W.R. Huff Asset Management Co. v. William Soroka 1989 Trust

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 09-3634
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W.R. HUFF ASSET MANAGEMENT CO, L.L.C.;
KATO-SAN CORP.; DBC 1 CORP.,
Appellants
v.
THE WILLIAM SOROKA 1989 TRUST; KAYE
WOLTMAN, as Successor Trustee to the William
Soroka 1989 Trust and Executor of the Estate
of William Soroka; THE WILLIAM SOROKA
CHARITABLE TRUST; JOHN DOE TRUSTEES
OF THE WILLIAM SOROKA CHARITABLE TRUST;
THE WILLIAM SOROKA ADMINISTRATIVE TRUST;
JOHN DOE TRUSTEES OF THE WILLIAM SOROKA
ADMINISTRATIVE TRUST,
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On Appeal from the United States District Court
For the District of New Jersey
(D.C. No. 04-cv-03093)
District Judge: Honorable Katharine S. Hayden
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Submitted Under Third Circuit L.A.R. 34.1(a),
October 6, 2010
BEFORE: FUENTES, JORDAN and ALDISERT, Circuit Judges
(Opinion Filed: October 28, 2010)
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OPINION OF THE COURT
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FUENTES, Circuit Judge:
1
In 1984 William Soroka ("Soroka") and several other investors gave William Huff
money in return for an ownership stake in a limited partnership called W.R. Huff Asset
Management ("Huff"). The general and limited partners of Huff intended to create a
closed arrangement limited to friends and family. Accordingly, the 1984 partnership
agreement, amended when the partnership converted to a limited liability company in
1994, contains several provisions designed to limit members' ability to transfer their
interests. The parties dispute the meaning and effect of these provisions.
After a three-day bench trial, the District Court entered judgment in favor of
Appellees—the executor of Soroka's estate, and the trusts Soroka created and their
trustees. Later, in a separate opinion and order, the District Court granted Appellees'
Motion to Amend Judgment to Include Prejudgment Interest. Huff and its two general
managers, Kato-San Corporation and DBC I Corporation, appeal from both decisions.
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332 and we have
appellate jurisdiction pursuant to 28 U.S.C. § 1291. On the appeal of a bench trial, we
review a district court's findings of fact for clear error and its conclusions of law de novo.
McCutcheon v. America's Servicing Co., 560 F.3d 143, 147 (3d Cir. 2009). We review
the District Court's grant of equitable relief under an abuse of discretion standard. See
James v. Richman, 547 F.3d 214, 217 (3d Cir. 2008); Commodity Futures Trading
Comm'n v. Am. Metals Exch. Corp., 991 F.2d 71, 76 (3d Cir. 1993).
Huff asserts that the District Court erred in four primary respects: (1) it
erroneously concluded that the only way to remedy the breach that occurred when Soroka
attempted to transfer his interest was to void the attempted transfer; (2) its interpretation
2
of the partnership agreement failed to acknowledge that Soroka's attempted transfer
triggered Huff's right to redeem his interest; (3) it was wrong to conclude that the
partnership agreement created a special post-mortem status in which Soroka's interest
was not transferred upon his death, but instead controlled by his executor; and (4) it
erroneously granted Appellees' Motion to Amend Judgment to Include Prejudgment
Interest.
After a careful review of the record and the parties' arguments, we find no basis
for disturbing either of the District Court's opinions. The District Court's decisions
properly put the parties in exactly the position they would have been in had Soroka not
unsuccessfully attempted to transfer his interest to a charitable trust.1 Therefore, we will
affirm the amended judgment for the same reasons set forth in the record.
1
For ownership of Soroka's interest in Huff to have been transferred, the requirements of §§ 8.1(B), 8.2(A), and
8.3(D) must have been met. Those requirements clearly were not met at anytime—in 1999, upon Soroka's death, or
after his death. So no valid transfer of Soroka's interest ever occurred.
3