Recomm Operations, Inc. v. Raymond Manklow

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED

U.S. COURT OF APPEALS

________________________ ELEVENTH CIRCUIT

APR 06, 2001

THOMAS K. KAHN

No. 00-14391 CLERK

________________________

D. C. Docket No. 98-02382 CV-T-17B

Bkcy. Docket No. 96-00805-8P1

IN RE: OPTICAL TECHNOLOGIES, INC.,

Debtor.

DELAINE GRAY, as Distribution Trustee for the Consolidated Debtors,

Plaintiff-Appellant,

versus

RAYMOND MANKLOW,

JEAN FRANCOIS VINCENS,

Defendants-Appellees.

________________________

Appeal from the United States District Court

for the Middle District of Florida

_________________________

(April 6, 2001)

Before BLACK and MARCUS, Circuit Judges, and HANCOCK*, District Judge.

*

Honorable James H. Hancock, U.S. District Judge for the Northern District of Alabama,

sitting by designation.

MARCUS, Circuit Judge:

This is an appeal from final summary judgment entered by the bankruptcy

court against Recomm Enterprises, Inc. and Recomm Operations, Inc. (“the

Debtors”) in an adversary proceeding in which the Debtors sought to recover

allegedly fraudulent transfers, preference payments and damages for breaches of

fiduciary duty. The district court affirmed the bankruptcy court’s order, after

which the Debtors appealed to this court. We agree with the analysis and well-

reasoned opinion of the district court and affirm, but take this opportunity to

reiterate the standard of review governing both this appeal and the appeal to the

district court from the bankruptcy court’s entry of summary judgment.

I.

The relevant facts are straightforward. Prior to 1994, Raymond Manklow

(“Manklow”) and Jean-Francois Vincens (“Vincens”) were the sole shareholders of

the Debtors. In addition, they owned several other entities, known collectively as

“the Recomm Companies.” Although there was a plan for a merger between the

Debtors and the Recomm Companies, no statutory merger was ever completed.

Manklow and Vincens sold their interests in the Recomm Companies to three

Recomm employees in 1994, and in 1996 the Recomm Companies and the Debtors

filed for bankruptcy.

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In this adversary action, the Debtors seek to avoid allegedly fraudulent

transfers made by the Debtors to Manklow and Vincens between 1992 and 1995,

pursuant to 11 U.S.C. §§ 547 and 548, and Fla. Stat. § 726.105(1)(a)-(b). The

Debtors also allege that Vincens and Manklow breached a fiduciary duty owed to

Recomm Operations and its creditors.

Following discovery, Vincens and Manklow moved for summary judgment,

arguing, inter alia, that (1) the Debtors could not avoid the allegedly fraudulent or

preferential transfers because the transfers had actually been made by the Recomm

Companies, not by either of the Debtors, and the claims were therefore not the

property of either of the Debtors’ bankruptcy estates; and (2) as to the breach of

fiduciary duty claim, there was insufficient evidence that Vincens and Manklow

qualified as “insiders” of Recomm Operations, a necessary element of the claim.

See 11 U.S.C. § 547(b)(4)(B). The bankruptcy court agreed with Vincens and

Manklow on both issues and entered summary judgment against the Debtors.

On appeal to the district court, as well as to this Court, the crux of the

Debtors’ argument is that summary judgment was improvidently granted because

there were genuine issues of material fact as to whether the Debtors owned the

claims to payments made by the Recomm Companies, and whether Vincens and

Manklow qualified as insiders.

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II.

Under Fed. R. Civ. P. 56(c), made applicable to adversary proceedings and

contested matters in bankruptcy cases by Bank. R. 7056 and 9014, summary

judgment is proper “if the pleadings, depositions, answers to interrogatories, and

admissions on file, 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

judgment as a matter of law.” Fed. R. Civ. P 56(c); Celotex Corp. v. Catrett, 477

U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986). “‘In making this determination, the

court must view all evidence and make all reasonable inferences in favor of the

party opposing summary judgment.’” Chapman v. AI Transp., 229 F.3d 1012, 1023

(11th Cir. 2000) (en banc) (citation omitted). “Where the record taken as a whole

could not lead a rational trier of fact to find for the non-moving party, there is no

‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986).

It is axiomatic that a bankruptcy court deciding a summary judgment

motion, just like a district court, must determine whether there are any genuine

issues of material fact. See Carey Lumber Co. v. Bell, 615 F.2d 370, 378 (11th Cir.

