2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 12-24-2008 

# In Re: B ro cka

wa y P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ocke t N o . 07-2858

F o l low thi s a nd a dd it ion al work s at : http://d i git alc ommon s .l a w . vi l l a no va . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. It h as be e n a c c e pt e d for inclusion in 2008 D e c i sion s b y a n author i z e d a dmini s tr at or of V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. F or mor e inform at ion, p le as e c on t a ct Be n j amin . C a rl s on@l a

w . vi l l a no va . e du . Re c omme nde d C it at ion " In Re: B r ock a

wa y " (2008). 2008 D e cisio n s . P ape r 44. http://d i git alc ommon s .l a

w . vi l l a no va . e du/thir dc ir c uit_2008/44NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

___________ N o. 07- 2858

___________ IN R E : B R O C K A W A Y P R E S S E D M E T A L , IN C ., D ebt or

E Y N O N A S S O C IA T E S , IN C ., A ppel l ant

v. L AS AL L E BA NK NAT I ONAL AS S OC I AT I ON; GENERAL M OTORS CORP ORATI ON; BORGW ARNER T ORQ T RA NS F E R S YS T E M S , I NC . ; DE L P HI CO RP OR AT I ON

____________________________________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e W e ste rn D istric t o f P e n n sy lv a n ia ( D . C . N o. 07- cv- 00563) D i s t r i c tJ u d g e : H o n o r a b l e T e r r e n c e F . M c V e r r y

_________________________ Subm i t t ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

on D ece m ber8, 2008 B efor e: M C K E E , SM I T H A N D R O T H , C i r cui tJ udges

( O pi ni on fi l ed: D ece m ber24, 2008)2 ___________ OP I NI ON

___________ M cK ee, J. E ynon A s s oci at es , I nc. appea l s t he di s t r i ctcour t ’ s or deraff i r m i ng t he bankrupt cy cour t ’ s deni al of Ey non’ s cl ai m t o funds hel d byL aSal l e B ank. For t he r eas ons t hat f o l l o w, we wi l l a f

f i r m. I n a s mu c h a s we wr i t e p r i ma r i l yf o rt h e p a r t i e s wh o a r e f

a mi l i a rwi t h t h i s c a s e , we need notr epea tt he pr ocedur al orfac tual hi s t or yexce pti ns ofaras m aybe hel pful t o our br i ef di s cus s i on. E ynon ar gues t hati ti s ent i t l ed t o t he di s put ed es cr ow funds pur s uantt o i t s cont r act f o r sa les c o m m iss io n s w ith th e d e b to r, B ro c k w a yP re ss e d M e tals , In c . A c c o rd in g to E ynon, t he di s put ed funds ar e i m pr es s ed w i t h ei t heran expr es s orcons t ruct i ve trus tfor t hatpor t i on of B r ockw ay ’ s r ece i vabl es equal t o t he comm i s s i ons E ynon earned on p ro d u c ts th a t it s o ld a n d d e liv e re d to c e rt a in o f B ro c k w a y ’s c u s to m e rs . In a M e m o ra n d u m O p in io n d a ted M a rc h 3 0 , 2 0 0 7 , H o n . T h o m a s P . A g re sti, expl ai ned w hyE ynon had notes t abl i s hed the exi s t ence of a trus t . I n aff i r m i ng t he b a n k ru p tcy co u rt’s o rd e r d e n y in g re lief , the d istric t co u rt a g re e d th a t E yn o n “ f a ile d to demonst r at e t w o of t he fourr equi r ed el ement s [of a t rus t ] - i nt entt o cr eat e a trus tand t he exi s t ence of an i dent i fi abl e r es . ” A pp. 6. T he di s t r i ctcour tconcl uded that“the s er i es of3

c o m m is s io n a g re e m e n ts b e tw e e n th e p a rt ie s d o n o t c o n s titu te ‘t ru s t’ d o c u m e n ts .” A p p . 7 . T he courtr ej ect ed Ey non’ s r el i ance on W illia m s v . F in la w , Mu e lle r& C o ., 141 A . 47 ( Pa. 1 9 2 8 ), c o n c lu d in g , c o u n s e l w a s “ s k a tin g c lo s e to th e b o u n d s o f th e ird u ty o f

c a n d o r. . .,” bym i s s t at i ng t he hol di ng of W illia m s . . .” . T h e b a n k ru p tcy co u rt b e liev e d th a t Wi l l i a ms couns el ed aga i ns tfi ndi ng a t rus thad bee n cr eat ed, and the di s t r i ctcour tconcl uded that “[t ] he B ankrupt cyC our t ’ s anal y s i s of Wi l l i a ms , w a s c o rr e c t.” A p p . 4 . T he di s t r i ctcour tal s o corr ect l yaff i r m ed the bankrupt cycour t ’ s r ej ect i on of t he t heoryof a “ cons t ruct i ve trus t ” bec aus e “no unj us tenr i chment had occ ur r ed. ” Id . , ( ci t i ng Y ohe v. Y ohe , 353 A . 2d 417, 420- 21 ( Pa. 1976) ) . T hus , es t abl i s hi ng a trus tovert he di s put ed funds “w oul d have the ef fec tof gi vi ng E ynon pr efe r ent i al t r eatm enti n t he bankrupt cypr ocee di ng. ” A pp. 5. W e ca n add l i t t l e t o t he t hor ough and thought ful di s cus s i on of t he bankrupt cy cour t , ort he di s t r i ctcour t ’ s expl anat i on of w hyt he bankrupt cycour tpr oper l yr ej ect ed E ynon’ s cl ai m forr el i ef. A ccor di ngl y , w e w i l l aff i r m s ubs t ant i al l yfort he r eas ons s etfor t h byt he b a n k ru p tcy co u rt a n d th e d istric t co u rt.