Opposition Brief — Ideco Division of Dresser Industries, Inc. v. Crocker National Bank

Supreme Court, U.S.

PIL ED

ape §& 1990

JOSEPH F. SPANIOL, JR.

No. 89-1447 | Pisa

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

IDECO DIVISION OF DRESSER INDUSTRIES, INC.,

Petitioner,

V.

CROCKER NATIONAL BANK and

T.O.S. INDUSTRIES, INC.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF IN OPPOSITION

STEPHEN R. KIRKLIN

Counsel of Record

TIM S. LEONARD

Davip Scott CURCIO

KIRKLIN & BOUDREAUX

1100 Louisiana

Suite 1800

Houston, Texas 77002

(713) 757-0000

Attorneys for Respondents

Crocker National Bank and

T.O.S. Industries, Inc.

Alpha Law Brief Co., Inc 8748 Westpark — Houston, Texas 77063 — 789-2000

fm BEST AVAILABLE COPY

ee — ———_ ——

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\

STATEMENT ON “QUESTIONS PRESENTED”

Crocker’ and TOS> are dissatisfied with Ideco’s”

“Questions Presented” and, under S.Ct. Rules 15.2 and

24.2, would state that the Questions do not arise from

the circumstances of this litigation. Specifically, facts were

not “assumed” by the district court, but rather were found

by the court based upon undisputed evidence presented

on cross-motions for summary judgment. Ideco did not

factually rebut the summary judgment evidence of Crocker

and TOS; it merely argued that a different legal conclusion

should be made. The court of appeals, therefore, properly

granted judgment for Crocker based upon established facts

and law. Also, [deco waived its right to a jury.

1. As required by S.Ct. Rule 29.1: Crocker National Bank is

now known as Wells Fargo Bank, N.A. Its parent company is Wells

Fargo & Company; it has no non-wholly owned subsidiaries. Re-

spondent Crocker National Bank is identified as ‘Crocker’ in this

Brief.

2. As required by S.Ct. Rule 29.1: Respondent T.O.S. Industries,

Inc. has no parent companies nor non-wholly owned subsidiaries.

It is identified as “TOS” in this Brief.

3. Petitioner Ideco Division of Dresser Industries, Inc. is identi-

fied as ‘‘Ideco” in this Brief but, for clarification, has been referred

to as “Ideco” or ‘Dresser’ interchangeably in lower court practice.

II

TABLE OF CONTENTS

SAALEMENS ON “QUESTIONS PRESENTED” ......

Reais SPE SARS REIN SS 6 ooh ol veh se enndvesusecteeses

STATEMENT ON JURISDICTION .......ccccccces

CORRECT STATEMENT OF THE CASE .......2005.:

SUMMARY OF ARGUMENTS FOR DISALLOWING

Sg Re nr See earner rrr me eet

PIU Neve acees sos e<50s 45542 se oa sa ey eee

IDECO WAS NOT DEPRIVED OF DUE PROCESS

IDECO WAS NOT DEPRIVED OF A JURY TRIAL

CONCLUSION AND PRAYER ..

CEP PUP EC AE Es CE DERN BE 655 ok cee kien a ewen

APPENDIX A— Complaint in Intervention Filed August

17, 1988 in the District Court ......

APPENDIX Bb -— Corrected Brief for the Appellants [p.

14] in the Fifth Circuit ..............

APPENDIX C — Hearing on Motion for Summary Judg-

ment [p. 39] in the District Court

APPENDIX D Rule 50, Fed. R. Civ. P.. Summary Juds

ment fe ; aie ee 8 ere nes

ws

[)-1

Ill

TABLE OF AUTHORITIES

CASES Page

Allen v. Barnes Hospital, 721 F.2d 643 (8th Cir. 1983) ... 10

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct.

moe we mama 202 (1986) .................0000, 6,7, 8,12

Avia Group International, Inc. v. L.A. Gear California, Inc.

Deeowue moar (mem. Cie, 1968) ...........cccccccese 6,7,9,11

Bass v. Hoagland, 172 F.2d 205 (5th Cir. 1949), cert.

denied, 338 U.S. 816, 70 S.Ct. 57, 94 L.Ed. 494 (1949) 1]

Block v. Meese, 793 F.2d 1303 (D.C. Cir. 1986). cert.

denicd, 478 U.S. 1021, 10. S.Ct. 3335. 92 L.Ed.2d 740

a 6

Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701.

a 9

Casperone v. Landmark Oil & Gas Corp., 819 F.2d 112

A SR 10

Celotex Corp. v. Catrett, 477 U.S. 316, 106 S.Ct. 2548,

I 6,7,8,12

Cline v. Kaplan, 323 U.S. 97, 65 S.Ct. 155, 89 L.Ed. 97

re ne whe erervcevvessscers 10

First Naitonal Bank of Pennsylvania v. Lincoln National

Life Ins. Co., 824 F.2d 277 (3rd Cir. 1987) ........... 9

Gulf Union Industries, Inc. v. Formation Security, Inc., 842

er 7

Hanlon v. Providence College, 615 F.2d 535 (1st Cir. 1980) 11

Hill v. McDermott, Inc., 827 F.2d 1040 (5th Cir. 1987),

cert. denied, 484 U.S. 1075, 108 S.Ct. 1052, 98 L.Ed.2d

ee ra A hve ae ve snvevecesccss 6

Independent Bankers Ass’n v. Heimann, 613 F.2d 1164

(D.C. Cir. 1979), cert. denied, 449 U.S. 823, 101 S.Ct.

er )

In re Muller, 851 F.2d 916 (7th Cir. 1988), cert. denied

sub nom., Rogers v. First National Bank, U.s.

