NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION F ile Nam e: 11a0664n.06 No. 10-5060 UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT

THE CADLE COMPA NY II, INC., Plaintif f-Appellant,

v. GA SBUS TERS PRODUC TION I LI MITED P ARTNERSHIP, Defendant-

Appellee

. ) ) ) ) ) ) ) ) ) ) ) ON AP P E AL FROM THE UNI TED STATES DI STRI CT COURT FOR THE WES TERN DI STRI CT OF KENTUCKY

O P I N I O N

BEFORE: WHITE and STRANCH, Circuit Judges; COHN, Distric t Judge. * AVERN COHN, District Judge. This is an appea l of a bankruptcy co u rt decision. Appellant The Cadle Company I I , I nc. (Cadle) , the primary unsecur ed cre ditor in a bankruptc y estate (estate ), appea ls a b an k ru p t cy court’s decision that Appellee Gasbuster s Production I L imited Partnership (GPI L P) has the owner ship rig ht to asser t claims ag ainst the estate. GPI L P’s claims are based on ag ree ments enter ed into betwee n GPI L P and estate debtor Clarenc e L ester Paul (Paul) relating to the ope ration and ma nag ement of 15 g as and oil we lls (wells). For the re asons that follow, the ba nkruptcy court’s de cision will be aff irmed. I. BACKG ROUND The e state whose a ssets are now at issue wa s formed w hen, on F ebrua ry 6, 2004, Paul and his wife Marg are t S. Paul (Mr. and Mrs. Paul) filed a Chapter 7 bankruptc y petition. Two y ear s afte r
The Honora

ble Aver n Cohn, United States District J udg e for the Easter n Di s t ri ct of * Michig an, sitting by

desig nation.No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

the bankr uptcy petition was filed, GPI L P filed a proof of cla im ag ainst the estate in the amount of $424,82 5

. 0 0 , i n o rder to rec over from what GPI L P asser ts was a brea ch of contra ct by Paul for failing to operate and proper ly manag e g as wells. At the same time, GPI L P moved for pay ment of g as-sa le proce eds in the amount of $25,659.33, which GPI L P a sserts it wa s entitled to beca use the p ro ceeds wer e ear

ned during a period of time in which it had an owner ship rig ht – b et we en settlement of a separ ate claim ag ainst GPI L P, descr ibed below, and Mr. and Mrs. Paul’s bankruptc y petition. Cadle subsequently purcha sed most of the asse ts of and rig hts in the Paul estate. Cadle filed an objection to GPI L P’s proof of claim and motion for g as-sa le proce eds with the bankruptc y court. As to the proof of claim, Cadle contende d that GPI L P was not entitled to rec over 2 from the est at e b eca

use it did not have an owner ship interest in the wells, primarily beca use of claimed defic iencies in the well-tr an s fe r agre ements. Cadle also argued that GPI L P used an arbitra ry methodology when it calc ulated the proof- of-c laim amount. Finally , Cadle maintained that the amount nee ded to be f urther r educe d to acc ount for ce rtain expenses and of fset items owed by GPI L P to P aul. The bankruptc y court held an evidentiar y h ear ing to aid in its resolution of the parties’ motions. Following the hear ing, Cadle’s objections wer e overr uled and GPI L P was awa

rded claims ag ainst the estate and g as-sa le p ro ce eds, but for a reduc ed amount: $312,239.50 for the proof of claim, and $20,861.15 in g as-sa le proce eds. Wit h reg ard to the p ro o f- o f-c laim amount, the

The objection was made to an amended proof of cla im, filed by GPI L P in response to the 2 estate’ s trustee objec tion that the orig inal claim was unliquidated. The fac t that the objection was made to an a

mended pr oof of c laim has no bea ring on the pre sent appe al. - 2 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership bankruptc y court reje cted Cadle’s argument that the claim neede d to be even further reduc ed beca use of the variou s e x pense offse ts, finding that Cadle failed to provide cre dible evidenc e conce rning their exis tence and amount. On ap p eal, a district court aff irmed the bankruptc y court’s decisions. Cadle appea ls. W e revie w the bankruptc y court’s decision direc tly , rathe r than the district co u rt o rd er . Nuvell Credit Corp. V. W

estfall , 599 F.3d 498, 500 ( 6th Cir. 2010). II. DISCUSS ION A. P roof of

Claim Cadle argue s on sever al g rounds as follows that the bankruptc y court err ed in finding that GPI L P had an owne rship interest to asser t a proof of

claim ag ainst the estate. 1. Judi cial Adm ission s Firs t , C ad l e say s that the bankruptc y court err ed during the evidentiar y hear ing when it decide d a motion in limine in favor of GPI L P, which allowe d statements made by Cadle in a prior adver sary proce eding to be treated as judicial admissions, rathe r than evidentiar y admissions. The
statements involve alleg ations by Cadle that Paul conce aled wrong ful business activities using altereg o entities, and the decision eff ectively preve nted Cadle from arguing that GPI L P’s proof of claim 3 ag ainst the estate was invalid o n t h e gro u n d that it should have been made ag ainst the alter- eg o

