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* Asurion Ins. Servs., Inc. v. Amp'd Mobile, Inc. (In re Amp'd Mobile, Inc.), 377 B.R 478 (Bankr. D. Del. Nov. 2007) (Shannon, J.)
The debtor was under no fiduciary duty to its creditor to justify the imposition of a constructive trust. The creditor filed a complaint against the debtor to collect funds allegedly held in a constructive trust and asked the court to determine that the same funds were not property of the estate. The debtor was engaged in the business of selling mobile phones and related services. One of the services it offered was an insurance program to protect against the loss of the customers' phones. The creditor in this case was the servicing agent for that insurance program. Under a service agreement between the debtor and the creditor, the creditor obtained insurance from a third party insurance company and acted as the servicing agent for debtor. The debtor, on the other hand, would sell the agreements to its customers, collect customers' payments, and then calculate the insurance premium payments based on the number of customers enrolled in the insurance program each month. According to the terms of the agreement, the debtor was to remit these "premiums" to the creditor each month. Considering applicable New York trust law and the agreements between the parties, the bankruptcy court determined that the parties had not intended to impose a fiduciary duty upon the debtor to collect and hold these "premiums" for the creditor servicing agent. Specifically, the court noted that two particular factors were critical to this conclusion: (1) the agreement did not require the debtor to segregate "premium" payments, and (2) the debtor was obligated to remit payments to the creditor regardless of whether it actually collected the monthly "premiums" from its customers. In the absence of a fiduciary relationship, the court concluded that there were no grounds on which to hold the premiums in a constructive trust for the benefit of the creditor. And, even if grounds for a constructive trust did exist, the court noted that the creditor failed to trace the funds in the debtor's general operating account.
* Christine Falls of New York, Inc. v. Algonquin Power Corp. (In re Franklin Indus. Complex, Inc.), 377 B.R. 32 (Bankr. N.D.N.Y. Oct. 2007) (Gerling, J.)
Pre-petition injunction also precluded creditors from re-litigating the merits of its purported security interest. Before the commencement of the debtors' bankruptcy cases, a group of creditors sought a preliminary injunction to prevent the debtors from transferring escrowed proceeds from a malpractice money judgment obtained by the debtors against a third party. In that pre-petition injunction proceeding, the creditors also requested an order of attachment to the escrowed proceeds based on pre-petition security agreements ostensibly granting the creditors security interests in most, if not all, of the debtors' property. The district court granted the preliminary injunction but denied the creditors' order of attachment, finding that they could not demonstrate the validity of their purported security interest in the malpractice proceeds. Shortly after the district court's ruling on the preliminary injunction, the debtors commenced these bankruptcy cases and filed a complaint (this adversary proceeding) seeking a declaration that the defendants did not have a valid security interest in the malpractice judgment, the proceeds of which were held in escrow. The parties filed their respective motions for summary judgment.
The bankruptcy court held that the district court's preliminary injunction opinion should preclude the defendants from arguing the merits of its security interest because the creditors:
