Dogpatch U.S.A., Inc., In re
| Decision Date | 02 February 1987 |
| Docket Number | Nos. 86-1233,s. 86-1233 |
| Citation | 810 F.2d 782 |
| Parties | Bankr. L. Rep. P 71,616 In Re: DOGPATCH U.S.A., INC., Debtor. DOGPATCH PROPERTIES, INC., Appellant, v. DOGPATCH U.S.A., INC.; FirstSouth, Formerly Batesville Federal Savings and Loan Association; Wynne Federal Savings and Loan Association, First Federal Savings & Loan Association of Stuttgart, Arkansas, Appellee. Arkansas Real Estate Commission. Jess P. Odom and Willastein J. Odom. to 86-1236. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Ronald L. Boyer, Rogers, Ark., for appellant.
Don F. Hamilton, Little Rock, Ark., for appellee.
Before HEANEY, FAGG and BOWMAN, Circuit Judges.
Dogpatch Properties, Inc., a purchaser of a bankruptcy debtor's property, and Jess and Willastein Odom, guarantors on the sale, appeal from judgments entered against them and the bankrupt, jointly and severally, for money owed to several banks on a sales contract. The sole question on appeal involves the jurisdiction of the bankruptcy court. For the reasons set forth below, we affirm.
In 1974 and 1975, Dogpatch U.S.A., Inc. (the debtor) obtained five separate loans from three savings and loan institutions (collectively the S & Ls). The loans were evidenced by promissory notes signed by Jess P. Odom and Willastein J. Odom and secured by mortgages on real estate known as the Buffalo River Resort, consisting of a twenty-two unit hotel, a twelve unit motel, and sixteen chalet units.
By 1980, the debtor had defaulted on the loans and the S & Ls began foreclosure proceedings on the mortgages in state court. On November 3, 1980, Dogpatch U.S.A. filed a petition for reorganization under Chapter 11 of the bankruptcy code with the Bankruptcy Court of the Eastern District of Arkansas. The foreclosure proceedings in state court were automatically stayed pursuant to 11 U.S.C. Sec. 362.
On April 23, 1981, the S & Ls filed adversary proceedings in the bankruptcy court to obtain relief from the stay and/or adequate protection. Shortly thereafter, the debtor offered adequate protection through 1) a proposed sale of the Buffalo River Resort, subject to the S & Ls' first mortgage to Dogpatch Properties, Inc. (DPI), a separate legal entity; and 2) a guaranty agreement executed by the Odoms. Jess Odom was chief executive officer and principal stockholder of Dogpatch U.S.A. and would be the largest unsecured creditor if the plan of reorganization was approved. By order dated July 10, 1981, the bankruptcy court approved the sale subject to the S & Ls' mortgage liens. The approval was made contingent upon the execution of the guaranty agreement by the Odoms. The court found that the amount of the indebtedness owed on the properties exceeded their fair market value, but that the Odoms' guaranty would be the "indubitable equivalent" of the S & Ls' security interest in the property.
The sale was not closed as contemplated, but following renewed negotiations the parties reached a compromise agreement which was conditionally approved by the bankruptcy court on June 23, 1982. In that order the judge found the parties had agreed, inter alia, that Buffalo River Resort could be sold by the debtor to DPI,
subject, however at all times to [the Savings & Loan institutions'] first mortgage liens which liens are not to be impaired or subordinated and all conveyances of the motel/hotel apartments and/or chalet dwellings shall be subject to these first mortgage liens until such time when the indebtedness in connection therewith is paid in full.
On August 5, 1982, a contract for the sale of the property, consistent with the agreement, was executed for the sum of $1,613,000. The contract acknowledged that the property would be sold on a time share basis.
The time shares were to be sold on a seven year ten percent monthly reduction basis generating approximate monthly payments of $1,600 per $100,000 worth of time share contracts. DPI was to make monthly payments to the S & Ls by pledging and assigning the time share contracts to the S & Ls, including DPI's rights to payment thereunder. The amount of the monthly payments was thus dependent on the value of the time shares DPI assigned to the S & Ls. The contract specified that DPI would assign to the S & Ls "the greater in value of Time Shares worth $35,000.00 or twenty percent (20%) of all Time Shares sold during that month[.]" The agreement also contemplated that in some months, DPI would not sell the minimum $35,000 worth of time shares required to be assigned. In this case, the contract called for DPI to pay the S & Ls the cash equivalent of the proceeds that would be generated by $35,000 worth of Time Shares. In any event, the cash payment in any given month was not to be less than $560.
On February 11, 1983, the bankruptcy court conditionally confirmed the debtor's proposed chapter 11 plan of reorganization, based on payments being made on the contract. Confirmation of the plan was subject to the following pertinent conditions:
(1) The discharge of the debtor shall be withheld until full confirmation of the plan of reorganization; and
(2) The bankruptcy court shall retain jurisdiction for all purposes until full consummation of the plan of reorganization; and
(3) The transferee entity of the debtor's real property, Dogpatch Properties, Inc. shall be regarded as within the jurisdiction of this Court as fully as if it were the Chapter 11 debtor until full consummation of the reorganization plan.