109 S.Ct. 1645, 104 L.Ed.2d 160 (1989) ............ 12

Joyner v. Dumpson, 712 F.2d 770 (2nd Cir. 1983) ...... )

Matsushita Electric Ind. Co. v. Zenith Radio Corp., 475

U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) .... 7

Morrison v. Murray Biscuit Co., 797 F.2d 1430 (7th Cir.

ee Sug ese wes s es ees veces 1]

Reid v. Evan, 765 F.2d 1457 (9th Cir. 1985) ........... 9

Royal American Managers, Inc. v. 1RC Holding Corp., 885

EE) 1¢

Shaw v. Federal Bureau of Investigation, 749 F.2d 58

A 10

IV

Page

‘ASES

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RI

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]

CORRECT CITATION OF OPINION BELOW

Ideco incorrectly cited the most recent Fifth Circuit

opinion in this matter as 889 F.2d 1432. The correct cite

is 889 F.2d 1452.

STATEMENT ON JURISDICTION

Ideco cited to 28 U.S.C. § 1241(1) as the basis for

this Court’s jurisdiction. As no such statute exists, Ideco

has failed to plead a basis for Supreme Court jurisdiction.

CORRECT STATEMENT OF THE CASE

Ideco has omitted some facts and misstated others

which have a bearing on the question of what issues

would properly be before the Court if certiorari were

granted. This case involves a summary judgment on

liability in an eight-year old dispute under Texas com-

mercial law. The dispute concerns an unpaid seller of

goods (Ideco) and a buyer’s lender (Crocker) with a

perfected security interest in goods delivered to the buyer

(TOS).

| Contrary to Ideco’s assertions, the thirteen engines for

| which the court of appeals allowed Crocker to recover

| were always a subject of this litigation. Crocker’s Original

| Complaint (Pet. App. G) sought recovery for certain

| listed items as well as “other collateral” taken from TOS

by Ideco. TOS, in its Complaint in Intervention (App.

A hereto) specifically listed and identified the thirteen

engines which are the subject of this litigation. The en-

gines were again specifically identified in Crocker and

TOS’ Amended Complaint (Pet. App. H). These identical

engines were the subject of the first appeal. (See App. B

a

2

hereto). The Brief (App. p. B-2 hereto) referenced certain

exhibits which listed the thirteen engines and described

them by the same serial numbers as the Complaint in

Intervention (App. A hereto) and the Amended Com-

plaint (Pet App. H). Furthermore, the judgments of the

district court and the court of appeals were based on the

live pleadings and motions of Crocker and TOS and all

related to the specifically identified thirteen engines. There

is nothing in either opinion to sug

ggest otherwise.

In response to both the first and second Motions for

Summary Judgment filed by Crocker and TOS, Ideco

chose not to controvert the evidence, including invoices

and affidavits. This evidence included documents gener-

ated by Ideco itself. It was also undisputed that the engines

were in fact (and not “apparently”) delivered to a storage

yard shared by TOS and Continental Drilling Company

(“Continental”), an affiliate of TOS. The evidence conclu-

sively established a relinquishment of possession by Ideco,

but not by TOS. Thus, the district court’s finding (Pet. App.

p. B-3; 702 F.Supp. at 616), used by the court of appeals,

of a sale to TOS, but not one by TOS, was apparent from

the record. Furthermore, Crocker never admitted that a

completed sale to Continental from TOS took place and,

in any event, it was undisputed that Crocker never

authorized the sale.

As the Fifth Circuit stated, “Ideco’s contract was with

TOS and it sent its invoices to TOS. TOS stored its

inventory at the Owentown facility. When the engines

were returned, TOS, not Continental, received the credit

memoranda and the release. We are thus persuaded TOS,

not Continental returned them.” (Pet. App. p. A-5; 889

F.2d at 1453). It went on to note, again based on un-

3

controverted evidence, that “[t]he engines were delivered

to TOS at Owentown and they were never moved.

Continental never paid for them . . . But TOS transferred

the engines back to Ideco.” (Pet. App. p. A-6; 889 F.2d

at 1454),

The district court’s findings are not “assumed”; they

are stated as found facts. For example, the district court

found, from the uncontroverted summary judgment evi-

dence, that “Ideco is the unpaid seller of the engines sold

to TOS,” that Ideco shipped the engines to a storage

facility used by TOS and Continental, and that Ideco

issued credit memoranda to, and executed a mutual re-

lease with, TOS. (Pet. App. p. B-3; 702 F.Supp. at 616,

emphasis added). Ideco never complained of any facts,

other than the value of the engines, found by the district

court in its cross-appeal before the Fifth Circuit.

The Fifth Circuit noted in its first opinion (Pet. App.

p. C-4; 839 F.2d at 1106), from which Ideco did not

attempt an appeal, that “[{i]n this case, the relevant facts

are not disputed but the parties reach different legal

conclusions on those facts.” The case was remanded in

that opinion for further development of the record con-

cerning the relationship of Continental to TOS and Ideco.

(Pet. App. p. C-4; 839 F.2d at 1109). The Fifth Circuit

stated that “the crucial issue between the Seller [Ideco]

and the Bank [Crocker] relates to whether or not the

Seller retained a possessory interest in the goods.” (Pet.

App. p. C-12; 839 F.2d at 1109-1110).

On remand, undisputed evidence was presented show-

ing that Continental was an affiliate of TOS and had no

relationship with Ideco other than being the party to

4

which Ideco, in its wrongful exercise of control, ulti-

mately sold the engines. Ideco admitted the fact of delivery

of the engines on remand, on appeal and in oral argument

before the Fifth Circuit, Ideco asserts that there was no

evidence of its conversion; however, the record included

invoices from Ideco evidencing the sale, and wrongful

conversion thereby, of the engines from Ideco to Con-

tinental Drilling Company after Crocker’s interest had

attached. Its one remaining question having been an-

swered, the Fifth Circuit rendered judgment for Crocker

(App. p. A-2-3, 6; 889 F.2d at 1452, 1454) based upon

the undisputed facts in the record before it. The Fifth

Circuit did not conduct “a broad factual review” as

postulated by Ideco, but rather rendered the judgment

which the district court should have entered on the cross-

motions for summary judgment.

