In re Outboard Marine Corp.

• Decision Date: 20 October 2003
• Docket Number: Bankruptcy No. 00 B 37405.,Adversary No. 01 A 00471.
• Citation: 300 B.R. 308
• Parties: In re OUTBOARD MARINE CORPORATION, et al., Debtors. Bank of America, N.A., successor in interest to Bank of America, N.A., formerly Nationsbank, N.A., successor in interest to Nationsbank of Texas, N.A., in its capacity as Prepetition Agent and DIP Agent, Plaintiff, v. Outboard Marine Corporation, et al., Defendants.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

300 B.R. 308

In re OUTBOARD MARINE CORPORATION, et al., Debtors.

Bank of America, N.A., successor in interest to Bank of America, N.A., formerly Nationsbank, N.A., successor in interest to Nationsbank of Texas, N.A., in its capacity as Prepetition Agent and DIP Agent, Plaintiff, v. Outboard Marine Corporation, et al., Defendants.

Bankruptcy No. 00 B 37405.

Adversary No. 01 A 00471.

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

October 20, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Larry J. Nyhan, Sidley, Austin, Brown & Wood, Bank One Plaza, Chicago, IL, for Movant or Plaintiff.

Jeffrey C. Dan, Crane, Heyman, Simon, Welch & Clar, Chicago, IL, for Makino, Inc.

AMENDED MEMORANDUM OPINION

JOHN H. SQUIRES, Bankruptcy Judge.

This matter comes before the Court on the motion of Makino, Inc. ("Makino") for partial summary judgment pursuant to Federal Rule of Bankruptcy Procedure 7056 and Federal Rule of Civil Procedure 56 on the complaint filed by Bank of America, N.A. (the "Bank") seeking a determination of the extent, validity and priority of liens in the proceeds of certain machinery that Makino sold to Outboard Marine Corporation and its related debtor entities ("OMC"). For the reasons set forth herein, the Court finds that a material factual issue as to OMC's intent to create a security interest precludes disposition of this matter through summary judgment. Accordingly, the Court denies Makino's motion.

I. JURISDICTION AND PROCEDURE

The Court has jurisdiction to entertain this matter pursuant to 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. It is a core proceeding under 28 U.S.C. § 157(b)(2)(K).

II. APPLICABLE STANDARDS

A. Summary Judgment

In order to prevail on a motion for summary judgment, the movant must meet the statutory criteria set forth in Rule 56 of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7056. Rule 56(c) reads in part:

The judgment sought shall be rendered forthwith 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). See also Dugan v. Smerwick Sewerage Co., 142 F.3d 398, 402 (7th Cir.1998).

The primary purpose for granting a summary judgment motion is to avoid unnecessary trials when there is no genuine issue of material fact in dispute. Trautvetter v. Quick, 916 F.2d 1140, 1147 (7th Cir.1990); Farries v. Stanadyne/Chicago Div., 832 F.2d 374, 378 (7th Cir.1987), quoting Wainwright Bank & Trust Co. v. Railroadmens Fed. Sav. & Loan Ass'n of Indianapolis, 806 F.2d 146, 149 (7th Cir.1986). Where the material facts are not in dispute, the sole issue is whether the moving party is entitled to a judgment as a matter of law. ANR Advance Transp. Co. v. Int'l Bhd. of Teamsters, Local 710, 153 F.3d 774, 777 (7th Cir.1998). In 1986, the United States Supreme Court decided a trilogy of cases which encourages the use of summary judgment as a means to dispose of factually unsupported claims. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The burden is on the moving party to show that no genuine issue of material fact is in dispute. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Celotex, 477 U.S. at 322, 106 S.Ct. 2548; Matsushita, 475 U.S. at 585-86, 106 S.Ct. 1348.

All reasonable inferences drawn from the underlying facts must be viewed in a light most favorable to the party opposing the motion. Parkins v. Civil Constructors of Ill., Inc., 163 F.3d 1027, 1032 (7th Cir.1998). The existence of a material factual dispute is sufficient only if the disputed fact is determinative of the outcome under applicable law. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Frey v. Fraser Yachts, 29 F.3d 1153, 1156 (7th Cir.1994). "[S]ummary judgment is not an appropriate occasion for weighing the evidence; rather, the inquiry is limited to determining if there is a genuine issue for trial." Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.1990). The Seventh Circuit has noted that trial courts must remain sensitive to fact issues where they are actually demonstrated to warrant denial of summary judgment. Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060, 1065-66 (7th Cir.2000); Szymanski v. Rite-Way Maint. Co., Inc., 231 F.3d 360, 364 (7th Cir.2000).

