Merv Props., LLC v. Friedlander (In re Merv Props., LLC), Case No. 11-52814

• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Eastern District of Kentucky
• Writing for the Court: Judge Tracey N. Wise
• Docket Number: Adversary No. 13-5034,Case No. 11-52814
• Parties: IN RE: MERV PROPERTIES, LLC, Debtor. MERV PROPERTIES, LLC, Plaintiff, v. ERIC FRIEDLANDER, et al., Defendants.
• Decision Date: 04 May 2015

IN RE: MERV PROPERTIES, LLC, Debtor.

MERV PROPERTIES, LLC, Plaintiff,
v.
ERIC FRIEDLANDER, et al., Defendants.

Case No. 11-52814
Adversary No. 13-5034

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF KENTUCKY Lexington Division

May 4, 2015

Chapter 11

Judge Tracey N. Wise

MEMORANDUM OPINION DISMISSING CLAIMS AGAINST DEFENDANTS FRIEDLANDER, FIFTH THIRD AND YESSIN

This adversary proceeding is before the Court on Motions for Summary Judgment and supporting memoranda of law filed by Defendants, Fifth Third Bank ("Fifth Third's Motion") [Docs. 99 & 100], Tim Yessin ("Yessin's Motion") [Docs. 113 & 114], and Eric Friedlander ("Friedlander's Motion") [Docs. 115 & 116]. Following a hearing held on September 11, 2014, the motions were taken under submission.¹

JURISDICTION

This Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334(b). The allegations against the Defendants discussed below are related-to, non-core proceedings which this Court is authorized to hear. 28 U.S.C. § 157(c)(1); MERV Props., LLC v. Fifth Third Bank (In re MERV

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Props., LLC), No. 5:14-007-DCR, 2014 WL 201614 (E.D. Ky. Jan. 17, 2014). The parties presently before the Court expressly consent to this Court entering final orders and judgments. 28 U.S.C. § 157(c)(2). Venue is proper pursuant to 28 U.S.C. § 1409.

SUMMARY JUDGMENT STANDARD

Pursuant to Federal Rule of Bankruptcy Procedure 7056, Federal Rule of Civil Procedure 56² applies in adversary proceedings.

[O]n several occasions, the Court of Appeals for the Sixth Circuit has described the standard to grant a motion for summary judgment as follows:

A court must grant summary judgment "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 judgment as a matter of law." Under this test, the moving party may discharge its burden by "pointing out to the [bankruptcy] court . . . that there is an absence of evidence to support the nonmoving party's case."

Buckeye Ret. Co., LLC, Ltd., v. Swegan (In re Swegan), 383 B.R. 646, 652-53 (B.A.P. 6th Cir. 2008) (quoting Gibson v. Gibson (In re Gibson), 219 B.R. 195, 198 (B.A.P. 6th Cir. 1998)). The Supreme Court instructs that a court must look beyond the pleadings and assess the proof needed to determine whether there is a genuine need for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, whether he is ruling on a motion for summary judgment or for a directed verdict. The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (emphasis added). After making an assessment of the proof, the determinative issue is "whether the evidence presents a sufficient disagreement to require submission to [the trier of fact] or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52. In this regard, the moving party carries the

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burden of showing there is an absence of evidence to support a claim. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25 (1986). After the moving party meets this burden, the nonmoving party must go beyond the pleadings to identify more than a mere scintilla of evidence showing that there is a genuine issue of material fact for trial. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989); FED. R. CIV. P. 56(c). "The respondent cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must 'present affirmative evidence in order to defeat a properly supported motion for summary judgment.'" Street, 886 F.2d at 1479 (quoting Anderson, 477 U.S. at 257).

MERV'S VERIFIED COMPLAINT AS EVIDENCE

As a preliminary matter, MERV did not file affidavits as permitted by Bankruptcy Rule 7056, but claims its verified Complaint may serve as an affidavit for evaluating the pending summary judgment motions. Defendant Friedlander contests this proposition.

For the purposes of summary judgment, a verified complaint carries the same evidentiary weight as an affidavit. El Bey v. Roop, 530 F.3d 407, 414 (6th Cir. 2008); Lavado v. Keohane, 992 F.2d 601, 605 (6th Cir. 1993). MERV's Complaint is verified as follows:

Merv Properties, LLC, by and through its Responsible Party, Vivian Collins, states that she has read the foregoing Verified Complaint, consisting of twenty-five pages including this page, has first hand and personal knowledge of the facts set forth therein and, to the best of her knowledge, information and belief, the facts stated herein are true and correct.

