Bankruptcy Court Case No. 06- 22377-C-7 Adv. Proc. No. 08-02352
The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge
Appellant Neil McLean appeals the bankruptcy court's May 10, 2011 order after remand, in which the bankruptcy court confirmed its initial award of damages in the amount of $300,000. Appellant argues "[t]he Bankruptcy Court failed to follow the Court's mandate on remand and simply reaffirmed its initial conclusion that the accounts are part of the sale proceeds without any substantive explanation." (Appellant's Br. 9.) Appellee filed a brief in response, requesting "this Court affirm the judgment in the amount of $300,000." (Appellee's Br. 10.) Jurisdiction over the appeal is under 28 U.S.C. §§ 158(a)(1) and (c)(1).
I. FACTUAL RECORD ON APPEAL
Shields is the former owner of Shields Trucking, a trucking company that encountered financial difficulties in the summer of 2004.
(Appellee's Excerpt of Record ("ER") 3, ¶¶ 2, 8-9.) McLean, a sales manager for a motorcycle dealership, loaned money to Shields Trucking, which Shields avers in his declaration "was to be credited to the purchase price for Shields Trucking if an agreement were reached or paid back if no agreement for the purchase of the business by McLean was reached." Id. ¶ 15. An agreement was never reached between Shields and McLean, and in 2005, Shields "began exploring opportunities to sell Shields Trucking to other purchasers[.]" Id. ¶ 34. By the fall of 2005, Shields was negotiating with SoCal D&D Services, Inc. ("D&D") to purchase Shields Trucking. Id. ¶ 47. However, negotiations were disrupted when Longaway, McLean's lawyer, sent D&D a letter stating that McLean and Shields had already reached an agreement for McLean to purchase Shields Trucking. (Appellee's ER 2, ¶ 19.)
Diver, a former accountant for Shields Trucking, avers in his declaration: "After Longaway's December 23, 2005 letter to D&D . . ., D&D immediately backed out of their agreement to purchase Shields Trucking." Id. ¶ 45. Shields declares "it was specifically agreed that as part of the deal [with D&D] all debt paid to Shields Trucking would be paid off[.]" (Appellee's ER 3, ¶ 52.) Shields further declares "[t]he proceeds of the sale . . . would have allowed me to pay off all the debts of Shields Trucking, including all amounts owed to McLean, and left me with more than $300,000"; however "[a]fter D&D backed out of the purchase of Shields Trucking, the business could not overcome its financial problems and I was forced to file for bankruptcy." Id. ¶¶ 69, 71-72; see also Appellant's ER 5 (showing Diver's calculation of Shields' loss from the disruption of sale as $327,151).
On July 2, 2008, Burkhart commenced an adversary proceeding on behalf of the bankruptcy estate against McLean and Longaway; included in the complaint was a claim against McLean for interference with prospective economic advantage. (Appellant's ER 1.) The adversary proceeding was tried in the bankruptcy court. On October 5, 2009, the bankruptcy court ruled in favor of the bankruptcy estate on the interference with prospective economic advantage claim and entered a $300,000 judgment, $200,000 of which was categorized as accounts receivable. (Appellant's ER 6; Appellant's ER 5, 233.) McLean and Burkhart each appealed from this judgment. (Appellant's ER 7,8.)
On November 18, 2010, this Court remanded to the bankruptcy court its initial factual determination that the $200,000 value of the accounts receivable was to be included in the damages award. (Appellee's ER 5, 5:9-25.) Specifically, this "issue was remanded for deletion of this amount from the judgment or for a clearer explanation of the judgment." Id. 5:18-21. Although this Court affirmed the measure by which the bankruptcy court calculated the award, it determined the inconsistent statements made by the bankruptcy court in the record made "the bankruptcy court's reason for including the referenced $200,000 in the judgment . . . unclear . . . ." Id. 5:18-19.
On May 10, 2011, the bankruptcy court issued an order after remand, confirming its award of damages in the amount of $300,000 and explaining the judgment is based on "the reasons as stated on the record at the hearing on February 17, 2011," and the following:
[T]he "loss of 'net proceeds from the sale' of Shields Trucking" amounted to $300,000 was the result of an overall calculation of the "pecuniary loss of the benefits of the contract"-a damage measure expressly endorsed by the District Court and undoubtedly proper under California law. Simply put, had the contract for sale not been disrupted Shields would have been able to be free from a failing business and left with $300,000 in excess cash. Thus, when McLean wrongfully interfered with the sale and stripped Shields from receiving the benefits of the contract, the pecuniary loss was at least $300,000. (Appellee's ER 8, 2:2-10.) On May 25, 2011, Appellant filed a Notice of Appeal from the May 11, 2011 order after remand and the October 5, 2009 judgment. (ECF No. 1.)
II. ISSUES RAISED BY APPELLANT
Appellant raises four issues on appeal from the bankruptcy court's May 10, 2011 order after remand, each stemming from the inclusion of the $200,000 value of accounts receivable in the award of damages: (1) "Did the Bankruptcy Court err in refusing to delete from its judgment the sum of $200,000 awarded for accounts receivable that were not to be sold and were retained by Shields?"; (2) "Did the Bankruptcy Court err by failing to provide a clearer explanation of the award of $200,000 for accounts receivable in that the court simply reaffirmed its initial holding that the receivables were part of the 'net proceeds' of the sale?"; (3) "Did the Bankruptcy Court err by failing to explain why its initial award of damages included $200,000 for accounts receivable that were not to be sold?"; and (4) "Did the Bankruptcy Court err by failing to consider the fact that its initial award of damages included $200,000 for accounts receivable?" (Appellant's Br. 7.)
Additionally, Appellant raises seven "issues on appeal from the Bankruptcy Court's [October 5, 2009] judgment." Id. However, the Court has already ruled on each of these issues in its November 18, 2010 order and Appellant has not shown that reasons justifying reconsideration of any of these rulings exist. See Gonzalez v. Arizona, 624 F.3d 1162, 1186-87 (9th Cir. 2010) ("Law of the case should not operate as a constraint on judicial review where (1) the decision is clearly erroneous and its enforcement would work a manifest injustice, (2) intervening controlling authority makes reconsideration appropriate, or (3) substantially different evidence was adduced at a subsequent trial."). "[A]n appellate court cannot efficiently perform its duty to provide expeditious justice to all if a question once considered and ...