Court Opinion

ID: 3023763
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:29:40.585372+00
Date Added: 2024-06-11T09:50:01.343064
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT

                                  __________

                                  No. 99-1007
                                  ___________

In re: Popkin & Stern,           *
                                 *
          Debtor.                *
---------------------------- *
                                 *
Nancy Fendell Lurie,             *
                                 *         Appeal from the United
          Defendant - Appellant, *         States District Court
                                 *         for the Eastern District
  v.                             *         of Missouri
                                 *
Robert J. Blackwell,             *
                                 *
          Plaintiff - Appellee.  *

                                  __________

                         Submitted: September 15, 1999
                          Filed: November 17, 1999
                                  __________

Before MCMILLIAN, MURPHY, Circuit Judges, and BOGUE,1 District Judge.
                           _________

BOGUE, District Judge.

      1
        The Honorable Andrew W. Bogue, United States Senior District Judge for the
District of South Dakota, sitting by designation.
       Appellee Robert J. Blackwell, in his capacity as Liquidating Trustee in
Bankruptcy of the Popkin & Stern Liquidating Trust, filed suit against Appellant Nancy
Fendell Lurie (hereinafter Nancy) in 1995. The trustee’s amended complaint alleged
violations of Missouri’s version of the Uniform Fraudulent Transfers Act (UFTA). Mo.
Rev. Stat. § 428.005 et seq. After a three day bench trial in 1996, the bankruptcy court
issued judgment against Nancy on most counts. The district court affirmed on October
15, 1998. Nancy appeals.

                                I. BACKGROUND

      Popkin & Stern was a Missouri law firm in which Ronald Lurie (hereinafter
Ronald) was a general partner. As part of a three member committee, Ronald was to
oversee the liquidation of the firm’s assets in 1991. In 1992, a Chapter 7 involuntary
bankruptcy proceeding was initiated against the firm, which converted the case to
Chapter 11. See 11 U.S.C. § 706(a). Robert J. Blackwell was appointed as trustee.

       On August 27, 1993, the bankruptcy court confirmed a reorganization plan under
which the former partners of Popkin & Stern agreed to contribute approximately $2.6
million to a Liquidating Trust. Ronald’s share of the contribution was to be $361,704.
Ronald signed a participant settlement agreement to finalize this settlement. To secure
this obligation, which was evidenced by two promissory notes signed by both Ronald
and his wife Nancy, the couple granted the trustee a deed of trust on their residence.
The deed was third in priority to two mortgages. It provided that “[i]f all or any part
of the Mortgaged Property is sold or transferred without [the trustee’s] prior written
consent, and if [the Luries] fail to pledge in place of the Mortgage Property such other
collateral of like net value as may be acceptable to [the trustee], or cash, then the
outstanding balance of the obligations shall immediately become due and payable
without demand. . . .”

                                           2
       On December 1, 1993, the Luries sold their residence and netted approximately
$288,000 without notifying the trustee. They deposited this sum in a joint investment
account. In executing the sale, Nancy and Ronald signed an affidavit which stated that
they did not “know of any facts . . . by reason of which any claim to any said property
might be asserted adversely to me.” The affidavit omitted any mention of the trustee’s
recorded deed of trust on the home. The title company failed to discover the trustee’s
lien and issued an owner’s title insurance policy to support the closing.

       On March 4, 1994, the bankruptcy court granted the trustee’s emergency motion
to enjoin the couple from transferring any assets until the sale proceeds were properly
disbursed. The Luries paid the trustee the amounts due him from the sale of their
residence three days later, but by April 1994, Ronald had defaulted on his obligation
under the reorganization plan, and the trustee filed suit against him for the deficiency
between the trust’s assets and the claims against the trust. See 11 U.S.C. § 723. On
October 20, 1994, the bankruptcy court entered judgment against Ronald in the amount
of $1,121,743.

      The action which forms the basis for this appeal was instigated on December 20,
1994, when the trustee filed an adversary proceeding against Nancy to avoid fraudulent
conveyances from her husband to her. See 11 U.S.C. § 548(a). The trustee’s amended
complaint listed a number of separate allegedly fraudulent conveyances.2 Prior to the

      2
         The counts included a note in the amount of $60,000 securing settlement of a
lawsuit by Ronald against William Wilkerson based on a loan made by Ronald to
Wilkerson; a note executed by Ted Lipsitz in the amount of $40,000; stock in 1772,
Inc.; stock in Dierdorf & Hart of St. Louis Union Station, Inc.; interest in PS Maryland,
Associates II, a limited partnership; $11,437 in cash; $14,400 in cash; $77,000 in cash;
a check issued to Ronald for legal services in the amount of $14,424.10; a check issued
to Ronald by Jefferson Bank & Trust Co. in the amount of $129,979.45; April and
May, 1994 payments to Ronald from United Oil Corp.; and Ronald’s portion of
$109,200 in proceeds from the sale of Ronald and Nancy’s wine collection.
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challenged transfers, all the assets had been in Ronald’s name alone. With just one
exception, the assets were all transferred to Ronald and Nancy jointly within one year
of the bankruptcy filing.

