
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1154                    STEPHEN DARR, TRUSTEE OF COLUMBUS MORTGAGE AND                       LOAN CORPORATION OF RHODE ISLAND, INC.,                                 Plaintiff, Appellee,                                          v.                           JOSEPH R. MURATORE, SR., ET AL.,                               Defendants, Appellants.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                    [Hon. Ronald R. Lagueux, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                            Cyr and Stahl, Circuit Judges,                                           ______________                             and Fuste,* District Judge.                                         ______________                                 ____________________            Paul J. Bogosian, Jr.  with whom Hodosh, Spinella & Angelone  were            _____________________            ___________________________        on brief for appellants.            Joseph Avanzato  with whom  John F.  Bomster and  Adler Pollock  &            _______________             ________________      ________________        Sheehan Incorporated were on brief for appellee.        ____________________                                 ____________________                                   November 1, 1993                                 ____________________        ____________________        *Of the District of Puerto Rico, sitting by designation.                    FUSTE,  District Judge.   The  Trustee  for a  bankrupt                    FUSTE,  District Judge.                            ______________          mortgage lending institution brought an action against the former          chairman  and chief executive  officer of the  company, his wife,          who was also an officer and director  of the bankrupt lender, and          three   separate   real  estate   and   development  corporations          controlled by the couple.  The Trustee's action sought to recover          over two million  dollars allegedly owed to  the bankrupt lending          institution  by defendants.  The Trustee contends that defendants          first, improperly created the debt, second, fashioned a favorable          calculation  of the amount  due, and third,  incorrectly declared          the loans repaid  through a questionable real  estate conveyance.          The  Trustee claims that defendants violated their fiduciary duty          to  the  institution  and  to  the  lender's  numerous  debenture          holders.                      Defendants   argue   that   no   fiduciary   duty   was          transgressed,  and counter that  the Trustee committed  waste and          failed  to mitigate  damages to the  bankrupt estate  by allowing          foreclosure  on the properties  which allegedly were  conveyed in          order to satisfy  the debt.  They also take issue with the method          of debt calculation utilized by the district court.  In addition,          defendants  contend that  they  are  entitled  to  a  significant          reduction of any  outstanding debt because of the  equity in, and          rental income  from, the conveyed  real estate, and to  a further          reduction of the debt because of the Trustee's alleged failure to          prevent  the foreclosures of the properties.  Finally, defendants                                         -2-                                          2          argue  that they  should receive  a setoff  of  any debt  owed to          plaintiff as  a result  of various  unrelated expenses  allegedly          advanced by defendants to the plaintiff.                    In  the   instant  appeal,  defendants   challenge  two          decisions  of the  district court:   A  grant of  partial summary          judgment  with  respect  to  the  total remaining  debt  owed  by          defendants,  and the court's certification of final judgment.  We          now affirm the district court's partial summary judgment and hold              affirm          that  final judgment  certification was  justified.   Defendants'          claims  of payment through  property transfer, waste,  failure to          mitigate, setoff, and miscalculation of debt are unavailing  as a          matter of law.                                          I.                                          I.                                      Background                                      Background                                      __________                    From August 1961 to  December 1991, Defendant-Appellant          Joseph R. Muratore,  Sr. ("Mr. Muratore") owned and  controlled a          mortgage  lending   institution,   Columbus   Mortgage   &   Loan          Corporation of Rhode  Island, Inc., as  well as its  wholly-owned          real   estate   development  corporation   subsidiary,   Columbus          Development Corporation.  The nature of the business  of Columbus          Mortgage was to serve as  a mortgage lending firm specializing in          residential  real  estate  loans  secured  by  first  and  second          mortgages  on real  estate.   At  some  point, however,  Columbus          Mortgage entered into the  business of making unsecured  loans in          its  real estate dealings,  financing them in  large part through                                         -3-                                          3          the sale of  debentures.1  Columbus Mortgage  eventually took its          business  a  step  further  and  sold  a  second   generation  of          debentures  to   refinance  the  first  generation   of  maturing          obligations.   As  of December  31, 1989,  Columbus Mortgage  had          $4,400,139 in  outstanding debentures.  It is undisputed that Mr.          Muratore owed a fiduciary duty  to the debenture holders, as well          as to  Columbus Mortgage.   In February  1991, Columbus  Mortgage          declared  bankruptcy, acknowledging  its inability  to  repay its          debts in full, including its debentures.                    