MIKE K. NAKAGAWA, Bankruptcy Judge.
On November 7, 2018, the court heard the Motion to Enforce Summary Judgment Against New Boca Syndications Group LLC ("Motion"). The appearances of counsel were noted on the record. After arguments were presented, the matter was taken under submission.
On June 17, 2010, a voluntary Chapter 11 petition was filed by Charleston Associates, LLC ("Debtor"), in the United States Bankruptcy Court for the District of Delaware ("Delaware Bankruptcy Court"). (ECF No. 1).
On November 24, 2010, Debtor commenced an adversary proceeding against RA Southeast Land Company, LLC ("RAS") and City National Bank ("CNB") by filing a "Complaint for Declaratory Judgment" in the Delaware Bankruptcy Court. The focal point of the dispute ("RAS Adversary") between the Debtor, its previous lender (CNB), and the purchaser from the previous lender (RAS) is the rights with respect to the undeveloped portions of land in a shopping center located in Las Vegas, Nevada ("Undeveloped Land").
On December 29, 2010, the Delaware Bankruptcy Court entered an order transferring venue of the RAS Adversary to Nevada, where it was assigned Adversary No. 10-01452-LBR.
On February 25, 2011, Debtor filed an amended complaint ("Complaint") in the RAS Adversary. (AECF No. 37).
On October 5, 2011, this bankruptcy court entered an order in the RAS Adversary granting partial summary judgment in favor of the Debtor and against CNB and RAS ("Prior PSJ Order"). (AECF No. 120). The order was appealed to the United States District Court for the District of Nevada ("USDC"), and ultimately assigned Case No. 2:11-cv-02023-MMD-PAL. (AECF Nos. 151, 153 and 156).
On August 3, 2012, Debtor filed a proposed First Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code ("Plan") in the Delaware Bankruptcy Court. (ECF No. 725).
On September 18, 2012, Debtor filed a variety of exhibits in support of its proposed Plan, including a copy of the Operating Agreement of New Boca Syndications Group, LLC, a Delaware Limited Liability Company ("New Boca Operating Agreement"). (ECF No. 790). Under Article 2, Section 2.3 of the New Boca Operating Agreement, the principal place of business of New Boca is at 9440 West Sahara Avenue, Suite 240, Las Vegas, Nevada 89117. Under Article 2, Section 2.4 of the New Boca Operating Agreement, the name and address of the registered agent for New Boca is International Property Syndications, Ltd., located at the same address as the principal place of business.
On September 26, 2012, Debtor filed a Declaration of Jeffrey P. Dragovich in Support of Confirmation of First Amended Plan of Reorganization of Charleston Associates, LLC ("Dragovich Declaration"). (ECF No. 802).
On September 28, 2012, an order was entered by the Delaware Bankruptcy Court confirming the Plan ("Plan Confirmation Order"). (ECF No. 809). Pursuant to the confirmed plan, New Boca Syndications Group, LLC ("New Boca") is defined to be the "Reorganized Entity."
Under the confirmed Plan, the Debtor's pre-confirmation debts were discharged upon confirmation of the Plan.
On January 15, 2013, the Delaware Bankruptcy Court entered an order transferring venue of the Chapter 11 proceeding to Nevada, where it was assigned Case No. 13-10499-LBR.
On July 25, 2013, the USDC entered an order reversing the Prior PSJ Order that had been entered by the Nevada bankruptcy court in the RAS Adversary ("Reversal Order"). (2011 USECF No. 70;
On August 23, 2013, Debtor filed a notice appealing the Reversal Order to the United States Court of Appeals for the Ninth Circuit ("Ninth Circuit").
On December 19, 2013, an order was entered by the bankruptcy court in the RAS Adversary granting RAS's motion for an award of $376,078.35 in attorney's fees and costs against the Debtor. (AECF No. 240).
On January 6, 2014, because of the Reversal Order, CNB filed a motion for an award of $880,822.04 in attorney's fees and costs incurred in connection with the RAS Adversary ("CNB Fee Motion"). (AECF No. 257).
On February 26, 2014, Debtor filed a response to the CNB Fee Motion. (AECF No. 274).
On March 5, 2014, CNB filed a reply. (AECF No. 275).
