Ballard Spahr LLP v. Official Committee of Equity Security Holders
2:21-cv-00175
E.D. Wis.Jun 9, 2025Background
- Debtor Greenpoint Tactical Income Fund LLC filed Chapter 11 in Oct. 2019; Ballard Spahr filed Claim No. 98 for $236,717.73 alleging fees for representing Michael Hull and Bluepoint in SEC/DOJ investigations and investor arbitrations.
- Ballard’s claim rested on three theories: (1) an oral agreement by Greenpoint to pay Ballard’s fees; (2) Hull’s indemnification/advancement rights under Greenpoint’s operating agreement and Wis. Stat. §183.0403; and (3) Wisconsin law permitting direct enforcement by counsel as intended beneficiaries.
- The Official Committee of Equity Security Holders objected, contending Ballard represented Hull/Bluepoint, not Greenpoint, and that any oral promise would be a guaranty barred by the Wisconsin statute of frauds.
- Bankruptcy Judge Halfenger found the Rule 3001(f) presumption rebutted, required Ballard to carry the evidentiary burden, and granted summary judgment to the Committee: Ballard failed to create a triable issue that (a) the oral promise was an "original undertaking" (not barred by the statute of frauds), (b) promissory estoppel applied, or (c) Hull was entitled to indemnification from Greenpoint.
- Ballard appealed; the district court reviewed de novo and affirmed the bankruptcy court’s grant of summary judgment and disallowance of Claim No. 98.
Issues
| Issue | Plaintiff's Argument (Ballard) | Defendant's Argument (Committee/Greenpoint) | Held |
|---|---|---|---|
| Whether Greenpoint’s alleged oral promise to pay Ballard’s fees is enforceable or barred by the Wisconsin statute of frauds | Ballard: promise was an "original undertaking" (unconditional obligation to pay) so statute of frauds does not apply | Committee: promise was a collateral guaranty for Hull’s debt and thus barred by Wis. Stat. §241.02 | Held: Affirmed — Ballard failed to produce specific evidence creating a triable issue that the promise was an original undertaking; statute of frauds bars the oral promise |
| Whether promissory estoppel excuses the statute-of-frauds defect | Ballard: relied to its detriment on Greenpoint’s assurance and estoppel should apply; estoppel need not have been pled earlier | Committee: Ballard waived estoppel and, in any event, did not prove detrimental reliance or that injustice requires enforcement | Held: Affirmed — estoppel either waived or fails on the merits (no nonconclusory evidence of reasonable, detrimental reliance or unavoidable injustice) |
| Whether Hull (or Ballard as Hull’s counsel) can recover under indemnification/advancement provisions of the operating agreement or Wis. Stat. §183.0403 | Ballard: Hull, as the functional manager (via GAM II), performed managerial functions for Greenpoint and thus is entitled to advancement/indemnification; counsel may enforce indemnity | Committee: indemnification statutory and contractual language applies only to members/managers of the LLC; Hull was not a member/manager of Greenpoint | Held: Affirmed — Hull was not a member/manager of Greenpoint; neither statute nor operating agreement obligated Greenpoint to indemnify Hull |
| Whether the bankruptcy court improperly weighed credibility or resolved factual disputes at summary judgment | Ballard: court made credibility assessments and improperly resolved material facts instead of reserving them for trial | Committee: Ballard failed to "put up" evidence required to create a genuine dispute | Held: Affirmed — court properly treated Axelrod’s affidavit and other materials as conclusory/insufficient; summary judgment appropriate because Ballard bore the burden and failed to produce specific admissible facts |
Key Cases Cited
- Mann v. Erie Mfg. Co., 120 N.W.2d 711 (Wis. 1963) (establishes test distinguishing an "original undertaking" from a collateral guaranty under the statute of frauds)
- Brennan v. Colby, 525 N.W.2d 273 (Wis. Ct. App. 1994) (discusses factors to distinguish original undertaking from guaranty)
- Prize Steak Prods., Inc. v. Bally Tom Foolery, Inc., 717 F.2d 367 (7th Cir. 1983) (interprets Wisconsin law on whether promisor intended primary liability)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden-shifting principles)
- Payne v. Pauley, 337 F.3d 767 (7th Cir. 2003) (clarifies when self‑serving affidavits may defeat summary judgment; need personal knowledge and specific facts)
- C.G. Schmidt, Inc. v. Permasteelisa N. Am., 825 F.3d 801 (7th Cir. 2016) (promissory estoppel third-element—whether injustice requires enforcement—is a question of law/policy)