Mr. Muratore and his  wife, Defendant-Appellant Rose E.          Muratore  ("Mrs.   Muratore"),  controlled  other   Rhode  Island          corporations, officially  unrelated to  Columbus Mortgage,  that,          inter alia, were  in the business of selling  and developing real          estate:   Defendants-Appellants Muratore Agency,  Inc. ("Muratore          Agency"), Muratore Realty Corp. ("Muratore Realty"), and Shawomet          Holding Associates ("Shawomet") (collectively  referred to as the          "Separate Muratore Companies").   We refer, collectively,  to all          Muratore  persons  and  Muratore  corporations as  the  "Muratore          Defendants".                    There  is  no  doubt  that  Columbus  Mortgage provided          several unsecured  loans  to  the  Separate  Muratore  Companies,          drawing funds from  the pool of money accumulated  by the selling          of debentures to citizens of  Rhode Island.  These loans  were by                                        ____________________               1"Debentures  are unsecured debt, as opposed to bonds, which          are secured by the assets of the issuing company."  In  re Worlds                                                              _____________          of Wonder  Sec. Litigation,  814 F.Supp.  850, 854 n.2  (N.D.Cal.          __________________________          1993).   See also  SEC v.  Howatt, 525  F.2d 226,  229 (1st  Cir.                   ________  ______________          1975).                                         -4-                                          4          no means insignificant.  In  fact, loans to the Separate Muratore          Companies,  most  or   all  of  which  were   unsecured,  totaled          $2,044,313  as of  June  30,  1989, more  than  half of  Columbus          Mortgage's total assets of $3,973,791 at that time.  In addition,          the  record strongly suggests that Columbus Mortgage's funds were          used to  pay miscellaneous personal  debts of Mr. Muratore.   The          record  contains  no proof  of  repayment  from  Mr. Muratore  to          Columbus  Mortgage.    The  bottom  line  is  that  the  Muratore          Defendants claim that their  total indebtedness was approximately          $900,000 in  December 1990, and  $1,200,000 in 1992.   Plaintiff-          Appellee  Stephen Darr, Chapter 11 Bankruptcy Trustee of Columbus          Mortgage ("Trustee"), argues that the defendant's  obligation was          over $2,000,000.                    The Muratore  Companies paid  off some  portion of  the          debt in  cash.  However,  the payments were applied  to principal          rather than  to accumulated  interest.   The Muratore  Defendants          claim   that  their  remaining  debt  to  Columbus  Mortgage  was          discharged in full on or about December 15, 1990, when two pieces          of real  estate of disputed  equity value were conveyed  from the          Muratore  Defendants to  Columbus Mortgage.2    In an  affidavit,          Mr. Muratore, an experienced appraiser in his own right, affirmed          under oath  that at the  time of the conveyance  he believed that          the fair market value of  the properties was $2,000,000, and that          approximately  $800,000  were  still   owed  on  the  properties'                                        ____________________               2The two properties  conveyed by the Muratore  Defendants to          Columbus Mortgage are  located at 1845 Post  Road, Warwick, Rhode          Island, and 275-277 Atwells Avenue, Providence, Rhode Island.                                         -5-                                          5          mortgages.  Thus, according to  Mr. Muratore, the equity value of          the properties was  approximately $1,200,000.  In  the affidavit,          Mr. Muratore also referred to  an independent aggregate appraisal          of the properties,  before encumbrances,  of $1,660,000,  meaning          that as of  December 15, 1990  the equity  in the properties  was          approximately $860,000.   Scanning the  record, we  only find  an          independent  appraisal of  the  Post  Road  Property,  valued  at          $856,000 as  of December  19, 1992.   The Trustee  challenges the          Muratore Defendants'  valuation of the property,  contending that          given the unpaid portion of  the mortgages on the two properties,          their aggregate equity value was less than $100,000.                      The  Muratore   Defendants  claim   that  the   Trustee          committed waste by failing to refinance the properties' mortgages          and allowing  foreclosure, causing  the estate  to lose  whatever          equity  remained.  Columbus Mortgage, through the Trustee, argues          that  it permitted foreclosure  on the properties  pursuant to 11          U.S.C.    362 because  they lacked equity  value.3   The Muratore          Defendants contend that  they deserve a  reduction of the  amount          owed to  Columbus Mortgage equal to the sum  of the equity in the          properties, the accrued rental income derived from the properties          before  foreclosure,  and  funds owed  to  the  Separate Muratore          Companies  by   Columbus  Mortgage  stemming   from  transactions          unrelated to the debt at issue in this case.                                          ____________________               311  U.S.C.   362  provides  for an  automatic  stay on  the          property   of  an  estate   which  is  undergoing   voluntary  or          involuntary bankruptcy.  However,  under   362(d)(2)(A), a  party          in interest may  obtain relief from the stay if the debtor has no          equity in the property.                                         -6-                                          6                    Two months after  the conveyance of the  properties, on          February  15,  1991,  Columbus Mortgage,  under  the  guidance of          Mr. Muratore, filed  a voluntary  Chapter 11  bankruptcy petition          with the United States Bankruptcy Court for the District of Rhode          Island.  