, d/b/a DebCon Co., Debtor. Raymond J. OBUCHOWSKI, Trustee of Estate of James T. Davis, Plaintiff, v. George V. DAVIS and Dorothy M. Davis, Defendants.

109 B.R. 633 (1989)

In re James T. DAVIS, d/b/a George Davis & Sons, d/b/a Quality Construction, d/b/a Quality Carpentry, d/b/a J & G Trucking, d/b/a DebCon Co., Debtor.
Raymond J. OBUCHOWSKI, Trustee of Estate of James T. Davis, Plaintiff,
v.
George V. DAVIS and Dorothy M. Davis, Defendants.

Bankruptcy No. 88-00049, Adv. No. 89-00001A.

United States Bankruptcy Court, D. Vermont.

June 15, 1989.

109 BR 634

J. Canney, Hull, Webber, Reis & Canney, Rutland, Vt., for George and Dorothy Davis (Davises).

R. Obuchowski, Mayer, Berk & Obuchowski, South Royalton, Vt., Trustee.

MEMORANDUM DECISION GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANTS

FRANCIS G. CONRAD, Bankruptcy Judge.

This adversary proceeding¹ is before us on the Trustee's complaint for declaratory judgment and to compel turnover of property. We hold that Vermont law requires the Trustee to be a bona fide purchaser before he can compel the Davises to turnover real property, and because we find he is not a bona fide purchaser, his motion for summary judgment will be denied.

The Debtor filed for Chapter 7 bankruptcy under Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., on February 29, 1988. The plaintiff-Trustee is the duly appointed Chapter 7 Trustee.

On January 26, 1989, the Trustee filed an adversary proceeding under 11 U.S.C. §§ 541, 542, and 543. For cause, the Trustee alleges that a certain parcel of land located in the Town of Woodford, Bennington County, State of Vermont was transferred to the Davises by the Debtor² under an instrument not properly executed and recorded under Vermont State law.

In a Pre-Trial Statement filed with the Court on March 10, 1989, the Davises admit to all of the relevant allegations in the Trustee's complaint including that they were witnesses to the May 6, 1986 instrument³ and that they failed to record the instrument under which they claim title.

At the Pre-Trial Conference, the parties added to the facts by agreeing that the Debtor intended to convey the property to the Davises and that Exhibit "A" was delivered to them.

At the Pre-Trial Conference, we indicated that oral cross-motions for summary judgment were appropriate and that we intended to rule from the bench. Both parties moved for summary judgment. The Davis' attorney requested the right to submit a brief prior to our ruling. We acquiesced to the request. With the briefs that were submitted, the Davises also attached an affidavit.

The affidavit shows that the Davises believed they were the lawful owners of the property. The affidavit also avers that after May 6, 1986, the Davises posted the property with "no trespassing" signs, signed by them. They maintained and replaced

109 BR 635

the "no trespassing" signs as needed. They assert that they physically used the property in various ways, including placing storage trailers on the property; storing personal property in the trailers and in a structure on the property; cutting trees and clearing bush; establishing and maintaining a vegetable garden; and, digging ditches that drained swamp areas. Finally, they claim that their use of the property continues to the present time. The Trustee did not object to, nor did he offer any rebuttal to, the facts averred in the affidavit

The Davises assert several arguments in defense of the Trustee's complaint. First, they assert that legal title was conveyed despite the facts that the deed was not recorded in the appropriate land records, was witnessed by the Davises, and lacks a notary public's acknowledgement. Second, and as an alternative argument, they claim that even in the absence of legal title, equitable title was conveyed. Third, they argue that the Trustee may not assume fraud on the part of the Debtor.⁴ Finally, in the event we decide the Davises are not entitled to keep the property, the Davises claim an executory contract to purchase the property exists that must be completed by the Trustee.

To prevail on a motion for summary judgment, the movant must satisfy the criteria set forth in F.R.Civ.P. 56 as made applicable by Rules of Practice and Procedure in Bankruptcy Rule 7056. F.R.Civ.P. 56 provides in part:

The judgment sought shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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.

See, Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Eastman Machine Company, Inc. v. United States, 841 F.2d 469 (2d Cir. 1988); Hossman v. Spradlin, 812 F.2d 1019, 1020 (7th Cir.1987); Clark v. Union Mutual Life Ins. Co., 692 F.2d 1370, 1372 (11th Cir.1982); United States Steel Corp. v. Darby, 516 F.2d 961, 963 (5th Cir.1975).