‘“ This case was presented to the district court for sum-

mary disposition by both parties. The evidence was fully

developed through substantial written discovery and depo-

sitions. The facts, other than the value of the engines

at the time of conversion, were not disputed. All that

remained was for the court to apply the proper law and

render judgment. The district court did so erroneously.

Also, after an explicit waiver of a jury by Ideco (App. C

hereto),’ the district court made a factual determination

as to the value of the engines based on live testimony of

experts from both sides. In its opinion (Pet. App. p.

B-5; 702 F.Supp. at 617), the district court expressly

stated that it was making the finding “to obviate another

4. A review of the referenced transcript will demonstrate that it

was counsel for Ideco who made sure that the record was clear that

it was waiving a jury.

5

remand.” The holding of the district court that an unpaid

seller which delivered goods to the inventory of a buyer

had priority over a perfected secured creditor in the

inventory of the buyer was properly reversed by the

Fifth Circuit based on undisputed facts and well-estab-

lished principles of law.

Thus, the district court did not “assume” facts, the

court of appeals did not “find” facts and the Questions

raised by Ideco in its Petition are not presented by this

litigation. Both the district court and the court of appeals

agreed that no further fact finding was necessary and

that a summary disposition of the litigation was proper.

They simply disagreed on what result the law required

on those facts.

SUMMARY OF ARGUMENTS FOR

DISALLOWING THE WRIT

Nothing presented in Ideco’s Petition merits review by

this Court. For example, Ideco seeks to raise complaints

concerning the Amended Complaint of Crocker and TOS

for the first time before this Court, despite the fact it

never complained in any lower court. Ideco, Crocker and

TOS presented the case for summary disposition and the

proper, and seemingly final, result was a judgment for

Crocker. The Fifth Circuit did not deprive Ideco of due

process nor of its right to a jury. A review on writ of

certiorari is not a matter of right, but of judicial discre-

tion. S.Ct.R. 10. None of the circumstances outlined by

Rule 10.1 exist in this case and there is no need for

this Court to exercise its discretion.

6

ARGUMENT

IDECO WAS NOT DEPRIVED OF DUE PROCESS

Summary judgment is proper if “the pleadings, deposi-

tions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.”

Rule 56(c), Fed. R. Civ. P.; Celotex Corp. v. Catrett,

477 U.S. 316, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d

265 (1986). “The inquiry performed is the threshold

inquiry of determining whether there is the need for a

trial—whether, in other words, there are any genuine

factual issues that properly can be resolved only by a

finder of fact because they may reasonably be resolved

in favor of either party.” Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.

2d 202 (1986).

“Ample due process safeguards are available in the

summary judgment procedures of Rule 56.” Avia Group

international, Inc. v. L.A. Gear California, Inc., 853 F.2d

1557, 1560 (Fed. Cir. 1988). “A summary judgment

reached in accordance with Federal Rule of Civil Pro-

cedure 56... satisfies the requirements of due process.”

Hill v. McDermott, Inc., 827 F.2d 1040, 1044 (Sth Cir.

1987), cert. denied, 484 U.S. 1075, 108 S.Ct. 1052,

98 L.Ed.2d 1014 (1988). On appeal from cross-motions

for summary judgment. a court of appeals may reverse

the summary judgment granted by the district court and

render the judgment sought by the opposing party. Block

v. Meese, 793 F.2d 1303, 1309 (D.C. Cir. 1986), cert.

denied, 478 U.S. 1021, 106 S.Ct. 3335, 92 L.Ed.2d 740

(1986).

7

In response to a motion for summary judgment, the

opposing party should marshall the evidence allowed

under Rule 56(c), Fed. R. Civ. P., and demonstrate the

existence of a genuine issue of material fact. Rule 56,

Fed. R. Civ. P.; Anderson, 477 U.S. at 248-249, 106

S.Ct. at 2510. The adverse party “must set forth specific

facts showing that there is a genuine issue for trial.” /d.;

Matsushita Electric Ind. Co. v. Zenith Radio Corp., 475

U.S. 574, 586-587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d

538 (1986). if the adverse party believes the motion is

premature and that further discovery is needed to develop

evidence, Rule 56(f), Fed. R. Civ. P., provides a remedy.

Celotex, 477 U.S. at 326, 106 S.Ct. at 2554. Thus, the

time for Ideco to raise any factual issues or to complain

of the need for more fact finding has long since passed.

Avia Group, 853 F.2d at 1561.

All evidence and all issues were presented to the district

court by the cross-motions for summary judgment. Ideco

now seeks to raise complaints about evidence and issues

before this Court which it failed to raise before the judg-

ment was rendered for Crocker. All such arguments have

been waived. Gulf Union Industries, Inc. v. Formation

Security, Inc., 842 F.2d 762, 765 (Sth Cir. 1988).

Generally, this Court will not decide questions not raised

or resolved in the lower court. Youakim v. Miller, 425

U.S. 231, 234, 96 S.Ct. 1399, 1401, 47 L.Ed.2d 701

(1976).

For example, Ideco now raises the issue that a sale

of the engines from TOS (but, apparently, somehow not

from its inventory) to Continental occurred.” However.

