# Appendix — Quinault Pacific Corp. v. Aetna Business Credit, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_0363%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1980 - **Citation:** 449 U.S. 954 ## Text | Supreme Court, Us 80-344 FILED | . SEP2 1989 ~ 80-345 Aiseasuiny 1 cm j SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1980 QUINAULT PACIFIC CORPORATION, INTERNATIONAL PAPER COMPANY, WHITE LUMBER SALES, INC., and GOLD REY FOREST PRODUCTS, INC., Petitioners, versus AETNA BUSINESS CREDIT, INC., and JOHN C. PENNINGTON, TRUSTEE, Respondents. QUINAULT PACIFIC CORPORATION, et al., Petitioners, versus AETNA BUSINESS CREDIT, INC., et al.. Respondents. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT PETITIONERS’ JOINT APPENDIX WINFORD KENT BISHOP Attorneys for Petitioners 1835 First National Bank Tower Two Peachtree Street, N.W. Atlanta, Georgia 30383 Telephone No. 404/658-1110 6 I. e Il. & # Il. @ e IV. * TABLE OF CONTENTS Part One: “Fed. R. Civ. P. 60 (b) Case” Page Opinion (In re Georgia Paneling Supply, Inc., 616 F.2d 893 (5th Cir. 1980)) entered May 8, 1980 and delivered upon purported re- ndering of judgment by the United States Court of Appeals for the Fifth Circuit whose decision is sought to be reviewed.......... 1 Other such opinions and orders rendered by the United States Court of Appeals for the Fifth Circuit im ti0 CROO. «6 occ ccecencees's 2 A. Order (In re Georgia Paneling Supply, Inc., 613 F.2d 137 (5th Cir. 1979)) entered December 26, 1070. 3 «so oe vs Fae 2 B. Opinion (Jn re Georgia Paneling Supply, Inc., 607 F.2d 117 (5th Cir. 1979)) en- tered November 19, 1979. ............ 3 Other such opinions and orders rendered by the United States Court of Appeals for the Fifth Circuit in a related, prior case. ...... 7 A. Order (In re Georgia Paneling Supply, Inc., 588 F.2d 93 (5th Cir. 1978)) entered December 30. 1916s 6. so cue eeu cea 7 B. Opinion (In re Georgia Paneling Supply, Inc., 581 F.2d 520 (5th Cir. 1978)) entered Goteber 6, 1678. ia « Sisk cc cece 8 Other such orders rendered by the United States District Court for the Northern Dis- trict of Georgia in the Case. ............. 11 A. Order entered June 26,1978. ......... 11 B. Order entered August 26,1977. ....... 13 C. Order entered July 22, 1977........... 15 D. Order entered June 15,1977. ......... 20 VII. Vill. Other such orders and opinions rendered by the United States Bankruptcy Judge/Referee in Bankruptcy in the case. A. Order entered December 20,1977. ..... B. Order entered September 23, 1977. C. Order entered September 16, 1977. D. Opinion entered January 5, 1978. ..... Other such order rendered by the United States District Court for the Northern Dis- trict of Georgia in a related, prior case, to wit: order entered April 15, 1977.......... Other such order by the United States Bank- ruptcy Judge/Referee in Bankruptcy in a related, prior case, to wit: order entered as a warn 5 6% 0's & ben's Ro Judgment of the United States Court of Ap- peals for the Fifth Circuit sought to be re- viewed and order of said Court on rehearing. A. Judgment entered July 22, 1980, dated May 8, 1980 (and issued as mandate: ge | | ee ern B. Judgment entered June 20, 1980, dated November 19, 1979 (issued as mandate): and retracted by letter of July 22, 1980 I or ae eg ar a C. Order denying Petition for Rehearing and Petition for Rehearing En Banc en- EE ee ee Part Two: “Fee Award Case” Opinion (Jn re Georgia Paneling Supply, Inc., 617 F.2d 293 (5th Cir. Table 1980)) entered May 9, 1980 and delivered upon purported rendering of judgment by the United States Court of Appeals for the Fifth Circuit whose decision is sought to be reviewed. ......... ll 24 24 25 27 31 61 66 80 IT. Il. IV. Other such opinions and orders rendered by the United States Court of Appeals for the Fifth Circuit in the case. ................ A. Order (Jn re Georgia Paneling Supply, Inc., 613 F.2d 312 (5th Cir. Table 1979)) entered December 28, 1979. .......... B. Opinion (Jn re Georgia Paneling Supply, Inc., 607 F.2d 1004 (5th Cir. Table 1979)) entered November 9, 1979. ........... Other such orders rendered by the United States District Court for the Northern Dis- trict of Georgia in the case. .............. A. Order entered August 30,1978. ....... B. Order entered October 13, 1978. ....... C. Order entered February 20,1979. ..... Other such orders and opinions rendered by the United States Bankruptcy Judge/Referee in Bankruptcy in the case. .............. A. Order éntered September 8, 1977. ..... Order entered September 12, 1977. Order entered September 16, 1977. Order entered September 23,1977. .... Order entered February 28,1978. ..... Order entered June 7, 1978. .......... Ammo O wD igin CARO lar a eNO im H. Memorandum entered November 14. I oer irs Ree Een Tee Yee Other such orders and opinions rendered by the United States District Court for the Northern District of Georgia in a related pending case not on appeal............... A. Order entered July 25, 1978 in Pen- nington, Trustee v. Aetna Business Credit, Inc., et al., Civil Action No. C75- 1540A (filed August 1975). ........... 83 83 84 142 142 VI. IT. B. Order entered March 30, 1978 in Pen- nington, Trustee v. Aetna Business Credit, Inc., et al., Civil Action No. C75- 1540A (filed August 1975) ............ C. Order entered September 30, 1976 in Pennington, Trustee v. Aetna Business Credit, Inc., et al., Civil Action No.C75- 1540A (filed August 1975). ........... Judgment of the United States Court of Ap- peals for the Fifth Circuit sought to be re- viewed and order of said Court on rehearing. A. Judgment entered July 22, 1980, dated May 9, 1980 (and issued as mandate: June 20, 1980 [sic]) ................. B. Judgment entered June 20, 1980, dated November 9, 1979 (issued as mandate) and retracted by letter of July 22, 1980. C. Order denying Petition for Rehearing and Petition for Rehearing En Banc en- Comer rue S, TOGO. ge vi ks cas can 143 152 163 163 164 167 Part Three: Constitutional Provisions, Statutes, Regulations etc. Involved in These Cases C. Article The Fifth (Fifth Amendment) ... D. Article The Sixth (Sixth Amendment). . . RR oy et er ey 3. Bankruptcy Act of 1898, as amended Section 41 (11 U.S.C. Sec. 69)....... lV aN . Bankruptcy Code of 1978........... Section 252 (28 U.S.C.A. Sec. 1481) 5. 18 U.S.C. Sec. 401 (1970)........... 6. 18 U.S.C. Sec. 402 (1970)........... BD. Gomme Bhatebee ..w 2 nc cc ccc wens. 1. Georgia Code Annotated Sec. 109A- rr rrr re rrr rere er rer er III. Regulations, Rules, Ethical Precepts....... A. i Ne aa ks aan kk ORS 1. Code of Judicial Conduct........... 2. Canons of Judicial Ethics TS & © eer wrerssr wee 3. Rules and Regulations for the Organi- zation and Government of the State Bar of Georgia (241 Ga. 643 (1978) et seq.) ......... (1) EC 1-4, DR 1-102 (2) EC 7-35, DR 7-102, DR 7-110 (3) EC 8-5, EC 8-6, Georgia Standard 60 (4) DR 4-101 B, Georgia Standard 28 Bankruptcy Rules of Procedure ON Re ree Local Rules of the United States District Court for the Northern District of Geor- Ee ren re Rules 91.8, 351.1 Rules 71.34, 71.54 Federal Rules of Appellate Procedure Rule 4(a), 6(a), 35, 40(a) Federal Rules of Civil Procedure....... Rule 38, 54 (b), 60(b) Federal Rules of Evidence............. Rule 408 190 190 190 191 191 191 192 192 192 206 207 214 219 221 IV. Pleading and Motion Filed by Aetna Busi- ness Credit, Inc. in Related Lower Court RSE TARR ine a Pat ala Aa en A. Counterclaim, filed October 25, 1977 in Pennington v. Aetna Business Credit, Inc., Civil Action No. C75-1540A (N.D. Te”. | ae Motion for Reconsideration, filed Janu- ary 19, 1978 (14 days after “Opinion” in 60(b) Motion), in Hampton Lumber Sales Co. v. Aetna Business Credit, Inc., Civil Action No. C’/4-1679A (N.D. Ga., August BLASTS AS ea eee Men aE Miscellaneous.................eceecece, A. Chronological Events from Official Bankruptcy Records of Georgia Paneling Supply, Inc., Bankrupt No. B74-1628A and Referee’s Calendars for September 19, 1977 and February 14,1978 ....... Critique of Jn re Dekle and In re Boyd, 308 So.2d 13, 5 (Fla. 1975)............. . Affidavit of Sandra Jean Thomas on. er Part Four: Analytical Tables Table I (Analysis of Stipulation Between Freeman & Hawkins and Appellants). . . Table II (Analysis of Trustee's Applica- tien for Fee Award) ................:. Table III (Analysis of Aetna’s Applica- tions for Fee Awards) ................ Table IV (Comparative Analysis of Fee | RRR ily SS CR Gre ODD vi 222 222 229 242 242 257 260 263 266 267 270 Part One: “Fed. R. Civ. P. 60(b) Case” MEMORANDUM DECISIONS Cite as 616 F.2d (1980) In the Matter of GEORGIA PANELING SUPPLY, INC. Bankrupt. INTERNATIONAL PAPER COMPANY White Lumber Sales, Inc., Quinault Pacific Corporation and Gold Rey Forest Products, Inc., Appellants, v. JOHN C. PENNINGTON Trustee and Aetna Business Credit, Inc., Appellees. No. 79-1076. United States Court of Appeals, Fifth Circuit. May 8, 1980. Appeal from the United States District Court for the Northern District of Georgia; RICHARD C. FREEMAN, Judge. Winford Kent Bishop, Atlanta, Ga., Ben R. Swank, Jr.,, Kansas City, Mo., for appellants. Douglas L. Cronkright, C. Edward Dobbs, R. William Ide, III, John C. Pennington, Atlanta, Ga., for appellees. Before HATCHETT and TATE, Circuit Judges and GROOMS", District Judge. PER CURIAM: Rehearing was granted, 613 F.2d 137 (5 Cir. 1979), vacating our panel opinion, 607 F.2d 117 (5 Cir. 1979), which had affirmed the ruling of the district court. The district court affirmed the bankruptcy court’s denial of the appellant’s Fed.R.Civ.P. 60(b) motion seeking relief from a judgment of the district court approving a settlement by the trustee previously approved by the bankruptcy court. After reviewing the contentions of the appellants once again in the light of the record, we reinstate the prior panel opinion. The appellee's motion for assessment of attorney fees against the appellants for frivolous appeal is denied. AFFIRMED. “District Judge of the Northern District of Ala., sitting by designation. MEMORANDUM DECISIONS Cite as 613 F.2d (1979) In the Matter of GEORGIA PANELING SUPPLY, INC. Bankrupt. INTERNATIONAL PAPER COMPANY White Lumber Sales, Inc., Quinault Pacific Corporation and Gold Rey Forest Products, Inc., Appellants, V. JOHN C. PENNINGTON Trustee and Aetna Business Credit, Inc., Appellees. No. 79-1076. United States Court of Appeals, Fifth Circuit. Dec. 28, 1979. Appeal from the United States District Court for the Northern District of Georgia; Richard C. Freeman, Judge. Winford Kent Bishop, Atlanta, Ga., for appellants. Douglas L. Cronkright, C. Edward Dobbs, R. William Ide, III, John C. Pennington, Atlanta, Ga., for appellees. Before GODBOLD, REAVLEY and ANDERSON, Circuit Judges. BY THE COURT: IT IS ORDERED that petitioners’ motion for rehearing is GRANTED and the prior panel opinion, 607 F.2d 117, is hereby VACATED. IF IS FURTHER ORDERED that this matter be placed upon the oral argument calendar. MATTER OF GEORGIA PANELING SUPPLY, INC. Cite as 607 F.2d 117 (1979) In the Matter of GEORGIA PANELING SUPPLY, INC. Bankrupt. INTERNATIONAL PAPER COMPANY Hampton Lumber Sales Company, White Lumber Sales, Inc., Quinault Pacific Corporation and Gold Rey Forest Products, Inc., Appellants, V. JOHN C. PENNINGTON Trustee and Aetna Business Credit, Inc., Appellees. No. 79-1076. Summary Calendar.* United States Court of Appeals, Fifth Circuit. Nov. 19, 1979. A bankruptcy court denied a motion made by five unse- cured creditors of bankrupt seeking relief from judgment approving settlement by trustee and creditor. The United States District Court for the Northern District of Georgia, Richard C. Freeman, J., affirmed. On appeal, the Court of Appeals held that: (1) allegations of misconduct on part of bankruptcy judge and district court judge were unfounded, and (2) unsecured creditors were not entitled to relief from judgment on ground of newly discovered evidence, miscon- duct, or any other reason. AFFIRMED. 1. Federal Civil Procedure ##2662. Allegations of misconduct on part of bankruptcy judge and district court judge involving denial of motion seeking relief from judgment approving settlement by trustee and creditor and affirmance of that judgment were unfounded. 2. Federal Civil Procedure ##2655 Where facts surrounding charges of impropriety should have been known to unsecured creditors prior to bank- ruptcy court’ approval of settlement, such facts did not constitute newly discovered evidence so as to entitle unse- cured creditors to relief from judgment of bankruptcy court approving settlement. Fed. Rules Civ. Proc. Rule 60(b)(2) 28 U.S.C.A. 3. Federal Civil Procedure ##2651 Allegations of misconduct by trustee and creditor with respect to judgment of bankruptcy court approving settle- ment were unsupported by record so as to entitle unse- cured creditors to relief from judgment on grounds of misconduct of adverse party. Fed. Rules Civ. Proc. Rule 60(b)\(3), 28 U.S.C.A. 4. Federal Civil Procedure ##2651 Unsecured creditors of bankrupt were not entitled to a relief from judgment of bankruptcy court approving settle- ment by trustee and creditor on general grounds. Fed. Rules Civ. Proc. Rule 60(b)(6), 28 U.S.C.A. Winford Kent Bishop, Atlanta, Ga., for appellants. Douglas L. Cronkright, C. Edward Dobbs, R. William Ide, III, John C. Pennington, Atlanta, Ga., for appellees. Appeal from the United States District Court for the Northern District of Georgia. Before GODBOLD, REAVLEY and ANDERSON, Circuit Judges. PER CURIAM: Appellants are five unsecured creditors of the bankrupt, Georgia Paneling Supply, Inc. Their current posture re- sults from a denial by the bankruptcy court of their Fed. R. Civ. P. 60(b) motion seeking relief from a judgment of that court approving a settlement by the trustee and Aetna Business Credit, Inc. (“Aetna”). On appeal, the district court affirmed the bankruptcy court. An earlier attempt to appeal to this court failed when leave to appeal was denied. Jn re Georgia Paneling Supply, Inc., 581 F.2d 520 (5th Cir. 1978). Alleging judicial misconduct in the petition for rehearing, appellants then won leave to appeal and a vacation of the previous opinion. Jn re Georgia Paneling Supply, Inc., 588 F.2d 93 (5th Cir. 1978). The charges of judicial impropriety are that the bank- ruptcy judge demonstrated partiality, lacked judicial integ- rity, and made materially misleading statements. The bankruptcy judge is also alleged to have engaged in ex parte discussions with appellees and their counsel, permit- ted orders and an opinion to be drafted and typed by appellees or their counsel, and misrepresented the facts regarding this alleged misbehavior. Appellants also argue that the district judge's affirmance is entitled to no weight because he engaged in various acts of misbehavior. [1] A careful