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    In re GENERAL DEVELOPMENT CORPORATION, Debtor. John E. SIPES; Mildred B. Sipes, Plaintiffs-Appellants, v. ATLANTIC GULF COMMUNITIES CORPORATION; General Development Corporation, Defendants-Appellees.
    No. 95-4379
    Non-Argument Calendar.
    United States Court of Appeals, Eleventh Circuit.
    June 7, 1996.
    Jennifer S. Carroll, Metzger, Sonneborn & Rutter, P.A., West Palm Beach, FL, for appellants.
    Kenneth Bruce Robinson, Arthur J. England, Jr., Christopher L. Kurzner, Green-berg, Trauig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami, FL, for Atlantic Gulf Communities Corp. and General Development Corp.

      Before TJOFLAT, Chief Judge, and KRAVITCH and HATCHETT, Circuit Judges.
   PER CURIAM:

We affirm on the basis of the opinion of the district court, dated January 27, 1995, 177 B.R. 1000. The relevant portions of the district court’s opinion are attached as an appendix.

AFFIRMED.

APPENDIX

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

IN RE: GENERAL DEVELOPMENT CORPORATION, et al., Debtors. JOHN E. SIPES AND MILDRED B. SIPES, Appellants, vs. GENERAL DEVELOPMENT CORPORATION, n/k/a ATLANTIC GULF COMMUNITIES CORPORATION, Appellee.

Case No. 94-0095-CIV-ARONOVITZ

BKC No. 90-12231-BKC-AJC

JAN 27 1995

ORDER ON PENDING MOTIONS AND AFFIRMING THE BANKRUPTCY COURT’S ORDER GRANTING ATLANTIC GULF’S MOTION TO ENFORCE EXECUTORY CONTRACT, DISCHARGE AND INJUNCTION PROVISIONS OF PLAN AND CONFIRMATION ORDER, AND DENYING MOTION FOR EX PARTE RELIEF FROM THE AUTOMATIC STAY, DATED NOVEMBER 5, 1993

BEFORE THIS COURT is an appeal from the Bankruptcy Court’s Order Granting Atlantic Gulfs Motion to Enforce Executory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, and Denying Motion for Ex Parte Relief from the Automatic Stay, dated November 5,1993. In addition, currently pending before the Court are three motions: (1) Appellee General Development Corporation’s (“GDC”) Motion to Strike Appendix A, Appendix B and Appendix C to Appendix to Appellants’ Reply Brief, file dated April 4, 1994; (2) Appellee GDC’s Motion to Supplement Appellate Record, file dated April 4,1994; and (3) Appellants’ John E. Sipes and Mildred B. Sipes (the “Sipes”) Motion to Supplement Appellate Record, file dated April 21,1994.

This Court heard oral argument on this appeal on October 7, 1994, and has carefully considered all briefs submitted on appeal, oral argument of counsel, the entire record including but not limited to the three pending motions and responses filed thereto, applicable law and is otherwise fully advised in the premises. For the following reasons, it is ORDERED AND ADJUDGED that:

1. Appellee GDC’s Motion to Strike Appendix A, Appendix B and Appendix C to Appendix to Appellants’ Reply Brief be, and the same, is hereby GRANTED IN PART. Only Appendix C to Appendix to Appellants’ Reply Brief shall be stricken from the appellate record, and Appendix A and B shall be considered part of the appellate record.

2. Appellee GDC’s Motion to Supplement Appellate Record be, and the same, is hereby GRANTED.

3. Appellants Sipes’ Motion to Supplement Appellate Record be and the same, is hereby DENIED.

4. The Bankruptcy Court’s Order Granting Atlantic Gulfs Motion to Enforce Execu-tory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, and Denying Motion for Ex Parte Relief from the Automatic Stay, dated November 5, 1993, is hereby AFFIRMED in its entirety.

Factual and Procedural Background

The Sipes appeal from an Order Granting Atlantic Gulfs Motion to Enforce Executory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, and Denying Motion for Ex Parte Relief From the Automatic Stay, entered by the Honorable A. Jay Cristol, United States Bankruptcy Judge and dated November 5, 1993. By this Order, Judge Cristol ruled, among other things, that an installment land sale contract between the Sipes and Debtor GDC was an executory contract subject to rejection by GDC pursuant to § 365 of the Bankruptcy Code.

The installment land sales contract at issue, entitled the “Homesite Purchase Agreement”, was entered into by the Sipes and GDC for the sale of a homesite in Port St. Lucie, Florida (the “Property”) on July 15, 1972. The Agreement provided that GDC would deliver to the purchaser a Warranty Deed once the purchaser made all monthly payments. The Sipes completed all of their payments due under the contract in March of 1983. However, due to alleged construction delays, the homesite remained undeveloped as of December of 1987.

GDC and its affiliates and subsidiaries ultimately filed voluntary Chapter 11 petitions on April 6, 1990. On October 26, 1990, the Bankruptcy Court approved GDC’s proposed Homesite Purchaser Assurance Program (the “Program”), which set forth a mechanism to assure purchasers that they will receive their deeds upon payment of a reduced purchase price. Under the Program, purchasers such as the Sipes whose homesites were on land which GDC did not intend to develop were afforded the option to participate in the Program and have their contract transferred to a developed lot. The Sipes declined to participate and as a result, GDC rejected the Sipes’ Homesite Purchase Agreement on June 19, 1992. The Sipes filed an objection to the rejection on July 9,1992.

Meanwhile, on March 27, 1992, GDC’s reorganization plan was confirmed. The GDC Plan provided that homesite purchasers whose contracts were rejected would receive a Class 2.2 (secured) claim in respect to their lien rights under § 365(j) of the Code, a Class 10 (unsecured) claim in respect of pre-petition principal and interest payments not covered by § 365(j), and an administrative claim for any payments made after filing date. The Confirmation Order provided that “all of the property of the estate, wherever situated, is vested in the Reorganized Company, free and clear of all claims and interests of creditors and of security equity holders, except as provided in the Plan and this Order.” It also discharged all prepetition debts and enjoined all persons from recovering on their claim.

On June 20, 1992, GDC sent the Sipes a special proof of claim form, calculating the Sipes’ claim to be $5,088.00. The Sipes disagreed and asserted a claim of $5,096.26. In November of 1992, the Sipes filed a state court action against GDC, seeking specific performance and damages. The action was dismissed with prejudice due to GDC’s pending bankruptcy.

After learning of GDC’s efforts to replat and redevelop the subdivision in which their property is located, the Sipes filed in the bankruptcy court a pro se Motion for Ex Parte Relief From the Automatic Stay on September 24, 1993. GDC thereafter filed a motion to enforce the executory contract, discharge and injunction provisions of the Confirmation Order against the Sipes. GDC sought an order (i) declaring that any claim or interest of the Sipes in the Property was terminated by GDC’s rejection of the Home-site Purchase Agreement and that the Property vested in Atlantic Gulf free and clear of any interest or claim of the Sipes; (ii) declaring that any prepetition claim of the Sipes was discharged pursuant to the Confirmation Order and § 1141(d) of the Code; and (iii) enjoining the Sipes from seeking to enforce or assert an interest in the Property and from interfering with GDC’s use and development thereof.

Following a hearing on the two motions, Judge Cristol denied the Sipes’ ex parte motion and granted GDC’s enforcement motion. He found that the Agreement was an execu-tory contract subject to rejection under 11 U.S.C. § 356(a) and that the Property was vested in Atlantic Gulf free and clear of any interest of claim of the Sipes. He also enjoined the Sipes from asserting an interest in the property or otherwise interfering with Atlantic Gulfs use and development of the Property. The Sipes appeal this Order.

As noted herein, also pending before this Court are three motions: (1) Appellee GDC’s Motion to Strike Appendix A, Appendix B and Appendix C to Appendix to Appellants’ Reply Brief; (2) Appellee GDC’s Motion to Supplement Appellate Record; and (3) Appellants Sipes’ Motion to Supplement Appellate Record.

In the course of examining the record, the appellate briefs and the outstanding motions in preparation for oral argument on the merits of the appeal, it became apparent that the Bankruptcy Court’s Order on appeal was devoid of any factual findings to support its ruling with respect to the Appellants’ procedural due process claim. This claim was raised at the trial level in the Response to Reorganized Debtors’ Motion to Enforce Ex-ecutory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, dated October 26,1993.

In addition, it was apparent that the Bankruptcy Court’s Order contained no citations to authority to support its ruling that the Homesite Purchase Agreement at bar was an executory contract subject to rejection pursuant 11 U.S.C. § 365. No citations to legal authority, other than “courts and commentators alike,” and no findings of fact were made to support the ruling. Issues of fact therefore remained undetermined. Accordingly, on May 11,1994, this Court entered an Order remanding this case to the United States Bankruptcy Court to (1) hold an evidentiary hearing and make findings of fact and conclusions of law regarding the Appellants’ procedural due process claim, and to determine which documents should be admitted into the record on that issue; and (2) to make findings of fact and further conclusions of law, and to hold an evidentiary hearing if necessary, regarding the issue of whether the Homesite Purchase Agreement at issue was an executory contract for rejection purposes under § 365 of the Bankruptcy Code. On September 16, 1994, the Bankruptcy Court entered its Order on Evidentiary Hearing Pursuant to Remand. (“Order on Remand”) This Court has carefully considered said Order on Remand and the arguments presented on appeal, including oral argument of counsel on October 7,1994.

