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In re Good Deal Supermarkets Inc.

December 31, 1975

IN THE MATTER OF GOOD DEAL SUPERMARKETS, INC., A CORPORATION OF THE STATE OF NEW JERSEY, ET AL., BANKRUPTS. JOSEPH R. MCMAHON, ESQ., AS TRUSTEE IN BANKRUPTCY OF GOOD DEAL SUPERMARKETS, INC., ET AL., BANKRUPTS, PLAINTIFF-APPELLANT,
v.
GREAT AMERICAN INSURANCE COMPANY AND TITAN SUPERMARKET ASSOCIATES, DEFENDANTS-APPELLEES



APPEAL FROM THE ORDER OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY.

Seitz, Chief Judge, Rosenn and Garth, Circuit Judges.

Author: Garth

GARTH, Circuit Judge.

This appeal, brought by the Trustee in Bankruptcy (Trustee) of a tenant, would have required us to determine whether insurance proceeds payable as a result of fire damage to the leased premises should be paid to the owner/landlord or to the tenant's Trustee in Bankruptcy. The district court's order filed on December 30, 1974 granted summary judgment in favor of the owner/landlord and denied summary judgment to the Trustee. However, neither that order nor any other order disposed of the issues involving the insurance company which had disclaimed liability. We thus have no appealable order and are required to dismiss the Trustee's appeal for lack of appellate jurisdiction without reaching the merits of the controversy.

I.

Titan Supermarket Associates (Titan), a New York real estate partnership, owned property in Chatham, New Jersey, which was leased to Good Deal Supermarkets, Inc. (Good Deal).

On December 22, 1972 Great American Insurance Co. (Great American) issued a builder's risk policy of insurance on the demised premises. This policy named Good Deal but not Titan as loss payee.

The leased premises were destroyed by fire on May 13, 1973. Good Deal did not repair the premises or reopen its supermarket. One month after the fire, on June 14, 1973, Good Deal filed a Petition for Arrangement under Chapter XI of the Bankruptcy Act. In October of 1973 Good Deal was adjudicated a bankrupt. Both the Trustee and Titan claimed the insurance proceeds.

Great American has disclaimed liability under its policy as to both the Trustee and Titan. As to the Trustee, numerous defenses, including alleged fraud by Good Deal, have been raised. As to Titan, Great American has asserted that Titan was not a party to the policy.

The Trustee thereupon instituted the present action in the Bankruptcy Court against Titan and Great American (among other defendants) seeking recovery of the proceeds of the policy and a determination of the Trustee's rights to the proceeds. The action was transferred to the district court for a plenary trial on all issues.

Titan answered and counterclaimed against the Trustee seeking the proceeds as beneficiary of a trust and alternatively as a secured creditor by virtue of an equitable lien. Titan also cross-claimed against Great American for the policy proceeds. Great American's pleadings sought a recision of the insurance policy.

Cross motions for summary judgment were made by the Trustee and Titan each claiming to be entitled to the proceeds. At no time was any motion addressed to, or made by, Great American which raised issues concerning Great American's liability on its policy.

There being no material issue of fact in dispute between Titan and the Trustee, on December 30, 1974 the district court granted summary judgment for Titan on its counterclaim and against the Trustee on its complaint, holding in a bench opinion that in the event of recovery against Great American, Titan's interest in the insurance proceeds was superior to that of the Trustee. All issues concerning Great American's liability were then and are still pending. Great American's liability was not and has yet to be determined. Great American remains a party to the action as defendant, cross-claimant and counter-claimant.

Appeal was taken by the Trustee from the district court's order filed December 30, 1974. No order of certification pursuant to Fed. R. Civ. ...


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