By order of the Bank ruptcy Appe llate Panel, the prec edential effec t of t his de c isi on is l im ite d to thec as e an d p ar tie s p ur su an t to 6th C i r
. B A P L B R 8 0 1 3 -1 (b). S

ee a l s o 6 th C i r
. B

A P L B R 8 0 1 0 -1 (c).
F ile Nam e: 09b0008n.06 BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT

I n re: J ACK V. OAKL EY, e t al

. , ) ) De bto rs
. )

_____________________________________ ) ) EL I Z AB ETH H. DO UCET, TRUSTEE ) and CI TI Z ENS BAN K OF L OGAN, ) ) Appellee s, ) ) v. ) No. 08-8102 ) DRYDOCK COAL

CO., e t al

. , ) ) ) Ap pe lla nts

. )

)
Appea l from the United States B ankruptc y Court for the Souther

n District of Ohio, Easte rn Division Ba nkruptcy Case No. 03- 59297; Adv. No. 05-2289 Argued: Novembe r 3, 2009
Dec ided and F iled: Dece mber 2, 2009
B e fo re : B OSWE L L , H ARRI S, a nd SHE A- STO NU M, B ank ru ptc y Ap pe llate Pane l Judg e s.

____________________ CO UN SEL
ARG UED: Ke nn e th C . Joh ns on , B RI CK ER & ECKL ER L L P, Co lum bu s, Oh io, fo r A

pp e lla nts

. Wil liam B

. L og an, J r., L UPER, NE I DENTHA L & L OGAN, Columbus, Ohio, for Appe llees. ON B RI E F: Kenne th C. J ohnson, J ustin W . Ristau, BRI CKER & ECKL ER L L P, Columbus, Ohio, for Appellants. Will iam B. L og an, Jr., Kenneth M. Richar ds, L UPER, NEI DE NT HA L & L OGAN,2

Col umb us , Ohi o, El iza

be th H. Do uc e t, EL I Z AB ET H H. DO UC ET & ASS OC I AT ES, L a ke Cha rl e s, L ouisiana, for

Appellee s.

____________________ OP IN ION

____________________ G. HARV E Y BO S WEL L , Ba nkruptcy Appellate Pane l J udg e. This appe al involves an alleg ed lost, written ag ree ment among the share holders of a closely held family

corpor ation

re s t ri ct i ng the transf

er or pledg e of stock. T he dispute stems from Jack V. Oa kley ’s (“ Debtor” ) ple dg e of sto c k t o C i t i z e n s B an k o f L o g an ( “ C i t i z e n s ” ) a s c o l l a t e r a l f o r a $ 1 m i l l i o n l o an p r i o r to filing f o r b an k ruptcy

protec tion. After the D ebtor filed f or bankr uptcy protec tion, the chapter

7 trustee ( “Truste e”) and Citiz ens filed an adver sary complaint seekinga dec laratory judgme nt that the alleg ed ag ree ment restric ting pledg e of the st o ck wa s of no ef fec t. The shar eholder s filed a

c ounte rc la im s e e kin g jud g me nt t hat th e a g re e me nt i s v a lid and that th e y ha d th e ri ght to purc ha se the pledg ed shar es for

$400 per sha

re. F ollowing a

five da y trial, the bankr

uptcy court fou nd that the share holders fa iled to prove the material ter ms of the alleg ed ag re em en t

. Fo r t he re asons that fo llo w, we a ff

ir m th e jud g me nt o f t

he ba nk ru ptc y c ourt

. I. ISS UE ON AP P EAL

T h e i s s ue ra ised by

this appeal is whethe r the ba nkruptcy court e rre d in finding tha t the Appellants fai l ed t o car

ry their burde n of provingthe mater ial terms of their a lleg ed ag ree ment restric ting the tr ansfe r or pledg e of the stock in their closely held family

corpor ation.

II. JU RI SDI CT ION AND STANDARD OF RE VI EW We have jurisdiction to decide this appeal. The United States District Court for the Southern District of Ohio has a

uthorized appea ls to the Panel, and no par ty to the appea l has timely

elec ted to have this appe al hea

rd by the district court. 28 U.S.C. §§ 158(b)( 6), (c )(1)

. A final order of the ba nk ru ptc y c ourt may be a pp e a le d a s o f ri ght pu rs ua nt t o 2 8 U .S. C. § 15 8( a )( 1) . “ [A] de c isi on is ordinarily considere d final and a

ppeala ble under § 1291 [and § 158(a)] only if it ‘ends the litigation on the merits and lea

ves nothing for the c ourt to do but ex ecute the j u d gment.’ ” Quack enbush v.3

Allstate Ins. Co. , 5 1 7 U. S

. 7 0 6 , 7 1 2 , 1 1 6 S

. C t

. 1 7 1 2 , 1 7 1 8 (1 9 9 6 ) ( qu o t i n g Catli n v. United States , 32 4 U .S. 22 9, 23 3, 65 S. Ct . 6 31 , 6 33 -3 4 ( 19 45 )) ; W ic he ff v . B au mg

ar t ( In re W ic he ff) , 215 B.R. 839 (B .A .P. 6th

Cir . 1 99 8) . T he ba

nk ru ptc y c ourt ’s jud g me nt r e so lve d the a dv e rs ary pr oc e e din g on

its merits and is a fina l , appea lable orde r. Se e Ly on v . E ise ma n ( In re Fo rb es) , 372 B.R. 321, 325 (B .A.P. 6th Ci r. 2007).
The c ourt’s finding s of fa ct ar e re viewed unde r the c lear ly err oneous standar d. Riverv iew Trenton R.R. Co. v. DSC, L td. ( In re DSC, Ltd.) , 486 F.3d 940, 944 (6th Cir. 2007)

. “A finding of fac t is clearly

err oneous ‘whe n althoug h there is evidence to support it, the reviewing court on the entire e vidence is left wit h t he def inite and firm convic tion that a mistake has bee n committed.’ ” Id. (q u o t i n g An de rso n v
. City of B esse me r Ci ty

, N. C. , 470 U.S. 564, 573, 105 S. C t. 1504 (1985)). The bankruptcy court’s leg al conclusions are re viewed de novo

. Ge n. El e c . Cr e dit Eq uit ie s, In c ., v
. Br ic e Rd

. D e v s. , LLC ( In re Br ic e Rd

. D e v s. , LLC ) , 392 B.R. 274 (B .A.P. 6th Cir. 2008). “ De

novo means that the a

ppellate c ourt d eter

mines the law indepe ndently of the trial c ourt’s deter mination.” Tre ini

sh v . Norwe

st Ban k Mi nn ., N.A . (

In re Pe ria nd

ri) , 2 66 B .R. 65 1, 65 3 ( B .A .P. 6th Cir. 2001) (citations omitted).

