In re SNA Nut Co.
| Decision Date | 25 August 1997 |
| Docket Number | Bankruptcy No. 94 B 5993,Adversary No. 95 A 00705. |
| Citation | 210 BR 140 |
| Parties | In re S.N.A. NUT COMPANY, Debtor. S.N.A. NUT COMPANY, Plaintiff, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Thomas B. Orlando, Chicago, IL, for Movant.
James D. Benak, Chicago, IL, for Respondent.
This matter comes before the Court on the motion of National Union Fire Insurance Co. ("National Union"), the defendant, for partial summary judgment on Count I of the First Amended Complaint for Declaratory Judgment and Breach of Contract (the "Complaint"), filed by S.N.A. Nut Company (the "Debtor"). Count I of the Debtor's Complaint alleges that National Union wrongly refused to provide coverage for the business interruption loss sustained by the Debtor in one of its nut processing plants, and seeks declaratory judgment that the insurance policy provides coverage for the Debtor's loss which is alleged to be in the amount of at least $2,540,216 ($500,000 representing net profit which was prevented from being earned and $2,040,216 representing all continuing expenses during the loss period). National Union, in support of its motion, argues that the Debtor cannot prove that it incurred and paid continuing expenses in the amount of $2,040,216, and therefore, no issue of fact remains as to whether, under the policy, the Debtor is entitled to compensation for that portion of its business interruption loss. Upon review of both parties briefs and upon hearing oral arguments from the parties, for the reasons set forth herein, this Court finds that whether the Debtor can substantiate its continuing expenses loss is a factual questions to be determined at trial. Accordingly, National Union's motion is denied.
The Debtor sustained a fire loss due to a fire in a pecan dryer at the Debtor's Mansfield, Louisiana facility. National Union, the Debtor's insurer, reimbursed the Debtor for damage to the pecan dryer and for related fire damage to real and personal property at the Mansfield facility. The fire interrupted the Debtor's business so that it was unable to process nuts at the Mansfield plant from October 22, 1992 through early 1993.
The Debtor had business interruption insurance with National Union. On September 3, 1993, the Debtor made a claim for its business interruption loss for the time the Mansfield facility lay idle. Calculating its loss using the gross earnings method, the Debtor submitted a claim in the amount of at least $2,540,216, of which $500,000 represented lost net profits and $2,040,216 represented necessarily incurred continuing expenses.
On October 21, 1993, in a letter written by adjuster, James Terlecki, National Union denied the Debtor's claim in its entirety. On or about March 14, 1994, National Union filed suit in the Western District of Louisiana seeking a declaration that it was not liable to the Debtor for the claimed loss from the Mansfield fire. In the Louisiana Complaint, National Union stated two reasons for denying coverage: (1) that the Debtor equated lost production with lost sales; and (2) that the Debtor allegedly mitigated its loss with inventory on hand.
On June 1, 1995, the Debtor narrowed its claim for business interruption to the core period of its loss, from October 22, 1992 through December 31, 1992. The Debtor defines this time period as its "buy-shell-sell" season, the time of year when, historically, it sells every nut it processes, arguably making the Debtor's production capacity equal to its lost sales. Like the September 1993 formulation of the Debtor's claim, the June demand was calculated by the gross earnings method. After a brief time in which the Debtor did not receive a response from National Union, the Debtor filed this action on June 19, 1995, seeking payment for its loss.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and General Rule 2.33.A of the United States District Court for the Northern District of Illinois.1 § 1334(b) states that "the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11."2 Bankruptcy Judges can enter final orders in "core" proceedings arising under title 11 pursuant to 28 U.S.C. § 157(b)(2), or submit proposed findings of fact and conclusions of law to the District Court in "noncore" proceedings which are "otherwise related to" a case under title 11 pursuant to § 157(c)(1).
