                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 11a0664n.06

                                           No. 10-5060                                     FILED
                                                                                      Sep 09, 2011
                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT                            LEONARD GREEN, Clerk


THE CADLE COMPANY II, INC.,                              )
                                                         )
       Plaintiff-Appellant,                              )        ON APPEAL FROM THE
                                                         )        UNITED STATES DISTRICT
v.                                                       )        COURT FOR THE WESTERN
                                                         )        DISTRICT OF KENTUCKY
GASBUSTERS PRODUCTION I LIMITED                          )
PARTNERSHIP,                                             )                          OPINION
                                                         )
       Defendant-Appellee.                               )
                                                         )

BEFORE: WHITE and STRANCH, Circuit Judges; COHN, District Judge.*

       AVERN COHN, District Judge. This is an appeal of a bankruptcy court decision.

Appellant The Cadle Company II, Inc. (Cadle), the primary unsecured creditor in a bankruptcy estate

(estate), appeals a bankruptcy court’s decision that Appellee Gasbusters Production I Limited

Partnership (GPILP) has the ownership right to assert claims against the estate. GPILP’s claims are

based on agreements entered into between GPILP and estate debtor Clarence Lester Paul (Paul)

relating to the operation and management of 15 gas and oil wells (wells).

       For the reasons that follow, the bankruptcy court’s decision will be affirmed.

                                       I. BACKGROUND

       The estate whose assets are now at issue was formed when, on February 6, 2004, Paul and

his wife Margaret S. Paul (Mr. and Mrs. Paul) filed a Chapter 7 bankruptcy petition. Two years after

       *
        The Honorable Avern Cohn, United States District Judge for the Eastern District of
Michigan, sitting by designation.
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


the bankruptcy petition was filed, GPILP filed a proof of claim against the estate in the amount of

$424,825.00, in order to recover from what GPILP asserts was a breach of contract by Paul for

failing to operate and properly manage gas wells. At the same time, GPILP moved for payment of

gas-sale proceeds in the amount of $25,659.33, which GPILP asserts it was entitled to because the

proceeds were earned during a period of time in which it had an ownership right – between

settlement of a separate claim against GPILP, described below, and Mr. and Mrs. Paul’s bankruptcy

petition. Cadle subsequently purchased most of the assets of and rights in the Paul estate.

       Cadle filed an objection to GPILP’s proof of claim and motion for gas-sale proceeds with the

bankruptcy court.2 As to the proof of claim, Cadle contended that GPILP was not entitled to recover

from the estate because it did not have an ownership interest in the wells, primarily because of

claimed deficiencies in the well-transfer agreements. Cadle also argued that GPILP used an

arbitrary methodology when it calculated the proof-of-claim amount. Finally, Cadle maintained that

the amount needed to be further reduced to account for certain expenses and offset items owed by

GPILP to Paul.

       The bankruptcy court held an evidentiary hearing to aid in its resolution of the parties’

motions. Following the hearing, Cadle’s objections were overruled and GPILP was awarded claims

against the estate and gas-sale proceeds, but for a reduced amount: $312,239.50 for the proof of

claim, and $20,861.15 in gas-sale proceeds. With regard to the proof-of-claim amount, the



       2
         The objection was made to an amended proof of claim, filed by GPILP in response to the
estate’s trustee objection that the original claim was unliquidated. The fact that the objection was
made to an amended proof of claim has no bearing on the present appeal.

                                               -2-
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


bankruptcy court rejected Cadle’s argument that the claim needed to be even further reduced because

of the various expense offsets, finding that Cadle failed to provide credible evidence concerning their

existence and amount.

       On appeal, a district court affirmed the bankruptcy court’s decisions. Cadle appeals. We

review the bankruptcy court’s decision directly, rather than the district court order. Nuvell Credit

Corp. V. Westfall, 599 F.3d 498, 500 (6th Cir. 2010).