Standard of Review

In accordance with Federal Rule of Bankruptcy Procedure 8013, the Bankruptcy Court’s findings of fact will not be set aside unless clearly erroneous. In re Chase & Sanborn Corp., 904 F.2d 588 (11th Cir.1990); In re T & B General Contracting, Inc., 833 F.2d 1455 (11th Cir.1987). Equitable determinations by the Bankruptcy Court are subject to review under an abuse of discretion standard. In re Red Carpet Corp. of Panama City Beach, 902 F.2d 883 (11th Cir.1990). Conclusions of law are subject to de novo review. In re Chase & Sanborn Corp., 904 F.2d at 593; In re Sublett, 895 F.2d 1381 (11th Cir.1990).

While the Bankruptcy Court’s factual findings are subject to a clearly erroneous standard, that standard does not apply when determining the propriety of the Bankruptcy Judge’s conclusions of law, (i.e.) determination of what law applies or determination of the ultimate legal conclusions resulting from the application of the law to the facts. Legal conclusions made by the Bankruptcy Judge may not be approved by the District Court without an independent determination. In re Columbia Data Products, Inc., 99 B.R. 682, 684 (D.Md.1989), affirmed, 892 F.2d 26 (4th Cir.1989); citing, In re Hunter Sav. Ass’n., 34 B.R. 368, 374 (Bankr.S.D.Ohio 1983), reversed on other grounds, 750 F.2d 536 (6th Cir.1984); In re Hollock, 1 B.R. 212, 215 (Bankr.M.D.Pa.1979).

Three Pending Motions

1. Appellee GDC’s Motion to Strike Appendix A, B and C of Appellants’ Appendix to Reply Brief

When the Sipes filed their reply brief, they also filed a second appendix containing, among other things, GDC’s certificate of service regarding the conformation hearing (“Appendix A”), GDC’s certificate of service regarding the disclosure statement (“Appendix B”), and an 10/27/93 GDC letter to the Sipes (“Appendix C”). According to the reply brief, these documents were added in support of the Sipes’ claim that they were denied procedural due process in connection with the confirmation hearing.

GDC moved to strike these documents on the ground that they were never designated as part of the record on appeal, that they are misleading, and that the Sipes never moved to supplement the record with these documents pursuant to Fed.R.AppP. 10(e). It further contends that the GDC letter (Appendix C) is a privileged settlement offer that should be stricken as an improper disclosure of settlement discussions.

In response, the Sipes contend that the two certificates of service (Appendices A and B) are and were part of the record below and therefore should not be stricken on appeal. These documents were attached to their reply brief in direct response to new arguments raised by GDC for the first time in GDC’s answer brief. As to Appendix C, the letter was not, as GDC maintains, a settlement offer but rather, GDC’s proposed final resolution of the Sipes’ claim.

2. Appellee GDC’s Motion to Supplement Appellate Record

In a separate motion, GDC has moved pursuant to Fed.RApp.P. 10(e) to supplement the record on appeal to include John Sipes’ Ballot rejecting the GDC Plan (“Exhibit A”); Mildred Sipes’ Ballot rejecting the GDC Plan (“Exhibit B”); and GDC’s Ballot and Disclosure Statement (“Exhibit C”). These documents are offered to rebut the Sipes’ claim that they should not be bound by the GDC Plan or Confirmation Order because they allegedly did not receive notice thereof. The Ballots (Exhibits A and B) advised the Sipes that “The Second Amended Joint Plan of Reorganization ... can be confirmed by the Bankruptcy Court and thereby made binding on you if it is accepted ...” The Sipes executed the Ballots by rejecting the Plan on November 1, 1991. (The Plan was confirmed in 1992). Exhibit C is a compilation of documents which GDC submits was sent with the ballots. Included in Exhibit C is the notice of the confirmation hearing. GDC argues that the Sipes could not have received the ballots without receiving Exhibit C.

GDC further submits that the Sipes’ claim of no notice should not be considered on appeal because it was not raised below, and that it is contrary to the lower court’s finding in a December 20, 1991 Memorandum Opinion that proper notice was given to all affected claimants.

In response, the Sipes maintain that the documents at issue should not be placed into the appellate record because they were not part of the record in the trial court. They also argue that the documents are irrelevant. 3. Sipes’ Motion to Supplement the Record

The Sipes move to supplement the appellate record to include the transcript of a March 27, 1992 hearing which they maintain shows (1) that the final confirmation hearing occurred on March 27, 1992; and (2) that GDC’s assumptions/rejeetions of many of the homesite contracts were made after the confirmation.

In response, GDC opposes said supplementation on the ground that the transcript is not a document which was considered by the bankruptcy court in its deliberations. It then argues that the Sipes have mischarac-terized the proceedings in the March 27,1992 hearing.

Discussion on Three Pending Motions

All of the contested documents relate to and stem from the Sipes’ claim that they are not bound by the GDC Plan and Confirmation Order because they did not receive adequate notice of the confirmation hearing and therefore, were denied procedural due process. GDC erroneously asserts that the due process argument is being raised for the first time in this case at the appellate level. The argument was raised at the trial level in the Sipes’ response to GDC’s Motion to Enforce Executory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order. Moreover, it was included in the Sipes’ Statement of Issues to be Presented on Appeal. Appellants’ initial brief, however, did not address the claim at all.

Because the Bankruptcy Court’s Order on appeal did not address the procedural due process issue, this Court remanded the issue back to the Bankruptcy Court for further findings. On remand, the Bankruptcy Court specifically found that:

Based upon the documentary and testimonial evidence presented, the Court finds that the Sipes were afforded and received full due process. They received all requisite notice that the law requires be provided to creditors in a Chapter 11 case. Moreover, despite their claims to the contrary, they were provided the opportunity to participate in GDC’s Chapter 11 case and object thereto, [footnote omitted] ... The Court notes that in previous pleadings filed with the district court, the Sipes denied receiving notice of the confirmation hearing as well as the Disclosure Statement and Summary of Plan. Apparently, these documents were subsequently located by the Sipes who stipulated prior to the evidentiary hearing in the Joint Pre-Evi-dentiary Order entered by the Court on June 14, 1994 that they “did receive copies of the Disclosure Statement for Creditors for Classes 2.3, 3.3, 10, 13, 14, and 16, Accompanying Summary of Second Amended Joint Plan of Reorganization of General Development Corporation, GDC documents Accompanying the Ballot and Disclosure Statement,” and that “any prior claims by the Sipes that they did not receive the aforementioned documents prior to the December 1991 confirmation hearings is withdrawn.” (Joint Pre-Evidentia-ry Hearing Order at ¶ 3) Accordingly, this issue is now moot, (underlining supplied) Order on Remand, pp. 7-9.

A review of the Order on Remand reflects that the contested documents as described above, with the exception of the 10/27/93 GDC letter to the Sipes (“Appendix C”), and the transcript of a March 27, 1992 hearing, were considered by the Bankruptcy Court in its determination that the Sipes were afforded and received full due process. Because the 10/27/93 GDC letter to the Sipes (“Appendix C”), and transcript of a March 27, 1992 hearing were not considered by the Bankruptcy Court they shall not be permitted to become part of the appellate record. However, those contested documents as described above, except for the 10/27/93 GDC letter to the Sipes (“Appendix C”), and transcript of a March 27, 1992 healing, shall be allowed to become part of the appellate record. Accordingly, it is ORDERED AND ADJUDGED that:

1. Appellee GDC’s Motion to Strike Appendix A, Appendix B and Appendix C to Appendix to Appellants’ Reply Brief be, and the same, is hereby GRANTED IN PART. Only Appendix C to Appendix to Appellants’ Reply Brief shall be stricken from the appellate record, and Appendix A and B shall be considered part of the appellate record.

2. Appellee GDC’s Motion to Supplement Appellate Record be, and the same, is hereby GRANTED.

3. Appellants Sipes’ Motion to Supple-, ment Appellate Record be and the same, is hereby DENIED.

Appellants Sipes’ Arguments on Appeal

The Sipes maintain that the dispositive issue on appeal is whether the Homesite Purchase Agreement is executory in nature. Section 365(a) of the Code provides that the trustee, subject to the court’s approval, may assume or reject any executory contract of the debtor. The court below reasoned that the Homesite Purchase Agreement was an executory contract. The Sipes argue that the Agreement was not an executory contract because installment land sale contracts are only security devices under Florida law. See First Federal Savings & Loan Ass’n v. Fox, 440 So.2d 652 (Fla. 2d DCA 1983); Cain & Bultman, Inc. v. Miss Sam, Inc., 409 So.2d 114 (Fla. 5th DCA 1982). In such situations, the purchaser is initially vested with equitable title and legal title remains in the seller only as security for the payment of the purchase price.