Paul is now deceas ed

. The alter- eg o alleg ations involved Paul’s operation of sever al 3 busin e s s e s , in c lu d ing Blue g rass Drilling, Delstar Resource s, Her itag e Properties, The Viking Group, Energ y Manag ers, a

nd others. - 3 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

entities and not Paul. We revie w a g rant of a motion in limine for an abuse of discretion. United States v. Humphre

y , 608 F.3d 955, 957 ( 6th Cir. 2010). I t is well estab l i s h ed i n our circ uit that “‘[p]l eading s in a prior case may be used as evidentiar y admissions.’” Barnes v. Owens-Corning Fiberglas Corp. , 201 F.3d 815, 829 (6th Cir. 2000) (quoting W

illiams v. Union Carbi de Corp. , 790 F.2d 552, 556 ( 6th Cir. 1986)). J udicial admissions, on the other ha nd, are formal a dmissions in the pleading s of a prese nt action, “which have the eff ect of withdrawing a fac t from issue and dispensing wholly with the need fo r p ro o f of the fac t.” In re Fordson Eng’ Corp. , 25 B.R. 506, 509 (B ankr. E.D. Mich. 1 9 8 2 ). “[U] n d er fede ral law, stipulations and admissions in the pleading s are g ener ally binding on the parties and the Court.” Ferguson v. Neighborhood Hous. Se rvs., Inc

. , 780 F.2d 549, 551 (6th Cir. 1 9 8 6 ) (citation and quotation marks omitted). “Not only are such admissions and stip u l at i o n s binding be fore the trial cour t, but they are binding on a

ppeal a s well.” Id. (citation omitted). Fur ther, admissions made during a deposition, absent exceptional circ umstances, have been held to be binding on the parties as a judicial admission a nd cannot be challeng ed in the trial court

or on appea l. Maynard v. Brewer , 787 F.2d 591(6th Cir. Marc h 4, 1986) (table order ) (holding that

a “blatant judicial admission by a plaintiff in his deposition that a jailer did not a ssault him, absent exceptional circ umstances . . . [was] binding on the pa rties”)

. Her e, in support of its motion in l imine , GPI L P provided the bankruptc y court with an amende d complaint fro m a prior adver sary proce eding , which contained the statements that wer e t re ated as judicial admissions. GPI L P also provided deposition testimony from the pre s en t

- 4 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership bankruptc y court proce eding , in which a Cadle repr esentative confirme d the statements as true and a Cadle attorney

stipulated to their truth. The ba nkruptcy court’s w ritten dec ision gra nting the motion states: On the motion filed b y [ GP I L P ] seeking an order deeming the alleg ations of fac t, including mix ed statements of law and fac t, in pleading s and paper s filed by [C adle] in adver sary no. 06-AP-3003 as judicial admissions of Cadle for purposes of t h is bankruptc y case , and the Court being sufficie ntly advised, it is here b y ORDERED that the motion is GRANTED. No evidenc e will b e ad m i t t ed at the upcoming evidentiar y hear ing( s) for the p u rp o s e of contra dicting the asser tion that the bankruptc y estate is liable for any lawful claim ag ainst the debtors in d i v i dually or d/b/a any Paul Family Entity (a) which claim exis ted on the date o f fi l i n g of the petition, (b) for which a proof of claim has been timely and proper ly filed in this case , and (c ) that the Court by

subsequent orde r may

deem to be a llowed. (B ankr. Ct. Doc. 630)

