Ring v. First Niagara Bank, N.A. (In Re Sterling United, Inc.) , 674 F. App'x 19 ( 2016 )

15-4131-bk
In re: Sterling United, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 22nd day of December, two thousand sixteen.
PRESENT: GUIDO CALABRESI,
REENA RAGGI,
GERARD E. LYNCH,
Circuit Judges.
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IN THE MATTER OF: STERLING UNITED, INC.
Debtor.
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JOHN H. RING, III, Trustee of the Chapter 7 Bankruptcy
Estate of STERLING UNITED, INC.,
Plaintiff-Appellant,
v. No. 15-4131-bk
FIRST NIAGARA BANK, N.A.,
Defendant-Appellee.
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APPEARING FOR APPELLANT: ARTHUR G. BAUMEISTER, JR., Amigone,
Sanchez & Mattrey, LLP, Buffalo, New York.
APPEARING FOR APPELLEE: GARRY M. GRABER, Hodgson Russ LLP,
Buffalo, New York.
1 Appeal from a judgment of the United States District Court for the Western
2 District of New York (William M. Skretny, Judge; Michael J. Kaplan, Bankruptcy
3 Judge).
4 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
5 AND DECREED that the judgment of the district court is AFFIRMED.
6 Plaintiff John H. Ring, III, the Chapter 7 bankruptcy trustee for the estate of
7 Sterling United, Inc., appeals from the affirmance of the bankruptcy court’s dismissal of
8 his claims that defendant First Niagara Bank’s security interests in debtor’s assets were
9 avoidable under 11 U.S.C. § 547. On plenary review of a decision of a district court
10 functioning as an intermediate appellate court in a bankruptcy case, we assess the
11 bankruptcy court’s legal conclusions de novo and its factual findings for clear error. See
12 In re Lehman Bros. Holdings Inc., 761 F.3d 303, 308 (2d Cir. 2014). In applying these
13 principles here, we assume the parties’ familiarity with the underlying facts, the
14 procedural history of the case, and the issues on appeal, which we reference only as
15 necessary to explain our decision to affirm.
16 Under 11 U.S.C. § 547(b)(4)(A), a bankruptcy trustee may avoid any “transfer of
17 an interest of the debtor in property . . . made . . . on or within 90 days before the date of
18 the filing of the petition” for bankruptcy, provided that those interests are not perfected
19 security interests. See id. § 547(c)(3). In New York, a financing statement perfects a
20 security interest if it (a) states the name of the debtor and the name of the secured party or
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21 a representative of the secured party, and (b) “indicates the collateral covered by the
22 financing statement.” N.Y. U.C.C. § 9-502. The collateral requirement may be
23 satisfied by “an indication that the financing statement covers all assets or all personal
24 property,” id. § 9-504, which is the minimum necessary to “provide[] notice that a person
25 may have a security interest in the collateral claimed,” id. § 9-504 cmt. 2.
26 The trustee argues that First Niagara inadequately perfected its interests in
27 debtor’s assets under these provisions. He therefore maintains that, rather than dismiss
28 his claim, the bankruptcy court should have awarded the estate the value of any property
29 interests transferred to, or liquidation proceeds collected by, First Niagara within 90 days
30 of the May 17, 2013 bankruptcy petition date. We do not agree.
31 The parties do not dispute the underlying facts. First Niagara loaned over one
32 million dollars to the debtor and was granted a blanket security interest in all of debtor’s
33 assets. Between 2005 and 2007, First Niagara filed three financing statements, pursuant
34 to N.Y. U.C.C. § 9-502, to perfect those interests. The collateral indication in the initial
35 U.C.C. filings was as follows:
36 All assets of the Debtor including, but not limited to, any and all equipment,
37 fixtures, inventory, accounts, chattel paper, documents, instruments,
38 investment property, general intangibles, letter-of-credit rights and deposit
39 accounts now owned and hereafter acquired by Debtor and located at or
40 relating to the operation of the premises at 100 River Rock Drive, Suite
41 304, Buffalo, New York, together with any products and proceeds thereof
42 including, but not limited to, a certain Komori 628 P & L Ten Color Press
43 and Heidelberg B20 Folder and Prism Print Management System.