The Sipes further submit that the legislative history of § 365 indicates that the term “executory contract” refers to a contract on which performance remains due to some extent on both sides. In re Charter Co., 52 B.R. 267 (Bankr.M.D.Fla.1985); In re Adolphsen, 38 B.R. 776 (Bankr.D.Minn.1983). In this case, since they had fully completed their performance under the contract seven years prior to GDC’s bankruptcy filing, the contract is not executory. The remedy they seek is specific performance; to compel GDC to convey an executed warranty deed for the Property at issue.

The Sipes argue that they are not bound by the GDC Plan because they were never given notice of the confirmation hearing and therefore, were denied due process. Citing, Reliable Electric Co., Inc. v. Olson Construction Co., 726 F.2d 620 (10th Cir.1984). As evidence of the lack of notice, the Sipes attached to their Reply Appendix copies of the certificates of service on the confirmation hearing (Appendix A) and on the Disclosure Statement (Appendix B). Neither lists the Sipes as a recipient.

The Sipes claim that they are entitled to specific performance, which is an equitable remedy available when the legal remedies are inadequate. The legal remedies here are inadequate in that the Sipes were never offered a full refund of their payments but only a fraction thereof, and any alternative property offered to them was considerably less in value than the lot they originally purchased. In addition, given the unique nature of land, it is well established that money damages to a purchaser of land is inadequate. See Henry v. Ecker, 415 So.2d 137 (Fla. 5th DCA 1982). The Sipes further rely on Ocean Dunes of Hutchinson v. Colangelo, 463 So.2d 437 (Fla. 4th DCA 1985), where the court held that specific performance was proper where the contractual remedies were neither reasonable nor mutual.

The Sipes argue that the United States Supreme Court in Butner v. United States, supra, made clear that state law governs questions of property rights in bankruptcy. Nevertheless, they assert that the contract in question is not an executory contract under either state or federal law. The controlling definition of an executory contract is found in the legislative history of the Code, which provides that executory contracts are those “on which performance remains due to some extent on both sides.” The Sipes further assert that their equitable lien or interest in the Property was not extinguished by the bankruptcy because the Homesite Purchase Agreement was not an executory contract subject to rejection. Moreover, that the GDC Plan has already been confirmed and substantially consummated is irrelevant. The Sipes contend that the specific performance relief they seek will not affect the reorganization.

Appellee GDC’s Arguments on Appeal

In rebuttal, GDC argues that aside from the issue of whether the Homesite Purchase Agreement was or was not an executory contract, the fact remains that any claims or interests the Sipes may have had were extinguished by the GDC Plan and the Confirmation Order. It is well established that confirmation of a Chapter 11 plan has three effects: (1) all creditors are bound by the plan; (2) all property vests in the debtor free and clear of all claims and interest of creditors, except as otherwise provided in the plan or confirmation order; and (3) the debtor is discharged of all prepetition debts. In re American Properties, Inc., 30 B.R. 239, 246 (Bankr.D.Kan.1983); In re Holywell Corp., 93 B.R. 780 (S.D.Fla.1988), affirmed, Miami Center v. Bank of New York, 881 F.2d 1086 (11th Cir.1989). Two years after the confirmation of the GDC Plan, the Sipes ask the Court to exonerate them from these well established principles, to ignore the fresh start and rehabilitative purposes of the Bankruptcy Code, to disregard the discharge and injunction provisions of the Confirmation Order, and to modify the GDC Plan as it pertains to the treatment of homesite purchasers for them alone. The GDC Plan was confirmed, the Sipes did not object to the confirmation nor did they appeal it. GDC argues that it is now too late for them to claim that they are entitled to different treatment. Citing, In re Dore & Associates Contracting, Inc., 48 B.R. 717 (Bankr.E.D.Mich.1984); In re Home, 99 B.R. 132 (Bankr.M.D.Ga.1989).

GDC concedes that although state law generally governs questions of property rights in bankruptcy in the absence of any conflict between state law and bankruptcy law, this deferral to state law gives way where there is a specific federal interest governing the relationship between the parties in bankruptcy. Such a federal interest exists here, GDC maintains. As recognized by one court “Congress has expressed an overriding federal interest in certain executory contracts, i.e., collective bargaining agreements and real property sales contracts when the debtor is the seller ...” In re Buchert, 69 B.R. 816 (Bankr.N.D.Ill.1987), affirmed, 1987 WL 16019 (N.D.Ill.1987) (emphasis added).

The distinction between a debtor as the seller versus a buyer of real property is fundamental to the determination of whether the sales contract may or may not be deemed executory, GDC asserts. This is because:

.. non-debtor vendees, by virtue of Sections 365(i) and 365(j), may receive more favorable treatment in bankruptcy than debtor/vendees. And debtor/vendors, because of other policies and provisions in the Code, may fair better than debt- or/vendees. It may be argued that this disparity in treatment is warranted because of the risk of default when debtor is vendor, or because the non-debtor ... is an innocent victim.

In re Booth, 19 B.R. 53, 63 (Bankr.D.Utah 1982). The court concluded that:

... it is the consequences of applying Section 365 to a party, especially in terms of benefits to the estate and the protection of creditors, not the form of contract between vender and vendee, which controls.

Id. at 57. Where the debtor is the seller of real estate, the courts have found the contract to be an executory one. See, e.g., In re Waldron, 36 B.R. 633 (Bankr.S.D.Fla.1984), reversed on other grounds, 785 F.2d 936 (11th Cir.1986) (option to purchase real estate was executory contract); In re Hardie, 100 B.R. 284 (Bankr.E.D.N.C.1989) (debt- or/vendor’s contract to sell option to purchase property would be permitted to reject option as executory contract); In re W. & L. Associates, Inc., 71 B.R. 962 (E.D.Pa.1987) (debtor/vendor may reject contract to sell notwithstanding that non-debtor/vendee had fully performed under contract). GDC argues that in each of the cases cited by the Sipes, the debtor was the buyer of real property, not the seller.

GDC further adds that its ability to reject the tens of thousands of homesite contracts was critical to its reorganization. Moreover, the non-debtor buyers were protected by the provisions of the Code. Section 365(j) provides that a non-debtor purchaser who is not in possession of the property “has a hen on the interest of the debtor in such property for the recovery of any portion of the purchase price that such purchaser or party has paid.” 11 U.S.C. § 365(j).

The Sipes’ argument that their Homesite Purchase Agreement was merely a security device under Florida misconstrues the nature of the agreement, GDC submits. Unlike the agreements for deed involved in the cases cited by the Sipes, the Sipes received neither possession nor ownership of the property at the time of entering into the Homesite Purchase Agreement. In addition, Florida courts have recognized that not all installment land sale contracts are security devices. In H. & L. Land Co. v. Warner, 258 So.2d 293 (Fla. 2d DCA 1972), the court held that a vendor under an installment land sale contract who gave the purchaser possession of the land and the benefits and burdens of ownership was in no different position than a vendor who conveyed legal title and took back a mortgage. The court also held that its ruling did not apply to a contract “that is not specifically enforceable or to one under which the buyer has no right to possession or other benefits and burdens of ownership.” Id. at 296.

GDC argues that Sipes’ requested relief of specific performance is foreclosed by the language of their Homesite Purchase Agreement. That agreement limited the Sipes’ remedies in the event of GDC’s default to: (1) a refund of all payments made; or (2) an exchange of the Property for other property of similar value in any of GDC’s communities. The Sipes failed to avail themselves of these remedies. Moreover, even if the Sipes had a right of specific performance under the contract, such relief is barred by the applicable one year statute of limitations under Florida law. See Fla.Stat. § 95.11(5)(a); City of Orlando v. Williams, 493 So.2d 15 (Fla. 5th DCA 1986).

Discussion on Appeal

Bankruptcy Court’s Order Granting Atlantic Gulfs Motion to Enforce Executory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, and Denying Motion for Ex Parte Relief from the Automatic Stay, dated November 5, 1993

Upon careful consideration of the arguments made by the parties and a review of the entire record, including all appellate briefs, as well as the Order on Remand, this Court agrees and adopts the Bankruptcy Court’s well reasoned analysis in its Order on Remand. The two dispositive issues in this case are (1) whether Appellants’ were denied procedural due process and (2) whether the Homesite Purchase Agreement at issue is an executory contract subject to rejection under § 365 of the Bankruptcy Code.

