Fleet National v. H&D Entertainment ( 1996 )


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    October 11, 1996 UNITED STATES COURT OF APPEALS
    FOR THE FIRST CIRCUIT
    ____________________

    No. 96-1218
    No. 96-1523

    FLEET NATIONAL BANK,

    Plaintiff, Appellee,

    v.

    H&D ENTERTAINMENT, INC.,
    (f/k/a DOVER BROADCASTING, INC.),
    and H&D MANAGEMENT, INC.,
    as general partner of each of
    H&D BROADCASTING LIMITED PARTNERSHIP,
    H&D MEDIA LIMITED PARTNERSHIP,
    H&D RADIO LIMITED PARTNERSHIP, and
    H&D WIRELESS LIMITED PARTNERSHIP,

    Defendants, Appellants,

    v.

    PNC BANK, OHIO, N.A.,
    CHARLES E. GIDDENS, individually, as receiver
    and as general partner of MEDIA VENTURE PARTNERS,

    Additional Counterclaim Defendants, Appellees.
    ____________________

    ERRATA SHEET

    The opinion of this Court, issued on September 24, 1996, is
    amended as follows:

    On page 8, 2nd line of footnote 2, add comma after "cert. _____
    denied". ______

    On page 15, 1st line of indented quote, replace "there" with
    "[T]here".

    On page 16, 1st full paragraph, line 10, replace "(1990);" with
    "(1990)." and delete "Restatement (Second) of Contracts.". _________________________________

    On page 19, 2nd full paragraph, line 2, replace "trustee" with
    "trustees".

    On page 22, line 1, replace "F. Suppp." with "F. Supp.".


















    On page 22, lines 7-8 of 2nd paragraph, delete "The borrowers
    apparently did not even cross-examine Zitelman on this issue."

    On Page 23, line 6 of 1st full paragraph, underline "Code of
    Conduct for United States Judges" and delete comma after "Judges".





























































    UNITED STATES COURT OF APPEALS
    FOR THE FIRST CIRCUIT
    ____________________

    No. 96-1218
    No. 96-1523

    FLEET NATIONAL BANK,

    Plaintiff, Appellee,

    v.

    H&D ENTERTAINMENT, INC.,
    (f/k/a DOVER BROADCASTING, INC.),
    and H&D MANAGEMENT, INC.,
    as general partner of each of
    H&D BROADCASTING LIMITED PARTNERSHIP,
    H&D MEDIA LIMITED PARTNERSHIP,
    H&D RADIO LIMITED PARTNERSHIP, and
    H&D WIRELESS LIMITED PARTNERSHIP,

    Defendants, Appellants,

    v.

    PNC BANK, OHIO, N.A.,
    CHARLES E. GIDDENS, individually, as receiver
    and as general partner of MEDIA VENTURE PARTNERS,

    Additional Counterclaim Defendants, Appellees.
    ____________________

    APPEAL FROM THE UNITED STATES DISTRICT COURT

    FOR THE DISTRICT OF MASSACHUSETTS

    [Hon. Nancy Gertner, U.S. District Judge] ___________________

    ____________________

    Before

    Torruella, Chief Judge, ___________

    Boudin, Circuit Judge, _____________

    and Barbadoro,* District Judge. ______________
    ____________________

    *Of the District of New Hampshire, sitting by designation.















    ____________________

    Stephen F. Gordon with whom Stanley W. Wheatley and Gordon & Wise _________________ ___________________ _____________
    were on briefs for defendants, appellants H&D Entertainment, Inc. and
    H&D Management, Inc., and claimants, appellants, Joel M. Hartstone,
    Barry J. Dickstein, Hartstone and Dickstein, Inc., Barry Dickstein &
    Co., Inc. and Joan Rory Hartstone.
    John D. Hanify and Charles L. Glerum with whom Harold B. Murphy, ______________ _________________ ________________
    Matthew P. McCue, Hanify & King, P.C., Paul E. Morton, Morton & _________________ _____________________ ________________ _________
    McCrevan, Sara A. Walker, Joseph H. Zwicker, Terri L. Ross and Choate, ________ ______________ _________________ _____________ ______
    Hall & Stewart were on briefs for appellees. ______________


    ____________________

    September 24, 1996
    ____________________















































    BOUDIN, Circuit Judge. At issue in this case are two _____________

    different appeals, which we have consolidated, whose source

    is a lawsuit over unpaid bank loans. In one appeal, the

    borrowers contest the grant of summary judgment in favor of

    the lending bank; in the other appeal, the borrowers

    challenge the district court's approval of a sale by the

    receiver of borrower assets that secured the loans. In both

    instances, we affirm.

