Howard R. Tallman, Judge United States Bankruptcy Court
THIS MATTER is before the Court on the following motions and related filings:
The Court held oral argument on December 12, 2014, following which the pending motions were taken under advisement. Having considered the pending motions and arguments of the parties, which total well over 4,000 pages, the Court is now prepared to rule, and hereby finds and concludes as follows.
The following facts are undisputed, unless otherwise indicated. On the Debtors' petition date, their assets consisted principally of real property, including 17,760 acres of mostly vacant land in El Paso County, Colorado (the "Property") owned by Debtor The Banning Lewis Ranch Company LLC ("BLRC"). The Property is included in a total collection of approximately 24,000 acres of real property, referred to as Banning Lewis Ranch.
In 1988, BLRC's predecessor in interest, Aries Properties, along with others owning property in Banning Lewis Ranch (together, the "Annexors"), entered into an Annexation Agreement with the City of Colorado Springs, Colorado (the "City"), constituting the largest annexation in the City's history. The Annexation Agreement sets forth the parties' intent that the annexation and provision of public facilities on the Annexed Property not create additional costs or impose additional burdens on the City's existing residents; instead, the costs of the anticipated public improvements and infrastructure were to be borne by the Annexors.
Shortly after the execution of the Annexation Agreement, Aries Properties fell into default under its obligations to its secured lender, Saguaro Mortgage Services. Aries conveyed title to Saguaro, which conveyed it to Western Savings and Loan Association, which, in turn, was taken over by the Resolution Trust Corporation, which sold the Property to Banning Lewis Ranch Corporation in the 1990's. Additional conveyances and corporate restructurings followed over the next decade, culminating in BLRC's acquiring title to the Property.
As time passed, and the Property remained vacant, other Annexors and their successors in interest pursued development in other areas of Banning Lewis Ranch. It was unclear whether any party who pursued development of a part of the Annexed Property was required to pay the full cost of improvements benefitting all of the Annexed Property, as set forth in the Annexation Agreement. In 2001, Receivers for a local improvement district in Banning Lewis Ranch filed a declaratory judgment action (the "Receiver Annexation Litigation") against the City, case number 01-CV-0566 in the El Paso County, Colorado, District Court (the "State Court"), seeking among other things a determination that the Annexation Agreement did not impose joint and several liability on the Annexors for infrastructure development costs.
BLRC appeared in the Receiver Annexation Litigation and filed a Trial Brief arguing against the Receivers' requested relief, which included rejecting the Annexation Agreement as an executory contract and selling Annexed Property free and clear of the Annexation Agreement. At that time (September 2004), BLRC stated that the Annexation Agreement was "neither impossible nor impracticable to perform," and that BLRC was "embracing the significant value the Annexation Agreement provides to all parties and is pressing forward with its efforts to develop its
The parties to the Receiver Annexation Litigation and other Annexors, including BLRC, entered into a Settlement Agreement, which was approved by the State Court in November 2004 and recorded in the El Paso County Clerk and Recorder's Office in 2005. The Settlement Agreement provided that the Annexation Agreement did not impose joint and several liability on the Annexors for infrastructure development. Instead, the parties agreed that each Annexor would bear its proportionate share of the costs for certain defined "Shared Infrastructure" to be constructed under the Annexation Agreement and that the City would be responsible for determining such specific Shared Infrastructure costs and the appropriate allocation of such costs.
In July 2007, the City approved a study in which BLRC actively participated, which estimated that the overall infrastructure obligations under the Annexation Agreement totaled $891,842,467 for the entire Banning Lewis Ranch. The City then established the Banning Lewis Ranch Annexor Obligation Fee of $2,355 per acre; the Banning Lewis Parkway Fee of $8,163 per acre; and the Banning Lewis Interchange Fee of $1,392 per acre; for total Shared Infrastructure fees of $11,910 per acre, or approximately $200 million for the Property.
BLRC did not proceed with development, and the Property remained vacant while residential development occurred in other areas of Banning Lewis Ranch. On October 28, 2010, the Debtors filed their voluntary Chapter 11 bankruptcy cases in the United States Bankruptcy Court for the District of Delaware (the "Delaware Court"). The bankruptcy cases were jointly administered under the lead case of BLRC (the "Debtor"). The City requested that the Delaware Court transfer venue of the bankruptcy cases to the United States Bankruptcy Court for the District of Colorado ("this Court"). The Delaware Court denied the City's requests.