In general, a proceeding "relates to" a bankruptcy if it affects the amount of property to be distributed or allocated among creditors. In re Xonics, 813 F.2d 127, 131 (7th Cir.1987). The present case is "related to" the Debtor's bankruptcy proceeding under title 11 because it concerns the Debtor's interest, if any, in an insurance policy issued by National Union. See UNR Industries, Inc. v. Continental Casualty Co., 942 F.2d 1101, 1103 (7th Cir.1991), cert. denied, 503 U.S. 971, 112 S.Ct. 1586, 118 L.Ed.2d 305 (1992) () The scope of the Debtor's interest "affects the amount of property available for distribution," establishing the District Court's jurisdiction.
The purpose for granting a summary judgment motion under Federal Rule of Civil Procedure 56 (adopted by Federal Rule of Bankruptcy Procedure 7056), is to avoid unnecessary trials when there is no genuine issue of material fact in dispute. Farries v. Stanadyne/Chicago Division, 832 F.2d 374, 378 (7th Cir.1987); Wainwright Bank & Trust Co. v. Railroadmens Fed. Sav. & Loan Assoc. of Indianapolis, 806 F.2d 146, 149 (7th Cir.1986). Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and that the moving party is entitled to 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); Matsushita Elect. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); Trautvetter v. Quick, 916 F.2d 1140, 1147 (7th Cir.1990). The burden is on the moving party to show that there is no such factual dispute. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552; Matsushita, 475 U.S. at 585-87, 106 S.Ct. at 1355-56; In re Chicago, Missouri & Western Ry. Co., 156 B.R. 567 (Bankr.N.D.Ill.1993). This burden is met when the record, as a whole, does not lead a rational trier of fact to find for the non-moving party. Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. "If the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2510-11 (citations omitted).
Once the movant makes a prima facie showing that it is entitled to judgment as a matter of law, the respondent must show that there is a genuine issue and may not rest upon pleadings, allegations or denials in its pleadings. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. All inferences to be drawn from underlying facts must be viewed in the light most favorable to the respondent. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986); Karazanos v. Navistar Int'l. Transp. Corp., 948 F.2d 332, 335 (7th Cir. 1991).
Although cast as a Motion for Partial Summary Judgment, National Union's motion is governed by Fed.R.Civ.P. 56(d), as applied through Fed. R. Bankr.P. 9014 and 7056(d), because it does not lead to a judgment on a complete count of the entire case, but only terminates further contest on a portion of the litigation. Rule 7056(d) provides:
If on motion under this rule judgment is not rendered upon the whole case or for all the relief asked and a trial is necessary, the court at the hearing of the motion, by examining the pleadings and the evidence before it and by interrogating counsel, shall if practicable ascertain what material facts exist without substantial controversy and what material facts are actually and in good faith controverted. It shall thereupon make an order specifying the facts that appear without substantial controversy, including the extent to which the amount of damages or other relief is not in controversy, and directing such further proceedings in the action as are just. Upon the trial of the action the facts so specified shall be deemed established, and the trial shall be conducted accordingly.
Fed. R. Bank. P. 7056(d). Pursuant to Rule 7056(d), in an effort to ascertain if any controverted material facts exist, this Court examined the pleadings and the evidence before it and interrogated counsel at a hearing conducted on March 5, 1997.
Partial summary judgment is available only to dispose of one or more counts of a complaint in their entirety. Commonwealth Ins. Co. v. O. Henry Tent & Awning Co., 266 F.2d 200, 201 (7th Cir.1959); Capitol Records, Inc. v. Progress Record Distributing, Inc., 106 F.R.D. 25, 28 (N.D.Ill.1985). However, an order that is interlocutory and in the nature of a pretrial order may be entered to help frame and narrow the triable issues. Capitol Records, 106 F.R.D. at 28-29; In re Farley, 146 B.R. 739, 743 (Bankr. N.D.Ill.1992); See also, Archer-Daniels-Midland Co. v. Phoenix Assurance Co., 936 F.Supp. 534, 537 (S.D.Ill.1996). Therefore, although partial summary judgment cannot be entered here, this Court will consider whether the entry of an interlocutory order is appropriate to address the issues that arise.
National Union, in support...
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