Furr's Supermarkets v. Richardson & Richardson
| Decision Date | 20 September 2004 |
| Docket Number | Civ. No. 03-1277 MCA/LCS. |
| Citation | 315 B.R. 776 |
| Parties | FURR'S SUPERMARKETS, INC., and Yvette Gonzales, Trustee, Plaintiffs/Appellees, v. RICHARDSON & RICHARDSON, INC., Defendant/Appellant. |
| Court | U.S. Bankruptcy Court — District of New Mexico |
Chris W. Pierce, Albuquerque, NM, for Plaintiff.
Carl A. Calvert, Sean R. Calvert, Albuquerque, NM, for Defendant.
ORDER ADOPTING MAGISTRATE JUDGE'S PROPOSED FINDINGS AND RECOMMENDED DISPOSITION
THIS MATTER comes before the Court on the Magistrate Judge's Proposed Findings and Recommended Disposition filed August 23, 2004 (Doc. 15). Neither the Appellees nor the Appellant have filed Objections to the Proposed Findings and Recommended Disposition.
WHEREFORE,
IT IS HEREBY ORDERED that the Magistrate Judge's Proposed Findings and Recommended Disposition filed August 23, 2004 (Doc. 15) are adopted by the Court.
IT IS FURTHER ORDERED that this matter be REMANDED to the Bankruptcy Court for further proceedings consistent with this opinion.
THIS MATTER comes before the Court on Defendant/Appellant's Notice of Appeal from the decision of the Bankruptcy Court granting partial summary judgment in favor of Plaintiff/Appellee, filed November 5, 2003. (Doc. 1). This Court set a briefing schedule in this matter on January 8, 2004. (Doc. 9). Having considered Appellant's Motion for Leave to Appeal from Interlocutory Order and for Reversal of Bankruptcy Court Order, Appellee's Response thereto, all relevant law, and being otherwise fully advised, I recommend that Appellant's Motion be GRANTED.
The standard for reviewing a bankruptcy court's grant of summary judgment is de novo, affording no deference to its decisions on questions of law. In re Western Pacific Airlines, Inc., 273 F.3d 1288, 1290-91 (10th Cir.2001) (citing Woodcock v. Chem. Bank, 144 F.3d 1340, 1342 (10th Cir.1998)); Key v. Liquid Energy Corp., 906 F.2d 500, 505 (10th Cir.1990). A bankruptcy court's findings of fact will be rejected only if they are clearly erroneous. Tulsa Energy, Inc. v. KPL Prod. Co., 111 F.3d 88, 89 (10th Cir.1997). The parties to this action do not challenge any of the factual findings of the bankruptcy court. Appellant argues instead, that the bankruptcy court incorrectly applied the law relating to mechanic's and materialmen's liens.
The essential facts of this case are not in dispute. On February 8, 2001, Furrs filed for bankruptcy under Chapter 11 of the Bankruptcy Code. During the preference period, Defendant Richardson & Richardson ("Richardson") performed construction services for Furrs under specific purchase orders and under contract with Furrs. Also during the preference period, Richardson received payments from Furrs for construction services performed at Furrs' stores.
On February 4, 2003, Furrs filed this adversary proceeding to avoid preferential transfers to Richardson in the amount of $236,911.37. The payments made by Furrs were in complete or partial satisfaction of debts owed by Furrs on stores 874, 875, 876, 879, 886, 894, 896, 897, and 905. In addition to the invoices paid by Furrs during the preference period, Richardson was owed additional amounts for work at stores 812, 868, 876, 877, 878, 879, 880, 885, 886, and 896 in the amount of $186,263.18.
After the bankruptcy filing, Richardson filed claims of liens on stores 812, 868, 874, 876, 877, 878, 879, 880, 883, 886, and 896 in the total amount of $186,263.18. Richardson filed a proof of secured claim, secured by the lien claims, on October 12, 2001. Furrs argues that Richardson is not secured in property of the estate, but this is a legal rather than a factual question.
Also following the bankruptcy filing, Furrs assigned stores 874, 875, 876, 877, 878, 879, 885, 886, 896 and 897 pursuant to an Order Approving Asset Purchase Agreement with Fleming Companies, Inc., dated July 3, 2001. Richardson argues that this transfer occurred pursuant to 11 U.S.C. § 363. Furrs argues that this transfer occurred pursuant to 11 U.S.C. § 365. During the bankruptcy, Furrs rejected its leases for stores 812, 868, 880, 894 and 905. All alleged preferential payments made to Richardson, with the exception of $435.33, were made prior to the date on which Richardson would have had to file its claim of lien to secure payments.
