Pettigrew v. Southern Aluminum Finishing Co. (In Re Amarlite Architectural Products, Inc.)

178 B.R. 904, 33 Collier Bankr. Cas. 2d 302, 1995 Bankr. LEXIS 261, 1995 WL 104747
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedMarch 1, 1995
Docket17-11566
StatusPublished
Cited by4 cases

This text of 178 B.R. 904 (Pettigrew v. Southern Aluminum Finishing Co. (In Re Amarlite Architectural Products, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pettigrew v. Southern Aluminum Finishing Co. (In Re Amarlite Architectural Products, Inc.), 178 B.R. 904, 33 Collier Bankr. Cas. 2d 302, 1995 Bankr. LEXIS 261, 1995 WL 104747 (Ga. 1995).

Opinion

ORDER

STACEY W. COTTON, Bankruptcy Judge.

Before the court is a joint motion for summary judgment filed by plaintiff, Harry W. Pettigrew, Chapter 7 trustee for Amarlite Architectural Products, Inc., and defendant, Congress Financial Corporation (Southern) (“Congress”). Plaintiff seeks a determination of the validity and priority of liens, claims or interests and that Congress is entitled to all funds presently held by the trustee pursuant to Congress’ first priority security interest in the Amarlite inventory and its proceeds. Defendant, Southern Aluminum Finishing Company (“SAF”) filed an answer, counterclaim and cross-claim claiming a superior interest and that the funds are being held in trust for its benefit. This is a core proceeding pursuant to § 157(b)(2)(K). The findings and conclusions of the court are set forth hereinafter.

FACTS

Amarlite Architectural Products, Inc. (“Amarlite”) was in the business of selling aluminum products for use in the construction industry. Congress is an asset based lender who provided certain terms and revolving financing to Amarlite. SAF is in the business of anodizing and painting fabricated aluminum products to be used in the con- - struction industry. From time to time Amarlite engaged SAF to anodize certain items of Amarlite’s inventory. On or about March 31, 1989, Amarlite granted to Congress a first priority security interest in all or substantially all of Amarlite’s assets. Congress duly perfected its security interest in all existing and after acquired inventory, accounts receivable, monies, general intangibles and proceeds.

Amarlite filed its petition for relief under Chapter 11 on October 5, 1990. By order entered December 20,1993, Amarlite’s Chapter 11 case was converted to a Chapter 7 case. As of the date of conversion, Amarlite was indebted to Congress in the principal amount of $7,883,258.07, plus interest and fees.

Following conversion, the trustee sold certain items of Amarlite’s inventory in SAF’s possession upon which SAF had performed services. SAF was paid $46,593.54, which equalled the outstanding claim for services on each item of such inventory sold. The trustee placed the remaining proceeds received from this sale of the inventory in SAF’s possession into an account designated “SAF/Trustee account.”

On March 9, 1994, the trustee sold substantially all of Amarlite’s equipment, inventory and general intangibles for the aggregate amount of $1,630,000. All of this inventory was in the possession of the debtor at the time of conversion and sale. Pursuant to the order of sale, the trustee placed $179,815 of the sale proceeds into an account designated “SAF/Trustee Sale Account” pending later determination of the competing interests of Congress and SAF. The proceeds in these two accounts are the subject of this action.

DISCUSSION

Federal Rule of Civil Procedure 56, made applicable by Bankruptcy Rule 7056, provides for the granting of summary judgment if “... there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c).. A fact is material if it “... might affect the outcome of the suit under the governing (substantive) law....” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1985). A dispute of fact is genuine “... if *907 the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The moving party has the burden of establishing the right of summary judgment. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991); Clark v. Union Mut. Life Ins. Co., 692 F.2d 1370, 1372 (11th Cir.1982); United States Steel Corp. v. Darby, 516 F.2d 961, 963 (5th Cir.1975).

In determining whether there is a genuine issue of material fact, the court must view the evidence in the light most favorable to the party opposing the motion. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Rosen v. Biscayne Yacht & Country Club, Inc., 766 F.2d 482, 484 (11th Cir.1985); United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984). The moving party must identify those evidentiary materials listed in Federal Rule 56(c) that establish the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); see also Fed.R.Civ.P. 56(e). Once the motion is supported by a prima facie showing that the moving party is entitled to judgment as a matter of law, a party opposing the motion must go beyond the pleadings and demonstrate that there is a material issue of fact which precludes summary judgment. Celo-tex, 477 U.S. at 324, 106 S.Ct. at 2553. Coats & Clark, 929 F.2d at 608.

Movants contend that Congress is entitled to all proceeds from the trustee’s sale based upon Congress’ first priority security interest in all of Amarlite’s assets. To support this position, movants rely upon the affidavit of Jerry Corley, the custodian of records of Congress, and the undisputed fact that Congress holds a first priority security interest in all or substantially all of Amarlite’s assets. The court finds the movants have sustained their burden of proof.

In response, defendant SAF contends that pursuant to O.C.G.A. 16-8-15 and the constructive trust fund doctrine, Amarlite, as a materialman, is protected by Georgia’s lien statutes and required to hold proceeds received from the sale of finished product in trust for the benefit of its suppliers, including SAF. 1 SAF further contends that the existence of a constructive trust for its benefit does not depend on whether SAF itself could have filed a lien, but rather on whether Amarlite would be subject to criminal penalty under O.C.G.A. § 16-8-15 if it received payment from its contractor/customer and failed to first pay SAF its share of those proceeds.

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178 B.R. 904, 33 Collier Bankr. Cas. 2d 302, 1995 Bankr. LEXIS 261, 1995 WL 104747, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pettigrew-v-southern-aluminum-finishing-co-in-re-amarlite-architectural-ganb-1995.