Good Gateway, LLC v. NRCT, LLC (In re Bay Circle Props.)
| Docket Number | 15-58440-WLH,Adv. Proc. 19-5284 |
| Decision Date | 31 January 2022 |
| Parties | IN RE: BAY CIRCLE PROPERTIES, LLC, et al. Debtor. v. NRCT, LLC, Defendant. GOOD GATEWAY, LLC and, SEG GATEWAY, LLC, on behalf of JOHN LEWIS, CHAPTER 11 TRUSTEE FOR BAY CIRCLE PROPERTIES, LLC, Plaintiff, |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
ORDER DENYING MOTION FOR SUMMARY JUDGMENT
THIS MATTER is before the Court on Plaintiff's Motion for Summary Judgment (Doc. No. 76) (the "Motion"). This is an action seeking contribution. It is a core matter within the meaning of 28 U.S.C. § 157(b), and the Court has jurisdiction pursuant to 28 U.S.C. § 1334(b).
Motions for summary judgment are governed by Federal Rule of Civil Procedure 56, made applicable in adversary proceedings by Federal Rule of Bankruptcy Procedure 7056. Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law". Celotex Corp. v Catrett, 477 U.S. 317, 322 (1986); Fed.R.Civ.P. 56(c); Fed.R.Bankr.P. 7056(c). "The substantive law [applicable to the case] will identify which facts are material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party moving for summary judgment has the burden of proving there are no disputes as to any material facts. Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 918 (11th Cir. 1993). A factual dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. The party moving for summary judgment has "the initial responsibility of informing the . . . court of the basis for its motion, and identifying those portions of 'the pleadings depositions, answers to interrogatories, and admissions on file, together with the affidavits if any' which it believes demonstrate the absence of a genuine issue of material fact." U.S. v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (citing Celotex Corp., 477 U.S. at 323). What is required of the moving party, however, varies depending on whether the moving party has the ultimate burden of proof on the issue at trial.
When the nonmoving party has the burden of proof at trial the moving party is not required to 'support its motion with affidavits or other similar material negating the opponent's claim' (cites omitted) in order to discharge this 'initial responsibility'. Instead, the moving party simply may 'show - that is point out to the . . . court - that there is an absence of evidence to support the nonmoving party's case. (cites omitted). Alternatively, the moving party may support its motion for summary judgment with affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial.
Id. at 1437-38 (citing Celotex Corp., 477 U.S. at 323-31). Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings. See Fed.R.Civ.P. 56(e). Rather, the nonmoving party must present specific facts that demonstrate there is a genuine dispute over material facts. Hairston, 9 F.3d at 918. "The existence of a presumption alters a summary judgment movant's ability to meet its summary judgment burden of production because the presumption excuses the beneficiary from having to put forth evidence until the party against whom the presumption operates puts forth "'evidence to rebut or meet the presumption.'" Devan v. CIT Group/Commercial Services, Inc. (In re Merry Go-Round Enters., Inc.), 229 B.R. 337, 341 (Bankr. D. Md. 1999) (citing Fed.R.Bankr.P 3017; Fed.R.Evid. 301).
When reviewing a motion for summary judgment, a court must examine the evidence in the light most favorable to the nonmoving party and all reasonable doubts and inferences should be resolved in favor of the nonmoving party. Hairston, 9 F.3d at 918. At the summary judgment stage the Court "'must not resolve factual disputes by weighing conflicting evidence.'" Tippens v. Celotex Corp., 805 F.2d 949, 953 (11th Cir. 1986) (quoting Lane v. Celotex Corp., 782 F.2d 1526, 1528 (11th Cir. 1986)). The Court must not "assess [ ] the probative value of any evidence presented to it, for this would be an unwarranted extension of the summary judgment device." Id. (quoting Gauck v. Meleski, 346 F.2d 433, 436 (5th Cir. 1965)).
Undisputed Facts[1]
NRCT, together with its affiliates, Bay Circle Properties, LLC ("Bay Circle"), DCT Systems Group, LLC ("DCT"), Sugarloaf Centre, LLC ("Sugarloaf"), and Nilhan Developers, LLC ("Nilhan Developers") (collectively the "Debtors"), each filed a petition for relief under Chapter 11 of the Bankruptcy Code on May 4, 2015. On June 8, 2015, the Court administratively consolidated the Debtors' cases.
