Appeal by debtor form an order of the United States District Court for the District of Connecticut, Jose Cabranes, J., modifying a previous order approving the sale of debtor's assets.
Newman, Pratt, and John W. Peck of the Sixth Circuit United States Court of Appeals, sitting by designation, Circuit Judges.
This case presents yet another chapter in the long-running story of perhaps the most prolific litigator in this circuit's history, Anthony R. Martin-Trigona, whose trials and tribulations have been well documented by this and other courts. For a sample of Martin-Trigona's multifaceted litigation career, we refer the uninitiated reader to, e.g., United States v. Martin-Trigona, 756 F.2d 260, (2d Cir. 1985); Martin-Trigona v. Belford, 732 F.2d 170 (2d Cir.), cert. denied, 469 U.S. 859, 105 S. Ct. 191, 83 L. Ed. 2d 124 (1984); Martin-Trigona v. Shiff, 702 F.2d 380, 382 (2d Cir. 1983); Martin-Trigona v. Smith, 229 U.S. App. D.C. 389, 712 F.2d 1421 (D.C. Cir. 1983); Martin-Trigona v. Gouletas, 634 F.2d 354 (7th Cir.), cert. denied, 449 U.S. 1025, 66 L. Ed. 2d 486, 101 S. Ct. 593 (1980); Martin-Trigona v. Underwood, 529 F.2d 33, 34 (7th Cir. 1975); Martin-Trigona v. Lavien (In re Martin-Trigona), 573 F. Supp. 1237 (D. Conn. 1983); Martin-Trigona v. Lavien (In re Martin-Trigona), 573 F. Supp. 1245 (D. Conn. 1983); In re WHET, Inc., 33 Bankr. 424 (Bankr. D. Mass. 1983).
In the case now before us, the debtor corporation, New Haven Radio, Inc., appeals from an order of the United States District Court for the District of Connecticut, Jose A. Cabranes, Judge, that modified a previous order and approved the sale of the corporate debtor's assets, which constituted AM radio station WNHC. The modification reduced the purchase price for the station's assets from $500,000 to $430,000. Before applying for this order, the trustee secured approval of the modification from the debtor's largest secured creditor, Capital Cities Corporation (Capital), which also agreed to an equivalent $70,000 reduction of its claim against the debtor.
New Haven Radio, Inc. was incorporated in Connecticut on July 18, 1977, with Martin-Trigona its sole stockholder and president. On May 30, 1980, the Connecticut Secretary of State declared its corporate charter forfeited pursuant to Connecticut General Statutes § 33-387 (1984). Instead of seeking reinstatement of the corporate charter as permitted by statute, id. at § 33-388, the corporation filed a voluntary petition in bankruptcy as described below. Ultimately the district court approved a liquidating plan for sale of the debtor's assets and payment of all claims and expenses, with the major creditor agreeing to accept less than full payment. After three days of hearings the district court approved the revised contract of sale at the reduced price.
A notice of appeal to this court on behalf of New Haven Radio, Inc. was filed on May 25, 1984, by Paul Taylor, Esq., who had represented the corporate debtor in the proceedings below. In July 1984 Mr. Taylor requested and was granted permission to withdraw his appearance. Martin-Trigona personally then filed on behalf of the corporation a record on appeal and brief. The trustee moved to strike both on the ground that a corporation must be represented by an attorney. On October 18, 1984 we granted the motion, stating: "Unless an entry of appearance by counsel is filed with the Clerk of this Court on behalf of the plaintiff-appellant, New Haven Radio, Inc. on or before October 15, 1984, the appeal shall be dismissed by the Clerk without further notice." Thereafter, George Collins, Esq., of Collins and Uscian, Esqs., of Chicago, Illinois filed a notice of appearance, and by order filed on January 7, 1985 this court granted permission to Christopher Bargione, Esq., of the same firm to appear pro hac vice and argue the appeal on behalf of New Haven Radio, Inc.
On appeal, the debtor raises a number of objections to the proposed sale, some of which have been raised in related proceedings, some of which were raised below, and others of which are raised for first time on this appeal. Finding no merit in any of the objections, we affirm the order of the district court.
On September 10, 1980, the law firm of Gellis & Mellinger filed a voluntary petition for Chapter 11 reorganization in the Southern District of New York listing as debtor, New Haven Radio, Inc. The petition was signed by Jan Ira Gellis of the same firm; its supporting "declaration" identified Anthony Martin-Trigona as president of the corporation and sole stockholder, stated that "the filing of this petition on behalf of the corporation has been authorized", and was signed "Anthony Martin-Trigona by POA [power of attorney] J.I. Gellis". At the time, Martin-Trigona was imprisoned in Illinois on a mail fraud conviction that was later reversed on appeal. United States v. Martin-Trigona, 684 F.2d 485 (7th Cir. 1982). On December 2, 1980, Martin-Trigona, represented by the Gellis firm, also filed for personal bankruptcy in the Southern District of New York.