    The background facts are largely undisputed. Between

    1983 and 1988, Fleet National Bank ("Fleet") provided various

    interrelated loans and lines of credit to H&D Entertainment,

    Inc., and other associated corporations and partnerships

    (collectively, "the borrowers"); the borrowers were licensees

    or had other ownership interests in radio stations in various

    cities, and those assets secured the loans. In early 1994,

    Fleet concluded that the borrowers were in default and

    brought suit in two different federal district courts to

    collect upon different notes made or guaranteed by the

    borrowers.

    On March 31, 1994, Fleet and the borrowers entered into

    a written settlement agreement. In exchange for Fleet's

    forbearance on the loans and dismissal of its law suits, the

    borrowers agreed to a repayment plan based on the sale of the

    radio stations. The settlement agreement provided that if

    the borrowers failed to comply with the plan's terms, this



    -3- -3-













    failure would end Fleet's forbearance obligation and also

    constitute the borrower's consent to the appointment of a

    receiver who would muster the assets and pay the debts.

    Fleet claims that on November 30, 1994, the borrowers

    missed the first deadline established under the settlement

    agreement. As Fleet reads the agreement, the borrowers were

    required by that date either to have made a down payment of

    $6.4 million or to have in force purchase agreements with

    third parties obligating the latter to buy stations from the

    borrowers for that amount or more. The borrowers dispute

    this reading. The precise terms of the settlement agreement

    and other pertinent facts are set forth below.

    On December 2, 1994, Fleet brought the present action in

    the federal district court in Massachusetts against the

    borrowers seeking over $12.9 million plus interest based on

    the notes and guarantees. Later, the borrowers

    counterclaimed. In the meantime, Fleet moved for the

    appointment of Charles Giddens as receiver for the stations.

    Giddens had an extensive background in appraising and selling

    radio stations and was a partner in a brokerage firm, Media

    Venture Partners, experienced in this field. In the past,

    Giddens had been appointed by courts to serve as receiver for

    radio stations and his firm had acted as broker in their

    sale.





    -4- -4-













    The district court designated Giddens as receiver and

    thereafter approved his retention of Media Venture Partners

    to act as broker in the sale of the stations, comprising four

    principal properties in Connecticut, Illinois, Massachusetts

    and New Jersey. Giddens also retained The Zitelman Group,

    Inc., to prepare monthly financial statements for the

    stations and certain tax filings. The Zitelman Group was one

    of the few firms known to Giddens as experienced in radio

    station accounting and prepared to do such work on a

    temporary basis.

    In March 1995, Media Venture Partners solicited bids

    from several hundred possible purchasers, widely publicizing

    the proposed sale. The largest bid, offering to buy all four

    station properties for approximately $15.3 million, was made

    by Spring Broadcasting, L.L.C. ("Spring"), which is

    associated in ownership and management with The Zitelman

    Group. The bid was subject to further examination by the

    bidder and further negotiations. At Giddens' request, The

    Zitelman Group resigned its bookkeeping tasks in June 1995,

    so that Giddens could freely negotiate a definitive purchase

    agreement with Spring.

    Throughout the period, the borrowers made constant

    objections to the receiver, the proposed sale, and many other

    details. It appears that the prospective sale price being

    negotiated would not even cover in full the borrowers' debts



    -5- -5-













    to Fleet plus interest, let alone leave any equity for the

    borrowers. Thus, the borrowers had little incentive to

    cooperate in the receiver sale. Still, as the district court

    pointed out, the prospective deficiency did give Fleet reason

    to obtain as much as possible for the stations.

    During the spring of 1995, Fleet and the borrowers filed

    cross motions for partial or complete summary judgment, the

    central issue being whether the borrowers had breached the

    settlement agreement. The cross motions were heard by a

    magistrate judge in June 1995. In early July 1995, the

    magistrate judge wrote a lengthy report and recommendation,

    concluding that Fleet's motion should be granted and the

    borrowers' motion should be denied. Ultimately, the district

    court approved the report and recommendations of the

    magistrate judge. This resolution would have disposed of

    most but not all of the claims on each side.

