Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re X-Cel Inc.

October 23, 1985

IN THE MATTER OF: X-CEL, INC., D/B/A SIZZLER FAMILY STEAK HOUSE, DEBTOR-APPELLANT


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 84-3274-Marvin E. Aspen, Judge.

Author: Flaum

Before FLAUM and EASTERBROOK, Circuit Judges, and SWYGERT, Senior Circuit Judge.

FLAUM, Circuit Judge.

Debtor-appellant X-Cel, Inc. appeals an order entered by the bankruptcy court allowing in full, with interest, a creditor's claim in X-Cel's Chapter 11 proceeding. The district court affirmed the order, holding that the bankruptcy court's findings were not clearly erroneous. Aside from disputing the merits of the creditor's claim, X-Cel argues on appeal that we should subject those findings to closer scrutiny, asserting that the "clearly erroneous" standard of review set forth in Rule 52(a) of the Federal Rules of Civil Procedure is inapplicable. For the reasons set forth below, we hold that the clearly erroneous standard is applicable in this instance. Nevertheless, the lack of clear findings upon which to base even a minimal degree of appellate scrutiny compels us to reverse and remand this cause to the district court, directing it to solicit new findings from the bankruptcy court.

I.

The claim allowed by the bankruptcy court arose out of advertising services performed by A. Eicoff & Company ("Eicoff"). At the time that Eicoff's claim arose, X-Cel operated several Sizzler Steak House franchises in the Chicago area. In 1981, X-Cel and three other corporations that also operated Chicago-area Sizzler franchises entered into an advertising agreement with Eicoff. The agreement provided that Eicoff was to act as an agent for the group of franchisees in purchasing television time and newspaper space in which to run Sizzler advertisements.

According to the parties' briefs, the dispute in issue had its inception in the events surrounding an involuntary Chapter 7 bankruptcy petition filed against X-Cel in May, 1982. Before it received notice of the petition, X-Cel's Chief Executive Officer, Siemieniak, had mailed a check to Eicoff for $20,008.48, in payment of its share of costs and commissions due Eicoff for advertising placed before April 1, 1982. According to X-Cel, it shortly thereafter learned of the petition and stopped payment on its check in order not to prefer Eicoff's claims over those of other creditors. X-Cel asserts that it simultaneously notified Eicoff that it was terminating the advertising agreement. Meanwhile, however, Eicoff had purchased on behalf of the group ninety days of television advertising for a "steak and all you can eat shrimp" campaign, allegedly in reliance upon X-Cel's payment of its delinquent account. After a conversation with one of the other franchisees about X-Cel's cancellation, Eicoff continued the "steak and all you can eat shrimp" advertising campaign throughout the summer of 1982. X-Cel's franchises remained in operation during that time, with X-Cel as debtor in possession, and each participated in the "steak and all you can eat shrimp" promotion.

Although X-Cel later paid for the pre-April 1 advertising, it disputes the contention that it must pay for a share of the summer campaign and argues that the bankruptcy court erred in evaluating the merits of Eicoff's claim. According to X-Cel, Eicoff breached the advertising agreement because it had purchased advertising time and space before receiving written authorization from the franchisees. X-Cel further asserts that it was entitled unilaterally to terminate the agreement regardless of Eicoff's breach. We decline to reach these issues, however, in light of our conclusion that the case must be remanded for new findings.

II.

The bankruptcy court's order, in its entirety, states as follows:

THIS CAUSE coming on to be heard upon the trial of Claim No. 22 filed by A. Eicoff & Company ("Eicoff") against X-Cel, Inc., d/b/a Sizzler Family Steak House ("Debtor" or "Siemieniak"), the court having held a trial in said matter, having observed the demeanor of the witnesses, having examined the documents admitted into evidence, having heard arguments of counsel and having read the memorandum in support of the various positions of the parties, and being fully advised in the premises DOTH FIND as follows:

1. This court has jurisdiction over the subject matter and over the parties hereto.

2. The court hereby adopts as its findings the factual statements as stated in the Memorandum in Support of Allowance of Claim No. 22 filed by Eicoff, a copy of which is attached hereto and made a part hereof and is expressly incorporated herein.

NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED and DECREED that Claim No. 22 for A Eicoff & Company is hereby allowed in the amount of $158,401.42, plus per diem interest in the amount of $65.73 commencing December ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.