Court Opinion

ID: 994127
Source: CourtListenerOpinion
Date Created: 2013-07-04 00:18:13.575774+00
Date Added: 2024-06-11T15:28:00.968515
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: FLYING A COMMUNICATIONS,
INC., A CORPORATION & GENERAL
PARTNER OF FLYING A
COMMUNICATIONS LIMITED
PARTNERSHIP, d/b/a WFWV, Inc.,
d/b/a WYVN TV, d/b/a WYVN TV
60,
Debtor.
                                                                     No. 97-1359
GARY A. ROSEN, Trustee,
Trustee-Appellant,

v.

PATRICK M. CLAWSON,
Appellee.

Appeal from the United States District Court
for the Northern District of West Virginia, at Martinsburg.
W. Craig Broadwater, District Judge.
(CA-96-33-3, BK-92-31171)

Argued: December 1, 1997

Decided: February 6, 1998

Before WILKINSON, Chief Judge, JONES,
United States District Judge for the Western District of Virginia,
sitting by designation, and MICHAEL,
Senior United States District Judge for the
Western District of Virginia, sitting by designation.

_________________________________________________________________
Affirmed by unpublished opinion. Judge Jones wrote the opinion, in
which Chief Judge Wilkinson and Senior Judge Michael joined.

_________________________________________________________________

COUNSEL

ARGUED: Roger Schlossberg, SCHLOSSBERG & ASSOCIATES,
Hagerstown, Maryland, for Appellant. George Robert Borsari, Jr.,
BORSARI & PAXSON, Washington, D.C., for Appellee. ON
BRIEF: Brett R. Wilson, SCHLOSSBERG & ASSOCIATES,
Hagerstown, Maryland, for Appellant. Anne Thomas Paxson, BOR-
SARI & PAXSON, Washington, D.C., for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

JONES, District Judge:

Gary A. Rosen, a bankruptcy trustee, appeals the district court's
decision affirming the bankruptcy court's award of compensation to
Patrick M. Clawson, a broker employed by Rosen. Rosen asserts that:
(1) the district court should not have applied a clearly erroneous stan-
dard of review; and (2) the bankruptcy and district courts erred in
interpreting the terms of Clawson's employment contract. Holding
that the bankruptcy court properly construed the contract, we affirm.

I

On October 9, 1992, Flying A Communications, Inc. ("Flying A"),
filed for protection under Chapter 11 of the Bankruptcy Code. On
June 22, 1993, the case was converted to Chapter 7 and David A.
Savasten was appointed trustee. Flying A had been engaged in the
operation of WYVN-TV ("WYVN"), a television station located in
Martinsburg, West Virginia. Flying A's primary assets consisted of

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the land and improvements upon which WYVN was located, the
broadcasting equipment utilized by the station, and the Federal Com-
munications Commission ("FCC") permit for the operation of
WYVN. The land was encumbered by a lien of F&M Bank ("F&M")
and the broadcasting equipment was encumbered by a lien of Dana
Commercial Credit Corporation ("Dana").

On September 29, 1993, the bankruptcy court granted Dana and
F&M relief from the automatic stay imposed by the Bankruptcy Code,1
permitting them to enforce their security interests, and effectively
removing both the land and equipment from the bankruptcy estate.
Savasten was thereafter replaced by Rosen as bankruptcy trustee.
Rosen, recognizing that the sale of WYVN as a unit would likely
command a higher sale price, sought to have WYVN sold together
with all of its constituent parts and in conjunction with F&M and
Dana. Accordingly, Rosen sought and was granted permission by the
bankruptcy court to employ Clawson as a media broker 2 for the sale
of the station and its assets as a package. Clawson's employment con-
tract, written by him, provided that he would receive a sale commis-
sion based upon the "venture transaction value," in accord with the
following schedule:

         5% of the first $1,000,000 or portion thereof, with a mini-
           mum fee of $25,000; plus
         4% of the second $1,000,000 or portion thereof; plus
         3% of the third $1,000,000 or portion thereof; plus
         2% of the fourth $1,000,000 or portion thereof; plus
         1% of the fifth and each additional $1,000,000 or portion
           thereof.

The bankruptcy court authorized the employment of Clawson "with
compensation payable only in the event of the settlement of a sale
procured by said broker or co-broker, and only from proceeds of such
sale."
_________________________________________________________________
1 11 U.S.C.A. § 362 (West 1993).

2 Clawson had sent a proposal to Savasten, the prior trustee, who chose
not to employ a broker.

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Clawson subsequently procured the sale of the combined assets to
a third party for the sum of $1,900,000, to be disbursed as follows:
$425,000 payable to the trustee; $625,000 payable to F&M; and
$850,000 payable to Dana. The sale was conditioned on a release by
F&M and Dana of their remaining claims against the debtor's estate.
It was approved by the bankruptcy court and closed on October 13,
1995. Thereafter Clawson filed an application for compensation seek-
ing a commission of $86,000, computed on the total sale price of
$1,900,000. Rosen objected to the amount of the commission, arguing
that Clawson was entitled to a smaller commission computed on the
basis of the $425,000 actually received by the bankruptcy estate, and
not on the total sale value which included payments to F&M and
Dana for the land and equipment used by WYVN.

