In re Miami Metals I, Inc.
| Decision Date | 13 January 2021 |
| Docket Number | Case No. 18-13359 (SHL) |
| Parties | In re: MIAMI METALS I, INC., et al., Debtors. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
(Jointly Administered)
DECISION AND ORDER DENYING SUMMARY JUDGMENT
APPEARANCES:
AKERMAN LLP
Counsel for the Debtors
Suite 3600
Dallas, TX 75201
By: Yelena E. Archiyan, Esq.
LUSKIN, STERN & EISLER LLP
Eleven Times Square
New York, NY 10036
By: Michael Luskin, Esq.
Stephan A. Hornung, Esq.
Alex Talesnick, Esq.
51 West 52nd Street
New York, NY 10019
By: Eric Lopez Schnabel, Esq.
Daniel P. Goldberger, Esq.
Attorneys for Tiffany & Co.
250 West Fifth Street
New York, NY 10019
By: Benjamin Mintz, Esq.
Before the Court is the former Debtors' and the Senior Lenders' joint motion [ECF No. 1201] (the "Summary Judgment Motion") seeking summary judgment as to an ownership dispute with one of its customers, Premier Gold Mines Limited ("Premier Gold"). Debtors are in the business of refining precious metals. Premier Gold is one of seven customers (each, a "Customer" and collectively, the "Customers") that originally comprised Buckets 3, 4 and 5, with the term "bucket" being a convention used to separate disputes between the Debtors and their customers into categories based on the similarity of the legal issues. The Senior Lenders2 are secured lenders of Debtors whose recovery in the case is impacted by the outcome of those customer disputes. The Customers initially comprising Buckets 3, 4 and 5 were:
The customer disputes with six of the seven Customers have been resolved, leaving only Premier Gold. For the reasons set forth herein, the Court denies the Debtors' and Senior Lenders' Summary Judgment Motion as to Premier Gold.
Each Debtor filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code on either November 2, 2018 or November 21, 2018. On December 23, 2019, the Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan of Liquidation (the "Plan") [ECF No. 1491-2]. See Findings of Fact, Conclusions of Law, And Order Pursuant to Sections 1129(a) and (b) of the Bankruptcy Code and Rule 3020 of the Federal Rules of Bankruptcy Procedure Confirming Debtors' Second Amended Joint Chapter 11 Plan of Liquidation [ECF No. 1668]. The Effective Date (as defined therein) of the Plan occurred on January 7, 2020 and, as such, the Plan was substantially consummated. See Notice of (A) Occurrence of the Effective Date of Plan, (B) Deadline to File Administrative Claims and (C) Deadline to File Rejection Damages Claims [ECF No. 1682].3
On November 2, 2018, the Debtors filed the Motion for Entry of Interim and Final Orders (I) Authorizing the Debtors to Use Cash Collateral (II) Granting Adequate Protection to the Secured Parties, (III) Scheduling a Final Hearing and (IV) Granting Related Relief [ECF No. 10] ("Cash Collateral Motion") seeking court authorization for the use of cash collateral. Variouscustomers of the Debtors filed over 40 objections and responses to the Cash Collateral Motion, asserting ownership interests in certain metals that the Debtors believed constituted property of the estate (collectively, the "Ownership Disputes"). To facilitate the resolution of the Ownership Disputes in an efficient and systematic manner, the Court entered the Order Approving Uniform Procedures for Resolution of Ownership Disputes [ECF No. 395], subsequently amended on April 15, 2019 [ECF No. 913], June 14, 2019 [ECF No. 1196] and October 28, 2019 [ECF No. 1516] (the "Uniform Procedures Order"), which established global procedures to address the Ownership Disputes. Pursuant to the Uniform Procedures Order, Customers were categorized and grouped into various "buckets" based on the type of contract governing their respective relationships with the Debtors.