11 U.S.C.   1121.   At first, Columbus Mortgage operated          as  a debtor  in possession;  however,  the creditors'  committee          brought an adversary  proceeding in the bankruptcy court  for the          purpose of collecting money damages from the Muratore Defendants.          In early April  1992, the adversary  proceeding was withdrawn  to          the  United  States District  Court  for  the District  of  Rhode          Island.   Soon thereafter,  Stephen Darr  was appointed  Columbus          Mortgage's  Bankruptcy Trustee.  The Trustee, substituted for the          creditors'  committee, continued  a  six-count action  to recover          damages allegedly sustained  by the estate and  supposedly caused          by the Muratore Defendants.4                      On October 14,  1992, the Trustee filed a  Fed. R. Civ.          P. 56 motion for partial summary  judgment and for entry of final          judgment on Count  III of the first amended  complaint alleging a          debt due and owing.  Fed. R. Civ. P. 54(b).  On January 12, 1993,          the district court granted the Trustee's motion and entered final          judgment  on Count  III against  the Muratore  Defendants  in the          amount of $2,146,034.24.  The  district court concluded that  the          Muratore Defendants  were in  fact one  entity,  one corpus,  and                                        ____________________               4The  Trustee's  six-count  action  includes  the  following          allegations:   Count  I,  Breach of  Fiduciary  Duty;  Count  II,          Conversion; Count  III, Debt Due  and Owing; Count IV,  Breach of          Contract, and Count V, a second Breach of Contract.                                           -7-                                          7          ordered final  judgment on Count  III because there was  "no just          reason for  delay."  The  district judge's primary  rationale for          Rule 54(b) certification was that the Muratore Defendants' assets          available to settle  the claim were barely sufficient  to pay the          debt and that  relief should be granted to  the debenture holders          as soon as possible.   The court noted that entry  of judgment on          Count III  would probably cause  the other counts to  become moot          because of the limited resources of the Muratore Defendants.                                           II.                                         II.                                   Summary Judgment                                   Summary Judgment                                   ________________                    In order to  review the district court's  certification          of  summary judgment  on Count  III of  the  adversary proceeding          against Mr. Muratore, we must decide whether the district court's          ruling fulfilled the  requirements for summary judgment  and Rule          54(b) certification.5          A.  Standard for Review          A.  Standard for Review              ___________________                    Our review  of summary  judgment decisions  is plenary.          Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir. 1990).  Summary          ____________________          judgment  is appropriate "if  the pleadings, depositions, answers                                        ____________________               5We do not  disturb the district court's  determination that          the various actorswho constitute theMuratore Defendants arealter-          egos of one  another.  That finding by the district court has not          been seriously  challenged  on appeal  and rests  on sound  legal          principles.  See Oman Int'l Fin. Ltd. v. Hoiyong Gems Corp.,  616                       ___ __________________________________________          F. Supp. 351, 363-66  (D.R.I. 1985) (discussing law of  corporate          collectivity)  (affirmatively cited  in  United Elec.,  Radio and                                                   ________________________          Mach. Workers of  America v. 163 Pleasant Street  Corp., 960 F.2d          _______________________________________________________          1080, 1096  (1st Cir.  1992)); cf. Vucci  v. Myers  Bros. Parking                                         ___ ______________________________          Sys., 494 A.2d  530, 535-36 (R.I.  1985).  Thus, we  will discuss          ____          the Columbus Mortgage  debt as an obligation of  the aggregate of          defendants  without   segregating  loans  among   the  particular          Muratore entities.                                         -8-                                          8          to interrogatories,  and admissions  on file,  together with  the          affidavits, if any, show that there is no genuine issue as to any          material fact and that the moving party is entitled to a judgment          as a matter of  law."  Fed. R.  Civ. P. 56(c).  In  applying this          standard to the  instant case, we  view the  record in the  light          most favorable to the nonmovants, the  Muratore Defendants.  Bank                                                                       ____          One Texas, N.A.  v. A.J.  Warehouse, Inc., 968  F.2d 94, 97  (1st          _________________________________________          Cir. 1992).  A nonmovant, however, bears the burden of placing at          least a  single material fact  into dispute after a  moving party          offers evidence of the absence of a genuine issue.  See Jaroma v.                                                              ___ _________          Massey, 873  F.2d 17, 20  (1st Cir. 1989) (per  curiam); White v.          ______                                                   ________          Hearst Corp., 669  F.2d 14, 17 (1st  Cir. 1982).  "[T]here  is no          ____________          issue for trial unless there is sufficient  evidence favoring the          nonmoving party  for a jury to return  a verdict for that party."          Anderson v.  