Appellants Were Not Denied Due Process

On remand, the Bankruptcy Court made the following detailed findings:

As early as 1980, GDC began sending correspondence to the Sipes advising of problems which prevented GDC from completing development of and deeding the Sipes the specific homesite lot for which they had contracted. This correspondence continued not only through GDC’s filing of its Chapter 11 petition but continued throughout GDC’s Chapter 11 case. {See GDC Exhibit Nos. 2, 3, 4, 5 and 7) ...
The Sipes were clearly put on notice that the homesite lot identified in their home-site purchase agreement was undeveloped and that they could elect to be transferred to another lot pursuant to HPAP. [Home-site Purchaser Assurance Program] Dis-positively, the Florida Public Offering Statement which was mailed to the Sipes, as well as tens of thousands of other home-site purchasers offered HPAP, left no question as to GDC’s plans with respect to Port St. Lucie Section 38, the section in which the homesite lot identified in the Sipes’ homesite purchase agreement was located ...
The Sipes were also advised of the consequences of their decision not to accept HPAP ... This notice was consistent with correspondence which the Sipes received from the Special Representative James Paul, [footnote omitted] as well as a letter sent by GDC to the Sipes dated February 6, 1991 in which the Sipes were advised that GDC apologized “for not being able to comply with your request,” that GDC immediately deliver a warranty deed and title insurance policy to the Sipes in connection with the homesite lot covered by their homesite purchase agreement. {See Exhibit Nos. 6 and 7) ...
In October, 1991, in connection with confirmation of GDC’s proposed plan of reorganization, the Sipes also received (i) a Disclosure Statement for Creditors of Classes 2.2, 3.3, 10, 13, 14 and 16 Accompanying Summary of Second Amended Joint Plan of Reorganization of General Development Corporation, (ii) Documents Accompanying the Ballot and Disclosure Statement, and (iii) Ballots for Accepting or Rejecting the Second Amended Joint Plan of Reorganization. (GDC Exhibit Nos. 16, 17, 18 and 19) Indeed, not only did the Sipes receive these documents, but as testified to by Mr. Sipes, evidently took the time and effort to scrutinize the same in great detail, highlighting and underlining sections which Mr. Sipes testified he believed relevant. The Sipes thereupon executed and returned ballots rejecting GDC’s Second Amended Joint Plan of Reorganization (the “GDC Plan”). (GDC Exhibit Nos. 18 and 19)
The confirmation hearing on the GDC Plan, of which the Sipes received notice in the Documents Accompanying the Ballot and Disclosure Statement, was held in December, 1991 ... After confirmation of the GDC Plan and entry of the Court’s Order Confirming Second Amended Joint Plan of Reorganization of General Development Corporation, dated March 27,1992 (the “Confirmation Order”), the Sipes were notified of GDC’s rejection of their home-site purchase agreement and provided with a special proof of claim form in which they could assert a claim arising from rejection of their homesite purchase agreement. The Sipes duly noted their objection to the amount that GDC claimed was due and owing ($5,088.00) and returned this special proof of claim form to the court setting forth and reiterating their previously filed claim for $5,096.26 (GDC Exhibit No. 24). With respect to GDC’s notice advising the Sipes of the rejection of their homesite purchase agreement, the Sipes did file a response objecting thereto. (GDC Exhibit No. 25) Order on Remand, pp. 3-6.

As previously noted herein, the Bankruptcy Court further found:

Based upon the documentary and testimonial evidence presented, the Court finds that the Sipes were afforded and received full due process. They received all requisite notice that the law requires be provided to creditors in a Chapter 11 case. Moreover, despite their claims to the contrary, they were provided the opportunity to participate in GDC’s Chapter 11 case and object thereto, (emphasis added) [footnote omitted]. Order on Remand, pp. 7-8.

The Bankruptcy Court goes on to state:

The Court has considered the Sipes’ claim that they did not receive the full GDC Plan, but rather a summary of the same. The Court does not find this argument convincing as the Sipes were advised that the full and complete GDC Plan was on file for review or could be obtained upon request. That the Sipes took the time to review the documents which they did receive and voted to reject the GDC Plan is indicative that the Sipes had sufficient information with respect to the treatment of their claim to make an informed decision as to whether to vote to accept or reject the GDC Plan.
Finally, the fact that the Sipes did not file an objection to the Disclosure Statement or contest confirmation based upon their claimed mistaken belief that they were not affected by the GDC Plan or the bankruptcy as a whole does not lend any support to an argument that the Sipes were denied due process. The Sipes were provided with all of the information and documentation which creditors similarly situated could have expected and were required to expect in a case of this size ... There is simply no evidence from the record presented to this Court or of which the Court is independently aware that the Sipes were denied due process, (emphasis added) Order on Remand, pp. 9-10.

Upon review of these specific findings and the arguments presented, Appellants have not demonstrated to this Court that the Bankruptcy Court clearly erred in its findings and conclusion on remand that the Sipes were not denied due process. Moreover, this Court agrees with the Bankruptcy Court that the Sipes were provided with all of the information and documentation which creditors similarly situated could have expected and were required to expect in a case of this size. This Court adopts and affirms the Bankruptcy Court’s findings and conclusion that the Sipes were not denied due process.

The Homesite Purchase Agreement is an Executory Contract Subject to Rejection Under § S65 of the Bankruptcy Code

The Bankruptcy Court’s analysis on remand as to this issue is well reasoned and worthy of restating in relevant part. Specifically, the Bankruptcy Court states on remand:

Section 365(a) of the Bankruptcy Code, as made applicable to a debtor-in-possession by Section 1107(a) of the Bankruptcy Code, permits a debtor to “assume or reject any executory contract or unexpired lease of the debtor.” The power of a debtor to reject a contract as part of its reorganization efforts is consistent with the fresh start and rehabilitative purposes of the Bankruptcy Code, [citations omitted]
The Sipes argue that their homesite purchase agreement was not an executory-contract because they had fulfilled all performance obligations under such agreement by completing payments of principal and interest in March, 1983. They urge this Court to apply the definition of “exec-utory” contract as articulated by Professor Yern Countryman in a law review article published in the Minnesota Law Review in 1963, which definition requires unperformed mutual obligations on both sides. Countryman, Executory Contracts and Bankruptcy, Part 1, 57 Minn.L.Rev. 439 (1963).
However, this court as well as other courts and commentators have consistently expanded the definition of “executoriness” beyond the static definition articulated by Professor Countryman and beyond that urged by the Sipes, [citations omitted] While counsel for the Sipes argued that the legislative history of Section 365 reflects that Congress intended an executory contract to be one in which there remained mutual obligations due and owing from the parties, this Court must respectfully disagree. As this Court stated in Arrow Air,
The legislative history of § 365 and the statute itself, establish that it is not always the case that there must be outstanding obligation on the part of both parties to a contract in order for a contract to be deemed executory ... The express language of § 365 reflects that congress did not adopt a specific definition of an “executory contract” which would require mutual obligations, in spite of its clear opportunity to do so. Legislative history for that section evidences that congress considered mutual obligation to be indicative of an execu-tory contract in some [sit], but not all, cases ... Even though there may be material obligations outstanding on the part of only one of the parties to the contract, it may nevertheless be deemed executory under the functional approach if its assumptional rejection would ultimately benefit the estate and its creditors, (emphasis added) In re Arrow Air, Inc., 60 B.R. 117, 121-22 (Bankr.S.D.Fla.1986) ...
In the instant case, GDC’s ability to reject homesite purchase agreements which obligated it to improve and deed developed homesite lots to tens of thousands of lot purchasers, when it was simply financially unable to fill such contractual obligations, was critical to GDC’s reorganization. The very purpose of rejection, as even recognized by Professor Countryman, was thus served in the instant case by GDC’s ability to reject such homesite purchase agreements ...
While the concept of executoriness will no doubt engender additional debate in the future, this court finds no support in the Code itself or the legislative history of section 365 to apply as rigid a definition of “executory” contract as Sipes would urge this Court to apply. It is clear that the Sipes’ homesite purchase agreement represented an unperformed contract. Whether the Sipes were required to undertake any further actions after completing payments of principal and interest under their agreement is not determinative of whether the purposes of rejection and reorganization would be served by defining such home-site purchase agreement as an executory contract, [footnote omitted] In the instant case, it is undisputed that at least GDC, as seller, had unfulfilled obligations under the terms of the homesite purchase agreement as of its Chapter 11 filing. Rejection permitted GDC to avoid obligations which it was financially unable to meet and which would have prevented a meaningful reorganization for the benefit of hundreds of thousands of creditors who might not have otherwise received any recovery in respect of their claims, [footnote omitted] Accordingly, the Court finds that the Sipes’ homesite purchase agreement was an ex-ecutory contract subject to rejection pursuant to section 365 of the Bankruptcy Code, (underlining supplied) Order on Remand, pp. 11-16.

This Court has reviewed de novo the Bankruptcy Court’s conclusion that Sipes’ Homesite Purchase Agreement was an exec-utory contract subject to rejection pursuant to section 365 of the Bankruptcy Code. The Court agrees with the application by the Bankruptcy Court of the “functional approach” in this ease. Under this approach, the question of whether a contract is executo-ry is determined by the benefits that assumption or rejection would produce for the estate. See In re G-N Partners, 48 B.R. 462 (Bankr.Minn.1985); In re Norquist, 43 B.R. 224 (Bankr.Wash.1984); In re Booth, 19 B.R. 53 (Bankr.D.Utah 1982). GDC’s ability to reject contracts which obligated it to improve and deed developed homesite lots was critical to its reorganization since it did not have the financial ability to fulfill such contractual obligations.

While it does not appear that the Eleventh Circuit has adopted the “functional approach” over the “Countryman approach”, the Eleventh Circuit in In re Martin Brothers Toolmakers, Inc., 796 F.2d 1435 (11th Cir.1986) appears more inclined to embrace the “functional approach.” In In re Martin Brothers Toolmakers, Inc., the Eleventh Circuit stated in dicta:

It is true that a real estate lease, as well as an installment sales contract, may be the functional equivalent of a secured financing transaction, [citations omitted] The determination in bankruptcy, however, of whether a particular agreement is in fact a lease or a security agreement for purposes of § 365 often depends on which characterization will best serve the interests of the estate. Section 365 enables the bankruptcy trustee to affirm or reject leases and executory contracts, and is based on the trustee’s long-standing power to abandon obligations burdensome to the estate.