    Giddens and Spring negotiated a final purchase price of

    just under $14 million during the summer of 1995, the lower

    price reflecting some deterioration of the stations and other

    adjustments. The magistrate judge held hearings, heard

    objections, and ultimately approved Giddens' proposal as to

    the procedures for completing the sale. This involved a

    second round of bidding, effectively inviting others to

    exceed the Spring offer. Information was furnished to

    prospective bidders, but no such bids were made. During this



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    period the borrowers conduct discovery. In October and

    November 1995 the district court held hearings on the

    proposed sale.

    During the fall, Giddens and Spring modified the

    proposed sale in certain respects. When the borrowers asked

    for a new round of competitive bidding because of the

    changes, Giddens conducted a third round of bidding ending in

    January 1996. No better bids were made. Further discovery

    was allowed to the borrowers. In January 1996 the district

    court held a further evidentiary hearing and then approved

    the sale from the bench. In April 1996, the district court

    issued a lengthy decision explaining its decision to approve

    the sale to Spring. Fleet National Bank v. H&D ______________________ ___

    Entertainment, Inc., 926 F. Supp. 226 (D. Mass. 1996). ___________________

    1. The borrowers have now appealed both from the order

    resolving the summary judgment motions and from the order

    approving the receiver's sale of the stations to Spring. At

    the outset, the borrowers argue that the summary judgment

    order is not properly before us, because it did not dispose

    fully of all of the claims or all of the counterclaims.1 For

    this reason, the district court directed, on approving the


    ____________________

    1On Fleet's claims, seven of the eight counts involved
    computation of damages and at least the interest component
    remained to be resolved. As for the borrowers'
    counterclaims, the claims against Fleet were fully resolved
    but two other claims directed by the borrowers against the
    receiver were not.

    -7- -7-













    magistrate judge's report and recommendation, "that final

    judgment be entered, pursuant to [Fed. R. Civ. P.] 54(b) and

    28 U.S.C. 1291."

    The borrowers do not argue that the district court

    failed to make or support the finding required by Rule 54(b)

    for a separate judgment on less than all claims or parties,

    namely, that there is "no just reason for delay." Rather,

    they simply assert that there is case law forbidding the use

    of Rule 54(b) as to any claim that has been adjudicated as to

    liability but not damages. E.g., Liberty Mut. Ins. Co. v. ____ ______________________

    Wetzel, 424 U.S. 737, 744 (1976). This is the status of most ______

    of Fleet's claims against the borrowers, although Fleet says,

    citing Herzog Contracting Corp. v. McGowen Corp., 976 F.2d _________________________ _____________

    1062, 1064 (7th Cir. 1992), that the mere calculation of

    interest due is ministerial and should not impair finality as

    to those claims.

    The borrowers' objection to their own appeal is an ill-

    advised attempt to throw sand in the wheels. The district

    court's order approving the sale of the stations to Spring is __

    properly before us--because by judicial gloss, such an order

    is treated as a final decision under 28 U.S.C., 1291,

    because of its importance and irrevocable character.2 And in

    ____________________

    2SEC v. American Bd. of Trade, Inc., 829 F.2d 341, 344 ___ ____________________________
    (2d Cir. 1987), cert. denied, 486 U.S. 1034 (1988); Citibank, ____________ _________
    N.A. v. Data Lease Fin. Corp., 645 F.2d 333, 337 (5th Cir. ____ ______________________
    1981). See generally Forgay v. Conrad, 47 U.S. (6 How.) 201, _____________ ______ ______
    203-04 (1848); 15A Wright, Miller, Cooper & Gressman, Federal _______

    -8- -8-













    reviewing the sale order, the borrowers are free to challenge

    any other ruling of the district court that underpins the

    sale order. E.g., Avery v. Secretary of Health & Human ____ _____ _____________________________

    Servs., 762 F.2d 158, 161 (1st Cir. 1985); 16 Wright, Miller, ______

    Cooper & Gressman, Federal Practice and Procedure 3921 ________________________________

    (1977).

