Opinion ID: 2798985
Heading Depth: 2
Heading Rank: 2

Heading: Reliance on a New Fact

Text: The majority opinion’s primary reasoning is that, because Simon later paid $3.5 million toward the Adamson-CIT loan with his personal funds and did not file a bankruptcy claim against Adamson, we should be less worried that Simon’s waiver of indemnification rights was a sham. As explained above, I disagree as a matter of law that those facts are relevant. But even if we must consider additional facts, the majority opinion errs by considering a “fact” that the bankruptcy court expressly declined to find. No one disputes that, in March 2004, Simon paid CIT about $3.5 million. But the reason for that payment was hotly disputed before the bankruptcy court. Simon asserted that the payment was in satisfaction of the Adamson-CIT loan. Plaintiff strongly disagreed and presented evidence that the payment was to satisfy a personal debt, owed by Simon to CIT, that had nothing whatsoever to do with Adamson. For our purposes, if the $3.5 million payment was made only to satisfy a personal debt, then that payment does not demonstrate anything with respect to whether the waiver on the Adamson-CIT loan was a “sham.” IN RE ADAMSON APPAREL, INC. 25 Everyone agrees that the bankruptcy court declined to reach this factual question. In effect, the majority decides a disputed issue of fact. But “[t]rial courts find facts. We do not.” Fisher v. Roe, 263 F.3d 906, 912 (9th Cir. 2001), overruled in other part by Payton v. Woodford, 346 F.3d 1204, 1217 n.18 (9th Cir. 2003) (en banc). Making that factual finding is all the more egregious because the record strongly (if not conclusively) suggests that the $3.5 million payment was not on Adamson’s behalf but was for a personal debt that Simon had acquired with respect to a different transaction and company (Grupo). In Simon’s favor is Simon’s own self-serving testimony. In Plaintiff’s favor is proffered evidence that included: • Financial statements by CIT in early 2004 showing (1) that no credit of $3.5 million appeared and (2) that, as of March 15, 2004—before the $3.5 million payment— Adamson owed CIT less than $200,000. • A separate note, which nowhere references Adamson and is a personal note: “FOR VALUE RECEIVED, ARNOLD H. SIMON, an individual (the “Debtor”), hereby unconditionally promises to pay on demand to the order of THE CIT GROUP . . . $3,379,630.00 . . . .” • A letter dated January 7, 2003, that describes the loan to Simon as “your personal loan from CIT.” 26 IN RE ADAMSON APPAREL, INC. • A letter from CIT that describes the loan as “the personal note to us dated November 5, 2002 with an approximate amount of $3[.]455 M,” which included interest on the principal amount. • A draft settlement agreement in late 2004 that states: “On or about November 5, 2002, CIT made a personal loan to Simon in the amount of $3,379,630 for which Simon executed a Demand Promissory Note . . . in favor of CIT in said amount.” • An email in late 2004 that describes the loan in similar terms. The majority opinion attempts to justify its appellate factual finding in two ways. First, it asserts that, because the personal debt arose as part of the “Grupo transaction,” and because Adamson assumed some of Grupo’s liabilities, “[t]he Grupo transaction was thus simply a subset of Adamson’s indebtedness to CIT.” Maj. op. at 19. The bankruptcy court never made factual findings on these points, so the majority opinion attempts to justify one improper factual finding by making others. Moreover, whether Adamson assumed certain liabilities to CIT is wholly irrelevant to the question of the nature of the debt between Simon and CIT. As noted above and as evidenced by the note itself and by other documents from 2002 and 2003, the debt in question was a personal one, owed by Simon in his individual capacity. Accordingly, when Simon paid that personal debt, it was for his own benefit, not Adamson’s. IN RE ADAMSON APPAREL, INC. 27 Second, the majority opinion asserts that Plaintiff’s lawyer “acknowledged at oral argument that . . . Simon personally paid CIT over $3.5 million to clear Adamson’s debt.” Maj. op. at 17. Such an acknowledgment would be a startling concession given that the issue was disputed vigorously before the bankruptcy court. Unfortunately for the majority opinion, the transcript of oral argument reveals no such concession. After oral argument, we ordered supplemental briefing on the effect of the following exchange: JUDGE GILMAN: I’ve just got one question. I want to know, was the debt to CIT fully paid off on December 18, 2003, when the BP Clothing amount was roughly five million was in fact diverted to . . . ATTORNEY HUNTER: No, I think it was fully paid off on March 31st when it took the . . . uh . . . March 2004, when it got the amounts from the cash collateral accounts. That statement cannot be considered a concession on the question of the reason for the March 2004 payment. Judge Gilman asked whether the debt was fully paid in December 2003, and the lawyer answered “no.” In context, the question concerned timing, not the reason for the 2004 payment. Moreover, the lawyer stated only that “I think” that the debt was satisfied by the March 2004 payment. (Emphasis added.) In the supplemental briefing, the lawyer explained that, after reviewing the record, his statement at oral argument had been incorrect. 28 IN RE ADAMSON APPAREL, INC. We of course have held that a “judicial admission is binding” when a party “clearly and expressly conceded [an issue] on appeal, both in briefing and at oral argument.” United States v. Crawford, 372 F.3d 1048, 1055 (9th Cir. 2004) (en banc). And as the majority opinion properly notes, an unambiguous concession at oral argument can be binding. Maj. op. at 18. But the majority opinion improperly extends that principle to a statement at oral argument that starts with the equivocal phrase “I think,” on a topic different from the topic of the question posed, on a matter that was litigated extensively before the trial court, and as to which the purported concession later was renounced in a supplemental brief. See Jonibach Mgmt. Trust v. Wartburg Enters., Inc., 750 F.3d 486, 491 n.2 (5th Cir. 2014) (“To qualify as a judicial admission, the statement must be . . . deliberate, clear, and unequivocal . . . .” (internal quotation marks omitted)); Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859–60 (9th Cir. 1995) (holding that a judicial admission may be retracted). Not only is there no support for the majority opinion’s incredibly strict application of the judicial admissions doctrine, we do ourselves and the litigants a great disservice if lawyers must be constantly wary that a mistaken guess about the content of the factual record, intended to aid the court, will be held against their clients conclusively. I would reverse the bankruptcy court’s holding that Simon was not a “creditor” and would remand for further proceedings. Accordingly, I dissent.