. As stated, Cadle argues that the statements at issue should have been treated as evidentiar y admissions rathe r t han judi cial admissi ons, in order to allow C adle to prese nt additional ev idence in support of its defe nse that other entities and not Paul are liable to GPI L P. In support, Cadle relies

on Dixie Sand & Grave l Corp. v. Holland , 255 F.2d 304 (6th Cir. 1958), in which this court held that “[a]ll eg ations i n p l ea d i n gs in other actions are admissible in evidenc e as admissions, but are not conclusive, and should be considere d in connec tion with any other evidenc e which may be offe red in explanation.” Id. at 310 (holding that an alleg ation from a prior state court case was not binding on the appe llant, even thoug h it was contra dictory to the appellant’ s prese nt contention). I n response , GPI L P arg

ues that the bankruptc y court’s decision to t re at t h e statements as judicial admissions was proper . I n support, GPI L P cites Cananwil l, Inc. v. EMAR Group, Inc. , 250 B.R. 533 (M.D.N.C. 1999), for the proposition that fac tual asser tions made by parties in ple ading s

- 5 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

filed in related adver sary proce eding s, unless subsequently amende d, are judicial admissions. Id. at 545. GPI L P further argues that there is no err or in the bankruptc y court’s decision beca use simil ar statements – or stateme nts confirming the truth of t he prior statements – wer e made in paper s and depositions on the prese nt bankruptc y court’s rec ord. For examp l e, GP I L P points to Cadle’s Responses to GPI L P’s First I n t er ro gatories to Cadle, (B ankr. Ct. Doc. 418, pp. 9-10), filed in the prese nt bankruptcy

court a ction, in which Cadle states: To the extent that the Paul Family Children’s “ar g ument” rests on the hotly contested asser tion .

. . that they , not the Debtors, are the actua l ow ners of a series of rea l a nd imag ined corpor ate en t i t i es that the Debtors have treated as their alter eg os for deca des, Cadle is fully prepa red to “take the Pepsi® Challeng e. . . .” The Objections filed by the Paul Fa

mily Children and the Debtors reve al that both are conce rned that the Settlement Ag ree ment will compromi s e the elabor ate fra ud that they have perpet ra t ed fi rst throug h y ear s of abuse of the corpor ate form and utiliz ation of fictional business entries

. . ., which repr esents nothing more than an at t em pt to shield the Debtors assets from cre ditors

. . . . [I ]t is understanda ble that any one with the Paul surname should take note of the storm clouds on the horizon beca use a dust-up is coming over which business interests and other proper ty are actua lly assets of the Debtors’ Estate.

. . . I f these business entities actua lly belong in the Debtors’ Estate, as Cadle intends to prove. . . . (B ankr. Ct. Doc. 312, pp. 5, 11-12, 14). GPI L P also cites to Cadle’s Responses to GPI L P’s Fi rs t I nterrog atories to Cadle, a lso filed in this bankruptcy case , in which Cadle states: Yes, Cadle ha s contende d in this case or in re lated adver sary proce eding s that [Mr. and Mrs. Paul] wer e individually liable for the obligations of or clai m s ag ainst Blue g rass, Del s t ar , Heritag e, and/or Energ y Manag ers. For a full and complete explanation of the fac tual basis for that contention, see the following pleading s and filings inThe Cadle Company II, I nc. v. Paul, et al. , Case No. 06- 3003. 4 (B ankr. Ct. Doc. 497, pp 9- 10).

The Cadle Company II, Inc. v. Paul, et al. , Case No

. 0 6 -3 0 0 3 is the related adver sary 4 proce eding ref

err ed to in the par

ties’ ar g uments.

- 6 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership Finally , GPI L P cites to deposition testimony g iven during the prese nt bankruptc y cou rt proce eding – and also attache d to its motion in limine reply brief – in which a Cadle repr esentative, Pete Ba rta (B arta ) – speaking on behalf of Cadle – was asked, “Cadle has contende d in this case or in related adversar

y proce eding s that t h e d eb t o rs wer e indi vidually liable for the obl iga tions of or claims ag ainst Blue g rass, Delstar, Her itag e and/or Energ y Manag ers. I s that still true? ” (B ankr. Ct. Doc. 623, Ex

. 1, p. 24). After resolving objections to the form and Ba rta’s rec ollection of the issue, Ba rta re sponded, “I

believe the alleg ations are true .