                                         II. DISCUSSION

                                         A. Proof of Claim

       Cadle argues on several grounds as follows that the bankruptcy court erred in finding that

GPILP had an ownership interest to assert a proof of claim against the estate.

                                      1. Judicial Admissions

       First, Cadle says that the bankruptcy court erred during the evidentiary hearing when it

decided a motion in limine in favor of GPILP, which allowed statements made by Cadle in a prior

adversary proceeding to be treated as judicial admissions, rather than evidentiary admissions. The

statements involve allegations by Cadle that Paul concealed wrongful business activities using alter-

ego entities,3 and the decision effectively prevented Cadle from arguing that GPILP’s proof of claim

against the estate was invalid on the ground that it should have been made against the alter-ego




       3
        Paul is now deceased. The alter-ego allegations involved Paul’s operation of several
businesses, including Bluegrass Drilling, Delstar Resources, Heritage Properties, The Viking Group,
Energy Managers, and others.

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No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


entities and not Paul. We review a grant of a motion in limine for an abuse of discretion. United

States v. Humphrey, 608 F.3d 955, 957 (6th Cir. 2010).

        It is well established in our circuit that “‘[p]leadings in a prior case may be used as

evidentiary admissions.’” Barnes v. Owens-Corning Fiberglas Corp., 201 F.3d 815, 829 (6th Cir.

2000) (quoting Williams v. Union Carbide Corp., 790 F.2d 552, 556 (6th Cir. 1986)).

        Judicial admissions, on the other hand, are formal admissions in the pleadings of a present

action, “which have the effect of withdrawing a fact from issue and dispensing wholly with the need

for proof of the fact.” In re Fordson Eng’ Corp., 25 B.R. 506, 509 (Bankr. E.D. Mich. 1982).

“[U]nder federal law, stipulations and admissions in the pleadings are generally binding on the

parties and the Court.” Ferguson v. Neighborhood Hous. Servs., Inc., 780 F.2d 549, 551 (6th Cir.

1986) (citation and quotation marks omitted). “Not only are such admissions and stipulations

binding before the trial court, but they are binding on appeal as well.” Id. (citation omitted).

        Further, admissions made during a deposition, absent exceptional circumstances, have been

held to be binding on the parties as a judicial admission and cannot be challenged in the trial court

or on appeal. Maynard v. Brewer, 787 F.2d 591(6th Cir. March 4, 1986) (table order) (holding that

a “blatant judicial admission by a plaintiff in his deposition that a jailer did not assault him, absent

exceptional circumstances . . . [was] binding on the parties”).

        Here, in support of its motion in limine, GPILP provided the bankruptcy court with an

amended complaint from a prior adversary proceeding, which contained the statements that were

treated as judicial admissions. GPILP also provided deposition testimony from the present



                                                 -4-
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


bankruptcy court proceeding, in which a Cadle representative confirmed the statements as true and

a Cadle attorney stipulated to their truth.

        The bankruptcy court’s written decision granting the motion states:

        On the motion filed by [GPILP] seeking an order deeming the allegations of fact,
        including mixed statements of law and fact, in pleadings and papers filed by [Cadle]
        in adversary no. 06-AP-3003 as judicial admissions of Cadle for purposes of this
        bankruptcy case, and the Court being sufficiently advised, it is hereby ORDERED
        that the motion is GRANTED. No evidence will be admitted at the upcoming
        evidentiary hearing(s) for the purpose of contradicting the assertion that the
        bankruptcy estate is liable for any lawful claim against the debtors individually or
        d/b/a any Paul Family Entity (a) which claim existed on the date of filing of the
        petition, (b) for which a proof of claim has been timely and properly filed in this case,
        and (c) that the Court by subsequent order may deem to be allowed.

(Bankr. Ct. Doc. 630).

