In re Silverman

• Court: U.S. Bankruptcy Court — Eastern District of North Carolina
• Citation: In re Silverman, 155 B.R. 362 (Bankr. E.D. N.C. 1993)
• Decision Date: 12 March 1993
• Docket Number: Bankruptcy No. 91-05126-8-ATS,Adv. No. S-92-00081-8-AP.
• Parties: In re Steven S. SILVERMAN and Sharon R. Silverman, Debtors. Steven S. SILVERMAN, Plaintiff, v. Henry E. MILLER, Jr., James C. Ballantine, Miller Building Corporation and Atrium Development Corporation, Defendants.

155 B.R. 362 (1993)

In re Steven S. SILVERMAN and Sharon R. Silverman, Debtors Steven S. SILVERMAN, Plaintiff, v. Henry E. MILLER, Jr., James C. Ballantine, Miller Building Corporation and Atrium Development Corporation, Defendants.

Bankruptcy No. 91-05126-8-ATS, Adv. No. S-92-00081-8-AP.

United States Bankruptcy Court, E.D. North Carolina, Wilson Division.

March 12, 1993.

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Gary K. Shipman, Wilmington, NC, for plaintiff.

Mark Clayton Kirby, Raleigh, NC, for defendants.

ORDER

J. RICH LEONARD, Bankruptcy Judge.

Steven S. Silverman ("Silverman") filed this lawsuit in New Hanover County Superior Court seeking damages based on a variety of legal claims. It was removed to this court after Silverman and his wife filed their bankruptcy petition. This case is related to Silverman's pending bankruptcy proceeding, and this court has jurisdiction pursuant to 28 U.S.C. §§ 157 and 1334. The parties have consented to this court's entry of a final judgment pursuant to § 157(c)(2).

This lawsuit is before the court on seven pending motions: (1) plaintiff's motion to compel and for sanctions, (2) defendant Henry E. Miller's ("Miller's") motion to compel, for sanctions, and to tax costs, (3) a motion for summary judgment filed by defendants Miller, James C. Ballantine ("Ballantine"), and Miller Building Corporation ("MBC"), (4) the plaintiff's motion for summary judgment against Miller, Ballantine, and MBC, (5) plaintiff's motion for summary judgment against Atrium Development Corporation ("Atrium"), (6) a motion to exclude evidence and for sanctions filed by defendants Miller, Ballantine, and MBC, and (7) the defendants' motion to strike Silverman's affidavit.

A hearing was held on these motions on February 17, 1993 in Wilmington, North Carolina. For the reasons given below, the court rules that: the defendants' summary judgment motion is granted in part and denied in part; the plaintiff's summary judgment motions are denied; the cross-motions to compel are denied; defendants' motion to exclude evidence is denied; and the defendants' motion to strike Silverman's affidavit is denied.

I. Defendants' Motion to Strike Silverman's Affidavit

Defendants ask the court to strike the affidavit filed by Silverman in opposition to the defendants' motion for summary judgment. They contend that Silverman's affidavit does not meet the requirements of Fed.R.Civ.P. 56(e) because it includes hearsay and does not show affirmatively that it is made on the affiant's personal knowledge. Defendants also object that the documents accompanying the affidavit are not presented in a meaningful fashion.

The court agrees that Silverman's affidavit contains some statements of opinion and hearsay that are inadmissible. It is also in agreement with the defendants' assessment of plaintiff's presentation of the numerous attached documents.

However, despite this agreement, the court finds itself unwilling to strike these documents. Silverman's affidavit and attachments are the core of his response to the defendants' motion for summary judgment. The court cannot reach a meaningful decision on defendants' motion without consideration of Silverman's best statement of his case. In addition, the improprieties contained in Silverman's submissions are muted by the fact that, at this stage of the proceedings, they are to be considered by the court, not by a jury, and the court is competent to rely only on the portions that are admissible. Accordingly, defendants' motion to strike Silverman's affidavit is DENIED.

II. Defendants' Motion to Exclude Evidence and for Sanctions

On December 7, 1992, the court entered an order authorizing plaintiff's counsel to issue a subpoena to Chloride allowing plaintiff's expert to enter and inspect the Chloride plant. The order provided that the court would determine any objection to the subpoena on an expedited basis. Defendants contend that plaintiff's counsel has abused the subpoena process by: (1) misrepresenting to Chloride that the court had already shortened the time for objection, and (2) sending a video crew to accompany the expert whose entry was authorized by the subpoena. As a sanction, defendants ask the court to suppress the introduction of all evidence related to the inspection.

