Short v. Simon (In re Oakland Physicians Med. Ctr.)
| Decision Date | 08 September 2021 |
| Docket Number | 20-1775 |
| Parties | IN RE: OAKLAND PHYSICIANS MEDICAL CENTER, LLC, dba Doctors' Hospital of Michigan, Debtor. v. BASIL SIMON, Appellee. MICHAEL SHORT, Appellant, |
| Court | U.S. Court of Appeals — Sixth Circuit |
In 2015, Oakland Physicians Medical Center, L.L.C., d/b/a Doctors' Hospital of Michigan (represented by Trustee Basil Simon, collectively hereinafter "Debtor") filed for Chapter 11 Bankruptcy. One of Debtor's memberphysicians, Defendant-Appellant Michael Short, who over the years, had advanced to Debtor some $1.6 million filed a proof of claim for $952, 377.80 that he alleged he advanced to Debtor as loans. Debtor objected to Short's proof of claim and brought this adversary action to recover $571, 939.44 that it had transferred to Short before filing for bankruptcy, claiming that these amounts were avoidable prepetition transfers. Because the record supported the claim that advances to Debtor in the amounts of $100, 000 and $114 000 were loans but was devoid of evidence that any other advances were loans, the bankruptcy court (1) characterized Short's advances worth $952, 377.88 as capital contributions and disallowed his proof of claim and (2) ordered Short to pay back to Debtor $357, 939.44's worth of avoidable preferential and fraudulent transfers. We AFFIRM the bankruptcy court.
In 2008, Debtor, which comprised approximately 45 member-physicians and McLaren Health Care, invested millions of dollars to acquire Pontiac General Hospital in Pontiac, Michigan. Two years later, McLaren left the venture and demanded repayment of the money loaned to Debtor. To repay McLaren and finance the hospital's revival, the member-physicians advanced cash to Debtor. But the member-physicians' efforts fell short: Debtor could not pay the payroll, taxes, vendors, and medical-malpractice insurance. It filed for Chapter 11 Bankruptcy in July 2015.
Short was one of those member-physicians who advanced money to Debtor. He also served on Debtor's board of directors. Between November 2011 and July 2015, Short made twenty advances[1] to Debtor totaling $1, 632, 333.34-including a $114, 000 loan; additionally in July 2011, Short advanced $100, 000 to Debtor. Both the $114, 00 loan and the $100, 000 advance are documented by signed promissory notes. Between April 2013 and July 2015, Debtor transferred $571, 939.44 to Short-including three payments totaling $100, 000 in July 2015 (within one year of Debtor's filing for bankruptcy), which the parties agreed paid back a June 2015 advance from Short referred to as the "Handshake Loan."
A year after Debtor filed for bankruptcy, Short filed a proof of claim in the amount of $952, 377.80 for "monies loaned," which Short claimed was the outstanding balance owed by Debtor for his prior advances. Debtor objected to Short's proof of claim and brought this adversary proceeding to (1) recharacterize as capital contributions Short's $952, 377.80's worth of advances and disallow his proof of claim, and (2) avoid the $571, 939.44 that Debtor paid to Short before filing for bankruptcy. We summarize Debtor's claims as follows:
Following discovery and extensive motion practice, each side moved for summary judgment: Debtor on Counts II, III, and IV, and Short on Count II. After a hearing on those motions, the bankruptcy court held that the three July 2015 transfers from Debtor to Short totaling $100, 000 (payment on the June 2015 Handshake Loan) were avoidable preferences under 11 U.S.C. § 547(b). Accordingly, the court granted Debtors' motion for summary judgment on Count II, denied Short's motion on that count, and denied as well Short's motion to reconsider.
Short then moved for summary judgment on Counts III through VI. Finding that there was a genuine issue of material fact as to whether the advances that were the subject of Counts III and IV, i.e., the fraudulent-transfer counts, were loans or capital contributions, the bankruptcy court held an evidentiary hearing at which it took evidence limited to that question. This determination, the court noted, would resolve both the fraudulent-transfer counts and the remaining characterization and disallowance counts. At the evidentiary hearing, the parties examined four witnesses and entered fourteen exhibits into the record, including: a "Loan Summary," which was compiled by Debtor's Controller Marsha Feigner; a 2015 affidavit from Short in connection with a separate Michigan lawsuit; and several signed and unsigned promissory notes. The bankruptcy court found that because the parties had memorialized with signed promissory notes only two of Short's twenty advances-the advances made on July 1, 2011, for $100, 000, and December 28, 2012, for $114, 000.00[2] - only those two were loans, and the remaining advances were capital contributions because the record was devoid of any credible evidence to the contrary. The court therefore held that $257, 939.44 in transfers from Debtor to Short were fraudulent under 11 U.S.C. § 548 (the "Code") and M.C.L. § 566.35 ("MUFTA") because they "were not made on account of an antecedent debt of Debtor."[3]
Debtor then filed a second motion for summary judgment on Counts I, III, IV, VI, and VII. The bankruptcy court entered final judgment in the case, granting judgment for Debtor on Counts I, III, IV, and VII, and dismissing Count V as withdrawn and Count VI as moot. It then ordered Short to repay to Debtor $357, 939.44-$100, 000 for the preferential payments and $257, 939.44 for the fraudulent transfers.
Short appealed the judgment to the United States District Court for the Eastern District of Michigan, which affirmed the bankruptcy court. Short v. Simon, No. 19-10454, 2019 U.S. Dist. LEXIS 109152 (E.D. Mich. July 1, 2019). He now timely appeals to this court.
In his sixty-six-page brief, Short advances three general arguments: that the bankruptcy court: (1) improperly granted summary judgment to Debtor on the Count II preference claim; (2) made numerous errors both of fact and law during the evidentiary hearing regarding Counts III and IV; and (3), due to several of its erroneous findings of fact, improperly concluded that only two of Short's twenty advances were loans. To the extent that Short's brief contains issues not encompassed by these three arguments, he did not provide any argument to support them. We decline to address those perfunctory claims. See Williamson v. Recovery Ltd. P'ship, 731 F.3d 608, 621 (6th Cir. 2013) ().
"When an appeal is taken from a district court's review of a bankruptcy court decision, we directly review the bankruptcy court's decision rather than the district court's review of the bankruptcy court's decision." Sunshine Heifers, LLC v. Citizens First Bank (In re Purdy), 870 F.3d 436, 442 (6th Cir. 2017) (quotation marks and citation omitted). "We accord discretion in reviewing only the original bankruptcy court findings, not those included in the decision rendered by the district court." Id. (quotation marks and alterations omitted).
We review de novo a motion for summary judgment, considering all facts and reasonable inferences in the light most favorable to the non-moving party. Autostyle, 269 F.3d at 735. To prevail, the non-movant must show sufficient evidence to create a genuine issue of material fact. Id. In other words, there must be evidence on which the jury could reasonably find for the nonmovant. When a party seeks summary judgment on claims for which it does not bear the burden of persuasion at trial, the moving party may discharge its burden by "pointing out to the district court . . . that there is an absence of evidence to support [the non-moving party's] case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party does so, the non-moving party "must come forward with specific facts showing that there is a genuine issue for trial." See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). If there is no factual disagreement or the evidence is one-sided, then the moving party must prevail as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
We review the court's findings of fact for clear error. Id. The courts have long held that a finding of fact is clearly erroneous only "when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). And "[w]e review a bankruptcy court's evidentiary admissions or exclusions for abuse of discretion." U.S. Bank Nat. Ass'n v. U.S. E.P.A., 563 F.3d 199, 210 (6th Cir. 2009).
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