        As stated, Cadle argues that the statements at issue should have been treated as evidentiary

admissions rather than judicial admissions, in order to allow Cadle to present additional evidence

in support of its defense that other entities and not Paul are liable to GPILP. In support, Cadle relies

on Dixie Sand & Gravel Corp. v. Holland, 255 F.2d 304 (6th Cir. 1958), in which this court held that

“[a]llegations in pleadings in other actions are admissible in evidence as admissions, but are not

conclusive, and should be considered in connection with any other evidence which may be offered

in explanation.” Id. at 310 (holding that an allegation from a prior state court case was not binding

on the appellant, even though it was contradictory to the appellant’s present contention).

        In response, GPILP argues that the bankruptcy court’s decision to treat the statements as

judicial admissions was proper. In support, GPILP cites Cananwill, Inc. v. EMAR Group, Inc., 250

B.R. 533 (M.D.N.C. 1999), for the proposition that factual assertions made by parties in pleadings


                                                  -5-
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


filed in related adversary proceedings, unless subsequently amended, are judicial admissions. Id. at

545. GPILP further argues that there is no error in the bankruptcy court’s decision because similar

statements – or statements confirming the truth of the prior statements – were made in papers and

depositions on the present bankruptcy court’s record. For example, GPILP points to Cadle’s

Responses to GPILP’s First Interrogatories to Cadle, (Bankr. Ct. Doc. 418, pp. 9-10), filed in the

present bankruptcy court action, in which Cadle states:

       To the extent that the Paul Family Children’s “argument” rests on the hotly contested
       assertion . . . that they, not the Debtors, are the actual owners of a series of real and
       imagined corporate entities that the Debtors have treated as their alter egos for
       decades, Cadle is fully prepared to “take the Pepsi® Challenge. . . .” The Objections
       filed by the Paul Family Children and the Debtors reveal that both are concerned that
       the Settlement Agreement will compromise the elaborate fraud that they have
       perpetrated first through years of abuse of the corporate form and utilization of
       fictional business entries . . ., which represents nothing more than an attempt to
       shield the Debtors assets from creditors . . . . [I]t is understandable that anyone with
       the Paul surname should take note of the storm clouds on the horizon because a
       dust-up is coming over which business interests and other property are actually assets
       of the Debtors’ Estate. . . . If these business entities actually belong in the Debtors’
       Estate, as Cadle intends to prove. . . .

(Bankr. Ct. Doc. 312, pp. 5, 11-12, 14). GPILP also cites to Cadle’s Responses to GPILP’s First

Interrogatories to Cadle, also filed in this bankruptcy case, in which Cadle states:

       Yes, Cadle has contended in this case or in related adversary proceedings that [Mr.
       and Mrs. Paul] were individually liable for the obligations of or claims against
       Bluegrass, Delstar, Heritage, and/or Energy Managers. For a full and complete
       explanation of the factual basis for that contention, see the following pleadings and
       filings in The Cadle Company II, Inc. v. Paul, et al., Case No. 06-3003.4

(Bankr. Ct. Doc. 497, pp 9-10).


       4
        The Cadle Company II, Inc. v. Paul, et al., Case No. 06-3003 is the related adversary
proceeding referred to in the parties’ arguments.

                                                 -6-
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


        Finally, GPILP cites to deposition testimony given during the present bankruptcy court

proceeding – and also attached to its motion in limine reply brief – in which a Cadle representative,

Pete Barta (Barta) – speaking on behalf of Cadle – was asked, “Cadle has contended in this case or

in related adversary proceedings that the debtors were individually liable for the obligations of or

claims against Bluegrass, Delstar, Heritage and/or Energy Managers. Is that still true?” (Bankr. Ct.

Doc. 623, Ex. 1, p. 24). After resolving objections to the form and Barta’s recollection of the issue,

Barta responded, “I believe the allegations are true . . . I believe today those allegations are true.”