The Debtors were all guarantors on two loans held by Wells Fargo Bank, NA. All eleven of the obligors on the loans, whether as guarantors or principals, are related. They are all owned or controlled by Chuck Thakkar or his family. Mr. Thakkar and his wife individually are also co-obligors and guarantors. The Debtors' obligations were secured by certain real property owned by each of them. The immediate reason for filing bankruptcy was a default on the loans and the threat of foreclosure on the real property. After the bankruptcy filings, Wells Fargo, the Debtors, and other non-Debtor entities including Chuck, Niloy, and Rohan Thakkar, executed a Settlement Agreement on November 18, 2015 in which Wells Fargo agreed to forbear from enforcing obligations and performance owed by the Debtors and other loan parties (the "Settlement Agreement"). The Settlement Agreement was amended on January 8, 2016 and approved by the Court on January 13, 2016 (Case No. 15-58440 Doc. No. 302). The Settlement Agreement stipulated the total debt due to Wells Fargo was $22, 561, 967.14, as of August 31, 2015, and required the full amount plus accruing interest to be paid by April 30, 2017. It set various deadlines for interim payments and release prices for the collateral. If Wells Fargo was not paid in full by April 30, 2017, it could record deeds-in-lieu of foreclosure on certain of NRCT's property and property of the other Debtors without further hearing. After the Settlement Agreement was finalized and approved, Wells Fargo assigned its interest and claim to Bay Point Capital Partners, L.P. ("Bay Point"). The first several months of these cases were devoted to the Debtors liquidating or refinancing various pieces of property to meet the milestone payment deadlines agreed to by Wells Fargo. All of the Debtors except NRCT liquidated or refinanced property to satisfy Wells Fargo, and the Wells Fargo debt was satisfied by the April 30, 2017 deadline.
Prior to the bankruptcy cases, Good Gateway, LLC and SEG Gateway, LLC (collectively "Gateway") obtained a judgment against Chuck Thakkar and others for $12 million. The judgment was recorded. At the time, Chuck Thakkar and Saloni Thakkar jointly owned the property now referred to as the Bay Circle Property. Shortly before the bankruptcy, Mr. and Mrs. Thakkar conveyed the Bay Circle Property to Bay Circle, but subject to Gateway's lien. As one of the milestone payments was approaching, Bay Circle sought to sell its property. Bay Circle was the second Debtor to seek to sell or refinance its property in furtherance of the Wells Fargo Settlement.
Gateway objected that its interest in the Bay Circle property was unnecessarily lost and asked that other Debtors be required to sell their property first or for adequate protection of the lien it lost by virtue of the sale of the Bay Circle Property. The Court approved the sale and provided Gateway a replacement lien on Bay Circle's claims for contribution and subrogation up to the amount of $2, 675, 000 (1/2 the sale price of the Bay Circle Property) ("Contribution Claim") (Case No. 15-58440 Doc. No. 797) (the "AP Order"). The Court later modified the AP Order .
On December 11, 2018, after notice and a hearing, the Court appointed a Chapter 11 Trustee in all five bankruptcy cases (Case No. 15-58440 Doc. No. 919). The appointment was triggered by Mr. Thakkar's actions in the Nilhan Developers case. When the Trustee was appointed, the Trustee was tasked with investigating the potential Contribution Claim of Bay Circle against NRCT and any other Debtors or entities. The Trustee asked GlassRatner Advisory & Capital Group, LLC to use its expertise and analyze possible claims by Bay Circle against the other Debtors and non-Debtors, taking into account payments made by the different Debtors and other obligors both before and after the filing of the petition. On March 27, 2019, the Trustee filed his Preliminary Analysis Regarding Bay Circle's Contribution Claim (Case No. 15-58440 Doc. No. 1007) ("Preliminary Report") with a chart showing the payments made by the Debtors to Wells Fargo and Bay Point. The Trustee acknowledged that additional information was needed to complete the analysis. Paul Dopp of GlassRatner conducted an analysis and produced a report suggesting possible claims based on various assumptions (the "Dopp Report"). The Dopp Report set forth two possibilities, Scenario 1 and Scenario 2, and concluded Bay Circle held a claim in the range of $0 to $2, 675, 000.
On April 29, 2019, the Trustee filed a Motion Requesting Determination of the Amount of Debtor Bay Circle's Contribution Claim (Case No. 15-58440 Doc. No. 1030) attaching the Dopp Report ("Motion to Determine Claim"). The Trustee requested the Court enter an...
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