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In re Liberty Coal Co.

March 31, 2010

IN RE: LIBERTY COAL COMPANY, LLC, DEBTOR.
DANA S. FRAZIER, TRUSTEE OF THE ESTATE OF LIBERTY COAL COMPANY, LLC, APPELLANT,
v.
SIKESTON BOARD OF MUNICIPAL UTILITIES; KANSAS CITY BOARD OF PUBLIC UTILITIES; CITIES TRUST; WESTERN FUELS SERVICES CORPO- RATION; AND WESTERN FUELS-- ILLINOIS, INC., APPELLEES.



The opinion of the court was delivered by: Reagan, District Judge

OPINION

This case involves Bankruptcy Trustee-Appellant Dana Frazier's ("Frazier") effort to hold the five Appellees liable for the debts left unpaid by Debtor Liberty Coal Co., LLC from operating a coal mine in southern Illinois. She brings the case on behalf of the unsecured creditors of the Debtor to pursue the Appellees, two municipal utility companies and their affiliates, for approximately $4 million. Frazier claims that Appellees should be responsible for debts on theories of corporate veil piercing.

Frazier, as trustee of the Chapter 7 bankruptcy estate of Liberty Coal Co., LLC, instituted this adversary proceeding (No. 08-4045) on May 12, 2007 against several stakeholders in Liberty to recover property for the estate. Those stakeholders moved for summary judgment which the bankruptcy court granted on April 7, 2009, denying Frazier all relief.

On April 15, 2009, Frazier perfected an appeal to this Court, which has jurisdiction over appeals "from final judgments, orders, and decrees" in matters referred to bankruptcy judges. 28 U.S.C. § 158(a) (2006). However, there is no judgment set out on a document separate from any memorandum or opinion, which is the usual way for final judgment to be entered. See Fed. R. Bankr. P. 7058 (noting that Civil Rule 58 applies in adversary proceedings and that any reference to the "civil docket" means the docket in Bankruptcy Rule 5003); Fed. R. Civ. P. 58(a) (noting that every judgment "must be set out in a separate document" except for orders disposing of certain post-trial motions); Fed. R. Civ. P. 58(c)(2) (noting that judgments that must be on a separate document are not deemed entered until either set out in a separate document or until 150 days elapse after a judgment notation is made on the civil docket); In re Behrens, 900 F.2d 97, 99 (7th Cir. 1990) ("[The bankruptcy rules], like Rule 58, require[] that a court set forth its judgment in a document separate from its opinion. The judgment must be self-contained and complete, setting forth the disposition and the relief to which the prevailing party is entitled; and, since the judgment is not an opinion, it should not contain any legal reasoning." (citations omitted)). In the instant case, the only document on the adversary docket purporting to be a judgment is Judge Meyers' order granting summary judgment. His order contains the disposition and the relief granted the prevailing party. No other document on the adversary docket "sets forth the disposition and the relief to which the prevailing party is entitled." Typically, the bankruptcy court in this district enters a separate judgment, and the failure to do so in this case was mere inadvertence. However, the failure of the bankruptcy court to observe a formality does not prevent the Court's appellate jurisdiction. In re Behrens, 900 F.2d at 99. The requirement for a separate document is not jurisdictional. See Bankers Trust Co. v. Mallis, 435 U.S. 381, 383 (1978) ("We conclude that the Court of Appeals for the Second Circuit was correct in deciding that it had jurisdiction in this case despite the absence of a separate judgment."). So long as the order from which the parties appealed is a final order, 28 U.S.C. § 158(a), and the parties fail to mention the failure of the court to enter judgment, they will have waived the issue and the district court can take up the case. In re Behrens, 900 F.2d at 100 (citing Bankers Trust, 435 U.S. 381; Wikoff v. Vanderveld, 897 F.2d 232 (7th Cir. 1990)). The standard for the finality of orders in bankruptcy cases is more flexible than in civil cases. Tidwell v. Smith (In re Smith), 582 F.3d 767, 776 (7th Cir. 2009) (quoting Zedan v. Habash, 529 F.3d 398, 402 (7th Cir. 2008)). A bankruptcy court's order is final "when it definitively resolves a discrete dispute within the larger case." Id. (citing In re Comdisco, Inc., 538 F.3d 647, 651 (7th Cir. 2008)). Judge Meyers' order meets this standard. He granted summary judgment to all defendants on all claims and ordered that "judgment is entered," indicating that he intended that there was nothing left to decide in the adversary proceeding. More than a discrete dispute was resolved.

