Rexnord Holdings, Inc. v. Bidermann

• Decision Date: 07 April 1994
• Docket Number: No. 819,D,819
• Citation: 21 F.3d 522
• Parties: REXNORD HOLDINGS, INC., Plaintiff-Appellee, v. Maurice BIDERMANN, Defendant-Appellant. ocket 93-7762.
• Court: U.S. Court of Appeals — Second Circuit

Page 522

21 F.3d 522

REXNORD HOLDINGS, INC., Plaintiff-Appellee, v. Maurice BIDERMANN, Defendant-Appellant.

No. 819, Docket 93-7762.

United States Court of Appeals Second Circuit.

Argued Jan. 11, 1994.

Decided April 7, 1994.

Robinson B. Lacy (Samuel W. Seymour, Julie B. Crockett, Sullivan & Cromwell, New York City, of counsel), for defendant-appellant.

Russell E. Brooks (John M. Conlon, Milbank, Tweed, Hadley & McCloy, New York City, of counsel), for plaintiff-appellee.

Before: MINER and MAHONEY, Circuit Judges, and RESTANI, Judge. ^*

MINER, Circuit Judge:

Defendant-appellant Maurice Bidermann appeals from a money judgment entered in the United States District Court for the Southern District of New York (Patterson, J.) in favor of plaintiff-appellee Rexnord Holdings, Inc. ("RHI") in the amount of $12,989,312.64, the district court having found that Bidermann was in breach of his obligations under a Settlement Agreement and a Stock Purchase Agreement ("Agreements") dated November 25, 1991. The Agreements represented the resolution of a contract action brought by RHI against Bidermann. The breach occurred when Bidermann defaulted on a scheduled payment due under the provisions of the Agreements. On appeal, Bidermann contends that the district court erred in directing judgment for RHI because there were genuine issues of material fact concerning RHI's breach of the Agreements and its lack of good faith. Bidermann also argues that the judgment should be vacated because it was entered after the filing of his Chapter 11 bankruptcy petition, in violation of the automatic stay provided by 11 U.S.C. Sec. 362. For the reasons that follow, we affirm.

BACKGROUND

On August 1, 1991, RHI commenced an action against Bidermann in the United States District Court for the Southern District of New York for breach of contract for Bidermann's failure to purchase securities of Bidermann Industries U.S.A., Inc. from RHI. RHI originally had purchased the securities from Bidermann Industries subject to an option agreement providing that Bidermann would buy back the securities upon the exercise of the option by RHI. When RHI later sought to exercise the buy-back option, Bidermann refused to purchase the securities.

The parties resolved their dispute by executing the Agreements. The Agreements required Bidermann to pay RHI $22,571,748 in five installments: four payments in the amount of $5,000,000 each to be made on November 11, 1991, June 30, 1992, December 31, 1992 and June 30, 1993, and one final payment of $2,571,748 to be made on December 30, 1993. The terms of the Agreements allowed Bidermann a grace period until the following payment date before his failure to pay an installment would be an event of default under the Agreements. ¹ On November 26, 1991, the parties stipulated to an order of dismissal of RHI's complaint. The Stipulation and Order of Dismissal provided that the district court would retain jurisdiction for the purpose of enforcing the Agreements. The Agreements provide that the district court "retains jurisdiction over the parties for the purpose of enforcing the [Agreements]. Any proceeding with respect to or arising out of [the Agreements] by or between the parties hereto shall be brought before the [district] court upon notice by personal service upon the attorneys for the parties."

It is undisputed that Bidermann failed to remit the scheduled December 31, 1992 payment, but that this failure was not deemed a default until June 30, 1993. Under the terms of the Agreements, RHI could accelerate the amounts due or "reduce its claim to judgment by any available judicial procedure" in the event of a default. The Agreements also provided that the "remedies provided herein are cumulative and not exclusive of any remedies provided by law or any other agreement."

On June 28, 1993, Bidermann informed RHI and its CEO, Jeffrey Steiner, that he could not meet the impending June 30 deadline for payment. Bidermann requested a 90-day moratorium on payments due under the Agreements to allow him to complete refinancing efforts or at least the opportunity to make a good-faith partial payment of the December 31, 1992 installment. On June 30, RHI allegedly informed Bidermann that it would not agree to the moratorium unless Bidermann made certain concessions on other business and financial issues that were unrelated to Bidermann's obligations under the Agreements. Bidermann rejected this proposal and, on July 1, 1993, RHI brought on a motion by order to show cause for judgment under the Agreements.