Liberty Lobby,  Inc., 477 U.S.  242, 249 (1986).   A          _________________________________          nonmoving party  has a duty  to oppose a cogent  summary judgment          motion.  Id.                   ___          B.  Discussion          B.  Discussion              __________                    Defendants  assert that there  exist genuine  issues of          material fact regarding the debt owed to Columbus  Mortgage which          preclude a grant of summary judgment.   In order to address these          allegations, we must  examine whether the real  estate conveyance          was a valid debt payment, whether the defendants were entitled to          any reductions  of the debt, and  whether it was correct  for the          defendants to  apply payments  to the principal  rather than  the          interest component of the debt.                                           -9-                                          9              1.  Were Real Estate Conveyances Debt Payments?              1.  Were Real Estate Conveyances Debt Payments?                  ___________________________________________                    The  record  clearly  demonstrates  that  the  Muratore          Defendants  owe Columbus  Mortgage a  significant  sum of  money.          Defendants  admit  to  a  certain  amount  of  debt  to  Columbus          Mortgage,  but   argue  that  prior  to  filing  for  Chapter  11          bankruptcy,  two  valuable  properties  were  conveyed  from  the          Separate Muratore  Companies  to  Columbus  Mortgage  in  partial          satisfaction of the admitted debt.                      Regardless  of the  fiduciary  propriety  of the  real-          estate- for-debt  transaction,6 Mr. Muratore admitted  before the          district court that the obligation created by his  arrangement of          Columbus Mortgage loans  to the Separate Muratore Companies was a          money debt.  There was no agreement that the debt could be repaid          through a  transfer of properties chosen by  the debtor.  Nor was          there evidence  of custom from  which such an agreement  could be          implied.  Since  loans are to be  normally repaid with money  and          not with houses or any other less liquid type of asset, even when          viewing the record  in the light most hospitable  to the Muratore          Defendants  we find untenable  the argument that  the real-estate                                        ____________________               6This court  finds questionable  that the  Separate Muratore          Companies  attempted  to  repay  a  seven-digit  debt  through  a          property  transfer at  the direction  of Mr.  Muratore when,  two          months later,  the creditor, Columbus Mortgage, voluntarily filed          a  Chapter  11  bankruptcy  petition  also by  the  hand  of  Mr.          Muratore.   The facts  undisputedly show  that  Mr. Muratore  was          effectively   in  control  of   both  the  creditor   and  debtor          institutions involved in these transactions.   It is evident that          a  large cash debt  was supposedly satisfied at  a time and under          circumstances  which greatly  benefitted the  Muratore Defendants          and harmed the soon-to-be declared bankrupt company controlled by          Mr. Muratore, working to the detriment of the unsecured creditors          of that company.                                           -10-                                          10          transfer satisfied  the debt.   We agree with the  district court          that  the debt  and  the real  estate  transaction have  separate          identities.  No genuine factual dispute revolves around the issue          of loan  satisfaction  by the  real estate  conveyance.   Without          prejudice to the bankruptcy court's final assessment of any claim          by the Muratore Defendants arising from the real estate transfer,          the money debt remains and the district court properly decided to          enforce the payment  of the same.  We now turn to a determination          of the extent of the debt.                     2.  Waste, Failure to Mitigate, and Setoff               2.  Waste, Failure to Mitigate, and Setoff                   ______________________________________                    The district  court held as  a matter of law  that what          the  Muratore Defendants  have defined  as waste  and  failure to          mitigate  are unavailing theories  as they pertain  to the motion          for summary judgment on Count III.  We agree.  Both the waste and          failure to mitigate theories operate on  the presumption that the          real-estate  conveyance   was  a  payment  toward   the  Muratore          Defendants' debt.  The district  court found that the real-estate          conveyance  cannot rightly  be deemed the  equivalent of  a money          payment  on the  Muratore Defendants'  debt  and, therefore,  any          credit or  complaint relating  to the  transferred properties  is          entirely separate  from the  debt owed by  defendant, and  may be          brought up  before the bankruptcy  court.  The $18,000  in rental          income that  the bankrupt estate  supposedly received due  to its          possession of the properties is no different.                        The question  of setoff  is different  than those  of          waste  and failure  to mitigate,  in that  defendants' theory  of                                         -11-                                          11          setoff   involves  debts  not  dependant  on  the  real  property          conveyance.  The  Muratore Defendants allege a right  to a setoff          of   $418,046.25  under  11  U.S.C.   553,7  citing  evidence  of          indebtedness  carried on the  ledger cards of  Columbus for wages          paid by the Muratore Defendants to employees of Columbus, and for          rental obligations due from Columbus.                     Section  553 does not  create new substantive  law, but          incorporates in bankruptcy the common law right of setoff, with a          few additional restrictions.  