III . F AC TS

I n 1940, J ack Oakley ’s (“D ebtor” ) ance stors founded D ry dock Coal Company (“D ry dock”)

. I n 1979, the Debtor acquir ed 100 share s of Drydock from his f ather

. On May

14, 1981, the Debtor executed the Jack Victor O akley Trus t Agr ee m ent (“ Trust”), a revoc able trust for

estate pla

nning purposes, a

nd transfe rre d his 100 shares to the Tr ust. His son, Timothy Oakley , was named as the Trust’s trustee

. The Trust provided that upon the death of the Debtor, his sha res of stock we re to be transfe rre d to his four sons equally . Following the death of the D ebtor’s f ather later in 1981, the Debtor acquir ed an additional 525 share s which he also transfe rre d to the Trust. Upon the death of the De bto r’ s f

a the r, the I RS va lue d th e sto c k at $4 00 pe r s ha re fo r e state ta x pur

po se s.
On Oc tob e r 2 0, 19 81 , th e De bto r a nd his fo ur so ns ent ered in to a purc ha se a g re e me nt i n which ea ch son purc has ed 65.625 share s for $400 pe r shar e fr om the Trust. That ag ree ment contained no r estriction on the pledg e or tra nsfer of Drydock stock. On that same date , eac h of the4

four sons made a down pa y ment of 10% a

nd signe d a promissory note t o the Trust for the r emaining 90% owe d. The promissory notes made no r efe rence to a r estriction on the pledg e or tra nsfer of Dry dock stock. The Appe llants (define d below) a ssert that t h ey al s o executed a buy -sell ag ree ment on October 20, 1981, (the “ 1981 Ag ree ment”) w hich imposed a lifetime r estriction on transf ers of any kin d, inc lud ingple dg ing sto c k a s se c ur ity

. Th e 19 81 Ag re e me nt a lle g e dly state d that up on the de a th of any share holder, Dr

y dock would purc hase the share s, and if any share holder bre ache d the 1981 Ag ree ment, the company

had the option to repur chase the s hare s. Finally , Mark Oa kley testified that the a g re eme nt st ated that on c e a t le a st t wo sh are ho lde rs die d, the a g re e me nt a uto ma tic a lly terminated. The Appellants fur ther a sserted that the purcha se p ri ce fo r shares under the 1981 Ag ree ment was $400 pe r shar e.
On December 15, 1981, Drydock purchased 25 share s from the trust at $400 per sha re a nd transferr ed t h em to Marg are t Galvin, a long time secre tary of Drydock and distant re lative of the family by marria g e. The purcha se ag ree ment betwee n the Trust and Dr y dock does not re fer ence any restric tions on the transfe r of Dr y dock stock. Ac cordingto Mark Oakley ’s testimony , althoug h the Appellants could not l ocate any documents, Marg are t Galvin agr eed to the 1981 Ag ree ment at that time, and all share holders ag ree d to the transfe r o f stock to her . Following this transaction, the Debtor’ s Trust held a c ontrolling intere st of approximately 54% o f t h e shares of Dr y dock. The

rema ining sha

res we re he ld by

the Debtor ’s sons, Mark, Gr eg g , Timothy , and John, and Marg are t Galvin (c ollectively

with Dry dock “A

ppellants”).
Eac h of the stock c ertifica

tes held by

the share holders, which w ere issued in D e c e mb er, 1981,

c on ta ins a le g e nd wh ic h r e a ds :
The shar es of stock r epr es en t ed by this certificate ar e subjec t to an a g re e me nt d ate d O c tob e r 2 0, 19 81 , a c op y of wh ic h [D ry do ck] wi ll mail to the holder of this ce rtificate , without charg e, withi n fi v e (5) day s of re ceipt of a written re quest there for, a nd said share s may

not be so ld, tr ans fe rr e d, a ssi g ne d, ple dg e d, hy po the cat e d, or

oth e rw ise disposed of, except in strict ac corda nce w ith the terms of that a g re e me nt.5

(A pp e lla nts ’ A pp . at 13 43 .) De sp ite se arc hin g a larg e sa fe ma int a ine d by Dr y do c k, Dr y do c k’ s f ile s, the per sonal files of e ach of the share holders, and f

iles of outside counsel a

nd acc ountants, neither the orig inal ag ree ment ref ere nced in the stock leg end nor any copy of the 1981 Ag ree ment has bee n found. While eac h of the shar eholder s has maintained their orig inal stock ce rtificate s, none of them maintained a c opy

of t he 1981 Ag ree ment. I n fac t, eac h Appellant testi fied that they have not se en this ag ree ment sin ce i t was ex ecute d in 1981. I n addition, while minute books of Drydock we re maintained throug hout the y ear s, there is a g ap in the books betwe en appr ox imately 1977 and 1984. On April 24, 1984, Mark Oakley executed a L ast Wil l and Testament in which he dire cted that his ex ecutor

“re cog nize and comply

with the provisions of a cer tain buy -sell ag ree ment executed October 20, 1981, by

and among my self, my brothers Gre g g , Timothy , and J ohn, and said Dr y dock Coa l C o m p an y , conce rning said share s, as said buy -sell ag ree ment now re ads or a s it may be amende d from time to time

. . . .” (Appe llants’ App. at 1243.) N o copy of the 1981 Ag ree ment was

a tta c he d to or

ma int a ine d w iththi s L a st Wi ll a nd Te sta me nt.
I n the ea rly 1990s, Dry dock wa s involved in litig ation with the United Mine Workers whic h Mark Oa kley fea red threatened the exis tence of Drydock. I n connec tion with that litigation, Mark Oakley wrote se vera l letters to Drydock’s c ounsel, Robin Hoke, two of whic h wer e intro d uced at trial on the subject a dversa ry proce eding

