Opinion
Civil No. 4:02cv0003AS
May 15, 2002
MEMORANDUM AND ORDER
This matter is before the court on appeal from the United States Bankruptcy Court for the Northern District of Indiana, No. 00-4004. Jurisdiction is conferred upon this court pursuant to 28 U.S.C. § 158(a).
The Honorable Robert E. Grant, United States Bankruptcy Judge for the Northern District of Indiana.
I. BACKGROUND
This particular appeal arrives at the district court after the dismissal of an adversary proceeding initiated by the Trane Company ("Trane") in order to ascertain whether the automatic stay provision applied to a lawsuit it had filed against the former parent company, Welbilt, of the particular debtor in this case Consolidated Industries Corporation ("Consolidated"). The bankruptcy court characterized the claim as follows: "[Trane] has also filed suit against the debtor's former parent, Welbilt, and others in an effort to recover the amounts due it from the debtor." (Bankruptcy Court's Amended Decision at p. 1.) The bankruptcy court noted in the first paragraph of its decision the purpose of Trane's Adversary proceeding was to ascertain whether a particular complaint filed by Trane against Welbilt in a Texas state court was subject to the automatic stay provision. Id. Further, the adversary complaint sought to establish that if the complaint against Welbilt was subject to the stay whether relief from the stay was appropriate. (Id.).
At this point it becomes necessary to recount the procedural history of this action because of the ultimate disposition of the case rendered by the bankruptcy court. Trane filed its adversary proceeding in this matter on February 14, 2000. Thereafter, on June 6, 2001, the parties entered into a joint stipulation into the proper resolution of this adversary proceeding. That stipulation stated the following:
1. This adversary action will be resolved by cross-motions for summary judgment based upon a stipulation of facts.
2. Consolidated and Trane shall file a stipulation of facts pursuant to Court order. (The parties believe that it will take approximately 30 to 45 days to negotiate such a stipulation.)
3. After the filing of the stipulation, Trane would file its opening brief in support of summary judgment in its favor. (Trane requests 20-45 days to file such brief.)
4. The Trustee would then file its opposition brief and brief in support of a cross-motion for summary judgment. (The Trustee requests 20-45 days to prepare the opposition.)
5. Trane's reply brief, if any, would be filed thereafter. (Trane requests 15-20 days to file such reply.) (Stipulation By and Between Defendant Daniel L. Freeland., Plaintiff The Trane Company, A Division of America Standard regarding procedure to resolve adversary action at p. 3).
As a result of that stipulation by the parties, the bankruptcy court entered the following scheduling order.
The parties have, by a stipulation filed on June 6, 2001, advised the court that the issues raised in this adversary proceeding may be submitted on stipulations of fact and briefs of counsel.
IT IS THEREFORE ORDERED that
1. Plaintiff and defendants shall file appropriate stipulations of fact on or before July 2, 2001. This is the deadline established by the court's order of March 22, 2001 for filing a proposed pre-trial order, which the court informed the parties would not be extended.
2. Plaintiff's brief shall be filed on or before August 2, 2001.
3. Defendant's brief shall be filed on or before September 4, 2001.
4. Plaintiff shall file any reply on or before September 19, 2001. Upon the submission of all briefs or the expiration of the briefing schedule, the issues raised in this adversary proceeding will be taken under advisement. In the event plaintiff and defendant would discover they are not able to stipulate to all relevant facts, they shall file a proposed pre-trial order on or before the date the stipulations are due, upon the approval of which the issues raised in this adversary proceeding will be set for trial by separate order. (See Bankruptcy Court Order of June 21, 2001);(Emphasis in original).
On July 2, 2001, pursuant to that order, the parties filed a joint stipulation of facts. Thereafter, Trane moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The matter was subsequently fully briefed by the parties in accordance with the bankruptcy court's scheduling order of June 21, 2001. On November 6, 2001, the bankruptcy court issued its decision on the matter and entered an accompanying judgment and order to dismiss the case.
Bankruptcy Rule 7056 provides that Rule 56 of the Federal Rules of Civil Procedure applies in adversary proceedings before the bankruptcy court. See Norton Bankruptcy Law and Practice 2d, Bankruptcy Rules 2001-02 Edition at p. 505.
Apparently, a second joint stipulation facts was filed by the parties on August 9, 2001.
The bankruptcy court framed the issue before it in the following manner; whether "the court [can] issue a declaratory judgment — that the action it is prosecuting against Welbilt is not property of the bankruptcy estate and is not barred by the automatic stay . . ." (Bankruptcy Court Decision at p. 3). In the body of the decision, the bankruptcy court distinguishes between various claims that are personal to a creditor of a debtor against a third party and those that are general to all creditors against a third party. (Bankruptcy Court Decision at p. 2). The bankruptcy court went on to state that in making such a determination required the court to look at the relief sought, presumably in the creditor's complaint against the third party, to determine whether the claim is personal to that particular creditor. (Id.).
At this point the bankruptcy court determined that based upon the stipulated facts submitted by the parties on July 2, 2001 it could not rule. The bankruptcy court specifically noted that the complaint filed by Trane against Welbilt in the Texas state court was not part of the stipulations. It went on to note that the complaint was not evidence which the court could properly use in reaching a decision because it was not included in the joint stipulations and the court declined to consider it.