In August 2019, the Court granted summary judgment as to the Debtors and Senior Lenders with respect to the Ownership Disputes relating to a subset of Bucket 1 Customers. See In re Miami Metals I, Inc., 603 B.R. 727 (Bankr. S.D.N.Y. 2019) (the "Bucket 1 Decision"). There, the Court concluded that the governing "Standard Terms and General Operating Conditions" between the Debtor formerly known as RMC and those respective customers (the "Bucket 1 Standard Terms") established a sale as opposed to a bailment relationship. See id. at 735 (). The Court concluded that multiple provisions in the Bucket 1 Standard Terms were unambiguously consistent with a sale and thus made it unnecessary to consider any extrinsic evidence of the parties' relationship. See e.g., id. at 736 (); see also id. (). The Court further noted that,while consideration of extrinsic evidence was unnecessary, the undisputed fact that these customers' metals were commingled and also was inconsistent with a bailment. See id. at 742. As such, the Court held that the precious metals given to the Debtors by these Customers were property of the estate, that the subset of Bucket 1 Customers lacked any ownership interests in these metals, and that these customers should instead be treated as unsecured creditors in this bankruptcy case. Id.
Premier Gold is part of so-called "Bucket 5", which is comprised of Customers whose agreements are "silent as to when title [of the metals] passe[s] from each Bucket 5 Customer to [Debtor, Miami Metals II, Inc. (f/k/a Republic Metals Corporation)]." Summary Judgment Motion at 12. The Ownership Dispute with Premier Gold centers principally on two agreements: (1) the Letter Agreement between Republic Metals Corporation ("RMC") and Premier Gold Mines Limited, dated as of September 30, 2016 (the "Premier Gold Agreement") and (2) the "Standard Terms and General Operating Conditions" (the "Premier Gold Standard Terms") executed just before the parties entered into the Premier Gold Agreement. See Declaration of Scott Avila in Support of Debtors and the Senior Lenders' Joint Motion for Summary Judgment as to Bucket 3, 4 and 5 Customers [ECF No. 1204] (the "Avila Declaration") ¶¶ 17, 18; Composite Exhibit B, Tab 5 to the Avila Declaration (copy of the Premier Gold Agreement); Composite C, Tab 1 to the Avila Declaration (copy of the Premier Gold Standard Terms).
The Premier Gold Standard Terms are essentially identical to the Bucket 1 Standard Terms that the Court previously addressed in its Bucket 1 Decision but for the following provisions which were excluded from the Premier Gold Standard Terms:
• Special provisions governing insurance, delivery, weighing and sampling for express delivery shipments; and• Language providing that the "Standard Terms and Conditions shall be deemed to be incorporated into each and every transaction between RMC and Customer, whether or not specifically stated therein."
Compare Exhibit B to the Amended Declaration of Scott Avila in Support of the Motion [ECF No. 1005] () with Composite C, Tab 1 to the Avila Declaration (copy of the Premier Gold Standard Terms). Relying on this Court's Bucket One Decision and the similarity between the Bucket One Standard Terms and the Premier Gold Standard Terms, the Debtors assert that the Premier Gold Standard Terms—much like the Standard Terms in the Bucket One decision—unambiguously provide for the sale of raw materials, thereby making those metals property of the estate.
Premier Gold disagrees, contending that the Premier Gold Standard Terms do not apply here. See Premier Gold's Counterstatement of Undisputed Fact ¶ 28; see also Premier Gold Mines Limited's Memorandum in Opposition to Debtors' and Senior Lenders' Joint Motion for Summary Judgment as to Bucket 3, 4 and 5 Customers [ECF No. 1465] ("Premier Gold Opposition") at 21-22. Premier Gold relies on the integration clause in Section 15.3 of the Premier Gold Agreement, which provides:
[The Premier Gold Agreement] constitutes the entire agreement between the parties with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements, between the parties with respect thereto. There are no representations, warranties, terms, conditions, opinions, advice, assertions of fact, matters, undertakings or collateral agreements, express, implied or statutory, by or between the parties (or by any representative thereof) with respect to the subject matter hereof other than as expressly set forth in this letter agreement.
Premier Gold Agreement § 15.3. Premier Gold notes that the Premier Gold Agreement was executed approximately one week after the execution of the Premier Gold Standard Terms. Given the integration clause in the Premier Gold Agreement, the argument goes, the later executed Premier Gold Agreement supersedes the Premier Gold Standard Terms. See PremierGold Agreement at 11 (); Premier Gold's Counterstatement of Undisputed Facts ¶ 28 (); Dec. 4, 2019 Hr'g ...
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