On August 13, 2014, an order was entered granting the CNB Fee Motion. (AECF No. 332). That order ("CNB Fee Order") awarded attorney's fees and costs in connection with the RAS Adversary in the total amount of $835,523.15, and also directed that judgment be entered against New Boca for the full amount. On the same date, a judgment ("CNB Fee Judgment") was entered in the RAS Adversary against New Boca. (AECF No. 333).
On September 22, 2014, New Boca filed a motion for leave to intervene in the RAS Adversary for the limited purpose of seeking to vacate the CNB Fee Order and CNB Fee Judgment pursuant to FRCP 60(b) ("New Boca Intervention Motion"). (AECF No. 363).
On September 24, 2014, CNB along with the Debtor and New Boca, entered into a stipulation ("Payment Stipulation") providing for New Boca to pay $875,000 in full satisfaction of the CNB Fee Judgment, subject to the outcome of the Ninth Circuit Appeal. (AECF No. 368). Among other things, the Payment Stipulation required CNB to return at least a portion of the payment to New Boca in the event the Ninth Circuit reversed the USDC's Reversal Order. In the event that the Ninth Circuit affirmed the USDC's Reversal Order, the New Boca Intervention Motion was to be withdrawn by New Boca with prejudice. The Payment Stipulation also provided that its terms would not prevent CNB from seeking an award of additional attorney's fees and costs incurred after December 1, 2013, including the right to obtain a new judgment for such additional amounts.
On September 29, 2014, the bankruptcy court entered judgment in the RAS Adversary in favor of RAS and against the Debtor and its successor, New Boca, awarding attorney's fees and costs in the total amount of $376,078.35 ("RAS Fee Judgment"). (AECF No. 370).
On October 16, 2014, the bankruptcy court entered an order approving the Payment Stipulation. (AECF No. 392).
On October 24, 2014, the Debtor and New Boca appealed the RAS Fee Judgment to the USDC, which was assigned Case No. 2:14-cv-01766-MMD. (AECF No. 402).
On January 25, 2016, the Ninth Circuit affirmed the USDC's Reversal Order ("Circuit Order"). 632 Fed.Appx. 362 (9th Cir. 2016). (2011 USECF No. 106). On February 24, 2016, the Ninth Circuit entered a separate order directing to the USDC all requests by CNB and RAS for an award of legal fees and costs in connection with the appeals. (2011 USECF No. 110).
On April 19, 2017, the USDC entered an order against the Debtor awarding $540,088.55 in attorney's fees and costs in favor of CNB in connection with the RAS Adversary appeal ("USDC CNB Fee Order"). (2011 USECF No. 138). The USDC denied without prejudice CNB's request, under the Plan, to enforce against New Boca the Debtor's liability for the amounts awarded.
On April 26, 2017, the USDC entered an order against the Debtor awarding $370,330.99 in attorney's fees and costs in favor of RAS in connection with the RAS Adversary appeal ("USDC RAS Fee Order"). (2011 USECF No. 140). The USDC also denied without prejudice RAS's request, under the Plan, to enforce against New Boca the Debtor's liability for the amounts awarded.
On May 19, 2017, First American Title Insurance Company ("FATCO"), as assignee of RAS, filed a motion in the Debtor's bankruptcy case to enforce the Plan ("FATCO Enforcement Motion") by requiring New Boca to pay the $370,330.99 in attorney's fees and costs that had been awarded under the USDC RAS Fee Order. (ECF No. 932). Opposition was filed by the Debtor. (ECF No. 943). A joinder in the FATCO Enforcement Motion was filed by CNB. (ECF No. 945). A reply to the Debtor's opposition was filed by FATCO. (ECF No. 946). A joinder in FATCO's reply was filed by CNB. (ECF No. 947).
On May 24, 2017, CNB filed a motion in the Chapter 11 case and in the RAS Adversary ("CNB Enforcement Motion") to join New Boca as a party to the RAS Adversary, and to award judgment against New Boca on the attorney's fees and costs that had been awarded by the USDC CNB Fee Order. (ECF No. 936; AECF No. 466).
On June 20, 2017, the FATCO Enforcement Motion was heard and granted by this court. On July 7, 2017, a written order was entered granting the FATCO Enforcement Motion. (ECF No. 954).
On June 21, 2017, the CNB Enforcement Motion was heard and granted by this court.
On July 7, 2017, a written order was entered granting in part and denying in part the CNB Enforcement Motion ("CNB Enforcement Order"). (ECF No. 953; AECF No. 494).