In May of 2011, the Delaware Court established procedures for the sale of substantially all of the Debtors' assets, with an auction to take place in June of 2011. The Debtor filed its Sale Motion asking the Delaware Court to approve the sale of the Debtors' assets, including the Property, free and clear of liens, claims, encumbrances, and other interests. The Debtor asserts that all Annexors were served with notice of the Sale Motion.
While the Sale Motion was pending, the auction was held as scheduled, with two parties participating in forty rounds of bidding to purchase the Property. Ultra Resources, Inc., the prior Plaintiff in this adversary proceeding, was declared the winning bidder. The Property was sold to Ultra for a total purchase price of $20 million, which was less than the $25.3 million first position claim secured by the Property.
At its hearing on the Sale Motion, the Delaware Court made clear that the parties needed to reach a consensual arrangement, barring which the sale would not work, and relief from stay would likely be granted to the first position secured creditor. The parties subsequently reached an agreement that severed from the Sale Hearing the resolution of their disputes as to the applicability of 11 U.S.C. §§ 363(f)(1), 363(f)(5), and 365.
Following the parties' agreement, the Delaware Court entered its Sale Order approving the sale of the Property to Ultra. The Debtor and Ultra (the "Plaintiffs") filed the instant adversary proceeding against the City and its Enterprise, Colorado Springs Utilities (the "Defendants"), on September 16, 2011, and the Delaware Court promptly transferred venue of the adversary proceeding to this Court. The adversary proceeding was held in abeyance for two and a half years while the parties participated in dispute resolution efforts. In March of 2014, at the parties' request, the Court terminated the abeyance, and the parties subsequently filed the above-listed pending motions.
While the motions were pending, Ultra sold the Property to BLH No. 1, LLC, a Colorado limited liability company, BLH No. 2, LLC, a Colorado limited liability company, and Banning Lewis Holdings, LLC, a Colorado limited liability company (collectively, "Banning Lewis Holdings"). In connection with the sale of the Property, Ultra assigned to Banning Lewis Holdings all of its claims, rights, and interests in this adversary proceeding. The Court substituted Banning Lewis Holdings as Plaintiffs by Order entered December 12, 2014. Also on December 12, 2014, the Court heard oral argument on the pending motions. Following oral argument, the pending motions and related filings were taken under advisement.
The Plaintiffs' motion for partial summary judgment seeks a declaration that the Annexation Agreement and other Agreements flowing therefrom
State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir.1994), quoted in Marlin Oil Corp. v. Lurie, 417 Fed.Appx. 740, 745 (10th Cir.2011).
Section 365 provides that a trustee (here, a debtor in possession) "may assume or reject any executory contract or unexpired lease of the debtor." The Bankruptcy Code does not define the term "executory contract," but the Tenth Circuit Court of Appeals has adopted the widely-followed Countryman definition:
Vern Countryman, Executory Contracts in Bankruptcy: Part I, 57 Minn. L.Rev. 439, 460 (1973); adopted by In re Baird, 567 F.3d 1207, 1211 (10th Cir.2009).
As an initial matter, the Court must address whether the Annexation Agreement and other Agreements flowing therefrom are "contracts" at all. To be sure, the Annexation Agreement originated from "an agreement between two or more parties," Black's Law Dictionary 318 (7th ed.1999) (first definition of "contract"), a meeting of the minds of the Annexors and the City. But, upon compliance with the requirements of the Colorado Municipal Annexation Act, Colo.Rev.Stat. § 31-12-101 et seq., the Annexation Agreement became a legislative act that set the boundaries of the City. See Town of Minturn v. Sensible Housing Co., 273 P.3d 1154, 1159 (Colo.2012) ("[A]nnexations are legislative proceedings.").
Even if the Annexation Agreement could be considered a contract, the Court cannot find that it meets the Countryman definition of an executory contract. As the Defendants point out, the purpose of the Annexation Agreement was to bring the Annexed Property into the City's boundaries, and that purpose has been fulfilled.