    Here, the decision that the borrowers violated the

    settlement agreement does underpin the sale. The borrowers'

    violation is the central premise for the appointment of the

    receiver and the authorization permitting the receiver to

    sell the security. In short, the borrowers are free, in

    challenging the sale order, to make their central claim that

    they did not violate the settlement agreement. This would be

    so even if Rule 54(b) had never been invoked as to the

    summary judgment order, and even if the summary judgment

    order were not before us except as a premise of the sale

    order.

    Conversely, the borrowers are mistaken in thinking that

    if they successfully challenged the Rule 54(a) designation,

    they could undo or invalidate the district court's decision

    on summary judgment. At best, they might limit this court's _____

    review to those aspects of the summary judgment decision that

    directly underpin the order approving the sale. But, so far

    as we can ascertain, the only attack made by the borrowers is ____

    ____________________

    Practice and Procedure 3910 (2d ed. 1991 & Supp. 1996). ______________________

    -9- -9-













    on just such an aspect of the summary judgment decision,

    namely, the ruling that the borrowers breached the settlement

    agreement.

    Thus, we have jurisdiction both over the order approving

    the sale and, incident to review of that order, over the only

    attack made on the summary judgment decision, regardless of

    Herzog Contracting. Further, the district court's order ___________________

    directed to the summary judgment motions is properly before

    us under Rule 54(b) at least insofar as that order completely

    disposes of most of the borrowers' individual counterclaims.

    Since we have plenary jurisdiction over the summary judgment

    order at least as to those claims, we are free to review--and

    affirm--both orders against the only attack made upon them.

    2. We turn now to the merits of that attack, namely,

    the district court's ruling that the borrowers breached the

    settlement agreement by failing either to make a $6.4 million

    initial payment by November 30, 1994, or alternatively to

    make sales agreements by that time in a comparable amount.

    Summary judgment is proper if there are no genuine issues of

    material fact and the law otherwise warrants judgment for the

    moving party; inferences and credibility are taken in favor

    of the opposing party; and review on appeal is de novo. Roy ________ ___

    v. Inhabitants of the City of Lewiston, 42 F.3d 691, 694 (1st ___________________________________

    Cir. 1994).





    -10- -10-













    The settlement agreement (in section 5(a)) required the

    borrowers either to have paid Fleet $6.4 million by November

    30, 1994--which did not occur--or to meet an alternative

    condition stated as follows:

    On or prior to November 30, 1994, members of the
    Borrower Group shall have . . . entered into
    binding [purchase and sale] agreements . . . which
    shall have become fully effective as contemplated
    below, providing for the sale, to one or more
    purchasers, of two or more Station Combinations
    providing for aggregate Net Sales Proceeds of not
    less that $6,400,000 . . . .

    Later dates were provided by which two further specified

    payments (or sales contracts in like amounts) were to be

    made. In addition, the settlement agreement provided (in

    section 5(e)) a trio of corresponding dates by which

    contracted-for station sales had to be completed. Thus, the

    first sale--contracted for by November 30, 1994, for not less

    than $6.4 million--had to be consummated by March 31, 1995.

    The five-month lag time was set to permit the necessary

    approval of license transfers by the Federal Communications

    Commission. This provision also required the borrowers to

    use their best efforts to obtain FCC approval, but it

    provided for reasonable extensions of time if, despite the

    borrowers' diligence, FCC approval were delayed past March

    31, 1995 (or comparable dates for the other two

    installments).

    In this court, both sides agree that by November 30,

    1994, the borrowers had paid only $1,050,000 toward their


    -11- -11-













    debt. But, on summary judgment, the borrowers said that they

    satisfied the alternative obligation under section 5(a)-- ___________

    quoted above--by entering into an agreement to sell stations

    for enough money to generate the balance of the $6.4 million

    first payment. The facts as to what happened are largely

    undisputed; the disagreement before us turns on an issue of

    contract interpretation.

    On June 23, 1994, well in advance of November 30, 1994,

    deadline, the borrowers contracted to sell two of the

    stations to a third party for amounts that, taken together

    with the prior $1 million payment, would have satisfied the

    November 30, 1994, obligation. This June 1994 sales contract

    conditioned the buyer's obligation on one of the radio

    stations attaining a listenership ranking of number 1 or 2 in

    the demographic category of adults age 25-54, as determined

    by the Arbitron ratings service. In July 1994, before

    consummation, new Arbitron ratings placed the station in

    seventh place and, in September 1994, the buyer terminated

    the sales contract.

