McNeill & Hsu, M.D.'s, Inc. v. Massey (In re Seeskin)

91 B.R. 39, 1988 U.S. Dist. LEXIS 10575
CourtDistrict Court, S.D. Ohio
DecidedJuly 1, 1988
DocketNo. C-1-87-988
StatusPublished
Cited by1 cases

This text of 91 B.R. 39 (McNeill & Hsu, M.D.'s, Inc. v. Massey (In re Seeskin)) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McNeill & Hsu, M.D.'s, Inc. v. Massey (In re Seeskin), 91 B.R. 39, 1988 U.S. Dist. LEXIS 10575 (S.D. Ohio 1988).

Opinion

ORDER

HERMAN J. WEBER, District Judge.

This matter is before the Court upon appeal from the judgment of the United States Bankruptcy Court for the Southern District of Ohio, Western Division. Appellants argue that the bankruptcy court erred by finding that Massey, Seeskin and Associates was not an actual partnership or a partnership by estoppel.

The determinative issue of law presented on this appeal involves the standard of review that the district court must apply in its review of a judgment of the bankruptcy court. Appellants contend that this Court is not limited by the “clearly erroneous” standards oí Fed.R.Civ.P. 52(a) and Rule 8013 of Bankruptcy Procedure in reviewing the judgment of the bankruptcy court. Appellants rely on a line of case authority which has created an exception to the clearly erroneous standard of review by allowing for a de novo review of findings of the trial court by a reviewing court. See Lydle v. United States, 635 F.2d 763 (6th Cir.1981); S.E.C. v. Coffey, 493 F.2d 1304 (6th Cir.1974), cert. denied, 420 U.S. 908, 95 S.Ct. 826, 42 L.Ed.2d 837 (1975); Wedding v. Wingo, 483 F.2d 1131 (6th Cir.1973), aff'd., 418 U.S. 461, 94 S.Ct. 2842, 41 L.Ed. 2d 879 (1974). Basically, the exception has been applied when the reviewing court was in as good a position as the trial court to view the evidence and arrive at a conclusion on credibility of the evidence.

The theory represented by this exception was addressed by the United States Supreme Court in Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985):

This theory has an impressive genealogy, having first been articulated in an opinion by Judge Frank and subscribed to by Judge Augustus Hand, see Orvis v. Higgins [180 F.2d 537 (2d Cir.1950) ], but it is impossible to trace the theory’s lineage back to the text of Rule 52(a), which states straightforwardly that ‘findings of fact shall not be set aside unless clearly erroneous.’ That the Rule goes on to emphasize the special deference to be paid credibility determinations does not alter its clear command: Rule 52(a) ‘does not make exceptions or purport to exclude certain categories of factual findings from the obligation of a court of [40]*40appeals to accept a district court’s findings unless clearly erroneous.’ (citations omitted).

Id. at 574, 105 S.Ct. at 1512.

Appellants’ theory, therefore, is subject to serious challenge. What appellants ask, in effect, is that this district court try this bankruptcy case de novo, reject nearly all of the findings of the bankruptcy court, and substitute contrary findings of its own. This Court finds such a theory inappropriate and contrary to the policies of appellate review.

The cases cited as authority supporting de novo review involve situations where all the facts were stipulated, where purely legal questions were presented, where the trial court’s decision was grounded totally on the pleadings, affidavits, depositions and briefs, or where no witnesses were called. The case at bar differs dramatically from those cases in significant aspects.

In this case, numerous facts were controverted; the credibility, intent and demeanor of the witnesses were particularly important; eleven witnesses were called over three days of trial. The two factual issues in the case were whether Massey and Sees-kin had actually formed a partnership or whether they were estopped to deny the existence of a partnership. Necessary to the resolution of those issues were inquiries into the parties’ intentions with regard to the actual partnership and into any reasonable reliance on representations if any were made with regard to the estoppel claim. These issues were in dispute and required the trial court to assess the demeanor and credibility of the witnesses and their testimony. The United States Supreme Court, in United States v. Yellow Cab Co., 338 U.S. 338, 70 S.Ct. 177, 94 L.Ed. 150 (1949), emphasized the reasoning and importance of deferring to the trial court’s findings in such situations:

[F]or triers of fact totally to reject an opposed view impeaches neither their impartiality nor the propriety of their conclusions ... Findings as to the design, motive and intent with which men act depend peculiarly upon the credit given to witnesses by those who see and hear them.

Id. at 341, 70 S.Ct. at 179; see also Wedding, 483 F.2d at 882.

Rule 8013 of the Rules of Bankruptcy Procedure and Rule 52 of the Federal Rules of Civil Procedure provide the controlling standard for this Court’s review in this matter.

Bankruptcy Rule 8013 imposes the clearly erroneous standard of review on findings of fact made by the bankruptcy court:

On an appeal, the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy judge’s judgment, order or decree or remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.

The United States Court of Appeals for the Sixth Circuit has reaffirmed this standard most recently in Johnson & Associates, Inc. v. Johnson, 845 F.2d 1395 (1988):

Findings of fact by a bankruptcy court shall not be set aside unless clearly erroneous ... This circuit has clearly enunciated that findings of fact of a bankruptcy court should not be disturbed by the district court judge unless there is ‘most cogent evidence of mistake or miscarriage of justice.’ Citing, Slodov v. United States, 552 F.2d 159, 162 (6th Cir.1977), reversed on other grounds, 436 U.S. 238, 98 S.Ct. 54, 54 L.Ed.2d 72 (1978).
As an appellate court in this [bankruptcy appeal] proceeding, the district court may not make its own independent factual findings.

See also In re Rosinski, 759 F.2d 539 (6th Cir.1985).

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91 B.R. 39, 1988 U.S. Dist. LEXIS 10575, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcneill-hsu-mds-inc-v-massey-in-re-seeskin-ohsd-1988.