Source: https://law.justia.com/cases/federal/appellate-courts/F3/106/258/558255/
Timestamp: 2019-11-20 04:40:06
Document Index: 350351326

Matched Legal Cases: ['§ 1291', '§ 1292', '§ 1292', '§ 1292', '§ 1292', '§ 4']

Federal Deposit Insurance Corporation, Appellee, v. Melvyn Bell, Defendant,darlene Bell, Appellant,bell Holdings, Inc., Defendant,bell Equities, Inc., Appellant, 106 F.3d 258 (8th Cir. 1997) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eighth Circuit › 1997 › Federal Deposit Insurance Corporation, Appellee, v. Melvyn Bell, Defendant,darlene Bell, Appellant,b...
Federal Deposit Insurance Corporation, Appellee, v. Melvyn Bell, Defendant,darlene Bell, Appellant,bell Holdings, Inc., Defendant,bell Equities, Inc., Appellant, 106 F.3d 258 (8th Cir. 1997)
US Court of Appeals for the Eighth Circuit - 106 F.3d 258 (8th Cir. 1997) Submitted Nov. 18, 1996. Decided Feb. 6, 1997. Rehearing and Suggestion for Rehearing En Banc Denied March20, 1997
The parties agree that the district court's grant of partial summary judgment was not a final order for purposes of determining whether this Court has jurisdiction. See 28 U.S.C. § 1291; see also Fed. R. Civ. P. 56(c) ("A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages.").6 The FDIC contends that this Court therefore has no jurisdiction to consider either the grant of injunctive relief or the grant of partial summary judgment. We disagree.
Under 28 U.S.C. § 1292(a) (1), this Court has jurisdiction over orders of the district court "granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court...." Here, the district court specifically granted an injunction prohibiting Darlene Bell and Bell Equities from disposing of property without notice to and consent from the Bank. See Order Granting Permanent Inj. at 4, reprinted in Appellants' Add. at 10.
The FDIC argues that, despite § 1292(a) (1)'s textual clarity, this Court does not have jurisdiction to hear an appeal of a grant of injunctive relief where "the injunctive order is merely incidental to the substantive relief sought and does not threaten to cause irreparable harm...." Appellee's Br. at 11. This is simply an incorrect statement of the law of this Circuit. See, e.g., Morgenstern v. Wilson, 29 F.3d 1291, 1294-95 (8th Cir. 1994) (" [I]f an interlocutory order expressly grants or denies a request for injunctive relief, the [requirement of irreparable injury] need not be met and the order is immediately appealable as of right under § 1292(a) (1). By contrast, if an order merely has the practical effect of granting or denying an injunction, the ... irreparable injury test must be satisfied ...." (interpreting Carson v. American Brands, Inc., 450 U.S. 79, 101 S. Ct. 993, 67 L. Ed. 2d 59 (1981) (citations omitted))), cert. denied, 513 U.S. 1150, 115 S. Ct. 1100, 130 L. Ed. 2d 1068 (1995). Darlene Bell and Bell Equities have an appeal as of right under § 1292(a) (1) to the district court's grant of injunctive relief against them, and we therefore have jurisdiction over this order of the district court.
In Fogie v. THORN Americas, Inc., 95 F.3d 645 (8th Cir. 1996), this Court described to what extent an appellate court has jurisdiction to review interlocutory orders of a district court that are related to an appeal of injunctive relief:
We review the district court's grant of injunctive relief for abuse of discretion. See Goff v. Harper, 60 F.3d 518, 520 (8th Cir. 1995). It would not be possible for us to determine if the district court abused its discretion in enjoining Darlene Bell and Bell Equities from encumbering or transferring assets without also determining if the district court erred, as a matter of law, in its determination that Darlene Bell and Bell Equities were liable for fraudulently-transferred assets. The district court's grant of injunctive relief was specifically predicated on its holding that Darlene Bell and Bell Equities were liable to Guaranty Federal and upon its determination that its judgment in favor of Guaranty Federal should be protected. See Order Granting Permanent Inj. at 3-4, reprinted in Appellants' Add. at 9-10. If Darlene Bell and Bell Equities are not liable, then the district court necessarily abused its discretion in issuing the injunction. In the circumstances of this case, therefore, we conclude that we have jurisdiction to consider the district court's grant of partial summary judgment.