    On summary judgment and on appeal, the borrowers'

    central position has been that they complied with the literal

    terms of the settlement agreement because, in the words of

    section 5(a) quoted above, they "entered into" the required

    "binding" and "fully effective" contract "[o]n or prior to"

    November 30, 1994. The borrowers say that it is no part of



    -12- -12-













    their problem that their June 1994 contract to sell the

    stations lapsed well before November 30, 1994, and that no

    such sales contract was in effect on that date. We join the

    magistrate judge and the district court in rejecting the

    borrowers' reading of the settlement agreement.

    By its own terms, the settlement agreement is to be read

    in accordance with Massachusetts law. Under the precedents,

    ably parsed by the magistrate judge in his report adopted by

    the district court, a contract governed by Massachusetts law

    must be construed in accord with common sense, the likely

    intent of the parties and (in commercial cases) "as a

    business transaction entered into by practical [people] to

    accomplish an honest and straightforward end." Shapiro v. _______

    Grinspoon, 541 N.E.2d 359, 363 (Mass. App. Ct. 1989). In _________

    short, words matter; but the words are to be read as elements

    in a practical working document and not as a crossword

    puzzle.

    In all likelihood, the phrase "fully effective" in the

    settlement agreement refers to the satisfaction of certain

    conditions precedent specified in the settlement agreement

    itself (e.g., the borrowers' filing of FCC applications for ____

    license transfer within 20 days). The magistrate judge--

    whose report the district court adopted--reasoned that the

    term "binding," to avoid superfluity, should be read to

    exclude "contingent purchase obligations which lapsed before



    -13- -13-













    ever ripening into absolute ones." Thus, he concluded that

    even on the most literal reading, the borrowers failed to

    meet the requirement.

    In our view, it is uncertain whether the parties to the

    settlement agreement entertained any very precise notion of

    the meaning of "binding." The term is often used--

    redundantly in most contexts--to mean legally enforceable,

    Black's Law Dictionary 168-69 (6th ed. 1990), and lawyers _______________________

    typically overwrite documents in this fashion. Further, at

    least one condition subsequent--that of FCC approval--was

    likely to remain unresolved until after November 30. But we

    think that even if the term "binding" is given no special

    meaning, the result is the same based upon a common-sense

    appraisal, elsewhere stressed by the magistrate judge.

    A self-evident aim of the settlement agreement was to

    make certain, by November 30, 1994, that future payment to

    Fleet of the $6.4 million was reasonably assured, assuming

    that actual payment had not already occurred. By law, the

    intended assurance would still be subject to the specific

    condition of FCC approval of the license transfers; and, of

    course, bankruptcy of the buyer or other intervening events

    might otherwise have frustrated the sale. But a sales

    contract that lapsed by its own terms prior to November 30

    simply does not satisfy the obvious basic objective of

    providing reasonable assurance to Fleet.



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    To adopt this view does not require that we suppose that

    the parties had an exact and identical view of how every

    contingency or condition might satisfy or violate the

    settlement agreement. It is enough that reasonable parties

    would not have believed that this settlement agreement would

    be satisfied where the seller and buyer built into the sales

    contract a significant condition subsequent that defeated the

    obligation to buy and led to the lapsing of the contract

    prior to November 30. See generally Cooke v. Lynn Sand & ______________ _____ ___________

    Stone Co., 70 F.3d 201, 204-05 (1st Cir. 1995). Other __________

    variations might present more difficulties.

    The borrowers have a fall-back position. They argue

    that the settlement agreement is at worst ambiguous and that,

    given the ambiguity, they are entitled to a trial to present

    evidence. Further, they point to the affidavit of Joel

    Hartstone, a leading figure in the management of the

    borrowers, that in the course of negotiating the settlement

    agreement,

    [T]here were specific discussions regarding the
    understanding that, if the Borrower Group fulfilled
    its good faith efforts obligations by entering into
    purchase and sale agreements, and if those
    agreements then terminated, the Borrower Group
    still would have until the principal payment
    deadline to consummate a transaction with a
    substitute purchaser.

