In re Miami Metals I, Inc.

Miami Metals I, Inc. (RMC) (debtor) was the debtor in a bankruptcy action. RMC took shipments of metals from its customers (creditors) pursuant to a written document titled “Executed Terms,” in which RMC agreed to refine the metals and return equivalent refined amounts to the customers. During refinement, metals from multiple customers were comingled. In the bankruptcy case, the customers claimed an interest in the metals in RMC’s possession, arguing they had been delivered under a bailment. RMC argued the metals had been sold under a purchase-and-sale agreement and therefore belonged to RMC, not the customers. The executed terms stated that equivalent metals, not exactly the same metals, would be returned to the customers. The customers argued that, despite those terms, the executed terms established a bailment—an agreement for one party to hold the property of another party in safekeeping—rather than a sale because the executed terms did not contain key terms for a sale of goods, such as price, quantity, and timing of the sale. While the executed terms did not contain a specific price for the metals, it did state that the price would be determined by the London Bullion Market Association’s current pricing. The customers asked the bankruptcy court to rule that the customers had an ownership interest in the metals held by RMC at the time of the bankruptcy filing.