From the Debtor's standpoint, while the Annexation Agreement anticipates that the Annexed Property will be developed, it does not require that development to occur. The parties agree that there has been no breach of the Annexation Agreement's obligations, even though neither the Debtor nor its predecessors in interest developed the Property. Given that the Debtor had the unilateral option to develop the Property (albeit in accordance with applicable zoning and other provisions, as required by 28 U.S.C. § 959(b)) or to not develop the Property, the Countryman requirements are not satisfied. See Michael T. Andrew, Executory Contracts Revisited: A Reply to Professor Westbrook, 62 U. Colo. L.Rev. 1, 32 (1991) (When a debtor's performance is completely optional, "it cannot be said that the failure of either [party] to complete performance would constitute a material breach excusing the performance of the other.'"). Considering the established test for "executoriness,"
Even if this Court were to abandon the established test for executoriness, as urged by Professors Andrew and Westbrook,
"[R]ejection of an executory contract serves two purposes. It relieves the
Clearly, the Plaintiffs did not bring this adversary proceeding to determine whether or in what amount the City may file a proof of claim in the Debtor's case. Here, there is expected to be no distribution to unsecured creditors, so any such claim would have no net effect. Instead, the Plaintiffs are seeking to "reject" the Annexation Agreement or other Agreements in order to accomplish a termination or rescission of the Agreements, such that the Debtor and its successors in interest would not be bound by the Agreements. Section 365 does not accomplish this result.
As several courts of appeal have held, "rejection" of a contract under § 365 does not mean "termination" of the contract:
In re Austin Development Co., 19 F.3d 1077, 1082 (5th Cir.1994) (citation omitted).
Similarly, rejection of a contract does not work a rescission of the contract and is not, itself, an avoiding power. Sunbeam Products, Inc. v. Chicago American Mfg., LLC, 686 F.3d 372, 377 (7th Cir. 2012); Thompkins v. Lil' Joe Records, Inc., 476 F.3d 1294, 1306 (11th Cir.2007); Michael T. Andrew, Executory Contracts Revisited: A Reply to Professor Westbrook, 62 U. Colo. L.Rev. 1, 16-17 (1991). Thus, while the Debtor may use rejection under § 365 to free itself from any obligation to develop the Property or to pay damages for any breach of the applicable Agreements, the Agreements themselves remain valid and enforceable. All non-debtor parties' rights "persist if they would persist under state law." In re Bergt, 241 B.R. 17, 25 (Bankr.D.Alaska 1999) (citing Professor Andrew and Westbrook's articles).
In this case, because the Agreements are of the type that run with the land
Considering the undisputed facts, the applicable law, and the relevant declaratory judgment factors, see State Farm Fire & Casualty Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir.1994), the Court cannot find that a judgment in favor of the Plaintiffs would settle the controversy or serve a useful purpose. The Agreements in question are not executory contracts under § 365 because they are neither "contracts" nor "executory." Even if rejection under § 365 were available to the Debtor, any such rejection would have no effect on the Debtor, its estate, its creditors, or any other parties to the Agreements or their successors in interest, including the Debtor's successors in interest. A declaratory judgment in favor of the Plaintiffs would increase friction between our federal and state courts and improperly encroach upon state jurisdiction. To the extent that the Plaintiffs no longer wish for their Property to be annexed into the City, a better and more effective remedy would be to pursue disconnection under applicable Colorado statutes. See, e.g., City of Littleton v. Wagenblast, 139 Colo. 346, 338 P.2d 1025 (1959) (like annexation, disconnection is a legislative function, and parties must comply with applicable statutes in order to obtain the requested relief). The relief of declaratory judgment is not appropriately granted to the Plaintiffs in this case. The Court will therefore deny the Plaintiffs' motion for partial summary judgment and will grant the Defendants' motion for partial summary judgment in this respect.
Section 363(f) provides, in relevant part, that a trustee (or here, a debtor in possession) may sell property free and clear of any interest of another entity if:
11 U.S.C. § 363(f)(1), (5).
As an initial matter, the Court must determine whether § 363(f) applies here to
Cases allowing sales free and clear of restrictive covenants, such as In re Daufuskie Island Properties, LLC, Case No. 09-00389-jw, 2010 WL 6982361, 2010 Bankr.LEXIS 5533 (Bankr.D.S.C. May 7, 2010), have held that the term "interest" should be interpreted broadly. But, those courts have also held that the term "interest" is defined by state property law. Id. In Daufuskie Island Properties, the court applied South Carolina law, including a case from the South Carolina Court of Appeals holding that restrictive covenants constitute an interest in property subject to § 363(f). Courts in other jurisdictions have reached contrary results. See, e.g., In re Skyline Woods Country Club, 636 F.3d 467 (8th Cir.2011) (applying law from the Nebraska Supreme Court holding that restrictive covenants could not be extinguished under § 363(f)).
