Wildman, Matter of

Decision Date12 October 1988
Docket NumberNos. 87-2487,87-2549,s. 87-2487
Citation859 F.2d 553
PartiesIn the Matter of Paul C. WILDMAN, et al., Debtors. Appeals of HARRIS TRUST AND SAVINGS BANK, Plaintiff-Appellee, Cross-Appellant, v. Mitchell EDELSON, Defendant-Appellant, Cross-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Arthur P. Sanderman, Brown & Shinitzky Chtd., Chicago, Ill., for defendant-appellant, cross-appellee.

James M. Breen, Chapman & Cutler, Chicago, Ill., for plaintiff-appellee, cross-appellant.

Before WOOD, Jr. and POSNER, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

HARLINGTON WOOD, Jr., Circuit Judge.

Plaintiff Harris Trust and Savings Bank (Harris) brought this action against defendant Mitchell Edelson, seeking a judgment that Harris has a valid and enforceable lien against certain property owned by Edelson. Harris prevailed before the bankruptcy court on summary judgment; the bankruptcy court also denied a motion by Edelson to vacate the judgment pursuant to Federal Rule of Civil Procedure 60(b)(2). On appeal, the district court affirmed both rulings, but denied Harris's request for costs and attorney's fees. Edelson now appeals the district court's affirmance of the grant of summary judgment and the denial of Edelson's Rule 60(b)(2) motion. Harris cross-appeals the district court's denial of its request for costs and attorney's fees. In addition, Harris seeks costs and fees in connection with this appeal.

I. FACTUAL BACKGROUND

This adversary proceeding arose from the consolidated bankruptcy cases of Paul Wildman, Steven Horowitz, Stephen Wolf, Kenneth Fogelberg, Stuart Kaiserman (the debtors), and numerous partnerships. On March 31, 1977, the debtors, Edelson, and Marvin Kamensky purchased property at 6830 North Sheridan Road, Chicago, Illinois. The purchasers executed an agreement directing that the property be held in Trust No. 3200 at Amalgamated Trust and Savings Bank (the land trust). The trust agreement provided that Edelson and the debtors jointly owned a fifty percent undivided beneficial interest in the land trust. Kamensky owned the remaining fifty percent undivided beneficial interest in the land trust. 1

In the spring of 1978, Harris extended several loans to partnerships controlled by the debtors. The debtors personally guaranteed the loans. In October 1978, Harris made an additional $45,000 loan to one of the debtors' partnerships, Devon Partnership, which the debtors also personally guaranteed. As security for the loan, and for all outstanding and future indebtedness to Harris, the debtors assigned to Harris a fifty percent beneficial interest in the land trust. 2

Between May and July 1981, the debtors and the Devon Partnership all filed individual petitions under Chapter 11 of the Bankruptcy Code. 3 The bankruptcy court consolidated the cases, along with others, for joint administration. At the time of filing, the debtors owed harris approximately $238,086 in principal and $65,000 in interest.

Edelson filed numerous claims against the various bankruptcy estates. In October 1982, Edelson entered into an agreement with the bankruptcy trustee settling certain of his claims. Among other things, the agreement required the bankruptcy trustee to transfer to Edelson the debtors' beneficial interest in the land trust, subject to Harris's claims under the October 1978 collateral assignment. In November 1983, pursuant to an order of the bankruptcy court, the trustee completed the transfer to Edelson.

On January 10, 1984, Harris initiated this adversary action, seeking to enforce its lien and security interest in the land trust. Edelson contended that Harris does not have a valid security interest in the land trust. The parties filed cross-motions for summary judgment. On February 4, 1986, the bankruptcy court granted Harris's motion and denied Edelson's motion, finding that Harris has an enforceable lien on five-twelfths of the land trust. Edelson appealed that finding to the district court.

After filing his notice of appeal, Edelson filed a motion for relief from judgment with the bankruptcy court under Federal Rule of Civil Procedure 60(b)(2). The bankruptcy court denied the motion and Edelson also appealed that ruling to the district court. Harris cross-appealed for costs and attorney's fees related to Edelson's appeal of the bankruptcy court's denial of the Rule 60(b)(2) motion.

The district court affirmed both the bankruptcy court's grant of summary judgment and its denial of Edelson's Rule 60(b)(2) motion. The district court, however, denied Harris's request for costs and fees. Edelson appeals the district court's decision affirming the bankruptcy court. Harris cross-appeals the district court's denial of costs and fees and also seeks double costs and attorney's fees related to this appeal.