The primary purpose for granting a summary judgment motion is to avoid unnecessary trials where no genuine issue of material fact is in dispute. Farries v. Stanadyne/Chicago Div., 832 F.2d 374, 378 (7th Cir.1987).

If the presentation by the nonmoving party in support of its version of the facts is such that the Court could not properly direct a verdict against it in a jury trial, or enter a judgment in favor of the moving party notwithstanding a verdict favorable to the nonmoving party, the motion for summary judgment may not properly be granted. Eastman Machine Company, Inc., supra at 473, citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

In remanding the case in Anderson, supra, so the correct standards under Rule 56 could be applied, the Supreme Court directed:

The judge must ask himself (herself) not whether he (she) thinks the evidence unmistakenly favors one side or the other but whether a fair minded jury could return a verdict for the plaintiff on the evidence presented. The mere existence of a scintilla of evidence in support of the plaintiff\'s position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. The judge\'s inquiry, therefore, unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict — `whether there is (evidence) upon which a jury can proceed to find a verdict for the party producing it. . . . \'

Anderson, id., 106 S.Ct. at 2512 (parentheticals supplied for clarity).

Thus, the function of a Bankruptcy Court when considering a motion for summary judgment is not to resolve disputed

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issues of fact but only to determine whether there is a genuine issue to be resolved. Anderson, supra, 106 S.Ct. at 2509-11; Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987)

On a motion for summary judgment our responsibility is to determine whether there are issues of fact to be tried, not to try issues of fact. Chittenden Trust Company v. Ford Motor Company & et al. (In re Burlington Lincoln-Mercury, Inc., d/b/a Southside Lincoln-Mercury), Slip Op., AP# 87-0045, Case# 86-00145, Jan. 20, 1988, Conrad, B.J. As our Second Circuit stated recently in Donahue v. Windsor Locks Board of Fire Commissioners, 834 F.2d 54, 57 (2d Cir.1987):

Moreover, in determining whether a genuine issue has been raised, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. United States v. Diebold, Inc., 369 US 654, 655, 82 S.Ct 993 994, 8 L.Ed.2d 176 (1962) (per curiam); Quinn v. Syracuse Model Neighborhood Corporation, 613 F.2d 438, 445 (2d Cir.1980). Therefore, not only must there be no genuine issue as to the evidentiary facts, but there must also be no controversy regarding the inferences to be drawn from them. Schwabenbauer v. Board of Education, 667 F.2d 305, 313 (2d Cir. 1981); Accord Anderson v. Liberty Lobby, Inc., 477 US 242, 106 S.Ct 2505, 2513, 91 L.Ed.2d 202 (1986).

Chittenden Trust Co., supra, at 11, citing Donahue, id. See, Celotex Corp., supra.

The party moving for summary judgment has the burden of clearly establishing no relevant facts are in dispute. Celotex Corp., supra, 106 S.Ct at 2548; Anderson, supra, 106 S.Ct at 2512; Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Eastman Machine Company, Inc., supra, at 473; Chittenden Trust Co., supra. Speculation and conjecture will not suffice.

Once a party has met its initial burden, the opposing party must set forth specific facts showing that there is a genuine issue for trial and that the disputed fact is material. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.1983), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). Thus, if the movant carries its initial burden the opposing party may not defeat the motion by merely relying on the contentions of its pleadings, but must produce significant probative evidence to support its position. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968); United States v. Pent-R-Books, Inc., 538 F.2d 519 (2d Cir.1976), cert. denied, 430 U.S. 906, 97 S.Ct. 1175, 51 L.Ed.2d 582 (1977).

Finally, in determining whether there is a genuine issue of any material fact we must view the evidence in a light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); Eastman Machine Company, Inc., supra, at 473; Rosen v. Biscayne Yacht & Country Club, Inc., 766 F.2d 482, 484 (11th Cir.1985). Moreover, all inferences must be construed in favor of the nonmovant. Diebold, supra, 369 U.S. at 655, 82 S.Ct. at 994; Eastman Machine Company, Inc., supra, at 473; Big O Tire Dealers, Inc. v. Big O Warehouse, 741 F.2d 160, 163 (7th Cir.1984).

The fact that both sides move for summary judgment does not guarantee that there is no material issue of fact to be tried. Eastman Machine...