II. STANDARD OF REVIEW
Under the applicable standard of review, the bankruptcy court's finding of facts are reviewed under a "clearly erroneous standard" and the conclusions of law are review under a de novo standard. In re Robert N. Jones and Margret N. Jones, 227 F.3d 917 (7th Cir. 2000); Kravit, Gass Weber, S.C. v. Michel (In re Crivello), 134 F.3d 831, 835 (7th Cir. 1998); see also Fed.R.Bankr.P. 8013. The bankruptcy court's disposition of a case using the summary judgment procedure as a vehicle to effect that end, necessarily, involves a mixed question of law and fact. TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 445, 448-449, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976) (The issue of materiality may be characterized as a mixed question of law and fact, involving as it does the application of a legal standard to a particular set of facts.). The application of the correct procedures involving a motion for summary judgment is a question of law and therefore reviewed under a de novo standard of review.
III. DISCUSSION
Trane appeals the decision of the bankruptcy court alleging four points of reversible error committed by the bankruptcy court below. As detailed in the following discussion, the court finds that the bankruptcy court erred in failing to consider the entire record in rendering its decision and therefore reaches no opinion as to the remaining points of error.
A. WHETHER THE BANKRUPTCY COURT ERRED IN FAILING TO CONSIDER THE ENTIRE RECORD.
Trane urges this court to reverse the decision below in light of the bankruptcy court's failure to consider certain uncontroverted facts and papers submitted by it as part of the record in dismissing the adversary proceeding below. Specifically, Trane asserts that the bankruptcy court failed to consider Trane's complaint that it filed against Welbilt in the Texas state court (hereinafter "Welbilt complaint") to determine what if any impact the automatic stay had on that particular action. The disposition of the proceeding below by the bankruptcy court limits this court's review of the matter. In light of the bankruptcy court's conclusion that it could not possibly rule on the merits of the adversary complaint, this court is limited to a review of whether the bankruptcy court committed an error of law by refusing to consider other matters in the record in resolving the cross motion for summary judgment submitted by the parties below.
Trane contends that had the bankruptcy court considered all the evidence of record (which included the Welbilt complaint) it could have easily ascertained the issues presented in its adversary proceeding and made a decision on the merits below. Alternatively, the Trustee posits that the bankruptcy court correctly dismissed the action on the merits. The Trustee argues that the bankruptcy court did not abuse its discretion be refusing to consider additional evidence not provided for by the parties according to the scheduling order. A point not in disagreement by this court. However, the Trustee's brief has been particularly unenlightening with regard to the procedural issue raised by Trane. Specifically, whether the Welbilt complaint attached to the adversary complaint was part of the record and should have been considered in deciding the merits of the adversary complaint below. (See Adversary Proceeding 00-4004 Docket Entry # 1). Moreover, the court notes that Trane, in submitting its materials in support of its motion for summary judgment, references the Welbilt complaint.
This particular document was central to the entire adversary proceeding and was made a part of the record as an exhibit to Trane's adversary complaint in this matter. Rule 10(c) of the Federal Rules of Civil Procedure specifically provides that: "A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." FED. R. CIV. P. 10(c); Northern Indiana Gun Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452-53 (7th Cir. 1998) (collecting cases on FED.R.CIV.P. 10(c)) Therefore, the Welbilt complaint was incorporated as part of the pleadings in this adversary proceeding at that point.
Rule 56(c) of the Federal Rules of Civil Procedure contemplate a decision only after a review of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to a material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c); (Emphasis Added). In interpreting Rule 56, both the Supreme Court and the Seventh Circuit have clearly delineated the applicable framework and necessary considerations a trial court must undergo in fulfilling its obligations in rendering a decision under this dispositional vehicle. See Celotex Corp. v. Catrett, 477 U.S. 317, 330 n. 2, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (in determining whether moving party has met its burdens and is entitled to summary judgment, "the court is obligated to take account of the entire setting of the case and must consider all papers of record as well as any materials prepared for the motion") (Brennan, J., dissenting); see also 10A Charles Alan Wright et al., Federal Practice and Procedure § 2727, at 476, 480 (3d ed. 1998). Apostol v. Landau, 957 F.2d 339, 344 (7th Cir. 1992) (Ripple concurring in part and dissenting in part). A trial court must consider the entire record, which includes the complaint and any parts incorporated to it, and then read the undisputed evidence in the light most favorable to the non-moving party. Apostol, 957 F.2d at 344; see also Green v. Carlson, 826 F.2d 647, 650 (7th Cir. 1987).
The bankruptcy court specifically noted that in making its decision to dismiss the case that it would not consider the Welbilt complaint. However, in the same vein the bankruptcy court noted that in determining whether certain claims belong to a creditor or to the bankruptcy estate the "answer is often found by an examination of the complaint and the allegations it contains." (Bankruptcy Court's Decision at p. 2-3). The court's refusal to consider the Welbilt complaint was error. Therefore the bankruptcy court's decision to dismiss the case based upon this error is now reversed and remanded for further consideration of Trane's claims not inconsistent with this opinion.
B. REMAINING ARGUMENTS OF ERROR BELOW
In light of the above reasoning and the bankruptcy's decision below, the court does not reach nor expresses any opinion as to Trane's assertions that the bankruptcy court erred in denying Trane's motion for summary judgment or whether the bankruptcy court should have clarified which of the claims made by Trane were subject to the automatic stay. Although these were touched upon in the bankruptcy court's decision, it declined to fully address those arguments in light of its refusal to address the Welbilt complaint and other evidence of record. A final decision on the merits must be rendered before this court can address those substantive issues. The court is quite confident that both the parties and the bankruptcy court will fully and adequately address these issues on remand once the appropriate materials are submitted, the entire record is reviewed and all materials properly before the court are considered.
IV. CONCLUSION
For the foregoing reasons the bankruptcy court's decision to dismiss the adversary proceeding below is now REVERSED and REMANDED. Each party to bear its own costs. IT IS SO ORDERED.