Summary of a Recent
Judicial Development in
Bankruptcy

Court Grants Creditor-Defendant's Motion for Summary Judgment
Due to Lack of Evidence

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In In re Pick, No. BK08-82149-TLS, 2009 WL 250283 (Bankr. D. Neb. Jan. 30, 2009), the United States Bankruptcy Court for the District of Nebraska granted a defendant creditor's motion for summary judgment because the plaintiff had failed to present any evidence of a fraudulent transfer to the creditor, a reason why the court should impose a constructive trust, or any authority to support his argument that the creditor's failure to promptly exercise its rights under its security agreements constituted civil conspiracy.

Background and Arguments

Plaintiff, who had previously obtained a state court judgment against the bankruptcy debtors, brought this action against their lender, Security National Bank, which held perfected security interests in most of the debtors' assets. Id. at *1. The plaintiff alleged that the Bank helped the debtors engage in fraudulent concealment of their assets by helping them manipulate their financial circumstances and allowing them to fraudulently convey certain assets to their children. Id. at *2. The plaintiff also alleged that the Bank only held the debtors' assets in a constructive trust. Id. He further claimed that the Bank participated in a civil conspiracy by failing to promptly exercise its rights under its security agreements. Id. The Bank moved for summary judgment on all claims. Id. at *1.

Analysis and Holdings

The court held that the Bank had met its initial burden of proving that no material facts were in dispute, and that the plaintiff had failed to meet his burden of setting forth specific facts showing that there was a genuine issue for trial. Id. at *2. In making this determination, the court noted that the plaintiff had offered no evidence that the Bank obtained its security interests by "fraud, misrepresentation, or an abuse of an influential or confidential relationship and that under the circumstances, such individual should not, according to the rules of equity and good conscience, hold and enjoy the property so obtained," as is required when requesting a court to impose a constructive trust. Id. There was also no transfer of assets to the Bank, and therefore no transfer to set aside, and the plaintiff had "failed to present any authority to support the proposition that failing to promptly exercise foreclosure rights constitutes participation in a civil conspiracy." Id. The court therefore granted the Bank's motion for summary judgment and dismissed it as a defendant in the case. Id. at *3.

The case was decided on January 30, 2009.