. The first such letter was dated Dec ember 11, 1993, and

e xpla ine d th e his tor

y and a sse ts o f D rydo c k. I n th a t le tte r, Ma rk Oa kle y state d, in p e rt ine nt p a rt :
Most of these shar es [held by the Trust] we re purcha sed by my fathe r from the e state of my

g randf ather for $ 4 0 0

. 0 0 (? ) per

share in 1981 (a c tua lly , h e too k th e sh are s in lie u o f c a shof e qu a l va lue ) T his e state was a udited by the I .R.S. He immediately sold to us our shares at the price per sha

re of $400.00. These sha res a re a ll subject t o a buy -sell ag ree ment, by and amongthe sh are ho lde rs and Dry do ck, a t th e pr ic e of $4 00 .0 0 p e r s ha

re . ( Th is price is subject to modific ation per the terms of the ag ree ment, but the price has neve r bee n chang ed.)
(Appe llants’ App. at 1221.) In the second letter, dated Fe bruar y 3, 1994, Mark Oakley ag ain stated that the share s were subject to a buy -sell ag ree ment, and:Witn e sse s te sti fi e d to thi s c ha ng e in t he dis po sit ive fe a tur e a s re fl e c te d on Exhi bit La t tr ia l. 1 This Panel has not bee n provided with a c opy of Exhibi t L , but we have g ather ed fr om the rema inder of the re cord that it is another amendment to the Tr

ust which was e x ecute d on October 20, 1999. 6 So t h a t D r

y d o c k h a s t h e c a s h t o e xe r c i s e i t s r i g h t s t h e r e u n de r t o purcha se the trust shar es re fe renc ed above , it owns and pay s the premiums on a life insura nce policy

on [Debtor], face a

mount $2 50 ,0 00 , th e state d p ur c ha se pr ic e fo r t he tr us t sh are s.
(Appe llants’ App. at 1311.)
On Decem b er 30, 1997, the Debtor executed a Me morandum of Tr ust naming John G. Oakley as succ essor trustee o f his Trust. No mention of the 1981 Ag ree ment or re striction on transfe r of stock is made in this documen t

. On No v ember 19, 1999, the Debtor e x ecute d an Amended Me morandum of Trust removing Timothy Oakley as trustee , naming himself as trustee , and namingTimothy

Oakley as successor trustee. Once ag ainst there was no mention of t he 1981 Ag re e me nt o r r e stri cti on on tr ans fe r o f s toc k. I n a dd iti on , h e a me nd e d th e dis po sit ive fe a tur e to provi d e t h at 20% of his stock in Drydock would be tr ansfe rre d to his wife, Sara nne Oakley , upon his de a th w iththe re ma ini ng80 % t o b e sp lit e ve nly a mon g his fo ur

so ns
. 1

I n April 2000, the De btor, the Trus t , an d C ar d inal Glenn, Inc., borr owed $1 million from Citi zen s B ank

of L og an ( “ Citi zen s” ) a s f

un din g fo r a

g olf c ours e de ve lop me nt. I n a dd iti on to c e rt a in

rea l estate be ing ple dg ed as co l l ater al for the loan, the De btor pledg ed the Tr ust’s 337.5 share s of sto c k in Dr y do c k a s c oll a te ra l. Wh e n he ple dg e d the sto c k, the De bto r pr ov ide d Citize ns an a ff ida vit which stated: “ I have authority under the [agr eeme nt g overning the Trust] to pledg e the subjec t stock as collate ral for

loan purposes a

nd have, by

separ ate instruments so elec ted to pledg e said c ommon stock to [C itiz ens].” (Appe llants’ App. at 1231.) Citizens took poss ession of th e T rust ’s stock

cer tificate w hich contained the l eg end refer encing the 1981 Agre ement; howeve r, not until li tigation later e nsued did it request a copy of the 1981 Ag ree ment from Dr y dock.
At t h e t ri al b ef

o re t h e b an kru p t cy co u rt , t h e De b t o r a s s er t edt h at h e n ev er i n t en d edt o p l ed ge the stock. Ac cordingto his testim ony , the lawy ers a nd banker s involved in the loan proc ess wer eThe ba nkruptcy court spec ifically

found this testimony

incre dible. 2
7 at his home when he showed them the s tock certificate to demonstrate that he owned the s tock as a n asset. He did not know that they had take n it. I n ad d i t i on, he asse rted that the a bove quoted para g raph of

the af fidavit was not on it when he signe d the af fidavit althoug h he did not deny signing the a ff ida vit

. 2 On Aug ust 3, 2001, the Debtor sig ned an a mendment to the Trust, purporting to give 5% of his stock, 1% eac h, to his wife a nd four sons. The document purpor ting to ef fec t this amendment makes no mention of a

restric tion on the transfe r of Dr y dock stock. On Aug ust 20, 2001, the Debtor a nd the Trust filed suit in state cour t aga i n s t C i t izens for brea ch of c ontrac t in connection with the loan f or the g olf course development. De spite numerous reque sts in connec tion with that litigation, the De btor and Dr y dock we re una

ble to produce the 1981 Ag re e me nt r e fe re nc e d o n th e sto c k c e rt if ic a te s.
I n c on ne c tio n w iththat li tig a tio n, the sh are ho lde rs of Dr y do c k atte mpt e d to r e c re a te the los t 1981 Ag ree ment. I n April 2003 they executed a “r estateme nt” of the lost ag ree ment with the assistance of attorne y

David Morr ison. Testimony at the trial of this adver sary proce eding reve aled that in the ear ly