On October 10, 1980, the United States trustee, pursuant to an order of the bankruptcy court, appointed Nicholas Bua trustee of the estate of the corporate debtor. This appointment remained in effect until December 8, 1980. Martin-Trigona was released on bail pending appeal of his mail fraud conviction at about this time, and he caused the corporate debtor to seek an order from the bankruptcy court to operate the radio station as debtor in possession. The bankruptcy court granted this order on the condition that Martin-Trigona make himself available to assist in the orderly administration of the debtor's estate. See In re New Haven Radio, Inc., 23 Bankr. 762, 767 (S.D.N.Y. 1982).
Soon thereafter, however, Martin-Trigona's criminal appeal bond was revoked and he was recommitted, whereupon Capital moved for reappointment of a trustee, based primarily on its concern that Martin-Trigona's absence would hamper the proper and effective administration of the estate, and that his conviction and imprisonment for a crime might adversely impact upon the value of the property since it could be a factor that the FCC might consider when it reviewed the radio station's application to renew its license. The bankruptcy court granted this motion on January 20, 1981 and, pursuant to 11 U.S.C. § 1106(a), Daniel Meister was appointed trustee and has to this date continued to act in that capacity.
Capital also moved to transfer the bankruptcy proceeding to the District of Connecticut on the ground of improper venue, based on the facts that the sole asset of the debtor was located in Connecticut and that most of the creditors listed in the petition had their places of business in Connecticut. The bankruptcy court also granted that motion. The order changing venue and the order appointing Meister as trustee were both affirmed by the district court, In re New Haven Radio, Inc., 23 Bankr. 762, and this court subsequently dismissed the debtor's appeal from the order, affirming the transfer. In re New Haven Radio, Inc., No. 84-5003 (2d Cir. Sept. 12, 1984) (mem.).
Upon transfer to the Connecticut bankruptcy court the corporate bankruptcy was consolidated with Martin-Trigona's personal bankruptcy which had also been similarly transferred. See Martin-Trigona v. Lavien (In re Martin-Trigona), 573 F. Supp. at 1249. Judge Alan Shiff and later Judge Robert Krechevsky, both of the bankruptcy court in Connecticut, presided over these consolidated cases. Initially, Martin-Trigona sought to intervene personally in the corporate bankruptcy, claiming that as sole shareholder of the corporation he was actually the debtor and that the corporation was merely his alter ego. Judge Shiff denied this motion, rejecting the claim that the debtor corporation was Martin-Trigona's alter ego, and holding that under Bankruptcy Rule 724 he personally had no right to intervene in the proceedings. Whatever potential residual interest Martin-Trigona had in New Haven Radio, Inc. that might have accorded him a right to intervene rested not with him, but with the trustee of the estate in his personal bankruptcy case. Thus, the court reasoned, Martin-Trigona had no cognizable "interest" that would have allowed him to intervene in the corporate proceeding "as of right" under the rule. The court further ruled that permissive intervention would be inappropriate because Martin-Trigona's various claims were collateral to the main action and threatened to hinder the orderly administration of the corporate debtor's estate. See In re New Haven Radio, Inc., 18 Bankr. 495 (Bankr. D. Conn. 1982). This order was affirmed by the district court. In re New Haven Radio, Inc., No. 5-82-152 (D. Conn. Oct. 22, 1982) (Burns, J.).
In April 1982 Judge Shiff confirmed a plan of corporate reorganization which called for the sale of the radio station, and payment in full of the claims of all the estate's creditors. At a hearing before Judge Krechevsky on the value of the station's assets, Martin-Trigona testified extensively as to what he considered their value to be. In his view, which was based primarily on the sale of what he considered to be a comparable radio station in the New Haven area, the station was worth approximately $1,300,000 to $1,500,000. In contrast, a professional appraisal firm, the Holt Corporation, conducted a detailed appraisal and concluded in June 1981 that the station's assets had a value of between $475,000 and $525,000.
