Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-13-04299/USCOURTS-ca3-13-04299-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 13-4299

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IN RE: GARY L. REINERT, SR. et al.,

 Debtors

METAL FOUNDATIONS ACQUISITION, LLC.

v.

GARY L. REINERT, SR.,

 Appellant

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On Appeal from the District Court

for the Western District of Pennsylvania

(D.C. Civil No. 2-12-cv-01782) 

District Judge: Honorable David S. Cercone

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Submitted Pursuant to Third Circuit LAR 34.1(a)

January 16, 2015

Before: HARDIMAN, SCIRICA, and BARRY, Circuit Judges

(Filed: February 20, 2015)

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OPINION*

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* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not 

constitute binding precedent.

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SCIRICA, Circuit Judge

Defendant, Gary L. Reinert, Sr., appeals the District Court’s affirmance of the 

Bankruptcy Court’s order requiring Reinert to return certain converted assets to Plaintiff, 

Metal Foundations Acquisition, LLC (“MFA”). We will affirm. 

I.

A bankruptcy sale proceeding and a later conversion action are relevant to this 

appeal. In the bankruptcy sale proceeding, the United States Bankruptcy Court for the 

Western District of Pennsylvania approved the sale of the assets of various Reinertcontrolled entities to MFA. Following the bankruptcy sale proceeding, MFA filed a 

Complaint in Equity against Reinert in Pennsylvania state court alleging Reinert 

converted personal property, proprietary trade secrets, and confidential information that 

MFA purchased during the bankruptcy sale proceeding. With consent of the parties, 

MFA’s complaint was removed to the United States Bankruptcy Court for the Western 

District of Pennsylvania, where MFA subsequently filed a Motion for Preliminary 

Injunction. It is MFA’s conversion action against Reinert that we review on appeal. 

The bankruptcy sale proceeding took place as follows. Fifth Third Bank, as the 

primary secured creditor, obtained a receivership order against Reinert and certain 

Reinert-controlled entities in the United States District Court for the Western District of 

Pennsylvania. Reinert and certain Reinert-controlled entities later commenced voluntary 

Chapter 11 cases before the United States Bankruptcy Court for the Western District of 

Pennsylvania. Those entities included Power Contracting, Inc.; MFPF, Inc.; Metal 

Foundations, LLC; Dressel Associates, Inc.; and Flying Roadrunner, Inc. (hereinafter 

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“debtor entities”). Certain Reinert-controlled entities, namely SAFE Foundations, LLC 

(“SAFE Foundations”), and SAFE Extensions, Inc. (“SAFE Extensions”), were subject to 

the receivership order but not included in the bankruptcy filings (“non-debtor entities”). 

The bankruptcy cases were jointly administered, a Chapter 11 trustee was appointed, and 

the Trustee sold certain assets to MFA. 

During the asset sale, Fifth Third Bank sold its secured claims to MFA. The 

Trustee then held an auction to sell assets subject to the lien of Fifth Third Bank, which 

now belonged to MFA. Ownership of the lien provided MFA with the right to credit bid 

its acquired secured claim at auction. No bankruptcy schedules were filed at the time of 

the auction. Although the Bankruptcy Court in the bankruptcy sale proceeding cautioned 

against proceeding to sale without schedules setting forth the identity of various debtors’ 

assets, the parties chose to proceed to auction. At auction, no competing bidder emerged 

and MFA subsequently purchased certain assets defined by a “credit bid letter 

agreement” (“CBA”). The CBA provided that all of the assets of all of the debtor entities 

were to be sold to MFA. In addition, the CBA provided that certain unencumbered assets 

of the debtors, including assets of Mr. Reinert, were also to be sold to MFA. Although 

MFA had a lien against SAFE Extensions and SAFE Foundations, they were not included 

in the CBA because they were non-debtors who were believed to own no assets. The 

assets included in the CBA were described in exhibits as “all of those [assets] used or 

related to the operation of foundations business” by the debtor entities. The Bankruptcy 

Court in the bankruptcy sale proceeding subsequently approved the sale. Believing it had 

acquired all of the assets of Reinert-controlled entities used in or related to the operation 

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of foundations business, MFA then released its lien, including the lien it held against 

SAFE Foundations. 

The CBA was prepared based upon the due diligence of MFA, with the assistance 

of the Trustee, Reinert, and his agents. Specifically, the CBA relied upon representations 

made by Reinert. First, Reinert represented that SAFE Extensions had dissolved years 

before the bankruptcy petition date. Second, Reinert represented to PNC Bank, Fifth 

Third Bank, and the Commonwealth of Pennsylvania that Metal Foundations, LLC, 

which was a debtor under the control of the Trustee and a party to the CBA, was the 

successor of SAFE Foundations. This representation was made again directly to MFA. 

Finally, exhibits to the CBA were circulated to Reinert stating that the assets in question 

belonged to Metal Foundations, LLC. Reinert did not object to these exhibits or claim the 

assets were owned by any entity other than Metal Foundations, LLC. In other words, 

Reinert represented to the Bankruptcy Court in the bankruptcy sale proceeding that any 

assets that were once owned by SAFE Extensions and SAFE Foundations were now 

owned by parties subject to the CBA.