The bankruptcy court overruled the objection and on March 4,
1996, approved payment of a commission based on the total sale price
of $1,900,000. Rosen appealed the award to the district court, arguing
that the compensation was neither reasonable nor properly determined
in accord with section 330 of the Bankruptcy Code. 3 However, during
the appeal process, Rosen reconsidered his position regarding the
proper basis for Clawson's commission, and agreed that Clawson was
entitled to commission based not only on the $425,000 paid to the
estate, but in addition, the value of the claims waived by F&M and
Dana.4

Holding that the bankruptcy court's finding that Clawson's com-
pensation was reasonable was not clearly erroneous, the district court
affirmed. Rosen now argues that the district court failed to apply the
proper standard of review and that both the bankruptcy court and the
district court improperly interpreted the contract language governing
the basis of Clawson's commission.
_________________________________________________________________

3 11 U.S.C.A. § 330 (West 1993).

4 Rosen agreed that the sum of the amount paid to the bankruptcy estate
and F&M's and Dana's respective claims would result in a commission
base of $850,000, producing a $42,500 commission.

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II

As a preliminary matter, Clawson contends that this appeal should
be dismissed because Rosen presents a different argument here than
that presented before the district court. Rosen argued below that the
commission was unreasonable; he now argues that the commission
violated the terms of Clawson's employment contract. While mindful
of the axiom that "[c]onsistency of position is a fundamental requisite
in appellate proceedings,"5 we need not reach this issue because we
affirm on the merits.

III

Rosen first contends that because the bankruptcy court's interpreta-
tion of the contract language constituted a legal determination, the
district court erred in applying a clearly erroneous standard.6 Assum-
ing, arguendo, that the district court applied the wrong standard of
review, that error is immaterial in light of the fact that our review of
the bankruptcy court's interpretation of the contract is de novo.7

IV

The substance of the parties' dispute is the interpretation of the
contract's definition of "venture transaction value." The contract pro-
vides that it is:

           the total amount of any and all amounts of money or other
           consideration paid or conveyed to WYVN or for its benefit
           or paid or conveyed by prospects in connection with the sale
           of assets or other business transactions involving WYVN
           including without limitation, cash; stock; bonds; indentures;
_________________________________________________________________
5 Southern Cotton Oil Co. v. Shelton, 220 F. 247, 256 (4th Cir. 1914).
6 Because a district court sits as an appellate court in bankruptcy, it
must apply those well established standards of appellate review which
govern review of district court judgments. First Nat'l Bank v. Stanley (In
re Stanley), 66 F.3d 664, 667 (4th Cir. 1995). Accordingly, a bankruptcy
court's findings of fact may not be set aside unless they are clearly erro-
neous, but its decisions of law are to be reviewed de novo. Id.
7 First Nat'l Bank v. Stanley (In re Stanley), 66 F.3d at 667.

                    5
          debentures . . . the assumption or discharge of liabilities . . .
          or any combination of the above or other items of consider-
          ation or value.

(emphasis added). Rosen originally argued that the definition encom-
passed only those funds paid or conveyed directly to WYVN, i.e., the
$425,000 paid to the bankruptcy estate. However, Rosen ultimately
agreed that F&M's and Dana's waiver of their remaining claims also
benefitted WYVN and therefore, should be included in the venture
transaction value.

Rosen's contention that the funds paid for WYVN's land and
equipment should not be included in the venture transaction value is
directly at odds with the plain language of the contract. The phrase
"the total amount of any and all amounts of money or other consider-
ation paid or conveyed to WYVN or for its benefit" is readily under-
stood to include all funds paid which benefitted WYVN. There is no
dispute that the purchase of the land and equipment from F&M and
Dana, in conjunction with the FCC permit, directly benefitted the
bankruptcy estate by resulting in a higher sale price for the FCC per-
mit -- the bankruptcy estate's only substantial asset -- than could
have otherwise been obtained. Rosen admits that the best offer made
for the FCC permit alone was only $100,000, less than twenty-five
percent of the price for the permit ultimately brokered by Clawson
through the sale of WYVN in its entirety. The agreement of the secur-
ity holders to accept the consideration paid for the equipment and
land was critical to Clawson's ability to broker the sale. Accordingly,
the bankruptcy court properly concluded that the total sale price was
the venture transaction value.

Even were we to find persuasive Rosen's argument that the con-
tract language was ambiguous, we would nevertheless be compelled
to reach the same conclusion. The record contains ample evidence
that the parties' understanding was that WYVN should be sold as a
unit and that Clawson was to be paid on the basis of the total sale
price. Rosen's actions themselves reflect his own understanding that
the bankruptcy estate stood to benefit from the sale of WYVN as a
unit. To his credit, when he took over as trustee, he successfully per-
suaded the bankruptcy court to permit a package sale of WYVN and
he obtained the services of a successful media broker who could

                     6
arrange for such a transaction. Likewise, F&M's and Dana's waiver
of their claims reflects the understanding that Clawson would arrange
for a package sale, for which he was to be compensated by the bank-
ruptcy estate.

Rosen's assertion that the bankruptcy court acknowledged that the
contract language was ambiguous misstates the record. The bank-
ruptcy court did find some ambiguity regarding Clawson's payment;
however, that ambiguity pertained to who should pay Clawson, not
how much he should be paid.8 The court resolved this question of who
should pay against the estate and found that the estate had agreed to
pay the entirety of the commission. That finding is clearly supported
by the evidence.

For the foregoing reasons, we affirm.

AFFIRMED
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8 As the bankruptcy court stated from the bench: "There is no doubt in
my mind that Mr. Clawson did a good job and should be compensated.
He got us out of a hole, all of us out of a hole, including [F&M and
Dana]."

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