Opinion
8:19-bk-03648-RCT Adv. Pro. 8:21-ap-00237-RCT
06-03-2022
In re: Apex Road Commercial, LLC, Debtor. v. Donald E. Phillips and The Lost Heaven Trust, Defendants. Stephen L. Meininger, Trustee, Plaintiff,
Chapter 7
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
Roberta A. Colton, United States Bankruptcy Judge
Before the Court is Defendants' Amended Motion for Summary Judgment (Doc. 22) on Plaintiff's preferential transfer claims under 11 U.S.C. § 547(b). Plaintiff has filed a response brief (Doc. 48), and Defendants have filed a reply (Doc. 49). As explained below, Defendants' motion is granted.
I. Standard of Review
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. The Court must draw all inferences from the evidence in the light most favorable to the non-movant and resolve all reasonable doubts in that party's favor. The moving party bears the initial burden of showing the Court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue for trial.
See Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006) (citation omitted).
See id. (citation omitted).
See id. (citation omitted).
II. Background
On April 22, 2019, Debtor Apex Road Commercial, LLC's creditors filed an involuntary bankruptcy petition under Chapter 7 due to Debtor's failure to pay its debts as they came due. Plaintiff Stephen Meininger was appointed the Chapter 7 Trustee of Debtor's bankruptcy estate.
Plaintiff now sues Debtor's principal/manager, Defendant Donald E. Phillips ("Phillips"), and a trust created by Phillips, Defendant The Lost Heaven Trust ("Trust"), which is a member of Debtor. Plaintiff contends that Phillips and the Trust, as guarantors of a construction loan, received a preferential financial benefit when Debtor released its disputed litigation claims against certain lender-related parties.
Phillips is the settlor of the Trust. (Doc. 46, depo. p. 8). The trustee of the Trust at the relevant times in this case was Phillips' brother. (Doc. 43, depo. p. 70). According to the trustee of the Trust, he thinks that the beneficiaries of the Trust are Phillips' children, but he is not certain. (Doc. 46, depo. p. 8).
Debtor's Statement of Financial Affairs lists the Trust as a member of Debtor with no percentage interest, and two other entities are listed as membership holders in Debtor with interests totaling 100%. (Doc. 29, p. 23).
A. The North Carolina Lawsuits
Many of the facts that form the bases for the North Carolina lawsuits are gleaned from the underlying complaints.
In 2015, Debtor retained Medalist Capital, Inc. ("Medalist") as its broker to procure interim financing for a construction project in North Carolina. Donaldson Williams ("Williams") was the owner and president of Medalist.
Doc. 48-11, ¶ 15-17; Doc. 44, depo. p. 6.
Doc. 44, depo. p. 6, 21-22.
While investigating financing opportunities for Debtor, Williams focused only on lenders that would allow him to participate in the financing, personally or through one of his companies. Ultimately, Williams found a lender-Chatham Pointe Mortgage Investors ("CPMI")-that would provide Debtor with interim financing for the project and that would allow Williams to invest by contributing approximately 28% of the funding (through his company, DGW Holdings, LLC).
Doc 48-11 ¶ 23
Doc. 48-11, ¶ 22-26; Doc 44, depo. p. 7.
Williams allegedly led Debtor to believe that he was "required" to invest a "small amount" to procure the financing. However, according to Debtor, Williams was not required to make any such investment, and he did not simply invest a small amount. When Debtor discovered the full extent of Williams' investment in the financing, Debtor concluded that Williams had an inherent conflict of interest and that he had misrepresented his investment to Debtor.
Doc 48-11 27
Doc. 48-11, ¶ 28.
Doc. 48-11, 28.
To obtain the interim financing from CPMI, Defendants Phillips and the Trust were required to guarantee the loan. Debtor asked Williams to negotiate to have the guaranty requirement removed. Williams apparently did the opposite and, when conveying the request to CPMI, Williams recommended that the lender still require the personal guaranties.Learning this, Debtor was convinced that Williams was working on behalf of the lender to Debtor's detriment.
Doc 48-11 ¶ 29
Doc 48-11 ¶ 29
Doc 48-11 ¶ 30
Once the interim financing was established, Williams and Medalist allegedly refused to fund the loan unless and until Debtor agreed to retain Medalist as its exclusive broker for long-term financing for the project. Then, according to Debtor, the only efforts that Williams and Medalist undertook to obtain the long-term financing was with Walker & Dunlop-a lender who agreed to pay Williams and Medalist a referral fee for arranging the loan. Alternatively, Debtor believed that Williams and Medalist only pursued long-term financing with Walker & Dunlop so that financing efforts would fail, the project would go into foreclosure, and Williams could purchase the underlying real estate through his related entities. Ultimately, Medalist did not obtain long-term financing for Debtor, the construction project suffered serious cost overruns and failed, and Debtor's primary lender foreclosed on the property in September of 2016.
