Robert J. Blackwell v. Ronald U. Lurie ( 1998 )

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
No. 97-6091EMSL
In re: *
*
Popkin & Stern, *
*
Debtor. *
* Appeal from the United
States
Robert J. Blackwell, Liquidating
* Trustee
Bankruptcy Court for the
of the Popkin & Stern Liquidating
* Trust
Eastern District of Missouri
*
Plaintiff-Appellee, * [UNPUBLISHED]
*
v. *
*
Ronald U. Lurie, *
*
Defendant-Appellant. *
Submitted: January 12, 1998
Filed: March 5, 1998
Before KRESSEL, William A. HILL, and SCOTT, Bankruptcy Judges.
KRESSEL, Bankruptcy Judge.
Ronald U. Lurie appeals from the bankruptcy court’s1 order
reviving the plaintiff’s
1
The Honorable Karen M. See, United States Bankruptcy Judge for the Western District
of Missouri, sitting by designation.
judgment against him. Because we agree with the bankruptcy
court that nothing in the settlement agreement between the
parties constituted a release or a satisfaction of that
judgment, we affirm.
BACKGROUND
This dispute goes back to the bankruptcy case of Popkin &
Stern, a St. Louis law firm of which Lurie was a partner.
Originally commenced on March 26, 1992, by an involuntary
petition, Popkin & Stern converted the case to a case under
chapter 11 and Blackwell was subsequently appointed the
trustee. On August 27, 1993, the bankruptcy court confirmed
a plan proposed by Popkin & Stern. That plan provided for the
creation of a liquidating trust to collect Popkin & Stern’s
assets and distribute them to creditors pursuant to the terms
of the plan. The plan provided that Blackwell would be the
trustee of the liquidating trust.
As part of his duties as the liquidating trustee,
Blackwell sued Lurie and on October 20, 1994, the bankruptcy
court entered a judgment in favor of Blackwell and against
Lurie in the amount of $1,121,743.00. Blackwell commenced
another adversary proceeding against Lurie and his two adult
children, Michael Lurie and Ryan Lurie, and a third adversary
proceeding against Lurie’s wife, Nancy F. Lurie.
During 1995, Blackwell, Lurie, Nancy Lurie, Michael Lurie,
and Ryan Lurie came to a settlement of the two pending
adversary proceedings and the judgment against Lurie. It is
that global settlement agreement dated September 13, 1995,
which is the centerpiece of the dispute between the parties to
this appeal. The global settlement agreement provided that on
the 30th day after the date upon which the approval order of
the bankruptcy court was entered, there would be a closing at
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which there would be a transfer of property and execution of
all documents. On October 19, 1995, the bankruptcy court
approved the agreement.
However, it wasn’t long before the parties were back in
court and on November 21, 1995, the bankruptcy court extended
the closing date so that it would occur no later than December
29 and tentatively set December 20, 1995, as the closing date.
However, on
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December 15, 1995, a hearing was held at which the bankruptcy
court took testimony, received other evidence and subsequently
made detailed findings of fact and conclusions of law on the
record and in a written order dated January 18, 1996. While
extremely lengthy and detailed, the thrust of the opinion is
that Lurie and his wife Nancy Lurie could not close the global
settlement agreement. In fact, there never was a closing.
Under Missouri law, judgment liens survive for only three
years. Mo. Rev. Stat. § 511.360. Therefore, on September 26,
1997, Blackwell filed a motion for revival of judgment. The
bankruptcy court scheduled a hearing and entered an order to
show cause setting a hearing for October 20, 1997. Lurie filed
a response to the motion on October 14, 1997, and a
supplemental memorandum on October 20, 1997, but did not
personally appear at the hearing.2
The court held a hearing on Blackwell’s motion on October
20, 1997,3 and on October 23, 1997, entered an order for
revival of judgment. It is from this order that Lurie appeals.
DISCUSSION
2
Neither the response nor the supplement memorandum have been made part of the
record on this appeal. In fact, the appellant has not filed any sort of designation of record or
provided the court with any record other than transcripts of hearings held on December 15, 1995,
and April 16, 1996. His only attempt to create a record seems to be the attachment to his reply
brief of an affidavit of Richard F. Huck, III, dated February 10, 1997--obviously, post-hearing
evidence which is not part of the record on appeal.
3
In his brief, Lurie complains in passing about the fact that the bankruptcy judge
conducted the hearing by telephone from Kansas City. But, as part of the statement of issues
recited in his memorandum, he does not make an issue out of the way that the hearing was
conducted. Lurie had the opportunity to file two written responses to the motion which the
bankruptcy court considered before entering its order.
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While Lurie’s arguments are lengthy and sometimes
convoluted, they can be distilled to one point. In spite of
the fact that he was unable to perform and did not perform his
obligations under the global settlement agreement, he claims
that the settlement agreement,
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releases him from any liability on the judgment. Paragraph V
of the global settlement agreement provides for mutual releases
among the parties “as of the Closing Date.” Since the closing
date is set in the agreement as being 30 days after court
approval and that date has come and gone, Lurie argues that the
release is effective notwithstanding that no closing was ever
held and, in fact, the bankruptcy court found that Lurie was
unable to perform his obligations under the agreement which
would enable a closing to be held.
However, the final paragraph of section V explicitly
provides that “the releases, and hold harmless provisions of
this paragraph V. . .shall become automatically effective and
enforceable without further action at the time of the Closing.”
And, in fact, a careful review of the global settlement
agreement reveals that the parties’ obligations are all tied
to the actual closing, not a hypothetical closing date. The
setting of the closing date is intended to be an indication of
an obligation to close on or within a certain time, but has no
independent effect of its own. Since Lurie never performed his
obligations under the global settlement agreement, he cannot
claim the benefit of the bargained-for release. See, Williams
v. AgriBank, FCB, 972 F.2d 962, 967 (8th Cir. 1992) (“When one
party to a settlement agreement refuses to comply with its
terms, the other party can abandon the settlement and proceed
on the original cause of action.”) Campbell v. Shaw, 947 S.W.2d
128, 131 (Mo. Ct. App. 1997) (“When a party fails to perform
according to the terms of a contract, it must be determined
whether the breach is material. If the breach is material or
if the breaching party’s performance is a condition to the
aggrieved party’s performance, the aggrieved party may cancel
the contract.”) McKnight v. Midwest Eye Institute of Kansas
City, Inc., 799 S.W.2d 909, 915 (Mo. Ct. App. 1990) (“The
judgment gave effect to the principle that a material failure
of one party to give performance gives the other party the
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right to repudiate the contract.” Quoting Boten v. Brecklein,
452 S.W.2d 86, 92 (Mo.1970). “It gives effect also to the
cognate principle that a party who is the first to violate the
contract by failure to give material performance may not claim
its benefits.”)
CONCLUSION
We simply cannot agree with Lurie that he is entitled to
the benefit of the release even though no closing was held and
he did not perform and was unable to perform his obligations
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under the global settlement agreement. We therefore affirm the
bankruptcy court’s judgment and order of revival of judgment
dated October 21, 1997, and entered October 23, 1997.
A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE
EIGHTH CIRCUIT.
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