SHF Holdings, LLC v. Allamakee Cnty. (In re Agriprocessors, Inc.)

• Decision Date: 06 July 2012
• Docket Number: Adversary No. 10–9070.,Bankruptcy No. 08–2751.
• Citation: 474 B.R. 896
• Parties: In re AGRIPROCESSORS, INC., Debtor. SHF Holdings, LLC, f/k/a SHF Industries, Inc., Plaintiff, v. Allamakee County, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Iowa

474 B.R. 896

In re AGRIPROCESSORS, INC., Debtor.

SHF Holdings, LLC, f/k/a SHF Industries, Inc., Plaintiff,

v.Allamakee County, Defendant.

Bankruptcy No. 08–2751.

Adversary No. 10–9070.

United States Bankruptcy Court,

N.D. Iowa.

July 6, 2012.

Brian P. Rickert, Rachel Thomas Rowley, Sean P. Moore, Brown Winick et al., Des Moines, IA, for Plaintiff.

Marty L. Rowlet, Shuttleworth & Ingersoll, P.L.C., Wesley B. Huisinga, Cedar Rapids, IA, for Defendant.

ORDER RE MOTION FOR AMENDMENT OF ORDER RE: MOTION FOR SUMMARY JUDGMENT AND MOTION FOR RELIEF UNDER RULE 60(b) (ECF DOC. NO. 62) AND MOTION TO AMEND OR ALTER THE JANUARY 17, 2012 ORDER (ECF DOC. NO. 63)

THAD J. COLLINS, Chief Judge.

These two related matters are again before the Court—this time on cross Motions to Reconsider and/or Alter or Amend Findings and Conclusions in the Court's Ruling Denying Summary Judgment and Rule 60(b) Relief. The matters originally came before the Court for hearing on the Summary Judgment and Rule 60(b) Motions. Defendant Allamakee County (the “County”) moved for Summary Judgment on the Complaint of Plaintiff SHF Holdings, LLC f/k/a SHF Industries, Inc. (“SHF”). The SHF Complaint sought a declaration that the County's tax liens on real property SHF purchased from Debtor Agriprocessors, Inc. (“Debtor”) are void and unenforceable against SHF. The County made the Motion under Federal Rule of Civil Procedure 60(b) in the bankruptcy case seeking to set aside an Order allowing sale of substantially all of Debtor's property free and clear of liens. The 60(b) motion raised issues similar to those in SHF's adversary and specifically asked the Court to void its July 20, 2009 Order approving sale free and clear of liens to the extent it effected the County's tax lien. The Rule 60(b) proceeding is a “contest case” under Bankruptcy Rule 9014. Because the identical arguments have been made in both the adversary and Rule 60(b) proceedings, and the parties argued the cases together, the Court has treated, and will continue to treat, the claims together.

The Court entered a detailed Summary Judgment ruling on these issues on January 17, 2012. The Court granted in part and denied in part the County's Motion for Summary Judgment. With regard to the Rule 60(b) Motion, the Court made no final ruling, indicating the matter would be heard and decided with the final disposition of the adversary. Both parties have requested that the Court Reconsider/Alter or Amend its ruling. These matters are core proceedings under 28 U.S.C. § 157(b)(2)(K).

STATEMENT OF THE CASE

A July 20, 2009 Order of this Court approved the sale of Debtor's property to SHF free and clear of all liens. After the approved sale, the County asserted a tax lien on the purchased property and claimed it had not received any notice of the sale free and clear. SHF filed an adversary complaint asking the Court to declare the purchased property to be free and clear of all liens and claims by the County. The County has denied these claims and filed a motion under Rule 60(b) asking the Court to set aside its order on the sale free and clear of liens.

The County filed a Motion for Summary Judgment in this adversary and sought similar summary adjudication of the Rule 60(b) motion in the main case. The County argued it did not receive notice of the proposed sale free and clear of all liens and, therefore, the Order approving the sale did not extinguish the County's tax lien as a matter of law. SHF argued that it was a good-faith purchaser at the bankruptcy sale, and the policy of finality protecting good-faith purchasers trumps any possible due process concerns.

On January 17, 2012, the Court granted in part and denied in part the Motion for Summary Judgment and denied summary adjudication of the Rule 60(b) Motion. The Court ruled the County had established under the undisputed factual record that it did not have actual notice, sufficient to satisfy due process, of the sale free and clear of liens. The Court also ruled SHF was not a good-faith purchaser on the undisputed record. The Court found, however, that critical factual issues remained on the question of the remedy the Court should apply in these proceedings.

The County asks the Court to reconsider its conclusions on the “remedy” issue. The County specifically asks the Court to reconsider its conclusion that factual issues remain on the question of remedy. SHF asks the Court to reconsider its ruling that SHF is not a good-faith purchaser as a matter of law under the undisputed factual record. For the reasons that follow, the Court denies both parties' Motions to Reconsider/Alter or Amend Findings.

THE PARTIES' ARGUMENTS

On January 26, 2012, the County filed a Motion Pursuant to Rule 52(b) for Amendment of the Order. On January 27, 2012, SHF filed a Motion to Amend or Alter the January 17, 2012 Order. Both motions have been fully briefed and argued.