Doc 48-11 ¶ 37
Doc 48-11 ¶ 41-42
Doc 48-11 ¶ 42
Doc 48-11 ¶ 46-47
Thereafter, in November of 2016, CPMI (now fully owned by DGW Holdings, LLC ("DGW")) sued Debtor, Phillips, and the Trust in North Carolina state court for payment of the interim financing loan. Although CPMI only advanced $1,021,157, CPMI sued for over $1.4 million for the loan (as of October 31, 2016) and over $210,000 in attorneys' fees (calculated as 15% of the outstanding loan balance). Additionally, CPMI alleged in its complaint that interest was continuing to accrue on the loan at a rate of $793.06 per day.
Doc. 48-1. At the time of CPMI's lawsuit, DGW Holdings, LLC had bought out the other investor that had contributed the other 72% of the funding through CPMI to Debtor. (Doc. 44, depo. p. 9).
Doc. 48-1.
Doc. 48-1.
In February 2018, while CPMI's lawsuit was pending, Debtor filed a separate suit against Medalist, Williams, and DGW in North Carolina state court. Debtor asserted ten claims: (1) breach of fiduciary duty, (2) constructive fraud, (3) breach of contract, (4) breach of the covenant of good faith and fair dealing, (5) breach of duty to negotiate in good faith, (6) fraud and fraud in the inducement, (7) negligent misrepresentation, (8) violation of North Carolina's Unfair and Deceptive Trade Practices statute, (9) piercing the corporate veil, and (10) constructive trust (collectively referred to as "Litigation Claims").
Doc. 48-11.
Page 26 of Debtor's complaint is missing, and it appears that Debtor's seventh claim-which began on the missing page-is for negligent misrepresentation. (Doc. 48-11).
Doc. 48-11.
B. The Global Settlement
On April 26, 2018, after mediation, there was a global settlement of both lawsuits by Debtor, Phillips, and the Trust on one side (collectively referred to as the "Phillips Parties") and Williams, CPMI, Medalist, and DGW on the other side (collectively referred to as the "Williams Parties"). The terms of the settlement agreement were as follows: (1) the Phillips Parties would pay the Williams Parties $1,025,000 for CPMI's loan (in three installments); (2) both lawsuits would be dismissed; (3) the Williams Parties would release the Phillips Parties; and (4) the Phillips Parties would release the Williams Parties. The settlement agreement also provided that if the Phillips Parties did not make the required payments, then a confession of judgment would be entered against the Phillips Parties for $2,034,399.55.
Doc. 48-3.
Doc. 48-3.
Doc. 48-3.
It is undisputed that Phillips and the Trust alone paid the $1,025,000 settlement amount. Although Debtor's liability to CPMI was eliminated by the global settlement, Debtor did not contribute any funds to the settlement. Notwithstanding the global settlement, Williams, Medalist, and DGW expressly disputed the allegations underlying the Litigation Claims.
Doc. 22-1; Doc. 43, depo. p. 48.
Doc. 22-1; Doc. 43, depo. p. 48.
C. This Adversary Proceeding
Plaintiff now contends that Phillips and the Trust, as insiders and guarantors, received the benefit of a preferential transfer when Debtor released the Litigation Claims as part of the global settlement. Specifically, Plaintiff alleges that Debtor's release of the Litigation Claims was a transfer, and that as consideration for that transfer, CPMI settled its claims against Debtor and Defendants Phillips and the Trust for $1,025,000-less than the full amount of their liability as guarantors of the interim financing loan. Further, Plaintiff contends that "[t]he monetization of the value of the [released] [c]laims inured to the benefit of Phillips and the Trust rather than the Debtor and/or its creditors" by reducing Phillips' and the Trust's guaranty obligation by at least $975,000. As a result, Plaintiff asserts preference claims against Phillips and the Trust under 11 U.S.C. § 547(b) and seeks recovery under 11 U.S.C. § 550.
Doc. 1, ¶ 29-30.