(Id. at 26.).5

        As an initial matter, GPILP’s argument that Cananwill, Inc., supra, resolves the issue is

unpersuasive, as it is not binding in this circuit. Similarly unpersuasive is GPILP’s argument that

the statements made in Cadle’s Responses to GPILP’s First Interrogatories to Cadle, (Bankr. Ct.

Doc. 418, pp. 9-10), and Cadle’s Response to an Objection to a Motion for Approval of Sale of

Estate Property, (Bankr. Ct. Doc. 312), defeat Cadle’s argument, as it is not clear from the record

whether the bankruptcy court relied on either document when it made its decision. In other words,

while it is true that both documents are part of the bankruptcy court’s record, we cannot discern

whether the bankruptcy court relied on these statements, or solely on the amended complaint from

the prior adversary proceeding.

        Moreover, Cadle’s assertion that the bankruptcy court erred when it relied on the statements

from the prior adversary proceeding’s amended complaint in making its decision has merit.


        5
        In the same deposition, Cadle’s counsel stipulates to the belief that the allegations in the
prior adversary proceeding’s amended complaint were true. (Id. at 30).

                                                 -7-
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


Particularly, precedence in this circuit dictates that if the bankruptcy court treated the statements as

judicial admissions based solely on pleadings from a prior action, this was an error. See e.g.,

Barnes, supra, at 829 (holding that “[p]leadings in a prior case may be used as evidentiary

admissions”).

        However, in this case, the record demonstrates that the bankruptcy court relied not only on

the statements from the prior action, but also on Barta’s deposition testimony given during the

present bankruptcy court action. Thus, to the extent that the bankruptcy court erred in considering

statements made in the prior adversary action, the error was harmless.

        Accordingly, because the bankruptcy court did not rely solely on the prior action’s pleadings

in making the decision, but at a minimum relied also on an admission by a Cadle representative

during a deposition in the bankruptcy proceeding before it, we cannot find that the bankruptcy court

abused its discretion. See Maynard, supra, *1.

                                 2. GPILP’s Ownership Interest

        Next, Cadle presents several additional arguments to support its position that the bankruptcy

court erred in finding that GPILP has a valid ownership interest in the wells.

                          a. Formation and Well Transfer Documents

        First, Cadle argues that the GPILP formation documents and well-transfer agreements on

which GPILP relies to assert its ownership interest are deficient. Particularly, Cadle states that the

documents contain grammatical errors and name inconsistencies, which render them unenforceable

by GPILP because they were never corrected. In response, GPILP argues that the documents are

valid and enforceable under Kentucky law. Thus, despite any deficiencies, GPILP argues that it is

                                                 -8-
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


the rightful transferee, which is sufficient to justify its proof of claim against the estate. As with

contracts, this Court reviews the district court’s construction of these documents as a matter of law

de novo. See e.g., Weimer v. Kurz-Dasch, Inc., 773 F.2d 669, 671 (6th Cir. 1985).

        As stated by the bankruptcy court, because this is a real property issue, Kentucky law

governs. Under Kentucky law, when construing a deed or assignment, as with any other contract,

the court’s primary object is to discover the intent of the parties through a fair examination of the

document as a whole. Babb v. Dowdy, 17 S.W.2d 1014, 1016 (Ky. 1929). “In modern times form

has largely yielded to intention, and a deed is now held to consist of the names of the parties, the

consideration, a description of the subject granted, the quantity of the interest conveyed, and the

conditions, reservations or covenants, if any.” Id. Further, “[i]t has long been the rule in [Kentucky]

. . . to uphold deeds as other contracts, however informally they may be drawn, when the terms are

sufficient to express the intention of the parties.” Id. “[A]nd to this end a liberal construction is

given a deed inartificially and untechnically drawn; the construction to be given such a deed and the

intention of the parties to it is to be gathered from a fair consideration of the entire instrument.” Id.

        Further, where there is ambiguity and/or mutual mistake, Kentucky law says that a court may

look beyond the four corners of the document in question to resolve the same. See, e.g., Ingram v.

