In re DeLorean Motor Co., Bankruptcy No. 82-06031-G

• Decision Date: 11 October 1988
• Docket Number: Bankruptcy No. 82-06031-G,Adv. No. 85-0486.
• Citation: 91 BR 766
• Court: U.S. Bankruptcy Court — Eastern District of Michigan
• Parties: In re DeLOREAN MOTOR COMPANY, a Michigan Corporation, Debtor. David W. ALLARD, Jr., as Trustee of DeLorean Motor Company, a Michigan corporation, Plaintiff, v. Ronald C. VINCI, a/k/a Ron Vinci, d/b/a Pacific Honda, Vinci Investment Co., Inc., a California corporation, Vinci Leasing, Inc., a California corporation, Roy S. Nesseth, Imogene Nesseth, Bernard W. Minsky, Hufstedler Miller Carlson & Beardsley, a California partnership, Ball, Hunt, Hart, Brown & Bearwitz, a California partnership, and Bank of America National Trust and Savings Association, a national bank, jointly and severally, Defendants.

91 B.R. 766 (1988)

In re DeLOREAN MOTOR COMPANY, a Michigan Corporation, Debtor David W. ALLARD, Jr., as Trustee of DeLorean Motor Company, a Michigan corporation, Plaintiff, v. Ronald C. VINCI, a/k/a Ron Vinci, d/b/a Pacific Honda, Vinci Investment Co., Inc., a California corporation, Vinci Leasing, Inc., a California corporation, Roy S. Nesseth, Imogene Nesseth, Bernard W. Minsky, Hufstedler Miller Carlson & Beardsley, a California partnership, Ball, Hunt, Hart, Brown & Bearwitz, a California partnership, and Bank of America National Trust and Savings Association, a national bank, jointly and severally, Defendants.

Bankruptcy No. 82-06031-G, Adv. No. 85-0486.

United States Bankruptcy Court, E.D. Michigan, S.D.

October 11, 1988.

John G. Colucci, Ronald G. Longhofer, of Honigman Miller Schwartz & Cohn, Detroit, Mich., for plaintiff.

Michael S. Khoury, of Clark, Klein & Beaumont, Detroit, Mich., for defendants.

DECISION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON COUNT VII AS AMENDED ON FEBRUARY 10, 1987 ONLY AS TO DEFENDANTS ROY S. NESSETH AND IMOGENE NESSETH.

RAY REYNOLDS GRAVES, Chief Judge.

This adversary proceeding is before the court on the trustee's motion for summary judgment against Roy S. Nesseth and Imogene Nesseth ("Nesseths") under Bankruptcy Rule 7056 and Fed.R.Civ.P. 56. The trustee's motion relates only to count VII as amended, a claim for conversion of proceeds derived from a sale of fifty-two vehicles and a claim for treble damages under M.C.L.A. 600.2919a. After consideration of the pleadings and other documents filed in the adversary proceeding, all appropriate affidavits and accompanying attachments submitted both in support of and in opposition to the motion, as well as answers to interrogatories filed by Roy S. and Imogene Nesseth, briefs, and arguments of counsel at hearing, the court denies the trustee's motion.

Understanding the issues presented in this motion requires a detailed account of the procedural background leading to this motion. The trustee brought this eight count action in May 1985. He seeks to recover money he says the defendants improperly routed to several California law firms that represented John Z. DeLorean in non-bankruptcy proceedings. On the theory that Roy and Imogene Nesseth aided and abetted or conspired with John Z. DeLorean to disburse funds to Bernard Minsky and other California law firms, funds that DMC should have received as payment for fifty-two DeLorean vehicles delivered to Capitol Cadillac Corp., the trustee alleges that Roy and Imogene Nesseth converted and diverted $832,000. See Trustee's Complaint (Docket # 1). The trustee also argues, on brief, that the Nesseths aided Capitol Cadillac Corp. ("Capitol Cadillac") in converting the fifty-two DeLorean vehicles by procuring Manufacturer's Certificates of Origin ("MCO's") for the vehicles, delivering them to Capitol Cadillac, and knowingly concealing the conversion of the vehicles. See Docket # 114 and # 133.

Court records indicate that the trustee first served a request for answers to interrogatories to Roy Nesseth on March 7, 1988. The court finds no record of the trustee's having deposed either Roy or Imogene Nesseth. Court records further show that on May 11, 1988 this court sent notice to counsel for the trustee and to defendant Bernard Minsky of pre-trial procedures and a September 26, 1988 trial date. On July 28, 1988, the trustee filed this motion for summary judgment against the Nesseths and Bernard Minsky. At the same time, the trustee filed a motion for default judgment against Roy Nesseth for failure to answer the March interrogatories. On August 8, 1988, after counsel for the trustee realized that the Nesseths had not received notice of the pre-trial procedures and September trial date, the court notified the Nesseths.