The County's Motion to Amend requests the Court to reconsider the remedy portion of the ruling. The County argues that the Court's other conclusions—that the County did not have constitutionally sufficient notice of the sale free and clear of liens, the County's lien was not extinguished, and SHF is not a good-faith purchaser—compel final resolution of these cases. The County argues that based on the relief requested, a finding that the lien was not extinguished means that there is nothing left to decide in either the adversary or Rule 60(b) proceeding. The County argues the July 20, 2009 Order simply has no effect on the County's tax lien and the County should be free to collect from SHF without restriction.

SHF's Motion to Amend or Alter argues that SHF was a good-faith purchaser or, at a minimum, that a genuine issue of fact exists as to its status. SHF argues that the cases the Court relied upon to reach its conclusion do not apply because they involve a sale of property free and clear of all liens, claims, and encumbrances and do not address issues of actual or constructive notice involved here. SHF argues that the proper question for determining a good-faith purchaser in this case is whether the purchaser “reasonably relied on representations made by the Trustee,” not whether the purchaser had knowledge of the adverse claims. In support of this position, SHF cites to Compak Companies, LLC v. Johnson, 415 B.R. 334 (N.D.Ill.2009), and Stearns v. Woolard (In re Laughinghouse), 51 B.R. 869 (Bankr.E.D.N.C.1985). SHF argues it reasonably relied on the Trustee's statements and that under those cases it would not be responsible for the County's lien. At a minimum, SHF argues there are factual disputes regarding whether it was a good-faith purchaser under this standard.

CONCLUSIONS OF LAW

A. Rule 52(b) and Rule 59(e) Standards

Federal Rule of Civil Procedure 52(b), Amended or Additional Findings, provides: “On a party's motion filed no later than 28 days after the entry of judgment, the court may amend its findings—or make additional findings—and may amend the judgment accordingly.” Fed.R.Civ.P. 52(b). “Rule 52 Fed.R.Civ.P. applies in adversary proceedings.” Fed. R. Bankr.P. 7052. “A Rule 52 motion is intended to ‘correct findings of fact which are central to the ultimate decision.’ ” Dale & Selby Superette & Deli v. U.S. Dep't of Agriculture, 838 F.Supp. 1346, 1347 (D.Minn.1993) (quoting Adams v. James, 526 F.Supp. 80, 86 (D.C.Ala.1981)).

Rule 52(b) is not to be used to obtain a rehearing on the merits nor to relitigate old questions, see, e.g., Gutierrez v. Ashcroft, 289 F.Supp.2d 555, 561 (D.N.J.2003), and such a motion may not be used to raise arguments which could have been made in advance of the prior court's ruling.

MidWestOne Bank & Trust v. Commercial Fed. Bank, 331 B.R. 802, 813 (S.D.Iowa 2005) (citing Diocese of Winona v. Interstate Fire & Cas. Co., 89 F.3d 1386, 1397 (8th Cir.1996)). “Motions made under [Rule 52(b) ] ... are not intended merely to relitigate old matters nor are such motions intended to allow the parties to present the case under new theories of law.” Pro Edge L.P. v. Gue, 377 F.Supp.2d 694, 698 (N.D.Iowa 2005) (quoting Evans, Inc. v. Tiffany & Co., 416 F.Supp. 224, 244 (N.D.Ill.1976)). Rule 52(b)'s purpose is to allow courts the “opportunity to correct manifest errors of law or fact.” Id.

Rule 59(e), Motion to Alter or Amend a Judgment, provides: “A motion to alter or amend a judgment must be filed no later than 28 days after the entry of the judgment.” Fed.R.Civ.P. 59(e). “Like Rule 52(b) motions, Rule 59(e) motions ‘serve the limited function of correcting manifest errors of law or fact or to present newly discovered evidence.’ ” Pro Edge, L.P., 377 F.Supp.2d at 698 (quoting Innovative Home Health Care, Inc. v. P.T.-O.T. Assocs. of the Black Hills, 141 F.3d 1284, 1286 (8th Cir.1998)). “A motion to amend a judgment under Rule 59(e) can be granted to: (1) incorporate an intervening change of law; (2) present new evidence previously unavailable; or (3) correct clear error or prevent manifest injustice.” Id. at 699. “Under Rule 59(e), a judgment may be amended to correct ‘clearly’ or ‘manifestly’ erroneous findings of fact or conclusions of law.” Doctor John's Inc. v. City of Sioux City, 438 F.Supp.2d 1005, 1027 (N.D.Iowa 2006) (citing Hagerman v. Yukon Energy Corp., 839 F.2d 407, 414 (8th Cir.1988); see Baker v. John Morrell & Co., 266 F.Supp.2d 909, 919 (N.D.Iowa 2003)). “ ‘A [trial] court has broad discretion in determining whether to grant a [Rule 59(e) ] motion to alter or amend judgment’ ” Pro Edge, L.P., 377 F.Supp.2d at 699 (quoting Innovative Home Health Care, Inc., 141 F.3d at 1286). Both parties have suggested the Court made a clear error of law.

B. Good–Faith Purchaser

Despite a finding by the Court that the County did not have actual knowledge of the sale, SHF has argued it still prevails because it was a good-faith purchaser. The Court's summary judgment ruling rejected that argument. SHF's Motion to Amend requests that the Court review and amend its...