In re Zupancic, BAP No. CC-82-1255-VAbP

Decision Date30 April 1984
Docket NumberBAP No. CC-82-1255-VAbP,Bankruptcy No. LA-80-04993(CA).
Citation38 BR 754
PartiesIn re Derek J. ZUPANCIC and Linda J. Zupancic, Debtors. Derek ZUPANCIC, D/W Development, Co., Appellant, v. Malcolm Jerome WINER, et al., Defendants.
CourtU.S. Bankruptcy Appellate Panel, Ninth Circuit

COPYRIGHT MATERIAL OMITTED

Stephenie Nordlinger, Baltaxe, Ruthin & Levin, Beverly Hills, Cal., for appellant.

John Joseph Mulrooney, Los Angeles, Cal., for defendants.

Before VOLINN, ABRAHAMS and PYLE, Bankruptcy Judges.

OPINION

SIDNEY C. VOLINN, Bankruptcy Judge:

This is an appeal by the debtor, Derek J. Zupancic, from a final judgment and order granting appellee's motion for summary judgment. The order dismissed debtors' amended complaint, alleging an oral partnership agreement with appellee, Malcolm J. Winer. We reverse.

I. INTRODUCTION
A. FACTS

Debtors Derek J. and Linda J. Zupancic filed a Chapter 11 bankruptcy petition in the Central District of California on June 2, 1980.

On December 21, 1979, debtor Derek Zupancic filed a complaint in Los Angeles Superior Court which alleged that he and appellee Malcolm Winer entered an oral partnership agreement to develop real property. In March 1980, debtor amended his complaint. It pleaded 11 causes of action relating to the parties' agreement to become general partners in D/W Development Co. for the purpose of purchasing, developing and selling real estate from early 1977 through March 25, 1980. It was also alleged that debtor agreed to contribute his services to the partnership, in return for an advance on profits of $5,000 a month. All net profits were allegedly to be divided equally between the parties.

The amended complaint sought damages, an accounting of the alleged partnership, and an order that the partnership property be sold, its debts paid and the surplus property divided between the partners.

The debtor removed the foregoing action to the bankruptcy court.

B. PROCEEDINGS IN BANKRUPTCY COURT

In June 1981, appellant Derek Zupancic sought leave to amend his complaint a second time to add a twelfth cause of action for payment in quantum meruit for work which he allegedly contributed to the partnership.

Appellee Malcolm Winer filed a motion for summary judgment. Before that motion was heard, Mr. Winer filed a motion to dismiss debtor's complaint. The bankruptcy court heard argument on the motion to dismiss on July 14, 1981. It issued an order denying the motion and requiring that each party file by July 20, 1981, a declaration from each witness who would support his case at trial.

The order denying the motion to dismiss specifically reserved ruling on debtor's motion to amend. Debtor contends in his appellate brief that the court never issued a final ruling on the motion to amend.

Appellee's motion for partial summary judgment alleged that there was no genuine issue of material fact as to whether the parties orally agreed to form a partnership. The bankruptcy court heard oral argument on the motion for summary judgment on July 24, 1981. It entered its memorandum of decision on June 9, 1982, granting appellee's motion for summary judgment on the issue of partnership and on each cause of action alleged in debtor's first amended complaint. The court stated in its memorandum that "there is no evidence to establish that Zupancic and Winer entered an oral partnership agreement about January 1, 1977, or at any time. They did not transact business as partners or conduct business as partners."

The court entered findings of fact which specifically found that the parties did not agree on the individual terms of partnership alleged in the amended complaint. It granted appellee's motion for non-suit on debtor's claim that he was entitled to reimbursement of expenses paid for the partnership. However, as indicated, the court did not rule on debtor's motion to amend the amended complaint to add a cause of action for payment in quantum meruit.

In its conclusions of law, the court held that debtor was not entitled to an accounting; that appellee held seven disputed properties free of any trust claimed by debtor; and that debtor was not entitled to compensatory or punitive damages.

II. CONTENTIONS OF PARTIES
A.

Debtor contends that the court erred by granting appellee's motion for partial summary judgment on the partnership claims and by dismissing the case without fully considering debtor's quantum meruit claim. In addition, debtor stated that he abandoned his appeal from the court's dismissal of the claim for unreimbursed expenses. However, in a supplemental brief, he sought the court's leave to rescind the abandonment. Debtor contends therein that the order of non-suit was in error because he was not allowed to complete presentation of evidence, as required by Fed.R.Civ.P. 41(b).