. . Ibelieve toda y those alleg ations are true.” ( Id. at 26.). 5 As an initial matter, GPI L P’s argument that Cana n w i ll, Inc. , supra , resolves the issue is unpersua sive, as it is not binding in this circ uit. Simi larly unpersua sive is GPI L P’s argument that
t h e s t at em ents made in Cadle’s Responses to GPI L P’s First Interrog atories to Cadle, (B ankr. Ct. Doc. 418, pp. 9-10), and Cadle’s Response t o an Ob j ec tion to a Motion for Approva l of Sale of Estate P ro p er t y , (B ankr. Ct. Doc. 312), defe at C adle’ s argument, as i t is not clea r from the record whether the bankruptc y court relied on either document when it made its decision. I n other words, while it is true that both documents ar e p ar t of the bankruptc y court’s rec ord, we cannot discern whether the bankruptc y court relied on these statements, or solely on the amende d complaint from the prior a dversa

ry proce eding

. Moreove r, Cadle’s asser

tion that the bankruptc y court err ed when it relied on the statements from the prior adver sary proce ed i n g’s am ended complaint in making its decision has merit.

I n the sam e d ep o s ition, Cadle’s counsel stipulates to the belief that the alleg ations in the 5 prior adve rsar

y proce eding ’s amende d complaint wer e true . ( Id. at 30). - 7 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership Particularly , prec edenc e in this circ uit dictates that if the bankruptc y court treated the statements as judicial admissions based s o l el y o n pleading s from a prior action, this was an err or. See e.g. , Barnes , su

p r a , at 8 2 9 (holding that “[p] leading s in a prior case may be used as evidentiar y admissions”). Howeve r, in this case , the rec ord demonstrates that the bankruptc y court relied not only on the statements from the prior action, but also on Ba rta’s d ep o s i t i o n testimony g iven during the prese nt ba

nkruptcy court action. Thus, to the extent that the bankruptc y court err ed in c onsidering statements made in the pr ior adve rsar y action, the e rror

was ha rmless. Acc ording ly , beca

use the bankruptc y court did not rely solely on the prior action’s pleading s i n making the decision, but at a minimum relied also on an admission by a Cadle repr esenta t i v e during a deposition in the bankruptc y proce eding befor e it, we cannot find that the bankruptc y court abused its discre tion. See Maynard , supra , *1. 2. GP ILP’ s Ow nership In ter est Next, Cadle prese nts sever al additional arguments to support its position that the bankruptc y court e rre d in finding that GPI L P has a valid owne rship interest in the we lls. a. F orm ation and Well Transf er D ocum ents First, Cadle argues that the GPI L P formation documents and well-tra nsfer agreements on which GPI L P r elies to asser t its owner ship interest are defic ient. Particularly , Cadle states that the documents contain g rammatica l err ors and name inconsistencies, which rende r them unenfor cea ble by GPI L P beca

use they wer e never corr ecte d. I n response , GPI L P argues that the documents are valid and enfor cea

ble under Kentucky law. Thus, despite any defic iencies, GPI L P a rg ues that it is - 8 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

the rig htful transfe ree , which is sufficie nt to justify its proof of claim ag ainst the es t ate. As with
contra cts, this Court revie ws the district court’s construction of these documents as a matter of law de novo. See e .g., W

eimer v . Kurz-Dasch, Inc

. , 773 F.2d 669, 671 ( 6th Cir. 1985). As stated by the b an k rupt cy court, beca use this is a rea l proper

ty issue, Kentucky law g overns. Unde r Ke ntucky law, whe n construing a dee d or assignment, as with any other c ontrac t, the court’s primary object is to discover the intent of t he parties throug h a fair e x am i n ation of t he document as a whole. Babb v. Dowdy , 17 S.W .2d 1014, 1016 (Ky

. 1929). “I n modern times f

orm has larg ely y ielded to intention, and a deed is now held to consist of the names of t h e p ar t ies, the consideration, a descr iption of the subject g rante d, t h e quantity of the interest convey ed, and the conditions, rese rvations or covena nts, if any .” Id. Fur

ther, “[i] t has long been the rule in [Kentucky ]

. . . to uphold deeds as other contra cts, howeve r informally they may be draw n, when the terms are suffi ci ent to express the intention of the parties.” Id. “[A]nd to this end a liberal construction is g iven a deed inartificially and untechnica lly draw n; the construction to be g iven such a deed and the intention of the parties to it is to be g ather ed from a fair consideration of the entire instrument.” Id. Fur ther, wher e there is ambig uity and/or mutual mistake, Kentucky law say s that a court may look be y ond the four corne rs of the document in question to resolve the same. See, e.g. , Ingram v. Ingram , 283 S

. W

. 2 d 2 1 0 , 212 (Ky

. 1955) (par ol evidenc e admissible to construe deed upon alleg ation of mutual mistake); Senters v. Elkhorn & Jellico Coal Co. , 145 S.W .2d 848, 850 (Ky