Ingram, 283 S.W.2d 210, 212 (Ky. 1955) (parol evidence admissible to construe deed upon

allegation of mutual mistake); Senters v. Elkhorn & Jellico Coal Co., 145 S.W.2d 848, 850 (Ky.

1940) (parol evidence admissible to prove allegation of mutual mistake); Virginia Iron, Coal & Coke

Co. v. Combs, 177 S.W. 238, 238 (Ky. 1915) (parol evidence admissible where ambiguity in deed



                                                  -9-
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


is latent, not apparent from face of instrument); Day v. Asher, 132 S.W. 1035, 1036 (Ky. 1911)

(ambiguity in deed shown by extrinsic facts may be resolved by extrinsic evidence).

       Cadle’s argument that the GPILP formation and well-transfer agreements are deficient

requires a brief description of the documents. With respect to the GPILP formation documents, they

consist of a Limited Partnership Agreement (Agreement) and a Certificate of Limited Partnership

(Certificate). The Agreement describes that William Polan (Polan) formed a Florida limited

partnership by the name of Gasbusters Production I for the stated purpose of “direct[ing] the Sales,

Drilling, Outfitting, Production of Natural Gas and acquiring the assets of Appalachian Natural Gas

. . . and certain oil and gas ownership interests of Quintana Coal Co. . . .” The Certificate describes

that 17 days after executing the Agreement Polan created an entity by the name of Gasbusters

Production I Limited Partnership. Both the Agreement and the Certificate name the initial general

partner of GPILP as Gasbusters, Inc., a Kentucky corporation, and the initial limited partner as KY-

Gasbusters, Inc., a Kentucky corporation. Both documents list the location of the partnership’s

principal office as Palm Beach, Florida, and the business office in Paintsville, Kentucky. However,

the partnership name used in the documents varies – Gasbusters Production I compared to

Gasbusters Production I Limited Partnership. Further, the Agreement expressly provides that the

partnership’s business “may be conducted under any other name deemed necessary or desirable by

the General Partner.” Both the Agreement and the Certificate contain several grammatical and

typographical errors.

       As for Polan’s involvement with the well properties, in April of 1994, Raymond R. Burgess

(Burgess) and Corbin J. Robertson and his family (collectively the Robertsons) – the original owners

                                                - 10 -
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


of the property on which the wells are located – transferred their interests in the wells to Polan and

GPILP entities. The undisputed transfers were executed via five documents, as follows:

       (1) Purchase and Sale Agreement: selling the 15 Burgess wells to Gasbusters Limited
       Partnership for $307,000.00 (Bankr. Ct. Doc. 691-5);

       (2) Assignment of Interest of Quitclaim and Sublease Surrender Agreement:
       assigning all of the interest in the 15 Burgess wells to Gasbusters, Inc. for $10.00
       (Bankr. Ct. Doc. 691-6);

       (3) Assignment of Lease: assigning remaining interests in the wells from the
       Robertsons to Gasbusters Limited Partnership I, acting through Gasbusters, Inc.
       (Bankr. Ct. Doc. 691-7);

       (4) Deed of Oil and Gas Rights: conveying oil and gas mineral rights from the 15
       Burgess wells to GasBusters Partnership I, acting through Gasbusters, Inc., for
       $200,000.00 (Bankr. Ct. Doc. 691-10);

       (5) Deed: conveying oil and gas mineral rights from the 15 Burgess wells to
       Gasbusters Partnership I, acting through Gasbusters, Inc., for $50,000.00.

(Bankr. Ct. Doc. 691-9).