1980s, the Debtor, a

n attorney , was also in private law prac tice. After g raduating from law sc hool, Mark Oa kley joined the law pr actice . Drydock and the law p ractice shar ed common office space . Acc ording to the testimony of Mark Oakley , the library of that common off

ice space contained V ol u m e 1 o f the Ohio Tr ansac tion Guide L eg al For m book. When searc hing f or the or ig ina l 19 81 Ag re e me nt, Mark Oa kle y fo un d wh a t he a sse rt s is the fo rm wh ic h w a s u se d b y

his br oth e r G re g g Oa

kle y , w ho ha d ju st t a ke n th e ba r e xam in 19 81 , to dr a ft the 19 81 Ag re e me nt w ith Gre g g Oakley ’s penc iled notations in the marg ins. This resulted in the us e of that form to “restate” the 19 81 Ag re e me nt. Attorney David Morr ison, wh o h a s r e p r e s e nte d D r y d o c k in c e r ta in ma tte rs, testified re g arding t h e c r e a t i o no f

t h e 2 0 0 3 r e s t a t e m e n t o f t h e 1 9 8 1 A g r e e m e n t

. A c c o r d i n g t o M o r r i s o n ’ s t e s t i m o n y, wh ic h w a s g ive n a ft e r Dr

y do c k g ra nte d a lim ite d wa ive r of the a tto rn e y -c lie nt p ri vil e g e to a llo w h im8

to testify at trial, it was he that noticed first that the l ege n d o n t h e Dr y dock stock c ertificates was identical to that in the Ohio Tra nsaction Guide and led him to sugg est to Mark Oa kley that perha

ps Dry dock per sonnel had used a copy of that book t o draf

t their 1981 Ag ree ment. Mark Oakley then appar ently

located D ry dock’s c opy

of the book a

nd found fa int pencil marking s on it which he

rec og nized a s Gre g g Oakley ’s handwr iting. Mark Oakley then dar kened the pencil mar

kings on the form to copy

the pag es and fax them to Morrison. Morrison’s testimony also reve als that he wor

ked exclusively

with M ar k Oa k l ey on the 2003 document a nd did not speak with Gre g g Oakley , who alleg edly draf ted the 1981 Ag ree ment, until after the 2003 doc ument was c ompleted and sig ned.
Gre g g Oakley

testified that wh i l e he had no direc t rec ollection of dra fting the 1981 Ag ree ment he believed he would have be en the one to draft it bec ause he had re cently been in law

sc ho ol a nd ha d ta ke n c la sse s o n s ome of

the iss ue s ra is ed by

the a g re e me nt. He re c og nize d h is handwr i t i n g i n the marg ins of the form book, but also ha d no independe nt rec ollection of making the marks. Gr eg g Oakley further testified that he would have g iven the book to a sec reta ry to ty pe the ag ree ment. Certain deta ils were le ft blank, howe ver, including the purc hase pr ice, a nd he wa s unable to r eca ll how the secr etar y would have known what to inc lude. Whil e Gr egg O akley acknow ledg ed havingdraf ted another such buy -sell ag ree ment for a client in 1990, he denie d that the marks in the f

orm book could have been r elated to that wor k beca use he w o u l d have use d a computer at that time. Finally , Gre g g Oakley stated that beyond understa n d i n g that he could not tr ans fe r h is s ha

re s, he ha d n o s pe c if

ic re c oll e c tio n o f t

he te rm s o f t

he 19 81 Ag re e me nt.
The 2003 re statement purpor ts to re plicate the orig inal ag ree ment as closely as possible. To that e nd , it

state s: The corporation and the sharehol ders, ex cept M argaret A. Galvin, who was no t a s ha re ho lde r a t th e tim e, m ad e a wri tte n agr e e me nt, dated October 20, 1981, restricting the t ransfer of Drydock stock. An amendme nt to this writt en agree ment was made on De cem ber 24, 1981, to prov i d

e f o r t he acquisition by Margaret A. G alvin of 25 sha r es of Drydock

stock, to be he ld by her subjec t to all of theI n a dd iti on to b e ing un a ble to l oc a te the 19 81 Ag re e me nt, the Ap pe llants were una ble to 3 fi nd the a me ndme nt t o th e a g re e me nt r e fe re nc e d h e re or any do c ume nts sig ne d by Ms

. Gal vin in connec tion with her ac quisiti on of 25 shar es of Dr y dock stock. 9 provi s i ons of the agreeme nt; and this wri tten agreem ent remains otherwise unchanged to this date. 3 After a diligent search, the corporation and its shareholders cannot find that agr eem ent, and they c an n o t p recisely reme mber its exac t te rm s. Thec or po ra tio n a nd

thesh ar e ho lde rs d

esir e to h on or

the ir c om mi tm e nts un de r th at a gr e e me nt, wha te v e r th os e c om mi tm e nts may hav e bee n, as nearly as possible. To t ha t e nd , th e c or po ra tio n’ s m an ag e me nt h as foun d a dra ft f or m for a m a n d

a to r yb u y - s e ll a gr e e m e n t, wi th m a r

g in a l n o ta ti o n s that wer e made when the original agreement was prepared, which requires that the stock certificates contain a legend that is identical to the l egend actually appearing on the ce rtifi cates for the corporation’s stock. The corporation and the shareholders believ e that the lost agreement for m was in the sa me for

m a s, or v e ry sim ila r to , th e ag

re e me nt f or m that was f ound. The re for e, in thesp iri t of

c om pr om ise , a nd des iring to h on or the ir commitme nts under the lost agr eement as nearly as possible, the corporation and the shareholders agreeto replace and re state the lost agreement with this n ew form agreeme nt, which is made according to the draft agreem ent form that was f ound.
(Appe llants’ App. at 15.) I ncluded in the pr ovisions of t h i s restated ag ree ment is a prohibition

a g a ins t tr ans fe rr ing , a ssi g nin g or e nc umb e ri ngthe sh are s.
On J une 20, 2003, the De btor and his wife , filed a joint voluntary petition for re lief under chapte r 11 of the B ankruptc y Code. Their c ase w as conve rted t o chapte r 7 on May 17, 2004, and Eliz abeth Douc et (“Tr

ustee” ) was appointed cha pter 7 trustee . Prior to the filing of this petiti on, the Debtor r evoked the Trust which he ld Dry dock stock.The pe rtinent stipulations read: “In the event that the [ Appellants] are succe ssful in proving 4 the exist ence and ter

ms of the 1981 Ag ree ment, then 1) the stock in the hands of the trustee is subject to the terms of the agre ement as proven, 2) D ry dock and its shar eholder s shall repurc hase the trustee’ s share s for the a

mount of $135,000 pursuant to the ter ms of the agree ment, or for some other g reater a mount as may

be orde red by

the Court, and 3) [Citi zens] and the Tr ustee will split any rec overy as a r esult of that stock ownership in the manner contemplated by

the settlement betwe en the estate and [Cit izens] . I n the eve nt that the [Appellants] are not succe ssful in proving the exis tence and terms of t he 1981 Ag ree ment, then t he st ock in t he hands of the Trustee is not subject to any restric tion impos ed by

any buy sell ag ree ment, and [Cit izens] and the Trustee will spli t any rec overy as a result of that stock owner ship in the manner contemplated by the settlement betwe en the estate and [Cit izens] .” (A ppellants’ App. at 109-110.)

