Nelson v. Fifth Third Bank, et al. (In re Brunsman, Jr.)

Summarized by J. Debbeler , Bricker Graydon LLP
9 years 9 months ago

Citation:

File Name:16b0008n.06 (Nos. 15-8014/8015, June 1, 2016

Tag(s):

Ruling:

The bankruptcy court abused its discretion when it granted summary judgment for the Chapter 7 Trustee sua sponte. While there is no prohibition against granting summary judgment sua sponte, it is discouraged in the Sixth Circuit. The better practice is to put parties on notice that the court is considering granting summary judgment to a party that did not request it. On the merits, as the decision of the bankruptcy court is reviewed de novo, factual issues precluded the granting of summary judgment.

Procedural context:

Chapter 11 was converted to a Chapter 7 case. Chapter 7 trustee sold certain aircraft then filed an adversary proceeding to determine the extent and validity of certain liens and encumbrances against the aircraft. Two defendants moved for summary judgment which the trustee opposed. Although the court below said the trustee filed a motion for summary judgment, the trustee did not do so.

Facts:

The dispute involved 7 aircraft owned by the debtor or entities related to or controlled by the debtor. A third party sold a membership interest to an entity affiliated with the debtor. The debtor's entity bought certain aircraft at the same time. Several parties tried to take security interests in the aircraft but there were errors in the paperwork which supported the claimed liens or encumbrances. The trustee asserted that there were no properly perfected secured creditors and wanted to distribute the proceeds from the sale of the aircraft through the Chapter 7 claims process. The trustee failed to file a cross motion for summary judgment when two lien claimants requested summary judgment on their own behalf.

Judge(s):

Harrison, Opperman, Wise

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