United States Court of Appeals
For the First Circuit
No. 00-1922
STEWART F. GROSSMAN, TRUSTEE OF THE MURRAY CREDITORS' TRUST,
Plaintiff, Appellant,
v.
STEPHEN BERMAN AND AAI FOOD SERVICES DIVISION, INC.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
[Hon. William C. Hillman, U.S. Bankruptcy Judge]
Before
Selya, Lynch and Lipez,
Circuit Judges.
Adam J. Ruttenberg, with whom Melvin S. Hoffman, Richard J.
Grahn, and Looney & Grossman LLP were on brief, for appellant.
Jay F. Theise, with whom Julie A. Koshgarian and Cherwin,
Glickman & Theise LLP were on brief, for appellees.
February 27, 2001
SELYA, Circuit Judge. In April of 1989, a petition was
filed in the bankruptcy court seeking to reorganize the affairs
of David W. Murray. See 11 U.S.C. § 303. The matter dragged on
for some two years, at which time the debtor, his wife Frances,
and the creditors' representative (the Official Creditors'
Committee) entered into a settlement agreement (the
Stipulation). The Stipulation provided that the creditors would
discharge certain claims and that the debtor, in return, would
deliver certain "non-exempt" property to the creditors' nominee.
The Stipulation also contained numerous additional provisions,
among them a promise that the parties would release all claims
inter sese other than "claims relating to the performance of the
terms of th[e] Stipulation" and an acknowledgment that, post-
confirmation, the bankruptcy court would retain jurisdiction
only to determine adversary proceedings pending as of the date
of confirmation.
In furtherance of the Stipulation, the parties entered
into a plan of reorganization (the Plan) on November 1, 1991.
Among other things, it established the Murray Creditors' Trust
as successor to the Official Creditors' Committee. The
bankruptcy court confirmed the Plan on December 4, 1991, and
appointed Stewart F. Grossman as trustee of the Murray
Creditors' Trust. The Stipulation, the Plan, and the
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confirmation order contained more or less similar provisions,
but often couched them in different language.
The supposed settlement proved more apparent than real.
Two years post-confirmation, the trustee brought an action in
the bankruptcy court against Frances Murray (an action that we
shall call "Grossman I"). This action had two objectives.
First, the trustee sought to recover property that the debtor
allegedly had transferred fraudulently to his spouse at some
point during the pre-petition period (January-April 1989).
Second, the trustee sought to recoup funds that Frances Murray
allegedly had withheld from the Murray Creditors' Trust
notwithstanding a contrary provision in the Stipulation.
The bankruptcy court refused to entertain the first of
these initiatives. It determined that the parties had intended
to limit the court's jurisdiction over adversary proceedings
commenced after confirmation; that such limiting provisions were
effective and enforceable; and that, therefore, the fraudulent
transfer claim should be dismissed for lack of subject-matter
jurisdiction. Grossman v. Murray (In re Murray), 214 B.R. 271,
276-77 (Bankr. D. Mass. 1997). The court accepted jurisdiction
over the second claim, but ruled that Frances Murray was under
no obligation to transfer the disputed funds to the trustee
because those funds were not part of the debtor's estate at the
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time the parties executed the Stipulation. Id. at 277-79. The
trustee appealed the decision in Grossman I to the district
court and lost. He eschewed any further appeal (and,
consequently, we take no view as to the soundness of the
bankruptcy court's rulings).
Even before Grossman I ran its course, the trustee, on
December 6, 1996, filed another action in the bankruptcy court.
This time he sued the Murrays and the appellees, Stephen Berman
and AAI Food Services Division, Inc. (AAI). We shall call this
action "Grossman II."
In Grossman II, the trustee alleged that on December
22, 1993, the Murrays fraudulently deeded their estate in
Bedford, New Hampshire, to Berman in a sham transaction and
granted a bogus $350,000 mortgage to AAI (a company that Berman
controlled). Accordingly, the trustee endeavored to set aside
these purportedly fraudulent conveyances. Citing, inter alia,
the bankruptcy court's decision in Grossman I, the appellees
moved to dismiss Grossman II with prejudice or, in the
alternative, for summary judgment.
The bankruptcy court granted the motion for summary
judgment with virtually no explanation. The court commented
that it had decreed in Grossman I "that Mr. Grossman is
exceeding his writ when he brings these actions on matters that
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didn't exist at a point in time," and with that cryptic
observation entered summary judgment against the trustee. On
the trustee's ensuing appeal, the district court issued a one
line order affirming the judgment. This appeal followed.
We recognize that the bankruptcy court, with the
confirmation of the Plan behind it, was seeking to conclude a
decade-old reorganization proceeding fairly and expeditiously.
Yet the court's failure to give any cogent explanation of the
rationale for its order, coupled with its failure to make any
findings (written or oral), places us in an untenable position.