44
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45 App’x 132 (emphasis added). On October 19, 2012, the financial statements were
46 amended to indicate the debtor’s change of address to 6030 N. Bailey Avenue, Amherst,
47 N.Y. 14226. Id. at 195. Those amendments, however, did not update the description
48 of the collateral to reflect the debtor’s changed address; that was done by amendment on
49 February 19, 2013. The final collateral indication states as follows:
50 All assets of the Debtor including, but not limited to, any and all
51 equipment, fixtures, inventory, accounts, chattel paper, documents,
52 instruments, investment property, general intangibles, letter-of-credit rights
53 and deposit accounts now owned and hereafter acquired by Debtor,
54 including but not limited to those located at or used in connection with the
55 business premises at 6030 N. Bailey Avenue, Amherst, NY 14226, together
56 with any products and proceeds thereof.
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58 Id. at 140 (emphasis added).
59 The parties agree that the February 2013 collateral amendments, which were filed
60 within 90 days of the bankruptcy petition, did not and could not have perfected First
61 Niagara’s security interests. The only dispute, therefore, is whether the initial collateral
62 description was sufficient to perfect First Niagara’s security interests, or whether, as the
63 trustee argues, the indication was restricted to property located at 100 River Rock Drive,
64 the initially stated address, and therefore a nullity with respect to debtor assets at the new
65 address.
66 We conclude that the description is sufficient because it unambiguously refers to
67 “[a]ll assets of the Debtor” irrespective of their location. The phrase “including, but not
68 limited to” introduces a subset of, and does not function as a limitation on, “[a]ll” of the
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69 debtor’s assets. See, e.g., Bloate v. United States, 559 U.S. 196, 208 (2010) (construing
70 statutory phrase “including but not limited to” to introduce “list of categories” that was
71 “illustrative rather than exhaustive”); Federal Land Bank of St. Paul v. Bismarck Lumber
72 Co., 314 U.S. 95, 100 (1941) (“[T]he term ‘including’ is not one of all-embracing
73 definition, but connotes simply an illustrative application of the general principle.”);
74 United States v. Huber, 603 F.2d 387, 394 (2d Cir. 1979) (“[A] list beginning with the
75 word ‘includes’ . . . is not exhaustive but merely illustrative.”); Pierre v. Providence
76 Wash. Ins. Co., 99 N.Y.2d 222, 236, 754 N.Y.S.2d 179, 188 (2002) (describing phrase
77 “includes, but is not limited to,” as signifying “nonexclusive definition”).
78 The trustee offers no reason for departing from this general principle of
79 interpretation. Instead, he argues that the address modifies “[a]ll assets” or, at least,
80 makes the collateral indication “seriously misleading” under N.Y. U.C.C. § 9-506.
81 Neither argument persuades. The textual argument founders because the location
82 restriction is the second half of a conjunctive phrase identifying assets included in but not
83 exhaustive of those covered by the collateral specification. See App’x 132 (“All assets of
84 the Debtor including, but not limited to, any and all [list of specific assets] . . . now
85 owned and hereafter acquired by Debtor and located at or relating to the operation of
86 the premises at 100 River Rock Drive, Suite 304, Buffalo, New York.” (emphasis added)).
87 The reading plaintiff urges—“All assets of the Debtor . . . and located at or relating to the
88 operation of the premises . . . .,” id. (emphasis added)—does not make sense.
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89 Nor do the cases cited by the trustee support his argument that the specific location
90 here makes the collateral indication “seriously misleading.” N.Y. U.C.C. § 9-506. In
91 none of those cases did the challenged collateral indication contain an explicit and
92 unambiguously broad term (“all assets”) paired with language disclaiming any limitation
93 on the contents of that category (“including, but not limited to”). For example, the
94 financing statement in In re I.A. Durbin, Inc., 46 B.R. 595, 598 (Bankr. S.D. Fla. 1985),
95 covered “[a]ll property rights of any kind whatsoever, whether real, personal, mixed or
96 otherwise, and whether tangible or intangible, encumbered by the above-mentioned
97 mortgage.” The phrase “encumbered by the above-mentioned mortgage” plainly
98 modified and limited “[a]ll property rights.” Id. The same conclusion applies to In re
99 Freeman, 33 B.R. 234, 234 (Bankr. C.D. Cal. 1983) (“All furniture and fixtures and
100 inventory of the Gold Chain Supermarkets now or at any time located or installed on the
101 land or in the improvements at 813 State Street, Santa Barbara, California.” (emphasis
102 added)). In sum, because the geographic reference in the initial collateral indication was
103 merely illustrative and because the indication clearly reaches all assets of the debtor, we
104 conclude, as the bankruptcy and district courts did, that the trustee’s § 547 claim against
105 First Niagara is properly dismissed.
106 We have considered plaintiff’s remaining arguments and find them to be without
107 merit. Accordingly, we AFFIRM the judgment of the district court.
108 FOR THE COURT:
109 Catherine O’Hagan Wolfe, Clerk of Court
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