At a public auction held in June 1982, the highest bid received for the station was $375,000, from Wardoco, Inc. While the other claims and administration expenses could easily be paid from the sum, it was not nearly enough to satisfy Capital's secured claim which exceeded $650,000. Because of this, and because the appraised value of the station was much higher than Wardoco's offer, Judge Krechevsky refused to approve the bid. Wardoco then increased its offer to $500,000, and Capital agreed to reduce the amount of its claim so as to provide for total recovery by all the unsecured, administration, and priority creditors, with the remainder going to Capital. In December 1982 Judge Krechevsky entered an order authorizing the trustee to sell the corporate assets to Wardoco for $500,000.
Even though he had been denied the right to intervene, Martin-Trigona continued to file numerous interlocutory appeals from orders of the bankruptcy court pertaining to the corporate bankruptcy, as well as to his personal bankruptcy, and he also sought to commence related actions in the district court. Almost without exception the actions and appeals Martin-Trigona sought to maintain in the district court were either dismissed as frivolous or otherwise summarily disposed of. Nevertheless, because of the sheer volume of the filings, the district court determined that the most efficient administration of all the litigation involving Martin-Trigona could be best achieved by assigning all the cases to a single district judge. As a result all pending cases involving Martin-Trigona were transferred in May 1983 to Judge Cabranes. See Martin-Trigona v. Lavien (In re Martin-Trigona), 573 F. Supp. at 1249 n.8.
In June 1983 the trustee in Martin-Trigona's personal bankruptcy sought to question Martin-Trigona as authorized by the Bankruptcy Rules. Martin-Trigona refused to answer several questions, claiming a fifth amendment privilege against self-incrimination. Upon application by the United States Attorney, Judge Cabranes granted Martin-Trigona use immunity under 18 U.S.C. § 6003. At a hearing held on January 3, 1984, Martin-Trigona still refused to testify, again asserting his privilege against self-incrimination. After Judge Cabranes ordered Martin-Trigona to answer the questions put to him by the trustee's counsel and he refused, Judge Cabranes found him to be in civil contempt and ordered him incarcerated. Martin-Trigona's incarceration was stayed pending appeal to this court. We affirmed, Martin-Trigona v. Belford, 732 F.2d 170 (2d Cir.), cert. denied, 469 U.S. 859, 105 S. Ct. 191, 83 L. Ed. 2d 124 (1984), and Martin-Trigona was incarcerated at the Danbury Correctional Facility in Danbury, Connecticut, until his release on March 12, 1985, by order of Judge Dorsey, to whom the case had been reassigned.
Meanwhile, Wardoco withdrew its bid to purchase the radio station, apparently because of the delay caused by the numerous motions and interlocutory appeals filed by Martin-Trigona. The trustee attempted to find other purchasers but was unsuccessful. Wardoco then made a third offer to purchase the station, but this time at a price of $430,000. After Capital agreed to further reduce its recovery by an additional $70,000, and also to accept a note for its share of the purchase price, the trustee signed the contract.
When the parties applied to the court for approval of the contract and a modified order of sale, Judge Cabranes ordered the trustee to give notice to all creditors by mail and to advertise the prospective sale in Broadcast Magazine and the Wall Street Journal. Additionally, he ordered the preparation of a current appraisal by the Holt Corporation, the same firm that had prepared the 1981 appraisal. The court then held an evidentiary hearing which began on March 27, 1984, and was continued on April 25 and April 30, 1984. The prospective purchaser's principal, the trustee, the radio station's manager, and the appraiser all testified and were cross-examined by counsel for the debtor. In the opinion of the appraiser the radio station then had a value of between $425,000 and $450,000. Counsel for the debtor represented to the court that he would obtain and submit an independent appraisal of the corporation's assets, but no such appraisal was ever submitted.
Martin-Trigona, at the time incarcerated under the civil contempt finding, sought to participate in this hearing. The court denied the request, concluding that Martin-Trigona had no standing to participate either as guarantor of the corporate debts or as "residual owner" of the station, based on the earlier decision of the district court affirming Judge Shiff's denial of Martin-Trigona's motion to intervene. Judge Cabranes further ruled that Martin-Trigona was not competent to testify as an expert witness as to the station's value, because he had not been qualified as an expert under Fed. R. Evid. 702. Nor was he entitled to give opinion testimony as a lay witness under Fed. R. Evid. 701, because he lacked the requisite knowledge of the facts, not having been in possession of the radio station or involved in its day-to-day operations for the previous two years. The debtor corporation presented no other witnesses at the hearing, nor did it produce any other evidence of value or even a prospective purchaser willing to bid on the station. On May 4, 1984, the court approved the sale of the debtor corporation's assets to Wardoco for $430,000, and this appeal followed.
The debtor raises numerous objections to the proceedings and the order approving the modified order of sale. We ...