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DiStefano v. Stern (In re J.F.D. Enters., Inc.)

DiStefano v. Stern (In re J.F.D. Enters., Inc.)

United States Bankruptcy Court for the District of Massachusetts

August 6, 1998, Decided

Chapter 7, Case No. 93-41606-HJB, Adversary Proceeding No. 97-4114

Opinion

 [*613] MEMORANDUM OF DECISION

Before the Court for determination are Motions for Summary Judgment (the "Motions") filed by all three of the defendants remaining in this adversary proceeding, Peter M. Stern ("Stern"), Eugene B. Berman ("Berman"), and Roger Dialessi ("Dialessi") (collectively, the "Defendants"). 1 In their complaint, Joseph F. DiStefano ("Mr. DiStefano"), a shareholder and unsecured creditor of J.F.D. Enterprises, Inc. ("JFD" or the "Debtor"), and his wife Patricia A. DiStefano ("Mrs. DiStefano"), an under-secured creditor of the Debtor, (jointly the "DiStefanos"), seek damages relative to the business failure and liquidation of the Debtor. They point the finger of blame for their losses at the three Defendants.

 [**2]  I. Background

A. Bankruptcy Proceedings and Postpetition Operations

Prior to the commencement of the case, the Debtor owned all the assets of Century Liquor Mart, a liquor store in West Springfield, Massachusetts. The business was managed by Mr. DiStefano. According to the DiStefanos, business had been good for a number of years, but financial difficulties began to intrude in 1990. The DiStefanos attribute the Debtor's prepetition financial problems to the closure of a nearby bridge and the concomitant reduction in traffic to the shopping plaza where the Debtor's business was located. JFD's financial statements from 1990 through 1993 reflect severe financial distress during that period. 2

 [**3]  On June 10, 1993, JFD filed a Chapter 11 petition in this Court. An Official Unsecured Creditors' Committee (the "Committee") was appointed shortly thereafter, and, on August 9, 1993, the Court 3 allowed the Committee's application to employ Kamberg, Berman, P.C. as its counsel. Berman is a principal of that firm.

On July 16, 1993, Mrs. DiStefano filed a "Motion . . . for Adequate Protection," alleging, inter alia, that she had loaned a total of $ 477,602 to the Debtor, and that the debt was secured by a junior lien on all of the assets of the company. The Committee filed an objection to allowance of the motion, and a hearing was held on September 9, 1993. Relying on the parties' representation that the matter had been resolved and that a stipulation would be forthcoming, the Court continued the hearing generally. That stipulation (the "Adequate Protection [**4]  Stipulation") was executed on October 27, 1993 by the Debtor, the Committee, and Mrs. DiStefano, and was subsequently approved by the Court on November 17, 1993. Pursuant to the terms thereof, Mrs. DiStefano's claim was fixed in the amount of $ 40,000, and deemed to be secured by the Debtor's inventory, proceeds, and accounts receivable, but junior to the security interest of Park West. The stipulation further provided:

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223 B.R. 610 *; 1998 Bankr. LEXIS 986 **; 33 Bankr. Ct. Dec. 114

In re: J.F.D. ENTERPRISES, INC., Debtor; JOSEPH F. DiSTEFANO and PATRICIA A. DiSTEFANO, Plaintiffs, v. PETER M. STERN, EUGENE B. BERMAN, PARK WEST BANK and TRUST CO., ROGER DIALESSI, and JAMES H. FIERBERG, Defendants

Disposition:  [**1]  Defendants' motions for summary judgment granted, and all remaining counts of the DiStefanos' complaint dismissed.

CORE TERMS

inventory, fiduciary duty, personal liability, appointed, parties, fiduciary, breached, Conversion, prepetition, cases, summary judgment, shareholders, convert, courts, summary judgment motion, unsecured creditor, standard of care, postpetition, Delinquency, deposition, receiver, terms, adversary proceedings, security interest, surcharge, proceeds, damages, losses, liquor license, material fact

Bankruptcy Law, Procedural Matters, Adversary Proceedings, Judgments, Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Discovery, Methods of Discovery, General Overview, Burdens of Proof, Motions for Summary Judgment, Genuine Disputes, Supporting Materials, Discovery Materials, Judgments, Evidentiary Considerations, Movant Persuasion & Proof, Scintilla Rule, Federal & State Interrelationships, Federal Common Law, Preliminary Considerations, Erie Doctrine, Stipulations, Responses, Defenses, Demurrers & Objections, Waiver & Preservation of Defenses, Contracts Law, Affirmative Defenses, Coercion & Duress, Contract Conditions & Provisions, Waivers, Defenses, Ambiguities & Mistakes, Contract Interpretation, Examiners, Officers & Trustees, Duties & Functions, Capacities & Roles, Justiciability, Standing, Bankruptcy, Estate Property, Contents of Estate, Business & Corporate Law, Directors & Officers, Management Duties & Liabilities, Reorganizations, Estate, Gift & Trust Law, Private Trusts Characteristics, Trustees, Removal & Resignation, Governments, Fiduciaries, Torts, Intentional Torts, Breach of Fiduciary Duty, Case Administration, Appointment, Removal & Replacement, Agency Relationships, Fiduciaries, Debtor Benefits & Duties, Debtor Duties, Committees, Committees, Remedies, Equitable Accountings, Notice, Duties & Powers, Public Entity Liability, Immunities, Judicial Immunity, Immunities & Liabilities, Courts, Judges