We review a grant of summary judgment de novo, applying the same standard as the district court. See Barge v. Anheuser-Busch, Inc., 87 F.3d 256, 258 (8th Cir. 1996). A grant of summary judgment is proper if, after viewing the evidence in the light most favorable to the nonmoving party, there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See id.; see also Fed. R. Civ. P. 56(c). Mere arguments or allegations are insufficient to defeat a properly supported motion for summary judgment; a "nonmovant must present more than a scintilla of evidence and must advance specific facts to create a genuine issue of material fact for trial." Rolscreen Co. v. Pella Prods. of St. Louis, Inc., 64 F.3d 1202, 1211 (8th Cir. 1995). See also Kiemele v. Soo Line R.R. Co., 93 F.3d 472, 474 (8th Cir. 1996) ("The nonmoving party must do more than show that there is some metaphysical doubt as to the material facts, and where the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." (quotations, citations, and alteration omitted)); JRT, Inc. v. TCBY Sys., Inc., 52 F.3d 734, 737 (8th Cir. 1995) (A nonmoving party has the burden of demonstrating to the district court "that at trial it may be able to put on admissible evidence proving its allegations." (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S. Ct. 2505, 2514-15, 91 L. Ed. 2d 202 (1986))).
In re Xonics Photochemical, Inc., 841 F.2d 198, 199-200 (7th Cir. 1988). See also In re Chase & Sanborn Corp., 904 F.2d 588, 594 (11th Cir. 1990) ("It is well established, however, that a contingent liability cannot be valued at its potential face amount....").
To correctly "value the contingent liability it is necessary to discount it by the probability that the contingency will occur and the liability become real." Xonics Photochemical, 841 F.2d at 200; see also In re Davis, 169 B.R. 285, 302 (E.D.N.Y. 1994) ("In order to value a contingent liability, a bankruptcy court must determine the likelihood that the contingency will occur, and multiply the total debt guaranteed by that probability."). Where a liability is contingent on an impossible or an extremely unlikely event, its value will be nothing or close to nothing, and will have negligible or no effect on the net value of an asset. In such a circumstance, a contingent liability need not be considered in determining the net worth of an asset. See Hansen v. Hansen, 302 N.W.2d 801, 802 (S.D.1981) (" 'Contingent liabilities that may never be paid or that may be paid only in part need not be deducted in determining net worth. Speculative contingent liabilities should not be considered in apportioning the parties' assets for purposes of a property division.' " (quoting Wallahan v. Wallahan, 284 N.W.2d 21, 26 (S.D.1979)) (alterations and additional quotations omitted)).
In this case, Darlene Bell and Bell Equities have never submitted any evidence regarding the likelihood that the $1.85 million contingent liability associated with Red Apple Enterprises would ever materialize. As noted by the district court, " [t]he defendants have not offered the notes themselves nor have they argued the terms of the notes." Order Denying Mot. to Recons.J. at 2-3, reprinted in part in Appellants' App. at 100. Without such evidence, there was no rational means for the district court to assign a value to the contingent liability.8 Because Darlene Bell and Bell Equities have failed to meet the burden placed on a nonmoving party to present evidence demonstrating that a material question of fact exists, see, e.g., Rolscreen, 64 F.3d at 1211, the district court properly granted partial summary judgment.9
Because the district court properly granted partial summary judgment against Darlene Bell and Bell Equities, it did not abuse its discretion by granting injunctive relief to prevent the defendants from transferring or encumbering certain assets. See Ark.Code Ann. § 4-59-207(a) (3) (i) (provision of Arkansas Fraudulent Transfer Act authorizing "injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property"). Accordingly, we affirm both the district court's grant of partial summary judgment and its grant of injunctive relief.
As noted by the majority, a "nonmovant must present more than a scintilla of evidence and must advance specific facts to create a genuine issue of material fact for trial," to defeat a properly supported motion for summary judgment. Rolscreen Co. v. Pella Prods. of St. Louis, Inc., 64 F.3d 1202, 1211 (8th Cir. 1995). However, a "party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2552-53, 91 L. Ed. 2d 265 (1986) (quoting Federal Rule of Civil Procedure 56(c)). In addition, in determining whether summary judgment is proper, the evidence must be viewed in the light most favorable to the nonmoving party. See Barge v. Anheuser-Busch, Inc., 87 F.3d 256, 258 (8th Cir. 1996).
Second, the majority discusses the nature of a contingent liability in concluding that the moving party fulfilled its initial burden. As recognized by the majority, a contingent liability should be discounted by the probability that the contingency will occur. See In re Xonics Photochemical, Inc., 841 F.2d 198, 199-200 (7th Cir. 1988). However, this does not mean that a contingent liability should not receive any value.
The record before the district court failed to give any indication as to what the proper valuation of the contingent liability, at the time of the property settlement agreement, should be. Because the moving party in the present case failed to properly support its motion for summary judgment regarding the valuation of the contingent liability, the nonmoving parties were not required to advance specific facts demonstrating that a genuine issue of material fact existed.10 See Heath v. John Morrell & Co., 768 F.2d 245, 249 (8th Cir. 1985) (reversing the grant of summary judgment because the moving party failed to properly support its motion for summary judgment even though the nonmoving party failed to present opposing evidence) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 160, 90 S. Ct. 1598, 1609-10, 26 L. Ed. 2d 142 (1970); Stubbs v. United States, 428 F.2d 885, 888 (9th Cir. 1970), cert. denied, 400 U.S. 1009, 91 S. Ct. 567, 27 L. Ed. 2d 621 (1971)). While it may have been more prudent to resist the summary judgment motion by advancing specific evidence creating a contested issue of material fact, Darlene Bell and Bell Equities' failure to do so should not result in the grant of partial summary judgment when the moving party failed to properly support its motion for summary judgment.