III. Motion for Summary Judgment
In Defendants' motion for summary judgment, they argue that, after more than two years of investigation, Plaintiff has little to no evidence to support his claims under § 547(b) of the Bankruptcy Code. Section 547(b) states:
[T]he trustee may . . . avoid any transfer of an interest of the debtor in property--
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made . . . between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive if-(A) the case were a case under chapter 7 of this title; (B) the transfer had not been made; and (C) such creditor received payment of such debt to the extent provided by the provisions of [the Bankruptcy Code].
11 U.S.C. § 547(b). If this case went to trial, Plaintiff would have the burden of proving, by a preponderance of the evidence, each of the five elements. See In re Grove Peacock Plaza, Ltd., 142 B.R. 506, 510 (Bankr. S.D. Fla. 1992).
The transfer of property at issue is Debtor's release of its disputed Litigation Claims. However, as explained below, Plaintiff cannot show that a genuine issue of fact exists as to the fifth element, and as such, Defendants are entitled to summary judgment.
A. Creditor
To avoid a transfer as a preference, Plaintiff must first show that the transfer was "to or for the benefit of a creditor." As explained by one court:
To prevail under §§ 547 and 550, the Trustee must establish that [the Defendant] was a creditor at the time of the Transfers. Sections 101(5)(A) and 101(10)(A) of Title 11 provide that a guarantor is a creditor of the debtor, because a guarantor has a contingent right to payment. A guarantor's contingency claim arises from the moment of the execution of the guaranty. A guarantor is a contingent creditor because it has a potential claim
for reimbursement against the debtor if it defaults on a loan and the guarantor[ ] [has] to satisfy the debt.
In re Oconee Regional Health Systems, Inc., 621 B.R. 64, 73 (Bankr. M.D. Ga. 2020) (internal citations and quotation marks omitted).
Accordingly, Defendants Phillips and the Trust became creditors of Debtor when they guaranteed the CPMI loan, and thus, this element is satisfied.
B. Antecedent Debt
Next, Plaintiff must show that the transfer was "for or on account of an antecedent debt owed by the debtor before such transfer was made." "A debt is antecedent to the transfer sought to be avoided under § 547(b) if it is pre-existing or is incurred before the transfer. Such antecedent debt exists when a creditor has a claim against the debtor, even if the claim is unliquidated, unfixed, or contingent."
Oconee Regional, 621 B.R. at 75-76 (internal citations and quotation marks omitted) (emphasis in original).
When Defendants Phillips and the Trust guaranteed the CPMI loan, they became contingent creditors of Debtor. Their guaranty obligation occurred prior to the global settlement of the lawsuits when the disputed transfer occurred, and therefore, the disputed transfer was for or on account of an antecedent debt of Debtor.
C. Insolvency
Next, Plaintiff must show that the transfer was made while Debtor was insolvent.There is no dispute that Debtor was insolvent at the time of the settlement agreement, when the disputed transfer was made.
Doc. 5, ¶ 36, 46.
D. Timing of the Transfer to an Insider
Next, Plaintiff must show that the transfer was made between ninety days and one year before the date of the filing of the bankruptcy petition, if the creditors at the time of the disputed transfer were insiders. There is evidence before the Court to support the contention that Phillips (as the manager of Debtor) and the Trust (as a member of Debtor, whose beneficiaries appear to be Phillips' children, and whose trustee is Phillips' brother) are insiders under the case law construing the definition of insiders in 11 U.S.C. § 101(31). Furthermore, the disputed transfer occurred pursuant to the settlement agreement that was entered into on April 26, 2018, and Debtor's creditors filed the involuntary bankruptcy petition less than one year later-on April 22, 2019. Therefore, for purposes of this motion for summary judgment, the Court construes the available facts in favor of Plaintiff, the non-moving party, and presumes Defendants are insiders and the one-year preference period applies.
See, e.g., In re Beaulieu Group, LLC, 2021 WL 4469928, at *29 (Bankr. N.D.Ga. Sept. 29 2021) (stating that "[m]anagers of a limited liability company are analogous to directors of a corporation, especially when the operating agreement vests management of the company in a board of managers"); In re LXEng LLC, 607 B.R. 67, 89 (Bankr. D. Conn. 2019) (stating that "[f]or the Bankruptcy Code's purposes, a director, officer, person in control, general partner, or relative of any of the aforementioned persons are all insiders of a corporation"); In re Ridgeway, 2018 WL 1116531, at *4 (Bankr. E.D. La. Feb. 27, 2018) (stating that "LLCs sufficiently resemble corporations to be treated as corporations within the meaning of insider").