But since 150 days has elapsed since the clerk made the notation on the docket that judgment had been entered, a final and appealable judgment in fact exists. Fed. R. Civ. P. 58(a). Confident in its ability to consider this appeal, the Court now turns to the merits.

Standard of Review

On appeal, the Court "may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." Fed. R. Bankr. P. 8013. Additionally, "[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses." Id.

Case law of this Circuit similarly instructs that a bankruptcy judge's "[f]actual findings are reviewed for clear error; [and] legal conclusions are reviewed de novo." In re Doctors Hosp. of Hyde Park, Inc., 474 F.3d 421, 426 (7th Cir. 2007); accord In re Crosswhite, 148 F.3d 879, 881 (7th Cir. 1998); Meyer v. Rigdon, 36 F.3d 1375, 1378(7th Cir. 1994). In fact, the standard of review that a district court applies on appeal from a bankruptcy judgment is the same standard applied by a Court of Appeals. Monarch Air Service, Inc. v. Solow (In re Midway Airlines, Inc.), 383 F.3d 663, 668 (7th Cir. 2004). However, granting a motion for summary judgment is a legal conclusion, meaning that it is reviewed de novo. Id. De novo review makes sense especially considering that neither the bankruptcy court nor the district court has had an opportunity "to judge the credibility of the witnesses" at the summary judgment stage. Fed. R. Bankr. P. 8013.

Summary judgment is appropriate where the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Estate of Suskovich v. Anthem Health Plans of Va., Inc., 553 F.3d 559, 563 (7th Cir. 2009) (citingFed. R. Civ. P. 56(c)); accord, Breneisen v. Motorola, Inc., 512 F.3d 972 (7th Cir. Cir. 2008); Levy v. Minn. Life Ins. Co., 517 F.3d 519 (7th Cir. 2008). In ruling on a summary judgment motion, the Court construes all facts and reasonable inferences in the light most favorable to the non-moving party (here, Frazier). Lloyd v. Swifty Transp., Inc., 552 F.3d 594, 600 (7th Cir. 2009); TAS Distrib. Co. v. Cummins Engine Co., 491 F.3d 625, 630 (7th Cir. 2007); Reynolds v. Jamison, 488 F.3d 756, 764 (7th Cir. 2007).

In response to summary judgment, the non-movant cannot rest on the pleadings. Rather, the non-movant must provide evidence on which the jury or court could find in favor of the non-movant. Maclin v. SBC Ameritech, 520 F.3d 781, 786 (7th Cir. 2008). As the Seventh Circuit recently explained:

[T]he non-moving party must submit evidence that there is a genuine issue for trial. The existence of merely a scintilla of evidence in support of the non-moving party's position is insufficient; there must be evidence on which the jury could reasonably find for the nonmoving party.

Giant Screen Sports v. Canadian Imperial Bank of Commerce, 553 F.3d 527, 531-32(7th Cir. 2009) (citation omitted) (citingPtasznik v. St. Joseph Hosp., 464 F.3d 691, 694 (7th Cir. 2006)).

Stated another way, to counter a summary judgment motion, the nonmoving party may not simply reiterate the allegations contained in his pleadings; more substantial evidence must be presented. A genuine issue of material fact is not shown by the mere existence of "some alleged factual dispute between the parties," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986), or "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [non-moving party] on the evidence presented." Anderson, 477 U.S. at 252.

One additional consideration is that not all issues of fact are material. As the Supreme Court put it:

[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); accord Hottenroth v. Vill. of Slinger, 388 F.3d 1015, 1027, 1036 (7th Cir. 2004) ...


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