Miller v. Greenwich Capital Financial Products, Inc. (In Re American Business Financial Services, Inc.)
457 B.R. 314
Bankr. D. Del.2011Background
- ABFS filed for chapter 11; Greenwich provided a DIP facility secured by substantially all assets including I/O Strips.
- DIP facility was approved; Debtor later announced reorganization was not possible and servicing rights were sold to Ocwen.
- Trustee Miller was appointed after conversion to chapter 7; Trustee and Greenwich entered into a Consent Agreement approving sale of certain assets.
- Trustee sued Berkshire and Trickey among others for fiduciary-related claims, among others; Defendants moved for summary judgment.
- Court dismissed or granted summary judgment on most counts, concluding no fiduciary relationship existed; decision pivots on whether a fiduciary duty or aiding/abetting liability existed.
- Disposition: Court granted Berkshire and Trickey’s summary judgment on all counts, including fiduciary-duty claims and related theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Berkshire and Trickey owed a fiduciary duty to the Trustee | Trustee contends a fiduciary relationship formed around confidential agreement and engagement | No engagement or authority; relationship limited to ITs; no fiduciary duties | No fiduciary relationship established |
| Whether Trickey and Berkshire knowingly aided a breach of fiduciary duty | Claim that Trickey aided Greenwich’s breach through undisclosed valuation | No breach by Greenwich and no evidence of aiding cheating the estate | Aiding/abetting claim dismissed |
| Whether a fraudulent transfer occurred | Estate did not receive equivalent value for Trickey’s services | Fees paid by ITs under cash collateral budget; value in use of ITs’ consent; pre-engagement work accounted for | No fraudulent transfer established |
| Whether Berkshire and Trickey aided and abetted a fraudulent transfer | Trustee asserts collaboration in fraudulent transfer | Aiding not recognized for trustee claims and no underlying transfer | Claim dismissed |
| Whether a civil conspiracy was proven | Conspiracy among Berkshire, Trickey, Greenwich, Ocwen to damage estate | No unlawful agreement or actionable underlying wrong shown | Civil conspiracy claim dismissed |
Key Cases Cited
- Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 901 A.2d 106 (Del.2006) (Delaware law limits fiduciary duty expansions; reliance on superior position required)
- In re Arkansas Co., Inc., 798 F.2d 645 (3d Cir.1986) (approval of retention critical for court oversight of professionals)
- Cheese Shop Int'l, Inc. v. Steele, 303 A.2d 689 (Del.Ch.1973) (fiduciary duties require dependency or superiority to be established)
- In re Hydrocarbon Chemicals, Inc., 411 F.2d 203 (3d Cir.1969) (court discusses oversight and competency in fiduciary contexts)