5. Crocker and TOS never “admitted” in their pl

8

it is undisputed that even if a sale occurred (and there

was evidence. which Ideco chose not to controvert, that

it did not), it was never disputed that Crocker did not

approve of the sale as would be required for its security

interest to become unperfected under the security agree-

ment and Texas law. Furthermore, it was admitted by

Ideco that it delivered the engines and, therefore, lost

the perfection of its possessory security interest. Similarly,

the issues regarding the status of the engines as inventory

and the wrongful exercise of dominion and control by

Ideco over the engines were presented, argued and briefed

before the district court and the Fifth Circuit. A Petition

for Writ of Certiorari should not be used to reopen

litigation resolved by courts closer to, and more familiar

with, the facts and state law involved. See, Celotex, 477

U.S.. at 327,-106 S.Ct. at 2555.

Ideco also contends that it “always denied the forma-

tion of a contract for the sale of the engines” from it to

TOS. However, it produced no evidence to factually rebut

the invoices and affidavits demonstrating the sale and

instead relied on its pleadings without explanation for

the basis of its denial. This is not sufficient to defeat a

summary judgment. Anderson, 477 U.S. at 248-249, 106

S.Ct. at 2510. Similarly, Ideco’s claims that it always

contested the issue of whether Crocker’s security interest

extended to the engines is based on its pleadings as it

did not controvert Crocker’s evidence and arguments on

that issue. It did not plead or offer evidence or argument

of ambiguity with respect to the language of the security

agreement or the notices filed pursuant to the UCC,

A litigant is not deprived of a trial upon grant of a

summary judgment “where the evidence of record at the

9

time of the motion supports its opponent on all key

issues and the nonmovant fails to put in sufficient evidence

to create a triable issue of any material fact.” Avia Group,

853 F.2d at 1561. Where a full record, devoid of disputed

material issues of fact, exists and where relevant legal

issues have been fully briefed and argued, a court of

appeals, in a case involving cross-motions for summary

judgment, can properly deny the summary judgment

granted by the district court and grant the opposing

motion. Independent Bankers Ass'n v. Heimann, 613 F.2d

1164, 1167 (D.C. Cir. 1979), cert. denied, 449 USS.

823, 101 S.Ct. 84, 66 L.Ed.2d 26 (1980). “An appellate

court may remand with directions to enter summary

judgment on appeilant’s unsuccessful cross-motion for

summary judgment where there is no dispute as to the

facts which would justify judgment for the appellant.”

First National Bank of Pennsylvania v. Lincoln National

Life Ins. Co., 824 F.2d 277, 281 (3rd Cir. 1987). The

foregoing authorities are precisely on point. The Fifth

Circuit was presented with a simple commercial law

dispute raised on cross-motions for summary judgment

where all parties had notice and a full opportunity to

present evidence and it properly reversed the judgment

for Ideco and granted judgment for Crocker. See, Id.;

Joyner v. Dumpson, 712 F.2d 770, 776 (2nd Cir. 1983).

Ideco was also clearly not deprived of procedural due

process. “Procedural due process requires only adequate

notice and an opportunity to be heard. See generally,

Board of Regents v. Roth, 408 U.S. 564, 569-70 & n. 7.

92 S.Ct. 2701, 2705 & n. 7, 33 L.Ed.2d 548 (1972).”

Reid v. Egan, 765 F.2d 1457, 1463 (9th Cir. 1985).

ideco has not complained of any lack of notice or

10

opportunity to be heard on Crocker’s motion for summary

judgment. That, in the arrogance of its position, it might

not have taken full advantage of that opportunity is no

basis for seeking relief from the Supreme Court of the

United States.

It is important to note that even if the Fifth Circuit

had decided factual issues, it would have been acting

well within its authority. Any findings made were sup-

ported by undisputed evidence on issues which had been

briefed and argued. Therefore, any findings were proper.

Shaw v. Federal Bureau ef Investigation, 749 F.2d 58,

63 (D.C. Cir. 1984); Talley v. U.S. Postal Service, 720

F.2d 505, 508 (8th Cir. 1983), cert. denied, 466 US.

952, 104 S.Ct. 2155, 80 L.Ed.2d 541 (1984).

IDECO WAS NOT DEPRIVED OF A JURY TRIAL

The right to a jury trial can be waived. U.S. v. Moore,

340 US. 616, G21, 71 S.Ct. 524, 527, 95 L.Ed. 582

(1951); Cline v. Kaplan, 323 U.S. 97, 99, 65 S.Ct. 155,

156, 89 L.Ed. 97 (1944). For example, participation in

a bench trial constitutes a waiver. Royal American Mana-

gers, Inc. v. IRC Holding Corp., 885 F.2d 1011, 1019

(2nd Cir. 1989): U.S. v. 1966 Beechcraft Aircraft, 777

F.2d 947, 950 (4th Cir. 1985). Similarly, failure to

object to a bench trial amounts to a waiver. Casperone

v. Landmark Oil & Gas Corp., 819 F.2d 112, 116 (Sth

Cir. 1987); Allen v. Barnes Hospital, 721 F.2d 643, 644

(8th Cir. 1983).

Ideco makes the convoluted argument that because it

claims some fact issues exist which somehow bar a sum-

mary judgment for Crocker, but not for Ideco, that the

granting of summary judgment for Crocker tread upon

a aes |

1]

its right to a jury. However, a summary judgment pro-

cedure does not amount to denial of a right to trial.

Avia Group, 853 F.2d at 1561. Ideco itself moved for

summary judgment. The district court granted that motion

and determined that a summary disposition of the entire

Case was proper since it determined, after a bench trial,

the one genuine issue of material fact which could possibly

prevent a summary judgment for Crocker. The Fifth

Circuit also determined that a summary disposition was

proper based upon the cross-motions and the history of

the litigation.

Furthermore, Ideco waived its right to a jury trial.

“The right to a jury trial . . . may be waived, and in a

civil case a waiver is shown by mere acquiescence, when

a party or his counsel is present and not objecting.” Bass

v. Hoagland, 172 F.2d 205, 209 (Sth Cir. 1949), cert.

denied, 338 U.S. 816, 70 S.Ct. 57, 94 L.Ed. 494 (1949).