examination of the record, especially those portions cited by appellants, reveals no impropriety. The allegations of misconduct are unfounded. [2] Appellants also claim entitlement to relief pursuant to Fed. R. Civ. P. 60(b)(2), (3), and (6) for various other reasons. The petition for leave to appeal, which was denied earlier, focused upon alleged collusion between the bank- ruptcy judge, the trustee and counsel for Aetna. They now shift their attack under Rule 60(b)(2), and allege that Aetna wrongfully retained certain fire insurance proceeds and improperly seized collateral of the bankrupt. The facts surrounding both charges should have been known to appellants prior to the bankruptcy court’s approval of the settlement. They do not constitute newly discovered evi- dence. Moreover, the claim that inventory collateral was wrongfully seized is improperly raised for the first time on appeal. Pierre v. United States, 525 F.2d 933, 936 (5th Cir. 1976). or [3] The request for relief under Rule 60(b)(3) is premised upon numerous allegations of misconduct by the trustee and Aetna. We find that the charges are either unsup- ported by the record or concern actions which did not prejudice appellants. [4] Finally, Fed. R. Civ. P. 60(b)(6) will not afford appel- lants any comfort. First, this theory was abandoned earlier in this suit and is not properly before us on appeal. Appellants’ first petition for relief under Rule 60(b) was made to the district court and included a request for relief under Rule 60(b)(6). That court denied relief. Upon peti- tion for reconsideraton, the district court remanded to the bankruptcy court for a hearing on claims under Rule 60(b)(1), (2), and (3). Appellants never pressed a Rule 60(b)(6) claim after their initial petition in the district court until the instant appeal. See Pierre, supra. Moreover, the charges leveled under this final theory for relief are either conclusory or unsupported by the record. For the foregoing reasons, the judgment of the district court is AFFIRMED. *Fed.R.App.P. 34(a); 5th Cir.R. 18 In the Matter of GEORGIA PANELING SUPPLY, INC. Bankrupt. INTERNATIONAL PAPER COMPANY Hampton Lumber Sales Company, White Lumber Sales, Inc., Quinault Pacific Corporation and Gold Rey Forest Products, Inc., Petitioners, ¥. JOHN C. PENNINGTON Trustee and Aetna Business Credit, Inc., Repondents. No. 78-8283. United States Court of Appeals. Fifth Circuit. Dec. 29, 1978. Petition for Leave to Appeal from An Order Affirming Bankruptcy Court’s Denial of a Rule 60\b) FR.Civ.P. Mo- tion; Richard C. Freeman, Judge. Winford Kent Bishop, Atlanta, Ga., for petitioners. Douglas L. Cronkright, C. Edward Dobbs, John C. Pen- nington, Atlanta, Ga., for repondents. ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC Before GODBOLD, RONEY and RUBIN, Circuit Judges. ORDER: Because of the allegations of judical misconduct con- tained in the petition for rehearing, the panel has decided that the rehearing should be granted, that the previous panel opinion, 581 F.2d 520, should be vacated, and that leave to appeal should be granted. No member of this panel nor Judge in regular active service on the Court having requestea that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 16) the Peti- tion for Rehearing En Banc is DENIED.. It is so ordered. ~ MATTER OF GEORGIA PANELING SUPPLY, INC. Cite as 581 F. 2d 520 (1978) In the Matter of GEORGIA PANELING SUPPLY, INC. Bankrupt. INTERNATIONAL PAPER COMPANY Hampton Lumber Sales Company, White Lumber Sales, Inc., Quinault Pacific Corporation and Gold Rey Forest Products, Inc., Petitioners, V. JOHN C. PENNINGTON Trustee and Aetna Business Credit, Inc., Respondents. No. 78-8283. United States Court of Appeals, Fifth Circuit. Oct. 5, 1978. The United States District Court for the Northern Dis- trict of Georgia, Richard C. Freeman, J., affirmed the Bankruptcy Court’s denial of a motion for a new trial. Petition for leave to appeal was filed. The Court of Appeals held that there was no compelling reason for further re- view and no showing of likelihood of success in such an eventuality. Appeal denied. 1. Federal Courts ##660 Action upon motion for leave to appeal is entrusted to court's sound discretion. Fed. Rules App. Proc. rule 6, 28 U.S.C.A. 2. Federal Courts ##825 District court’s determination on a motion for new trial will not be disturbed absent clear abuse of discretion. Fed. Rules Civ. Proc. Rule 60(b), 28 U.S.C.A. 3. Bankruptcy ##467(4) On review, a judgment of district court affirming bank- ruptcy court’s determination based on findings of fact will not be disturbed unless findings are clearly erroneous; such findings are presumptively correct where court con- siders conflicting evidence. 4. Bankruptcy ##252 Occurrence of ex parte conferences between bankruptcy judge, trustee, and lawyer alone do not demonstrate collu- sion in the approval of trustee’s settlement of suit. 28 U.S.C.A. Sec. 455. Winford Kent Bishop, Atlanta, Ga., for petitioners. Douglas L. Cronkright, C. Edward Dobbs, Atlanta, Ga., for respondents. John C. Pennington, pro se. Petition for Leave to Appeal from An Order Affirming Bankrutpcy Court’s Denial of a Rule 60(b) F. R. Civ. P. Motion. Before GODBOLD, RONEY and RUBIN, Circuit Judges. BY THE COURT: Alleging the discovery of new evidence which could not by due diligence have been discovered in time to move for a new trial, petitioners sought relief in the bankruptcy court under Fed. R. Civ. P. 60(b)(2). Upon denial of their motion, they appealed to the district court which affirmed. They now petition this Court for leave to appeal. FR.A.P. 6; 11 U.S.C.A. Sec. 47. Finding no claim which would warrant the exercise of our discretion to allow an appeal, we deny the petition. [1] Action upon a motion for leave to appeal under Rule 6 is entrusted to the Court’s sound discretion. Jn re Hawkins Mortgage Co., 66 F.2d 16 (7th Cir. 1933), cert. denied sub nom., Harter v. Wallace, 291 U.S. 659, 54 S.Ct. 376, 78 L.Ed. 1051 (1934). Where, for example, the ques- tion presented is not of sufficient importance, leave to appeal has been refused. New York Credit Men’s Adjust- ment Bureau, Inc. v. David Strauss & Co., 296 F.2d 702 (2d Cir. 1961). [2] In the instant case, we find neither procedural nor substantive basis for further review. A determination on Fed. R. Civ. P. 60(b) will not be disturbed absent clear abuse of discretion. Pagan v. American Airlines, Inc., 534 F.2d 990 (1st Cir. 1976); Martin v. H.M.B. Construction Co., 279 F2d 495 (5th Cir. 1960); Darlington v. Studebaker- Packard Corp., 291 F.2d 903 (7th Cir.), cert. denied, 359 U.S. 992, 79 S.Ct. 1121, 3 L.Ed.2d 980 (1959). This stan- dard, stringent upon an initial review, can only be more difficult to meet where a second review is sought. It has not been met here. [3] Petitioners rest their claim of abuse upon what they view as the compelling merits of the case, thereby seeking to obtain a review of the merits on this motion. Upon review, a judgment of the district court affirming the bankruptcy court’s determination based on findings of fact will not be disturbed unless the findings are clearly erro- neous. Sears, Roebuck & Co. v. Boydston, 520 F.2d 1098, 1100 (5th Cir. 1975); Porterfield v. Gerstel, 249 F.2d 634 (5th Cir. 1957). Such findings are presumptively correct in a situation such as is here presented, where the lower court considers conflicting evidence. [4] Petitioners have not demonstrated that there is clear error in the bankruptcy judge's approval of the trustee's settlement of the suit against Aetna Business Credit, Inc. The charges of collusion between the bankruptcy judge, the trustee, and the lawyer for Aetna are conclusional. Moreover, petitioners have failed to file an affidavit stat- ing the facts and reasons for the belief that bias or preju- dice exists and a certificate of counsel showing good faith as required by 28 U.S.C.A. Sec. 144. Neither have peti- tioners shown that there exists the requisite extrajudicial basis of prejudice and bias under 28 U.S.C.A. Sec. 455. Davis v. Board of School Commissioners, 517 F.2d 1044, 1052 (5th Cir. 1975), cert. denied, 425 U.S. 944, 96 S.Ct. 1685, 48 L.Ed.2d 188 (1976). The occurrence of ex parte conferences between the bankruptcy judge, the trustee, and Aetna’s lawyer alone do not demonstrate collusion. Martelli v. City of Sonoma, 359 F. Supp. 397 (N.D.Cal. 1973). In sum, where there is no compelling reason for further review and no showing of likelihood of success in such an eventuality, we decline to exercise our discretion to grant review. Accordingly, the motion for leave to appeal is denied. 10 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION ) IN RE: GEORGIA PANELING SUPPLY, INC. B74-1628 [Filed June 26, 1978] ORDER This bankruptcy appeal is presently before the court on intervenors’ appeal from the bankruptcy court’s order of December 20, 1977, and opinion of January 5, 1978, deny- ing the appellants’ motion for relief from the bankruptcy court's order of June 17, 1976, approving the trustee's application to compromise and settle. On August 25, 1977, this court remanded the action to the bankruptcy court solely for consideration of appellants’ asserted grounds for relief under Rule 60(b)(1), (2) and (3), Fed. R. Civ. P. Specifically, the rule provides as follows: On motion and upon such terms as are just, the court may relieve a party or his legal representa- tive from a final judgment, order, or proceeding from [sic] the following reasons: (1) mistake, in- advertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move from a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or ex- trinsic), misrepresentation, or other misconduct / of an adverse party;... The propriety of granting relief under all three of these subsections is addressed to the sound discretion of the court, Hand v. United States, 441 F.2d 529 (5th Cir. 1971) and must be balanced against the competing interest of t achieving finality in litigation, see In Re Casco Chemical Co., 335 F.2d 645 (5th Cir. 1964). The major thrust of appellants’ argument fell under the “newly discovered evidence” heading of Rule 60(b)(2). Un- 11 der this heading, the evidence must be “newly discovered” in the sense of not being in the possession of the movant before the order was entered, see Kolstad v. United States, 262 F.2d 839 (9th Cir. 1959). In addition, it must be not merely cumulative but rather such as probably would produce a different outcome and it must be evidence that could not have been discovered by “due diligence” prior to the hearing or in time to move for a new trial. Flett v. W. A. Alexander & Co., 302 F.2d 321 (7th Cir.), cert. denied, 371 U.S. 841 (1962). Appellants were afforded more than a full day to present their evidence. In an opinion measuring forty pages in length, the bankruptcy court carefully sifted the evidence and concluded that appellants could not carry their burden under any of the three pertinent subsections of Rule 60(b). Specifically, the bankruptcy court found inter alia: (1) that there was little or no evidence that the subject Joan had been made to a sister corporation rather than to the bankrupt: and (2) that appellants’ “newly discovered evi- dence” consisted not of new evidence but rather of different legal theories attached to the same facts. After a careful independent review of the evidence and the bankruptcy court’s order of January 5, 1977 [sic], we cannot conclude that these findings of fact were “clearly erroneous.” See Rule 810 of the Rules of Bankruptcy Procedure. Accordingly, for the reasons hereinabove expressed, the bankruptcy court’s order of December 20, 1977, and opin- ion of January 5, 1978, are hereby AFFIRMED. IT IS SO ORDERED. This, the 23rd day of June, 1978. /s/ RICHARD C. FREEMAN UNITED STATES DISTRICT JUDGE 12 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION IN RE: GEORGIA PANELING SUPPLY, INC. B74-1628 [Filed August 26, 1977] ORDER It has come to the attention of this court that, contrary to the representations of appellants’ counsel at the in camera hearing held on July 19, 1977, the date upon which the challenged order was entered was June 17, 1976, rather than May 18, 1976. Accordingly, appellants’ motion under Rule 60(b)(1), (2), and (3), Fed. R. Civ. P, which was made on May 31, 1977, was within the one year maximum period for the filing of such motions. See 7 J. W. Moore, Moore’s Federal Practice, Sec. 60.22{4] (1977). In addition, we cannot say on the record presently before this court that the subject motion so prejudiced appellees as to war- rant a finding that it was not otherwise filed within a reasonable time. See 11 C. Wright and A. Miller, Federal Practice and Procedure, Sec. 2866 at 229-230 (1971). Nev- ertheless, as we indicated in our previous order, appellants factual allegations should be considered in the first in- stance by the bankruptcy judge who initially performed the function of fact finder in this action. Accordingly, this court’s order of July 22, 1977 insofar as it applies to appellants’ motion under Rule 60(b)(1), (2) and (3) is hereby VACATED and the instant action is hereby ORDERED to be REMANDED to the bankruptcy court for an evidentiary hearing upon the question of whether ap- pellants can carry their heavy burden of demonstrating grounds for relief under Rule 60(b)(1), (2) or (3) which would warrant setting aside the judgment of the bank- ruptcy court of June 17, 1976. If such grounds are found, the bankruptcy judge is hereby DIRECTED to enter the appropriate findings of fact and conclusions of law and to 13 apply to this court for leave to amend our mandate of affirmance to the extent that any conflict therewith may be found to exist. IT IS SO ORDERED. This, the 25th day of August, 1977. s/ RICHARD C. FREEMAN UNITED STATES DISTRICT JUDGE 14 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION In the Matter of: GEORGIA PANELING SUPPLY, INC. Bankruptcy Case No. B74-1628A [Filed July 22, 1977] ORDER This bankruptcy appeal is presently before the court on the motions filed by several unsecured creditors of the bankrupt under Rule 60(b), Fed. R. Civ. P, to relieve appellants from this court’s order of April 15, 1977, affirm- ing the bankruptcy judge's approval of the trustee’s settle- ment. Appellant's original motion and four subsequent amendments rely upon grounds specified in Rule 60(b) including: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due dili- gence could not have been discovered in time to move for a new tria! under Rule 59(b). Fed. R. Civ. P; (3) fraud, misrepresentation or other misconduct of appellees; and (4) other reasons allegedly justifying relief from the operation of the judgment. At a hearing held in camera on July 19, 1977, threshold issues concerning the jurisdiction of this court and the timeliness