    Hartstone's gloss is highly unlikely as a statement of

    the parties' actual intent in section 5(a) but not quite

    impossible. It is highly unlikely because it is so serious a


    -15- -15-













    departure from the words and structure of the settlement

    agreement. Nothing in section 5(a) suggests that the

    contract signing was merely a "good faith efforts" hurdle; if

    that was the intention, it could easily have been expressed.

    Further, there is a lucid "best efforts" clause in section

    5(e), pertaining to the borrowers' duty to seek FCC approval,

    but none in section 5(a).

    Still, this would be a more difficult case if there were

    solid extrinsic proof--that is, evidence independent of the

    words of the settlement agreement--that the parties mutually

    intended section 5(a) to have the meaning claimed by

    Hartstone. The contract could rationally have been drafted

    as Hartstone urges, and sometimes parties fail to express

    themselves clearly in their drafting. This looks, at first

    glance, like a classic problem as to when extrinsic evidence

    may be offered to assist in contract interpretation, an issue

    largely governed by the parol evidence rule.

    Somewhat simplified, the traditional version of the

    parol evidence rule is that a contract provision is either

    clear or ambiguous and that, in the former case, extrinsic

    evidence of negotiations is prohibited (if the contract was

    intended to be a complete integration). The modern approach,

    embodied in the Restatement (Second) of Contracts (1981), __________________________________

    allows extrinsic evidence to "interpret" even a seemingly

    unambiguous contract, but not to vary or contradict its



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    terms. Id. 212(1) and comment b, and 214(c) (1981). ___

    See Farnsworth, Contracts 7.12 (1990). Massachusetts ___ _________

    courts may tend toward the older view but not unequivocally

    so. Compare ITT Corp. v. LTX Corp., 926 F.2d 1258, 1261-62 _______ _________ __________

    (1st Cir. 1991), with Robert Indus. Inc. v. Spence, 291 ____ ___________________ ______

    N.E.2d 407 (Mass. 1973).

    In this case, the elaborate settlement agreement was

    plainly intended as a complete integration and contains a

    clause to this effect. Thus, if the Hartstone affidavit were

    sufficient, it would pose nice questions as to whether

    Massachusetts law requires an ambiguity before permitting

    extrinsic evidence, (if so) whether the agreement is

    ambiguous on the point at issue, and (above all) whether the

    Hartstone gloss can be said to explain--rather than

    contradict--the terms of the agreement. A factfinder might

    also have to decide whether Hartstone's affidavit correctly

    and fully described what was said at the negotiations.

    But Hartstone's affidavit is not sufficient to raise a

    genuine issue of material fact. The affidavit contains only

    the conclusory assertion that in the negotiations there were

    "specific discussions" adopting his best-efforts

    interpretation. No dates, names or actual statements are

    supplied; not a single "specific" is set forth to

    demonstrate, or even illustrate, the content of the alleged

    "specific discussions." There is only some lawyer-like



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    argument in a further paragraph as to why Hartstone's "best

    efforts" gloss conformed to the general tenor of the

    agreement.

    Thus, the quoted passage in Hartstone's affidavit did

    not create a genuine issue of fact as to what happened at the

    negotiations. Nor did it supply specific facts that, if

    uncontested, might have affected the district court's own

    reading of the settlement agreement. Cf. Lumpkin v. ___ _______

    Envirodyne Indus., Inc., 933 F.2d 449, 456 (7th Cir. 1991) ________________________

    (court may construe document if facts undisputed). It is

    just the kind of conclusory affidavit statement that is

    regularly disregarded by courts. Wynne v. Tufts Univ. Sch. _____ ________________

    of Medicine, 932 F.2d 19, 27-28 (1st Cir. 1991); Posadas de ___________ __________

    Puerto Rico, Inc. v. Radin, 856 F.2d 399, 401-02 (1st Cir. __________________ _____

    1988).