. 1940) (par ol evidenc e admissible to prove alleg ation of mutual mistake); Virginia Iron, Coal & Coke Co. v. Combs , 177 S.W . 238, 238 (Ky . 1915) (pa rol evidenc e admissible w here ambig uity in de ed

- 9 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

is latent, not appar ent from fac e o f i n s t rument); Day v. Asher , 132 S.W

. 1035, 1036 (Ky

. 1911) (ambig uity

in deed shown by

extrinsi c fa cts may

be re solved by

extrinsi c evide nce)

. Cad l e’s argument that the GPI L P formation and well-tra nsfer ag ree ments are defic ient require s a brief descr iption of the documents. Wit h respe ct to the GPI L P formation documents, they consist of a L imited Partnership Agr eeme nt (Ag ree ment) and a C ertificate of L imited Partnership (C ertifica te). The Ag ree ment descr ibes that Wil liam Polan (Polan) formed a Florid a l i m i t ed partne rship by the name of Gasbuster s Production I for the stated purpose of “dire ct[ing] the Sales, Drilling, Outfitting, Production of Natura l Gas and acquir ing the assets of Appalac hian Natura l Gas

. . . and cer

tain oil and g as owner ship interests of Quintana Coal Co.

. . .” The Certificate descr ibes that 17 day s afte r executing the Ag ree ment Polan cre ated an entity by the n am e o f Gasbuster s Production I L imited Partnership. Both the Ag ree ment and the Certificate name the initial g ener al partne r of GPI L P as Gasbuster s, I nc., a Kentucky corpor ation, and the initial limit ed partne r as KYGasbuster s, I nc., a Kentucky corpor ation. Both d o cu m en t s list the location of the partne rship’s principal office as Palm Be ach, Florida , and the business office in Paintsvil le, Kentucky

. Howeve r, the partne rship name used in the documents varie s – Gasbuster s P ro d u ction I compar ed to Gasbuster s Production I L imited Partnership. Fur ther, the Ag ree ment expressly provides that the partne rship’s business “may be conducte d under any other name deeme d nece ssary or desirable by the Gene ral Partner.” Both the Ag ree ment and the Certificate contain sever al g rammatica l and ty pog raphic al er

rors. As for Polan’s involvement with the well proper ties, in April of 1994, Ray mond R. Bur g ess (B urg ess) and Corbin J

. Robertson and his family (collec tively the Robertsons) – the orig inal owner s - 10 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

of the proper

ty on which the wells are located – transfe rre d their interests in the wells to Polan and GPI L P entities. The undisputed transfe rs wer e executed via five doc uments, as follows: (1) Purchase and Sale Ag ree ment: selling the 15 Bur g ess wells to Gasbuster s L imited Partnership for

$307,000.00 (B ankr. Ct. Doc. 691- 5); (2) Assignme nt of I ntere st of Quitclaim and Subl ea s e Surrende r Ag ree ment: assig ning all of th e i n t ere st in the 15 Bur g ess wells to Gasbuster s, I nc. for $10.00 (B ankr. Ct. Doc. 691- 6); (3) Assignme nt of L ease : assig ning rema in i n g i n t erests in the wells from the Robertsons to Gasbuster s L imited Partnership I , acting throug h Gasbuster s, I nc. (B ankr. Ct. Doc. 691- 7); (4) Dee d of Oil and Gas Rights: convey ing o i l an d gas mineral rig hts from the 15 Bur g ess wells to GasB usters P ar t n er ship I , acting throug h Gasbuster s, Inc., for $200,000.00 (B ankr. Ct. Doc. 691- 10); (5) Dee d: convey

ing oil and g as mineral rig hts fr o m t h e 1 5 Bur g ess wells to Gasbuster s Partnership I , actingthroug h Gasbuster s, I nc., for $50,000.00. (B ankr. Ct. Doc. 691- 9). As for Polan’s involvement with Paul, on Feb ru ar y 13, 1996, Polan, in his capa city as president of GPI L P, and Paul enter ed into two ag ree me nts. I n the first ag ree ment, titled “Assig nment and Dee d of Oil and Gas Rights,” Paul – throug h Delstar Res o u rc es

– p u rchased an oil and g as proper ty from Polan and Ga sbusters L imited Par tnership I for $10.00. The sec ond ag ree ment was

an operating ag ree ment enter ed into by Paul – this time doing business as Blue g rass Drilling – and Polan individually and as the manag ing g ener al partne r for Gasbuster s L imited Partnership I