The party seeking summary judgment always bears the initial responsibility of informing the court of the basis for its motion, identifying those portions of the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrates the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once the motion is supported by a prima facie showing that the moving party is entitled to judgment as a matter of law, a party opposing the motion may not rest upon the mere allegations or denials in its pleadings; rather its response must show that there is a genuine issue for trial. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Matsushita, 475 U.S. at 587, 106 S.Ct. 1348; Patrick v. Jasper County, 901 F.2d 561, 565 (7th Cir.1990). The manner in which this showing can be made depends upon which party will bear the burden of persuasion at trial. If the burden of persuasion at trial would be on the non-moving party, the party moving for summary judgment may satisfy Rule 56's burden of production either by submitting affirmative evidence that negates an essential element of the non-moving party's claim or by demonstrating that the non-moving party's evidence is insufficient to establish an essential element of the nonmoving party's claim. See Union Nat'l Bank of Marseilles v. Leigh (In re Leigh), 165 B.R. 203, 213 (Bankr.N.D.Ill.1993) (citation omitted).

Rule 56(d) provides for the situation when judgment is not rendered upon the whole case, but only a portion thereof. The relief sought pursuant to subsection (d) is styled partial summary judgment. Partial summary judgment is available to dispose of only one or more counts of the complaint in their entirety. Commonwealth Ins. Co. of N.Y. v. O. Henry Tent & Awning Co., 266 F.2d 200, 201 (7th Cir.1959); Biggins v. Oltmer Iron Works, 154 F.2d 214, 216-17 (7th Cir.1946); Quintana v. Byrd, 669 F.Supp. 849, 850 (N.D.Ill.1987); Arado v. Gen. Fire Extinguisher Corp., 626 F.Supp. 506, 509 (N.D.Ill.1985); Capitol Records, Inc. v. Progress Record Distrib., Inc., 106 F.R.D. 25, 28 (N.D.Ill.1985); Strandell v. Jackson County, Ill., 648 F.Supp. 126, 136 (S.D.Ill.1986); In re Network 90 Degrees, Inc., 98 B.R. 821, 831 (Bankr.N.D.Ill.1989). Rule 56(d) provides a method whereby a court can narrow issues and facts for trial after denying in whole or in part a motion properly brought under Rule 56. Capitol Records, 106 F.R.D. at 29. In the case at bar, Makino seeks partial summary judgment as its motion relates only to the fourth defense asserted in its answer.

The parties have filed cross-motions for summary judgment. However, the Bank has failed to present its cross-motion to the Court in violation of the local bankruptcy rules. Specifically, Local Bankruptcy Rule 9013-1 provides that, with exceptions not applicable here, "[t]he date of presentment contained in a notice of motion shall be within 14 calendar days of the service of the notice." Local Bankr.R. 9013-1. "A local rule has the force of a statute and is binding on the ... court as well as the parties." Premier Elec. Constr. Co. v. Am. Nat'l Bank of Chicago, 276 Ill.App.3d 816, 213 Ill.Dec. 128, 658 N.E.2d 877, 891 (1995) (citations omitted). A party moving for summary judgment must comply with all applicable local court rules and statutes. Deaton v. Lloyd's Jewelry Co., 7 Ill.App.3d 926, 289 N.E.2d 123, 126 (1972) (citation omitted). "A motion that does not comply with the provisions of ... Rule [9013-1] may be stricken by the court without prior notice." Local Bankr.R. 9013-1. In this case, the Bank filed a cross-motion for summary judgment, as well as notice of that filing, on August 29, 2003, but did not present its cross-motion within fourteen calendar days of the service of the notice. Accordingly, the Court strikes the Bank's cross-motion and proceeds by examining only Makino's motion for partial summary judgment.

Local Bankruptcy Rule 7056-1 of the Local Bankruptcy Rules for the United

States Bankruptcy Court for the Northern District of Illinois, which deals with summary judgment motions, was modeled after LR56.1 of the Local Rules of the United States District Court for the Northern District of Illinois. Hence, the case law construing LR56.1 and its predecessor Local Rule 12 applies to Local Bankruptcy Rule 7056-1.

Pursuant to Local Bankruptcy Rule 7056-1, a motion for summary judgment imposes special procedural burdens on the parties. Specifically, the Rule requires the moving party to supplement its motion and supporting memorandum with a statement of undisputed material facts ("7056-1 statement"). The 7056-1 statement "shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph. Failure to submit such a statement constitutes grounds for denial of the motion." Local Bankr.R. 7056-1B.

Makino filed a 7056-1 statement that fully complies with the Rule. It includes numbered paragraphs establishing undisputed facts with specific references to...