304 F.3d 223 (2nd Cir. 2002), 01-5052, In re Petrie Retail, Inc.
|Citation:||304 F.3d 223|
|Party Name:||In re PETRIE RETAIL, INC., Debtor.Luan Investment S.E., Appellant,v. Franklin 145 Corp., Cruz-Ponce Corp., Marianne, Ltd., formerly known as Urban Acquisition Corp., G&G Retail, Inc., Appellees.|
|Case Date:||September 05, 2002|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued April 18, 2002.
Edilberto Berrios, New York City, (Thomas M. Gandolfo, Oppenheimer Wolff
& Donnelly, LLP, of counsel), for appellant.
Mark S. Indelicate, New York City, (Donna J. Hyman, Hahn & Hessen, LLP, of counsel), for appellee, Franklin 145 Corp.
Mark N. Parry, New York City, (Moses & Singer, LLP, of counsel), for appellees, Marianne, Ltd., formerly known as Urban Acquisition Corp. and Cruz-Ponce Corp.
(McDermott, Will & Emery, New York City), for appellee, G & G Retail, Inc.
Before: OAKES, JACOBS and CALABRESI, Circuit Judges.
Judge JACOBS dissents in a separate opinion.
OAKES, Senior Circuit Judge.
Luan Investment, S.E. ("Luan") appeals from a July 19, 2001, Memorandum and Order and a December 4, 2001, Stipulation and Order entered by the United States District Court for the Southern District of New York, William H. Pauley III, Judge. The district court affirmed three orders entered by the United States Bankruptcy Court for the Southern District of New York, Arthur J. Gonzalez, Judge, in the context of the Chapter 11 proceedings of Petrie Retail, Inc. ("Petrie") and its subsidiaries. The bankruptcy court orders enjoined Luan from commencing or continuing any action contingent upon the interpretation of lease provisions that were at issue in the administration of the debtors' estate, denied Luan's request for an administrative claim against the estate, and struck from the record documents referencing extrinsic evidence the bankruptcy court found inadmissible. Because we find the bankruptcy court had subject matter and personal jurisdiction to issue the injunction, had discretion to refuse to abstain, and properly excluded parol evidence from the proceedings, we affirm.
This appeal involves an ongoing attempt by Luan to recover from a bankrupt and its assigns amounts believed to be owing under a lease for commercial property in Puerto Rico. On August 6, 1990, Luan Investment Corp. entered into a lease with Atlantico-M.P.A. ("Atlantico"), a former wholly-owned subsidiary of Petrie, for the operation of a Marianne/Marianne Plus store at the Aguadilla Mall in Aguadilla, Puerto Rico. Luan Investment Corp. subsequently assigned the lease to appellant Luan, to whom Atlantico attorned.
The lease provides for a fixed annual rent, to be paid in monthly installments. However, under Rider 2A to the lease, the obligation to pay the fixed rate of rent is contingent on the satisfaction of certain occupancy conditions at the Aguadilla Mall. Until the occupancy conditions are met, the tenant is obligated to pay a reduced rate of rate.
On November 10, 1993, Atlantico opened a Marianne/Marianne Plus store in the Aguadilla Mall. Because the occupancy conditions had not been met, Atlantico paid the reduced rate for rent.
On October 12, 1995, Petrie and its subsidiaries, including Atlantico (collectively, the "debtors"), filed a petition for reorganization under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code").1
Luan maintains, as it has throughout this case, that the occupancy conditions
triggering the escalation in rent were satisfied on October 31, 1996. The debtors and their assigns argue that the occupancy conditions were not met in 1996 or at any time during these proceedings.
On or about April 28, 1998, Luan filed with the bankruptcy court a motion to compel Atlantico to pay post-petition rent amounts due under Luan's interpretation of the occupancy conditions of the lease and to compel the debtors to assume or reject the lease within thirty days (the "Luan motion"). Based on consensual requests of the parties, the bankruptcy court periodically adjourned the Luan motion until a hearing was held on December 16, 1999.
On November 12, 1998, in response to a bankruptcy court order setting a deadline for the filing of proofs of administrative expenses, Luan filed an administrative proof of claim for the additional rent. In addition, on November 20, 1998, Luan filed an objection to the debtors' motion seeking approval of the assumption and assignment of certain unexpired leases, asserting a cure objection and a cure claim objection to the debtors' plan of reorganization. Luan's proof of claim and objections to the debtors' reorganization plan sought the interpretation of the same lease provisions at issue in the Luan motion.