E. Preferential Treatment to Defendants
Next, Plaintiff must show that the transfer enabled Phillips and the Trust to receive more than they "would receive if-(A) the case were a case under chapter 7 of this title; (B) the transfer had not been made; and (C) [Phillips and the Trust] received payment of such debt to the extent provided by the provisions of [the Bankruptcy Code]." The fifth element of § 547(b) has been described as requiring a trustee to show that the disputed transfer enabled the creditors (here, Phillips and the Trust) to receive more than they would have received had the debtor's estate been liquidated under Chapter 7 and the disputed transfer had not been made.
In re Globe Manufacturing Corp., 567 F.3d 1291, 1296 (11th Cir. 2009).
"The § 547(b)(5) test is automatically satisfied whenever a general unsecured creditor such as [Phillips and the Trust] receives any payment within the preference period unless the estate is sufficient to pay unsecured claims in full." In this case, Debtor has no assets to pay any of its creditors' claims, so any payment to Defendants would be sufficient to satisfy § 547(b)(5).
In re David Jones Builder, Inc., 129 B.R. 682, 694 (Bankr. S.D. Fla. 1991) (citation omitted); see also In re Toy King Distributors, Inc., 256 B.R. 1, 95 (Bankr. M.D. Fla. 2000).
Doc. 48-8, ¶ 4.
Plaintiff thus argues that this element is satisfied because Defendants received a financial benefit in the form of reduced guaranty exposure. Indeed, it is well-established that when a debtor makes a payment directly to the obligee of a guaranteed obligation, there can be a preferential transfer to the extent that the guarantor's obligation is reduced by the debtor's payment to the obligee. Here, however, the analysis is more complicated because Debtor did not pay anything-it just released its Litigation Claims as part of the global settlement. And, the global settlement eliminated Debtor's repayment obligation to CPMI.
See Oconee Regional, 621 B.R. at 72 (citations omitted).
The § 547(b)(5) analysis is further complicated because neither the value of the Litigation Claims nor the amount of any reduction in guarantor liability can be established with any objective certainty. Plaintiff argues that if Debtor had not released the Litigation Claims, Williams, on behalf of CPMI, would not have agreed to settle CPMI's claims against Debtor and Defendants for $1,025,000. Thus, Plaintiff concludes that Defendants financially benefitted from Debtor's release of the Litigation Claims to the extent that they paid at least $975,000 less than the amount of the default confession of judgment to settle CPMI's claim. Alternatively, Plaintiff relies on statements about an offer by CPMI to settle its claim for $1,650,000 as evidence of that being the amount Defendants would have had to pay to settle CPMI's claim.
Doc. 44, depo. p. 26.
Doc. 48-10.
Setting aside the evidentiary problems raised by Defendants, Plaintiff's argument that Defendants obtained value - more than in a liquidation - is wholly speculative. Plaintiff's difficulty stems from his effort to isolate and avoid part of the global settlement (the release of the Litigation Claims) without avoiding the entirety of the global settlement (including the release of Debtor's liability for the interim financing loan). The analysis must account for all that went into the global settlement, including the fact that at the time of the global settlement, CPMI was apparently controlled by DGW and Williams. As explained by the First Circuit, "[a]lmost always, a main goal of a global settlements is to leave no loose ends."
In re Montreal, Maine & Atlantic Railway, Ltd., 956 F.3d 1, 11 (1st Cir. 2020).
Examining the "evidence" of value in excess of liquidation offered by Plaintiff illustrates the leaps of faith necessary to find a preference. First, none of the parties (including Debtor's state court counsel) could remember how the default provision of the global settlement agreement was negotiated or calculated. On its face, it is characterized as "security" for the delayed payments under the global settlement. Second, assuming the off-handed reference to CPMI's $1,650,000 settlement offer overcomes Defendants' hearsay and Federal Rule of Evidence 408 objections, settlement offers by nature are irrelevant to prove the value of a claim. Third, Plaintiff's assumption that Defendants would ultimately have to pay more than $1,025,000 (the global settlement amount), if Debtor had not released the Litigation Claims, again is just speculative. Money in hand is often more valuable than the possibility of obtaining more money later via litigation. As such, the Court finds that there is not sufficient probative evidence to create a genuine issue of material fact regarding whether Defendants obtained any "cognizable" benefit as a result of Debtor's release of the Litigation Claims, as required by § 547(b)(5).
Doc. 44, depo. p. 27; Doc. 43, depo. p. 49; Doc. 45, depo. p. 47; Doc. 46, depo. p. 30-31.