On July 18, 2017, a judgment in favor of CNB and against New Boca was entered in the Debtor's bankruptcy case and in the RAS Adversary in the amount of $540,088.55 in attorney's fees and costs, plus interest at the federal judgment rate from April 19, 2017 ("CNB Fee Judgment"). (ECF No. 958;
On July 24, 2017, a judgment in favor of FATCO and against New Boca was entered in the Debtor's bankruptcy case in the amount of $370,330.99 in attorney's fees and costs, plus interest at the federal judgment rate from April 27, 2017 ("FATCO Fee Judgment"). (ECF No. 960).
On September 27, 2017, CNB filed a satisfaction stating that New Boca had satisfied the CNB Fee Judgment. (AECF No. 510).
On March 1, 2018, the USDC entered an order affirming the RAS Fee Judgment with respect to the award against the Debtor but reversing the RAS Fee Judgment with respect to New Boca ("USDC Order"). (2014 USECF No. 29).
On March 26, 2018, in the RAS Adversary, CNB filed a motion for partial summary judgment on the merits of various claims in light of the Reversal Order and Circuit Order ("CNB PSJ Motion"). (AECF No. 580). As part of its motion, CNB sought to have judgment entered on the merits in the RAS Adversary against New Boca, in addition to the Debtor.
On April 13, 2018, FATCO filed a motion to enforce the confirmed Plan, or, in the alternative, to convert the case to Chapter 7 liquidation ("FATCO Conversion Motion"). (ECF No. 998 and 1000). FATCO sought an order to enforce the confirmed Plan by requiring New Boca to satisfy the Debtor's obligations to FATCO's predecessor in interest, RAS. In the alternative, FATCO sought to convert the Chapter 11 proceeding to Chapter 7.
On May 2, 2018 and May 7, 2018, an opposition to the FATCO Conversion Motion was filed by creditor The Black Mailbox, LLC ("TBM"), along with a corrected supporting declaration of James W. Pengilly ("Pengilly Declaration"). (ECF Nos. 1007 and 1010).
On May 14, 2018, Debtor filed its opposition to the CNB PSJ Motion. (AECF No. 593).
On May 24, 2018, CNB filed its reply in support of the CNB PSJ Motion. (AECF No. 599).
On May 31, 2018, an opposition to the FATCO Conversion Motion was filed on behalf of the Debtor. (ECF No. 1016).
On June 5, 2018, a hearing was conducted on the CNB PSJ Motion, and the matter was taken under submission.
On June 7, 2018, a reply was filed by FATCO in support of the FATCO Conversion Motion. (ECF No. 1017).
On June 8, 2018, a joinder in the FATCO Conversion Motion was filed by American Contractors Indemnity Company ("ACIC"). (ECF No. 1019).
On June 8, 2018, New Boca filed a joinder in the Debtor's opposition to the FATCO Conversion Motion. (ECF No. 1023).
On June 13, 2018, an initial hearing was held on the FATCO Conversion Motion. The hearing was continued to July 19, 2018, however, on the suggestion from counsel representing both the Debtor and New Boca that funds to satisfy the judgments in favor of FATCO might be raised.
On July 19, 2018, oral arguments on the FATCO Conversion Motion were presented, and the matter was taken under submission.
On July 24, 2018, an order was entered denying the FATCO Conversion Motion ("FATCO Conversion Order"). (ECF No. 1028).
On July 24, 2018, an order was entered granting in part and denying in part, the CNB PSJ Motion, that was accompanied by a memorandum decision ("CNB PSJ Memorandum"). (AECF Nos. 618 and 617).
On July 30, 2018, CNB filed a motion under FRCP 54(b) for certification with respect to the CNB PSJ Order and for dismissal of its remaining claims in the RAS Adversary ("CNB 54(b) Motion"). (AECF No. 629).
On August 23, 2018, Debtor filed an opposition to the CNB 54(b) Motion. (AECF No. 635).
On August 29, 2018, CNB filed a reply in support of the CNB 54(b) Motion. (AECF No. 636).
On September 5, 2018, the CNB 54(b) Motion was heard and taken under submission.
On September 27, 2018, an order was entered granting the CNB 54(b) Motion. (AECF No. 651).
