?Either you karate do ?yes? or karate do ?no.?? You karate do ?guess so? ? [you get squished] just like grape.? ? Mr. Miyagi, The Karate Kid
Attorneys often take common expressions for granted, but a recent decision in the United States Bankruptcy Court for the Southern District of Indiana reminds us to pay close attention to how to express the foundation for the facts asserted in supporting affidavits and declarations.
In Fredin Bros., Inc. v. Bankers Bank (In re Eastern Livestock Co.), Peoples Bank sought a determination that it was entitled to certain funds paid into the court by Fredin Brothers, Inc.? The dispute arose from a transaction in which Eastern Livestock bought 192 steers from Kansas farmers who were, in turn, financed by Peoples Bank.? To pay for the cattle, Eastern wrote a check to the farmers and Peoples Bank, which check was subsequently dishonored.? Meanwhile, Eastern had sold the steers to a third party, which sold the steers to Fredin Brothers, which then sold the cattle down the supply chain to other purchasers.? Fredin Brothers, which had not yet paid for the cattle, then filed an interpleader action so as to avoid having to pay twice for the same cattle.
Once the interpleader suit was removed and transferred to the Indiana bankruptcy court, Peoples Bank filed a motion for summary judgment seeking a determination that it was entitled to the funds paid into the court by Fredin Brothers in connection with the interpleader action.? Along with its motion for summary judgment, Peoples Bank included a sworn and notarized verification from its president (which was, pursuant to for 28 U.S.C. ??1746, akin to a stand-alone affidavit or declaration).? That sworn statement included a qualifier that the facts alleged in the motion were ?true and correct to the best of my knowledge.?? In opposing the bank?s motion, the chapter 11 trustee for Eastern Livestock argued (among other things), that the presence of this caveat demonstrated that the bank?s president would not be qualified to testify to these facts or to introduce the supporting materials at trial and that the motion must be denied because it failed to satisfy the requirement, pursuant to Rule 56 of the Federal Rules of Civil Procedure, that any sworn declaration or affidavit (or, in this case, verified complaint) must demonstrate that the declarant is competent to testify to the matters stated therein.
In support of its argument that the bank president?s verified statement should be disregarded, the Eastern Livestock trustee relied on the Seventh Circuit Court of Appeals? decision in Price v. Rochford, in which the circuit court held that a litigant?s verification ?based upon his own personal knowledge or upon his information and belief? did not suffice to show that the affiant could testify to the matters stated in his sworn statement.? Similarly, the trustee contended that ?to the best of my knowledge? was too great a qualifier on the sworn testimony.
Though the bankruptcy court ultimately denied the bank?s motion for summary judgment on other grounds, it rejected the trustee?s argument that ?to the best of my knowledge? invalidated the sworn statement from the bank?s president.? The court noted that it was not a ?subjunctive escape clause? like the language at issue in Price, and the qualifier did not suggest that the statement was based on secondhand information.? The court, citing Visser v. Packer Eng?g Assocs., wisely noted that ?all knowledge is inferential? and that the apparent caveat in the sworn statement was accordingly ?of no moment.?? Even though ?upon information and belief or upon personal knowledge? would not run afoul of Bankruptcy Rule 7056, ?to the best of my knowledge? was considered adequate evidence of competency to testify to the facts set forth in the sworn statement.
It is easy to ignore the jargon that so often crops up in legal writing, but attorneys and putative witnesses would be well-advised to consider their words wisely.? Though it can be tempting to include caveats to protect ourselves and our witnesses from making false statements under oath, Eastern Livestock reminds us that these hedges have real meaning, and should be considered carefully.
And that?s no bull.
28 USC Sec. 1746Sec. 1746. Unsworn declarations under penalty of perjury
? ? Wherever, under any law of the United States or under any rule, regulation, order, or requirement made pursuant to law, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn declaration, verification, certificate, statement, oath, or affidavit, in writing of the person making the same (other than a deposition, or an oath of office, or an oath required to be taken before a specified official other than a notary public), such matter may, with like force and effect, be supported, evidenced, established, or proved by the unsworn declaration, certificate, verification, or statement, in writing of such person which is subscribed by him, as true under penalty of perjury, and dated, in substantially the following form:
? ? (1) If executed without the United States: "I declare (or certify, verify, or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date).
(SIGNATURE)".
? ? (2) If executed within the United States, its territories, possessions, or commonwealths: "I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct. Executed on (date).
(SIGNATURE)".
? ? (a) Motion for Summary Judgment or Partial Summary Judgment. A party may move for summary judgment, identifying each claim or defense ? or the part of each claim or defense ? on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion.
? ? (b) Time to File a Motion. Unless a different time is set by local rule or the court orders otherwise, a party may file a motion for summary judgment at any time until 30 days after the close of all discovery.
? ? (c) Procedures.
? ? (1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:
? ? (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or
? ? (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.
? ? (3) Materials Not Cited. The court need consider only the cited materials, but it may consider other materials in the record.
? ? (4) Affidavits or Declarations. An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.
? ? (d) When Facts Are Unavailable to the Nonmovant. If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition, the court may:
? ? (1) defer considering the motion or deny it;
? ? (2) allow time to obtain affidavits or declarations or to take discovery; or
? ? (3) issue any other appropriate order.
? ? (1) give an opportunity to properly support or address the fact; ? ? (2) consider the fact undisputed for purposes of the motion; ? ? (3) grant summary judgment if the motion and supporting materials ? including the facts considered undisputed ? show that the movant is entitled to it; or ? ? (4) issue any other appropriate order.
? ? (f) Judgment Independent of the Motion. After giving notice and a reasonable time to respond, the court may:? ? (1) grant summary judgment for a nonmovant; ? ? (2) grant the motion on grounds not raised by a party;or ? ? (3) consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute.
? ? (g) Failing to Grant All the Requested Relief. If the court does not grant all the relief requested by the motion, it may enter an order stating any material fact ? including an item of damages or other relief ? that is not genuinely in dispute and treating the fact as established in the case. ? ? (h) Affidavit or Declaration Submitted in Bad Faith. If satisfied that an affidavit or declaration under this rule is submitted in bad faith or solely for delay, the court ? after notice and a reasonable time to respond ? may order the submitting party to pay the other party the reasonable expenses, including attorney?s fees, it incurred as a result. An offending party or attorney may also be held in contempt or subjected to other appropriate sanctions. (As amended Dec. 27, 1946, eff. Mar. 19, 1948; Jan. 21, 1963, eff. July 1, 1963; Mar. 2, 1987, eff. Aug. 1, 1987; Apr. 30, 2007, eff. Dec. 1, 2007; Mar. 26, 2009, eff. Dec. 1, 2009; Apr. 28, 2010, eff. Dec. 1, 2010.)Bankruptcy Rule 7056 provides that Rule 56 of the Federal Rules of Civil Procedure applies in adversary proceedings in bankruptcy court. In turn, Federal Rule 56 provides that ?[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.? Both impliedly and by reference, Rule 56 incorporates Rule 602 of the Federal Rules of Evidence, which provides that ?[a] witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.?
947 F.2d 829, 832 (7th Cir. 1991)
924 F.2d 655, 659 (7th Cir. 1991) (en banc)
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