Nat'l Am. Ins. v. Ruppert Landscaping
| Decision Date | 10 June 1999 |
| Docket Number | CA-97-847,No. 98-1562,98-1562 |
| Parties | (4th Cir. 1999) NATIONAL AMERICAN INSURANCE COMPANY; GULF INSURANCE COMPANY, Plaintiffs-Appellants, v. RUPPERT LANDSCAPING COMPANY, INCORPORATED, Defendant-Appellee. (). . Argued: |
| Court | U.S. Court of Appeals — Fourth Circuit |
Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria.
COUNSEL ARGUED: Neil Lawrence Henrichsen, MITTERHOFF, HENRICHSEN & STEWART, P.L.L.C., Washington, D.C., for Appellants. Charles Thomas Brown, SILVER & BROWN, Fairfax, Virginia, for Appellee. ON BRIEFS: Dawn C. Stewart, Lorraine M. Magee, MIT-ERHOFF, HENRICHSEN & STEWART, P.L.L.C., Washington, D.C., for Appellants. Glen H. Silver, SILVER & BROWN, Fairfax, Virginia, for Appellee.
Before WILKINSON, Chief Judge, and ERVIN and MICHAEL, Circuit Judges.
Affirmed by published opinion. Chief Judge Wilkinson wrote the opinion, in which Judge Ervin and Judge Michael joined.
Two insurance companies seek to challenge the validity of an asset transfer between a now-bankrupt party and Ruppert Landscaping Company by suing Ruppert in district court. The district court granted summary judgment to Ruppert. Because standing to challenge the validity of the transfer rests with the trustee in bankruptcy, we affirm the judgment of the district court.
This case stems from the financial difficulties and ultimate bankruptcy of Green Thumb Enterprises (Green Thumb), which in the early 1990s was one of the largest landscaping companies in the Washington, D.C. metropolitan area. During the course of Green Thumb's operations, the National American Insurance Company and the Gulf Insurance Company (collectively Sureties) issued numerous payment and performance bonds on behalf of Green Thumb for various landscape installation and maintenance contracts.
In mid-1995, Green Thumb entered into a series of agreements with another landscaping company, Ruppert Landscaping Company (Ruppert). Most importantly for this case, Ruppert agreed to purchase a few of Green Thumb's notes from its primary lender and also to purchase some of Green Thumb's assets.
During the following months Green Thumb experienced financial difficulties and defaulted on landscape contracts that were bonded by the Sureties. In October 1995, the Sureties filed an involuntary bankruptcy petition against Green Thumb. The bankruptcy ultimately became a Chapter 7 proceeding and a trustee was appointed.
In January 1996, Ruppert moved to lift the automatic stay pursuant to 11 U.S.C. § 362 in connection with its secured claims. The bankruptcy court granted Ruppert's motion. The Sureties then brought suit in district court challenging Ruppert's transactions with Green Thumb. The Sureties pursued a variety of counts: successor liability, tortious interference with contract, and statutory and common law conspiracy. The district court granted summary judgment to Ruppert finding that the Sureties lacked standing to bring these causes of action and that the Sureties' claims were barred by res judicata and collateral estoppel. The Sureties now appeal.
The Sureties argue that they have standing to bring their claims in district court. If a cause of action is part of the estate of the bankrupt then the trustee alone has standing to bring that claim. See SteyrDaimler-Puch of Am. Corp. v. Pappas, 852 F.2d 132, 136 (4th Cir. 1988). The Sureties assert that since their claims are not property of the estate, they can bring their claims directly against Ruppert in district court.
We disagree. The bankruptcy court noted that the trustee has a potential fraudulent conveyance action to challenge the legality of the transaction between Ruppert and Green Thumb. See 11 U.S.C. § 548. All of the Sureties' claims have this same focus. To make out their successor liability claim the Sureties rely heavily on exposing the Ruppert/Green Thumb transaction to be fraudulent in fact. See Harris v. T.I., Inc., 413 S.E.2d 605, 609 (Va. 1992). The Sureties' tortious interference with contract and conspiracy claims likewise depend on showing fraud or other unlawful action with regard to Ruppert's purchase of Green Thumb's assets. See Chaves v. Johnson, 335 S.E.2d 97, 102 (Va. 1985) (); Allen Realty Corp. v. Holbert, 318 S.E.2d 592, 596 (Va. 1984) (statutory conspiracy); Commercial Business Systems, Inc. v. BellSouth Services, Inc., 453 S.E.2d 261, 267 (Va. 1995) (common law conspiracy). In fact, the Sureties' complaint and briefs abound with examples and allegations of the improper and illegal nature of this transaction. Although the Sureties' claims and the trustee's fraudulent conveyance claim do not contain identical elements, they all share this same underlying focus. See Litchfield Co. v. Anchor Bank (In re Litchfield Co.), 135 B.R. 797, 804 (W.D.N.C. 1992) ().
The Sureties' causes of action are thus so similar in object and...
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