At the final hearing before the district court on the

motions for summary judgment, the court indicated that

it would proceed with a summary disposition of the case

and liquidate the value of the engines. Counsel for Ideco

pointed out that “one or both” parties had demanded a

jury and that he wanted to make sure that the record

was clear. (App. C hereto). The court then stated, “I’m

not a jury. I'm going to decide that issue. Hearing no

objection, everything is all right, all right. Thank you,

counsel.” (App C hereto, emphasis added). Once a party

has withdrawn his demand for a jury trial, even at the

strong suggestion of the trial judge, he may not change

his mind. Hanlon v. Providence College, 615 F.2d 535,

538-539 (Ist Cir. 1980): see also, Morrison y. Vurray

Biscuit Co., 797 F.2d 1430, 1432 (7th Cir. 1986). A

12

first complaint about a bench trial comes too late on or

after an appeal. /n re Muller, 851 F.2d 916, 920 (7th

Cir. 1988), cert. denied sub nom., Rogers v. First Na-

tional Bank, ___U.S.____, 109 S.Ct. 1645, 104 L.Ed.

2d 160 (1989).

CONCLUSION AND PRAYER

Ideco, Crocker and TOS twice presented this case to

the district court for summary disposition based upon

voluminous written discovery. depositions and affidavits.

Twice the parties fully briefed and argued the issues to

the district court and court of appeals. The Fifth Circuit

resolved the ancient litigation based upon a completely

developed record, undisputed facts and cross-motions for

summary judgment. It is now too late for Ideco to reopen

this litigation and raise issues it chose not to raise in

response to a motion for summary judgment. This con-

version case involving the commercial law of the State

of Texas was properly resolved on cross-motions for

Summary judgment and no issue involved rises to the

constitutional level suggesting intervention by this Court.

Ideco’s attempt to create such an issue is contrived. Even

if the Court desired to limit the scope of Celotex and

Anderson and restrict summary judgment practice, as

Ideco invites, this litigation does not present any cir-

cumstances for doing so. Therefore, Crocker and TOS

~—

we)

respectfully pray that Ideco’s Petition for Writ of Certio-

rari be in all things denied.

STEPHEN R. KIRKLIN

Counsel of Record

1100 Louisiana

Suite 1800

Houston, Texas 7700

eioge A

757-0000

Of ( ounsel.

TIM S. LEONARD

Davip Scott CuURCIO

KIRKLIN & BOUDREAUX

1100 Louisiana

Suite 1800

Houston. Texas

(713) 757-0000

T7T(0( ))

14

CERTIFICATE OF SERVICE

In accordance with S.Ct. Rules 15.2 and 29.3, I hereby

certify that three true and correct copies of the foregoing

Brief have been forwarded to:

Robert Hayden Burns

James R. O'Donnell

Kevin Risley

Jeannette McAllister

Butler & Binion

1600 First Interstate Bank Plaza

Houston, Texas 77002

by first class United States certified mail, return receipt

requested, this the day of April, 1990. As required

by S.Ct. Rule 29.5, a separate Proof of Service is being

filed herewith.

STEPHEN R. KIRKLIN

A-1

APPENDIX A

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CIVIL ACTION NO. H-83-2988

CROCKER NATIONAL BANK, and

T.O.S. INDUSTRIES, INC. d/b/a

TEXAS OILFIELD SUPPLY,

Debtor in Possession,

Plaintiffs

V.

IDECO DIVISION OF DRESSER INDUSTRIES. INC..

Defendant

(Filed August 17, 1988)

COMPLAINT IN INTERVENTION

COMES NOW, T.O.S. INDUSTRIES, INC. d/b/a

TEXAS OILFIELD SUPPLY, a Texas corporation,

debtor in possession in Chapter 11 reorganization pro-

ceedings presently pending in the United States Bank-

ruptcy Court, Southern District of Texas, Houston Divi-

sion, under Case No. 82-02295-H2-5, as Plaintiff, com-

plaining of the IDECO Division of Dresser Industries,

Inc. (“DRESSER”), Defendant, and in support of this

Complaint in Intervention states the following:

I.

Jurisdiction in this Civil Action is based on 28 U.S.C.

S$ 1331, and 11 U.S.C. $$ 547, 549. The matter in con-

A-2

troversy, exclusive of interest and costs, exceeds the sum

of $10.000.00 (Ten Thousand Dollars) and arises under

the laws of the United States.

I.

On August 10, 1982, T.O.S. Industries. Inc. d/b/a

Texas Oilfield Supply (“TOS”). filed a petition under

Chapter 11 of Title 11 of the United States Code. Since

such filing TOS has acted, and now acts, as debtor in

possession, with all the rights and powers of a trustee

appointed under Title 11 of the United States Code.

Il.

DRESSER, from time to time has sold goods to TOS,

including drilling rigs and related accessory products.

Such eoods were sold to TOS for resale by TOS or to

be held by TOS for sale or lease to its customers. TOS

became heavily indebted to DRESSER in amounts which

apparently exceeded $10,000,000.00.

IV.

DRESSER made arrangements with TOS for the col-

lection of the indebtedness owed by TOS to DRESSER.

Pursuant to these arrangements, on or about July 12.

1982, in cancellation of indebtedness owed by TOS to

DRESSER, TOS transferred drilling rigs and related ac-

cessory products (“the Goods”) to DRESSER out of the

TOS inventory. Such TOS transfers to DRESSER on or

5

about July 12, 1982, included the following:

a) TOS transferred to DRESSER rig components and

accessory products under Sales Return No. DI,

(b)

A-3

BO091 through D1/B0091-6. The componsents are

described and have serial numbers as follows:

SCR System

UTB-360-5-42 Block 370

LR-275 Rotary 683

TL-300 Swivel 280

2 Caterpillar D-398 Power Units 35Z01139

35Z01140

1 Caterpillar D-379 Power Unit 34Z008 64

ED-1200 Hoist 227

Dretech Model 3550 Brake 8116

2 GE-752 Electric Motors 7544015

7544168

TOS was issued a credit memorandum for return

of the components in the total amount of One Mil-

lion, Four Hundred One Thousand, One Hundred

Sixteen and No/100 Dollars ($1,401,116.00).