1980) (per curiam) (holding that a bankruptcy court that (1) determined that there

were no issues of material fact, (2) accepted all undisputed factual allegations as

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true, and (3) found that summary judgment was warranted as a matter of law,

“followed the correct legal standard.”). Like a district court, a bankruptcy court

may only grant summary judgment where there is no genuine issue of material fact.

See Fed. R. Civ. P. 56(c). Our law is also clear that an appellate court

reviews a bankruptcy court’s grant of summary judgment de novo. See In re

Walker, 48 F.3d 1161, 1163 (11th Cir. 1995) (“We review the bankruptcy court’s

grant of summary judgment de novo, applying the same legal standards used by

the trial court.”); In re Club Assocs., 951 F.2d 1223, 1229 (11th Cir. 1992) (citing

In re Nash, 765 F.2d 1410, 1412 (9th Cir. 1985) (“The bankruptcy court’s grant of

summary judgment, affirmed by the district court, is subject to de novo review.”)).

To the extent, however, that the district court’s opinion may be read to

suggest that appellate review of a bankruptcy court’s entry of summary judgment

may be governed by a clearly erroneous standard,1 we take this opportunity to

make clear that both the district court and this Court review a bankruptcy court’s

entry of summary judgment de novo. The district court relied on In re Club

Assocs., which explained that “factual findings by the bankruptcy court are

reviewed under the limited and deferential clearly erroneous standard.” 951 F.2d

1

In laying out the standard of review, the district court stated, among other things, that

“[f]indings of fact by the bankruptcy judge shall be upheld on appeal unless found to be clearly

erroneous.” In re Optical Technologies, Inc., 252 B.R. 531, 533 (M.D. Fla. 2000). The district court

also observed that it reviewed the bankruptcy court’s conclusions of law de novo. Id. at 537.

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at 1228. While it is true that, in general, a district court reviews a bankruptcy

court’s factual findings for clear error, we do not read In re Club Assocs. to hold,

nor could it be so read in light of our precedent, that the standard of review for

summary judgment, which by definition involves no findings of fact, is anything

other than de novo. See also Rosen v. Bezner, 996 F.2d 1527, 1530 n.2 (3d. Cir.

1993) (“because summary judgment may only be granted where there is no

genuine issue of material fact, any purported ‘factual findings’ of the bankruptcy

court cannot be ‘factual findings’ as to disputed issues of fact, but rather are

conclusions as a matter of law that no genuine issue of material fact exists.”).

Quite simply, our law is, and has been, that a summary judgment ruling is reviewed

de novo.

Our sister Circuits likewise have unanimously articulated the principle that

both the district court and the courts of appeal review a bankruptcy court’s entry of

summary judgment de novo. See In re Blackwood Assocs., L.P., 153 F.3d 61, 67

(2d Cir. 1998) (“[W]e review the district court’s affirmance of the bankruptcy

court in accordance with our well established standards of review. Specifically, we

review a grant of summary judgment de novo . . .”); In re Hudson, 107 F.3d 355,

356 (5th Cir. 1997) (same); Southern Tech. College, Inc. v. Hood, 89 F.3d 1381,

1383 (8th Cir. 1996); In re Slamans, 69 F.3d 468, 472 (10th Cir. 1995); In re

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Varrasso, 37 F.3d 760, 763 (1st Cir. 1994); In re Batie, 995 F.2d 85, 88-89 (6th

Cir. 1993); Rosen, 996 F.2d at 1530; In re Knightsbridge Development Co., 884

F.2d 145, 147 n.3 (4th Cir. 1989); In re Colonial Discount Corp., 807 F.2d 594,

596 (7th Cir. 1986); In re New England Fish Co., 749 F.2d 1277, 1280 (9th Cir.

1984).

In the instant case, the bankruptcy court properly concluded that there were

no genuine issues of material fact and that summary judgment was appropriate as a

matter of law. The bankruptcy court made no findings of fact, nor could it, on

summary judgment, and accordingly, our review is de novo.

Having conducted a de novo review of the bankruptcy court’s order, we

agree with the district court that summary judgment was properly granted as to all

claims in this case. As the bankruptcy court noted, the facts of this case were

essentially undisputed, and, even when viewed in the light most favorable to the

Debtors, are insufficient as a matter of law to establish that the Debtors owned the

claims arising from transfers made by the other Recomm Companies, or that

Vincens and Manklow were insiders of either of Recomm Operations.

Accordingly we affirm.

AFFIRMED.

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