10 On June 10 , 2 00 5, Citi zen s and the Tr us te e ini tiate d a

n a dv e rs ary pr oc e e din g a g a ins t a ll holders of Dry dock st ock seeking a declaratory judgme nt that the provisi ons of the re statement of the 1981 Ag ree ment restric ting the t ra n s fe r, assignment or e ncumbra nce of the share s were of no eff ect a nd did not replac e the origina l ag ree ment. The defenda nts in the adversa

ry proce eding filed

an answ er a

nd counter claim in which they soug ht a n order decla ring that the 1981 Ag ree ment was

a va lid re str ic tio n o n the tr ans fe r of the ple dg e d sto c k and g a ve the de fe nd ants the ri g ht t o p ur c ha se the pledg ed shar es at $400 pe r shar e. Dur ing the course of t he li tigation, the Trustee and Citiz ens
r e a c h e d ana g r e e m e n tth a t , i f

t h e y w e r e u n s u c c e s s f

u l , t h e y w o u l d s p l i t an y f

u n d s r e c e i v e d

e qu a l l y, and if they

wer e s u ccessful, Citiz ens would re ceive 80% of pr ocee ds rec overe d and the Tr ustee

wo uld receive 20 %. O n Jun e 19 , 2 00 7, the ba nk ru ptc y c ourt e nte re d a

n o rd e r a pp ro vin g thi s compromise.

Pr ior to t he tr ia l on

the c la ims of

the Tru st ee and Citize ns , th e pa rt ie s e nte re d in to c e rt a in stipulations which provided that if the Appe llants proved the e x is t en ce an d t erms of the 1981 Ag ree ment, they

would be entitled to purc hase the Debtor’ s pledg ed stock fo r $ 1 3 5 ,000. I f the Appellants we re unsuc cessf ul, the stock would not be subject to any transfe r or pledg e re striction,

and the Tr us te e and Citi zen s w ou ld s pli t any pr oc e e ds re c ov e re d f

ro m th e sto c k pe r t

he ir compromise. 4

I n Fe bru ar

y 2 0 0 8 , th e b an kr

u p tc y c o u rt h e ld a f

iv e d ay tr ia l s o le ly o n th e is s u e s of the exis tence and ter

ms of t he allege d 1981 Ag ree ment. At trial, the Appe llants introduced testimony to d e mo n s tr a te th a t t

h e y h a d ma d e a d il ig e n t s e ar c h f

o r th e lo s t 1 9 8 1 A g r e e me n t a n d s e c o n d a ryThe Appe llants ex pressly repr esente d to the bankruptc y court that they

wer e not re ly ing 5 direc tly on the 2003 document in support of the ir rig hts with respec t to the pledg ed stock, but rather that th e 20 03 do c ume nt wa s sec on da ry e vid e nc e of the e xiste nc e and te rm s of the 19 81 Ag re e me nt. The Debtor did not join in this a ppeal. On A

pril 9, 2008, the Debtor, pr o s e , filed a Motion 6 for L ack of

J urisdiction and L ack of Standing. On October 22, 2008, the ba nkruptcy court e ntere d an orde r deny

ing the Debtor’ s motion. The Debtor, pr o s e , appealed that orde r to this Panel. On J une 18, 2009, we issued an opinion aff irming the bankruptc y

court’s or der de ny ing the Debtor’ s mot ion fi nd ingtha

t bo th t he Tr us te e and Citi zen s h a d s tand ing . T he Ap pe lla nts in t his a pp e a l a lso challeng ed the standingof Citiz ens to bring i t s cl ai m s
. At oral a rg ument, Appellants’ c ounsel conce ded that the issue is moot as our previous dec ision finding that Citiz ens indee d has standing is now the law of this case
. See Consolidation Coal Co. v. McM

ahon , 77 F.3d 898, 905 n.5 ( 6th Cir. 1996) (unde r the lawof the c ase doc trine, cour t is ordinarily

prec luded from r e-e x amining issues previously

decide d in the same c ase) ; In re The George W orthington Co. , 92 1 F .2 d 62 6, 62 8- 29 (6 th Cir. 1990) (“T he purpose of the doctrine of law of the case i s to promote judicial comity , the judicial sy stem’s interest in finality , and the e fficie nt administration of case s.”). 11 evidenc e, in the for

m of testimony

and docume nts, of the exist en ce an d t er ms of the 1981 Ag ree ment. Eac h of the shar ehol d er s o f Dry dock, including Marg are t Galvin by deposition, 5 testified that t hey understood there t o be a restric tion on transfe r of their shares of Drydock. None of them could re call, howe ver, the exact terms of the a g ree ment, nor had the y seen it since the y purported to sig n it in 1981. Galvin, who was 86 y ear s old at the time of her deposition, ha d worke d for Dr y dock fr om 1943 to 1983 and, while she testified that she unde rstood there was a restric tion, sh e did no t r e c a ll e ve r s ig nin g the a lle g e d a g re e me nt.
On Novembe r 22, 2008, the ba nkruptcy court issued a memorandum opinion a nd judgme nt in favor of

the Trustee and C itiz ens. The court found that while the A ppellants had e stablished the exis tence of some a g re e me nt r e g ard ing the Dr y do c k s toc k, the y