       Meanwhile, negotiations were undertaken in an effort to settle this adversary
proceeding, as well as another adversary proceeding against Ronald’s and Nancy’s
sons, and the aforementioned judgment against Ronald. The parties’ efforts culminated
in a Global Settlement Agreement (GSA). According to a ruling by the bankruptcy
court, the terms of the agreement had to be performed by December 29, 1995.
Thereafter, following a hearing, the bankruptcy court determined that not all the Lurie
parties were able to perform their obligations, and that the GSA’s release provisions
were therefore not enforceable.

      After Nancy’s request for a jury trial in the adversary proceeding against her was
denied, a hearing was held before the court on April 17-19, 1996. Nancy’s position
was that many of the assets in question were purchased with funds from her investment
account which had been placed in the couple’s joint checking account. She argued that
these were thus assets owned by both spouses as tenants by the entirety and beyond the
reach of Ronald’s creditors. See Mo. Rev. Stat. § 428.009(2)(c). Detailed testimony
was given and numerous exhibits received. The parties gave closing arguments in
November 1997. Judgment was entered in favor of the trustee on all but one count on
April 15, 1998.

       The bankruptcy court found “as a general matter” that the testimony of Ronald
Lurie was not credible. The court held that the trustee had demonstrated that each of
the challenged transfers was fraudulent under Missouri law, see Mo. Rev. Stat. §
428.024, with the exception of the twenty-fourth count of the trustee’s complaint. The
court found that none of the assets in question had been held as tenants by the entirety,
and that the challenged transfers had been made with the actual intent to hinder, delay
and defraud Ronald’s creditors.

                                           4
       In addition, the bankruptcy court found that Nancy’s actions – such as her
signing the false affidavit when the couple sold their residence – constituted ratification
of her husband’s fraud, that she had acted in concert with him, and that she should
therefore be deemed a joint creditor for purposes of reaching any of the couple’s
entireties property. Finally, the court held that for purposes of execution, the judgment
should be merged with the adversary proceeding judgment against Ronald. The district
court affirmed and this appeal followed.

                                   II. DISCUSSION

       Many of the Nancy’s arguments question the sufficiency of the evidence on
which the bankruptcy court based its findings, conclusions, and judgment. This is
especially true of the first two of the issues she raises which questions whether any
assets transferred by Ronald retained their tenants by the entirety characteristic, thereby
falling outside the reach of UFTA, and whether the bankruptcy court erred in merging
separately obtained judgments based on its finding that Nancy and Ronald acted jointly
to commit fraud. We will not overturn the bankruptcy court’s findings of fact unless
they are clearly erroneous. Wegner v. Grunewaldt, 821 F.2d 1317, 1320 (8th Cir.
1987); In re Martin, 761 F.2d 472, 474 (8th Cir. 1985).

        After a careful review of the voluminous record in this case, we are of the
conviction that no clear error was made with regard to the bankruptcy court’s findings
as to the character of the assets at issue. Nancy’s attempts to shield property from the
reach of the trustee by arguing that the property remained tenants by the entirety
property was rejected by the court based on sufficient evidence to the contrary. The
property at issue was the subject of numerous transfers. “Certainly the acquiescence
of one tenant by the entirety to the purchase (from the joint funds) of property taken in
the name of the other would destroy the entirety interest. . . .” Cooper v. Freer, 385
S.W.2d 340, 345 (Mo. App. 1964). To the extent that Nancy advanced “tracing”
arguments, the court found that she failed to meet her burden of proof. Instead, the

                                            5
court held that the Luries’ actions effectively severed the entireties character of the
property at issue. We see no clear error in this conclusion.

       In a similar vein, Nancy asks us to review the court’s decision to merge separate
judgments based on the joint acts of Nancy and Ronald to defraud the trustee. This
decision was based on extensive evidence that Nancy and Ronald worked in concert
to commit acts of fraud. See Mo. Rev. Stat. § 428.024.1(1) (defining fraudulent
transfers as including those made “[w]ith actual intent to hinder, delay, or defraud any
creditor”); Mo. Rev. Stat. § 428.024.2(1)-(11) (listing factors which may be considered
in determining the existence of such an “actual intent” including whether the transfer
was to an insider, the timing of the transfer, and whether the debtor retained control of
the property following the transfer). Clearly, it was the joint actions of Nancy and
Ronald which caused the default of Ronald’s obligations under the participant
settlement agreement. Because the merger of the judgments was based on sufficient
evidence, our scope of review precludes any deeper analysis.

