Lippe v. Bairnco Corp.

99 F. App'x 274
CourtCourt of Appeals for the Second Circuit
DecidedMay 17, 2004
DocketNo. 03-7360
StatusPublished
Cited by50 cases

This text of 99 F. App'x 274 (Lippe v. Bairnco Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lippe v. Bairnco Corp., 99 F. App'x 274 (2d Cir. 2004).

Opinion

AMENDED SUMMARY ORDER

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED that the judgment of the District Court be AFFIRMED.

Familiarity is assumed as to the facts, the procedural context, and the specification of appellate issues.

Throughout the 1970s, Keene Corporation (“Keene”) was a conglomerate that owned, among other things, an insulation business that once manufactured and sold asbestos-containing products. Between [277]*2771981 and 1988, Keene engaged in a corporate restructuring in which it first created appellee-defendant Bairnco Corporation (“Bairnco”), and, through a “drop down” merger, became a subsidiary of Bairnco. Over the next several years, Keene sold a number of its constituent businesses to other subsidiaries of Bairnco. Defendants-appellees Kaydon Corporation, The Genlyte Group Incorporated, Kasco Corporation, Shielding Systems Corporation, and Arlon Inc. each were created in order to, and in fact did, purchase assets from Keene. Defendant-appellee Glenn W. Bailey (“Bailey”) was one of the founders of Keene, and was an officer and director of Keene, Bairnco, and the other corporate defendants. Throughout the 1970s, 1980s, and into the early 1990s, Keene was named in an increasing number of asbestos-related lawsuits. In 1993, upon becoming unable to purchase appeal bonds, Keene filed for bankruptcy.

Plaintiffs-appellants are the trustees of Keene Creditors Trust, a trust instituted to represent persons exposed to asbestos-containing products manufactured by Keene and the insulation business it purchased in 1967. Pursuant to § 544(b) of the Bankruptcy Code, such a “trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim....” 11 U.S.C. § 544(b)(1). According to a stipulation approved by the bankruptcy court, the “applicable law” here is New York law. In 1996, plaintiffs brought suit in the United States District Court for the Southern District of New York, alleging that Keene sold its constituent businesses and paid dividends to Bairnco as part of a scheme to divest itself of assets that otherwise would have been available to Keene’s asbestos-victim creditors. Plaintiffs contended that all of the corporate defendants were liable to these creditors under theories of actual fraudulent conveyance, see N.Y. Debt. & Cred. Law § 276 (McKinney 2003), constructive fraudulent conveyance, see id. §§ 273-75, and successor liability. Further, plaintiffs sought to pierce the corporate veil in order to impose Keene’s asbestos liabilities on Bairnco. Finally, plaintiffs alleged that, as a director of Keene, Bailey caused Keene to pay unlawful dividends to Bairnco, see N.Y. Bus. Corp. Law §§ 510, 719 (McKinney 2003), and, by virtue of his involvement with the asset sales and dividend payments, breached his fiduciary duties as a corporate officer and engaged in corporate misconduct. See id. § 720(a)(1)(A).

Defendants initially moved for partial summary judgment on statute-of-limitations grounds, arguing, inter alia, that plaintiffs were time-barred from bringing constructive-fraud claims based on transactions that occurred prior to 1988. In October 1998, the district court (Chin, J.) denied defendants’ motion in part and granted it in part, holding that plaintiffs could bring pre-1988 claims on behalf of one category of creditors, the so-called “inactive docket” claimants. See Lippe v. Bairnco Corp., 225 B.R. 846, 855-56 (S.D.N.Y.1998) (“Lippe I”). However, the court later reconsidered that ruling and held that plaintiffs could not satisfy the time-bar for any pre-1988 claims brought under New York Debtor & Creditor Law (“DCL”) §§ 273, 274, or 275, including those brought on behalf of the “inactive docket” claimants. See Lippe v. Bairnco Corp., 229 B.R. 598, 601-02 (S.D.N.Y.1999) (“Lippe II”).

Following years of discovery and numerous applications to the district court with regard to discovery, defendants moved in January 2003 to exclude plaintiffs’ experts from testifying as to the value of assets sold by Keene to the corporate defendants. [278]*278That motion was granted. See Lippe v. Bairnco Corp., 288 B.R. 678 (S.D.N.Y. 2003) (“Lippe III”). In March of 2003, the district court denied plaintiffs’ motion to substitute a new valuation expert and granted defendants’ motions for summary judgment, dismissing plaintiffs’ claims of actual and constructive fraud, as well as plaintiffs’ claims under theories of unlawful dividend payments, successor liability, piercing the corporate veil, breach of fiduciary duty, and corporate misconduct. See Lippe v. Bairnco Corp., 249 F.Supp.2d 357 (S.D.N.Y.2003) (“Lippe IV”). Plaintiffs appeal the district court’s rulings regarding plaintiffs’ proffered experts; its grant of summary judgment to defendants on plaintiffs’ fraudulent-conveyance claims; and its grant of summary judgment to defendants on plaintiffs’ remaining claims, including the court’s final statute-of-limitations determination. For the reasons that follow, we fully agree with the district court’s thoughtful and thorough decisions and affirm them in all respects.

I. Plaintiffs Proffered Experts

“We review a district court’s decision to exclude expert testimony for abuse of discretion, and we have explained that ‘[a] decision to admit or exclude expert ... testimony is not an abuse of discretion unless it is manifestly erroneous.’ ” Zaremba v. General Motors Corp., 360 F.3d 355, 357-58 (2d Cir.2004) (quoting Amorgianos v. Nat’l R.R. Passenger Corp., 303 F.3d 256, 265 (2d Cir.2002)) (internal citation and quotation marks omitted). Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), the Federal Rules of Evidence “assign to the trial judge the task of ensuring that an expert’s testimony both rests on a reliable foundation and is relevant to the task at hand.” Id. at 597. In carrying out this task, a trial judge is “to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). Accordingly, the Federal Rules of Evidence permit the admission of expert testimony only “if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.” Fed.R.Evid. 702.

In granting defendants’ motion to exclude the testimony of plaintiffs’ valuation experts, Thomas E. Dewey, Jr. and Professor Jocelyn D.

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