The record is inscrutable as to the basis for the grant of
summary judgment, and the parties have galloped off in all
directions, constructing a myriad of hypothetical scenarios in
a vain attempt to explain why the bankruptcy court might have
ruled as it did. In the last analysis, these scenarios are pure
guesswork — and they raise more questions than they answer.1
1 To cite one example, the parties speculate that the basis
for the bankruptcy court's decision may have been the court's
belief that it lacked subject-matter jurisdiction, and they
argue at some length over what they perceive to be a pivotal
jurisdictional issue. While theoretically rich, this dialogue
appears wholly irrelevant. After all, the bankruptcy court
granted summary judgment — a disposition that presupposes the
existence of subject-matter jurisdiction. See generally 11
James Wm. Moore et al., Moore's Federal Practice ¶ 56-02 (3d ed.
1999).
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We acknowledge that a trial court, on a motion for
summary judgment, has no absolute obligation either to make
specific findings of fact or to elaborate upon its view of the
controlling legal principles. See Fed. R. Civ. P. 52(a)
(exempting motions for summary judgment from the usual praxis);
Bankr. R. 7052 (applying Fed. R. Civ. P. 52(a) and its exemption
for summary judgment motions to bankruptcy litigation); see also
Domegan v. Fair, 859 F.2d 1059, 1065-66 (1st Cir. 1988)
(refusing to vacate an order denying summary judgment for lack
of specific findings). But if our multi-tiered adjudicative
system is to function smoothly, a trial court must provide an
adequate record for appellate review. For that reason, we
repeatedly have emphasized the value of statements explaining
the legal basis for a nisi prius court's decision, whether or
not required by some rule. E.g., Roque-Rodriguez v. Lema Moya,
926 F.2d 103, 105 n.3 (1st Cir. 1991); Domegan, 859 F.2d at
1066. Although busy trial judges need not write lengthy
opinions in every case — a lucid explanation from the bench or
a brief memorandum of decision almost always will do — they
should take reasonable steps to ensure that the parties and the
appellate courts will be able to glimpse the foundation on which
their rulings rest.
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In many cases, such statements are helpful, but not
essential. At times, however, such statements are a necessary
precondition to intelligent appellate review. Such an occasion
arises when a trial court grants a motion for summary judgment
under circumstances in which the basis for its ruling is not
easily ascertainable from the bare record. In that kind of
situation, it is risky business for an appellate court to guess
at what the trial court might have been thinking, and the better
course is to remand for an elaboration of the decision.2 E.g.,
Francis v. Goodman, 81 F.3d 5, 8 (1st Cir. 1996); Myers v. Gulf
Oil Corp., 731 F.2d 281, 283-84 (5th Cir. 1984).
This is such a case. Grossman I had two separate
aspects: a fraudulent conveyance claim, 214 B.R. at 275-77, and
what the court termed a "breach of contract" claim (evidently
referring to a breach of the Stipulation), id. at 277-79. The
court decided these claims on different legal grounds. Grossman
II can best be described as a hybrid of these double-barreled
claims. Thus, the bankruptcy court's allusion to Grossman I
does not shed any light on why the court thought that Grossman
2We note that the Court of Appeals for the Third Circuit has
exercised its inherent supervisory authority to require that
trial courts provide an explanation for all orders granting
summary judgment. Vadino v. A. Valey Eng'rs, 903 F.2d 253, 258-
59 (3d Cir. 1990). We recognize, however, that such
explanations are unnecessary in many situations, and we limit
our holding accordingly.
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II should summarily be put out to pasture. By the same token,
the court's elliptical comment that the trustee exceeded his
writ does not enhance our ability to discern the basis for its
ruling; the court could have been referring to limitations on
its own jurisdiction, or to the trustee's standing to bring the
action, or to some recondite interpretation of the Stipulation.
The parties' confusion, as manifested in their briefs, mirrors
our difficulty in attempting to understand this comment — a
difficulty that is magnified by the court's decision to grant
summary judgment rather than to dismiss the case without
prejudice to the trustee's right to pursue it in another forum.
See supra note 1. Because the basis for the bankruptcy court's
ruling is not ascertainable from the record without extensive
surmise, we think that the wisest course is to remand for
enlightenment.
We need go no further. The bankruptcy court's
enigmatic explanation supplies insufficient guidance for
reasoned review. The district court's terse affirmance does not
fill the void. Consequently, we vacate the appealed order and
remand to the district court with instructions that the matter
be remanded to the bankruptcy court for further proceedings
consistent with this opinion. The bankruptcy court may, in its
discretion, either rehear the matter and enter a new decision or
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reinstate its original decision with a suitable explication of
its reasoning.
Vacated and remanded. All parties will bear their own
costs.
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