The Plaintiffs have pointed to no authority from the state of Colorado, and this Court's research has not revealed any. But, even if applicable Colorado law generally held that restrictive covenants were subject to free and clear sales under § 363(f), the Annexation Agreement here is not simply a restrictive covenant between or among neighboring property owners; it is a legislative proceeding over which a court's authority is limited. Town of Minturn v. Sensible Housing Co., 273 P.3d 1154, 1159-60 (Colo.2012); Colo.Rev. Stat. § 31-12-116 (providing for limited judicial review of annexation proceedings). Given the particular nature of annexation agreements under applicable Colorado law, the Court cannot find that they are properly included as "interests" under § 363. The Court finds as a matter of law that the Property may not be sold free and clear of the Annexation Agreement and other Agreements flowing therefrom under § 363(f), and the Court will grant the Defendants' motion for partial summary judgment in this respect.
The Court's holding that § 363(f) does not apply to the Annexation Agreement and other Agreements as a matter of law eliminates the need for any specific discussion of subsections 363(f)(1) or (f)(5). However, out of an abundance of caution, the Court will specifically address each subsection, as an alternative holding.
Section 363(f)(1) looks to applicable non-bankruptcy law. The Plaintiffs have asserted two possible bases for a conclusion that Colorado law would allow the sale of the Property free and clear of the Annexation Agreement and other Agreements: the Agreements constitute an unreasonable restraint on alienation, or changed circumstances render the Agreements unenforceable. The Court will address each in turn.
First, Colorado law recognizes that the common law rule against restraints on alienation prohibits restraints that are unreasonable. Malouff v. Midland Fed. Sav. and Loan Ass'n, 181 Colo. 294, 509 P.2d 1240, 1243 (1973) (finding that a deed of trust's "due on sale" acceleration clause was a restraint on alienation, but not an unreasonable one). Courts in other jurisdictions have recognized that restrictive covenants constituting unreasonable restraints on alienation are subject to free and clear sales under § 363(f)(1). See, e.g, In re TOUSA, Inc., 393 B.R. 920 (Bankr.S.D.Fla.2008) (allowing a sale free and clear of a restrictive covenant prohibiting sales of neighboring lots for less than a specified minimum purchase price, which the court found to be an unreasonable restraint on alienation). The restrictive covenants at issue in Malouff and TOUSA were direct restraints on alienation because they attempted to limit or penalize sales of the property in question. Here, the Plaintiffs have pointed to no provisions in any of the Agreements that attempt to limit or penalize sales of the Property. The Property is freely alienable, as evidenced by the Debtor's purchase of the Property well after the Annexation Agreement became law, and as further evidenced by the Debtor's sale of the Property to Ultra and Ultra's subsequent sale of the Property to Banning Lewis Holdings.
The Plaintiffs may argue that the Agreements constitute an indirect restraint on alienation. The U.S. District Court for the District of Colorado has recognized this doctrine, at least in theory, explaining:
CBS Outdoor, Inc. v. 800 Lincoln LLC, Case No. 11-cv-02233-WYD-MJW, 2012 WL 4356241, at *20 n. 13 (D.Colo. Sept. 24, 2012) (quoting Lamar Advertising v. Larry and Vickie Nicholls, L.L.C., 213 P.3d 641, 644 (Wyo.2009) (further quotation omitted)). The CBS Outdoor court applied a less stringent "rational justification" test to an indirect restraint on alienation. Id. Under the rational justification test, "[t]he fact that the servitude limits the market for property by limiting its use or reducing its value ... is irrelevant in determining its validity, so long as there is some rational justification for creation of the servitude." Id. (quoting the Restatement (Third) of Property: Servitudes § 3.5 cmt. a).
Here, the Annexation Agreement specifically provides that its purpose is to annex the property into the City and provide for
Even if the rational justification test were not the appropriate test, and instead the Court were required to determine whether the Agreements were reasonable "in view of the justifiable interests of the parties," Malouff, 509 P.2d at 1243, the Court cannot find that the Annexation Agreement and other Agreements flowing therefrom fail to meet the justifiable interests of the parties. All the evidence before the Court supports a conclusion that the Agreements met the justifiable interests of the parties, both at the time they became effective and at later times in the Property's history.