of the subject motion were raised. Accordingly, this court will consider the subject of appellants’ motion only if we first conclude that appellees’ threshold argu- ments are without merit. THE JURISDICTION OF THIS COURT TO ENTERTAIN APPELLANTS’ MOTION UNDER RULE 60(b) FED. R. CIV. P. Appellants argue in essence that, under the “plain meaning” of Rule 60(b), Fed. R. Civ. P., any court, includ- ing this court, sitting in its appellate function in the instant bankruptcy proceeding may vacate one of its prior 15 orders for any of the reasons specified in the rule. In addition, appellants argue that since the bankruptcy court in this district is not a separate court but rather a division of the district court, filing the subject motion in the district could not have been error. Appellees in turn argue that a motion under Rule 60(b) must be filed in the court which entered “judgment”; in this case the bankruptcy court. The gravamen of appellees’ argument is that when this court, sitting in an appellate function, affirmed the order of the bankruptcy court, it surrendered jurisdiction over the subject action in favor of the bankruptcy court. Therefore, while the bankruptcy court could not properly have revised its own judgment, or a fortiori that of the district court, without first obtaining the leave of this court, Warner v. City of Bay, St. Louis, 526 F2d 1211 (5th Cir. 1976); Graves v. Kaiser Aluminum and Chemical Co., 528 F.2d 1360 (5th Cir. 1976), the bank- ruptcy court was nevertheless the only court with jurisdic- tion to entertain the motion in the first instance. Accordingly, this court is directly confronted with the question of whether or not we have jurisdiction to enter- tain a motion to set aside a “judgment” or order of this court in a bankruptcy proceeding after this court has already affirmed the ruling of the bankruptcy judge upon appeal. In Dickerson v. Continental Oil Co., 476 F.2d 635 (5th Cir. 1973) the district court upon remand added interest to a judgment in favor of an intervening compensation car- rier and the ruling was appealed. In a ner curiam opinion the Court of Appeals suggested the proper procedure would be to direct a post-judgment-post-mandate request to the Court of Appeals. However, the court also noted that the result flowed from the mandate rather than from “any actual or supposed” restrictions on Rule 60/b) post- judgment relief. Jd. at 636. Therefore, the court implicitly assumed that the trial court was the appropriate court in which to lodge the Rule 60(b) motion. In A. G. Pro, Inc. v. Sakaraida, 481 F.2d 668 (5th Cir. 1973), a patent infringement action, a claim of newly discovered evidence under Rule 60(b)\(2), Fed. R. Civ. P., was raised after the Court of Appeals rendered the deci- sion but before the issuance of the mandate. The Court of Appeals then reaffirmed the decision but remanded the 16 action to the district court for consideration of the Rule 60(b)(2) motion. Therefore, the Court of Appeals essen- tially followed Dickerson once more and concluded that the trial court was the proper court in which to consider such an evidentiary allegation. There is logic in the position which the Court of Appeals has adopted — especially when the gravamen of an appel- lants’ motion is that newly discovered evidence within the meaning of Rule 60(b)(2) has become available. In the latter instance, the argument is not that any mistake of law or fact was made by the trial or appellate courts. Instead, the thrust of the argument is that the record below was inadequately developed and needs supplementa- tion. Therefore, it would be incongruous and somewhat unseemly for the appellate court to usurp the function of the trial court by effectively taking additional evidence and then attempting to determine in the first instance what result that evidence mandates. Nevertheless, the foregoing case authority clearly suggests that once the trial court ruling is affirmed upon appeal, leave of the appellate court must be obtained before a Rule 60(b) mo- tion may be entertained upon its merits. However, this court cannot definitively say in light of the divisional status of the bankruptcy court in this district, that appel- lants Rule 60(b) motion could not properly have been construed as a motion for leave to file a Rule 60(b) motion with the bankruptcy court. Accordingly, consideration of appellees’ untimeliness argument is warranted. THE TIMELINESS OF APPELLANTS’ RULE 60(b) MOTION Appellants putative claims sound under Rule 60(b) Sec- tions (1), (2), (3) and (6). At the in camera hearing held on July 19, 1977, appellants admitted that the judgment of which they complain was entered on May 18, 1976, and that the subject motion was not filed until May 31, 1977. The second sentence of Rule 60(b), Fed. R. Civ. P. states that [sic]: The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than one year after the judgment, order or pro- ceeding was entered or taken. 17 Authorities agree that the “reasonableness” requirement operates only within the one year period and that one year is a maximum time beyond which no proceeding under this clause can be maintained. Bershad v. McDonald, 469 F.2d 1333 (7th Cir. 1972); Greater Boston Television Corp. v. F-C.C., 463 F.2d 268 (D.C. Cir. 1971); 11 C. Wright and A. Miller, Federal Practice and Procedure, Sec. 2866 at 222 (1971). Accordingly, this court may not consider the merits of appellants claims under Rule 60(b) Sections (1), (2) and (3). Appellants’ sole remaining claim upon the merits is that there are “other reasons” within the meaning of Rule 60(b)(6) which justify relief in the instant action. It is clear under this clause that the sole limitation upon the timeli- ness of such a motion is reasonableness, Armor & Co. v. Nard, 56 F.R.D. 610 (D.C. Iowa 1972); 11 C. Wright and A. Miller, Federal Pratice and Procedure, Section 2866 at 232 (1971), and that the court must consider whether relief under clause (6) will further justice without affecting sub- stantial rights of the parties. U.S. v. Cato Brothers, Inc., 273 F2d 153 (4th Cir. 1959). In the instant action, this court, in the exercise of its discretion, see 11 C. Wright and A. Miller, Federal Practice and Procedure, Sec. 2857 (1971), is not persuaded that appellants can meet the foregoing test. First, a perusal of the argument and documents submit- ted by appellants, reveals that regardless of how they attempt to characterize their claims, appellants have de- monstrated at most,newly discovered evidence rather than the extreme circumstances which make relief under Rule 60(b)(6) appropriate. Klapprott v. United States, 335 U.S. 601 (1949) (incarceration during the period of the action resulting in a default judgment cancelling appellants’ nat- uralization certificate); United States v. Karahalias, 205 F.2d 331 (2nd Cir. 1953) (absence from the country and an intervening war prevented appellant from defending a denaturalization proceeding); Menjer v. United States, 405 F.2d 245 (5th Cir. 1968); Brothers, Inc. v. W. E. Grace Manufacturing Co., 320 F.2d 594 (5th Cir. 1963); Crane uv. Kerr, 53 FR.D. 311 (N.D. Ga. 1971). Second, the better view is that clauses (1) through (3) and clause (6) present grounds which are mutually exclu- 18 sive. Therefore, appellants may not accumulate charges under the former sections and allege that they amount to a violation of the latter. Transit Casualty Co. v. Security Trust Co., 441 F.2d 788 (5th Cir. 1971), cert. denied, 404 U.S. 883; Gulf Coast Building & Supply Co. v. Interna- tional Board of Electrical Workers, Local 480, ALF-CIO, 460 F.2d 105 (5th Cir. 1972). In addition, appellant should not be allowed to use the subject Rule 60(b)(6) motion as a substitute for the appeal which appellants failed to timely file. See 7 J. W. Moore, Moore's Federal Practice, Section 60.18[8] (1976). Finally, we must conclude that the interests of justice would not be served by considering and granting appel- lants’ motion under Rule 60(b)(6). Appellants asserted at the in camera hearing on July 19, 1977 that the main body of this action which was not affected by the challenged order is nearly ready to be tried and that appellants have individual actions presently pending against Aetna Busi- ness Credit, Inc. In view of these circumstances, we must conclude alternatively that appellants’ motion was not filed within a “reasonable time” and/or that the motion is now barred by laches. The foregoing decision pretermits consideration of appellants’ motion upon the merits. Accordingly, for all the reasons hereinabove expressed, appellants’ motion for relief from judgment under Rule 60(b)(1), (2), (3) and (6), Fed. R. Civ. P. is hereby DENIED. IT IS SO ORDERED. This, the 22nd day of July, 1977. /s/) RICHARD C. FREEMAN UNITED STATES DISTRICT JUDGE 19 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION IN RE: GEORGIA PANELING SUPPLY, INC. B74-1628A [Filed June 15, 1977] ORDER On April 15, 1977, this court entered an order in an appeal from the bankruptcy court affirming the bank- ruptcy judge’s order approving the trustee's application to compromise and settle the bankrupt’s claims against Aetna Business Credit, Inc. in a plenary action pending before this court styled Pennington, Trustee v. Aetna Busi- ness Credit, Inc: et al., Civil Action No.75-1540A. The action is presently pending before this court on motions filed by several unsecured creditors of the bankrupt (1) for an extension of time in which to file a notice of appeal from this court’s order until June 15, 1977, and further (2) upon such creditors’ “motion to relieve appellants from the order of April 15, 1977, affirming the bankruptcy judge’s ap- proval of the trustee’s settlement,” filed pursuant to Rule 60(b). In support of their motion to extend time for appeal, the putative appellants rely on three grounds: (1) excusable neglect; (2) misconduct by an adverse party in the related plenary acton; and (3) the interest of a just, speedy, and inexpensive determination of the issues involved. At the outset, it appears that both parties agree as to the applica- bility of Rule 4(a), Fed. R. App. P., which provides that in appeals taken as of right, a notice of appeal must be filed with the clerk of the district court within 30 days from the date of the judgment or order appealed from. However, Rule 4(a) also allows the district judge, in the exercise of his discretion, to extend the time for filing the notice of appeal an additional thirty days upon a showing of “excus- able neglect.” 20 The parameters of what facts and circumstances consti- tute excusable neglect is not entirely clear; however, resort to the historical development of the instant rule is appro- priate. Prior to 1966, former Rule 73(a), Fed. R. Civ. P, authorized a district court to extend the time for appeal only “upon a showing of excusable neglect based on a failure of a party to learn of the entry of judgment.” While it is clear that a finding of excusable neglect is not re- stricted solely to the foregoing ground, it is likewise clear. as observed by the Advisory Committee on the Federal Rules in 1966, that “the district court should have the power to permit the notice to be filed out of time [only] in extraordinary cases where injustice would otherwise re- sult.” Professor Moore, relying on the examples accom- panying former Rule 27/22), Fed. R. Crim. P., posits the following illustrations of what may constitute “excusable neglect” for purposes of allowing an out-of-time appeal: disability of the person to whom the notice has been entrusted for filing by reason of sudden illness; ... unusual and uncontrollable delay in transmission by mail... death of a party entitled to appeal before appeal is taken, or the death or disablity of the a..orney for a party under circumstances which might prevent the timely filing of a notice of appeal. J. W. Moore, Moore's Federal Practice, Sec. 204.13{1] at 972-73 (1976). It is clear, however, the mere negligence on the part of an attorney, i.e., where a heavy workload causes him to overlook the time for filing an appeal does not constitute excusable neglect warranting relief from the thirty-day filing requirement. E.g., Maryland Casualty Co. v. Conner, 382 F.2d 13 (10th Cir. 1967); Buckley v. United States, 382 F2d 611 (10th Cir.) cert. denied, 390 U.S. 996 (1967). Likewise, counsel's lack of familiarity with local practice or his misreading of procedural rules does not constitute excusable neglect. E.g., Buckley v. United States, supra; Harlan v. Graybar Electric Co., 442 F.2d 425 (9th Cir. 1971). While we have found no case precisely on point, the facts herein are somewhat similar to those in Gann v. Smith, 21 443 F2d 352 (5th Cir. 1971). In Gann, the Fifth Circuit dismissed an appeal, holding that the trial judge had abused his discretion in extending the time for filing a notice of appeal. The court observed that the State Attor- ney had not been guilty of “neglect” of any kind, but that he deliberately and voluntarily made a decision not to appeal the case, adhered to it until after the initial thirty days had expired, and thereafter sought an extension of time to appeal. The Fifth Circuit concluded that the fact that the respondent changed his mind was not the equiva- lent of excusable neglect for purposes of Rule 4(a). The facts herein are somewhat less convincing with respect to extending the time for appeal. Unlike Gann, it is not even clear to this court that the putative appellants intend or desire to take an appeal from this court’s order. On the contrary, it appears that the course of action that they prefer is to have this court vacate its April 15 order if it finds that there are genuine and substantial issues of material fact and of law raised by its Rule 60(b) motion, and, then, thereafter, proceed to dispose of the merits of the 60(b) motion in a less hasty fashion. The purpose of this circuitous procedure is to “obviate a protective appeal.” The would-be appellants cite no cases approving of this rather novel suggested procedure, and indeed, we do not believe that the Federal Rules compel such a result, nor will the interests of justice and judicial economy be served thereby. Likewise, we find that the putative appellants have not shown any facts or circumstances upon which a finding of “excusable neglect” in failing to timely file a notice of appeal might be predicated. At most, the pur- ported delays attributable to Aetna or the other defen- dants in the plenary action which prohibited prompt discovery of the newly found evidence would only be rele- vant to consideration of whether we should reach the merits of their Rule 60(b) motion and do not compel a finding of excusable neglect within the meaning of Rule 4(a). Cf. Files v. City of Rockford, 440 F.2d 811 (7th