Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

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


United States District Court, S.D. New York

June 7, 2005.

In re: ACTION REDI-MIX CORP., Debtor. ACTION REDI-MIX CORP., Plaintiff-Appellee,

The opinion of the court was delivered by: LEONARD SAND, Senior District Judge


Lafarge Corporation appeals orders of the United States Bankruptcy Court for the Southern District of New York dated September 15, 2003 and December 7, 2003, as amended December 8, 2003. The September order denied Lafarge's motion to hold Action Redi-Mix Corp. in contempt and to lift an automatic stay. The December orders granted Action Redi-Mix Corp's motion for summary judgment to determine that Lafarge was an unsecured creditor. For the reasons set forth below, the bankruptcy court's orders are affirmed. I. Background

In October 2002, Action Redi-Mix Corp. and Lafarge entered into a Stipulation of Settlement to resolve Lafarge's claims that Action failed to pay for cement it had ordered from Lafarge. As collateral for its obligations under the Stipulation, Action Redi-Mix Corp. gave Lafarge a security interest in ten cement mixer trucks.

  After Action Redi-Mix Corp. failed to make a payment pursuant to the Stipulation, Lafarge obtained a temporary restraining order ("TRO") against it enjoining it from using the collateral. That very day, however, Action Redi-Mix Corp. filed a voluntary petition for reorganization pursuant to Chapter 11 of the Bankruptcy Code. The bankruptcy court held soon thereafter that an automatic stay precluded enforcement of the TRO against the Debtor's property.

  On July 2, 2003, the Debtor commenced an adversary proceeding against the IRS, the New York State Department of Taxation and Finance (NYSDTF), and Lafarge, seeking a declaratory judgment pursuant to 11 U.S.C. § 506(a) and 28 U.S.C. § 2201 to determine the nature, validity, and extent of the parties' respective security interests.

  In August 2003, Lafarge made a motion to lift the automatic stay to permit Lafarge to take possession of the collateral and to adjudge the Debtor and its principals in civil and criminal contempt of court for their violations of the TRO. On September 15, 2003, the bankruptcy court issued an order denying Lafarge's motion. On October 2, 2003, Lafarge filed a Notice of Appeal from the September 2003 order, which is now before this Court.

  On November 21, 2003, Action Redi-Mix Corp. filed a motion for summary judgment to determine that Lafarge's claims against the Debtor relating to the collateral constituted a general unsecured claim. In orders dated December 7, 2003 and December 8, 2003, the bankruptcy court granted Action Redi-Mix Corp's motion on grounds that the collateral was part of the bankruptcy estate and that the taxing authorities' security interests, totaling roughly $3.7 million, were perfected prior to the date on which Lafarge had perfected its lien and exceeded the value of Lafarge's collateral security interest. Lafarge now appeals this judgment.

  II. Discussion

  A. The December Orders

  Lafarge argues that the December orders granting summary judgment to Debtor were flawed on several grounds. The core of Lafarge's argument is that an award of summary judgment was inappropriate because genuine material issues of fact existed as to whether the collateral was part of Debtor's bankruptcy estate, or whether it belonged to a distinct entity called the Action Redi-Mix Group.

  A dispute regarding a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Once the movant has established a prima facie case demonstrating the absence of a genuine issue of material fact, the nonmoving party must come forward with evidence to support a jury verdict in its favor. See Matsushita Elect. Indus. Co. v. Zenith Radio Corp., 45 U.S. 574, 586 (1986).

  Here, the parties disagree as to whether there was a genuine dispute regarding whether the collateral was part of Debtor's bankruptcy estate. Debtor produced evidence that all of the documents relating to the purchase of the collateral in February 1997 were in the name of Action Redi-Mix Corp, rather than Action Redi-Mix Group. In addition, Debtor's principal testified that no entity ever existed by the name of Action Redi-Mix Group. Lafarge countered with evidence of certain documents submitted to the New York State Department of Motor Vehicles (DMV) that bore the name "Action Redi-Mix Group" as owner of the collateral. However, Lafarge conceded that there was no evidence in the record before the bankruptcy court, such as a corporate filing with the Secretary of State, which indicated the existence of a corporate entity called "Action Redi-Mix Group." In light of the absence of any evidence rebutting the prima facie case that Debtor made in favor of the conclusion that the collateral was part of Debtor's estate, no reasonable jury could find that the collateral belonged to a distinct corporate entity by the name of Action Redi-Mix Group. The reference to Action Redi-Mix Group on the DMV form may be seen either as a clerical error or simply an alternative reference to the Debtor, but is insufficient to create a genuine dispute as to whether the collateral was part of Debtor's estate. Therefore, the bankruptcy court's grant of summary judgment was appropriate.