    3. The remaining issue is whether the district court

    erred in approving the receiver's agreement to sell the

    stations to Spring. The district court has wide discretion

    in judging whether a receiver's sale is fair in terms and

    result and serves the best interests of the estate. E.g., ____

    United States v. Peters, 777 F.2d 1294, 1298 n.6 (7th Cir. ______________ ______

    1985). On review, an abuse of discretion standard governs

    such judgments, although subsidiary findings of fact are

    reviewed under a clearly erroneous standard and propositions





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    of law are subject to de novo review. Pye v. Teamsters Local _______ ___ _______________

    Union No. 122, 61 F.3d 1013, 1018 (1st Cir. 1995). _____________

    In this case, the borrowers make almost a dozen

    different attacks on the sale, but only a few require

    discussion. The first attack, and the one most vigorously

    argued, arises from the fact that the winning bidder-buyer

    (Spring) was closely associated with the company (The

    Zitelman Group) that until June 1994 performed specified

    accounting services for the seller-receiver (Giddens). For

    present purposes, we omit the details of the association and

    (arguendo) treat the case as if Spring and The Zitelman Group ________

    were one entity.

    Exceptions aside, a full-fledged fiduciary, such as

    trustees or a court-appointed receiver like Giddens, may not

    normally sell estate property to himself even if the terms

    are fair. Restatement (Second) of Trusts 170 comment b _______________________________

    (1959); Bogert, The Law of Trusts and Trustees 543, at 248 _______________________________

    (rev. 2d ed. 1993); Scott & Fratcher, The Law of Trusts __________________

    170.1 (4th ed. 1987); see, e.g., Attorney General v. Flynn, ___ ____ ________________ _____

    120 N.E.2d 296, 302 (Mass. 1954). The central reason is

    obvious: despite the safeguard of court oversight, the main

    assurance that the estate will be maximized is the zeal of

    the seller to secure the best price, and that zeal is likely

    to be tempered if the seller is selling to himself. Bogert,

    supra. The benefits of the general ban outweigh the risk _____



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    that, in an individual case, the receiver might otherwise be

    the highest bidder.

    The borrowers in this case urge that The Zitelman Group

    ought to be viewed as a fiduciary. While the label is not an

    exact term, see SEC v. Chenery, 318 U.S. 80, 85-86 (1943); ___ ___ _______

    Restatement (Second) Torts 874 comment a (1979), we agree ___________________________

    with the district court that the specific accounting tasks

    allotted to The Zitelman Group were narrow, mechanical, and

    unrelated to the sale. The district court's findings to this

    effect, 926 F. Supp. at 242-43, have not been impeached. If

    The Zitelman Group had been engaged as the receiver's

    financial advisor on the sale, our view might be different.

    In the alternative, the borrowers urge that the general

    ban on trustee buying trust property ought to extend with the

    same force to anyone who is employed or engaged by the ______

    fiduciary, as The Zitelman Group was in performing accounting

    services. This is an arguable position (we ignore the

    possible significance of the June resignation), and there are

    a few cases that purport to support such a general ban on

    those who assist a fiduciary. E.g., Donovan & Schuenke v. ____ ___________________

    Sampsell, 226 F.2d 804, 811 (9th Cir.), cert. denied, 350 ________ _____________

    U.S. 895 (1955); In re Q.P.S., Inc., 99 B.R. 843, 845 (Bankr. __________________

    W.D. Tenn. 1989).

    But, as the district court showed, it is not clear that

    the ban is uniformly followed even in those few jurisdictions



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    that purport to adopt it. 926 F. Supp. at 244 n.64. And the

    greater weight of authority is that any judgments as to

    disqualification of a non-fiduciary purchaser should be made

    on a case by case basis, taking account of all of the

    surrounding circumstances. Id. at 244; Restatement (Second) ___ ____________________

    of Trusts 170 comment e; Bogert, supra, 543, at 254; _________ _____

    Scott & Fratcher, supra, 170.6; see, e.g., Burlingham v. _____ ___ ____ __________

    Worcester, 218 N.E.2d 123, 126 (Mass. 1966); Gunther v. Gove, _________ _______ ____

    175 N.E. 464, 467 (Mass. 1931).

    The central reason for disqualifying the fiduciary as a

    buyer is that there is no one else who can similarly protect

    the estate's interest. See Bogert, supra, 543, at 227-28. ___ _____

    But where the purchaser is merely hired by the fiduciary to

    perform a discrete and narrow function unrelated to the sale,

    the fiduciary's guardian role is not automatically impaired.

    On the contrary, the fiduciary should still have every

    incentive to refuse to sell unless the purchaser is making

    the most attractive available offer. Thus, there is often

    little risk that the estate will be disserved by allowing the

    bid.