U.S.  ex rel. I.R.S. v. Norton, 717                                        ______________________________          F.2d 767, 772 (3d Cir. 1983).  The right of setoff allows parties          that  owe mutual debts to each  other to assert the amounts owed,          subtract one from  the other, and  pay only the  balance.  In  re                                                                     ______          Bevill, Bresler & Schulman Asset Mgmt. Corp., 896 F.2d 54, 57 (3d          ____________________________________________          Cir. 1990).   However, allowing setoff undermines a basic premise          of bankruptcy law,  equality among creditors, by  "permit[ting] a          creditor  to obtain full satisfaction of a claim by extinguishing          an equal amount of the creditor's obligation to the debtor . .  .          in effect,  the creditor receives a 'preference'."   Id. (quoting                                                               ___          In re Braniff Airways, Inc.,  42 B.R. 443, 448 (Bankr. N.D.  Tex.          ___________________________          1984)). As a result, setoff in the context of a bankruptcy is not          automatic.  Under section 553, debts cannot be setoff unless they          are mutual.   Mutuality requires  that the debts "be  in the same                                        ____________________               7In pertinent part, 11 U.S.C.   553 provides:  "[T]his title          does not affect any right of  a creditor to offset a mutual  debt          owing  by such  creditor  to  the debtor  that  arose before  the          commencement of the case under this title against a claim of such          creditor against the debtor that arose before the commencement of          the case."  11 U.S.C.   553(a) (1993).                                         -12-                                          12          right  and  between  the  same  parties,  standing  in  the  same          capacity."  4 Collier  on  Bankruptcy    553.04 (15th  ed. 1992).                        _______________________          Where the liability  of the party seeking the  setoff arises from          breach of a fiduciary duty, mutuality of debts does not exist and          therefore no  setoff is available.   Id.   See also In  re Drexel                                               ___   ___ ____ _____________          Burnham  Lambert  Group,  Inc.,  113  B.R.  830,  847-48  (Bankr.          ______________________________          S.D.N.Y. 1990); In re  Esgro, Inc., 645 F.2d  794, 797 (9th  Cir.                          __________________          1981)  (discussing precursor to section 553); Allegaert v. Perot,                                                        __________________          466 F.Supp. 516, 518 (S.D.N.Y. 1978).                      If the district court correctly found that Mr. Muratore          breached  his fiduciary duty to Columbus  Mortgage by causing the          unsecured loans to  the Muratore Defendants to be  made, then the          debts of the two parties are not mutual and no setoff  is allowed          as a  matter of  law.   The  district court  determined that  the          Muratore Defendants violated their fiduciary responsibilities and          assisted in the bankruptcy of Columbus Mortgage by taking actions          to  their benefit  and  against the  interests  of the  debenture          holders.     The  Muratore   Defendants  argue   that  the   loan          transactions carried  on between  Columbus Mortgage,  on the  one          side,  and the Separate Muratore Companies  and the Muratores, on          the   other,   were  honest,   arm's-length   business  dealings.          Defendants  cite their accounting  documentation as proof  of the          legitimacy of  the loans and terms at issue.  After reviewing the          record,   we  cannot   find  error   in   the  district   court's          determination  that the  Muratore  Defendants seriously  breached          their  fiduciary  obligations.   This  breach  of  fiduciary duty                                         -13-                                          13          created a  lack of  mutuality between  the unsecured  loans which          were made to the Muratore Defendants by Columbus Mortgage and any          money advanced to  Columbus Mortgage by the  Muratore Defendants.          As a result, there is no genuine issue of material fact regarding          the propriety of  any setoff  of the  debt owed  by the  Muratore          Defendants.                 3.  Applying Cash Payments to Interest               3.  Applying Cash Payments to Interest                   __________________________________                    Defendants  next   argue  that  summary   judgment  was          improper because of  a dispute about the effect  of partial money          payments on  their debt obligations.   Defendants claim  that the          amount  owed is  lower than  the  trial court  found because  the          partial payments were to be used to reduce the principal (without          capitalizing   unpaid   interest)   rather  than   first   paying          accumulated   interest.8    The  district  court  concluded  that          repayment should have been  on an interest-first basis  and found          that the Separate Muratore Companies owed substantially more than          previously suggested  by the  Columbus Mortgage  account ledgers.          The  Muratore Defendants  argue that the  district court  did not          have  sufficient evidence  to decide  that  the repayment  method          should have been on an interest-first basis.                      It  is undisputed that  the record contains  no express          agreement  detailing the method  for repaying the  loans.  Sample          promissory  notes  used  by Columbus  Mortgage  suggest  that the          standard practice for  Columbus Mortgage was payment  of interest                                        ____________________               8By  allowing the payment  of principal first,  the Muratore          Defendants were able  to save over $600,000 in  interest on their          loans.                                         -14-                                          14          first,  with the  remainder  of any  given  payment going  toward          decreasing  the principal.    Defendants did  not place  into the          record  any promissory notes allowing payment of principal first,          then  interest.   Defendants  rely  primarily  on unsubstantiated          statements and assertions that question the evidence submitted by          the Trustee, and  fail to present hard evidence  to cast doubt on          the  Trustees'  or  the  district  court's  calculations  of  the          outstanding obligation.  Defendants assert that such calculations          were  done incorrectly and  were based on  incorrect assumptions,          but   provide  no   evidenced  alternatives   to  support   these          assertions.  In short, Defendants offer no "significant probative          evidence"  that  creates a  genuine  dispute about  the  terms of          repayment.   Anderson v. Liberty  Lobby, Inc., 477 U.S.  242, 249                       ________________________________          (1986).                      We  note  further that  the dispute  over the  terms of          repayment ultimately presents  not a factual question for  a jury          but a legal  question for the court.   While Rhode Island  law is          unclear on the subject, the  normal rule throughout the nation is          that, absent  an express  agreement to the  contrary, there  is a          presumption that  loan payments are  made to  interest first  and          then principal.9   See  In re Department of  Energy Stripper Well                             ___  _________________________________________          Exemption  Litigation, 944 F.2d  914, 916  (Temp. Emer.  Ct. App.          _____________________                                        ____________________               9Some courts have referred to this principle as the "'United          States Rule' on partial payments."  Shutts v.  Phillips Petroleum                                              _____________________________          Co., 567  P.2d 1292,  1321 (Kan. 1977),  cert. denied.,  434 U.S.          ___                                      _____________          1068  (1978).    The  rule   has  ancient  roots;  it  was  first          acknowledged by the  Supreme Court over a century and a half ago.          See Story v. Livingston, 38 U.S. 359, 371 (1839).          ___ ___________________                                         -15-                                          15          1991); Bonjorno  v. Kaiser  Aluminum &  Chemical Corp.,  865 F.2d                 _______________________________________________          566, 576 (3d Cir. 1989), aff'd in part and rev'd in part on other                                   ________________________________________          grounds,  494  U.S. 827  (1990);  Devex Corp.  v.  General Motors          _______                           _______________________________          Corp., 749 F.2d  1020, 1025 n.6 (3d Cir. 1984), cert. denied, 474          _____                                           ____________          U.S. 819 (1985); Nat G.  Harrison Overseas Corp v. American Barge                           ________________________________________________          Sun  Coaster, 475  F.2d 504,  507 (5th  Cir. 1973);  Whiteside v.          ____________                                         ____________          Washington  Loan and Trust Co., 95 F.2d  83, 87 (D.C. Cir. 1937);          ______________________________          Torosian v. National Capital Bank,  411 F. Supp. 167, 173 (D.D.C.          _________________________________          1976); Shutts  v. Phillips  Petroleum  Co., 567  P.2d 1292,  1321                 ___________________________________          (Kan.  1977), cert.  denied,  434 U.S.  1068  (1978); Landess  v.                        _____________                           ___________          State,  335 P.2d  1077  (Okla. 1958);  see also  45 Am.  Jur. 2d,          _____                                  ________          Interest and Usury,   99,  pp. 88-89; 47 C.J.S., Interest,    66,          pp. 72-73.                    As  the  United  States  Rule  contemplates  that  loan          repayments  ordinarily  are  to be  credited  first  to interest,          absent a  contrary agreement,  we are not  inclined to  conjure a          different   rule  under  Rhode  Island  law.    Moreover,  sample          promissory notes, testimony, and the national custom of crediting          loan  repayments  first  to interest,  all  support  the district          court's  conclusion.  Since there was  no genuine factual dispute          about the property transfer, the alleged reductions or the manner          of  debt calculation, we  hold that the  district court correctly          calculated the outstanding debt at $2,146,034.24.                                           III.                                         III.                               Entry of Final Judgment                               Entry of Final Judgment                               _______________________          A.  Standard for Review          A.  Standard for Review              ___________________                                         -16-                                          16                    A  district court  "may  direct the  entry  of a  final          judgment  as to one or  more but fewer than all  of the claims or          parties only upon an express  determination that there is no just          reason for delay and upon an  express direction for the entry  of          judgment."  Fed. R. Civ. P. 54(b).  Orders pursuant to Rule 54(b)          are reviewable by the Court of Appeals for abuse of discretion by          the trial  court.  