Id. at 1439. Citing to the Sixth Circuit, the Eleventh Circuit continued:

The key, it seems, to deciphering the meaning of [§ 365’s lease-executory contract provision] is to work backward, proceeding from an examination of the purposes rejection is expected to accomplish. If those objectives have already been accomplished, or if they can’t be accomplished through rejection, the [agreement] is not [a lease or executory contract] within the meaning of the Bankruptcy Act.

Id. (citing In re Becknell & Crace Coal Co., Inc., 761 F.2d 319, 322 (6th Cir.1985)). Since it appears the Eleventh Circuit is more amenable toward the functional approach, the Bankruptcy Court properly applied said approach to the case at bar. Moreover, this Court agrees with the Bankruptcy Court’s conclusion that the Homesite Purchase Agreement did not constitute a security device under Florida law where the Sipes neither had possession nor incurred the benefits and burdens of ownership at any time since their execution of said Agreement in July, 1972. Rather, the Bankruptcy Court properly found that:

It is clear from the facts presented to this Court that their homesite purchase agreement was indeed a contract to convey real property which GDC, as a debtor/seller, was entitled to reject as an executory contract pursuant to Section 365(a) of the Bankruptcy Code. Order on Remand, p. 19.

Appellants, therefore, have not demonstrated that the Bankruptcy Court erred as matter of law in concluding that Sipes’ Homesite Purchase Agreement was an exec-utory contract subject to rejection pursuant to section 365 of the Bankruptcy Code. Likewise, Appellants have not shown that the Bankruptcy Court erred in its Order Granting Atlantic Gulfs Motion to Enforce Execu-tory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, and Denying Motion for Ex Parte Relief from the Automatic Stay. To the contrary, the Bankruptcy Court’s legal determinations are well reasoned and supported by law. Accordingly, this Court affirms and ratifies the Bankruptcy Court’s (1) Order Granting Atlantic Gulfs Motion to Enforce Executory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, and Denying Motion for Ex Parte Relief from the Automatic Stay, dated November 5, 1993, and its (2) Order on Evidentiary Hearing Pursuant to Remand, dated September 16,1994.

In summary and for the reasons set forth herein, it is ORDERED AND ADJUDGED that:

* * *

1. Appellee GDC’s Motion to Strike Appendix A, Appendix B and Appendix C to Appendix to Appellants’ Reply Brief be, and the same, is hereby GRANTED IN PART. Only Appendix C to Appendix to Appellants’ Reply Brief shall be stricken from the appellate record, and Appendix A and B shall be considered part of the appellate record.

2. Appellee GDC’s Motion to Supplement Appellate Record be, and the same, is hereby GRANTED.

3. Appellants Sipes’ Motion to Supplement Appellate Record be and the same, is hereby DENIED.

4. The Bankruptcy Court’s Order Granting Atlantic Gulfs Motion to Enforce Execu-tory Contract, Discharge and Injunction Provisions of Plan and Confirmation Order, and Denying Motion for Ex Parte Relief from the Automatic Stay, dated November 5, 1993, is hereby AFFIRMED in its entirety.

DONE AND ORDERED in Chambers at Miami, Florida, this 27 day of January, 1995.

      . See, In re Neshaminy Office Building Ass'n, 62 B.R. 798 (E.D.Pa.1986).

      . One of the listed issues to be presented on appeal is "[w]hether GDC's Reorganization Plan is applicable to John and Mildred Sipes.”

      . The Sipes assert that the law of the state where the property is situated governs questions of property rights, even in the context of a bankruptcy proceeding. See Stellwagen v. Clum, 245 U.S. 605, 38 S.Ct. 215, 62 L.Ed. 507 (1918); Butner v. United States, 440 U.S. 48, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979); Johnson v. First Nat’l Bank of Montevideo, MN, 719 F.2d 270 (8th Cir.1983); Heartline Farms, Inc. v. Daly, 128 B.R. 246 (Bankr.D.Neb.1990); Shaw v. Dawson, 48 B.R. 857 (Bankr.D.C.N.M.1985).

      . These certificates of service are the subject of GDC's motion to strike discussed supra.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    N.B., by her mother and next friend, D.G. a/k/a N.B., Plaintiff-Appellant, v. ALACHUA COUNTY SCHOOL BOARD, Robert W. Hughes, Superintendent, Alachua County School Board, individually and in his official capacity, Suwannee County School Board, Charles F. Blalock, Jr., Superintendent, Suwannee County School Board, individually and in his official capacity, Columbia County School Board, Diane Lane, Superintendent, Columbia County School Board, individually and in her official capacity, Defendants-Appellees.
    No. 95-3214
    Non-Argument Calendar.
    United States Court of Appeals, Eleventh Circuit.
    June 7, 1996.

      N. Albert Bacharaeh, Jr., N. Albert Ba-eharach P.A., Gainesville, FL, for appellant.
    Francis H. Sheppard, Francis H. Sheppard, P.A., Orlando, FL, for appellees.
    John M. Caceiatore, Gregory David Swart-wood, Unger, Caceiatore & Swartwood, P.A, Orlando, FL, for Suwannee County School Board & Charles F. Blalock, Jr.
    Before TJOFLAT, Chief Judge, and DUBINA and BLACK, Circuit Judges.
   PER CURIAM:

We affirm the judgment of the district court for the reasons stated in the district court’s dispositive order of July 20, 1995, which appears in the Appendix.

AFFIRMED.

APPENDIX

ORDER

This cause comes before the Court upon motion to dismiss plaintiffs first amended complaint by defendants Alachua County School Board and Columbia County School Board (doc. 6). For the reasons stated below, the motion is GRANTED.

BACKGROUND

Plaintiff N.B. is a hearing impaired child. During the relevant time periods, N.B. lived in either Columbia or Suwannee County, Florida. Sometime prior to March 1986, N.B. was bused from her home in Columbia or Suwannee County to attend a special school for hearing impaired children in Ala-chua County. Plaintiff claims that this decision caused her to be segregated from hearing students. She also claims that the long bus ride caused her to miss a significant portion of class work each school day. N.B. left the State of Florida at the end of the 1992/93 school year and is no longer in the Florida educational system.

N.B. has brought this suit alleging violations of the Individuals with Disabilities in Education Act (“IDEA”), 20 U.S.C. § 1400 et seq. She seeks compensatory damages under the IDEA (Count I) and 42 U.S.C. § 1983 (Count II).

In the motion to dismiss, defendants move for dismissal of the first amended complaint based on the following four grounds: 1) the plaintiff has failed to exhaust administrative remedies; 2) the plaintiffs claims are barred by the statute of limitations; 3) compensatory damages are not available under the IDEA; and 4) compensatory damages are not available under 42 U.S.C. § 1983 for violations of the IDEA. Because the Court finds dismissal is appropriate for plaintiffs failure to exhaust necessary administrative remedies as a prerequisite to filing this action, the Court need not reach the remaining three issues concerning the statute of limitations and the availability of compensatory damages under the IDEA and 42 U.S.C. § 1983.

DISCUSSION

The IDEA, formerly known as the Education for All Handicapped Act (“EHA”), 20 U.S.C. § 1400 et seq., provides federal money to state and local education agencies in order to assist them in educating handicapped children, on the condition that the states and local agencies implement the substantive and procedural requirements of the Act. The principal purpose of the Act is “to assure that all children with disabilities have available to them ... a free appropriate public education which emphasizes special education and related services designed to meet the handicapped child’s unique needs, ... [and to ensure] that the rights of handicapped children and their parents or guardians are protected.” 20 U.S.C. § 1400(c).

To carry out these objectives, the IDEA provides procedural safeguards to permit parental involvement in all matters concerning the child’s educational program and allows parents to obtain administrative and judicial review of decisions they deem unsatisfactory or inappropriate. Honig v. Doe, 484 U.S. 305, 311-12, 108 S.Ct. 592, 597-98, 98 L.Ed.2d 686 (1988). Under this scheme of procedural protections, parents are entitled to 1) examination of all relevant records pertaining to evaluation and educational placement of their child, 2) prior written notice whenever the responsible educational agency proposes, or refuses, to change the child’s placement, 3) an opportunity to present complaints concerning any aspect of the local agency’s provision of a free appropriate public education, and 4) an opportunity for an “impartial due process hearing” with respect to any such complaints. Id. at 312, 108 S.Ct. at 598.

In the event that a party is dissatisfied with or aggrieved by the findings and decisions made after the impartial due process hearing, that party may obtain additional administrative review by the state educational agency. 20 U.S.C. § 1415(c). If that party is still dissatisfied or remains aggrieved after the administrative appeal, a judicial review is available in either state court or federal court to contest the decisions of the educational agency. Id. § 1415(e)(2).