The Plaintiffs have offered one other possible basis of applicable nonbankruptcy law: the doctrine of changed circumstances. Colorado law recognizes that courts have the power to remove or cancel restrictive covenants when "it is shown that the restrictive covenants no longer serve the purpose for which they were imposed and are no longer beneficial to those claiming under them." Zavislak v. Shipman, 147 Colo. 184,362 P.2d 1053, 1055 (1961). Here, the Plaintiffs assert that circumstances have changed substantially over the past 25 years, such that enforcement of the Agreements imposes an oppressive burden prohibiting development of the Property.
The Court notes that the pending cross-motions for partial summary judgment were filed at a relatively early stage in the adversary proceeding, and discovery has not been completed. But, the pendency of discovery does not, by itself, provide a justification for denial of summary judgment. Pub. Serv. Co. of Colo. v. Cont'l Cas. Co., 26 F.3d 1508, 1518 (10th Cir. 1994) ("[T]here is no requirement in Rule 56, Fed.R.Civ.P., that summary judgment not be entered until discovery is complete."). A party opposing summary judgment on the ground that essential facts are unavailable must comply with Fed.R.Civ.P. 56(d). Here, the Plaintiffs filed no such affidavit or declaration. In the absence of an explanation of how any additional opportunity for discovery would enable the Plaintiffs to meet their burden in opposing summary judgment, the Court may proceed to grant the Defendants' motion. See Guthrie v. Sawyer, 970 F.2d 733, 738 (10th Cir.1992) (applying the rule then-codified at Fed.R.Civ.P. 56(f)).
Finally, the Court notes that the Plaintiffs are seeking a declaratory judgment. When considering whether to grant a declaratory judgment, this Court must take into account "whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction" and "whether there is an alternative remedy which is better or more effective." State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir.1994). Here, the Court finds that both factors strongly support denial of declaratory relief under § 363(f)(1). The Plaintiffs are seeking to set aside an Annexation Agreement, a matter of state law to which Colorado courts have accorded great deference. If Colorado law would allow any court to set aside the Annexation Agreement under either theory asserted by the Plaintiffs, then the Plaintiffs would be able to obtain that same relief by bringing a quiet title action in the State Court. A quiet title action would bind not only the parties to this proceeding, but all other parties who may later assert a right to enforce the provisions of the Agreements — a better and more effective remedy for the Plaintiffs. See DeJean v. Grosz, No. 13-cv-02381-BNB-MJW, 2014 WL 5488406, at *9 n. 6 (D.Colo. Oct. 29, 2014) (noting the benefits of a quiet title action). The Court therefore finds that declaratory judgment is not appropriately granted to the Plaintiffs on their claim for relief under § 365(f)(1). The Court will grant the Defendants' motion for partial summary judgment in this respect.
Turning to the remaining subsection, § 365(f)(5), the Court must determine whether the City could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of its interests under the Annexation Agreement and other Agreements. Courts in other jurisdictions have identified hypothetical proceedings in which a variety of interest holders could be forced to accept a money satisfaction of their interests, from enforcement of buy-out or agreed damages provisions, to tax sales or foreclosure sales. See, e.g., In re Jolan, Inc., 403 B.R. 866 (Bankr. W.D.Wash.2009) (discussing several types of hypothetical proceedings).
The Plaintiffs point to the Annexation Agreement's election of remedies clause, which provides, in relevant part, that "the non-defaulting party may elect, at its discretion, either to cure the default and recover the cost thereof from the defaulting party, or seek to enjoin the default if of a continuing nature, or seek specific performance and/or damages." Annexation Agreement § XIX(M). The election of remedies clause would allow the City, as a non-defaulting party, to choose to pursue damages. But, the election of remedies clause does not require or compel the City to accept damages in lieu of specific performance. As the Seventh Circuit Court of Appeals explained:
Gouveia v. Tazbir, 37 F.3d 295, 299 (7th Cir.1994).
The Plaintiffs criticize Gouveia, citing the case of In re Signature Developments, Inc., 348 B.R. 758 (Bankr.E.D.Mich.2006), which noted that a court should recognize its own power to compel a non-breaching party to accept money damages. Id. at 764. Taken to its logical extreme, the Signature Developments reasoning proves too much: if a court can approve a sale under § 363(f)(5) simply because a court has the power to compel the acceptance of money damages, then there would be no case in which § 363(f)(5) would not apply. The exception would swallow the rule. But, there is no need to consider the logical extreme of the Signature Developments court's reasoning, because the court's own holding reveals that it is limited. Signature Developments distinguished Gouveia, noting that in Gouveia, the restrictive covenant at issue was one that was properly enforced by "classic injunctive equitable relief," while the restriction at issue in Signature Developments was one that was properly enforced by money damages. Id. at 767. Here, the Annexation Agreement is not one that is properly enforced by money damages.