                       A. Dismissal of Interlocutory Appeal

       When the bankruptcy court denied Nancy’s motion for a jury trial in her
adversary proceeding, she filed an interlocutory appeal to the district court. On
October 17, 1995, Judge Stohr ordered the parties “to file a stipulation for dismissal,
a motion for leave to voluntarily dismiss, or a motion seeking for good cause shown,
additional time to file a dismissal” no later than December 1, 1995. The order warned
that “failure to comply would result in dismissal of the [appeal].” Nancy subsequently
filed two motions for an extension of time in which to dispose of the matter, which
were granted. The last order required Nancy to dispose of the appeal by March 1,
1996. Rather than follow this order, however, Nancy merely filed a status report.
Consequently, the district court dismissed her appeal as a sanction for failure to

                                           6
prosecute and comply with the court’s orders. See Fed. R. Civ. P. 41(b). Her right to
a jury trial before the bankruptcy court was thereby extinguished.3

        We review the imposition of sanctions for an abuse of discretion. Rodgers v.
Curators of Univ. of Missouri, 135 F.3d 1216, 1219 (8th Cir. 1998). “Dismissal with
prejudice is an extreme sanction and should be used only in cases of wilful
disobedience of a court order or . . . persistent failure to prosecute a complaint.” Id.
(citation omitted); see also Hutchins v. A.G. Edwards & Sons, Inc., 116 F.3d 1256,
1260 (8th Cir. 1997) (stating that a sanction of dismissal may be appropriate “where a
litigant exhibits ‘a pattern of intentional delay.’”) (citation omitted). The district court’s
sanction must be proportionate to the litigant’s transgression. Rodgers, 135 F.3d at
1219.

       Here, the district court’s sanction was prompted by a wilful failure to comply
with the court’s order. The adverse impact suffered by the Appellant as a result of the
sanction was minimal since she did not forfeit her opportunity to have evidence
received and her arguments heard by an impartial judge. Because the adverse impact
on Nancy was proportionate to the egregiousness of her conduct, we find no abuse of
discretion in the district court’s dismissal. Having determined that the district court’s
dismissal of the appeal in which she raised her right to a jury trial should not be
disturbed, we have no occasion to examine the underlying merits of the bankruptcy
court’s denial of that right.

                         B. The Global Settlement Agreement

       Nancy appealed this dismissal to this Court which declined to hear her appeal
       3

due to lack of appellate jurisdiction. In re Popkin & Stern, 105 F.3d 1248 (8th Cir.
1997).
                                              7
       In 1995, during the trustee’s adversary litigation against Nancy, the parties
engaged in settlement negotiations in an attempt to resolve the litigation between the
trustee, Ronald, Nancy, their two sons Michael and Ryan, and the creditors of Ronald
and his law firm. The GSA was the result of those negotiations. It was comprised of
three separately signed and dated documents – one signed by Ronald; one signed by
Nancy; and one signed by Michael and Ryan Lurie. The fundamental purpose of the
GSA was to effectuate a transfer of property from the Luries in exchange for a release
of judgment against Ronald and the dismissal of proceedings against the Lurie family
members. Because of the complicated and intertwining property interests of the Luries,
an agreement that bound all of them jointly was necessary to execute the transfers of
property and execution of documents required under the terms of the agreement.

       In 1996, following a show cause hearing, the bankruptcy court found that Ronald
and Nancy Lurie had failed to demonstrate that they could comply with their
obligations under the GSA. Apparently, the Lurie sons were capable of performing
their obligations under the GSA, although their parents were not. Nancy contends
before this Court that the GSA was actually three separate agreements which did not
bind all parties jointly, and that in any event the trustee settled and released his claims
against her under the terms of the agreement. Both of these contentions were rejected
below.

       Several instruments constitute a single contract when they pertain to the same
transaction and when the parties intend for them to be construed as such. Paglin v.
Saztec Int’l, Inc., 834 F. Supp. 1184, 1192 (W.D. Mo. 1993); see also St. Paul Fire &
Marine Ins. Co. v. Tennefos Constr. Co., 396 F.2d 623, 628-29 (8th Cir. 1968)
(“[w]here several instruments, executed contemporaneously or at different times,
pertain to the same transaction, they will be read together although they do not
expressly refer to each other”) (citation omitted). The GSA’s language clearly
indicates the parties’ intent to execute a single agreement where it states, “This
Agreement may be executed in counterparts, each of which shall be deemed to be an

                                            8
original and all of which taken together shall be deemed to be one and the same
instrument.” Further, the GSA is explicit in the parties’ intent that it bind all the parties
jointly: “Provided that a Closing, as defined in this Agreement, has occurred, each
provision of this Agreement is independent, and not interdependent. . . .” In other
words, the agreement contemplated that the provisions of the GSA would remain
interdependent until the exchange of performance, or closing, occurred.