On October 5, 2018, a judgment in the RAS Adversary was entered in favor of CNB and against the Debtor in the amount of $6,851,030.98 ("CNB Judgment"). (AECF No. 656).
On October 5, 2018, CNB filed in the Chapter 11 proceeding the instant Motion seeking to enforce the CNB Judgment against New Boca, and a copy was served electronically on counsel for both the Debtor and New Boca. (ECF No. 1034).
On October 24, 2018, New Boca filed an objection to the instant Motion ("Objection"). (ECF No. 1045).
On October 31, 2018, CNB filed a reply in support of the Motion ("Reply"). (ECF No. 1047).
On November 7, 2018, the Motion was heard, and the matter was taken under submission. At the hearing, counsel for the Debtor and RAS informed the court that a settlement had been reached between those parties, and the RAS Adversary would be dismissed as to all other claims between them.
By its current Motion, CNB seeks to enforce the CNB Judgment against New Boca pursuant to the terms of Article IV, Section B(4) and Article VII, Section C of the confirmed Plan.
In response, New Boca argues that the CNB Judgment cannot be enforced against it because the Motion has not been properly served. It argues that service of the Motion was improper for two reasons: (1) that New Boca is not the debtor in the bankruptcy case, and (2) that New Boca is not a party to the RAS Adversary. For those reasons, New Boca argues that enforcement of the CNB Judgment would violate due process.
In reply, CNB maintains that New Boca has voluntarily assumed its liabilities under the confirmed Plan and has actively participated in the bankruptcy proceeding.
The court having considered the written and oral arguments of counsel, together with the record in this proceeding, concludes that the Motion must be denied without prejudice.
On its face, the relief requested by CNB is supported by the provisions of the Debtor's confirmed Plan. Article IV, Section B(4) specifically provides that "Any Claims of CNB, contingent or otherwise, are unimpaired under the Plan. CNB shall retain, unaltered, all the legal, equitable and contractual rights it may have against the Debtor. In addition,
Additionally, Article VII, Section C of the confirmed Plan specifically provides in pertinent part that "As of the Effective Date,
Moreover, Article XII of the confirmed Plan specifically provides for the bankruptcy court to retain jurisdiction for the purpose of, inter alia, "Issuing any order necessary to implement the Plan or Confirmation Order," as well as "
It is clear from these provisions of the confirmed Plan that New Boca is liable for the full amount of the CNB Judgment.
This conclusion is not inconsistent with the ruling on the FATCO Conversion Motion. In that matter, FATCO sought relief based on provisions of the confirmed Plan that were simply inapplicable. In its motion, FATCO sought to recover from New Boca the attorney's fees awarded in connection with the RAS Adversary, by relying solely on Article V, Section C of the confirmed Plan. That Plan provision, however, addresses only distributions in connection with "Disputed Claims." Because RAS could not be, and was not, the holder of a Disputed Claim as defined by the confirmed Plan, the language of Article V, Section C simply did not apply.
More important, this conclusion is consistent with the language of the USDC's decision on appeal in connection with the RAS Fee Judgment.
USDC Order at 5-8 (emphasis added).
Exercise of personal jurisdiction over New Boca is appropriate for a variety of reasons. Although New Boca is a limited liability company formed under Delaware law, its principal place of business is in Las Vegas, Nevada, and its registered agent at the same address is International Property Syndications, Ltd.
Subject matter jurisdiction of the bankruptcy proceeding exists under 28 U.S.C. § 1334 as was previously determined by the Delaware Bankruptcy Court.
Venue was determined to be proper in the Delaware Bankruptcy Court,
It appears, however, that the instant Motion was not properly served on New Boca. As a contested matter under 9014(a), the Motion must be served in the manner provided for service of a summons and complaint under FRBP 7004.
There is no evidence in the record that New Boca was personally served with the Motion at its principal place of business, nor was its registered agent served at the registered address. Nor is there evidence that New Boca was served by first class mail to the attention of a member, manager, general agent, or authorized agent. There is evidence in the record that New Boca's local counsel was given electronic notice of the Motion.
Under these circumstances, the Motion will be denied for lack of proper service. Because the Motion otherwise is properly brought before this court, however, denial will be without prejudice.
On December 29, 2014, both the Chapter 11 proceeding and the RAS Adversary were reassigned to this court upon the retirement of the previously assigned bankruptcy judge.