B.

Appellee makes three main contentions. First, he contends that the court correctly issued the partial summary judgment; second, that the finding of no partnership left no issues remaining to be decided (we take this second contention to mean that the judgment left no need to decide on the debtor's motion to amend the amended complaint by adding a cause of action for payment in quantum meruit); third, that the court based its finding as to the lack of credibility on a general lack of credible evidence, other than on the character of Mr. Zupancic.

III. STANDARD OF REVIEW

In reviewing the grant or denial of a summary judgment motion, this Panel applies the same test which the trial court applies under Fed.R.Civ.P. 56(c). Rule 56(c) provides in pertinent part that the court shall grant the motion for summary judgment if the affidavits and other materials demonstrate 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."

Applying that test, "summary judgment is `proper only where there is no genuine issue of any material fact or where viewing the evidence and the inferences which may be drawn therefrom in the light most favorable to the adverse party, the movant is clearly entitled to prevail as a matter of law.'" Radobenko v. Automated Equipment Corporation, 520 F.2d 540, 543 (9th Cir.1975), quoting Caplan v. Roberts, 506 F.2d 1039, 1042 (9th Cir.1974).

IV. CONSIDERATION OF THE RECORD
A. APPELLEE'S MATERIALS

The first question to be addressed when considering affidavits in a summary judgment motion is whether the information which they contain would be admissible at trial. Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2738 at p. 470.

Appellee's material in support of the motion for summary judgment consists of the declarations of appellee, and of four other witnesses. (Declarations may be admitted in the place of affidavits for the purpose of a summary judgment motion. 28 U.S.C. § 1746.) Appellee's declaration denies that he was ever debtor's partner or held himself out to be a partner. This is admissible to support his motion for summary judgment because it would be admissible at trial.

The witnesses' declarations state that they have never heard Mr. Winer introduce or refer to Mr. Zupancic as his partner, nor have they heard Mr. Zupancic claim to be Mr. Winer's partner in his presence.

We note the principle that the party moving for summary judgment cannot sustain his burden merely by denying the allegations in his opponent's pleadings, especially in light of the countering materials. Goldwater v. Ginzburg, 414 F.2d 324 (2d Cir.1969), cert. denied, 396 U.S. 1049, 90 S.Ct. 701, 24 L.Ed.2d 695. Appellee in the case before us has done little more than to state that he never agreed to a partnership with debtor. Since we recognize that it is difficult to prove a negative, we accept appellee's materials as marginally adequate.

B. DEBTOR'S MATERIALS

We note that debtor's own declaration is conspicuously absent from the record before us. At the appellate argument, debtor's current attorney said that she spoke with one of debtor's former attorneys (there were several substitutions of counsel), who admitted that he has failed, for some unexplained reason, to include debtor's declaration in the trial record. However, the issue is whether the declarations submitted by debtor are sufficient to raise an issue of fact.

Initially, we note the contention that appellant's statements as to partnership are conclusionary in nature and therefore inadequate. Appellant's declarations to the extent conclusionary, are of the same nature as those of appellee, being simply the other side of the coin. Considered in this context, a dispute does exist as to the status of the parties. However, appellant's declarations involve more than bare conclusionary assertions as to status.

Appellee argues that it would be improper for us to consider the declarations of Roman Lopez, Elvia Stork, Ken Willis, Thomas Bowles, Joseph Licha, Jack Ayers, Jack Galloway, Littleton Strong and Mike Doyle. These nine declarations were furnished to counter appellee's declarations. Appellee contends that debtor did not serve copies of the declarations on appellee's attorney, and therefore violated the court's deadline of July 20, 1981 for each party to submit materials from witnesses. Appellee argues that the court therefore was required to exclude—and implicitly did exclude —these declarations from the materials which it examined when reviewing the motion.

However, the record shows that the bankruptcy court did consider the materials and acted within its discretion in doing so. Appellee admits in his brief that, at the summary judgment hearing, "the court then advised defendant's appellee's counsel that it had already read the declarations and requested the clerk make copies for the defendant after the hearing." (Brief of Malcolm Winer, p. 11.) While the record before us does not specify which declarations the court considered, we assume that it admitted and considered all of them....

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