Several time share sales were made after confirmation.
In June of 1983, The Arkansas Time Share Act, Ark.Stat.Ann. Secs. 50-1301--50-1338, became effective vesting the Arkansas Real Estate Commission with the authority to enforce the Act. Section 50-1321 of the Act required that prior to the transfer of time share intervals, the developer shall record or furnish to the purchaser releases of all liens affecting the time share interval or provide a surety bond or insurance against the lien from a company acceptable to the agency. DPI was forced to halt its time share sales as a result of the newly passed legislation. DPI sought but was unable to obtain relief from the S & Ls or the Arkansas Real Estate Commission.
DPI filed an adversary proceeding against the Arkansas Real Estate Commission, the S & Ls, and Dogpatch USA, Inc., on August 5, 1983. It asked the bankruptcy court to hold that the Arkansas Time Share Act was not applicable to DPI's Buffalo River Resort time share project. The S & Ls filed a counterclaim against DPI asserting that DPI had breached the contract by failing to make the required monthly payments. They also filed a third-party complaint against the Odoms alleging that DPI was in default and requesting immediate judgment on the Odoms guaranty, and they filed a cross-claim against Dogpatch, U.S.A.
On February 27, 1984, the court held that the time share act was not applicable to DPI's Buffalo River Resort Project. However, it required DPI to give specific written notice to purchasers that the S & Ls' continued to have a first lien on the purchased time shares until such time as the S & Ls' mortgages were paid in full. Time share sales immediately declined. Thereafter, extensive negotiations between DPI, the S & Ls, and the Odoms took place. The goal of the negotiations was to arrive at a lump sum settlement that the S & Ls would be willing to accept in exchange for release of their liens. The negotiations, however, proved unsuccessful.
In September of 1984, the S & Ls gave notice of default for...
To continue reading
Request your trial
-
In re Kelton Motors Inc.
...of Xonics, Inc.), 813 F.2d 127, 131, n. 2, 17 CBC.2d 230, CCH BLR Para. 71695 (7th Cir.1987); Dogpatch Properties, Inc. v. Dogpatch U.S.A., Inc. (In re Dogpatch U.S.A., Inc.), 810 F.2d 782, 786, CCH BLR Para. 71616 (8th Cir.1987). See also, A.H. Robins Co., Inc. v. Piccinin (In re A.H. Robi......
-
Arnold v. First Greensboro Home Equity Inc.
...impacts upon the handling and administration of the bankruptcy estate." Specialty Mills, 51 F.3d at 774 (quoting In re Dogpatch U.S.A., Inc., 810 F.2d 782, 786 (8th Cir.1987)). For purposes of this opinion, the Court agrees with defendants that plaintiffs' action is related to their bankrup......
-
In re General American Communications Corp.
...of Xonics, Inc.), 813 F.2d 127, 131, n. 2, 17 CBC.2d 230, CCH BLR Para. 71695 (7th Cir.1987); Dogpatch Properties, Inc. v. Dogpatch U.S.A., Inc. (In re Dogpatch U.S.A., Inc.), 810 F.2d 782, 786, CCH BLR Para. 71616 (8th Cir.1987). See also, A.H. Robins Co., Inc. v. Piccinin (In re A.H. Robi......
-
Robinson v. Michigan Consol. Gas Co. Inc.
...107 S.Ct. 251, 93 L.Ed.2d 177 (1986); the Fifth Circuit, see In re Wood, 825 F.2d at 93; the Eighth Circuit, see In re Dogpatch, U.S.A., Inc., 810 F.2d 782, 786 (8th Cir.1987); and the Ninth Circuit, see In re Fietz, 852 F.2d 455, 457 (9th Cir.1988). We too have accepted the Pacor articulat......
-
Timothy A. Davis, Defining the Close Nexus: an Analysis of a Bankruptcy Court?s Chapter 11 Postconfirmation Jurisdiction
...1988); Wood v. Wood (In re Wood),825 F.2d 90, 93 (5th Cir. 1987); Dogpatch Props. v. Dogpatch U.S.A., Inc. (In re Dogpatch U.S.A., Inc.), 810 F.2d 782, 786 (8th Cir. 1987); A.H. Robins Co. v. Piccinin (In re A.H. Robins Co.), 788 F.2d 994, 1002 n.11 (4th Cir. 1986). However, the Supreme Cou......
-
Chapter 4, C. Noncore: Related To
...264 B.R. 609 (C.D. Cal. 2001).[39] Landry v. Exxon Pipeline Co., 260 B.R. 769 (Bankr. M.D. La. 2001).[40] In re Dogpatch U.S.A. Inc., 810 F.2d 782 (8th Cir. 1987).[41] In re Wood, 825 F.2d 90 (5th Cir. 1987).[42] Krafchick v. Zayre of East Providence Inc., 137 B.R. 560 (D. Mass. 1991).[43] ......