A Bogus Claim May Beat Summary Judgment, but It Won’t Reach a Jury

February 13, 2018

Offering a bogus claim to ownership may defeat a motion for summary judgment, but that isn’t enough for the question to reach a jury, according to District Judge Matthew F. Leitman of Flint, Mich.

The appeal involved a dispute over the ownership of manuscripts written by Malcom X. A man claimed he had purchased the manuscripts from the debtor in the 1990s. The trustee disagreed and mounted an adversary proceeding for turnover and to declare that the manuscripts belonged to the debtor’s estate.

The bankruptcy court granted the trustee’s motion for summary judgment. Judge Leitman said the bankruptcy judge “offered a lengthy, well-reasoned, and well-supported explanation as to why” the defendant’s claim to ownership “lacks credibility.” Judge Leitman himself said the defendant’s ownership claim “does not pass the ‘laugh test.’”

Judge Leitman nonetheless reversed the grant of summary judgment in favor of the trustee, saying in his Feb. 5 opinion that a trial “court may not grant summary judgment based on a credibility assessment drawn from a cold record.”

Judge Leitman explained how the defendant had submitted affidavits and sworn deposition testimony claiming he had owned the manuscripts since the 1990s. Even though the defendant’s claims were “not always consistent as to how or when he obtained ownership,” Judge Leitman said the bankruptcy court was “required to accept [the defendant’s] sworn statements as true and construe any inconsistencies in the statements in [the defendant’s] favor.”

Therefore, Judge Leitman said, the trustee “was not entitled to summary judgment on the ground that [the defendant’s] claim of ownership in his affidavits and deposition were not credible.”

Still, Judge Leitman said, the inability to grant summary judgment in favor of the trustee did not mean that the defendant was “entitled to a jury trial on the turnover claim.”

Judge Leitman ended his opinion by drawing a roadmap for the trustee and the bankruptcy court. After an evidentiary hearing on remand regarding ownership, he said the bankruptcy court could “enter the turnover order” if the “claim of ownership is not colorable.”

If the claim of ownership is not colorable, Judge Leitman said the defendant “would not have a right to a jury trial” on the turnover claim.

The opinion is not authority for whether the bankruptcy court would have power to enter a final judgment if the claim to ownership were insufficient to reach a jury. Likewise, the opinion appears to assume without deciding that the defendant had a right to a jury trial.

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