Cir. 1971). The continuing hedging of the putative appellants as to whether or not they desire or intend to appeal certainly does not constitute mere neglect excusing them from failure to file a timely notice of appeal, but constitu- tes a mere tactical dilemma. See, e.g., Gann v. Smith, 22 supra; Linabary v. Maritime Overseas Corp., 376 F. Supp. 688, 689 (S.D. N.Y. 1973). See also Dyotherm Corp. v. Turbo Machine Co., 434 F.2d 65 (3rd Cir. 1970). On the other hand, the alleged “Catch 22” dilemma in which they contend they find themselves is not the sort of extraordinary case where injustice would otherwise result if an appeal were not taken. It appears to this court that the appropriate procedural approach is to have this court consider the merits of the unsecured creditors’ Rule 60(b) motion. Any order refusing relief under Rule 60(b) would itself be an appealable order, with the result that the putative appellants’ remedies will not be forfeited thereby. Accordingly, for the reasons hereinabove expressed, the motion filed by several of the bankrupts unsecured credi- tors for an extension of time in which to file a notice of appeal is hereby DENIED. It is hereby ORDERED that the matter of the unsecured creditors’ motion for reconsid- eration be set down for a hearing before the undersigned on the 19th day of July, 1977, at 10:00 A.M. in Room 522, United States Courthouse, Atlanta, Georgia. IT IS SO ORDERED, this 13th day of June, 1977. /s/ RICHARD C. FREEMAN UNITED STATES DISTRICT JUDGE 23 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION In the Matter of: GEORGIA PANELING SUPPLY, INC., Bankrupt Bankruptcy Case No. B74-1628A [Filed December 20, 1977] ORDER For the reasons set forth in an Opinion of this Court to be hereafter filed, it is hereby ORDERED that the Motion of International Paper Com- pany, Hampton Lumber Sales Company, Gold Rey Forest Products, Inc., Versapanel, Inc. and White Lumber Sales, Inc. (hereinafter collectively referred to as “Appellants”) for relief under Rule 60(b)(1), (2) and (3) of the Federal Rules of Civil Procedure, which Motion was remanded to this Court for determination by order of the Honorable Richard C. Freeman, U. S. District Judge, on August 25, 1977, be, and the same hereby is in all respects, DENIED; and it is FURTHER ORDERED that a hearing on the Applica- tion of Aetna Business Credit, Inc. for an assessment of expenses incurred by it on appeal and on the Application of the Trustee for an assessment of expenses incurred by him on appeal shall be heard before this Court at 2:00 o'clock p.m., on the 19th day of January, 1978, in Room 546 of the U. S. Courthouse, 56 Forsyth Street, Atlanta, Georgia; and it is FURTHER ORDERED that Appellants shall bear all costs incurred in connection with the hearing on their Motion. The time for appeal from this Order shall run from the date of entry of the Opinion to be filed in connection herewith. SO ORDERED in Atlanta, Georgia, this 20th day of December, 1977. ‘'s/ WILLIAM L. NORTON, JR. UNITED STATES BANKRUPTCY JUDGE UNITED STATES DISTRICT COURT 24 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION In the Matter of: GEORGIA PANELING SUPPLY, INC., Bankrupt In Bankruptcy No. B74-1628A (Filed: September 23, 1977] ORDER At the hearing before this Bankruptcy Court on Septem- ber 19, 1977, on the objecting creditors’ Rule 60(b) motion remanded to this Court for hearing by Order of United States District Court Judge Richard C. Freeman, John C. Pennington, duly appointed Trustee for the captioned Bankrupt, on oral motion requested this Court to consider amendment of its Order of September 16, 1977, and the objecting creditors placed before this Court three written motions for consideration, being: (1) Notice of Appeal and Request for Immediate Review; (2) Motion for a Stay Pending Appeal; and (3) Motion to Reassign Case. After hearing oral argument by counsel for the parties, the Court ruled: Trustee’s Motion to Amend Order of September 16, 1977 In accord with its intention announced to the parties on September 16, 1977, to clarify its Order of that same date, IT IS ORDERED that the last three lines of the last full paragraph preceding the date be amended to read as follows: ee Motion, and as to ‘newly discovered evi- dence’ under Rule 60(b)(2), that which necessar- ily could not have been discovered by due diligence in time to move for a new trial under Rule 59(b), or a rehearing under Bankruptcy Rule 923.” 25 Notice of Appeal and Request for Immediate Review The objecting creditors’ Notice of Appeal and Request for Immediate Review was brought to the attention of this Court to indicate its filing and to provide the basis for the objecting creditors’ motion, which next follows. Motion for a Stay Pending Appeal The parties being present with witnesses and ready to proceed, the objecting creditors’ motion under Rule 805 of the Rules of Bankruptcy Procedure was DENIED, it ap- pearing that such denial would best serve to protect the * rights of all parties in interest, the objecting creditors’ '; having been advised by this Court that they will be af- ‘’ forded such time or periods of time as may be necessary to permit a full hearing of evidentiary matters which are admissible and appropriate in the consideration of a Rule 60(b) motion. Motion to Reassign Case For the reasons appearing in the foregoing denial of the objecting creditors’ motion under Bankruptcy Rule 805, and it further appearing that this Court has heard evi- dence and arguments of counsel for a period of at least five hours, with additional time for hearing being presently set, this Court would DENY objecting creditors’ motion to reassign the case. Moreover, this Court is subject to the United States District Court’s Order of remand, dated August 26, 1977, and is without authority under Rule 102 of the Bankruptcy Rules of Procedure to reassign the case. SO ORDERED this 19th day of September, 1977. /s/ WILLIAM L. NORTON, JR. U.S. BANKRUPTCY JUDGE 26 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION IN RE: GEORGIA PANELING SUPPLY, INC.., Bankrupt Case No. B74-1628A [Filed September 16, 1977] ORDER Certain creditors of the referenced Bankrupt, Interna- | tional Paper Company, Hampton Lumber Sales Company, Gold Rey Forest Products, Inc., Versapanel, Inc., and White Lumber Sales, Inc., appealed from the Order of this Bankruptcy Court entered on June 17, 1976, approving the settlement by the Trustee of a controversy with Aetna Business Credit, Inc. After affirmance of said Order in all respects by the District Court sitting on appeal, the object- ing Creditors filed a motion under Rule 60(b) of the Fed- eral Rules of civil Procedure and the District Court by its Order entered on July 22, 1977, [sic] remanded the object- ing Creditors’ Rule 60(b) Motion to this Court for a hear- ing and determination of the issues presented. On September 8, 1977, this Court entered an Order setting the matter for hearing at 8:00 a.m. on the 19th day of September, 1977. On September 12, 1977, the objecting Creditors filed an Application with this Court requesting that the time and date set for hearing be postponed until a date on or after October 24, 1977, for the following cited reasons: (1) Counsel for the objecting Creditors would be otherwise engaged in a jury trial before the Honorable Albert J. Henderson, Jr., District Court Judge of this District; (2) that a determination need first be made by this Court as to the adequacy or competence of the Trustee to conduct the defense, presumably in his own behalf, and as to whether Aetna Business Credit, Inc. is a proper party to this preceeding; and (3) that an order need first be entered by this Court incorporating all of the discovery documents in certain related plenary actions into these 27 proceedings in bankruptcy on the Creditors’ Rule 60(b) Motion. The Trustee, by his response to the Creditors’ Applica- tion, has shown by the affidavits of counsel that certain criminal matters and jury trial in a civil action are set to be tried before Judge Henderson during the week of Sep- tember 19, 1977, prior to the trial of the matter in which counsel for the objecting Creditors is involved. It therefore appearing that said case involving counsel for Creditors will not be reached by Judge Henderson during the time set by this Court for hearing of Creditors’ Rule 60(b) Motion, Creditors’ Application for continuation and post- ponement for the reason of the conflict anticipated by counsel for Creditors is hereby DENIED. This Court does not perceive a logical nexus between a determination as to the Trustee’s adequacy or competence to conduct his own defense, and the question of whether Aetna Business Credit, Inc. is a proper or interested party to be heard in these proceedings. It appears sufficient that Aetna Business Credit, Inc. has participated in the matter before this Court from the time of the original hearing on the Trustee's Application to settle his controversy. Further, as a party to the settlement which is the subject of this proceeding, Aetna Business Credit, Inc. would appear to have real and obvious interest in the outcome. Accordingly, whether by right or by reason of the discre- tion vested in this Court to hear those who would be directly affected by its decisions, Aetna Business Credit, Inc. will not be denied a voice in this matter if it so desires. It therefor appearing that Creditors’ Application for post- ponement for the reason that the Trustee has not been shown to be inadequate or incompetent with the result that Aetna Business Credit would be then not a party, is without merit or logic, their request for such reason is hereby DENIED. Judge Freeman's Order of remand directed this Court to the question of whether Appellants can carry their heavy burden of demonstrating grounds for relief under Rule 60(b) (1), (2) or (3) which would warrant setting aside the earlier judgment of this Court. The cited portion of Rule 60\b) states the following reasons for providing relief from a final judgment: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence, which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepre- sentation, or other misconduct of an adverse party. Since evidence supporting the grounds for relief stated under (1) and (3) of Rule 60(b) would not likely appear in the discovery documents in the related plenary actions, this Court sees no need to consider these provisions of the rule in the context of the Creditors’ request for postpone- ment based on the need for an order incorporating such discovery records into these proceedings. The character of the evidence which must be offered in order to support a claim for relief under (2) of Rule 60(b) as stated in Professor Moore's Treaties, *.. must be such as was not and could not by the exercise of due diligence have been discovered in time to present in the original proceeding. And must be admissible and credible, and must be of such a material and controlling nature as will probably change the outcome, not merely cumu- lative or tending to impeach or contradict a wit- ness.” 7 Moore's Federal Practice, Sec. 60.23(4). It seems highly improbable to this Court that all of the discovery documents in the various related plenary actions would be admissible under the suggested criteria, or fur- ther the Creditors’ effort to carry their heavy burden of demonstrating grounds for relief. It will be incumbent on the Creditors to select and offer only evidence of such a character as will meet the cited standard for “newly dis- covered evidence”. This Court should not be put upon or required to examine or sift through a large body of discov- ery documents in order to determine that which might support the Creditors’ contentions. This would be the case whether such purported evidence were offered en masse, or introduced by the Creditors in a random fashion for the purpose of determining which of such evidence might be admissible on the narrow issues before this Court. Accordingly, since this Court views it to be the burden of the movants to produce only evidence such as would be admissible in the context of their motion, and the sum- 29 mary nature of the proceeding from which it stems, it perceives no reason why an order should issue incorporat- ing quantities of discovery documents which could only tend to burden the Court and hamper an efficient and just determination of the issues. Therefore, Creditors’ Application for Postponement for the reason that an order needs to first be entered incor- porating all of the discovery documents in the related plenary actions is hereby DENIED. Counsel for Creditors suggests that the hearing on their Rule 60(b) Motion will require two to three weeks. This Court fails to comprehend how it will require such an amount of time to show this Court what the Creditors have discovered since the original hearing on May 18, 1976, which by due diligence was not discoverable before said date and which would require a different ruling with respect to the propriety of the Trustee’s settlement of its controversy with Aetna Business Credit, Inc. Creditors’ request for reservation by this Court of a two to three week period for the hearing of their Rule 60(b) Motion is therefore hereby DENIED. On Monday, September 19, 1977, the Court will confine its examination exclusively to evidence offered by the Creditors which is of a character appropriate to a Rule 60(b) Motion, and as to new evidence, that which necessar- ily could not have been discoverable prior to the hearing on May 18, 1976. IT IS SO ORDERED, this 16th day of September, 1977. /s/ WILLIAM L. NORTON, JR. UNITED STATES BANKRUPTCY JUDGE UNITED STATES DISTRICT COURT 30 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION In the Matter of: GEORGIA PANELING SUPPLY, INC., Bankrupt Case No. B74-1628A [Filed January 5, 1978] Opinion This matter came on for hearing on September 19, 1977, upon the remanded Motion of International Paper Com- pany, Hampton Lumber Sales Company, Gold Rey Forest Products, Inc., Versapanel, Inc. and White Lumber Sales, Inc. (hereinafter collect. vely referred to as “Appellants”), which was previously filed with the United States District Court pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, and upon the Application of Aetna Business Credit, Inc. (hereinafter “Aetna”) for an assessment of expenses incurred by it on appeal, and upon the Applica- tion of John C. Pennington, Trustee herein of Georgia Paneling Supply, Inc., for an assessment of expenses in- curred on appeal. The Court heard argument of counsel for Appellants in support of their Motion and argument of counsel for the Trustee and Aetna in opposition thereto on September 19 and 20, 1977, at the conclusion of which the Court directed Appellants to submit a brief setting