On December 1, 1998, the bankruptcy court held a hearing concerning the sale of the debtors' assets and related relief (the "sale hearing"). Luan was present at the sale hearing. On the same date, the bankruptcy court entered an order (the "sale order"), approving, inter alia, an Asset Purchase Agreement and the sale of the debtors' assets. Pursuant to the sale order, Marianne, Ltd. ("Marianne"), formerly known as Urban Acquisition Corp., acquired the lease at issue.2
Under the sale order, Marianne did not assume certain liabilities (the "excluded liabilities"). The excluded liabilities included defaults under the assigned contracts that existed prior to the assignment and any other obligations arising prior to, and required to be performed prior to, the assignment unless Marianne specifically assumed the obligations. The sale order provided that those holding excluded liabilities were "enjoined from asserting or prosecuting any Claim or cause of action" against Marianne related to the excluded liabilities. The sale order further barred and enjoined parties to the leases that were assigned from asserting against Marianne any default or breach under the leases that was outstanding as of the date of the closing. The sale order also contained provisions for payment of cure amounts and included a clause in which the bankruptcy court retained "sole and exclusive jurisdiction over all matters arising from or related to the [lease], the [debtors' motion seeking approval of the assumption and assignment of certain unexpired leases], the Transaction Documents, the implementation thereof and [the Sale] Order."
On December 8, 1998, the bankruptcy court entered an order (the "confirmation order") confirming the Debtors' Second Amended Joint Plan of Reorganization (the "plan of reorganization"). The plan of reorganization and confirmation order incorporated the terms of the sale order. The plan designated appellee Franklin 145 Corp. as the debtors' distribution company. The Plan's effective date and thus the closing date for the sale of assets was December 18, 1998.
On September 27, 1999, Luan sent a letter to Marianne declaring it in default and announcing its intention to terminate the lease for non-payment of rent. Invoking the rent-escalation provision in the lease, Luan demanded that Marianne pay additional rent of $411,030.05 plus $61,732.29 in interest, which amount the bankruptcy court found to include amounts defined as excluded liabilities under the sale order, the plan of reorganization, and the confirmation order.
On November 19, 1999, in response to Luan's letter, Marianne filed a motion with the bankruptcy court pursuant to 11 U.S.C. §§ 1141(a) and 1142(b) for an order in aid of consummation of the Plan (the "plan consummation motion"). The plan consummation motion sought entry of an order enforcing the sale order's injunction as to excluded liabilities and finding Luan in violation of the confirmation order for seeking to collect excluded liabilities.
On November 23, 1999, Luan filed a lawsuit against Marianne in Puerto Rico (the "Puerto Rico action") seeking entry of an order declaring Marianne in default under Luan's interpretation of the lease.
On December 16, 1999, the bankruptcy court held a hearing in connection with the plan consummation motion and the Luan motion. In opposition to the plan consummation motion, Luan argued that the bankruptcy court lacked subject matter jurisdiction over the dispute and personal jurisdiction over Luan, and that, regardless of the jurisdictional matters, the bankruptcy court should abstain from the action.
On December 21, 1999, the bankruptcy court entered an order granting the plan consummation motion and enjoining Luan from "commencing, continuing or prosecuting any action contingent upon the interpretation of the . . . provisions of the leases at issue before this Court." The bankruptcy court determined that it had jurisdiction to enforce the pre-existing injunction as stated in the sale order and to interpret the lease in the context of Luan's administrative claim against the debtors and its claim against Marianne for excluded liabilities. In addition, the bankruptcy court found it had personal jurisdiction over Luan based on the fact that Luan put the interpretation of the lease before the court in its motion and submitted to the court's jurisdiction in that regard.
On March 8, 2000, the bankruptcy court held a hearing with respect to the interpretation of the lease. Marianne filed a motion in limine to exclude parol evidence on the ground that the terms of the lease were clear and unambiguous. On March 29, 2000, the bankruptcy court granted the motion in limine finding that, under Puerto Rico law, the terms of the lease related to the payment of rent were not ambiguous, and, therefore, parol evidence was not admissible to contravene the terms of the lease.
On June 7, 2000, the bankruptcy court entered an order resolving the Luan motion by denying Luan's request for an administrative claim, rejecting Luan's...
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