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In re BX Acquisitions, Inc.

United States Bankruptcy Appellate Panel of the Sixth Circuit

April 19, 2019

In re: BX Acquisitions, Inc., Debtor.
Toledo-Lucas County Port Authority, Defendant-Appellee. Scott E. Eisenberg, as Trustee of the BX Acquisitions, Inc. Liquidating Trust, Plaintiff-Appellant,

          Appeal from the United States Bankruptcy Court for the Northern District of Ohio at Toledo. No. 15-33538; Adv. No. 17-03024-John P. Gustafson, Judge.

         ON BRIEF:

          Robert Michaels, GOLDSTEIN & MCCLINTOCK LLLP, Chicago, Illinois, Patricia Fugée, FISHER BROYLES, LLP, Perrysburg, Ohio, for Appellant.

          Michael W. Bragg, Jennifer A. McHugh, SPENGLER NATHANSON P.L.L., Toledo, Ohio, for Appellee.

          Before: HARRISON, OPPERMAN, and WISE, Bankruptcy Appellate Panel Judges



         Scott E. Eisenberg, the Liquidating Trustee ("Trustee"), appeals from the bankruptcy court's decision granting summary judgment to Toledo-Lucas County Port Authority ("Port Authority"), dismissing the Trustee's claim to avoid and recover post-petition transfers, and denying the Trustee's cross-motion for summary judgment.


         Whether the Debtor's disputed post-petition payments to the Port Authority were authorized by agreed Cash Collateral Orders, and whether the Cash Collateral Orders were binding on the Trustee.


         The United States District Court for the Northern District of Ohio has authorized appeals to the Panel, and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Asphalt Corp. v. United States, 489 U.S. 794, 798 (1989) (citations and internal quotations omitted). The granting of a motion for summary judgment to one party and denying it to another is a final order. Rogan v. Fifth Third Mortg. Co. (In re Rowe), 452 B.R. 591, 593 (B.A.P. 6th Cir. 2011).


         Generally, the granting of summary judgment is reviewed de novo. Dymarkowski v. Savage (In re Hadley), 561 B.R. 384, 388 (B.A.P. 6th Cir. 2016). "Under a de novo standard of review, the reviewing court decides an issue independently of, and without deference to, the trial court's determination." Matteson v. Bank of Am., N.A. (In re Matteson), 535 B.R. 156, 159 (B.A.P. 6th Cir. 2015) (citations omitted). In this case, however, the bankruptcy court's decision was based on an interpretation of its prior orders, and a review of such is for clear abuse of discretion. East Coast Miner LLC v. Nixon Peabody LLP (In re Licking River Mining, LLC), 911 F.3d 806, 810 (6th Cir. 2018) (citing Enodis Corp. v. Emp'rs Ins. of Wausau (In re Consol. Indus. Corp.), 360 F.3d 712, 716 (7th Cir. 2004)).


         BX Acquisitions, Inc. ("Debtor") was a Delaware corporation that provided customized logistics solutions to the transportation and distribution industries. Its principal place of business was located at One Air Cargo Parkway East, Swanton, Ohio, an intermodal cargo sort facility ("Facility"), owned and managed by the Port Authority.

         On October 31, 2011, the Debtor entered into a Facilities and Services Management Agreement ("Management Agreement") with the Port Authority that outlined the relationship between the parties as it pertained to the Debtor's use of the Facility. The Management Agreement provided that in exchange for the Debtor's use, management, and maintenance of the Facility, the Debtor would pay the Port Authority: (1) a periodic fixed annual fee ("Fixed Fee"), due semiannually in 2012 and 2013 and then monthly beginning in 2014; and (2) a percentage-based fee based on the Debtor's gross annual revenues. Beginning in 2014, the parties operated under a Third Amendment to the Management Agreement. The Third Amendment, finalized in July 2015, provided that instead of periodic Fixed Fee payments, the Debtor would pay the Port Authority a Fixed Fee of $500, 000 on or before December 31 of each contract year. Although not signed by the parties, the Debtor and the Port Authority treated the Third Amendment as effective and binding until it was later rejected during the course of the Debtor's bankruptcy.

         Per the uncontroverted affidavit of the Port Authority's general counsel, Dawn M. Wenk, "[u]nder the terms of the Third Amendment, BX owed the Port Authority a fee of $500, 000.00 by December 31, 2015. BX was entitled to take a credit against that payment in the amount of $350, 000.00." [Aff. of Dawn M. Wenk, Esq., at 2, Adv. P. 17-03024 ECF No. 30, Exh. A]. Ms. Wenk also maintained that the Debtor paid the 2014 Fixed Fee via a single annual payment as required under the Third Amendment and had not made the 2015 Fixed Fee payment as of the date of bankruptcy filing. Further, Ms. Wenk stated in her affidavit that the Debtor communicated with the Port Authority post-petition regarding the Debtor's intent to assume the Management Agreement during the course of its Chapter 11 proceedings and eventually extend its terms.

         On November 2, 2015, the Debtor filed a voluntary Chapter 11 petition that included reference to the Port Authority and the Management Agreement on Schedule G, "Executory Contracts and Unexpired Leases." On that same day, the Debtor filed a Motion to Use Cash Collateral with an attached budget, running from November 1, 2015, through December 31, 2015. The motion did not include any payments intended for the Port Authority, either in the motion or the attached budget. The bankruptcy court entered an order shortening the time for notice to one day. The first cash collateral hearing was held on November 3, 2015, and the bankruptcy court's proceeding memo reflected that the parties were "to circulate and submit an agreed Order." [Proceeding Memo, Bankr. Case No. 15-33538, ECF No. 13]. The Agreed First Interim Order for use of cash collateral, adequate protection, and setting an additional hearing was entered on ...

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