forth the facts and legal principles urged in support of their Motion. The Court has reviewed the brief submitted by Appellants and the responsive brief submitted by the Trustee (which was adopted by Aetna as its response to Appellants’ brief) and, based upon these briefs, the oral argument of counsel, and the record of this bankruptcy case, the Court has determined that Appellants’ Motion must be DENIED for the reasons that follow. Procedural History The procedural history of this bankruptcy case and the circumstances out of which Appellants’ instant Motion 31 arise is of more than passing interest and should be re- viewed in order to place in proper perspective the conten- tions of the parties. Georgia Paneling Supply, Inc., a Georgia corporation formed on October 19, 1972 (hereinafter “the Bankrupt”) was adjudicated a bankrupt upon an involuntary petition filed by three of the Appellants on June 24, 1974, and consented to by the Bankrupt on July 29, 1974. On Sep- tember 10, 1974, John C. Pennington was appointed and duly qualified as Trustee of the bankrupt estate, which was on the date of his appointment and is now without any assets. On July 9, 1975, the Trustee filed a civil action against Aetna Business Credit, Inc. (hereinafter “Aetna”) and The C & S Bank of North Fulton (hereinafter “C & S”) wherein he sought to recover the amount of certain transfers to them suffered by the Bankrupt through foreclosure of their security interests upon the property of the Bankrupt. On January 20, 1976, after having conducted discovery and investigation of the facts, the Trustee made applica- tion to this Court to settle his lawsuit with respect to Aetna pursuant to Section 27 of the Bankruptcy Act. At an in-chambers hearing held that same day, Appellants ap- peared in opposition to the settlement proposed and there- after moved to intervene in the Trustee’s lawsuit, which was then pending before the United States District Court. On April 16, 1976, the Trustee renewed his application to settle with Aetna, and on May 5, 1976, Appellants filed an application to remove the Trustee for alleged dereliction of his fiduciary duties in attempting to effectuate a settle- ment upon terms opposed by them. In addition, Appellants filed an application requesting the Court to appoint a named successor trustee with Appellants’ counsel to serve as such successor trustee's attorney. A hearing on the Trustee's application, as well as on the two applications filed by Appellants, was held on May 18, 1976. After lengthly argument of counsel for the Trustee, Aetna and Appellants, the Court entered an order on June 17, 1976, which granted the Trustee's application and de- nied those filed by Appellants. From that order Appellants appealed on June 29, 1976, to the District Court, which affirmed this Court's rulings by order of April 15, 1977. On 32 May 16, 1977, Appellants filed a motion requesting the District Court to extend the time within which they might file a notice of appeal and on May 31, 1977, Appellants also filed the instant Motion under Rule 60(b) of the Federal Rules of Civil Procedure requesting the District Court to vacate its affirmance of this Court’s June 17th order. The District Court denied Appellant's motion to extend time on June 15, 1977, and on July 22, 1977, the District Court denied Appellants’ instant Motion as un- timely filed. Following the denial of their Motion under Rule 60(b), Appellants filed a second Rule 60(b) motion wherein they requested the District Court to vacate its denial of the instant Motion because the District Court had entered its order under a misapprehension of the facts relating to Appellants’ timeliness. On August 26, 1977, the District Court entered an order upon Appellants’ second Rule 60(b) motion vacating its denial of the instant Motion and re- manding same for consideration by this Court under sub- paragraphs (1), (2) and (3) of Rule 60(b). On September 8, 1977, this Court entered an order directing Appellants, Aetna and the Trustee to appear before the Court on September 19, 1977, for a hearing upon Appellants’ remanded Motion. Appellants on Septem- ber 13, 1977, filed with the Court an application request- ing a continuance of the scheduled hearing; urging the Court to prohibit counsel for Aetna from participating at the hearing; requesting the Court to have all discovery taken in the pending action before the District Court incorporated by reference for use at the hearing; and asking the Court to set aside two weeks of its calendar to devote to the hearing on their Motion. On September 16, 1977, this Court entered an order denying in all respects this application of Appellants. At the outset of the scheduled hearing on their Motion, Appellants informed the Court that they had or were planning to file a notice of appeal from the Court's denial on September 16, 1977, of their pre-hearing application; moved the Court for a stay of the hearing pending a disposition of the appeal; and requested the Court to reas- sign their Motion to another Bankruptcy Judge whose calendar would permit the devotion of two weeks to the 33 hearing. The Court likewise denied these requests of Ap- pellants. Thereafter, the hearing proceeded and the Court permit- ted Appellants to present evidence in support of their Motion. In view of Appellants’ contention that the hearing would require two full weeks, which the Court found somewhat incredible, and in an effort to focus the hearing upon the grounds for relief asserted in the Motion rather than allowing the hearing to evolve into a full-blown trial on the merits, the Court requested Appellants’ counsel to summarize their asserted grounds for relief and the nature of the evidence that Appellants intended to repesent in support thereof prior to their examination at length of witnesses. The Court’s primary purpose in making this request was to determine whether, taking as true the evidence that Appellants intended to present, Appellants would as a matter of law be entitled to relief under any one or more of subparagraphs (1), (2) or (3) of Rule 60(b) of the Federal Rules. Appellants’ counsel strenuously objected to this request of the Court and maintained that they should be permitted to present all of their evidence without first having to explain how such evidence might be relevant to their Motion. Before complying with the Court’s request, Appellants’ counsel moved the Court to exclude the Trustee and his attorney from the courtroom during his explanation of Appellants’ contentions and the nature of their evidence. The Trustee voluntarily agreed to absent himself from the courtroom and the Court ruled that the Trustee’s counsel was entitled to remain. After approxi- mately four hours, during which Appellants’ counsel sum- marized in part the nature of Appellants’ contentions and argued the relevance of the evidence which they proposed to offer in support of their Motion, the hearing was ad- journed to the following morning, at which time it re- sumed and continued for a period of several more hours. As a result of the Court's failure to discern the factual contentions urged by Appellants in support of their Motion and the relevance of much of the evidence that they proposed to offer, stemming largely from the refusal of Appellants’ counsel to explain same, the Court directed counsel for Appellants to submit a legal brief detailing what they expected to elicit from their witnesses and what 34 they expected their documentary evidence to show (atta- ching such documents to their brief) in order that the Court could determine whether Appellants would be en- titled to any relief under Rule 60(b) even assuming the truth of their evidence. The Court made clear to all parties that, in the event there were any disputes as to any material fact set forth in Appellants’ brief or in any brief filed in response thereto, a hearing would be held solely for the purposes of receiving evidence as to those disputed facts. Summary of Undisputed Facts The following is a summary of those facts, which for the purpose of this Motion have not been disputed by the parties either in their briefs or at the hearing: (1) Prior to its adjudication, the Bankrupt was engaged in the wholesale lumber business at Mimms Drive, Gwin- nett County, Georgia, and was owned and managed by T. R. Locke, J. Wayne French and other persons whose identi- ties are unimportant for the purpose of the instant Motion. (2) In addition to their ownership interest in and man- agement of the Bankrupt, Messrs. Locke and French had an ownership interest in and managed the operations of several other companies (hereinafter collectively referred to as “the Georgia Paneling group”) known as Georgia Paneling Company, Inc. (hereinafter referred to as “Panel- ing”), Georgia Paneling Company of Doraville, Inc. and Georgia Paneling Company of Forest Park, Inc. (hereinaf- ter referred to as “Forest Park”). The Georgia Paneling group operated essentially as retail outlet stores on behalf of the Bankrupt, which consigned to them for retail sale inventory consisting of lumber and related products pur- chased by the Bankrupt from its supplier. All accounts receivable generated by the Georgia Paneling group were owned by and turned over to the Bankrupt, which would remit a certain percentage of the proceeds back to the Georgia Paneling group in order to maintain their retail sales operations. (3) Appellants were suppliers of the Bankrupt and are now unsecured creditors of the Bankrupt. (4) On June 22, 1973, Aetna completed an internally preparec| document styled “Loan Application Approval” in 35 connection with an accounts receivable financing arrange- ment that it was contemplating with Paneling, which then was operating out of a warehouse at 122 Oak Street in Roswell, Georgia. (5) Both the Bankrupt and Paneling executed the fol- lowing loan documents, each of which are dated June 25, 1973, and delivered same to Aetna: General Loan and Security Agreement; Security Agreement-Accounts and Accounts Receivable; Promissory Note to Aetna for $250,000.00; Continuing Guaranty by the Bankrupt of all indebtedness of Paneling to Aetna; Continuing Guaranty by Paneling of all indebtedness of the Bankrupt to Aetna; and UCC Form-1 Financing Statements. (6) The Trustee has demonstrated, and Appellants have not disputed, that on October 16, 1973, Aetna completed an internally prepared document styled “Loan Application Approval” in connection with an increase in the loan limit of its accounts receivable financing arrangement with the Bankrupt. (7) The Bankrupt executed the following loan docu- ments, each of which are dated October 22, 1973, and delivered same to Aetna: Amendment to Security Agree- ment and Promissory Note to Aetna for $450,000.00. (8) The Bankrupt executed the following loan docu- ments, each of which are dated January 7, 1974, and delivered same to Aetna: General Loan and Security Agreement; Security Agreement-Accounts and Accounts Receivable; Promissory Note to Aetna for $450,000.00; and UCC Form-1 Financing Statement. (9) Pursuant to the various loan documents referred to above, both the Bankrupt and Paneling granted to Aetna a security interest in, among other things, all of their then existing and after-acquired inventory, accounts receivable, contract rights, general intangibles and the proceeds of the foregoing. (10) In December of 1973, Appellants contend, and the Trustee apparently does not dispute, that a fire destroyed all or substantially all of the contents of the warehouse of Forest Park. The contents of the warehouse apparently were insured against fire loss and the Bankrupt was or claimed to be the loss payee on the policy of insurance. Appellants contend that the Bankrupt received the insur- 36 ance proceeds from the fire loss and that these proceeds were ultimately paid to Aetna. (11) The Trustee contends, and Appellants have not disputed, that pursuant to the loan documents previously described, Aetna made wire transfers of funds during 1974 to the Bankrupt’s checking account at C & S. There is no evidence that Aetna ever wired any sums of money to Paneling. (12) Beginning sometime in June of 1974, Aetna took possession of the inventory of the Bankrupt without a breach of the peace and foreclosed its security interest thereon by reason of certain defaults alleged by Aetna to have occurred. Issue Presented The ultimate issue in this case is whether Appellants are entitled to any relief under Rule 60b of the Federal Rules of Civil Procedure. Appellants in their Motion contend that “upon discovery of Aetna Business Credit, Inc., in a related plenary action” they have evidence showing that “Aetna received a prefer- ence voidable under Section 60b of the Bankruptcy Act from” the Bankrupt and that Aetna “broke its obligation of good faith” and “acted in a commercially unreasonable manner as to” the Bankrupt. Thus, they contend that they are entitled as unsecured creditors of the Bankrupt to relief from the Court’s order of June 17, 1976, which approved over their opposition the settlement between the Trustee and Aetna, pursuant to the following subpara- graphs of Rule 60(b) of the Federal Rules of Civil Procedure: (1) Subparagraph (1) of Rule 60(b), which authorizes the Court to grant relief from an order for “mistake, inadver- tence, surprise, or excusable neglect”; (2) Subparagraph (2) of Rule 60(b), which authorizes the Court to give relief from an order on the grounds of “newly discovered evidence”; and (3) Subparagraph (3) of Rule 60(b), which empowers the Court to afford relief from an order obtained by “fraud misrepresentation or other conductisic] of an adverse party.” | 37 Before examining the facts that Appellants urge in sup- port of their Motion, it is appropriate first to review the principles of law which are applicable to a motion under Rule 60(b). Applicable Law The Trustee's Brief fairly summarizes the law applicable to a Rule 60(b) motion. As the Trustee correctly observes, the August 26th order of the District Court remanded to this Court for determination whether Appellants “can carry their heavy burden of demonstrating grounds for relief under Rule 60(b) (1), (2) or (3) which would warrant setting aside” this Court’s June 17th order approving the Trustee’s settlement. An analysis of the provisions of these subparagraphs of Rule 60(b) is therefore appropriate at this juncture. Rule 60(b) provides in pertinent part as follows: “On motion and upon such terms as are just, the court may relieve a party or his legal representa- tive from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadver- tence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other conduct(sic] of an ad- verse party... The motion shall be made within a resonable period of time, and for reasons (1), (2) and (3) not more than one year after the judg- ment, order or proceeding was entered or taken.” The courts are in agreement that a motion for relief under Rule 60(b) is addressed to the sound discretion of the court. See Hand v. U. S., 441 F.2d 529 (5th Cir. 1971). In exercising such discretion, the Court must balance the policy of the law to prevent injustice against the equally strong policy in favor of achieving finality in litigation. See In Re Casco Chemical Co. 335 F2d 645, 651 (5th Cir. 1964). Some factors which must be weighed in the balance are whether the motion has been made within a “reason- 38 able time”, even though the stated time limit has not expired; whether the movant can show good reason for his failure to take appropriate action sooner; whether the movant can show a good claim or defense; and whether undue prejudice or hardship would result to other parties if the motion were granted. See generally 11 Wright and Miller, Federal Practice and Procedure, Section 2857, at 160-61 (1973). Subparagraph (1) of Rule 60(b) authorizes the Court to give relief from an order for “mistake, inadvertence, sur- prise, or excusable neglect.” The authority granted by this subparagraph has been exercised in a variety of circum- stances, such as when a party not represented by counsel makes a procedural error, see Woods v. Severson, 9 F-R.D. 84 (D.Neb. 1949); when a party failed to appear at trial for good reason, see Denman v. Shubrow, 413 F.2d 258 (1st Cir. 1969); when an answer was not filed until one day after the expiration of an extended time for service and filing, see Davis v. Parkhill-Goodloe Co., 302 F.2d 489 (5th Cir. 1962); and when a consent order is entered into based upon erroneous factual respresentations made by the other party, see U.S. v. Gould, 301 F2d 343 (5th Cir. 1962). However, relief generally has not been granted solely on the grounds of ignorance of the law, see U.S. v. Erdoss, 440 F.2d 1221 (2nd Cir.1971), cert. denied, 404 U.S. 849; care- lessness of a litigant or his attorney, see Cline vs. Hoogland, 518 F.2d 776 (8th Cir. 1975); failure to present all of the facts known to the movant that might have been useful to the court in rendering a decision, see Smith v. Stone, 308 F.2d 15 (9th Cir. 1962); or ineffective tactical decisions of counsel, see U.S. v. 1,550.44 Acres of Land, 369 F. Supp. 1078 (D.N.D. 1974). Subparagraph (2) of Rule 60(b) empowers the Court to give relief from an order on the grounds of newly discov- ered evidence. The evidence must have been in existence at the time of the trial or hearing, see Ryan v. U.S. Lines Co., 303 F.2d 430 (2d Cir. 1962); it must be “newly discov- ered” in the sense that it was not in the possession of the movant before the order was entered, see Kolstad v. U.S., 262 F.2d 839 (9th Cir. 1959); it must have been evidence 39 that “by due diligence” could not have been discovered prior to the hearing or in time to move for a new trial or for reconsideration, see Flett v. WA. Alexander & Co., 302 F.2d 321 (7th Cir. 1962), cert denied 371 U.S. 841; it must be evidence that is not merely cumulative and must be of such materiality and weight as to probably produce a difference[sic] outcome in the proceedings, see Trans Mis- sissippt Corp. v. U.S., 494 F.2d 770 (5th Cir. 1974). Subparagraph (3) of Rule 60(b) authorizes the Court to grant relief from an order obtained by fraud, misrepresen- tation or other misconduct of an adverse party. The burden is upon the movant to establish the fraud by clear and convincing evidence. See Saenz v. Kenedy, 178 F.2d 417 (5th Cir. 1950); Wilkin v. Sunbeam Corp., 466 F.2d 714 (10th Cir. 1972). As a general rule, a statement of opinion as to the law, whether or not accurate, would not consti- tute fraud or other misconduct within the meaning of subparagraph (3). See Walker v. Bank of America National Trust & Savings Association, 268 F.2d 16 (9th Cir. 1959). A motion made under any or all of the above-discussed subparagraphs of Rule 60(b) must be made within a rea- sonable time after entry of the order from which relief is sought and in no event later than one year after the order was entered. If a motion for relief under any of these subparagraphs is not made within a reasonable time, it will be denied, although made within the one-year max- imum period. See Standard Newspapers, Inc. v. King, 375 F.2d 115 (7th Cir. 1967); 7 Moore, Federal Practice, Sec. 60.28(2] (2d ed. 175). What constitutes reasonable time must of necessity depend upon the facts in each case. However, the Court should consider whether the party opposing the motion has been prejudiced by the delay in seeking relief and whether the movant has some good reason for his failure to take appropriate action sooner. See generally 11 Wright and Miller, supra, Sec. 2866 at pp. 228-31. Having thus reviewed the general principles governing relief under Rule 60(b) (1), (2) and (3), it is now incumbent upon the Court to analyze each of Appellants’ asserted grounds for relief in the context of these principles. 40 Summary of Appellants’ Contentions Appellants have filed four amendments to their original Rule 60(b) Motion, each of which amendments attempts to supplement and enlarge the grounds alleged for relief. In their original Motion, Appellants argue that their motion should be granted on the basis of newly discovered evidence indicating that (1) Aetna never made a “loan” to the Bankrupt (and presumably, therefore, foreclosed upon the' wrong company;* (2) that the person signing the loan documents on behalf of Aetna did not have the requisite corporate authority to sign; (3) that Aetna allegedly col- lected excessive amounts of interest from Paneling, the company to which Aetna actually made the loan according to Appellants; (4) that J. Wayne French did not have proper authority to surrender the premises to Aetna on June 7, 1974, the date on which Aetna took possession of the inventory of the Bankrupt prior to actual foreclosure; (5) the Bankrupt as guarantor of the indebtedness of Paneling was discharged by reason of a novation and an accord and satisfaction; (6) that Aetna wrongfully seized the insurance proceeds which resulted from a fire of the Forest Park warehouse and which were payable to the Bankrupt; (7) that Aetna’s loan documents were uncom scionable on their face; (8) that Aetna took possession of the Bankrupt’s inventory on June 7, 1974, without Mr. French’s consent and by duress or coercion; \9) that the Bankrupt’s guaranty of the Paneling indebtedness was an unsecured guaranty and therefore Aetna could not enforce that guaranty in rem by foreclosing upon the assets of the Bankrupt; (10) that the loan documents executed in January of 1974 were without consideration and therefore unenforceable; and (11) that Aetna foreclosed upon the property of the Bankrupt in a commercially unreasonable manner. *Appellants’ use of the term “loan” is slightly misleading. lt appears that Aetna never made one lump sum advance to either the Bankrupt or Paneling, but rather advanced against accounts receivable pledged to it from time to time under an accounts receivable financing arrange- ment. 41 In their first amendment to their original 60(b) Motion, Appellants attach an affidavit of a person who presumably analyzed all invoices in the possession of the Trustee and determined that eighty percent of those invoices bear the letterhead of Paneling while only twenty percent bear the name of the Bankrupt. This affidavit is offered to supple- ment Appellants’ contention that the loan from Aetna was made to Paneling and not to the Bankrupt. Appellants’ second amendment to their Motion consists of an Affidavit from their counsel and is offered to demon- strate excusable neglect, newly discovered evidence, mis- representation or misconduct of an adverse party and “any other reason justifying relief” from the operation of this Court's approval of the Trustee’s settlement. Appellants’ third amendment to their Motion consists solely of a photocopy of their original Motion with hand- written notations interspersed throughout which give cita- tions to various depositions. Appellants’ fourth amendment to their Motion contains two affidavits, the first from an employee of one of the Appellants and the second from Appellants’ counsel, which are offered to demonstrate their “mistake, surprise and inadvertence”. Appellants also filed in support of their original Motion a document styled “Motion for Leave to Submit Affidavits of Persons Present Under Subpoena for Hearing before the Honorable Richard C. Freeman on July 19, 1977”, which by order dated July 22, 1977, the District Court denied. Although these affidavits are not properly before this Court on remand, the Court will nevertheless consider them. Finally, Appellants have filed with this Court a brief which advances three grounds in support of their Motion: First, on the ground of newly discovered evidence showing that Aetna made a loan to Paneling and not to the Bank- rupt; secondly, on the grounds that Appellants were mis- taken as to the true identity of the party to whom the loan from Aetna was made; and thirdly, on the ground that Aetna committed a fraud in representing to this Court at the May 18th settlement hearing that the loan was made to the Bankrupt when, in fact, it was made to Paneling as they contend. It appears from Appellants’ brief that Appel- 42 lants have abandoned the majority of their numerous theories and place almost total reliance upon their conten- tion that Aetna made only one loan and that that loan was made to Paneling rather than to Aetna(sic]. Conclusions of Law A. Rule 60(b)(1) — Mistake, Inadvertence, Surprise or Excusable Neglect. In support of their claim for relief under subparagraph (1) of Rule 60(b), Appellants first offer the affidavit of their counsel, which in essence consists of a 32-paragraph over- view of the history of this litigation and his participation therein. The affidavit is attached to Appellants’ Second Amendment to their Motion and is offered in part to demonstrate “excusable neglect”. The Court understands the term “excusable neglect” as used in Rule 60(b) (1) to mean neglect prior to the entry of the order from which relief is sought. The Court is unable to find in this affi- davit of Appellants’ counsel, which is largely self-serving, any reference to neglect prior to the June 17th order, and the Court is unable to infer any neglect from the narration of facts contained in the affidavit. Accordingly, the Court concludes that this affidavit does not satisfy the require- ments for relief under Rule 60(b)(1). Appellants also offer in support of their claim for relief under Rule 60(b)(1) the two affidavits attached to their Fourth Amendment to the instant Motion. The first of these affidavits is that of Billie Fred Sponsler, an agent of one of the Appellants, and the second is an affidavit of Appellants’ counsel.*.Mr. Sponsler’s affidavit consists of a fifteen paragraph narration of his mistake in believing that Aetna had made a loan to the Bankrupt; his surprise in learning the alleged facts which Appellants now claim constitutes newly discovered evidence; and his inadver- tence in failing to instruct his attorney to examine certain of the loan documents between Aetna and the Bankrupt. The Court finds Mr. Sponsler’s affidavit to be largely *None of the Appellants besides International Paper Company (of which Mr. Sponsler is an agent) submitted any affidavits to demon- strate their surprise, inadvertence or excusable neglect. 43 conclusory and essentially self-serving. The mistake to which Mr. Sponsler alludes is not the type of mistake contemplated by Rule 60(b)(1). Moreover, Mr. Sponsler has given no reason in his affidavit to justify his failure to avoid such a mistake. If in fact the loan was made to Paneling rather than the Bankrupt and Appellants were unaware of this fact, then a claim for relief based upon newly discovered evidence might be possibly stated, but not a claim for relief under Rule 60(b)(1). The same holds true for Mr. Sponsler’s alleged surprise. If the facts which he was surprised to learn after the hearing constitute newly discovered evidence, then subparagraph (2) rather than subparagraph (1) of Rule 60(b) would be the appropri- ate grounds for granting the relief. Finally, with regard to Mr. Sponsler’s alleged inadvertence, the Court finds that the inadvertence of a client in not instructing his attorney to perform the very legal services for which the attorney was retained does not amount to “inadvertence” under Rule 60(b)(1). The Court does not understand Mr. Sponsler’s affidavit to mean that his counsel was negligent and that Appellants therefore should be relieved from the effect of such negligence. Mr. Sponsler simply states that he was inadvertent in not telling his attorney what to do. This is not enough to justify relief under Rule 60(b)(1). The second affidavit attached to this Fourth Admend- ment, which is the affidavit of Appellants’ counsel, recites events that occurred after the June 17th order and there- fore completely fails to demonstrate any mistake, surprise, inadvertence or excusable neglect which would justify re- lief under Rule 60(b)(1). Finally, Appellants contend in the brief filed herein that the Court made a mistake by basing its June 17th order upon the erroneous assumption that Aetna made a loan to the Bankrupt. Appellants argue at one and the same time that no loan was made to the Bankrupt and that the Court erred “in assuming that there was no doubt as to the identity of the borrower.” See Appellants’ Brief at pp. 12 and 14. As to Appellants’ latter argument, it is inconceiv- able how this Court could have erred in thinking that there was no doubt in view of the fact that the Bankrupt, its attorney, its officers, the Trustee and everyone con- cerned advised the Court that the Bankrupt was the prin- cipal obligor to Aetna. As to the former argument, the Court concludes for the reasons stated hereinafter that Appellants have offered no evidence that demonstrates a loan made by Aetna to any person or entity other than the Bankrupt. The Court concludes, therefore, that Appellants have not offered any facts (or even assertions of fact) that would justify the granting of their Motion under subparagraph (1) of Rule 60(b). B. Rule 60(b)(3) — Fraud, Mispresentation or other Mis- conduct of an Adverse Party. In support of their claim for relief under Rule 60(b)(3), Appellants maintain that Aetna through its attorney mis- represented to the Court at the May 18th heering that Aetna made a loan to the Bankrupt. Appellants argue that this representation was false and imply that it was made with knowledge of the falsity of the statement. It is an extremely serious matter to charge another