. Under the second ag ree ment, Paul was employ ed to manag e 15 wells owned by Pol an and Gasbuster s L imited Partnership I

. As compensation for his se rvice s, Paul was to rec eive $1,500.00 per month

- 11 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership plus expenses to be deducte d from g as-sa le proce eds. At some point there afte r, Paul beg an operating and mana g ing the wells. Ba s ed u pon the above descr ibed formation documents and well-tra nsfer ag ree ments, the bankruptc y court found it “abunda ntly clea r that the Well T ra n sfer Documents serve d to transfe r

owner ship of the wells in question to GPI L P.” ( See Ba nkr. Ct. Doc. 710, supra , at 10). Particularly , the bankruptc y court held that overw helming evidenc e, including the following , demonstrated that GPI L P had owned the w ells since 1994: (1) a n am e simil ar to “Ga s[b] usters Production I L imited Partnership” is listed as g rante e on four

of five w ell transfe r docume nts; 6

Cadle plac es much emphasis on the fact that one of the five well-tra nsfer ag ree ments, the 6 Assignme nt of I ntere st of Quitclaim and Sublease Surrende r Ag ree ment, assig ns all interest in the Bur g ess wells to “Ga sbusters, I nc.” alone. Contrary to the other four ag ree ments, this document does not indicate that Gasbusters, I nc. is acting in an ag ency role for another “Ga sbuster Partnership” entity

. Cadle argues that since the four other documents expressly ref ere nce Gasbuste rs, I nc. as acting in an agency role , the parties must have intended to d es i gn at e Ga s b u sters, I nc. as the sole assig nee on this particula

r ag ree ment. Cadle argues that the ag ree ment is una mbiguous on its fac e and that, fac ed with an unambiguous document, the ba n k ru p t cy court clea rly err ed in considering evidenc e bey ond “the four corner s ” o f t h at document (such as the purpose of GP I L P’s formation, the amount of money involved in transfe rring the wells, etc.)

. See Ho h ei mer v. Hoheime r , 30 S.W .3d 176, 178 (Ky

. 2000) (“Extrinsic evidenc e cannot be admitted to vary the terms of a written instrument in the absenc e of an ambiguous deed.” ). This a rg ument is not altog ether unpersua sive, but it ignor es the fac t that “[c]ontract lang uag e . . . may be clea r on its fa ce and y et contain a latent ambig uity .” State Farm Mut. Auto. Ins. Co. v. Slusher , 325 S.W .3d 318, 322 (Ky

. 2010) (citation omitted). “A latent ambig uity is one which does not appea r upon the fac e of the words used, and it is not known to exis t until the words are broug ht i n co n t ac t wi t h the collater al fac ts.” Carroll v. Cave Hill Cem etery Co. , 189 S.W

. 186, 190 (Ky

. Ct. App. 1916) (quoted in Slusher ). I n this c ase, the latent amb i gu i t y is exposed when the Assignment of Interest of Quitclaim and Sublease Surrender Agreem ent i s “b ro ug ht in contac t” with the four other well-tra nsfer documents, all of which ref ere nce Gasbuster s, I nc. as the ag en t o f a Ga s b uster Partnership entity

. Arguably , the bankruptc y court could have found the Assignment of Interest of Quitclaim and Sublease Surrender Agreem ent

unambig uous on its face ; however , it was not clea r er ror to hold otherw ise. - 12 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership (2) GPI L P was forme d expressly for the pur

pose of a cquiring the wells; (3) t he well transfe rs, which totaled approximately $550,000.00 in consideration, occur red shortly afte r new limit ed partne rs joined GP I L P an d contributed approximately

$700,000.00; . . . (5) no party other than Cadle has ever come forwa rd to challeng e GPI L P’s owner ship interest in the we lls; and (6) no e vidence was submitted that GPI L P transfer red a way its ownership interests in the wells. ( Id . at 10-11). We find the bankruptc y court’s analy sis to b e sound. That is, a fair consideration of the instruments in their entirety demonstrate that GPI L P was the i ntended transfer ee and t ransf eror of the wells, such that it had standing to asser t a proof o f cl ai m against the estate. See Babb , supra (“[A] liberal construction is g iven a deed inartificially and untechnica lly drawn; the construction to be g iven such a deed and the intention of the parties to it is to be g ather ed from a fair consideration of the entire instrument.”). As such, we aff irm the bankruptc y court’s deter mination that GPI L P had

