Fla. Assoc.s Capital Enter.s LLC v. Sundale
| Decision Date | 08 October 2010 |
| Docket Number | Adv. Case No. 08-1312-BKC-LMI,Case No. 07-21016-BKC-LMI |
| Parties | FLORIDA ASSOCIATES CAPITAL ENTERPRISES, LLC, Plaintiff, v. SUNDALE, LTD. and KENDALL HOTEL AND SUITES, LLC, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
TAGGED OPINION DO NOT PUBLISH
FINDINGS OF FACT AND CONCLUSIONS OF LAW
WITH RESPECT TO FINAL JUDGMENT
IN FAVOR OF PLAINTIFF/COUNTERDEFENDANT
FLORIDA ASSOCIATES CAPITAL ENTERPRISES, LLC.
This matter arose from a dispute between the now reorganized debtor, Sundale, Ltd. ("Sundale"), and Florida Associates Capital Enterprises, LLC ("FACE"). FACE filed an adversary complaint to determine the extent, validity, and priority of its claims against Sundaleand Kendall Hotel and Suites ("KHS") (collectively, Sundale and KHS shall be referred to as the "Reorganized Debtors" or the "Defendants").1 FACE asserts that it has a claim in the principal amount of $3,250, 000, plus default interest accruing at 18% from May 2005 to the effective date of the Debtors' Chapter 11 plan confirmed in the main bankruptcy case, as well as a claim for attorneys' fees, based on loans FACE extended to Sundale, which loans are secured by real estate owned by Sundale, and through a trust by Sundale's principal, Phillip J. Scutieri, Jr ("Mr. Scutieri").
The Defendants assert that the FACE loans were not intended to be enforceable but were, as discussed in greater detail below, a payoff relating to a family dispute between the Scutieri family and a man named Raymond G. Chambers and that the funds paid were merely disguised as a loan. The Defendants assert numerous affirmative defenses, and in counterclaims, seek to declare FACE's loan documents unenforceable and to recoup all monies paid by Sundale to FACE. FACE asserts various affirmative defenses to the recoupment claim.
Once having waded through all the facts, disputed and undisputed, relevant and irrelevant, there are two issues that I must resolve. The first issue is the enforceability of release and reaffirmation provisions in mortgage modification agreements executed by Sundale in 2001. Because I find that the release and reaffirmation provisions are enforceable, judgment on Count I of the Plaintiffs Complaint shall be entered in favor of Plaintiff/Counter-Defendant FACE and against the Defendants/Counter-Plaintiffs on Count I of the Counterclaim. The second issue is whether the Defendants/Counter-Plaintiffs have a valid cause of action for recoupment. Because I find that the Defendants/Counter-Plaintiffs have failed to demonstrate by a preponderance of the evidence entitlement to recoupment, judgment is entered against Defendants/Counter- Plaintiffs with respect to Count II of the Counterclaim. The following constitute my findings of fact and conclusions of law in accordance with Federal Rule of Civil Procedure 52, made applicable to this adversary proceeding by virtue of Federal Rule of Bankruptcy Procedure 7052.
This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §1334(b) and 28 U.S.C. §157. The jurisdiction of the bankruptcy courts is set forth in 28 U.S.C. §1334, which provides, in pertinent part, that "the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. §1334(b). 28 U.S.C. §157(b) provides that "[b]ankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11, referred under subsection (a) of this section, and may enter appropriate orders and judgments, subject to review under section 158 of this title." 28 U.S.C. §157(b). This matter is a core proceeding under 28 U.S.C. §157(b)(2)(K). With respect to the Counterclaims asserted by the Defendants/Counter-Plaintiffs, this Court has jurisdiction over the lien claim in Count I under 28 U.S.C. §157(b)(2) as a core proceeding and has jurisdiction over the Recoupment claim in Count II under its "related-to" jurisdiction pursuant to 28 U.S.C. §1334(b). Venue is proper in this district pursuant to 28 U.S.C. §1409.
While the parties to this dispute are FACE, Sundale and KHS, the facts underlying this dispute start with relationships between the family of Mr. Scutieri, the principal of Sundale and KHS, and Raymond G. Chambers ("Mr. Chambers"). Thus, in order to understand the allegations of the complaint and counterclaim, it is necessary to understand the genesis of the relationship. We start with the cast of characters.
Mr. Chambers is a successful businessman who made his fortune in the leveraged buyout business in the 1980s. For the last two decades, Mr. Chambers has been focused mainly on philanthropic endeavors. (Raymond Chambers' Trial Testimony at pg. 49:3-23, hereinafter "RC Trial Testimony at pg._)."
Delphine Scutieri ("Mrs. Scutieri") was married to Philip Scutieri, Sr. ("Mr. Scutieri, Sr."). Mrs. Scutieri and Mr. Scutieri, Sr. were the parents of Mr. Scutieri, and Joan Adubato ("Mrs. Adubato").
