Court Opinion

ID: 612385
Source: CourtListenerOpinion
Date Created: 2011-08-23 18:07:10+00
Date Added: 2024-06-11T17:50:19.714249
License: Public Domain

FILED
                                               United States Court of Appeals
                                                       Tenth Circuit

                                                     August 23, 2011
                UNITED STATES COURT OF APPEALS
                                             Elisabeth A. Shumaker
                                                      Clerk of Court
                       FOR THE TENTH CIRCUIT

PYRAMID DIVERSIFIED
SERVICES, INC., d/b/a Simple HR,

           Plaintiff-Counter
           Defendant,                        No. 10-6263
                                     (D.C. No. 5:09-CV-00622-HE)
v.                                           (W.D. Okla.)

PROVIDENCE PROPERTY &
CASUALTY INSURANCE
COMPANY,

           Defendant-Counter
           Claimant-Cross
           Defendant-Cross
           Claimant,

and

PACA, INC.,

           Defendant-Cross
           Claimant-Third Party
           Plaintiff-Cross
           Defendant-Appellee,

and

PARK AVENUE PROPERTY &
CASUALTY INSURANCE
COMPANY,

           Cross-Defendant,

v.

PROVIDENCE HOLDINGS, INC.,
              Third Party-Defendant-
              Appellant,
    __________________________

    SKILSTAF, INC.,

               Intervenor Defendant-
               Third Party Plaintiff-
               Cross Claimant-
               Cross-Defendant-
               Appellee.

                           ORDER AND JUDGMENT *

Before BRISCOE, Chief Judge, EBEL and O’BRIEN, Circuit Judges.

        Third-party defendant Providence Holdings, Inc. appeals from a partial

summary judgment, certified as final under Fed. R. Civ. P. 54(b), that awarded

Skilstaf, Inc. and PACA, Inc. damages arising out of a loan dispute. We AFFIRM

for substantially the same reasons given by the district court.

*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

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                                   B ACKGROUND

      Providence is an insurance holding company. A Providence subsidiary

provided workers compensation coverage to Skilstaf and PACA, which are

organizations that manage human-resource responsibilities for various businesses.

      Skilstaf and PACA loaned Providence $3.1 million under three “surplus

loan agreements” to help the subsidiary carry out its insurance business and “meet

regulatory requirements as to capital and surplus.” Aplt. Br. at 3. Providence

then loaned $7.05 million to its subsidiary pursuant to “surplus certificates.” Id.

Providence was required to repay Skilstaf and PACA “when and as interest and

principal are received on the . . . surplus note[s],” Supp. Aplee. App., Vol. 2 at

39, 44, 49.

      In 2005, Providence canceled the surplus certificates and converted them to

paid-in capital. In 2008, Providence sold its subsidiary. At some point thereafter,

the subsidiary was placed into receivership and liquidated. Providence made

interest payments under the surplus loan agreements to Skilstaf and PACA

through November 2009, but failed to repay any principal.

      Skilstaf and PACA sued Providence, and moved for summary judgment,

arguing that the surplus loan agreements mandated repayment of the loans when

Providence converted the surplus certificates to paid-in capital. The district court

agreed, stating that “the indebtedness represented by the surplus notes was

discharged by the conversion and that this discharge/conversion effected a

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repayment of the surplus notes within the meaning of the surplus loan

agreements.” Aplt. App. at 172. Accordingly, it granted Skilstaf and PACA

summary judgment.

                                   D ISCUSSION

      We review the grant of summary judgment de novo, applying the same

standards as the district court. See Hinds v. Sprint/United Mgmt. Co., 523 F.3d

1187, 1195 (10th Cir. 2008). Summary judgment is appropriate “if the movant

shows that there is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In conducting our

review, “we examine the factual record and reasonable inferences therefrom in the

light most favorable to the party opposing the motion.” Oldenkamp v. United Am.

Ins. Co., 619 F.3d 1243, 1246 (10th Cir. 2010) (quotation omitted).

      Providence argues that summary judgment was inappropriate because there

was no evidence concerning the amount of debt canceled by the debt-to-equity

conversion. That is incorrect. The cancellation satisfied a $7.05 million debt

owed by the subsidiary to Providence—$3.1 million of that amount had been

supplied by Skilstaf and PACA. And as the district court observed, Providence

admitted in an interrogatory that it had completed the loan transaction and

canceled the surplus certificates. Against this evidence, Providence has cited

nothing to show that the loan to its subsidiary was not repaid. “[I]n response to a

properly supported motion for summary judgment,” the non-moving party “must

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produce sufficient evidence for a reasonable trier of fact to find in its favor at

trial on the claim or defense under consideration.” Nahno-Lopez v. Houser, 625

F.3d 1279, 1283 (10th Cir. 2010). Providence has failed to carry its burden.

      Providence also contends that because its subsidiary was in liquidation

while “Skilstaf and PACA were pursuing their motion for summary judgment,”

their recovery was limited by the surplus loan agreements. Aplt. Br. at 9.

Providence relies on language in those agreements stating that “[i]n the event of

liquidation of [the subsidiary], repayment . . . shall be paid to [Skilstaf and

PACA] out of any assets remaining after the repayment of all policy obligations

and all other liabilities of [the subsidiary].” Aplee. Supp. App., Vol. 2 at 49. But

as the district court aptly noted, Skilstaf and PACA were entitled to payment

based on the 2005 debt-to-equity conversion; consequently, the liquidation of

Providence’s subsidiary after its sale in 2008 was irrelevant.

                                    C ONCLUSION

      The judgment of the district court is AFFIRMED for substantially the same

reasons given by the district court in its September 16, 2010, order granting

summary judgment.

                                                      Entered for the Court

                                                      David M. Ebel
                                                      Circuit Judge

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