The lien claims filed by Richardson were timely filed and recorded. Pursuant to Court order, the claim of lien recorded by Defendant on store number 876 in the amount of $172,873.41 has been paid in full and released. This was accomplished by increasing the cure amount to the landlord and the payment was made to the landlord. Pursuant to the above-mentioned court order, the claim of lien recorded by Richardson on store number 879 has been paid in full and released. This also was accomplished by increasing the cure amount to the landlord, and the payment was made to the landlord. No other liens have been satisfied or released. Furrs did not own the property or buildings on which the work was performed, but instead leased the land and buildings, with the exception of store 885.
Appellant filed its Motion for Summary Judgment on July 7, 2003, alleging that it was a secured creditor in Appellee's properties and was entitled to recover in full the amounts owed it by Appellee. On October 14, 2003, the Bankruptcy Court entered its Opinion on cross-motions for Summary Judgment. The Bankruptcy Court held that under New Mexico law, Appellee's leaseholds constituted personal property and therefore were not subject to mechanic's and materialman's liens.
Appellee first contends that this Court lacks appellate jurisdiction to consider the Bankruptcy Court's grant of summary judgment. A District Court must have appellate jurisdiction before it can address any of the issues in this case. Leave to hear appeals from interlocutory orders should be granted with discrimination and reserved for cases of exceptional circumstances.
Appellee further argues that this matter is not a reviewable interlocutory appeal. Title 28, Section 158(a) of the United States Code governs the jurisdiction of bankruptcy appeals. It provides in pertinent part: The district courts of the United States shall have jurisdiction to hear appeals (1) from final judgments, orders and decrees; ... (3) with leave of the court, from other interlocutory orders and decrees. [T]o be final and appealable, the district court's order must end the litigation and leave nothing to be done except execute the judgment. In re Buckner, 66 F.3d 263, 265 (10th Cir.1995) (quoting In re Magic Circle Energy Corp., 889 F.2d 950, 953 (10th Cir.1989)).
Additionally, Federal Rule of Bankruptcy Procedure 8003 provides for a motion for leave to appeal from an interlocutory order pursuant to 28 U.S.C. § 158. However, neither 28 U.S.C. § 158 nor the Bankruptcy Rules provide a specific standard for evaluating whether to allow interlocutory appeals; thus, district courts often utilize the standards governing appeals of interlocutory orders from district courts to courts of appeal pursuant to 28 U.S.C. § 1292(b). In re Matter of Bertoli, 58 B.R. 992, 993 (D.N.J.1986), aff'd, 812 F.2d 136 (3d Cir.1987).
While the test for appeal under 28 U.S.C. § 1292(b) differs slightly from one appellate jurisdiction to another, generally it requires that 1) these orders must involve a controlling question of law as to which there is substantial ground for difference of opinion, and 2) the immediate resolution of the order may materially advance the ultimate termination of the litigation. In re Sorrells, 218 B.R. 580, 582 (10th Cir. BAP 1998) (quoting Personette v. Kennedy, 204 B.R. 764, 769 (10th Cir. BAP 1997)) (citing 28 U.S.C. § 1292(b)); 1 Collier on Bankruptcy, Section 3.03(d)(1). See also, Raymond v. Mobil Oil Corp., 983 F.2d 1528 (10th Cir.1993).
In the present case, I believe a reading of the cases and the New Mexico Statutes provides substantial ground for difference of opinion as to whether a mechanic's or materialmen's lien may attach to a leasehold interest in realty. Having reviewed the decisions of New Mexico's appellate courts, it is apparent that there has not been a decision on the precise issue at hand in this case.1 I further find that a decision by this court on the merits may materially advance the ultimate determination of this case. Id. Therefore, I recommend that Richardson's Motion for Leave to Appeal the Interlocutory Order be GRANTED.
In its Memorandum Opinion analyzing the parties' Cross Motions for Summary Judgment, the Bankruptcy Court found that, under New Mexico law, a leasehold constitutes personal property, not real property. The Court looked to a number of New Mexico cases in reaching this conclusion. See e.g., Western Sav. & Loan Ass'n v. CFS Portales Ethanol I, Ltd., 107 N.M. 143, 144, 754 P.2d 520 (1988); New Mexico ex rel. Truitt v. District Court of Ninth Judicial District, Curry County, 44 N.M. 16, 29, 96 P.2d 710 (1939). The Bankruptcy Court further found that leaseholds constituted personal property even though they may be classified as real estate for the purposes of the real estate conveyancing statutes. Section 47-1-1 NMSA 1978 (1995 Repl.); Resolution Trust Corp. v. Binford, 114 N.M. 560, 569, 844 P.2d 810 (1992).
The Court further found that, under New Mexico law, mechanic's and materialmen's liens attach only to real property and not to personalty. The Court again looked to New Mexico case law in determining that ...
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