        Nancy’s proposed interpretative spin on the GSA suggests that the trustee would
agree to a settlement that would release the million dollar judgment against Ronald and
the pending adversaries against Nancy and the two Lurie sons in exchange for the
performance of the Lurie sons alone. By virtue of the express language of the GSA,
the parties were not entitled to the benefit of their bargain if Ronald and Nancy were
unable to comply with their obligations under the agreement. In seeking to ascertain
the parties’ intent, we give language its natural, ordinary, and common sense meaning,
examine the entire contract, and consider the object, nature, and purpose of the
agreement. Wilshire Constr. Co. v. Union Elec. Co., 463 S.W.2d 903, 906 (Mo. 1971)
(citations omitted). Applying these principles, we agree with the bankruptcy court’s
construction of the GSA.

       Nancy also attempts to suggest an untenable definition of the term “closing date”
as used in the GSA. Unless it plainly appears that a different definition is intended, the
meaning of a term in a contract will be the lay person’s definition of that term.
Rodriguez v. General Accident Ins. Co. of America, 808 S.W.2d 379, 382 (Mo. 1991)
(en banc). The term “closing” generally refers to “the final steps of the transaction
whereat consideration is paid. . . .” Black’s Law Dictionary 231 (5th ed. 1979). A
“closing date” would therefore ordinarily mean the date arranged for the final exchange
of performance by the parties to a contract.

      Nancy contends, however, that the parties intended that the “closing date” be
defined as the thirtieth day following the court’s approval of the settlement agreement,

                                             9
regardless of whether all the assets had been conveyed. Therefore, she continues, the
GSA’s releases became effective automatically and all the rights and duties of the
parties became fully operational whether or not any property was conveyed. She points
to the following language in the GSA: “The closing of the settlement contemplated by
this Agreement and the transfer of property and execution of all documents in
connection therewith are to be consummated by [the parties] pursuant to the terms and
conditions of this Agreement and shall be the 30th day after the date upon which the
Approval Order of the Bankruptcy Court is entered. . . .” She argues that this language
illustrates a clear distinction between the closing and the transfer of property.

       We reject this reading of the agreement. Nancy’s interpretation would require
the trustee to release all the Lurie parties simply by the passage of time. Actual
performance is generally a condition precedent to closing. E.g., Rimmel v. Mercantile
Trust Co., 774 F.2d 279, 283 (8th Cir. 1985). A “closing,” in other words,
contemplates performance. The bankruptcy court concluded that the language of the
GSA supports this common sense interpretation of the parties’ use of the term, and we
fully agree with this conclusion.

                                 C. Transfer Rulings

        Nancy’s final four issues deal with specific property and transfer rulings made
by the bankruptcy court. As for her claims that the bankruptcy court erred in awarding
the value of two promissory notes which it found had been fraudulently transferred, and
in setting aside the transfer of a number of assets as fraudulent, the bankruptcy court’s
decision is supported by more than adequate evidence and a lengthy discussion of the
factual bases for these rulings would serve no useful purposes. See Mo. Rev. Stat. §
428.024.1(2) (defining fraudulent transfers as including those made “[w]ithout
receiving a reasonably equivalent value in exchange” while intending to incur debts
beyond one’s ability to pay them). The bankruptcy court found several “badges of
fraud” in connection with these transfers. Because the court’s detailed findings as to

                                           10
the fraudulent nature of these transfers were not clearly erroneous, they may not be
overturned.

       Similarly, we will not disturb the bankruptcy court’s factual finding as to the date
on which Ronald transferred his interest in two corporations. (The date of the transfers
becomes important under UFTA’s four year statute of limitations found at Mo. Rev.
Stat. § 428.049.) Ronald obtained an ownership interest in both 1772, Inc. and
Dierdorf & Hart’s of St. Louis, Inc. which he subsequently transferred to himself and
Nancy jointly. Although the stock certificates from both corporations showed a
transfer date of January 1990, the trustee introduced substantial other evidence on
which the bankruptcy based its finding that the transfer actually occurred in 1992 and
was recognized by the respective companies in 1993.4 This finding was adequately
supported by competent evidence and must therefore be affirmed.

                                  III. CONCLUSION

      For the foregoing reasons, the decision below is affirmed in all respects.

      A true copy.

          Attest:

             CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

      4
        For example, corporate tax forms indicated that Ronald was the individual
owner of stock through 1992; Ronald’s 1991 financial statements represented that he
was the sole owner; and corporate resolutions dated 1992 failed to recognize Nancy
as a joint shareholder of either corporation. It was not until 1993 that the corporate tax
forms identified the stock owners as Ronald and Nancy jointly.
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