TOS transferred to DRESSER rig components and

accessory products described under Sales Return No.

D1/B0128 through D1/B0O128-7. The components

are described and have serial numbers as follows:

| Foster Model 24-AH Breakout 1876

Cathead

| Foster Model 37-AH Spinning 1555

Cathead

LR-275 Rotary 581

| Caterpillar D-399 Power Unit 36Z01204

1 Caterpillar D-398 Power Unit 35Z01143

Caterpillar D-379 Power Unit 34Z00866

SCR System

E-1700 Hoist MM245

Dretech Model 5250 Brake 8086

2 GE-752 Electric Motors 7543866

7544055

(Cc)

A-4

L-400 Swivel

JTB-525-6-50 Block

T-1300 Pumps

T-1300 Pump Drives

GE-752 Electric Motors

BMmNI CS

181

630

199, 204

967, 968

7543852

7543881

7544122

7543916

TOS was issued a credit memorandum for the return

of the above referenced components in the amount

of Two Million, Three Hundred Thirty-One Thou-

sand, Three Hundred Twelve and No/100 Dollars

($2.331,312.00).

TOS transferred to DRESSER rig components and

accessory products described in Sales Return No

D1/BO0093 through D1I/BOO93-5,

The components

are described and have serial numbers as tollows:

UTB-360-5-42 Block

2 Caterpillar D-398 Power Units

| Caterpillar D-379 Power Unit

SCR System

LR-275 Rotary

TL-300 Swivel

ED-1200 Hoist

Dretech Model 3550 Brake

2 GE-752 Electric Motors

| Foster Model 37-AH Spinning

Cathead

1 Foster Model 24-AH Breakout

Cathead

369

35Z01141

35Z01142

34Z00865

619

287

229

SOS 7

7544117

7544090

1574

1960

TOS was issued a credit memorandum for return of

the above referenced components in the total amount

of One Million, Four Hundred Seven Thousand, One

A-5

Hundred Ninety and No/100 Dollars ($1,407,190.-

OO).

(d) TOS transferred to DRESSER rig components and

accessory products described in Sales Return No.

D1/B0094 through D1/B0094-5. The components

are described and have serial numbers as follows:

UTB-360-5-42 Block 371

SCR System ~-

2 Caterpillar D-398 Power Units 35Z01223

35Z01227

| Foster Model 37-AH Spinning 1407

Cathead

1 Foster Model 24-AH Breakout 2122

Cathead

1 Caterpillar D-379 Power Unit 34Z00938

TL-300 Swivel 289

ED-1200 Hoist 230

Dretech Model 3550 Brake 8139

2 GE-752 Electric Motors 7544088

7544099

TOS was issued a credit memorandum for the return

of the above referenced components in the total

amount of One Million, Three Hundred Thirty-

Three Thousand, Eight Hundred Ninety-Eight and

No/100 ($1,333,898.00).

(ec) TOS transferred to DRESSER rig components and

accessory products described in Sales Return No.

D1/B0096 through D1I/BO0096-6. The components

are described and have serial numbers as follows:

UTB-360-5-42 Block 219

SCR System —-

LR-275 Rotary 634

TL-300 Swivel 292

2 T-1000 Pumps MI-269

JS-192

eee tacie nelle

(f)

A-6

Pump Gages, Valves, Puls. Damp. _

Pullers

2 T-1000 Pump Drives 923, 924

2 GE-752 Electric Motors _

2 Caterpillar D-398 Power Units 35Z01322

35Z01323

1 Caterpillar D-379 Power Unit 34Z00939

TOS was issued a credit memorandum for the return

of the above referenced components in the total

amount of One Million, Five Hundred Fifty-Four

Thousand, Five Hundred Fifty-Six and No/100 Dol-

lars ($1,554,556.00).

TOS transferred to DRESSER rig components and

accessory products described in Sales Return No.

D1/B0130 through D1/BO130-4. The components

are described and have serial numbers as follows:

SCR System

LR-275 Rotary 624

TL-400 Swivel 190

1 Foster Model 37-AH Spinning 1414

Cathead

! Foster Model 24-AH Breakout 1872

Cathead

1 Caterpillar D-399 Power Unit 36Z01497

1 Caterpillar D-398 Power Unit 35Z01324

Caterpillar D-379 Power Unit 34Z0094 |

E-1700 Hoist MM-249

Dretech Model 5250 Brake 8109

2 GE-752 Electric Motors 7544005

7540123

TOS was issued a credit memorandum for the return

of the above referenced components in the total

amount of One Million, Four Hundred Thirty-Five

Thousand, One Hundred Ninety and No/100 Dol-

lars ($1,435,190.00).

A-7

(g) TOS transferred to DRESSER Caterpillar Packaged

Electric Sets described in Sales Return Nos. DI/

A0644-8, D1/A0645-8, D1/A0642-7 and D1/A06

43-8. The components are described and have serial

numbers as follows:

Caterpillar D-399 Packaged

Electric Set

Cat D-399 Engine

KATO Generator

O & M Radiator

Caterpillar D-398 Packaged

Electric Set

Cat D-398 Engine

KATO Generator

O & M Radiator

Caterpillar D-379 Packaged

Electric Set

Cat D-379 Engine

KATO Generator

O & M Radiator

Caterpillar D-399 Packaged

Electric Set

Cat D-399 Engine

KATO Generator

O & M Radiator

Caterpillar D-399 Packaged

Electric Set

Cat D-399 Engine

KATO Generator

O & M Radiator

Caterpillar D-398 Packaged

Electric Set

Cat D-398 Engine

KATO Gen

UO & \1 Radiato

35B06578

84425-4

130-263

66B09262

§4426-10

129-19]

34Z00784

§4426-19

| 29-23]

A-8

Caterpillar D-379 Packaged

Electric Set

Cat D-379 Engine

KATO Gener:.tor

O & M Radiator

Caterpillar D-398 Packaged

Electric Set

Cat D-398 Engine

KATO Generator

O & M Radiator

Caterpillar D-398 Packaged

Electric Set

Cat D-398 Engine

KATO Generator

O & M Radiator

Caterpillar D-379 Packaged

Electric Set

Cat D-379 Engine

KATO Generator

O & M Radiator

Caterpillar D-398 Packaged

Electric Sets

Cat D-398 Engine

KATO Generator

O & M Radiator

Caterpillar D-398 Packaged

Electric Sets

Cat D-398 Engine

KATO Generator

O & M Radiator

Caterpillar D-379 Packaged

Electric Sets

Cat D-379 Engine

KATO Generator

O & M Radiator

34Z786

84426-12

129-232

66B9230

84426-16

129-005

66B9271

84426-17

129-008

342774

84426-18

128-973

66B9272

8§4426-2

129-007

66B9273

§$4426-3

129-006

34Z783

§4426-20

128-972

A-9

TOS was issued credit memoranda for the return of

the above referenced components in the total amount

of One Million, Seven Hundred and Eight Thousand,

One Hundred and Twenty-Seven and No/100 Dol-

lars ($1,708,127.00).

V.

TOS, as debtor in possession, has not determined all

the details or the extent of the arrangements DRESSER

made with TOS for collection of its claims against TOS,

but these details are well known to DRESSER and will

be discovered by Crocker National Bank, the original

plaintiff in this Civil Action.

AVOIDANCE OF PREFERENTIAL TRANSFER

TOS, as debtor in possession, is entitled to recover

from DRESSER all of the goods transferred to DRESSER

out of the TOS inventory. Such transfers were made to

DRESSER as a creditor of TOS, for or on account of

antecedent debt owed by TOS before such transfers were

made, while TOS was insolvent, made on or within 90

days before the date of the filing by TOS of its petition

ider Title 11 of the United States Code, the effect of

h transfer enabling DRESSER to receive more than

| receive if, in a case under Chapter 7 of Title 11

United States Code the transfer had not been

nd DRESSER had received payment of its debt

xtent provided by the provisions of Title 11 of

United States Code. Accordingly, TOS as debtor in

void, and hereby seeks avoidance of such

the provisions of 11 USC §547(b).

A-10

DETERMINATION OF SECURITY INTEREST

Any retention or reservation by DRESSER of title to

the goods was to secure payment or performance of TOS’s

indebtedness to DRESSER. As a matter of law, the only

interest of DRESSER in the goods is a security interest

that is not perfected as required by law and is not en-

forceable against TOS as debtor in possession pursuant

to the provisions of 11 USC § 544, 1107. TOS, as debtor

in possession, is entitled to a determination and judgment

that its powers and rights to the goods transferred are,

pursuant to Title 11, first, prior and superior to any

claims held by DRESSER to the goods.

TOS, as debtor in possession, has not yet asserted, but

may later assert, other claims against DRESSER, includ-

ing but not limited to, claims for the value of the goods.

TOS, as debtor in possession, therefore reserves its right

to amend this Complaint after it has discovered what

DRESSER has done with the goods,

WHEREFORE, PREMISES CONSIDERED, Plaintiff,

TOS Industries, Inc., d/b/a Texas Oilfield Supply, as

debtor in possession, prays that upon trial the Plaintiff

have judgment for recovery of all of the goods in the

possession of the defendant, the IDECO Division of

Dresser Industries, Inc., for the value of any of the goods

converted to the use or benefit of the IDECO Division

of Dresser Industries, Inc., and a declaration by this

Court that the claim of TOS, as debtor in possession,

to the goods is first, prior and superior to any claim of

the IDECO Division of Dresser Industries, Inc. and for

such other and further relief, general and special, at law

A-11

or in equity, to which Plaintiff may show itself justly

entitled.

Respectfully submitted,

/S/ FRANK R. MONROE

Frank R. Monroe

Attorney in Charge

Miriam Kass

Sheinfeld, Maley & Kay

3700 First City Tower

Houston, Texas 77002

(713) 658-8881

OF COUNSEL:

Sheinfeld, Maley & Kay

3700 First City Tower

Houston, Texas 77002

(713) 658-8881

B-1

APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

NO. 87-2634

CROCKER NATIONAL BANK n/k/a

WELLS FARGO BANK and

T.O.S. INDUSTRIES, INC.,

Appellants,

Vv.

{DECO DIVISION OF DRESSER INDUSTRIES, INC.,

Appellee.

Appeal from the United States District Court

for the Southern District of Texas

CORRECTED BRIEF FOR THE APPELLANTS

TIM S. LEONARD

ANN SPIEGEL

KIRKLIN, BOUDREAUX

& JOSEPH

1800 InterFirst Plaza

Houston, Texas 77002

(713) 757-0000

Attorneys for Appellants

Crocker National Bank n/k/a

Wells Fargo Bank and

T.O.S. Industries, Inc.

