Opinion ID: 197463
Heading Depth: 3
Heading Rank: 2

Heading: Checks from Debtor's Customers

Text: 29 The bankruptcy court likewise denied the Trustee's motion to amend the judgment to set aside alleged fraudulent transfers of several checks from the Debtor's business customers made payable directly, or endorsed over, to Mrs. Rauh. See 11 U.S.C. § 548(a)(2) (transfers by insolvent within one year of bankruptcy petition); id. § 549 (postpetition transfers). Although the bankruptcy court once again acted on the mistaken belief that the Trustee had filed no postjudgment motion to amend the complaint, see supra Section II.B, we may affirm its ruling on any ground supported by the record. See Max Sugarman Funeral Home, Inc. v. A.D.B. Investors, 926 F.2d 1248, 1253 n. 9 (1st Cir.1991). As Mrs. Rauh did not agree to try this issue, we decline to disturb the bankruptcy court ruling. 30 The record discloses that Mrs. Rauh was never on fair notice of these claims. The checks in question were material to count VI of the complaint as amended prior to trial, see DCPB, Inc., 957 F.2d at 917; Luria Bros. & Co., 780 F.2d at 1089; Ellis, 609 F.2d at 440, wherein the Trustee alleged that funds presently in Mrs. Rauh's various bank and mutual fund accounts were property of the chapter 7 estate, either because Ms. Rauh had converted them from the Debtor, or the Debtor had fraudulently conveyed them to her. See supra pp. 48-49. Count VI focused on transfers from joint accounts to accounts held in Mrs. Rauh's name alone (e.g. between November, 1988 and November, 1989, the Defendant and/or the Debtor transferred funds ... at various times from jointly owned bank accounts to other bank accounts.). See supra Section II.A. In her answer Mrs. Rauh asserted that these accounts contain[ed] monies which were earned or derived solely by her efforts and were not monies earned or derived from any effort of the debtor. 31 The dispute at trial likewise concerned whether the monies in the joint accounts had derived solely from Mrs. Rauh's own efforts, or from the Debtor's. See supra note 3. Mrs. Rauh testified that she was the sole source of these monies. The Trustee, in turn, used the Debtor-customer checks made payable to Mrs. Rauh to impeach her credibility by way of demonstrating that the Debtor--not Mrs. Rauh--was the source of those particular deposits to their joint accounts. 32 Thus, neither the Trustee's introduction of these Debtor-customer checks into evidence, nor the Trustee's examination of the witnesses, fairly signaled an intention to establish that the Debtor had transferred these specific checks to Mrs. Rauh with fraudulent intent, within the meaning of 11 U.S.C. §§ 548(a)(2) and 549. Rather, it was not until after trial that the Trustee mentioned these specific transfers to Mrs. Rauh's accounts from the Debtor's business customers. As the Trustee thus failed to alert Mrs. Rauh to his intention, her failure to object at trial did not connote implicit consent to try the unpled issue. See Modern Elec., Inc., 81 F.3d at 247; United States v. 890 Noyac Road, 945 F.2d 1252, 1257 (2d Cir.1991); Luria Bros. & Co., 780 F.2d at 1089. 33 Although the Trustee's unpled claims may well have prevailed at trial, we cannot assume that Mrs. Rauh would not have been able to establish her present contention--that the checks were not property of the chapter 7 estate--had she been afforded fair notice and opportunity to resist the unpled claims at trial. 11 See 890 Noyac Road, 945 F.2d at 1259 (although opposing party already may have presented all the evidence she had, [g]iven the confused context in which this proof was presented, however, we decline to speculate about how [the defendant] might have dealt with the issue ... had it been squarely presented.); Morgan and Culpepper, Inc., 676 F.2d at 1068 (We deem improper the Commission's prejudgment of possible defenses which a company may assert.... Where amendment of pleadings is permitted on the basis of the second half of Fed.R.Civ.P. 15(b), the Commission may not deny the petitioner the opportunity to present new defenses by stating the ex parte conclusion that all possible defenses are meritless.). As Mrs. Rauh was not afforded fair notice that these newly minted Debtor-customer check claims were being interjected by the Trustee at trial, the Trustee was not entitled to amend either the complaint or the judgment. III