Id. On the basis of this limited factual dispute, the district court held that " [i]f this case proceeds to trial, the Bank [Guaranty Federal] will be allowed to argue about the overvaluation of Market Street Plaza, in which case, it might be entitled to an even larger judgment against Darlene Bell and Bell Equities." Id.
We presume that a fifty-fifty split was intended under Arkansas law because the chancellor made none of the findings that are required before deviating [from] the presumption of an equal division of marital property. While the chancellor was understandably not concerned with dividing the property to the penny, particularly where the parties agreed with a division that was approximate [ly] an equal division, this Court is so concerned. Under Arkansas law, the Bank [Guaranty Federal], as a present creditor of an insolvent debtor, has the right to half of every dollar transferred by the debtor to Mrs. Bell over the fifty percent to which she was entitled.
Order Granting Partial Summ. J. at 5 n. 5, reprinted in Appellants' Add. at 5. This construction is fully supported by the record of the state court proceedings, in which the state court declared to Darlene Bell that, " [w]ith respect to the valuations on the assets, I noticed that they're fairly even in terms of value. It looks like Bell Holdings has about $34 million and you have about $32 million assets, according to these sheets." Id. at 4 n. 3 (quoting Tr. of H'rg at 17-18) (describing gross assets, emphasis added), reprinted in Appellants' Add. at 4. The valuation schedules show that Melvyn Bell received $1,407,538.00 less in net value than Darlene Bell. While this disparity in net assets may appear "fairly even" in a property settlement between consenting parties pursuant to a marital dissolution, it is rather less even in an action by a creditor to recover fraudulently-transferred assets from an insolvent debtor.
For the $1,850,000.00 contingent liability on Red Apple Enterprises to have reduced the value of Darlene Bell's transferred assets to the equivalent value of Melvyn Bell's retained assets, it would have been necessary, at the time of the transfer of assets, for there to have been at least a 76% likelihood that the contingent liability would occur ($1,850,000.00 X .7608313513514 = $1,407,538.00). Darlene Bell and Bell Equities failed to present any evidence which could have supported such a finding and, as a matter of law, would have been unsuccessful on this point had the issue been tried by a jury. Because of their failure to present any evidence supporting the valuation of the contingent liability, summary judgment was properly granted against them. See JRT, Inc. v. TCBY Sys., Inc., 52 F.3d 734, 737 (8th Cir. 1995) (A nonmoving party has the burden of demonstrating to the district court "that at trial it may be able to put on admissible evidence proving its allegations." (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S. Ct. 2505, 2514-15, 91 L. Ed. 2d 202 (1986))). The dissent nevertheless asserts that:
Dissenting Op. at 266-67 (citations and note omitted). We disagree. It was not merely imprudent for Darlene Bell and Bell Equities to fail to advance evidence to support their allegations; it was necessarily fatal to their defense. We do not allow a case to go forward to trial on the mere chance that a jury will disregard all evidence and accept the unsupported speculation of a party litigant. See Gregory v. City of Rogers, 974 F.2d 1006, 1010 (8th Cir. 1992), cert. denied, 507 U.S. 913, 113 S. Ct. 1265, 122 L. Ed. 2d 661 (1993) ("To withstand the appellees' motion for summary judgment, the appellants had the burden of presenting evidence sufficiently supporting the disputed material facts that a reasonable jury could return a verdict in their favor. The object of our review, then, is to determine whether the appellants submitted sufficient probative evidence that would permit a finding in their favor on more than mere speculation, conjecture, or fantasy." (citations, quotations, and alterations omitted)).
Because the moving party, the FDIC, had no evidence demonstrating that the contingent liability was without value, for purposes of summary judgment, it must "affirmatively show the absence of evidence in the record" regarding the value of the contingent liability. See Hanson v. F.D.I.C., 13 F.3d 1247, 1253 (8th Cir. 1994) (reversing the district court's grant of summary judgment because the moving party failed to demonstrate that there was no evidence negating an element of the nonmoving party's case). As a result of the FDIC acknowledging the existence of the contingent liability by producing the valuation schedules to support their motion for summary judgment, "the FDIC would have needed to have affirmatively pointed to evidence or lack thereof" that the contingent liability was of no value. See Id. However, it failed to do so. In addition, the FDIC did not base its summary judgment motion on the argument that Darlene Bell and Bell Equities could not produce any evidence to support their valuation of the contingent liability. Rather, the FDIC asserted that the valuation schedule, on its face, indicated that Melvyn Bell did not receive reasonably equivalent value for the transferred property