Counsel for the Nesseths entered his appearance on August 16 and on August 19 filed briefs in opposition to the trustee's summary judgment motion, in response to the trustee's motion for a default judgment, the Nesseths' first request to the trustee for answers to interrogatories, the Nesseths' amended answer to the complaint and request for a jury trial, and a motion to extend discovery and adjourn the trial date. In response, trustee's counsel requested and received this court's order permitting him to file a longer than normal reply brief to the Nesseths' summary judgment response.

The court heard oral arguments on the summary judgment motion on September 9, 1988. Counsel for the trustee contended, first, that the court should strike as untimely the respondents' supplemental brief and Roy Nesseth's affidavit that were filed several hours before the hearing. In opposition, the Nesseths' counsel argued that the court should consider Roy Nesseth's affidavit, notarized just one day earlier in the State of Utah, and the supplemental brief. Counsel for the Nesseths explained that he had entered the case only three weeks earlier, his clients believing until early August that the trustee had abandoned the 1985 adversary proceeding against them. He submitted, moreover, that Roy Nesseth's affidavit raised material issues of fact and that the supplemental brief pointed out factual disputes apparent from examination of documents already filed in the case.

It is within the court's discretion whether to consider affidavits and documents submitted beyond a stated deadline. Hooks v. Hooks, 771 F.2d 935, 946 (6th Cir.1985); Mas Marques v. Digital Equipment Corp., 637 F.2d 24, 29-30 (1st Cir.1980). Federal Rule of Civil Procedure 56(c) says that a party opposing a summary judgment motion may serve opposing affidavits "prior to the day of the hearing." It does not say that the court cannot or should not permit adverse parties to the motion additional time to present affidavits. Although Local Rule 17(g), promulgated for use in the Eastern District of Michigan, requires that a respondent opposing a motion file a brief and supporting documents "as are then available" within ten days after service of a motion, it is apparent to this court that drafters of the local rules did not intend to restrict the rights of an adverse party to a summary judgment motion. Clearly, the local rule contemplates late filings in appropriate circumstances.

This court finds that the Nesseths' counsel offered a reasonable explanation for the untimely filings and will consider the supplemental brief and Nesseth's affidavit. In ruling on a summary judgment motion, the court must determine whether genuine issues of material fact exist. In the process, the court is obligated to consider the entire case record in deciding the motion. The trustee's familiarity with the underlying issues in this adversary precludes a finding that use of the defendant's affidavit unduly prejudices the trustee. Edwards v. Whirlpool Corp. Aviation Dept., 678 F.Supp. 1284, 1287 (W.D.Mich.1987). Furthermore, although the court does not encourage or condone untimely filings, there is a significant difference between accepting the affidavit of an adverse party to the motion and in taking evidence in support of the motion at the last minute when the opponent has no opportunity to rebut it. Chan Wing Cheung v. Hamilton, 298 F.2d 459, 460 (1st Cir.1962). Cf. Jones v. Menard, 559 F.2d 1282, 1285 (5th Cir.1977).

The trustee argues that there is no genuine issue as to any material fact that precludes this court from granting his motion for summary judgment. He argues, moreover, that as a matter of California law he has established a claim for conversion against the Nesseths and is, therefore, entitled to summary judgment on Count VII of his complaint. However, the trustee submits that Michigan law entitles him to treble damages.

The trustee supports his motion with two affidavits and attachments, and portions of two depositions. See Exhibits # 1-# 4 (Docket # 187). In addition, the trustee refers on brief to a deposition taken of another defendant during this adversary proceeding but not filed with the court or submitted in support of his summary judgment motion. Finally, the trustee directs the court's attention to the transcript of a summary judgment hearing in a separate adversary proceeding brought in the DeLorean case and to this court's published opinion in In the Matter of DeLorean Motor Company, 39 B.R. 157 (Bankr.E.D.Mich. 1984), aff'd, 59 B.R. 329 (E.D.Mich.1986).

The Nesseths object to the trustee's using these documents and decisions this court has made in other proceedings to support his summary judgment motion. First, they object to consideration of Exhibit # 1, an affidavit filed in another adversary brought by the trustee in the DeLorean bankruptcy case, an action that did not involve the Nesseths. However, this court finds no requirement in Federal Rule of Civil Procedure 56(e) or case law that affidavits be made specifically as support for the motion before the court. Neither does the rule require that an affidavit must be made in connection with the case at bar. Rather, an affidavit may be used if made on personal knowledge, if it shows affirmatively that the affiant is competent to testify to the subject matter, and to the extent it sets forth facts that would be admissible in evidence. Therefore, this court concludes that it must consider the affidavit submitted as Exhibit # 1. However, under Rule 56(e), the court may not and will not consider the unsworn and uncertified copies of documents attached to the affidavit.

Next, the Nesseths object to consideration of the transcript of Allard v. Capitol Cadillac Corporation, Adv.Pro. No. 87-0193. Similarly, they object to use of findings made in In the Matter of DeLorean Motor Co. supra. It is settled that the court may take judicial notice of other cases that involve the same subject matter or present issues of a related nature between the same parties. 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure Civil 2d sec. 2723 (1983). H...