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United States Bankruptcy Court for the Southern District of New York
August 9, 2019, Decided
Chapter 11, Case No. 18-13359 (shl) (Jointly Administered)
[*730] MEMORANDUM OF DECISION ON DEBTORS' AND SENIOR LENDERS' JOINT MOTION FOR SUMMARY JUDGMENT AS TO BUCKET 1 CUSTOMERS [ECF NO. 938]
Before the Court is the Debtors' and Senior Lenders' Joint Motion for Summary Judgment as to Bucket 1 Customers (the "Motion") [ECF No. 938]. The Court is not deciding the Motion in its entirety. Rather, the Court's ruling today covers eight of the 26 Bucket One Customers (as defined herein) where the factual record is most developed and hopefully should offer some general guidance for the other Customers (as defined herein) going forward.
When the Debtors filed their motion to approve use of cash collateral [ECF No. 10] back in November 2018, they received more than 40 objections and responses from customers (collectively, the "Customers" and each [**2] a "Customer") claiming ownership interests in raw metals and other assets that the Debtors believe constitute property of the estate. In January, the Court entered an order establishing uniform procedures to resolve such ownership disputes in an efficient and systematic way. See ECF No. 395. Consistent with such procedures, the Debtors and Senior Lenders2 grouped the Customers into different "buckets" and filed this Motion to address the claims made by the Customers in so-called Bucket One.3 See Mar. 21, 2019 Hr'g Tr. at 32:8-10 [ECF No. 872] ("The debtor lenders [sic] would like to bring forward dispositive motions on certain issues—we've been talking about buckets, concurrently while discovery is going on.").
According to the Debtors, Bucket One is comprised of Customers who sold raw materials to the Debtors pursuant to the Debtors' "Standard Terms and General Operating Conditions," which are attached as Exhibit B (with respect to the Debtor formerly known as RMC) and Exhibit C (with respect to the Debtor formerly known as RMC2) to the Amended Declaration of Scott Avila in Support of the Motion (the "Avila Declaration" or "Avila Decl.") [ECF No. 1005]. See Motion at 1. Broadly, the [**3] Debtors and the Bucket One Customers disagree as to whether the terms signed by the Bucket One Customers (the "Executed Terms") provide for a purchase and sale or a bailment of the Bucket One Customers' metals. The Debtors argue that the Executed Terms unambiguously evidence a purchase and sale and that no extrinsic evidence need be or even can be considered. The Bucket One Customers argue that the contracts contain elements of both sale and bailment, requiring the Court to look at the parties' [*731] course of dealing. The Bucket One Customers further posit that the Debtors' course of dealing with each of them evidences bailment relationships. The Bucket One Customers submitted supporting evidence in varying degrees, with some submitting no evidence at all. Compare Alex Morningstar Corp.'s Joinder in "Bucket 1" Customers' Joint Opposition to Debtors' and Senior Lenders' Joint Motion for Summary Judgment [ECF No. 1090] (attaching a declaration from their principal describing course of dealing with RMC and supporting documentation in the form of transaction documents from a typical sale) with Joinder of Pyropure, Inc. d/b/a Pyromet in "Bucket 1" Claimants' Response to and Brief Opposing Joint [**4] Motion for Summary Judgment [ECF No. 1083] (stating their intent to join in the Joint Response to Debtors' and the Senior Lenders' Joint Statement of Mutual Undisputed Facts (the "Joint Response") [ECF No. 1081], but offering no declaration, exhibits, or any other evidentiary support).4
Notwithstanding the Debtors' claim that all 26 Bucket One Customers signed "standard" terms, there are actually multiple iterations of such terms, with some Bucket One Customers having signed no terms at all. See Avila Decl., Composite Ex. D. Cognizant of this issue, the Court has reviewed Composite Exhibit D to identify Bucket One Customers who are similarly situated and where there is a sufficiently developed factual record for a ruling. Based on that review, the Court has separated out for a ruling today those Bucket One Customers for whom the Debtors have submitted a complete set of Executed Terms with RMC. These eight Customers—a group that the Court will refer to as the "Silo One Customers"—are:
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
603 B.R. 727 *; 2019 Bankr. LEXIS 2508 **
In re: MIAMI METALS I, INC., et al.,1 Debtors.
Customers, bailment, metals, Terms, refining, Bucket, parties, Lenders, sales contract, ownership, precious metals, raw material, commingled, Declaration, disputed, quantity, summary judgment motion, summary judgment, contemplates, unambiguous, contracts, genuine, mutual, gold, supporting evidence, choice of law, non-moving, undisputed, shipped, bailee
Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Burdens of Proof, Movant Persuasion & Proof, Judgments, Opposing Materials, Supporting Materials, Entitlement as Matter of Law, Preliminary Considerations, Federal & State Interrelationships, Choice of Law, Contracts Law, Contract Interpretation, Intent, Parol Evidence, Business & Corporate Compliance, Contracts Law, Types of Contracts, Bailments, Commercial Law (UCC), Sales (Article 2), Form, Formation & Readjustment, Contract Provisions, Contract Terms, Title, Creditors & Good Faith Purchasers, Passing of Title, Subject Matter, Contract Interpretation, Remedies, Constructive Trusts