                                                                     FILED
                                                         United States Court of Appeals
                          UNITED STATES COURT OF APPEALS         Tenth Circuit

                                     TENTH CIRCUIT                          December 5, 2012

                                                                           Elisabeth A. Shumaker
                                                                               Clerk of Court


 In re: QuVIS, INC.,

        Debtor.

 ------------------------------

 DOUGLAS A. FRIESEN, M.D.;
 MARILYN R. FRIESEN GREENBUSH,
 Ph.D.; DOUGLAS C. CUSICK

         Plaintiffs–Appellants,
                                                               No. 12-3099
 and                                                 (D.C. No. 6:11-CV-01072-EFM)
                                                                (D. Kan.)
 JFM LIMITED PARTNERSHIP I;
 UNSECURED CREDITORS’
 COMMITTEE,

        Plaintiffs,

 v.

 SEACOAST CAPITAL PARTNERS II,
 L.P.,

         Defendant–Appellee.



                                  ORDER AND JUDGMENT*

       * This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. This court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
                                                                               Continued . . .
Before LUCERO, SEYMOUR, and MURPHY, Circuit Judges.


       Appellants seek reversal of a bankruptcy court order declining to equitably

subordinate the claim of Seacoast Capital Partners II, L.P. (“Seacoast”). We are in

substantial agreement with the bankruptcy and district courts. Exercising jurisdiction

under 28 U.S.C. § 158(d)(1), we affirm.

                                             I

       Given our agreement with the lower courts in this matter, we will not recite the

facts of this case in detail. Appellants, along with Seacoast and other lenders, loaned

funds to QuVIS, Inc., a company that was later placed into involuntary Chapter 11

bankruptcy. Although appellants initially possessed a secured interest in QuVIS’s assets

pursuant to a UCC-1 financing statement filed with the Kansas Secretary of State, they

lost their secured status when the financing statement lapsed by operation of state law.

Seacoast, along with other lenders, noted the lapse and filed new financing statements to

secure their interests. The bankruptcy court ruled that secured lenders would be paid

from the QuVIS estate on a first-to-file basis, an issue not before us on appeal.

       Appellants initiated an adversary proceeding seeking to equitably subordinate

Seacoast’s claim. The bankruptcy court concluded that equitable subordination would be



the terms and conditions of 10th Cir. R. 32.1.


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improper because Seacoast was not an insider of QuVIS and Seacoast did not engage in

inequitable conduct. The district court affirmed.

                                              II

       “In an appeal in a bankruptcy case, we independently review the bankruptcy

court’s decision, applying the same standard as the . . . district court.” Miller v. Bill and

Carolyn Ltd. P’ship (In re Baldwin), 593 F.3d 1155, 1159 (10th Cir. 2010). We review

the grant of summary judgment de novo. Atl. Richfield Co. v. Farm Credit Bank of

Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000).

       A bankruptcy court may “subordinate for purposes of distribution all or part of an

allowed claim to all or part of another allowed claim.” 11 U.S.C. § 510. A party seeking

equitable subordination must establish, inter alia, “inequitable conduct on the part of the

party whose debt is sought to be subordinated.” Sender v. Bronze Grp., Ltd. (In re

Hedged-Investments Assocs.), 380 F.3d 1292, 1300 (10th Cir. 2004) (quotation omitted).

“Where the claimant is an insider or a fiduciary, the party seeking subordination need

only show some unfair conduct, and a degree of culpability, on the part of the insider.”

Id. at 1301. “If the claimant is not an insider or a fiduciary, however, the party seeking

subordination must demonstrate even more egregious conduct such as gross misconduct

tantamount to fraud, misrepresentation, overreaching or spoilation.” Id. at 1301-02

(quotation omitted).

       We agree with the thorough and persuasive orders of the bankruptcy and district

courts. Appellants have not advanced evidence creating a question of fact as to whether
                                             -3-
Seacoast was an insider of QuVIS. See 11 U.S.C. § 101(31)(B) (criteria for statutory

insiders); Anstine v. Carl Zeiss Meditec AG (In re U.S. Medical, Inc.), 531 F.3d 1272,

1276 (10th Cir. 2008) (criteria for non-statutory insiders). Nor have they created a fact

question as to whether Seacoast engaged in inequitable conduct. See Sender, 380 F.3d at

1301-02 (describing inequitable conduct standard for non-insiders). The record

demonstrates that Seacoast simply filed a financing statement to secure its interest after

noting a lapse as part of its due diligence investigation.

                                             III

       AFFIRMED.



                                                   Entered for the Court



                                                   Carlos F. Lucero
                                                   Circuit Judge




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