Frank Adubato ("Buzz" or "Mr. Adubato") was, and still is, married to Mrs. Adubato, the daughter of Mr. Scutieri, Sr. and Mrs. Scutieri. Mr. Adubato has been one of Mr. Chambers' closest friends. (RC Trial Testimony at pg. 61:3-14).
Mr. Chambers had a very close personal relationship with the Scutieri family that dates back over forty (40) years. . Mr. Chambers and the Scutieri family lived in New Jersey. . Mr. Chambers also had business relationships with Mr. Scutieri, Sr. and Mr. Scutieri at different times. (See Exhibit 2). Mrs. Adubato introduced Mr. Chambers to his wife, , and at some brief point in time, Mr. and Mrs. Chambers lived with Mrs. Scutieri and Mr. Scutieri, Sr. Mrs. Adubato was, and may still be, Mrs. Chambers' closest personal friend. (Id. at 53:22-25).
Since the 1980s, Mr. Chambers' wealth and personal financial affairs have been managed by a company called Van Beuren Management ("VBM"), whose only clients are Mr. Chambers and his family and the various entities in which the Chambers family has interests, including various trusts. (See David Roy Trial Testimony at pg. 7:18-8:4, hereinafter "DR Trial Testimony at pg. _)." VBM not only administers Mr. Chambers' numerous trusts, but manages all of Mr. Chambers' financial affairs. VBM is owned by David Roy ("Mr. Roy") and Kurt Borowsky ("Mr. Borowsky"), both of whom are trustees of Mr. Chambers' trusts at VBM. (DR Trial Testimony at pg. 9:16-25). There is no dispute that since the formation of VBM, Mr. Roy and Mr. Borowsky have been, and continue to be, responsible for most, if not all, of Mr. Chambers' money, investments, and even personal expenses. .
Since the early 1970s, Mr. Scutieri has been the owner, through Sundale or its predecessors, of an approximate nine (9) acre tract of land located at 9100 North Kendall Drive, Miami, Florida (the "Sundale Property"). For a time in the mid-1970s, when there was an assisted living facility for retired senior citizens ("ACLF") located at the Sundale Property, Mr. Chambers and Mr. Adubato had some kind of limited partnership interest in the project with Sundale. .
On or around November 20, 1997, Mrs. Scutieri advised her son, Mr. Scutieri, that she believed that Mr. Chambers, with the help of Mr. Adubato, (who, in November of 1997, became separated from Mrs. Adubato), had taken certain assets of the estate of Mr. Scutieri, Sr. (the "Estate") (See Exhibits 2 and 3). Mrs. Scutieri further believed that Mr. Chambers used some of these assets to obtain the capital and assets to begin his leveraged buy-out business. Id.
At Mr. Scutieri's request, Mr. Scutieri met with Mr. Chambers in New Jersey several days later. (Philip Scutieri, Jr., Trial Testimony at pgs. 328:13-329:2, hereinafter "PS Trial Testimony at pg._"). At the meeting, Mr. Scutieri asserted Mrs. Scutieri's belief that Mr. Chambers, along with Mr. Adubato, had improperly taken certain assets of Mr. Scutieri, Sr. after his death. Mr. Scutieri accused Mr. Chambers of betraying his parents. Both Mr. Scutieri and Mr. Chambers agree the meeting was very emotional, although they dispute virtually everything about what Mr. Chambers and Mr. Scutieri said during the course of the meeting. .
After leaving the meeting at the restaurant, Mr. Chambers spent that night drafting a letter to Mrs. Scutieri until the early morning hours, and sent the letter to Mrs. Scutieri the next day, (RC Trial Testimony at pg. 59:1-16). This letter contains a detailed explanation by Mr. Chambers concerning his involvement in the disputed assets and that he would "share everything" he had with Mrs. Scutieri and that it gave him "no pleasure whatsoever to have anything" if Mrs. Scutieri was not happy. (See Exhibit 2).
On December 15, 1997, Mrs. Scutieri wrote a letter to Mr. Chambers advising Mr. Chambers that while she was thankful for his recent letter referring to several past transactions between himself and her late husband, Mr. Scutieri, Sr., she was disturbed with information that had recently been brought to her attention. (See Exhibit 3). Mrs. Scutieri attached a draftcomplaint in which she named Mr. Chambers as a defendant, as well as Mr. Adubato, and asked that Mr. Chambers contact Mr. Scutieri to meet and discuss "an amicable solution to my claims." Id.
After Mrs. Scutieri sent her letter of December 15, 1997, Mr. Chambers and his agents attempted to resolve the dispute. (DR Trial Testimony at pg. 29:8-14). Meetings were held in Miami between the Scutieris and their lawyer and Mr. Chambers'...
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