Sears, Roebuck & Co.  v. Mackey, 351 U.S. 427,                             _______________________________          437 (1956); Ginett  v. Computer Task Group, Inc.,  962 F.2d 1085,                      ____________________________________          1092 (2d Cir. 1992).  This court, however, has limited the Mackey                                                                     ______          holding  to cases  like the  instant one  in which  a Rule  54(b)          certificate has  been granted  by the district  court.   Makuc v.                                _______                            ________          American Honda Motor Co., 692 F.2d 172, 173 (1st Cir. 1982).            ________________________                    In  Spiegel v. Trustees  of Tufts College,  843 F.2d 38                        _____________________________________          (1st Cir.  1988), we held that the district court's certification          of a final  judgment pursuant to Rule 54(b)  must satisfy certain          criteria.  First,  the judgment must have the  "requisite aspects          of finality."  Id. at  43 (citing Morrison-Knudsen Co. v. Archer,                         ___                ______________________________          655  F.2d 962, 965 (9th Cir. 1981)).   Second, the district court          must have  made its  decision to certify  a final  judgment while          viewing all claims  and parties in perspective.   See id. (citing                                                            ___ ___          Pahlavi v. Palandjian, 744 F.2d 902, 904 n.5 (1st Cir. 1984), and          _____________________          quoting Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 10                  _________________________________________          (1980)).  Third, we examine  the trial judge's "assessment of the          equities"  regarding any justifiable reasons for delay.  Spiegel,                                                                   _______          843 F.2d  at 43.   This process is necessarily  case-specific and          requires an assessment  of the entire litigation  and an analysis                                         -17-                                          17          of factors which  suggest reasons to relax  the usual prohibition          against piecemeal  appellate review.10   "If  the district  court          has fulfilled  its responsibility  of enlightening  us as to  the          basis  for  certification  .  .  .  then   we  give  'substantial          deference'  to the  court's  exercise of  its  discretion."   Id.                                                                        __          (quoting Pahlavi, 744 F.2d at 904 n.5).                   _______          B.  Discussion          B.  Discussion              __________              1.  Two-Pronged Threshold Test              1.  Two-Pronged Threshold Test                  __________________________                    The first  prong of our inquiry is  whether judgment on          Count III, alone,  satisfies the requirement of  finality.  Count          III of  the Trustee's first  amended complaint simply  asserts an          amount  of money  owed to  the  bankrupt estate  by the  Muratore          Defendants.  There can be  little doubt that entering judgment on          Count  III  provides  the requisite  quantum  of  finality.   See                                                                        ___          Spiegel, 843 F.2d at 43.  If a certain sum of money  is deemed to          _______          be owed to a bankrupt estate, a decision that recognizes the debt          and orders payment is a coherent and final disposition.  The debt          is either owed or it is not.                                          ____________________               10Factors  analyzed by other courts in evaluating Rule 54(b)          motions  include (1) the relationship between the adjudicated and          non-adjudicated claims,  (2) the  possibility that  the need  for          review  might be  mooted by future  developments in  the district          court, (3) the possibility  that the same issue might  have to be          considered  again by  the reviewing  court, (4)  the presence  or          absence of a claim or counterclaim which might result in a setoff          against the judgment which is to be made final, (5) miscellaneous          considerations   such    as   delay,   economic    and   solvency          considerations, efficiency,  frivolity of  competing claims,  and          expense.   Allis-Chalmers Corp. v. Philadelphia Electric Co., 521                     _________________________________________________          F.2d 360, 364 (3d Cir. 1975).                                         -18-                                          18                    Second, we  verify whether  the trial judge  considered          the interrelatedness  of claims and  the overall  context of  the          case before him.   See Spiegel,  843 F.2d at 43  (citing Pahlavi,                             ___ _______                           _______          744 F.2d at  904 n.5, and quoting Curtiss-Wright  Corp., 446 U.S.                                            _____________________          at  10).   Here,  the  district court  observed that  a  grant of          partial summary judgment would  cause the other counts  to become          moot,  since the  effect of  the  satisfaction of  the Count  III          judgment would  be to  deplete the  Muratore Defendants  of their          assets.    The  district  court  was  explicitly  referring  to a          contextual analysis.  The district judge found that the assets of          defendants  are not  sufficient  to  satisfy  any  further  money          claims.  Thus, we hold  that the second Rule 54(b)  criterion was          met when the district judge contemplated his action pertaining to          Count  III with a  view to the  other five  counts and not  in an          abstract or myopic fashion.              2.  Equities                2.  Equities                    ________                    Moving  to the  heart  of  this  analysis,  we  examine          whether the trial judge abused his discretion in determining that          there was  "no just reason for delay," Fed.  