party or its counsel of having committed a fraud upon the Court, and, absent a strong showing to the contrary, the Court must presume that the parties and their counsel have dealt with each other and with the Court honestly and in good faith. The burden of proving fraud is upon Appellants and such fraud must be shown by clear and convincing evidence. Appellants have utterly failed to carry this burden. All they have shown is that Aetna’s counsel made the repre- sentation in question at the May 18th hearing. Even assuming arguendo that the representation was inaccu- rate, Appellants have offered nothing to indicate that Aetna’s counsel knew or even suspected that the represen- tation was untrue. Furthermore, it should be emphasized that from time to time during the course of this bank- ruptcy case the Bankrupt, its officers and attorney, and the Trustee have made the same representation as that made by Aetna’s counsel respecting the loan from Aetna. See Appellant’s brief at page 11. Appellants stand alone in their contention that no such loan was made by Aetna to the Bankrupt and the evidence which they offer in support of this contention is far from convincing. Appellants also charge that Aetna was guilty of miscon- duct in connection with discovery taken in the Trustee's 45 lawsuit after the June 17th order of this Court. Even assuming that such misconduct occurred (which the Court has no reason to believe), Appellants have not demonstra- ted why this would justify granting the relief requested in their Motion. For the foregoing reasons, the Court concludes that Appellants have failed to suggest any basis for relief under Rule 60(b)(3). C. Rule 60(b)(2) — Newly Discovered Evidence. Before proceeding with an examination of Appellants’ claim for relief under subparagraph (2) of Rule 60(b), the Court will first address a number of contentions made by Appellants in their original Motion, which they presum- ably offer in support of their claim for relief under sub- paragraph (2), but which this Court finds to be altogether without merit. First, Appellants refer throughout their Motion and brief to Aetna’s alleged bad faith in its dealings with the Georgia Paneling group. The Court has been unable to discern any specific instances of alleged bad faith as Ap- pellants’ assertions in this regard have been merely con- clusory. In any event, the Court notes that the provisions of Section 109A-1—203 of the Georgia Code, which states that an obligation of “good faith” inheres in the perfor- mance or enforcement of every contract and to which Appellants presumably refer, is directive rather than re- medial. The Court has béen unable to find any jurisdiction that allows recovery of damages under this general provi- sion of the Georgia Uniform Commercial Code. Accord Chander v. Hunter, 304 So.2d 818 (Ala. 1976). Secondly, Appellants contend that Aetna overcollected interest from Paneling. Appellants presumably have aban- doned this claim since they have made no offer of proof of this fact other than their counsel's affidavit that an ac- countant was retained to verify this fact. The Court assu- mes that Appellants were contending that this alleged overcharge operated to discharge the Bankrupt from its guaranty of Paneling’s debt to Aetna. Appellants have offered no proof of an overcharge and indeed have failed to point to one fact supporting their assertion that Aetna collected any interest from Paneling whatsoever. 46 Thirdly, Appellants argue that the Bankrupt was dis- charged from its guaranty as a result of an agreement between Paneling and Aetna to extend the time of pay- ment of the Paneling debt, which Appellants argue amounted to a novation and an accord and satisfaction, and by reason of the alleged bad faith of Aetna. No effort has been made by Appellants to substantiate such claims and there is nothing in the record, other than Appellants’ conclusory statements, from which to infer that these claims have any factual basis. In any event, Appellants’ success on these theories likewise hinges upon a finding that the Bankrupt was liable to Aetna only as a guarantor and not as a principal obligor. The Court finds these unsupported assertions of Appellants totally unsatisfac- tory for purposes of relief under Rule 60(b)(2). Moreover, the Court takes this opportunity to observe that, while a novation discharges a surety when made without the surety’s consent, as argued by Appellants, the Bankrupt in the instant case was a guarantor and not a surety. Even assuming that the Bankrupt was a surety, the Bankrupt @iented in the Continuing Guaranty signed by it to any extension of time granted by Aetna for the payment by Paneling of any indebtedness owed to Aetna and to any compromise or settlement of any such indebtedness to Aetna. Furthermore, even assuming that Paneling rather than the Bankrupt was the principal obligor to Aetna, and further assuming that Paneling and Aetna entered into an accord as argued by Appellants, there is no evidence that the accord was likewise meant to constitute a satisfaction until the indebtedness was paid in full. See J. A. Construc- tion Co. v. Greenbriar Shopping Center, 332 F.Supp. 1336 (N.D. Ga.), affd 461 F.2d 1269 (5th Cir. 1971) (a mere accord is dependent upon complete performance before it operates in satisfaction of original agreement). Fourthly, Appellants maintain that the various loan documents executed by Paneling and the Bankrupt are unenforceable because they are unconscionable on their face and were executed on behalf of Aetna by an offical without the requisite corporate authority to bind Aetna to the agreements. With respect to Appellants’ arguments about the alleged unconscionable nature of the loan docu- ments, which they argue should be nullified under section 47 109A-2—302 of the Georgia Code dealing with uncon- scionability, Appellants have simply noted that the docu- ments authorized Actna to make advances in its discretion and required the Bankrupt to pledge its accounts receiv- able to Aetna for so long as the agreements remained in force and the Bankrupt was indebted to Aetna. Initially, the Court would point out that section 109A-2-302 does not by its terms apply to transactions not involving a sale, such as in the instant case. See Interstate Security Police, Inc. v. Southern Emory Bank, 237 Ga. 37 (1976). In any event, the Court finds nothing unconscionable about such an arrangement, which is the essence of accounts receiv- able financing. The Court must assume that the Bankrupt and Paneling entered into such agreements voluntarily, there being no argument or evidence to the contrary. Further, the Court notes that the agreements provide for termination at will by either party. Even assuming that the loan documents were found to be unconscionable in whole or in part, Appellants have failed to suggest how the Bankrupt was injured thereby and have omitted any cita- tions of authority for the proposition that Aetna would thereby be required to forfeit either the debt owed to it or its perfected security interest in the inventory of the Bank- rupt. From a review of such loan documents, the Court is of the opinion that the outcome of the settlement hearing on May 18th would not have been altered had Appellants, who at that time were aware of the contents of such loan documents and had examined same, argued that the joan documents were unconscionable. With respect to Appel- lants’ assertion that the loan documents are unenforceable because not signed by an officer of Aetna with the neces- sary corporate authority to bind Aetna to the agreements, the Court finds such an assertion to be wholly without merit and bordering on being frivolous. Appellants do not contend that the person signing on Aetna’s behalf did not * have the necessary authority, but rather state that they are unaware of any fact suggesting that he did have such authority. Without speculating whether such authority ex- isted, the Court is of the opinion that lack of corporate authority on the part of an Aetna employee could not be raised in an action by the Trustee against Aetna to vitiate the very agreements which Aetna from the inception of this litigation has relied upon as its defense. Even assum- ing lack of proper corporate authorization, it is apparent that Aetna has ratified the act of its agent who executed the documents and has never once maintained that it should be relieved from the effect of the agreements. See Ga. Code Ann. Sec. 4-303; Advance Mortgage Corp. v. Guaranty Title Ins. Co., 416 F.2d 451 (5th Cir. 1969); Greene v. Golucke, 202 Ga. 494 (1947). Fifthly, Appellants have argued in their Motion that J. Wayne French, an officer of the Bankrupt, did not have the necessary corporate approval to surrender possession of the Bankrupt’s inventory to Aetna in June of 1974 and that Aetna took possession of the inventory without Mr. French’s consent and by duress or coercion. Although the Court finds these two assertions to be patently inconsis- tent — that Mr. French, on the one hand, consented with- out proper authority and that, on the other hand, he did not consent at all — the Court feels that such assertions are without merit in any event. Under Georgia law a secured party has the right to take possession of his collateral upon default without judicial process if this can be done without a breach of the peace. Ga. Code Ann. Sec. 109A-9-503. Georgia law, therefore, does not require the debtor’s consent to such action. See also Thompson v. Ford Motor Credit Co., 550 F.2d 256 (5th Cir. 1977). Accordingly, it is irrelevant whether Mr. French was “authorized” to surrender the inventory to Aetna. Indeed, contrary to Appellants’ assertions, it appears that the loan documents expressly authorized Aetna to take possession of its collat- eral upon default and that these loan documents were approved by a resolution of the Board of Directors of the Bankrupt. See Exhibit “A” to Trustee’s Brief. With regard to Appellants’ alternative theory that Aetna took posses- sion of the invento: y without Mr. French’s consent and by duress or coersion, the Court first notes that, for the reaons previously discussed, Mr. French’s consent was not necessary. Appellants have offered no evidence that Aetna took possession of its collateral by any duress or coercion. On the contrary, one of Appellants’ witnesses testified at the hearing on their Motion that a single Aetna represen- tative appeared at the premises of the Bankrupt on June 7, 1974, to effect the takeover and that a number of the 49 Bankrupt’s employees were present. It can hardly be presumed that an agent of Aetna single-handedly took control of the Bankrupt away from Mr. French and several of the Bankrupt’s employees by force or against their will. Finally, even assuming that Aetna used coercion to take possession of its collateral, Appellants have not shown how this fact alone injured the Bankrupt, nor how it should alter the outcome of the May 18th settlement hearing. Sixthly, Appellants argue that the Bankrupt’s guaranty of all indebtedness of Paneling to Aetna was not secured because on the second page of the guaranty the words “This guaranty is secured by” precede a blank space that has not been completed by the parties. Therefore, argue Appellants, Aetna could not foreclose upon the property of the Bankrupt by reason of Paneling’s default under the loan documents. This argument also is based upon the assumption that the Bankrupt was not indebted to Aetna independently of its guaranty and is totally without merit if, as the Trustee contends, Aetna made advances of money to the Bankrupt pursuant to the accounts receivable financing arrangement. Without addressing the question whether Appellants would be entitled to any relief even assuming that the Bankrupt was not the recipient of advances from Aetna, the Court feels compelled first to examine the dispositive issue, to-wit: whether Paneling, rather the Bankrupt, was the sole recipient of disburse- ments from Aetna, which examination will be taken he- reinbelow. Seventhly, Appellants allege that the loan documents executed in January, 1974, which create security interests in favor of Aetna in the property of the Bankrupt, are unenforceable because they were without consideration. Apparently, Appellants’ argument is that, if the loan docu- ments do not constitute a binding agreement because they are without consideration, then Aetna’s security interest is unenforceable. Under Georgia law, however, all that is necessary for the creation of an enforceable security inter- est is an agreement that it attach to collateral, the giving of value and the acquistion by the debtor of rights in the collateral. Ga. Code Ann. Sec. 109A-9—204(1). There does not seem to be any dispute that the loan documents consti- ~- 50 tute an agreement that a security interest attach. Nor does there appear to be any dispute thatthe Bankrupt acquired rights in the inventory collateral. Thus, the only remain- ing question is whether value was given. A person gives “value” for rights under Georgia law if he acquires those rights “as security for or in total or partial satisfaction of a pre-existing claim.” Ga. Code Ann. Sec. 109A-1—201(44). If at the time these loan documents were executed or afterwards the Bankrupt was indebted to Aetna, then Aetna acquired the rights granted to it under the loan documents for value. Whether the Bankrupt was indebted to Aetna in January of 1974 at the time that these loan documents were executed or thereafter will hinge upon the discussion below concerning whether Aetna made the loan to Paneling, as Appellants contend, or to the Bankrupt, as the Trustee contends. Finally, Appellants argue that Aetna did not foreclose upon the Bankrupt in a commercially reasonable manner. Other than the naked and argumentative assertions embo- died in their Motion, Appellants have offered no evidence to indicate any commercial unreasonableness on Aetna’s part in foreclosing upon the property of the Bankrupt. Apparently, the alleged commercial unreasonableness to which Appellants refer is Aetna’s alleged seizure of lumber owned by them or in which they had an interest. As the Court noted in its June 17th order, such facts might if true support their claim for relief in their intervention action against Aetna, but would not constitute grounds for relief by the Trustee. Turning to Appellants’ claim for relief under subpara- graph (2) of Rule 60(b), Appellants maintain that they have “newly discovered evidence” which would presumbly satisfy the conditions for qualification as such. Appellants contend that their newly discovered evidence indicates that only one loan was made to the Georgia Paneling group and that the one loan was made to Paneling rather than to the Bankrupt. Appellants