On that same day, RHI also effected service in France of orders attaching Bidermann's principal assets there, including shares of stock and bank accounts. These orders had been obtained ex parte by RHI from the Tribunal de Grande Instance in Paris on June 11, 1993, but did not become effective until July 1, the day after Bidermann was deemed in default of the Agreements. Also on July 1, RHI, ex parte, obtained from the district court an order of attachment for Bidermann's assets in the United States and served that order.

At a hearing that began at 2:30 p.m. on July 7, 1993, the district court heard arguments of counsel regarding the entry of judgment in favor of RHI. In support of its motion, RHI had submitted on July 1, 1993 an affidavit, with attached exhibits, subscribed by Donald Miller, Vice President and General Counsel of RHI. On July 7, 1993, Bidermann submitted a memorandum of law in opposition to the motion for judgment, but failed to submit any affidavits or documentary evidence. During the hearing, Bidermann's counsel conceded the default, but argued that RHI's application for an ex parte order of attachment in France violated both the express provisions of the Agreements and RHI's implied obligations of good faith and fair dealing. Counsel also alleged that RHI sought to condition negotiations regarding the moratorium upon a waiver by Bidermann of certain rights in unrelated transactions that he had with RHI and Steiner. At the conclusion of the hearing, the district court stated: "I'm going to order that judgment be entered in favor of [RHI] in the amount of $12,946,748 principal and accrued interest.... So I'm going to endorse the original documents to that effect on this application.... I want to enter this today."

That same day, Bidermann's counsel advised the district court and RHI by letter that Bidermann had commenced a proceeding under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York by filing a petition at 3:18 in the afternoon, following the district court hearing. The following day, July 8, the money judgment was entered on the district court docket by the court clerk. ² This appeal was taken following the entry of an order by the bankruptcy court modifying the automatic stay to permit Bidermann to appeal from the district court's judgment.

DISCUSSION

On appeal, Bidermann argues that the judgment of the district court directing payment to RHI for the total amount owed under the Agreements should be vacated for two reasons. He first contends that there were genuine issues of material facts that should have precluded the district court from summarily granting judgment and, second, that the judgment is void because it was entered in contravention of the automatic stay that took effect when Bidermann filed his bankruptcy petition. We consider each claim in turn.

1. Summary Judgment

Although RHI's motion was for entry of judgment upon Bidermann's default under the Agreements, both parties have agreed that the standard applicable to a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure should be applied. Accordingly, we will review the district court's grant of judgment under those standards for the purpose of deciding this appeal. Summary judgment is appropriate "if the pleadings ... 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." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); accord Brown v. E.F. Hutton Group, Inc., 991 F.2d 1020, 1030 (2d Cir.1993). Once the moving party properly supports its motion for summary judgment, the non-moving party must establish a genuine issue of material fact in order to preclude a grant of summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment[.]" Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2510. We review the grant of a motion for summary judgment de novo, see Peoples Westchester Sav. Bank v. FDIC, 961 F.2d 327, 330 (2d Cir.1992), and conclude that it was proper in this case.

Initially, we note that RHI established a prima facie right to summary judgment. A settlement agreement is to be construed according to general principles of contract law. See City of Hartford v. Chase, 942 F.2d 130, 134 (2d Cir.1991). Under New York law, ³ an action for breach of contract requires proof of (1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages. Bank Itec N.V. v. J. Henry Schroder Bank & Trust Co., 612 F.Supp. 134, 137-38 (S.D.N.Y.1985). Here, it is manifest that there was a contract between RHI and Bidermann and that RHI had performed its obligations thereunder. Moreover, RHI submitted the affidavit of Miller, together with the Agreements, to establish that there was a breach by Bidermann and that RHI was entitled to judgment for damages in the amount owed under the Agreements. Indeed, it is uncontroverted that Bidermann was in default of his obligations under the Agreements. Therefore, it is clear that RHI established a breach of...