Defendants argue that Plaintiff relies on inadmissible settlement offers under Federal Rule of Evidence 408 and inadmissible hearsay statements regarding settlement discussions.
See, e.g., In re C.M. Meiers Company, Inc., 2016 WL 9458553, at *37 (Bankr. C.D. Cal. Dec. 20, 2016) (noting that settlement offers are generally inadmissible to prove the value of a claim based on two rationales: "(1) irrelevance, as an offer to compromise may not be an admission, but rather an attempt to purchase peace; and (2) policy, in that the admissibility of such evidence would discourage parties to enter into settlements"); In re First Software Corp., 107 B.R. 417, 424-25 (D. Mass. 1989) (finding that the bankruptcy court properly excluded, under Federal Rule of Evidence 408, a settlement offer submitted as evidence of the amount of the creditor's preference liability).
See Travelers Ins. Co. v. Cambridge Meridian Group, Inc. (In re Erin Food Services, Inc.), 980 F.2d 792, 796-97 (1st Cir. 1992)
See, e.g., In re Teltronics, Inc., 540 B.R. 481, 487 (Bankr. M.D. Fla. 2015) (evaluating reasonably equivalent value in the context of a fraudulent transfer claim relating to the debtor's transfer of blocking rights in exchange for $5,000 and stating that it was possible to speculate that the debtor could have negotiated a higher price for the blocking rights had it known of the $12 million agreement to sell the patent portfolio, and that it was not unreasonable to surmise that the transferee would have paid the debtor more in order to close the $12 million sale, but finding that there was no evidence in the record to show that the debtor's receipt of $5,000 was not reasonably equivalent value for the blocking rights).
But even accepting Plaintiff's argument that the Litigation Claims must have been "worth something" for purposes of § 547(b)(5)-which the Court does not-the test for recovery of a preferential transfer under § 550(a) is more exacting. To the extent that a transfer is avoided under § 547, the trustee may recover, under § 550(a), for the benefit of the estate, the value of the property transferred from the initial transferee or the entity for whose benefit such transfer was made.
11 U.S.C. § 550(a)(1). "Bankruptcy courts have consistently held that § 550 'is designed to restore the estate to the financial condition that would have existed had the transfer never occurred.'" In re Kingsley, 518 F.3d 874, 877 (11th Cir. 2008) (citations omitted).
Thus, Plaintiff cannot avoid valuing the Litigation Claims, so that the Court can determine the value of the property transferred for recovery purposes. A nominal or speculative value is insufficient to survive summary judgment.
Unfortunately, after much time and effort, Plaintiff's evidence of the value of the Litigation Claims boils down to the following: (1) Williams' general statement in his deposition that CPMI would not have accepted $1,025,000 to settle its claims without Debtor releasing the Litigation Claims; (2) the default provision in the settlement agreement providing for a confession of judgment for roughly $2 million if the settlement amount was not paid as agreed; (3) settlement communications and related emails, all of questionable admissibility and probative value; (4) the equivocal testimony of the trustee of the Trust, suggesting that Williams, Medalist, and DGW may have played some role in Debtor's demise, but admitting that they certainly were not the sole cause; and (5) Debtor's North Carolina attorney's rather obvious assessment that the complaint his firm filed asserting the Litigation Claims was accurate and not frivolous, and his pre-litigation settlement demand letter stating that the claims were worth "several million dollars."
Doc. 44, depo. p. 26.
Doc. 48-2; Doc. 48-9; Doc. 48-10. Defendants raised potential hearsay and Federal Rule of Evidence 408 objections with respect to this evidence.
Doc. 46, depo p. 24-27, 41-42.
Doc.45, depo p. 37-38.
Doc. 48-2.
From this, Plaintiff jumps to the conclusion that the value of the Litigation Claims must have been worth between "$625,000 and $1,009,399.55." Even construing the evidence proffered by Plaintiff favorably, Plaintiff's proposed valuation of the Litigation Claims is far too speculative and is insufficient to create a triable issue of fact.
Doc. 48, ¶ 15. CPMI's $1,650,000 settlement offer, less $1,025,000; or the $2,034,399.55 confession of judgment, less $1,025,000.
First, Williams' testimony is not evidence that the Litigation Claims had any value. The Litigation Claims could be frivolous or subject to meritorious defenses, and even then, a partial settlement of just CPMI's claims might be inadvisable given that additional attorneys' fees and costs would need to be expended to defend against the claims. And, although Williams obviously wanted the peace of a global settlement, he was also adamant that he and his entities were not the reason Debtor's construction project failed.