Considering the undisputed facts and the requirements for issuance of a declaratory judgment, the Court cannot find that the Plaintiffs are entitled to a declaratory judgment in their favor under § 363(f)(5). There is no basis for a court to compel the City to accept a monetary satisfaction of
In summary, the Court finds as a matter of law that § 363(f) does not apply to the Annexation Agreement and other Agreements flowing therefrom. As an alternative holding, the Court has considered each applicable subsection of § 363(f). As for § 363(f)(1), the Court cannot find that applicable bankruptcy law would permit the sale of the Property free and clear of the Annexation Agreement and other Agreements, as the Plaintiffs have not presented evidence supporting a judgment in their favor on their claims under the doctrines of unreasonable restraints on alienation or changed circumstances. As for § 363(f)(5), the Court cannot find that the City could be compelled to accept a money satisfaction of its interests under the Annexation Agreement or other Agreements. The Court will therefore grant summary judgment in favor of the Defendants on the second and third counts for relief of the Plaintiffs' Complaint.
Randle W. Case seeks to intervene as a Defendant in this adversary proceeding, asserting that he is an Annexor in Banning Lewis Ranch.
MasterCard Int'l Inc. v. Visa Int'l Serv. Ass'n, Inc., 471 F.3d 377, 389-90 (2d Cir. 2006).
The Plaintiffs assert that this adversary proceeding, which is the result of a settlement agreement between the Plaintiffs and the Defendants providing a mechanism for those parties to resolve their dispute regarding the sale of the Debtor's Property, should be limited to the specific parties involved, particularly where no other party objected to the sale nor had standing to do so. Mr. Case and the Defendants argue that the disposition of the adversary proceeding will, as a practical matter, impair or impede the other Annexors' ability to protect their interests in their property.
In the Court's view, if the Plaintiffs were to obtain a declaratory judgment allowing the Debtor to rescind the Annexation Agreement or allowing the Property to be sold free and clear of the Annexation Agreement, the property interests of the other Annexors would be affected. The Annexors are all parties to the Annexation Agreement, and in the contract context, courts often find joint obligees to be indispensable (or, under the revised rules, "required") parties. See, e.g., Acton Co. Inc. of Mass. v. Bachman Foods, Inc., 668 F.2d 76, 81-82 (1st Cir.1982) (in an action seeking recision of a contract, all parties to the contract and others having a substantial interest in it are indispensable parties). But, given the Court's ruling as set forth above, the Court cannot find that the disposition of this adversary proceeding will impair or impede any Annexor's rights. Both Mr. Case's Motion to Intervene and the Defendants' Motion to Require Joinder of Absent Annexors in Banning Lewis Ranch will be denied.
The result of the Court's ruling that the Defendants are entitled to partial summary judgment in their favor is that judgment in favor of the Defendants will enter on all three counts of the Plaintiffs' Complaint and on the first two claims for relief of the Defendants' Amended Counterclaim. No party sought summary judgment on the remaining three claims for relief of the Defendants' Amended Counterclaim, in which the Defendants seek a declaratory judgment as follows:
Amended Counterclaim at 20. It is not clear that this Court has jurisdiction to determine these matters of state water law that appear to have no impact on the Debtor's bankruptcy case.
The Court has considered the following factors:
In re Schempp Real Estate, LLC, 303 B.R. 866, 875 -876 (Bankr.D.Colo.2003) (citing In re Tucson Estates, Inc., 912 F.2d 1162, 1167 (9th Cir.1990)). Here, all or substantially all of the applicable factors favor abstention. Significantly, the water rights claims are not core proceedings. They are based solely on state law and do not relate at all to the Debtor's bankruptcy case. Severing the water rights claims is not only feasible, but is desirable in order to streamline the resolution of this adversary proceeding, resulting in more efficient administration of the Debtor's estate. The Court therefore declines to exercise any jurisdiction that it may have over the water rights claims.
For the reasons discussed above, the Court finds and concludes that the Plaintiffs'
Therefore, it is HEREBY ORDERED that:
The Court will enter judgment accordingly.