“The philosophy of the [IDEA] is that plaintiffs are required to utilize the elaborate administrative scheme established by the [IDEA] before resorting to the courts to challenge the actions of the local school authorities.” Ass’n for Retarded Citizens of Alabama v. Teague, 830 F.2d 158, 160 (11th Cir.1987) (citing Smith v. Robinson, 468 U.S. 992, 104 S.Ct. 3457, 82 L.Ed.2d 746 (1984)). Key reasons for requiring the exhaustion of administrative remedies are as follows: 1) to permit the exercise of agency discretion and expertise on issues requiring these characteristics; 2) to allow the full development of technical issues and a factual record prior to court review; 3) to prevent deliberate disregard and circumvention of agency procedures established by Congress; and 4) to avoid unnecessary judicial decisions by giving the agency the first opportunity to correct any error. Id.

The exhaustion requirement, however, is not jurisdictional and therefore “ ‘is not to be applied inflexibly.’” Id. (quoting McGee v. United States, 402 U.S. 479, 483, 91 S.Ct. 1565, 1568, 29 L.Ed.2d 47 (1971)). The exhaustion of the administrative remedies is not required where resort to administrative remedies would be 1) futile or 2) inadequate. Id. (citing to Smith v. Robinson, 468 U.S. at 1014 n. 17, 1019 n. 22, 104 S.Ct. at 3469 n. 17, 3472 n. 22).

In the amended complaint, plaintiff does not allege that she has exhausted her administrative remedies. Instead, plaintiff argues that exhaustion of administrative remedies is not required in this case because she no longer attends any of the defendant school districts. This argument was squarely rejected in Torrie By and Through Torrie v. Cwayna, 841 F.Supp. 1434 (W.D.Mich.1994). In that case, an emotionally impaired student and his mother brought an action against a school district and its employees for alleged violations of IDEA, Rehabilitation Act, false arrest and false imprisonment. The student and his mother neither requested an impartial due process hearing nor filed a complaint with the school district before filing the action. In responding to the school district’s motion to dismiss based on failure to exhaust administrative remedies, the plaintiffs argued that exhaustion was not required under the futility exception because they no longer lived in the defendant school district. Reasoning that parents’ unilateral act of removing their child from a public school could not excuse their failure to exhaust administrative remedies, the court dismissed the action for failure to exhaust remedies. Torrie, 841 F.Supp. at 1442. The rationale of Torrie is persuasive. If parents can bypass the exhaustion requirement of the IDEA by merely moving their child out of the defendant school district, the whole administrative scheme established by the IDEA would be rendered nugatory. Permitting parents to avoid the requirements of the IDEA through such a “back door” would not be consistent with the legislative intent of the IDEA.

The plaintiffs second argument is equally unpersuasive. The plaintiff argues there is no point pursuing administrative remedies because the defendant school districts lack authority to grant the relief requested, namely money damages. Again, if the plaintiffs argument is to be accepted, then future litigants could avoid the exhaustion requirement simply by asking for relief that administrative authorities could not grant. This goes against the very reason that we have the exhaustion requirement, which is “[to prevent] deliberate disregard and circumvention of agency procedures established by Congress.” Teague, 830 F.2d at 160. In fact, courts that considered this argument have all rejected it. See Buffolino v. Board of Education of Sachem Central School District, 729 F.Supp. 240, 247 (E.D.N.Y.1990); Waterman v. Marquette-Alger Intermediate School District, 739 F.Supp. 361, 368 (W.D.Mich.1990) (“A procedure that may result in any substantial relief is not futile”); Torrie, 841 F.Supp. at 1442.

Nor does the fact that the plaintiff also seeks money damages under 42 U.S.C. § 1983 for violations of the IDEA make any difference. “[W]hen parents choose to file suit under another law that protects the rights of handicapped children—and the suit could have been filed under the [IDEA]— they are first required to exhaust the [IDEA]’s remedies to the same extent as if the suit had been filed originally under the [IDEA]’s provisions.” Mrs. W. v. Tirozzi, 832 F.2d 748, 756 (2d Cir.1987). As the plaintiff has failed to exhaust administrative remedies, the plaintiff may not proceed with her § 1983 claims for violations of the IDEA.

CONCLUSION

Accordingly, the defendants’ motion to dismiss (doc. 6) is GRANTED. The Clerk is directed to dismiss the first amended complaint with prejudice.


author: ENGEL, Senior Circuit Judge:

text:
    Paul ISENBERGH, Plaintiff-Appellant, v. KNIGHT-RIDDER NEWSPAPER SALES, INCORPORATED, a/k/a Newspapers First, Inc., Knight-Ridder, Inc., Defendants-Appellees.
    No. 94-4769.
    United States Court of Appeals, Eleventh Circuit.
    June 11, 1996.

      William R. Amlong, Amlong & Amlong, P.A., Ft. Lauderdale, FL, for appellant.
    Robert J. Gregory, E.E.O.C., Office of General Counsel, Washington, D.C., for ami-cus E.E.O.C.
    John-Edward Alley, Robert D. Hall, Jr., Alley and Alley, Chartered, Tampa, FL, Charles A. Shanor, Kelly J. Koelker, Paul, Hastings, Janofsky & Walker, Atlanta, GA, for appellees.
    Before EDMONDSON and DUBINA, Circuit Judges, and ENGEL, Senior Circuit Judge.

       Honorable Albert J. Engel, Senior U.S. Circuit Judge for the Sixth Circuit, sitting by designation.

   ENGEL, Senior Circuit Judge:

Plaintiff Paul Isenbergh appeals the district court’s grant of judgment as a matter of law for defendant Knight-Ridder Newspaper Sales, Inc. (“KRNS”), a/k/a Newspapers First, Inc. (“Newspapers First”), in Isen-bergh’s suit under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621-634. Isenbergh claims that Newspapers First discriminated against him because of his age in selecting the manager for the company’s Miami sales office. After trial, a jury returned a verdict in favor of Isenbergh and awarded him $250,000 in damages. Newspapers First, which earlier had submitted a motion for judgment as a matter of law that the district court denied, renewed its motion under Rule 50(b) of the Federal Rules of Civil Procedure. The district court granted the motion. Because we agree that Isenbergh did not produce evidence from which the jury could reasonably infer intentional discrimination based on age, we affirm.

I.

In 1990, KRNS merged with Million Market Newspapers/Times Mirror National Marketing, Inc. (“MMTM”) to form Newspapers First. At the time of the merger, Isenbergh, sixty years old, was the manager of KRNS’s Miami sales office. Larry Malloy, forty-four years old, was the manager of MMTM’s Miami sales office. Both were candidates, along with eight other KRNS and MMTM managers from around the country, for the new position of manager of Newspapers First’s Miami sales office. To select the new manager, King Anthony, the former president of MMTM and current president of Newspapers First, and John Kosanke, the former president of KRNS and current executive vice-president of Newspapers First, interviewed the ten candidates. The only real competition for the new position, however, was apparently between Isenbergh and Mal-loy, because Newspapers First did not want to move a manager from another part of the country to Miami. In conjunction with the interviews, Anthony and Kosanke used an “alternation ranking system” to rate the candidates. KRNS had never used this system before to make personnel decisions. Under the system, each candidate received two ordinal rankings: one based on past management performance and one based on the interview. The two rankings were averaged to obtain each candidate’s overall score.

When the nine candidates who had worked at KRNS or MMTM for more than six months were ranked according, to this system, Isenbergh finished eighth. Malloy finished second. Three managers over age fifty—including one who was sixty-three years old—finished higher than Isenbergh. Malloy got the job, and Isenbergh was offered the chance to interview for a sales position in Miami. He chose to take early retirement instead.

Isenbergh testified that the atmosphere at his interview was “cold” and that Anthony was on the phone most of the time. His interview allegedly lasted only a half-hour, whereas Malloy’s was a full hour, as all of the interviews were planned to be. Newspapers First presented evidence challenging Isen-bergh’s version of what happened at the interview.

Isenbergh worked for KRNS from the late 1960s until 1990, mostly as a salesman. He became a vice-president in 1984. In 1986, he won the praise of Kosanke by selling an advertising package to Walt Disney World. Isenbergh’s competitors for the account included a newspaper whose sales were handled by Malloy. The parties dispute the significance of this transaction. Isenbergh characterizes it as evidence of his good job performance in the past and of his superior qualification, relative to Malloy, for the managerial job. Newspapers First deems it to be irrelevant, because it involved sales, not management, and because Isenbergh’s newspaper was able to offer Walt Disney World a lower advertising rate than was Malloy’s newspaper.

There is conflicting evidence about how Isenbergh was viewed within the company and about his qualifications as a manager. Isenbergh points to his annual pay raises and management-by-objective bonuses that were approved by Kosanke, as well as to the lack of a paper trail of criticism, as evidence of his perceived competence. He further points to testimony by Kosanke that Isenbergh was a “seasoned manager” and a “satisfactory manager.” Kosanke also testified, however, that Isenbergh was a “lone ranger” and was not a “team player.” Isenbergh argues that his experience running newspaper offices of up to five people and commanding a department of about sixty men while he was in the Navy qualified him as a manager. Newspapers First counters that Isenbergh’s job at KRNS entañed little management and that for the management Isenbergh did do, he was criticized by Kosanke. It stresses Malloy’s extensive management experience and argues that he was better suited for the new job than Isenbergh.

II.

A.