ha d f a ile d to pr ov e the ma te ri a l te rm s of the 1981 Ag ree ment. The Appe llants’ timely notice of a

ppeal f ollowed. 6

IV . D ISC USS ION
B y vir tue of the sti pu la tio ns e nte re d in to p ri or to tr ia l, the iss ue s b e fo re the ba nk ru ptc y c ourt , and now be fore this Panel, are very narr ow: (1) doe s the 1981 Ag ree ment exis t and (2) if the 1981 Ag ree me n t e xis ts , w h a t ar e it s mate r ia l te r ms ? Sp e c if

ic a ll y , d id th e 1 9 8 1 A g r e e me n t c o n ta in a provision which prohibi ted t he Debtor from pledging the Trust’s stock to Citi zens? As the par tiesThe Ohio Supreme Court has not decide d whether the pre pondera nce of evidenc e or c lear 7 and c on vin c inge vid e nc e sta

nd ard is pr op e r to pr ov e the e xiste nc e of a c on tr a c t. T he Sixth C ir c uit Court of Appea ls has anticipated that it would apply the prepondera

nce of evidenc e standa

rd. I n the absenc e of binding prec edent on th e i s sue, we will follow the Six th Circuit as did the bankruptcy c ourt

. 12 se e kin g to e nf

or c e the a lle g e d tr ans fe r o r ple dg e re str ic tio ns of the 19 81 Ag re e me nt, the Ap pe lla nts bore the burden of

proving , by

a pre pondera

nce of the evidenc e, i t s ex i s t ence
. W oodman Design Gr ou p, In c . v . H

om este ad s o f Ne wto wn, LLC , 20 03 WL 22 27 25 96 (D

. Conn. Se pt. 30 , 2 00 3) ; see als o Lincoln Elec. Co. v. St. Paul Fire &Marine Ins. Co. , 210 F.3d 672, 688 ( 6th Cir. 2000) (a nti c ipatin g tha

t O hio Sup re me Court

wo uld a pp ly prep on der anc e of

e vid e nc e sta

nd ard ); Kohler v. Taco Eds, Inc . (

In re Taco Eds, I

nc.) , 41 B.R. 693, 696 (B ankr. N .D. Ohio 1984). 7
Ohio law does not re quire that a contra ct be reduc ed to w riting. The e ssential elements of a contr act unde r Oh i o l aw are “an of fer , acc eptanc e, contr actua l capa city , consideration (the barg ained f

or leg al bene fit and/or detr iment), a manife station of mutual assent and leg ality of objec t and of c onsideration.” Minster Farmers Coop. Exc h. Co. v. Mey er , 884 N. E. 2d 10 56 , 106 1 ( Oh io 2008). “The most basic require ment for the f ormation of a c ontrac t is a meeting o f t h e m i n d s or mut ua l a sse nt t o th e te rm s o f a n ag re e me nt, ” and a c le ar und e rs tand ing by bo th part ie s o f t he te rm s of the a g ree ment and the intention to be bound by those terms. Taco Eds, Inc. , 41 B.R. at 695. The parties to a c ontrac t may establish a mee ting of

the minds through the ir t es t i m o ny
. See, e .g., Giurbino v. Giurbino , 626 N.E. 2d 1017, 1026 (Ohio Ct. App. 1993) (“ Ba sed on the testimony

. . . we c onclude that the r equisite meeting of the minds was pre sent to form a c ontrac t . . . .”).

I n d et ermini ng the disputed issue of fa ct as to whe ther the 1981 A g ree ment exis ts, the bankruptc y

court c oncluded: The [Appellants] presented e x tensive evide nce r eg arding the meeting of their minds ba c k in 19 81 on the c on c e pt o f a

buy -s e ll a g re e me nt. Of

c ours e , th is t e sti mony

c ou ld be viewe d as self- serving . Corrobor a ti n g th e ir testimony , howeve r, ar e the r efe renc es to t he 19 81 Ag re e me nt i n o the r p re -p le dg e do c ume nts , s uc h a s th e Ap ri l 19 84 la st will and testament of Mark Oa kley and the letter

dated F ebrua

ry 3, 1994 from Mar

k Oakley to his attorney , Robin Hoke. The will and the le tter co u l d b e construed a s evidenc e only

that Mark Oa

kley believed that there was a 1981 Ag ree ment and not13

nece ssarily

that their wa s a mee tin g o f the minds. But a lso corrobor ating the testimony are the leg ends on the Dr y dock stock c ertificates. Taken together, the evide nce appe ars to support t he existence of some kind of agree ment restricting the tra ns fe r o f so meof t

he sto c k in D ry do c k

in s om e ma nn e r. (A pp e lla nts ’ A pp
. a t 27 0- 71 .) (e mph a sis a dd e d. ) Th e ba nk ru ptc y c ourt ’s c on c lus ion

is r e a so na

bly

su pp or te d b y the e vid e nce in t

he re c or d b e fo re us . T he c ourt did no t e rr in f ind ingthat some ty

pe of ag ree ment exis ted. Although a

writing is not required to for m a contra ct under Ohio law, the Appellants base d their ar g uments con ce rn ing the contents of the 1981 A g ree ment upon the exist ence of a w ritten contra ct. B eca

use they could not prese nt the orig inal writingas re quired by the “be st evidence rule” purs ua nt t o F e de ra l Ru le of