Doc. 44, depo p. 30-31.
Second, the default provision for a $2 million confession of judgement in the settlement agreement bears no relationship to the value of the Litigation Claims. Again, the evidence before the Court shows that no one could remember how the $2 million figure was calculated.On its face, it is simply a negotiated provision designed to incentivize the Phillips Parties to make the settlement payment.
Doc. 44, depo. p. 27; Doc. 43, depo. p. 49; Doc. 45, depo. p. 47; Doc. 46, depo. p. 30-31.
The confession of judgment and a Deed of Trust on separate property secured the Phillips Parties' payments under the global settlement.
Third, the settlement communications and related emails, even if admissible, offer nothing for the Court to use to value the Litigation Claims. As previously stated, settlement proposals are generally irrelevant to the value of a claim. They often contain, as these do, obvious posturing that bears no rational relationship to the actual value of the claims.Plaintiff's speculation that there is a clear line from a settlement proposal to the value of the claims ignores the numerous factors that go into a settlement proposal, including but not limited to, the difficulty of proof, the time value of money, the value of peace, litigation costs, and the collectability of judgments.
Even Phillips admitted in his deposition that the settlement demand that Debtor's attorney sent contained posturing. (Doc. 43, depo. p. 43-44).
See Montreal, Maine & Atlantic Railway, 956 F.3d at 9-10 (finding that there was no evidence to allow the bankruptcy court to evaluate the value of the released claims and noting that many "considerations, including the cost of litigation, the staying power of the parties, their relative desire to avoid litigation, and their bargaining leverage" may affect the value of a claim).
Fourth, the deposition of the trustee of the Trust does not help Plaintiff. If anything, it illustrates the multitude of problems with the Litigation Claims, including proof of causation and damages, in light of the serious cost overruns facing Debtor on the construction project. This deposition testimony also must be tempered by what the witness acknowledges earlier in his deposition-that his involvement as trustee of the Trust was limited to guaranteeing the loan on behalf of the Trust and that he was "guessing" about some things.
Doc. 46, depo. p. 13-14.
And finally, the North Carolina attorney's deposition testimony-that the complaint his law firm filed was accurate and not frivolous-is equally unhelpful in establishing value. The complaint was dismissed within a short time after filing, pursuant to the global settlement, without development of the facts. His pre-litigation assessment of the claims in the demand letter, which is of dubious evidentiary status, is posturing at its finest. It is not probative evidence of the value of the Litigation Claims.
To find a genuine issue of material fact, the Court must conclude that a rational trier of fact could find in favor of Plaintiff. But a rational trier of fact could not do so when the only evidence is speculative and conjectural. Obviously, Debtor filed suit against Williams, Medalist, and DGW to get leverage in the negotiations, and perhaps the ploy worked. Still, that does not mean that the Litigations Claims had any value independent of that leverage.
See Montreal, Maine & Atlantic Railway, 956 F.3d at 8 n.4 (recognizing that the value of the released claims as a bargaining chip to secure a settlement differed from their value on the open market).
Ultimately, Plaintiff asks the Court to assume that if Debtor had not released its Litigation Claims against Williams, Medalist, and DGW, Plaintiff could have successfully pursued those claims. Plaintiff does not offer any analysis of the Litigation Claims and available affirmative defenses to show that the claims would be meritorious. Likewise, Plaintiff fails to offer any expert testimony as to the value of those claims, and Debtor's attorney's statement in the settlement demand letter is not sufficient evidence, on its own, of their value. Finally, even assuming the Litigation Claims had merit, there is no evidence regarding the cost of litigating the claims or evidence that the claims could ultimately net any money to the estate. Therefore, the Court finds that summary judgment is warranted.
See id. at 9 (stating that "even a claim alleging a substantial figure for damages may have no . . . value at all if the cost, difficulty, or uncertainty of litigation makes it not worthwhile to pursue").
IV. Conclusion
In essence, in response to Defendants' motion for summary judgment, Plaintiff has failed to provide the Court with sufficient evidence to find a genuine issue of material fact. The Court will not simply assume facts for which Plaintiff was required to provide evidentiary support, and thus, Defendants are entitled to summary judgment on Plaintiff's claims.
Accordingly, it is ORDERED that:
(1) Defendants' Amended Motion for Summary Judgment (Doc. 22) is GRANTED.
(2) The Court will enter a separate judgment for Defendants and then the Clerk can proceed to close this case.
Service of this Order other than by CM/ECF is not required. Local Rule 9013-3(b).