Friedlander asserts that the Complaint is not properly verified for purposes of summary judgment because it is not signed under penalty of perjury in accordance with 28 U.S.C. § 1746, which provides:

Wherever, under any law of the United States or under any rule, regulation, order, or requirement made pursuant to law, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn declaration, verification, certificate, statement, oath, or affidavit, in writing of the person making the same (other than a deposition, or an oath of office, or an oath required to be taken before a specified official other than a notary public), such matter may,

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with like force and effect, be supported, evidenced, established, or proved by the unsworn declaration, certificate, verification, or statement, in writing of such person which is subscribed by him, as true under penalty of perjury, and dated, in substantially the following form:
. . . .
(2) If executed within the United States, its territories, possessions, or commonwealths: "I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct. Executed on (date).["]

28 U.S.C. § 1746 (emphasis added).

"May" is defined as "hav[ing] permission to" or "hav[ing] the liberty to" do something. Webster's New Collegiate Dictionary 704 (G. & C. Merriam Co. 1981). The term "may" also "indicate[s] a certain measure of likelihood or possibility." The American Heritage Dictionary of the English Language 1112 (3d ed., Houghton Mifflin Co., 1996). . . .
This Court notes that dictionaries also define the term "may" as meaning "must" when used in statutes, deeds, or contracts. See Webster's New Collegiate Dictionary 704; Webster's Third New International Dictionary of the English Language (Unabridged) 1396 (Merriam-Webster Inc. 1993). Webster's New Collegiate Dictionary qualifies this obligatory definition of "may" to circumstances "where the sense, purpose, or policy requires this interpretation." Webster's New Collegiate Dictionary 704. . . .

Old Life Ins. Co. of Am. v. Garcia, 411 F.3d 605, 614 (6th Cir. 2005), adhered to as amended sub nom. Old Line Life Ins. Co. of Am. v. Garcia, 418 F.3d 546 (6th Cir. 2005). Friedlander provides no basis for a finding that the "sense, purpose, or policy" of § 1746 requires that a verified complaint must be signed under penalty of perjury. When considering the practical impact that § 1746 has on court proceedings, the Sixth Circuit explains that "[s]ection 1746 authorizes the use of unsworn declarations under penalty of perjury, rather than sworn declarations under oath, whenever the law, rule, regulation, order or requirement permits the matter to be supported, evidenced, established or proved by sworn declaration." United States v. Gomez-Vigil, 929 F.2d 254, 258 (6th Cir. 1992) (first emphasis added). Therefore, that the Complaint here is not sworn to under penalty of perjury does not preclude its use as evidence in the Court's decision on the summary judgment motions.

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Nonetheless, to qualify as evidence for summary judgment purposes, the Complaint must meet the requirements of Civil Rule 56(c)(4), applicable herein via Bankruptcy Rule 7056. To do so, it must: (1) be made on personal knowledge; (2) set forth facts that would be admissible into evidence; and (3) demonstrate that the affiant is competent to testify on the matters stated. FED. R. CIV. P. 56(c)(4). Any inadmissible portion of an affidavit or verification made by a notarized signing that fails to meet the three requirements outlined in Civil Rule 56 must be stricken from the testimony. Upshaw v. Ford Motor Co., 576 F.3d 576 (6th Cir. 2009). That said, the Sixth Circuit instructs that a court should "use a scalpel, not a butcher knife," when striking portions of an affidavit, or in this instance, a verified complaint, that do not satisfy the requirements of Civil Rule 56(c)(4).³ Id. at 593 (citation omitted). Thus, the verified allegations of the Complaint herein will not be considered evidence unless they are supported by personal knowledge, admissible under the Federal Rules of Evidence, and demonstrate that the affiant is competent to testify on the matter.

One classification of testimony that fails to meet the Civil Rule 56 requirements are statements based "upon information and belief." Such statements are inadmissible for the purposes of supporting or rebutting a motion for summary judgment because they fail to satisfy the personal knowledge requirement established by Civil Rule 56. Alpert v. United States, 481 F.3d 404, 409 (6th Cir. 2007).

Collins avers that she "has first hand and personal knowledge of the facts set forth therein and, to the best of her knowledge, information and belief, the facts stated herein are true and correct." Here it appears that Collins has personal knowledge of some of the facts in the Complaint and some of the "facts" are true to the best of her knowledge, information and belief because they are based on information obtained from another source which Collins believes to be

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true.⁴ Where it is...