We review de novo the district court’s grant of judgment as a matter of law. Daniel v. City of Tampa, 38 F.3d 546, 549 (11th Cir.1994), cert. denied, — U.S.-, 115 S.Ct. 2557, 132 L.Ed.2d 811 (1995). In other words, we apply the same standard as that applied by the district court. Carter v. City of Miami, 870 F.2d 578, 581 (11th Cir.1989). In considering a motion for judgment as a matter of law, a court must view all the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of the nonmoving party. Id. The motion should be granted only if upon such consideration, the court finds that reasonable people in the exercise of impartial judgment could not arrive at a contrary verdict. Id. The court may not weigh the evidence or decide the credibility of witnesses. Watts v. Great Atl. & Pac. Tea Co., 842 F.2d 307, 310 (11th Cir.1988) (quoting Boeing Co. v. Shipman, 411 F.2d 365, 375 (5th Cir.1969) (en banc)). The nonmoving party must provide more than a mere scintilla of evidence to survive a motion for judgment as a matter of law; “there must be a substantial conflict in evidence to support a jury question.” Carter, 870 F.2d at 581.

Newspapers First argues that judgment as a matter of law is appropriate in age discrimination cases more often than in other eases because in age discrimination eases juries tend to return verdicts based on sympathy rather than law. Certainly it is true that in some age discrimination cases, “sympathy for the plaintiff may present an overriding but impermissible factor in a jury verdict for plaintiff.” Chappell v. GTE Prods. Corp., 803 F.2d 261, 265 (6th Cir.1986), cert. denied, 480 U.S. 919, 107 S.Ct. 1375, 94 L.Ed.2d 690 (1987). If there can be no reasonable dispute as to the facts of the case and the inferences to be drawn from them, judgment as a matter of law is of course applicable to prevent a jury verdict based purely on sympathy. The legal standard for when to grant judgment as a matter of law in age discrimination cases, however, is no different from that in other cases: whether reasonable people could arrive at a contrary verdict. In fact, this court has cautioned against taking employment discrimination eases away from the jury. See Batey v. Stone, 24 F.3d 1330, 1336 (11th Cir.1994) (noting that summary judgment is often inappropriate in employment discrimination cases because the factual inquiry involves an examination of motive and intent); Hairston v. Gainesville Sun Publishing Co., 9 F.3d 913, 921 (11th Cir.1993) (noting that summary judgment is “generally unsuitable in Title VII eases in which the plaintiff has established a prima facie case”).

The fact that the district court judge allowed the question of Newspapers First’s liability to go to the jury before granting judgment as a matter of law does not affect our review of the judgment. Before the 1991 amendment to Rule 50, a Rule 50 motion before the verdict was a “motion for directed verdict,” and a Rule 50 motion after the verdict was a “motion for judgment notwithstanding the verdict.” Now, both are termed “motion for judgment as a matter of law.” The Advisory Committee on Rules has explained that one reason for the change in terminology was to express “the common identity of the two motions made at different times in the proceeding.” Fed.R.Civ.P. 50(a) advisory committee’s note on 1991 amendment. Furthermore, our cases have acknowledged that the standard of review for a judgment notwithstanding the verdict is the same as that for a directed verdict. E.g., Lamb v. Sears, Roebuck & Co., 1 F.3d 1184, 1187 (11th Cir.1993). The district court’s grant of Newspapers First’s motion for judgment as a matter of law after the jury verdict under Rule 50(b) was not inconsistent with its denial of Newspapers First’s motion for judgment as a matter of law before the verdict under Rule 50(a). As the Advisory Committee has explained,

Often it appears to the court ... that a motion for judgment as a matter of law made at the close of the evidence should be reserved for a post-verdict decision. This is so because a jury verdict for the moving party moots the issue and because a pre-verdict ruling gambles that a reversal may result in a new trial that might have been avoided. For these reasons, the court may often wisely decline to rule on a motion for judgment as a matter of law made at the close of the evidence....

Fed.R.Civ.P. 50(b) advisory committee’s note on 1991 amendment. The district court in this case took such a prudent course, which in no way affects our analysis of whether its grant of the motion after the verdict was correct.

B.

We look first to see whether Isen-bergh has presented a prima facie case of discrimination. A plaintiff alleging age discrimination under the ADEA may choose one of three ways to establish a prima facie case: (1) direct evidence of discriminatory intent; (2) statistical proof of disparate treatment; or (3) meeting a test such as that set out in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). See Carter v. City of Miami 870 F.2d 578, 581 (11th Cir.1989).

In McDonnell Douglas, the Supreme Court articulated the four elements a plaintiff must show in order to establish a prima facie case of employment discrimination:

(i) that he belongs to a [protected class]; (11) that he applied and was qualified for a job for which the employer was seeking applicants; (in) that, despite his qualifications, he was rejected; and (iv) that, after his rejection, the position remained open and the employer continued to seek applicants from persons of complainant’s qualifications.

McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. at 1824. The Supreme Court intended this framework to be flexible, see id. at 802 n. 13, 93 S.Ct. at 1824 n. 13, rather than “mechanized, or ritualistic,” United States Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 715, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983) (quoting Furnco Constr. Corp. v. Waters, 438 U.S. 567, 577, 98 S.Ct. 2943, 2949, 57 L.Ed.2d 957 (1978)). This court has enunciated various reformulations of the McDonnell Douglas test. For example, in Carter, we applied a variation of the McDonnell Douglas test requiring that a plaintiff show the following elements to establish a prima facie case under the ADEA:

(1) that he is a member of the protected group; (2) that adverse employment action was taken against him, e.g. discharge, demotion, or failure to hire; (3) that he was replaced by a person outside the protected group; and (4) that he was qualified for the position for which he was rejected.

Carter, 870 F.2d at 582 (footnote omitted). In Carter, the plaintiff had been fired and replaced by a younger employee. In Earley v. Champion International Corp., 907 F.2d 1077 (11th Cir.1990), we set forth a slightly different variation of the McDonnell Douglas test in a case involving a “reduction in force.” The plaintiff had to show

(1) that he was in a protected age group and was adversely affected by an employment decision; (2) that he was qualified for his current position or to assume another position at the time of discharge or demotion; and (3) evidence by which a fact finder might reasonably conclude that the employer intended to discriminate on the basis of age in reaching the decision at issue.

Earley, 907 F.2d at 1082.

We have followed the Supreme Court’s command that the application of any test for establishing a prima facie case be flexible. E.g., Carter, 870 F.2d at 582 n. 11; see also Pace v. Southern Ry. Sys., 701 F.2d 1383, 1387 (11th Cir.) (“The particularly amorphous nature of age discrimination counsels against rigid application of a McDonnell Douglas[-type] test”), cert. denied, 464 U.S. 1018, 104 S.Ct. 549, 78 L.Ed.2d 724 (1983). Noting the difficulty of tailoring the McDonnell Douglas test to a specific case, we have held that the essence of any prima facie case test is simply “whether the plaintiff has presented sufficient evidence to provide a basis for an inference that age was a factor in the employment decision.” Pace, 701 F.2d at 1387. Any particular test that a court chooses to use in evaluating this question is merely a “tool” to facilitate this evaluation. Id.

The district court treated this case as a “failure to hire” case, as opposed to a “reduction in'force” case. Although, as discussed above, case law suggests that the standard for establishing a prima facie case depends on whether the case concerns a reduction in force as opposed to a termination or a failure to hire, compare Earley, 907 F.2d at 1082 (listing prima facie case criteria for reduction-in-force cases), with Carter, 870 F.2d at 582 (listing prima facie case criteria for termination and failure-to-hire cases), the instant appeal demonstrates why, as we noted in Pace, employment discrimination cases are not easily categorized and why any prima facie case test must be flexible. In a sense, the position of manager of Newspapers First’s Miami office was a new job as a result of the merger of KRNS and MMTM, and Isenbergh’s and Malloy’s previous positions disappeared. From this viewpoint, the case is one of a failure to hire. Because the candidates considered for this “new” position, however, were all from within the two merging companies, the situation was not the same as in a standard failure-to-hire case. In essence, because of the merger, there was a reduction in force from two Miami managers to one. In deciding whether Isenbergh has established a prima facie case, we need not crudely categorize the facts as involving either a failure to hire or a reduction in force. Bather, we examine the facts of the ease and decide “whether the plaintiff has presented sufficient evidence to provide a basis for an inference that age was a factor in the employment decision.” Pace, 701 F.2d at 1387.

If Isenbergh has succeeded in presenting a prima facie case, we then examine whether Newspapers First has satisfied its burden of producing evidence that the hiring of Malloy over Isenbergh was based on some “legitimate, nondiscriminatory reason.” Texas Dep’t of Community Affairs v. Burdine, 450 U.S. 248, 254, 101 S.Ct. 1089, 1094, 67 L.Ed.2d 207 (1981). This burden on the employer is one of production, not persuasion. St. Mary’s Honor Center v. Hicks, 509 U.S. 502, 510-11, 113 S.Ct. 2742, 2749, 125 L.Ed.2d 407 (1993). If the burden is met, the McDonnell Douglas framework “drops out” of the case, leaving the jury to decide the ultimate question of whether the employer intentionally discriminated on the basis of age. Hicks, 509 U.S. at 510-11, 113 S.Ct. at 2749.

