In re Harstad
| Decision Date | 30 June 1993 |
| Docket Number | Bankruptcy No. 4-90-869,Adv. No. 4-93-048. |
| Citation | 155 BR 500 |
| Parties | In re Keith T. HARSTAD and Diane N. Harstad, d/b/a Harstad Companies, Debtors. Keith T. HARSTAD and Diane N. Harstad, d/b/a Harstad Companies, Plaintiffs, v. FIRST AMERICAN BANK, f/k/a Drovers First American Bank of South St. Paul, Defendant. |
| Court | U.S. Bankruptcy Court — District of Minnesota |
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William E. Connors, Fredrikson & Byron, Minneapolis, MN, for plaintiffs.
Daniel C. Beck, Winthrop & Weinstine, St. Paul, MN, for defendant.
ORDER OF DISMISSAL
This adversary proceeding came on for hearing on April 21, 1993, on the defendant's motion to dismiss. Thomas G. Wallrich appeared for the plaintiffs and Daniel C. Beck appeared for the defendant. This court has jurisdiction pursuant to 28 U.S.C. §§ 1334 and 157(a) and Local Rule 201. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(F).
On February 16, 1990, the plaintiffs filed a case under chapter 11. On October 19, 1993, I confirmed their plan. Article X of the plan provides:
The Court will retain jurisdiction until this Plan has been fully consummated for the following purposes: classification of the claims for damages form rejection of executory contracts or unexpired leases; determination of all questions and disputes regarding title to the assets of the estate and the determination of all causes of actions between Debtors and any other party, including but not limited to, any right of Debtors to recover assets pursuant to the provision of the Bankruptcy Code; correction of any defect, the curing of any omission, or the reconciliation of any inconsistency in this Plan or the order of confirmation as may be necessary to carry out the purpose and intent of this Plan; interpretation and enforcement of the terms of this Plan; shortening or extending, for cause, of time fixed for doing any act or thing under this Plan; entry of any order, including any injunction, necessary to enforce the title, rights and powers of Debtors; and entry of an order concluding the terminating this case. The Court may exercise its jurisdiction after notice and hearing or ex parte, as the Court determines to be appropriate.
Shortly after confirmation, the plaintiffs commenced this adversary proceeding seeking to avoid and recover a preferential transfer to the defendant in the amount of $140,663. The defendant moved for dismissal pursuant to Rule 12 of the Federal Rules of Civil Procedure and Rule 7012 of the Federal Rules of Bankruptcy Procedure.
Can debtors bring a preference action after confirmation of a plan if their plan does not specifically and unequivocally provide for the post-confirmation retention of preference actions and if all recoveries inure solely to the benefit of the debtors?
The plaintiffs have asked me to deny the defendant's motion because of procedural deficiencies. First, the plaintiffs assert they were improperly served since the motion was served 7, not 10 days before the hearing. Second, the plaintiffs maintain that the motion did not comply with the Local Rules since it did not contain a proof of service, it did not state the last day to file a response, and it failed to state the jurisdictional basis for the motion. While the defendant's motion suffers from both improper service and non-compliance with the Local Rules, I do not believe the plaintiffs were in any way prejudiced. Indeed, they submitted a well written, researched and reasoned brief which artfully analyzed each of the defendant's arguments. Beyond, the written submission, their attorney was well prepared and articulately argued the plaintiffs' position at the hearing. The plaintiffs' procedural objections are overruled.
The defendant has moved to have the plaintiffs' complaint dismissed pursuant to Rule 7012(b) and (c) or Rule 7056 both of the Federal Rules of Bankruptcy Procedure. Rule 7012(c) provides that "if, on a motion for judgment on the pleadings, matters outside of the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56. . . ." Fed.R.Bankr.P. 7012(c). Since the defendant submitted affidavits and other supporting documentation with its motion, I must treat this motion as one for summary judgment pursuant to Rule 7056 of the Federal Rules of Bankruptcy Procedure.1
Summary judgment plays a very important role allowing the judge to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Advisory Committee Notes to Rule 56. The importance of summary judgment cannot be overemphasized. Indeed, "summary judgment . . . is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986) (quoting Rule 1 of the Federal Rules of Civil Procedure). "The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts' trial time for those cases that really do raise genuine issues of material fact." City of Mt. Pleasant, Iowa v. Associated Elec. Co-Op., Inc., 838 F.2d 268, 273 (8th Cir.1988); see Catrett v. Johns-Manville Sales Corp., 756 F.2d 181, 189-90 (D.C.Cir. 1985) (Bork, J., Dissenting).3
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "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." Fed.R.Civ.P. 56(c). "The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. at 2552.
A. The Burdens
Initially, the burden is on the party seeking summary judgment. It is the moving party's job to inform the court of the basis for the motion, and identify those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Simply stated, the moving party must show the court that there is an absence of evidence to substantiate the non-moving party's case. Id. at 325, 106 S.Ct. at 2553. To that end, the movant discharges its burden by asserting that the record does not contain a triable issue and identifying that part of the record which supports the moving party's assertion. See Id. at 323, 106 S.Ct. at 2552; City of Mt. Pleasant, 838 F.2d at 273.
Once the movant has made its showing, the burden of production shifts to the non-moving party. The non-moving party must "go beyond the pleadings and by its . . . own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,'" establish that there is specific and genuine issues of material fact warranting a trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553 (quoting Fed.R.Civ.P. 56(c)). The non-moving party cannot cast some metaphysical doubt on the moving party's assertion. Matsushita Elec. Indust. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). The non-moving party must present specific significant probative evidence supporting its case, Johnson v. Enron Corp., 906 F.2d 1234, 1237 (8th Cir.1990) sufficient enough "to require a . . . judge to resolve the parties' differing versions of the truth at trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (quoting First Nat'l Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569 (1968)). Any affidavits must "be made on personal knowledge, must set forth such facts as would be admissible in evidence, and shall affirmatively show that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e) (emphasis added). If, however, the evidence tendered is "merely colorable," or is "not significantly probative," the non-moving party has not carried its burden and the court must grant summary judgment to the moving party. Id. at 249-50, 106 S.Ct. at 2511. Here, no material facts are in dispute. Accordingly, judgment may be entered as a matter of law.
The defendant urges me to dismiss this adversary proceeding for four reasons: Subject matter jurisdiction is absent; the plaintiffs lack standing; this action is not "for the benefit of the estate"; and because of the plaintiffs' pre-confirmation representations, they are judicially estopped. While I have subject matter jurisdiction, I am granting summary judgment to the defendant and dismissing the adversary proceeding as the plaintiffs lack standing and any preference recoveries will not benefit the estate.
Jurisdiction generally and bankruptcy jurisdiction particularly are among the most misunderstood and misapplied concepts in the law. Federal jurisdiction is essentially statutory. As with all statutes, analysis focuses on words of Congress....
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