II. DISCUSSION

Edelson asserts, as he did before both the bankruptcy court and the district court, that Harris does not have a valid security interest in the land trust. According to Edelson, he and the debtors were members of the 6830 North Sheridan Road Partnership. Edelson asserts that, at the time of the collateral assignment to Harris, the 6830 North Sheridan Road Partnership owned the fifty percent undivided interest in the land trust. 4 Therefore, Edelson argues that because he had no knowledge of and did not consent to the collateral assignment to Harris, the assignment of partnership property is invalid under the Illinois Uniform Partnership Act, Ill.Rev.Stat. ch. 106 1/2, p 25(2)(b).

A. Summary Judgment

After Harris moved for summary judgment, Edelson had "the responsibility of going beyond the pleadings and setting forth 'specific facts showing that there [was] a genuine issue for trial.' " Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 659 (7th Cir.) (quoting Fed.R.Civ.P. 56(e)), cert. denied, --- U.S. ----, 108 S.Ct. 488, 98 L.Ed.2d 486 (1987). Summary judgment was then proper only if there was no genuine dispute as to any material fact and Harris was entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Donald v. Polk County, 836 F.2d 376, 378-79 (7th Cir.1988). In reviewing the district court's grant of summary judgment, we must determine whether there was a material factual dispute, drawing all reasonable inferences in the light most favorable to Edelson, the non-movant. Davis v. City of Chicago, 841 F.2d 186, 189 (7th Cir.1988); Donald, 836 F.2d at 378-79. A factual dispute must be outcome determinative to preclude summary judgment. Donald, 836 F.2d at 379; Wallace v. Greer, 821 F.2d 1274, 1276 (7th Cir.1987); Hossman v. Spradlin, 812 F.2d 1019, 1020-21 (7th Cir.1987). Therefore, "[i]f the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (citations omitted).

The existence of the 6830 North Sheridan Road Partnership is irrelevant to the outcome of this case unless Edelson can show that that partnership, rather than the debtors, owned the beneficial interest in the land trust. Both the bankruptcy court and the district court found that there was no genuine issue of material fact as to whether the partnership existed or, even if it did, whether the partnership owned the fifty percent beneficial interest in the land trust. To prove both the existence of the partnership and its ownership of a beneficial interest in the land trust, Edelson relies on several pieces of evidence.

First, Edelson points to the trust agreement itself, which provided that Edelson and the debtors would share "an undivided 50%" interest in the land trust. Under Illinois law, to prove the existence of a partnership in the absence of a written partnership agreement, a claimant must show that the members intended to form a partnership. See, e.g., Olson v. Olson, 66 Ill.App.2d 227, 233, 213 N.E.2d 95 (2d Dist.1965). Edelson argues that he and the debtors manifested their intent to form a partnership by electing common ownership. Edelson acknowledges that common ownership by itself cannot establish the existence of a partnership. 5 Nevertheless, Edelson argues that common ownership is a factor to be considered together with his other evidence establishing the existence of the partnership and its ownership of the land trust.

Edelson also relies on his affidavit, which he attached to his response to Harris's motion for summary judgment. In his affidavit, Edelson asserts that he and the debtors "formed the 6830 North Sheridan Road Partnership for the purpose of managing the building at that address and renting it for a profit." Edelson claims that he filed a K-1 information tax return with the Internal Revenue Service (IRS) for his interest in the partnership for the years 1977- 1979. Edelson includes the partnership's IRS identification number in his affidavit. However, Edelson did not attach a copy of the tax return to his affidavit. Federal Rule of Civil Procedure 56(e) specifically requires that "[s]worn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith." Edelson could easily have requested a certified copy of the tax return from the IRS. At oral argument, Edelson's attorney could offer no explanation for this inexcusable omission. Nevertheless, even if we accept Edelson's unsupported statement that he filed the tax return, this evidence is relevant only to show the existence of the partnership. Although the tax return itself may have indicated whether or not the partnership owned an interest in the land trust, it is not part of the record.

Edelson also relies on the statement in his affidavit that "[t]he aforesaid beneficial interests in trust no. 3200 were property of the 6830 North Sheridan Road Partnership." Mere conclusory allegations in the non-movant's affidavit are not sufficient to overcome a motion for...

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