Michael Ciesla Trustee of the KLN Liquidating Trust v. Harney Management Partners (In re KLN Steel Products Co., L.L.C.) (Feb. 18, 2014)
The defendant argued that the liquidating trustee’s complaint failed to state a claim as to a $50,000 day-of-bankruptcy payment. In rejecting defendant’s argument, the Court first found that the complaint did not list specific payments, but rather stated that it intended to capture transfers made within ninety days of the petition date. Second, the Court noted that Federal Rule of Civil Procedure 15(b)(2) states that when an issue that is not raised by the pleadings is tried by the parties’ express or implied consent, the issue is treated in all respects as if it were raised in the pleadings. The Court also noted that a party may move at any time to amend the pleadings to conform them to the evidence at trial, but that failure to amend does not affect the result of the trial on that issue. Thirdly, the Court found that any objection to the pleadings was waived by the inclusion of the day-of-bankruptcy payments in the parties’ pre-trial orders, since both parties included the $50,000 payment as an issue to be tried.
WL Cite: Ciesla, Trustee of the KLN Liquidating Trust v. Harney Management Partners (In re KLN Steel Products Co., L.L.C.), 506 B.R. 461 (Bankr. W.D. Tex. 2014)