Ev ide nc e 10 02 , th e y

so ug ht t o in tr od

uc e se c on da

ry e vid e nc e of

the te rm s of the 1981 Ag ree ment pursuant to Fe dera l Rule of Evidence 1004(1). While concludingthat the Appellants we re e ntitled to int roduce sec o ndary evidenc e, the ba

nkruptcy court noted that such

e vid e nc e mus t g ive it
more to g o on than ‘shee r spec ulation.’ Harrow Prods., Inc. v. Liberty Mut. Ins. Co. , 64 F.3d 1015, 1021 (6th Cir. 1995) (“ [W ]e cannot state that a party can ne ver pr ove the t erm s o f [a

n in sura nc e ] pol ic y

wi tho ut a

c op y of the po lic y

or a re a so na ble fac simil e ther eof. B ut the party trying to do so c erta inly fac es a f ormidable burde n. He re no jur

y c ou ld f ind , a bs e nt s he e r s pe c ulatio n, the sc op e of c ov e ra g e
. . . a nd a ll other a spects of the policy , on which cove rag e ofte n hinge s.”) (A pp e lla nts ’ A pp . at 27 5. ) H a vin g so no te d, the ba nk ru ptc y c ourt c on c lud e d th a t:
Th e [Ap pe lla

nts ] de mon str a te d th a t th e brot hers p ro ba bly a g re e d to th e c o n c e p t of a b u y - s e ll a g r e e me n t in s o me f o r m. T h e [Ap p e ll a

n ts ], howeve r, fa iled to car

ry their burde n of proving the mater ial terms of t h a ta g r e e m e n t

. T h e t e s t i m o n y s h o w e d t h a t o n e o f

t h e O a k l e ys draf ted a buy -sell ag ree ment fo r a cli ent and that the O akley s were succe ssful in locating a copy of t hat other a g ree ment. Given this, they have not shown by

a preponde ranc e of the evidenc e that the marks on the fo rm buy -s e ll a g re e me nt i ntr od uc e d in to e vid e nc e fr om t he Oh io Tr ans a c tio n Gu ide re la te d to the 19 81 Ag re e me nt. Th e [Ap pe lla nts ] also failed to pr ove that the De btor - as oppose d to his sons - wasFor example, they

attempt to expl ain that Mark O akley ’s will would not mention the Debtor 8 or the Tr ust a s p art ie s to the 19 81 Ag re e me nt b e c a us e the De bto r w a s n ot a sh are ho lde r, a nd

it ref ere nced T imothy

Oakley , the trustee of

the Trust. The Appe llants also attempt to ex plain that the De bto r m ay

have sig ne d the a ff

ida vit a sse rt inghis a

uth or ity to p le dg e the sto c k “ [p]e rh a ps [be c a us e he] was despe rate to ge t the loan closed, a nd signe d whateve r [Ci tiz ens] put in fro n t of him.” (A pp e lla nts ’ B r. at 22 -2 3. ) Ad dit ion a lly , the y argue that in re g ard to t he purc ha se pr ic e of

the sh a re s, the bankr uptcy court ig nored or

dismiss ed Mark Oakley ’s t estimony and focused solely on his letters to Robin Hoke. 14

su bje c t to wh a te ve r r e str ic tio ns we re se t fo rt h in the 19 81 Ag re e me nt. Mark Oa kley ’s wil l ref

ere nced an agr eeme nt among him, his brothers and Dr y dock, but did not mention the Debtor or the T ru s t as being p ar t i es t o t h e a gre em en t

. M o re o v er , t h e De b t o r di d n o t ac tas t h o u gh he be lie ve d th a t he or the Tr us t w a s su

bje c t to the 19 81 Ag re e me nt. The De btor not only pledg ed the Pledge d Stock to Citi zens, he signe d an af fidavit repr esenting to Cit izens that he had the authority to do so. I n addition, the documents g overningthe Trust, some of w hich the Debto r ex ecute d afte r the 1981 Ag ree ment alleg edly was c reated, wer e inconsistent with the Debtor ’s purported oblig ations under the 19 81 Ag re e me nt a

nd did no t e ve n r e fe re nc e the 19 81 Ag re e me nt. (Appe llants’ App. at 275-76.) (footnote omitted.) Finally , beca

use Mar k Oakley stated in his F ebrua

ry 3, 1994, letter to his attorney that there

was a life insuranc e policy

on the Debtor, “fa ce amount $250,000, the stated purcha se price for the tr us t sh are s, ” the ba

nk ru ptc y c ourt fo un d th a t th e Ap pe lla

nts a lso fa ile d to pr ov e that th e purc ha se price for the ple dg ed stock wa s $400 per sha re a s they asser ted. T h e co u rt conc luded that the Appellants fa iled “to prove either of the m ater ial terms of the 1981 Ag ree ment: price or restric tion on the transf

er of share s by the Debtor .” (A

ppellants’ App. at 277.) The Appe llants urg e this Pa n e l t o r e v e r s e th e b ankruptc y court’s f actua l findings be cause they believe that the bankruptc y court did not g ive “a dequate weig ht to the most probative evide nce . . . the endor sement on the stock cer tificate itself.” (Appe llants’ Br

. at 24.) In support of their a ssertion that th e ba

nk ru ptc y c ourt mis c on str

ue d th e e vid e nc e in r e a c hin g its fi nd ing s, the Ap pe lla nts me re ly

rec ite the fa cts and attempt to provide alternative interpre tations of the evidenc e. Such alternative 8 interpre tations, or differ ing views, of the evidenc e do not constitute clea r er ror. Thurman v. Y

ellow Freight Systems, I

nc. , 90 F.3d 1160, 1166 (6th Cir. 1996) (“Where there are two permissible views15

of the e vid e nc e , th e fa c tf

ind e r’ s c ho ic e be tw e e n the m c ann ot b e c le arl y e rr on e ou s. ” ); Forbes , 372 B. R

. at 3 3 4 (“ W h en d i ff

er i n g v i e ws o f t h e e v i d en ce ar e p o s s i b l e, t h e b an kru p t cy co u rt ’s fi n d i n gs
c ann ot b e c le arl y

e rr on e ou s. ” ). “ Th e c le arl y e rr oneou s stand ard

do e s n ot p e rm it this Pane l to substitut e its assessments of c redibility in place of

the expl i ci t fi n d i ng s made by the bankr

uptcy court.” Forbes , 37 2 B .R. a t 33 4. We g ive pa rt ic ula r d e fe re nc e to t

he ba nk ru ptc y c ourt ’s a sse ssm e nts of cr edibility

beca use, unlike this Panel, it h ad t h e opportunity to observe the testimony of the witnesses. Anderson , 4 70 U. S. a t 57 5. As lon g a s the ba nk ru ptc y c ourt ’s fi nd ing s are “ re a so na ble and supported by

the evidenc e,” w e may

not overturn them. Forbes , 372 B.R. at 334.
The ba nkruptcy court’s f actua l findings i n t h is case a re a mply supported by