       As for Polan’s involvement with Paul, on February 13, 1996, Polan, in his capacity as

president of GPILP, and Paul entered into two agreements. In the first agreement, titled “Assignment

and Deed of Oil and Gas Rights,” Paul – through Delstar Resources – purchased an oil and gas

property from Polan and Gasbusters Limited Partnership I for $10.00. The second agreement was

an operating agreement entered into by Paul – this time doing business as Bluegrass Drilling – and

Polan individually and as the managing general partner for Gasbusters Limited Partnership I. Under

the second agreement, Paul was employed to manage 15 wells owned by Polan and Gasbusters

Limited Partnership I. As compensation for his services, Paul was to receive $1,500.00 per month



                                                - 11 -
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


plus expenses to be deducted from gas-sale proceeds. At some point thereafter, Paul began operating

and managing the wells.

        Based upon the above described formation documents and well-transfer agreements, the

bankruptcy court found it “abundantly clear that the Well Transfer Documents served to transfer

ownership of the wells in question to GPILP.” (See Bankr. Ct. Doc. 710, supra, at 10). Particularly,

the bankruptcy court held that overwhelming evidence, including the following, demonstrated that

GPILP had owned the wells since 1994:

        (1) a name similar to “Gas[b]usters Production I Limited Partnership” is listed as
        grantee on four of five well transfer documents;6



        6
         Cadle places much emphasis on the fact that one of the five well-transfer agreements, the
Assignment of Interest of Quitclaim and Sublease Surrender Agreement, assigns all interest in the
Burgess wells to “Gasbusters, Inc.” alone. Contrary to the other four agreements, this document does
not indicate that Gasbusters, Inc. is acting in an agency role for another “Gasbuster Partnership”
entity. Cadle argues that since the four other documents expressly reference Gasbusters, Inc. as
acting in an agency role, the parties must have intended to designate Gasbusters, Inc. as the sole
assignee on this particular agreement. Cadle argues that the agreement is unambiguous on its face
and that, faced with an unambiguous document, the bankruptcy court clearly erred in considering
evidence beyond “the four corners” of that document (such as the purpose of GPILP’s formation,
the amount of money involved in transferring the wells, etc.). See Hoheimer v. Hoheimer, 30
S.W.3d 176, 178 (Ky. 2000) (“Extrinsic evidence cannot be admitted to vary the terms of a written
instrument in the absence of an ambiguous deed.”). This argument is not altogether unpersuasive,
but it ignores the fact that “[c]ontract language . . . may be clear on its face and yet contain a latent
ambiguity.” State Farm Mut. Auto. Ins. Co. v. Slusher, 325 S.W.3d 318, 322 (Ky. 2010) (citation
omitted). “A latent ambiguity is one which does not appear upon the face of the words used, and it
is not known to exist until the words are brought in contact with the collateral facts.” Carroll v.
Cave Hill Cemetery Co., 189 S.W. 186, 190 (Ky. Ct. App. 1916) (quoted in Slusher). In this case,
the latent ambiguity is exposed when the Assignment of Interest of Quitclaim and Sublease
Surrender Agreement is “brought in contact” with the four other well-transfer documents, all of
which reference Gasbusters, Inc. as the agent of a Gasbuster Partnership entity. Arguably, the
bankruptcy court could have found the Assignment of Interest of Quitclaim and Sublease Surrender
Agreement unambiguous on its face; however, it was not clear error to hold otherwise.

                                                 - 12 -
No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


        (2) GPILP was formed expressly for the purpose of acquiring the wells;

        (3) the well transfers, which totaled approximately $550,000.00 in consideration,
        occurred shortly after new limited partners joined GPILP and contributed
        approximately $700,000.00; . . .

        (5) no party other than Cadle has ever come forward to challenge GPILP’s ownership
        interest in the wells; and

        (6) no evidence was submitted that GPILP transferred away its ownership interests
        in the wells.

(Id. at 10-11).

        We find the bankruptcy court’s analysis to be sound. That is, a fair consideration of the

instruments in their entirety demonstrate that GPILP was the intended transferee and transferor of

the wells, such that it had standing to assert a proof of claim against the estate. See Babb, supra

(“[A] liberal construction is given a deed inartificially and untechnically drawn; the construction to

be given such a deed and the intention of the parties to it is to be gathered from a fair consideration

of the entire instrument.”). As such, we affirm the bankruptcy court’s determination that GPILP had

an ownership interest to assert the claims against the estate.