  In any event, the IRS correctly observes that Lafarge's lien, which was granted by "Action Redi-Mix Corp.," would be a nullity if the collateral were found to be owned by an entity called "Action Redi-Mix Group."

  Lafarge argues, further, that the bankruptcy court lacked jurisdiction to rule on Action's summary judgment motion because of Lafarge's previous appeal from the September order to this Court. Lafarge cites a number of cases to support the proposition that filing a notice of appeal divests a bankruptcy court of jurisdiction to act on the matters that are the subject of the appeal. See, e.g., In Re Winimo Realty Corp. et al. v. City of Albany, et al., 270 B.R. 99 (S.D.N.Y. 2001) (citing United States v. Rodgers, 101 F.3d 247, 251 (2d Cir. 1996) (filing of notice of appeal divests lower court of jurisdiction over those aspects of the case involved in the appeal)). Bankruptcy courts are not, however, deprived of jurisdiction to decide issues and proceedings different from those involved in a pending appeal. See, e.g., In re Bd. of Dir. of Hopewell Int'l Ins. Ltd., 258 B.R. 580, 583 (S.D.N.Y. 2001). Here, the issues decided in the September order were different than the issues decided in the December order: the former denied Lafarge's motion for contempt and to lift the automatic stay, while the latter determined that Lafarge had an unsecured claim. Therefore, it is a mischaracterization to suggest that the September and December orders presented identical issues.

  Finally, Lafarge argues that the adversary proceeding leading to the December orders was defective pursuant to 11 U.S.C. § 506(a) because it lacked a valid purpose. However, the IRS's argument is persuasive that determining if Lafarge's claim was secured was necessary for the purpose of determining whether Lafarge was entitled to adequate protection and of enabling Debtor to propose a plan. See, e.g., In re Dairy Mart Convenience Stores, Inc., 351 F.3d 86, 90-91 (2d Cir. 2003) (employing § 506(a) of the bankruptcy code to determine that party was not secured creditor and thus not entitled to adequate protection).

  B. The September Order

  Lafarge also appeals the bankruptcy court's September 2003 denial of its motion to hold the Debtor in contempt for continuing to use the collateral after the bankruptcy petition was filed. Lafarge argues, further, that the IRS has "no standing" to oppose this portion of the appeal because of its lack of pecuniary interest in the outcome. However, the cases that Lafarge cites in support of this proposition are inapposite, for they concern the standing requirement for the appellant from a bankruptcy court ruling rather than for the appellee.

  There is, as the IRS highlights, support in the Second Circuit for the bankruptcy court's denial of Lafarge's contempt motion. In In re Sonnax Indus., Inc., the court affirmed the denial of a motion to lift a stay to permit enforcement of a pre-bankruptcy petition preliminary injunction. 907 F.2d 1280, 1288 (2d Cir. 1990). There, as in the instant case, the pre-petition order concerned "property of the estate." Id.; cf. In re Rudaw/Empirical Software Prods. Ltd., 83 Bankr. 241 (Bankr. S.D.N.Y. 1988) (stay lifted to permit creditor to proceed with contempt proceedings where pre-petition order was not related to property of the estate). Accordingly, the bankruptcy court's determination that the pre-petition TRO did not prohibit Debtor from continuing to use the collateral post-petition appears consistent with Second Circuit case law, and to be within the discretion of the bankruptcy court.

  III. Conclusion

  For the reasons set forth above, the orders and judgment of the bankruptcy court are affirmed.



© 1992-2005 VersusLaw Inc.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

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