the evidenc e. The ba nkruptcy court c ould not have dete rmined the materia l te rms of the 1981 Ag ree ment absent sh e e r s pe c ulatio n. Th e re is no me nti on of a re str ic tio n on tr ans fe r or ple dg e of sh are s in the purc ha se
a g re e me nt s ig ne d b y

the De bto r’ s sons or the pr omi sso ry no te s sig ne d by the so ns on the same date as the a lleg ed 1981 Ag ree ment. There is no mention of a re striction on transfe r or pledg e of sha res in the purcha se ag ree ment for the 25 share s which wer e purcha sed for Marg are t Galvin. The De btor

r e v is e d h is Trust on severa l occa sions after the 1981 Ag ree ment was a lleg edly signe d; however , none of the Tr ust revision documents mentions the restric tion on tra nsfer or pledg e of share s. I n fac t, the Debtor r evised his Trust to provide that share s of Dry dock would transfe r t o Saranne Oakley upon the Debtor ’s death, a t ransf er w hich would be pr ohibited by the 1981 Ag ree ment as Sara nne wa s
ne ve r a sh a reho ld er. Ad dit ion a lly , th e De bto r’ s T ru st’ s p ro po se d d ist ri bu tio n u

po n h is d e a th

c on tr a dic te d th e a

pp are nt p ro vis ion s o f t

he 19 81 Ag re e me nt r e g ard ingthe de a th o f s ha re ho lde rs
. Moreove r, despite the f

act that the T rust was a lrea dy in pla ce at the time the 1981 Ag ree ment was signe d, nothing in the 1981 Ag ree ment addre ssed how the Trust’s share s wer e to be ha ndled as the ag ree ment appar ently

addre ssed only

individual shareholder s, i.e .: t he a g re e me nt r e fe rs to l if e tim e restric tions wherea s the Trust has no “ lifetime” a nd it refe rs t o d i s tribution upon the death of a share holder whe rea s the Trust does not “die .” Mar k Oakley ’s will, which the Appe llan t s assert supports their position, makes no ref ere nce to Ma

rg are t Galvin, the Trust, or the D ebtor be ing s u bject to the 1981 Ag ree ment.16

Th e str on g e st e vid e nc e in sup po rt of the ba nk ru ptc y c ourt ’s fi nd ingthat th e Ap pe lla nts did not meet their burde n of provingthe essential e lements of the 1981 Ag ree ment is found in the 2003 restate ment itself. The introduction to the restatement, which eac h of the shar eholder s signe d, states that “they cannot prec isely reme mber [t he orig inal ag ree ment’s] ex act ter ms,” that the shar eholder s int e nd to h on or the ir com mi tm ents un de r t

he or ig ina l a g re e me nt “ whatever tho se c omm itm e nts

m i g h t h a v e b e e n , a s n e ar l y a s p o s s i b l e , ” t h a tt h e y “ believe that the lost ag ree ment form wa s in the

same fo rm

a s, or ve ry sim ila r t o, the a g re e me nt f

or m th a t w a s f

ound ,” and

fi na lly that “in

the sp ir it of c omp ro mis e , a

nd de sir ingto h on or

the ir c omm itment s und e r t

he los t a g re e me nt as nearly as po ssi ble .” This lang uag e demonstra tes that the Appe llants themselves do not know exactly what the te rm s o f t he 19 81 Ag re e me nt w e re . T he ir us e of the fo rm bo ok to r e c on str

uc t th is a g re e me nt i s a lso

su sp e c t be c a

us e Gr e g g Oa

kle y , who a lle g e dly dr a ft e d the or ig ina l ag re e me nt, do e s n ot a c tua lly re c a ll

makin g the mark s in

the bo ok wh ic h le d th e Ap pe lla

nts to use the fo rm

in r e c re a tin g the ir

a g re e me nt. The Appe llants simply did not prove, by a preponde ranc e of the evidenc e, what the terms of the 1981 Ag ree ment wer e, and in pa rt i cu lar, that the 1981 A g ree ment prohibited the De btor from pledg ing the Trust’s shar es as se curity for his loan fr om Cit izens. To the contra ry , the evidenc e demonstrates that in rec reating the 1981 A g ree ment, the Appellants themselves were eng ag ing in mer e spec ulation

a s to the ma te ri a l te rm s o f t he a g re e me nt.
The ba nkruptcy court’s f inding that the Appellants failed to prove that the price per sha re se t forth in the 1981 Ag ree ment was $400 is also supported by t h e evide nce. T he letter s from Mar k Oakley to Dry dock’s c ounsel in which he state s that the share s are subject to a buy -sell ag ree ment

are indeed inconsistent. One state s that the price per sha re is $400 while the othe r states that the f ace value of the 337.5 share s is $250,000 (approximately $740 per sha

re)

. Mark Oakley testified that the $250,000 was a

n err or on his part, and the Appellants asser t that the bankruptc y

court ig nored this testim ony . I t is not, however, f or this Panel to substit ut e i t s as s es s m ent of thi s witness’s te sti mony fo r t hat of the ba nk ru ptc y c ourt . In a dd iti on , th e le tte r statin g that the pr ic e is $ 40 0 a lso indicates that the price is subject to modification. Moreover , the form book f rom which the Ap p el l an t s wo rk edt o re co n s t ru ct t h e a gre em en td i d n o tco n t ai nt h e p u r ch as e p ri ce an d Gr egg Oakley , whose ha

ndwritin g is in the book, testified “I don’t know what the exact terms of the purcha se pr ic e pr ov isi on

wo uld have be e n b e c a

us e a c c or din g to t

he no ta tio ns in t

he fo rm bo ok it,17

it’s indicating that that should be left blank.” (Appe llants’ App. at 583.) Finally , Timothy Oakley testified that he ha d believed that the price was in fa ct $100, but later r ealized it was in fac t $400, po ssi bly be c a us e that is wh a t hi s b ro the r i nc lud e d in the 20 03 re state me nt o f t he a g re e me nt.
V. CO NC LU SION
For the fore g oing r easons, the judg ment of the ba nkruptcy court is AF FI RMED.