Hicks holds that the plaintiff must show not only that the employer’s proffered reason for the adverse employment' decision was false, but also that discrimination was the real reason. Id. at 515-17, 113 S.Ct. at 2752. In Hicks, a ease involving alleged employment discrimination based on race, the Supreme Court held that the plaintiff was not entitled to judgment as a matter of law when the trier of fact disbelieved the employer’s proffered nondiscriminatory reason. The district court, which was the trier of fact, did not believe the defendant’s reason for firing the plaintiff but also did not think that the plaintiff had proved that race was the real reason for his discharge. The court therefore entered judgment for the defendant. The Eighth Circuit reversed, arguing that the discrediting of the defendant’s proffered reason entitled the plaintiff to judgment as a matter of law. The Supreme Court in turn reversed the court of appeals and remanded the case for further proceedings consistent with its opinion, presumably reinstating the judgment entered in favor of the defendant by the district court as the trier of fact. We recognize that the effect of our decision is not to reinstate the verdict for the plaintiff entered by the jury as the trier of fact but rather to express our agreement with the trial court that as a matter of law discrimination was not shown. Nonetheless, we believe that Hicks is instructive here and persuades us that the district judge did not err in granting the Rule 50(b) motion.

Evidence allowing the trier of fact to discredit an employer’s proffered reason for an adverse employment decision thus alone is not enough for a plaintiff to survive a motion for judgment as a matter of law. Isenbergh disputes this proposition, relying on the following language from Hicks:

The factfinder’s disbelief of the reasons put forward by the defendant (particularly if disbelief is accompanied by a suspicion of mendacity) may, together with the elements of the prima facie case, suffice to show intentional discrimination. Thus, rejection of the defendant’s proffered reasons, will permit the trier of fact to infer the ultimate fact of intentional discrimination, ... [and] upon such rejection, “[n]o additional proof of discrimination is required,” ....

Id. at 510-11, 113 S.Ct. at 2749 (quoting Hicks v. St. Mary’s Honor Center, 970 F.2d 487, 493 (8th Cir.1992) (appellate court decision in same case)). The first sentence of this passage shows that disbelief of the employer’s proffered reason may be enough for a plaintiff to survive a motion for judgment as a matter of law. The second sentence is potentially confusing in saying that rejection of the proffered reason “will permit” the inference of discrimination. In the context of both sentences together, however, it is clear that rejecting the proffered reason is not always sufficient to show discrimination. The Hicks Court clarified this distinction in a footnote:

Contrary to the dissent’s confusion-producing analysis, there is nothing whatever inconsistent between [the statement quoted above] and our later statements that (1) the plaintiff must show “both that the reason was false, and that discrimination was the real reason,” and (2) “it is not enough ... to dis believe the employer.” Even though (as we say here) rejection of the defendant’s proffered reasons is enough at law to sustain a finding of discrimination, there must be a finding of discrimination.

Id. at 511 n. 4, 113 S.Ct. at 2749 n. 4.

Therefore, under Hicks, a plaintiff must show both that the defendant’s reason was false and that the real reason was discrimination. Id. at 511 n. 4, 515-17, 113 S.Ct. at 2749 n. 4, 2752. A finding that the defendant’s reason was false is alone not enough; there must also be a finding of discrimination. The finding of discrimination may be inferred, though, from the disbelief. Evidence from which the jury may reasonably disbelieve the employer’s proffered reason is not necessarily enough to support a verdict for the plaintiff; the jury also must be able to infer from this disbelief or from other evidence that the employer’s actual reason was discrimination. Id. at 510-11 & n. 4, 113 S.Ct. at 2749 & n. 4. Therefore, if the evidence in this case reasonably allows both the inference that Newspapers First’s alleged reason for the employment decision was false and the inference that the real reason was age discrimination, then we must let the jury verdict stand.

C.

We find that Isenbergh has presented a prima facie case. The circumstances surrounding the merger of the two companies and the way in which Malloy was selected for the new position suggest that the newly formed company might have wanted to avoid hiring employees of Isenbergh’s age. Isenbergh was in the protected age group, and he was adversely affected by Newspapers First’s decision to select Malloy, who is sixteen years younger than Isenbergh, as the new manager. Moreover, because the deci-sionmakers for Newspapers First were familiar with Isenbergh’s performance in his work for KRNS, we can infer from the fact that he was granted an interview that Isenbergh was at least at some level qualified for the new job. Without deciding the ultimate question of whether a jury could reasonably infer intentional discrimination, we believe that Is-enbergh has satisfied this part of the McDonnell Douglas-Burdine burden-shifting analysis.

We next inquire whether Newspapers First has met its burden of producing evidence of a legitimate, nondiscriminatory reason for offering the job to Malloy rather than to Isenbergh. We find that it has done so. It has produced evidence showing that the principal criterion used in determining who would get the job was management ability, as assessed at the interviews and by evaluating past performance.

Finally, we examine whether Isen-bergh has produced evidence that Newspapers First’s proffered reason was false and that the real reason was age discrimination. Looking at all the evidence in the light most favorable to Isenbergh, and drawing all reasonable inferences in his favor, we find that even if a reasonable jury could have disbelieved Newspapers First’s proffered reason for hiring Malloy, there was no evidence from which a reasonable inference could be drawn that age discrimination was the actual reason. We stress that this holding is not inconsistent with our conclusion that Isenbergh has presented a prima facie case of discrimination. See Carter v. City of Miami, 870 F.2d 578, 585 (11th Cir.1989) (“[T]he mere establishment of a prima facie case of discrimination ... does not alone establish a genuine issue of material fact sufficient to go to the jury.”).

As discussed above, under Hicks, evidence based on which the employer’s proffered reason may be disbelieved may be enough to permit the trier of fact to infer discrimination. In this case, however, it is not. Once the employer asserts a reason for the adverse employment decision, the case is in equipoise, and the McDonnell Douglas-Burdine framework becomes irrelevant. Walker v. NationsBank of Florida, N.A., 53 F.3d 1548, 1557 (11th Cir.1995). The plaintiff has the burden of proving discrimination, so if the case remains in equipoise, the plaintiff must lose as a matter of law. Disbelief of the employer’s reason is enough to push the case beyond equipoise and support a judgment for the plaintiff only if the disbelief is coupled with a reasonable belief that discrimination was the true reason. In Hicks, the trier of fact (the district court) disbelieved the defendant’s reason but did not believe that the plaintiff had proved discrimination, and therefore the plaintiff lost. In the case at bar, similarly, we find that there is no evidence from which a reasonable jury could have inferred the “ultimate fact of intentional discrimination.” See Hicks, 509 U.S. at 511, 113 S.Ct. at 2749.

The alternation ranking system, by which Newspapers First evaluated managers from all around the country, may or may not have been a fair way to evaluate the candidates for the new job. Looking at it in the light most favorable to Isenbergh, Newspapers First may not have been completely truthful in claiming that this somewhat objective criterion was used to evaluate the candidates. Malloy did not rank first in the selection process, and the competition for the new job may effectively have been only between Mal-loy and Isenbergh, the two candidates from Miami, which makes the process appear somewhat suspect. Isenbergh’s testimony that his interview was shorter than planned and that Anthony talked on the phone during most of the time, if believed, casts further doubt on the selection process. It would not have been mere speculation for the jury to disbelieve Newspapers First’s explanation of the selection process. There is no evidence, however, that the real selection process used age as a criterion. A sixty-three-year-old candidate was rated more highly than Isen-bergh overall, and more highly than both Malloy and Isenbergh in terms of managerial skills. Most likely, Kosanke and Anthony chose Malloy because they liked the way he had performed in the past. The alternation ranking system may have been a smoke screen hiding the fact that Newspapers First held Malloy in higher regard than Isenbergh, but there is no evidence from which a jury could reasonably believe that it was a smoke screen hiding the fact that Malloy was hired because of his relative youth.

In sum, there was not sufficient evidence of intentional discrimination to allow Isen-bergh’s claim to be decided by the jury. Therefore, the district court was correct in granting Newspapers First’s motion for judgment as a matter of law.

III.

Newspapers First argues that Isenbergh’s failure to remain employed and thereby mitigate his damages cuts off any claim that he may have. In view of our ruling, we need not and do not address this issue.

For the foregoing reasons, the judgment of the district court is AFFIRMED.

      . An ADEA plaintiff need not show that the person selected for the job was younger than 40, even though ADEA protection begins at that age. See, e.g., Pace v. Southern Ry. Sys., 701 F.2d 1383, 1387 (11th Cir.) ("Because of the value of experience rarely are sixty-year-olds replaced by those under forty.” (quoting McCorstin v. United States Steel Corp., 621 F.2d 749, 754 (5th Cir.1980))), cert. denied, 464 U.S. 1018, 104 S.Ct. 549, 78 L.Ed.2d 724 (1983).

      . That Malloy was also a member of the class of persons protected by the ADEA does not render insufficient Isenbergh’s prima facie showing. See O'Connor v. Consol. Coin Caterers Corp.,-U.S. -, 116 S.Ct. 1307, 134 L.Ed.2d 433 (1996).