 In the conversion action reviewed here, Reinert’s primary defense to MFA’s 

conversion claim was that the assets in question were not sold to MFA because they 

belonged to SAFE Extensions and SAFE Foundations, which were not subject to the 

CBA. Because Reinert’s position in the conversion action was in direct contrast to his 

representations in the bankruptcy sale proceeding—that SAFE Extensions and SAFE 

Foundations owned no assets—the Bankruptcy Court and the District Court in the 

conversion action found equitable estoppel to bar Reinert from denying his 

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representations in the bankruptcy sale proceeding. Accordingly, Reinert was found to 

have converted, and thus ordered to return, MFA’s assets. 

II.1

Reinert argues that the use of “equitable estoppel” in the conversion action defined 

the scope of the sale in the bankruptcy sale proceeding beyond the Bankruptcy Court’s 

jurisdiction. But we see no jurisdictional issue in this case. Instead, the issue here is the 

finality of the bankruptcy sale proceeding. 

We have recognized the importance of providing finality to bankruptcy court 

orders such that they can be relied upon by third parties. Cf., e.g., Pittsburgh Food & 

Beverage, Inc. v. Ranallo, 112 F.3d 645, 649-50 (3d Cir. 1997) (finding that jurisdictional 

challenges to the authority of the Trustee under section 363(b) are moot if the stay 

required by section 363(m) is not obtained and a reversal or modification would affect the 

validity of the sale). There were many opportunities in the bankruptcy sale proceeding for 

Reinert to object that the assets in question were not properly part of the sale, including at 

the hearing on the motion to approve the sale, at which Reinert was silent, and upon 

direct appeal after acquiring a stay. But rather than object or appeal, Reinert allowed the 

approval of the sale to become final. Reinert explained that he did not view objecting in 

the bankruptcy sale proceeding as a “big deal . . . because [he] thought MFA bought all 

the assets,” including those at issue in this appeal. Reinert was not alone in this belief, as 

 

1 We exercise plenary review over the Bankruptcy Court’s legal conclusions and the 

District Court’s appellate review of the Bankruptcy Court’s decision. In re Miller, 730 

F.3d 198, 203 (3d Cir. 2013). The factual findings of the Bankruptcy Court are reviewed 

for clear error. Id. The Bankruptcy Court had jurisdiction under 28 U.S.C. §§ 157(b), 

1334(b), and 1452(a). The District Court had jurisdiction to review the bankruptcy appeal 

under 28 U.S.C. § 158(a). We have jurisdiction under 28 U.S.C. §§ 158(d) and 1291. 

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MFA also understood the sale to include the assets in question. Reinert’s representations 

that SAFE Extensions and SAFE Foundations owned no assets2formed a core premise of 

the Bankruptcy Court’s approval of the sale in the bankruptcy sale proceeding and 

MFA’s decision to release its lien. Nonetheless, upon accusations that he has converted 

assets of MFA, Reinert now asserts the assets were actually owned by SAFE Extensions 

and SAFE Foundations. In other words, Reinert wishes to undo the finality of the 

bankruptcy sale proceeding by taking a contrary position in the later conversion action. 

But Reinert never objected to the sale or appealed it and he cannot do so now in the later

conversion action. Accordingly, no jurisdictional defect exists in this case.

Finally, Reinert contends that it was error for the court in the conversion action to 

order that he return a “tooling” asset to MFA from India. Reinert contends that the court’s 

order was based upon an erroneous factual finding that Reinert moved the tooling from 

South Africa to India after the sale to MFA. But what Reinert describes as plain error was 

harmless error. While the court said the tooling was shipped to India in 2012, which was 

after the sale, the context of the court’s opinion exposes this as a clear typographical 

error. If the court had in fact meant 2012, there would have been no need for it to explain 

that the transfer took place without the knowledge or consent of the Trustee, as by that 

time MFA would have been the owner of the tooling and the Trustee’s consent would 

have been irrelevant. In addition, all the evidence shows the tooling was moved to India 

in 2011. 

 

2 Reinert represented that SAFE Extensions was dissolved and SAFE Foundations was 

succeeded by Metal Foundations, LLC. During the due diligence leading up to the sale, 

Reinert represented that the only asset owned by SAFE Foundations was an excavator, 

which MFA ultimately purchased outside of the sale. 

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But the problem for Reinert is that, even if the tooling was moved before the sale, 

it was indisputably moved after the Trustee’s appointment and without the knowledge or 

consent of the Trustee in violation of the automatic stay provision of the Bankruptcy 

Code. See 11 U.S.C. § 362(a)(3). In its memorandum order considering Reinert’s motion 

for reconsideration, the court clarified that its order to return the tooling was based on 

Reinert’s violation of the automatic stay. Reinert is fortunate the court limited his penalty 

to returning the tooling to MFA, as a more serious penalty could have been imposed 

given the court’s finding that his “exercise of control over the tooling subsequent to the 

[T]rustee’s appointment was a sanctionable violation of the automatic stay.”3 

Accordingly, it was not error to order Reinert to return the tooling. 

III.

For the foregoing reasons, we will affirm. 

 

3 See In re Atl. Bus. & Cmty. Corp., 901 F.2d 325, 329 (3d Cir. 1990) (stating that the 

automatic stay provision “provides for damages upon a finding that the defendant knew 

of the automatic stay and that the defendant’s actions which violated the stay were 

intentional” (quoting In re Bloom, 875 F.2d 224, 227 (9th Cir. 1989))). 

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