The court agrees with defendants that the order did not shorten the time for objection to the subpoena or authorize the entry of a video crew on the Chloride premises. Most importantly, the court did not waive plaintiff's obligation to notify the defendants of the time of the requested entry.

Nevertheless, the court is also of the opinion that it would have allowed both inspection and videotaping even if objections had been made. Thus, although the court does not encourage plaintiff's counsel to take such liberties in the future, it is reluctant to grant the relief sought by defendants when plaintiff's failure to formally make these requests has caused no practical harm.

Based on the foregoing, defendants' motion to exclude evidence and for sanctions based on the procedural impropriety is DENIED. However, if counsel for plaintiff lists the videotape as a trial exhibit, counsel for defendants is free to seek its exclusion on the ground that it is incomplete or misleading.

III. Defendants' Motion for Summary Judgment as to the Complaint

"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.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In making this determination, conflicts are resolved by viewing all facts and inferences to be drawn from the facts in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). Summary judgment should not be granted unless the moving party establishes his right to judgment "with such clarity as to leave no room for controversy. . . ." Portis v. Folk Construction Co., 694 F.2d 520, 522 (8th Cir.1982).

A. Facts

Steven S. Silverman is a former real estate developer and manager who has developed a number of projects using the trade name "Atrium."¹ In 1989, Silverman completed an office building in Wilmington, North Carolina known as Atrium Landfall. Through this development he met Henry E. Miller, Jr., a principal in Miller Building Corporation, a Wilmington building contractor.

In June of 1989, Miller, Silverman, and Ballantine (Executive Vice President of MBC) formed Atrium Development Corporation, a closely held corporation whose purpose was to "acquire, lease, build and manage" commercial real estate. (Affidavit of Silverman at 2.) To fund Atrium's activities, the three principals obtained and personally guaranteed two $125,000 lines of credit from Peoples Bank & Trust. Silverman was named president of Atrium and placed in charge of finding development opportunities for the firm.

The "Chloride Deal"

In January of 1990, the Chloride Group PLC ("Chloride"), a British company doing business in the United States, solicited bids for a planned facility to be built in the Wilmington area. State and local officials notified MBC and at least one competitor of this opportunity, and MBC began work on a proposal to submit to Chloride. Although Chloride was initially interested in a "build to suit" project, it shortly became clear that Chloride had decided to lease, and not own, its Wilmington facility. The acquisition of this project and all subsequent facets of its development have come to be known as the "Chloride deal."

Plaintiff does not dispute that the Chloride deal resulted from an initial contact between MBC and Chloride, and that the initial work was performed solely by MBC employees. However, he alleges that he and Atrium were asked to become involved once the nature of the deal shifted from construction to leasing and management. In late January of 1990, Miller asked Silverman to work on the Chloride lease with Wilburn Honeycutt, MBC's Vice President for Business Development. (Silverman Affidavit at 5.)

On February 9, 1990, Honeycutt flew to London to discuss the proposed lease with Chloride officials. Silverman alleges that Honeycutt's negotiations did not go smoothly, and states that he was asked by Miller to review the proposed figures over the weekend. Silverman then made suggestions which were incorporated in a revised proposal sent by Honeycutt to Peter Roberts of Chloride on February 11, 1990.

On February 22, 1990, MBC "requested Silverman to assume the lease negotiations with the Chloride Group, including the making of additional proposals for alternate lease terms." (Complaint at 2.) In his affidavit, Silverman alleges that this request took the form of a letter from Honeycutt which he understood "to hire" Atrium to perform these functions.² (Silverman Affidavit at 5.) Silverman has submitted a copy of this letter, which reads in part:

As you are aware, Miller Building Corporation has negotiated with Chloride Group PLC to build and lease to them a facility in Pender County. . . . Your co-operation is needed so that we can confirm preliminary lease rates and provide Chloride with a lease agreement and financial information on the proposed landlord.

In order to assist you and to provide guidelines for your proposal we have enclosed:. . . . You will initiate the lease prior to construction. In making your proposal, your lease rates for a 15 year term should adhere closely to the following values. . . .

(Exhibit 14 to Silverman Affidavit.)

Silverman alleges that pursuant to this request, he negotiated the terms and conditions of a lease with Chloride, found and acquired a suitable site for the facility, and obtained the financing commitments necessary to complete the project. Furthermore, h...