    The general rule, by disqualifying the fiduciary as a

    bidder, might in some rare case foreclose the highest bidder,

    but only one such bidder is lost. If courts extend that

    circle of automatic disqualification, the risk becomes

    greater of harming the estate by limiting those who might



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    offer the highest price. This is especially so in cases

    where the universe of serious buyers is likely to be small,

    as may well be the case here. And, of course, even without a

    rigid rule disqualification, an objecting party is free to

    argue on particular facts against a proposed sale to someone

    employed by the fiduciary.

    Here, the borrowers do argue that The Zitelman Group's

    access to inside information did give Spring an advantage in

    framing its bid. If Spring had thereby bid less than it

    otherwise would have, interesting problems of remedy might

    arise--for it still might not help the estate to throw out

    the highest bid made to it. In all events, the district

    court specifically found that the information available to

    The Zitelman Group was not "confidential information or even

    raw financial data," 926 F. Supp. at 243, and was effectively

    available to other bidders. Id. at 233 n.22. ___

    On appeal, the borrowers make no effort to show that the

    monthly financial statements or any other information

    available to The Zitelman Group gave Spring any unique

    advantage over the information available to all bidders. On

    the contrary, the prospective bidders were supplied with more

    detailed and pertinent information than the limited data

    available to The Zitelman Group for accounting purposes. 926

    F. Supp. at 233 & n.23. The borrowers' brief gives us no





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    reason even to suspect error on this finding, let alone clear

    error.

    We turn now to a quite different attack made by the

    borrowers on the sale. The borrowers assert that the

    receiver or his associated brokerage company, Media Venture

    Partners, accepted a "bribe" from Spring by agreeing to act

    as Spring's broker to buy another radio station in the

    Atlantic City area. Apparently, in April 1995, at virtually

    the same time that Spring submitted the winning bid in the

    first round, Spring offered Media Venture Partners a

    commission to secure Spring a second station in the same

    city.

    To describe this offer as a proven bribe is a dramatic

    overstatement. Zitelman (who headed The Zitelman Group)

    himself testified at a hearing that the offer of a commission

    to Spring to procure a second station in Atlantic City was an

    arm's length agreement unrelated (except by Spring's desire

    for a duopoly) to the receiver's sale of the borrowers'

    stations. The district court did not discuss the episode,

    perhaps because the borrowers developed very little evidence

    about it in the district court. The borrowers apparently did

    not even cross-examine Zitelman on this issue.

    In this court, the borrowers simply repeat their charge

    that the commission was a bribe. If it were, the matter

    would be very serious. But the borrowers have adduced no



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    evidence that the commission was intended by Spring as a

    bribe, regarded by Giddens or Media Venture Partners in that

    light, or that it had any effect on the sale of the

    borrowers' station. Out of an abundance of caution we have

    read what can be found in the record on the subject, and it

    does not alter our conclusion.

    The borrowers might have argued that, as a prophylactic

    matter, a receiver who is selling property should be barred

    from any other dealing with the buyer in the same time frame.

    A federal judge, for example, could not normally accept a

    gift from a lawyer litigating a case before that judge. 5

    U.S.C. 7353(a)(1) (1994); Code of Conduct for United States _________________________________

    Judges Canon 5(4). But the borrowers have made no effort to ______

    offer citations or arguments for such a prophylactic rule

    here; and it is certainly not self-evident that so broad a

    rule would make sense in the context of ordinary business

    transactions.

    Finally, the borrowers offer a motley of other attacks

    on the sale. These include charges that Media Venture

    Partners helped Spring in "crafting" its bid by providing it

    help not afforded to other bidders; that the receiver

    concealed information from the court regarding bids submitted

    by other bidders; that adjustments in the sales contract

    between the receiver and Spring were unwarranted; that the

    second and third rounds of bidding were too hasty; and that



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    the sale price ultimately fixed for the stations was too low

    in light of earlier appraisals.

    These objections are answered in the district court's

    lengthy opinion approving the sale. The objections turn on

    the specific facts and the district court's opinion is

    reported. In each case, we think that the district court's

    discussion is sufficient and that no error occurred. In our

    view, the district court and the magistrate judge have done a

    very able job in handling this complex and contentious case.

    Affirmed. _________




































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