further contend that Aetna converted property of the Bankrupt when it ob- tained the insurance proceeds paid on account of the fire loss at the Forest Park warehouse. They go on to argue that Aetna’s alleged refusal to return the portion of such proceeds attributable to the destruction of equipment in 51 which Ann Roberts, an employee of “Forest Park”, had an interest,* discharged the Bankrupt as a guarantor of the indebtedness to Aetna. Appellants assert these latter in- stances of newly discovered evidence under the heading of “summary of facts”, without citing authority for the con- clusions of law derived therefrom other than reference to Appellants’ deductions as to Aetna’s “bad faith”. To prove their contention that Aenta made no loan to the Bankrupt, Appellants would necessarily have to overcome the clear meaning of the language contained in the various loan agreements between Aetna and the Bankrupt. They would apparently claim to have newly discovered parol or other evidence which would clearly prove a course of con- duct inconsistent with such language. The documentary evidence and the record reflecting the conduct of the par- ties simply does not support such a finding or conclusion. The clear language of the loan documents executed by the Bankrupt and the Georgia Paneling group evidenced the fact that Aetna entered into an accounts receivable financ- ing arrangement. As Appellants admit, most if not all of such documents, including notes, security agreements, guaranty agreements and cross collateralization agree- ments, were available to Appellants and inspected by their counsel at least as early as October 6, 1975, being seven months prior to the May 18th hearing on the Trustee’s settlement application. Of greater significance, the uncontroverted evidence in the record reflects that Aetna made wire transfer advances directly to the Bankrupt’s checking account with C & S against receivables pledged to Aetna by the Bankrupt. Readily available records demonstrate that Aetna made such advances directly to the Bankrupt in the amount of at least $519,000.00 during the period of November 30, 1973, through April 11, 1974. (Compare highlighted cash ad- vances appearing on Aetna’s MTD Transaction Summaries (Trustee’s Exhibit “B”] with highlighted deposit entries shown on the Bankrupt’s checking account statements “Appellants themselves seem to be confused about who had the inter- est. In their Brief, they indicate that Ann Roberts held the interest while in their Motion they say Leonard Roberts had the interest. 52 from C & S [Trustee’s Exhibit “C”]). Moreover, Appellants themselves observe that the Bankrupt forwarded to Aetna checks received from the Bankrupt’s account debtors in the approximate amount of $263,657.96. See Affidavit of W. Kent Bishop, attached to Appellants’ Brief, at paragraph 70. There is no evidence that Paneling made any payments to Aetna. The fact of an agreement to advance money to the Bankrupt, together with the fact that substantial ad- vances were actually made to the Bankrupt and payments made to Aetna by the Bankrupt, convincingly demonstrate that the Bankrupt was indebted to Aetna pursuant to the loan agreements. While the loan agreement, which speaks for itself, and the foregoing analysis of the money had and received by the Bankrupt should clearly dispose of Appellants’ conten- tion that Aetna never made a loan to the Bankrupt, Appellants point to the following in their attempt to rebut the clear and convincing evidence of a loan from Aetna to the Bankrupt: a Loan Application Approval form, being an internal document prepared by Aetna to assist in deter- mining the feasibility of an accounts receivable financing arrangement, which indicates Aetna’s initial contempla- tion that Paneling was to be the borrower; the testimony of an officer of Aetna to the effect that only “one loan” was made to the Bankrupt and the Georgia Paneling group; an analysis of invoices, being those presumably pledged to Aetna, which reveals that eighty percent bore Paneling’s name and only twenty percent that of the Bankrupt; and the fact that Aetna’s internal records of the amount of daily pledges, advances and receipts, which are embodied in a document called an “MTD Transaction Summary” (See examples in Trustee’s Exhibit “B”) show that the loan was carried in Paneling’s name. When viewed in context and with the other evidence available in the record, the support Appellants would offer for their contentions is not sufficient to carry their burden of proof, whether such were to be characterized as newly disovered or otherwise. The Court agrees with the Trustee that the loan application approval form cannot be used to demonstrate that no loan existed between Aetna and the Bankrupt as it has no probative value for the purpose of rebutting the uncontradicted evidence that funds were in 53 fact advanced by Aetna to the Bankrupt. Indeed, it is apparent from the testimony of T. R. Locke, the President of the Bankrupt and of Paneling, that about the same time that Aenta was preparing the cited loan application ap- proval, Paneling was transferring assets from its Oak Street location to the. then recently opened warehouse of the Bankrupt. (See Vol. I, Locke Disposition, 5/10/77, pp.8- 11, Trustee’s Exhibit “D”) The record reflects Aetna’s awareness and concern regarding such intercompany transfer of assets as well as its resulting decision to docu- ment the loan in the name of the Bankrupt as well. (See Trustee’s Exhibit “E”, correspondence from Aetna concern- ing the loan documents, dated 6/25/73, addressed to Panel- ing, and the(sic] 7/2/73, addressed to the Bankrupt.) Moreover, a subsequent Loan Application Approval form dated October 16, 1973, which the Appellants do not cite, bears only the name of the Bankrupt as the applicant. Further, on this later application, Paneling is shown only as a guarantor and referred to as a “sales agent” and “shell corporation”. (See Trustee’s Exhibit “E”). A further indica- tion of the true identity of the borrower is the fact that the loan documents dated October 22, 1973, were executed in the wake of the October 16, 1973, loan application evidenc- ing the full awareness by all parties of the changed cir- cumstances of Paneling and the Bankrupt. (See Trustee’s Exhibit “A”). As to said changed circumstances, it should also be noted that at the time of the original loan application, the Bankrupt had not yet begun to function as the wholesaler and “parent” of the Georgia Paneling group. After its establishment at the Mimms Drive Location, which Appel- lants at pages 8 and 9 of their original Motion and in their Brief at page 6 concede took place subsequent to the June loan application form, the Bankrupt operated as the wholesale operation arm of the Georgia Paneling group and made all purchases of supplies, which it consigned to| the other stores in the Georgia Paneling group for sale to the public. See Vol. I, Locke Deposition (5/10/77) at pages 10-14, (Trustee’s Exhibit “D”); Vol. II, Locke Deposition (5/ 11/77) at pages 64-68; Locke Deposition (9/20/74) at pages 7, 11-12 and 40, (Trustee’s Exhibit “G”); First Meeting of Creditors at pages 18-21, 24-26. As Mr. Locke's testimony makes abundantly clear, the Bankrupt owned all of the inventory sold by the Georgia Paneling group of compa- nies. All receivables generated by such retail sales of its inventory were treated as receivables of the Bankrupt which it assigned to Aetna. See also Affidavit of Ann G. Roberts, attached to Appellants’ Brief, at paragraph 23. The money advanced by Aetna against these receivables was advanced to the Bankrupt, which, unlike the retail stores in the group, required funds to replenish its inven- tory and to continue to place the inventory ~» consignment with the retail stores. Mr. Locke unequivocally stated that the retail stores in the Georgia Paneling group owned neither the inventory sold nor the receivables generated from such sales, all of which were owned by the Bankrupt. Because the retail stores actually sold the inventory to the public, it is logical that they would use their own invoices to reflect such sales rather than invoices bearing the name of the Bankrupt. That Aetna fully understood the afore- described operational arrangements of the Paneling group is clearly evidenced by its own interoffice memorandum of October 16, 1973, precisely detailing the same (See Trustee’s Exhibit “H”). Again, it would seem unreasonable, if not inconceivable, that Aetna with full awareness of the facts would make loans to “shell corporations” and “sales agents” as opposed to the Bankrupt. As the Trustee correctly observes, the statement by the Aetna officer to the effect that there was just “one loan” made to the Bankrupt and the Georgia Paneling group must be read in the context within which it was made. Such a reading will certainly suggest he merely meant that since the companies were under common manage- ment, ownership and control and viewed by Aetna in this light, Aetna needed to document the loan in the name of each of the companies, to obtain corporate guaranties from each for the debts of the others, and to perfect security interests in the property of each of the companies. This was felt necessary due to the frequent physical transfer of inventory from the Bankrupt to the retail companies and the fact that most of the Bankrupt’s receivables were generated by sales through the retail companies of inven- tory consigned to them by the Bankrupt. At the same time, Aetna understandably wanted the advances on its “one 55 loan” to the Bankrupt to be handled through one bank account in the name of the Bankrupt. (See Trustee’s Ex- hibits “A”, “E”, “F”, “H”, and “I”, the latter being the deposition of Charles R. White, 5/3/77, containing the referenced statement of an Aetna officer at pages 153-155). As to Appellants’ analysis of the invoices, again refer- ence need only be made to the aforecited testimony of Mr. Locke who indicated that all accounts of the Georgia Paneling group were owned by the Bankrupt and, there- fore, must necessarily have been pledged to Aetna by Bankrupt. Even assuming that each of the invoices re- ferred to by Appellanis was actually pledged to Aetna, there is nothing in the record to indicate their being pleged by anyone other than the Bankrupt, the owner of the accounts receivable evidenced by the invoices. Further, various correspondence to Aetna on the letterhead of the Bankrupt indicates its active authority and responsibility with respect to the pledging of accounts. (See Trustee’s Exhibit “J”). Even assuming that Appellants’ analysis of the various invoices should be taken at face value and without consideration of the circumstances which explain the reason why Paneling invoices were in the Bankrupt’s possession rather than Paneling’s possession, the affidavit attached to Appellants’ First Amendment to their Motion reflects that approximately 20% of the invoices which totalled about $156,833.48 were invoices on the Bankrupt’s letterhead. Appellants would therefore be required to ad- mit, even under their theory of the facts, that Aetna did advance sums of money to the Bankrupt pursuant to an assignment of these invoices and that the Bankrupt was accordingly more than a “mere guarantor” of Paneling’s alleged indebtedness to Aenta. Finally, the appearance of the name of Paneling in the headings of the MTD Transaction Summaries (Trustee’s Exhibit “B”) is at best indication only that Paneling was the name initially placed in a computer to designate the account. The similarity of the corporate names of the Bankrupt and Paneling also could account for the use of “Ga. Paneling Co.” on these Summaries. As noted, the substantive portions of the MTD’s evidence the fact of cash transactions between Aetna and the Bankrupt in a man- ner completely consistent with the clear meaning of the 56 language appearing in the written loan agreements be- tween Aetna and the Bankrupt. (See Trustee’s Exhibits “B” and“C”). In view of the history of the structural changes in the Paneling group, the name in the heading is unper- suasive and insufficient as evidence, if not irrelevant, for the purpose of overcoming the writings, documents and oral testimony of the parties and disproving the existence of the cash advances to the Bankrupt which they clearly demonstate. Appellants have simply failed to offer any rebuttal to the fact that the Bankrupt executed an accounts receivable financing agreement with Aetna, forwarded its invoices as well as those of Paneling to Aetna and received substantial sums by wire transfer advances from Aetna against the invoices thus assigned. From a review of the record, it is clear, contrary to the contentions of Appellants, that a loan and indebtedness existed between Aetna and the Bank- rupt, and that the foreclosure by Aetna on the assets of the Bankrupt was in exercise of its rights under the written agreements evidencing said loan and indebtedness. With regard to Appellants’ contentions that Aetna wrongfully retained the proceeds of insurance paid as a result of the fire at the Forest Park company, the loan agreements show that Aetna was entitled to be the loss payee with respect to any such fire insurance proceeds and that Aetna had a security interest in the inventory of the Bankrupt located at the Forest Park store. (See Trustee’s Exhibit “A”). Even if it were conceded for the purpose of argument that Aetna was not entitled to such proceeds with respect to the equipment, the injured party would be Ann Roberts and not the Bankrupt as Appellants content.[sic]* Further, the proceeds retained by Aetna ac- tually reduced the Bankrupt’s debt to Aetna. Appellants’ argument that the retention of the fire insurance proceeds prevented the rebuilding of the Forest Park store and thereby injured Paneling or the Bankrupt by depriving it *In fact, Appellants concede that Aetna, used a portion of the insurance proceeds to pay off an indebtedness of Ann Roberts to the First National Bank, which had a security interest in the equipment. There is, therefore, some question whether Ann Roberts was injured by Aetna’s actions, even assuming the truth of Appellants’ assertions. 57 of substantial cash flow is too speculative to merit com- ment. Nor is there anything of probative value in the record to demonstrate that this was the case. Aetna did not cause the fire and it was entitled to receive the proceeds of insurance as proceeds of its collateral. Finally, Appellants’ theory that Aetna’s sole motivation in having the January loan documents executed was in order for it to obtain the insurance proceeds is completely implausibl. inasmuch as Aetna was alrea [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_0363%3A2. Public record. Not legal advice.