                                     b. Settlement Agreement

        Cadle next argues that the bankruptcy court erred when it relied on a settlement agreement

from a separate lawsuit as further support that GPILP has an ownership interest in the wells. The

lawsuit was instituted by Burgess and his company Appalachian Natural Gas Corp. (ANG) against

Polan, Gasbuster, Inc. and GPLIP, claiming that GPILP had defaulted on the well-transfer

agreements described above. The parties ultimately reached a settlement in September of 1999. The

settlement agreement provided that Burgess and ANG would release all claims against GPILP in

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No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


exchange for “the sum of $35,000.00 in cash from escrow fund disbursed to [counsel for GPILP] by

the Lawrence Circuit Court Clerk” pursuant to the order and judgment.” Additionally, Burgess,

ANG, and Paul entered into a separate release and settlement agreement, in which Paul, on behalf

of himself and his assigns, also agreed to pay Burgess $35,000.00 in exchange for an agreement of

dismissal of the case with prejudice. The case was dismissed by an agreed order and judgment,

entered on December 21, 1999. The order and judgment provides in pertinent part:

        6. Upon the oral Motion of [GPILP] for a Default Judgment on its Crossclaim against
        William J.M. Pol[a]n and others, it is ORDERED AND ADJUDGED that all
        persons, other than the Lessors under the Lease, Bluegrass Drilling Corporation and
        Delta, who claim to have liens, encumbrances, mortgages or security interests in and
        to the property of [GPILP], or claims of rights to payments from [GPILP], are VOID,
        TERMINATED AND/OR EXTINGUISHED. . . .

        10. All other claims, counterclaims and crossclaims asserted in this action should be
        and hereby are, DISMISSED WITH PREJUDICE.

(Bankr. Ct. Doc. 685-1).

        The bankruptcy court determined that the language in the settlement agreements and

subsequent dismissal order was persuasive insofar as it provided further evidence of GPILP’s

ownership interest as recognized by Paul and Burgess – the transferors – as well as the adjudicating

court. (Bankr. Ct. Doc. 710, p. 11 (finding that “the Lawrence Circuit Court Litigation shows that

the parties to th[e] litigation . . . considered GPILP the transferee of the property in question . . . and

[that] the Lawrence Circuit Court expressly found and actually adjudicated in favor of GPILP vis a

vis [] Polan and [GPILP] concerning the power to assert claims with regard to the property.”)).

        The bankruptcy court properly considered all these documents in resolving the ambiguity

created by the use of various titles for DPILP. Kentucky law permits a court to look beyond the four

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No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


corners of a document in the case of ambiguity and/or mutual mistake. See Ingram, supra, at 212;

Senters, supra, at 850; Va. Iron, supra, at 238; Day, supra, at 1036. Accordingly, the bankruptcy

court did not err in determining that the settlement agreement supported its finding relating to

GPILP’s ownership interest.

                                   3. Proof-of-Claim Amount

       Cadle next argues that even if the Court determines that GPILP has an ownership interest,

the bankruptcy court further erred in its calculation of the proof-of-claim amount and in its

determination that further reductions to the claim amount were not warranted.

       The bankruptcy court’s decision sets forth how it approached the task of calculating an

accurate amount:

               Having determined that GPILP has the right and standing to assert its Proof
       of Claim, the Court must consider the amount of GPILP’s claim, which derives from
       the alleged production and sale of natural gas from the wells owned by GPILP.