an owne rship interest to asser t the claims ag ainst the estate. b. Settlem ent Agr eem ent Cadle next arg ues that the bankruptc y court err ed when it r elied on a settlement ag ree ment from a separ ate lawsuit as further support that GPI L P has an owner ship interest in the wells. The lawsuit was instit uted by Bur g ess and his company Appalac hian Natura l Gas Corp. (ANG ) ag ainst Polan, Gasbuster , I nc. and GPL I P, claiming that GPI L P had defa ulted on t h e we l l -t ransf er ag ree ments descr ibed above. The parties ultimately rea ched a settlement in September of 1999. The
set t l em ent ag ree ment provided that Bur g ess and ANG would rele ase all claims ag ainst GPI L P in - 13 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership exchang e for “the sum of $35,000.00 in cash from escr ow fund disbursed to [counsel for GPI L P] by the L awr ence Circuit Court Clerk” pursuant to the order and judgme nt.” Additiona l l y , Bu rgess, ANG, a nd Paul e ntere d into a separ ate r elea se and se ttlement ag ree ment, in which Paul, on behalf of himself and his assig ns, also ag ree d to pay Bur g ess $35,000.00 in exchang e for an ag ree ment of dismiss al of the case with prejudice

. T h e ca s e was dismiss ed by an ag ree d order and judgme nt, enter ed on De cembe r 21, 1999. The or der a nd judgme nt provides in pertinent pa rt: 6. Upon the oral Motion of [GP I L P] for a Def ault J udg ment on its Crossclaim ag ainst W i lliam J .M. Pol[ a]n and others, it is ORDERED AND ADJUDGED that al l persons, other than the L essors under the L ease , Blue g rass Drilling Corporation and Delta, who claim to have liens, encumbr ance s, mortg ag es or secur ity interests in and to the proper

ty of [GP I L P] , or claims of rig hts to pay ments from [GP I L P] , are VOI D, TERMI NATED A

ND/OR EXTI

NGUI SHED. . . . 10. All other claims, counter claims and crossc laims asser ted in this action should be and her eby

are , DI SMI SSED W I TH PREJ UDI CE. (B ankr. Ct. Doc. 685- 1). The bankruptc y court deter mined that the lang uag e in the settlement ag ree ments and subseque n t dismiss al order was persua sive insofar as it provided further evidenc e of GPI L P’s

owner ship interest as rec og nized by Paul and Bur g ess – the transfe rors – as well as the adjudicating
court. ( Ba nkr. Ct. Doc

. 710, p. 11 (finding that “the L awr ence Circuit Court L itigation shows that the parties to th[ e] litigation

. . . considere d GPI L P the transfe ree of the proper ty in question

. . . and [t hat] the L awr ence Circuit Court expressly found and actua lly adjudicate d in favor of GPI L P vis a vis [ ] P olan and [GPI L P] conce rning the power to assert c laims with reg ard to the pr operty .”))

. The bankruptc y court prope rl y co nsidered all these documents in resolving the ambig uity

cre ated by the use of various titles for DPI L P. Kentucky law permits a court to look bey ond the four - 14 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

corne rs of a document in the case of ambig uity and/or mutual mistake

. See Ingram , supra , at 212; Senters , supra , at 850; Va. Iron , supra , at 238; Day , supra , at 1036. Acc ording ly , the bankruptcy
court did not err in deter mining that the settlement ag ree ment supported its finding rel at i n g t o GPI L P’s ownership intere st. 3. P roof-of-Claim A m ount Cadle nex t arg

ues t hat even if the C ourt deter mines that GPI L P has an owner ship interest, the bankruptc y court further err ed in its calc ulation of the proof- of-cl aim amount and in its deter mination that further r eductions to the cla im amount were not warr anted. The bankruptc y court’s decision sets for t h h ow it approa ched the task of calc ulating an

acc urate amount:

Having deter

mined that GPI L P ha s the rig ht and standing to a ssert its Proof of Claim, the Court must consider the amount of GPI L P’s claim, which derive s from the alleg ed produc tion and sale of natural g as fr om the wells owned by GPI L P. The g as field at issue here contains a total of 18 natura l g as wells connec ted to two pipelines lines, eac h of which ends in a meter near a compre ssor wher e the g as is compre ssed, m easu re d and then enter s into a larg e gas transmission line for sale an d d i s t ribution. Eac h well is surrounde d by approximately 40 acr es of land. T h e northern pipeline (Meter No. 824440) contains eleve n wells, and GPI L P makes no claim of owner ship to one of those we lls (Robertson No. 2). The southern pipeline (Meter No. 830110) contains seven wells, and GPI L P makes no claim to two of those wells (Robertson Nos. 6 & 7). The parties produce d extensive productio n rec ords; howeve r, they are all ref

ere nced by meter not by well. Since eac h meter is at the end of t h e p i p eline, the challeng e is asce rtaining how m uch of the gas flowing through the two meters orig inates from wells to which GPI L P makes a claim and how much comes fr om others (the “ Non-GPI L P W ells”). (B ankr. Ct. Doc. 710, p. 12)

.

- 15 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership

Us ing this methodology , the bankruptcy court nex t considere d evidenc e produced by b o t h GPI L P and Cadle, in the for m of expert testimony

and we ll production data, in orde r to deter mine how much g as came from GPI L P’s wells, which would then allow the court to deter mine how much GPI L P wa s owed. Id. at 12-15. After analy zing all of the evidenc e, the bankruptc y court adjusted GPI L P’s amende d proof of claim down to $312,239.50. Id. at 1 5

. Nex t, relating to Cadle’s argument for additional reduc tions, the bankruptc y court found that fu rt her offse ts to acc ount for
amounts claimed to be owed to Paul by GPI L P wer e not war rante d beca

use Cadle “fa iled to provide any cre dible evidenc e conce rning the exis tence and, more importantly , the amount of such ‘off sets.’” Id. at 16. Contrary to Cadle’s argument, the rec ord demonstrates that the bankruptc y court thoroug hly analy zed the evidenc e produce d by both GPI L P and Cadle in arr iving at its claim-amount decision. Thus, reve rsal is not war

ran t ed o n these g rounds. Fur ther, Cadle fails to provide authority for its argument that the bankruptc y court err ed in finding that the offse t evidenc e was not cre dible. I ndeed, in its brief, Cadle “does not dispute the f act that some of the entries on its e x pense- documentation exhibi ts do not repr esent proper offse ts ag ainst [GP I L P’s] claim.” (Appe llant’s Br ief, p. 67). Rather than providing acc urate offse ts to the bankruptc y court, Cadle seeming ly left it to the bankruptc y court to compile a ccur ate f igur es. ( Id. at 67-68). Particularly , Cadle states that it “did not see any need

. . . to prepa

re a sprea dsheet of these expenses in its Post-Trial Br ief beca use of its belief that the Ba nkruptcy Court would corr ectly resolve the standing issue and never rea ch the q u es t i o n of offse ts.” (

Id. ). I n other words, with o u t au t h ority for the proposition, Cadle maintains that the

- 16 -No. 10-5060 , The Cadle Company II, I nc. v. G asbusters Production I Limited Partnership bankruptc y court should have on its own calc ulated the offse t amounts that Cadle failed to provide rathe r than findingthat the amounts that Cadle provide d wer e not cr edible. Cadle’s argument lacks merit. The bankruptc y court was under no obligation to deter mine any offse ts that Paul may have been entitled to. Acc ording ly , based on the above, the bankruptcy court did not err

in determining GPI L P’s claim amount.

B. Gas-Sale P roce eds Finally , Cadle appea ls the bankruptc y court’s order g ranting GPI L P’s motion for $20,861.15 in g as-sa le proce eds during the time betwee n the previously descr ibed settlement and Mr. and Mrs. Paul’s bankruptc y petition. Particularly , Cadle argues “[b] eca use of the substantial fac tual and leg al overla p” betwee n GPI L P’s amende d proof of claim and its motion for pay ment of g as-sa le proce eds, “the reve rsible err ors alleg ed above [] with r espec t to the former apply equally to the [b] ankruptc y [c] ourt’s dec ision-making pr ocess a s to the latter.” ( Appellant’s B rief, p. 68)

. Fr om what the Court c an g lean, Cadle’s argument assumes a finding in its favor relating to GPI L P’s owner ship interest in order to preva il. Fatal to this arg ument then i s our agr eeme nt with the bankr uptcy court that GPI L P has a suffic ient owner ship interest to assert its claim. Moreove r, Cadle fails to offe r an alterna t e gro u n d in support of its argument. Acc ording ly , the bankruptc y court’s de cision on this is sue will be af firmed.

III. CONCLUSION For the re asons stated a

bove, the ba

nkruptcy court’s de cision is AFF I RMED.

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