B-2

[14]

merely as bailee for TOS, did not hold a perfected security

interest in the goods. Ideco is only the holder of an un-

perfected security interest which is inferior to the interest

of Crocker, a secured creditor with a perfected security

interest in the rigs and is also inferior to Crocker as good

faith purchaser for value. Further, Ideco’s alleged per-

fected purchase money security interest in the rigs would

be subordinate to Crocker’s perfected security interest

since Ideco failed to give Crocker the notification required

by § 9.312(c) prior to TOS’ constructive possession of

the goods. With regard to the control units and engines,

Ideco clearly did not have a perfected security interest in

these goods since Ideco did not have possession of these

goods. The control units were manufactured and remained

at the Ross Hill Company and never were in Ideco’s pos-

session. Ideco transferred possession of the engines to

TOS care of a third party by shipping the engines to

Continental Drilling Company. (Vol. 1, p. 24: Exhibits

1, 2, 3, and 4 to Deposition of Bradford). Thus, Crocker’s

prior perfected security interest in the control units and

engines is unquestionably superior to Ideco’s unperfected

security interest in these goods.

C. Case Law Applicable To Legal Questions Raised.

In Inierfirst Bank of Abilene v. Lull Manufacturing,

778 F.2d 228, 229 (Sth Cir. 1985), this Court was faced

with the issue of whether a Bank’s perfected security in-

terest in the after-acquired property of the purchaser at-

tached to a forklift upon delivery and thereby rendered

the Bank’s interest

C-1

APPENDIX C

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CIVIL ACTION NO. H-83-2988

CROCKER NATIONAL BANK

v.

IDECO DIVISION OF DRESSER INDUSTRIES, INC.

OCTOBER 24, 1988

4:10 P.M.

HEARING ON MOTION FOR SUMMARY JUDGMENT

BEFORE THE HONORABLE LYNN HUGHES

APPEARANCES:

For the Plaintiff:

Mr. Charles Kirklin

Mr. Tim Leonard

Mr. Bob Ward

For the Defendant:

Mr. James R. O’Donnell

Court Reporter

Linda D. Williams

Proceedings recorded by mechanical stenography,

transcript produced by note reading.

C-2

[39]

MR. O'DONNELL: I don’t think it is probably the

thing to do. I think it is—I don’t know what the law is

on this. I think one or both of us demanded a jury. If

we are going to decide that issue without a jury, I think

we ought to be explicit about it.

THE COURT: I'm not a jury. I'm going to decide

that issue. Hearing no objection, everything is all right,

All right. Thank you, counsel.

MR. KIRKLIN: Thank you, Judge. Appreciate it.

(Proceedings concluded at 5:07 p.m.)

D-1

APPENDIX D

RULE 56, FED. R. CIV. P.

Rule 56. Summary Judgment

(a} For Claimant. A party seeking to recover upon a

claim, counterclaim, or cross-claim or to obtain a declara-

tory judgment may, at any time after the expiration of

20 days from the commencement of the action or after

service of a motion for summary judgment by the adverse

party, move with or without supporting affidavits for a

summary judgment in the party's favor upon all or any

part thereof.

(b) For Defending Party. A party against whom a

claim, counterclaim, or cross-claim is asserted or a de-

claratory judgment is sought may, at any time, move with

or without supporting affidavits for a summary judgment

in the party’s favor as to all or any part thereof.

(c) Motion and Proceedings Thereon. The motion

shall be served at J:ast 10 days before the time fixed for

the hearing. The adverse party prior to the day of hearing

may serve opposing affidavits. The judgment sought shall

be rendered forthwith if the pleadings, depositions, an-

swers to interrogatories, and admissions on file, together

with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law. A summary

judgment, interlocutory in character, may be rendered on

the issue of liability alone although there is a genuine as

to the amount of damages.

(d) Case Not Fully Adjudicated on Motion. If on

motion under this rule judgment is not rendered upon

D-2

the whole case or for all the relief asked and a trial is

necessary, the court at the hearing of the motion, by

examining the pleadings and the evidence before it and

by interrogating counsel, shall if practicable ascertain what

material facts exist without substantial controversy and

what material facts are actually and in good faith con-

troverted. It shall thereupon make an order specifying

the facts that appear without substantial controversy, in-

cluding the extent to which the amount of damages or

other relief is not in controversy, and directing such

further proceedings in the action as are just. Upon the

trial of the action the facts so specified shall be deemed

established, and the trial shall be conducted accordingly.

(e) Form of Affidavits; Further Testimony; Defense

Required. Supporting and opposing affidavits shall be

made on personal knowledge, shall set forth such facts

as would be admissible in evidence, and shall show af-

firmatively that the affiant is competent to testify to the

matters stated therein. Sworn or certified copies of all

papers or parts thereof referred to in an affidavit shall be

attached thereto or served therewith. The court may per-

mit affidavits to be supplemented or opposed by deposi-

tions, answers to interrogatories, or further affidavits.

When a motion for summary judgment is made and

supported as provided in this rule, an adverse party may

not rest upon the mere allegations or denials of the ad-

verse party’s pleading, but the adverse party’s response,

by affidavits or as otherwise provided in this rule, must

set forth specific facts showing that there is a genuine

issue for trial. If the adverse party does not so respond,

summary judgment, if appropriate, shall be entered against

the adverse party.

D-3

(f) When Affidavits are Unavailable. Should it appear

from the affidavits of a party opposing the motion that

the party cannot for reasons stated present by affidavit

facts essential to justify the party’s opposition, the court

may refuse the application for judgment or may order a

continuance to permit affidavits to be obtained or deposi-

tions to be taken or discovery to be had or may make

such other order as is just.

(g) Affidavits Made in Bad Faith. Should it appear

to the satisfaction of the court at any time that any of

the affidavits presented pursuant to this rule are presented

in bad faith or solely for the purpose of delay, the court

shall forthwith order the party employing them to pay

to the other party the amount of the reasonable expenses

which the filing of the affidavits caused the other party

to incur, including reasonable attorney’s fees, and any

offending party or attorney may be adjudged guilty of

contempt.

Gr.

ead gic. 26 Nee

Se y"