               The gas field at issue here contains a total of 18 natural gas wells connected
       to two pipelines lines, each of which ends in a meter near a compressor where the gas
       is compressed, measured and then enters into a large gas transmission line for sale
       and distribution. Each well is surrounded by approximately 40 acres of land. The
       northern pipeline (Meter No. 824440) contains eleven wells, and GPILP makes no
       claim of ownership to one of those wells (Robertson No. 2). The southern pipeline
       (Meter No. 830110) contains seven wells, and GPILP makes no claim to two of those
       wells (Robertson Nos. 6 & 7). The parties produced extensive production records;
       however, they are all referenced by meter not by well. Since each meter is at the end
       of the pipeline, the challenge is ascertaining how much of the gas flowing through
       the two meters originates from wells to which GPILP makes a claim and how much
       comes from others (the “Non-GPILP Wells”).

(Bankr. Ct. Doc. 710, p. 12).




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No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


        Using this methodology, the bankruptcy court next considered evidence produced by both

GPILP and Cadle, in the form of expert testimony and well production data, in order to determine

how much gas came from GPILP’s wells, which would then allow the court to determine how much

GPILP was owed. Id. at 12-15. After analyzing all of the evidence, the bankruptcy court adjusted

GPILP’s amended proof of claim down to $312,239.50. Id. at 15. Next, relating to Cadle’s

argument for additional reductions, the bankruptcy court found that further offsets to account for

amounts claimed to be owed to Paul by GPILP were not warranted because Cadle “failed to provide

any credible evidence concerning the existence and, more importantly, the amount of such ‘offsets.’”

Id. at 16.

        Contrary to Cadle’s argument, the record demonstrates that the bankruptcy court thoroughly

analyzed the evidence produced by both GPILP and Cadle in arriving at its claim-amount decision.

Thus, reversal is not warranted on these grounds. Further, Cadle fails to provide authority for its

argument that the bankruptcy court erred in finding that the offset evidence was not credible. Indeed,

in its brief, Cadle “does not dispute the fact that some of the entries on its expense-documentation

exhibits do not represent proper offsets against [GPILP’s] claim.” (Appellant’s Brief, p. 67). Rather

than providing accurate offsets to the bankruptcy court, Cadle seemingly left it to the bankruptcy

court to compile accurate figures. (Id. at 67-68). Particularly, Cadle states that it “did not see any

need . . . to prepare a spreadsheet of these expenses in its Post-Trial Brief because of its belief that

the Bankruptcy Court would correctly resolve the standing issue and never reach the question of

offsets.” (Id.). In other words, without authority for the proposition, Cadle maintains that the



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No. 10-5060, The Cadle Company II, Inc. v. Gasbusters Production I Limited Partnership


bankruptcy court should have on its own calculated the offset amounts that Cadle failed to provide

rather than finding that the amounts that Cadle provided were not credible.

       Cadle’s argument lacks merit. The bankruptcy court was under no obligation to determine

any offsets that Paul may have been entitled to. Accordingly, based on the above, the bankruptcy

court did not err in determining GPILP’s claim amount.

                                      B. Gas-Sale Proceeds

       Finally, Cadle appeals the bankruptcy court’s order granting GPILP’s motion for $20,861.15

in gas-sale proceeds during the time between the previously described settlement and Mr. and Mrs.

Paul’s bankruptcy petition. Particularly, Cadle argues “[b]ecause of the substantial factual and legal

overlap” between GPILP’s amended proof of claim and its motion for payment of gas-sale proceeds,

“the reversible errors alleged above [] with respect to the former apply equally to the [b]ankruptcy

[c]ourt’s decision-making process as to the latter.” (Appellant’s Brief, p. 68).

       From what the Court can glean, Cadle’s argument assumes a finding in its favor relating to

GPILP’s ownership interest in order to prevail. Fatal to this argument then is our agreement with

the bankruptcy court that GPILP has a sufficient ownership interest to assert its claim. Moreover,

Cadle fails to offer an alternate ground in support of its argument. Accordingly, the bankruptcy

court’s decision on this issue will be affirmed.



                                       III. CONCLUSION

       For the reasons stated above, the bankruptcy court’s decision is AFFIRMED.



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