R. Civ. P. 54(b), in          light  of  the  futility  of  the  defendants'  claims  regarding          reductions  in  the amount  of  the debt  and  the time-sensitive          position of the Trustee and debenture holders.11                                          ____________________               11An additional requirement  for a  proper certification  is          that the district judge must  have made an "express direction for          the entry of judgment."  Fed. R. Civ. P. 54(b).  This requirement          was obviously met by the judge's oral and written directions.                                          -19-                                          19                    In the usual case, if there is a possibility of a later          setoff  of a  money debt,  Rule 54(b)  certification of  the debt          would  be improper  because of  the  inefficient and  inequitable          result which  would occur  if one party  were allowed  to collect          money which may have to  be paid back to the other party when the          remaining litigation is  completed.   Pahlavi, 744  F.2d at  904.                                                _______          However, that is  not the case here.   No setoff or  reduction of          the Muratore  Defendants' debt  could be allowed  as a  matter of          law.  The claimed reductions relating to the transferred property          could  not be  applied  to reduce  the money  debt.   The  amount          allegedly owed by Columbus Mortgage  for wages and rent cannot be          setoff because the fiduciary relationship between the two parties          renders  the debts  non-mutual.   Here  then, we  do  not face  a          situation   where  the  Muratore  Defendants  will  pay  Columbus          Mortgage only to have Columbus Mortgage return the money when the          remaining  claims are decided.   Rather, the  Muratore Defendants          will  have to  join  the other  unsecured  creditors and  proceed          through the Bankruptcy Court in  an attempt to recover any amount          allegedly owed by Columbus Mortgage.  The claimed setoffs present          no just reason for delay.                  The  district  court  determined  that certification  was          proper because the Trustee and debenture holders  would be harmed          with  the  postponement of  any  appeal.    The trial  court,  in          exercising its discretion  in the  Rule 54(b)  context, may  take          time  and value into consideration in finding delay unreasonable,          particularly  in  a  case  of failure  to  meet  basic  fiduciary                                         -20-                                          20          responsibilities.     Cf.  Curtiss-Wright   Corp.,  446  U.S.   1                                ___  ______________________          (consideration of  time-value  of  money).   While  there  is  an          economic preference for  all claims in a particular  case to move          to the appeal stage together, a demonstration  of clear injustice          or  hardship resulting  from  delaying  a  final  judgment  on  a          particular  question  may  justify  certification.    Since   the          district court  in the  instant case  considered the  appropriate          criteria in a  reasonable and coherent manner,  "we conclude that          [the court] did not abuse its discretion . . . ."  Curtiss-Wright                                                             ______________          Corp., 446 U.S. at 12; see Spiegel, 843 F.2d 38; see  also Pierce          _____                  ___ _______               _________ ______          v.  Underwood, 487  U.S.  552, 562  (1988).   There was  "no just          _____________          reason for delay."  Fed. R. Civ. P. 54(b).                                         -21-                                          21                                         IV.                                         IV.                                      Conclusion                                      Conclusion                                      __________                    We  hold that there was  no genuine dispute of material          fact concerning the district court's calculation of the debt owed          by the Muratore Defendants  to Columbus Mortgage and its  Trustee          in the amount  of $2,146,034.24.   Fed.  R. Civ. P.  56(c).   The          attempt to satisfy the debt through a transfer of real estate was          unavailing because there is no evidence of an arrangement between          the parties whereby real estate conveyances were to be considered          payments on  the outstanding debt.   No reduction of the  debt by          funds  related to  the  properties can  be  granted, because  the          property  itself was  not a repayment  for the loans  made to the          Muratore Defendants.   Because  defendants created  the loans  in          violation of the fiduciary duty  owed to the plaintiff, no setoff          for  other  alleged  debts owed  by  plaintiff  to defendants  is          available.   Furthermore,  the cash  payments  on the  debt  were          incorrectly  applied to the  principal rather than  the interest,          and  therefore the  sum  calculated  by  the district  court  was          correct.  We have examined the record in the light most favorable          to  defendants, but we are  unwilling to go  further and take the          leaps of faith suggested by the Muratore Defendants.  Finally, we          hold  that entry of final judgment  on Count III pursuant to Rule          54(b) was well within the sound discretion of the district court.          Fed.  R.  Civ.  P. 54(b).   We,  therefore,  affirm the  district                                                       affirm                                                       ______          court's summary judgment on Count III.                                           -22-                                          22
