In re 1606 New Hampshire Ave. Associates
| Decision Date | 13 May 1988 |
| Docket Number | Bankruptcy No. 87-05831S. |
| Citation | 85 BR 298 |
| Parties | In re 1606 NEW HAMPSHIRE AVENUE ASSOCIATES, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Timothy A. Gallogly, Philadelphia, Pa., for debtor.
Myron Bloom, Kevin W. Walsh, Philadelphia, Pa., for Reiss Const. Co.
Douglas Q. Wickham, Raleigh, N.C., Christopher G. Kuhn, Philadelphia, Pa., Joseph J. Levin, Jr., Washington, D.C., for Cavalier Real Estate, Inc. Paul Rosen, Lawrence Tabas, Philadelphia, Pa., for Dover Admin. Services, Inc.
James J. O'Connell, Kevin Callahan, Office of the U.S. Trustee, Philadelphia, Pa.
We are presented with two motions in this case, both of which will be addressed herein: (1) A motion to dismiss or to obtain relief from the stay filed by Cavalier Real Estate, Inc., the Debtor's only admittedly secured creditor (hereinafter referred to as "Cavalier"); and (2) A motion to dismiss or to change venue to the Bankruptcy Court of the District of Columbia (hereinafter referred to as "D.C.") filed by Reiss Construction Company, Inc., another of the Debtor's creditors (hereinafter referred to as "Reiss"). Because the Debtor's sole asset is realty in D.C. and virtually all of the Debtor's creditors are located there, we deem it appropriate to transfer venue of this case to D.C. under 28 U.S.C. § 1412, even though we find that proper venue exists in this court pursuant to 28 U.S.C. § 1408. However, having heard evidence on Cavalier's motion on testimony presented for three days in our court, we believe that conservation of judicial resources is best served by our ruling promptly on the record made on this motion here. We are certainly disinclined to grant the motion to dismiss and we shall deny the motion for relief from the automatic stay, at least on the record made here.
This voluntary Chapter 11 case was filed in our court on November 20, 1987. On January 5, 1988, we entered an order allowing the Debtor to use rental income generated from its only asset, a four-story office building located proximate to Dupont Circle in D.C., to administer the building. On February 3, 1988, we approved a stipulation between Cavalier and the Debtor allowing the Debtor to use the rental income, which was cash collateral for Cavalier's debt, for administration costs of the building under certain stipulated conditions.
Cavalier's instant motion was filed on January 8, 1988. It came before us for a hearing on February 3, 1988, the same date that we were presented with and approved the cash collateral stipulation. We commenced the hearing on that date, receiving testimony from Kent Worthington, a D.C. real estate "evaluator" called as an expert witness by Cavalier. At the conclusion of Mr. Worthington's testimony, the parties expressed an agreement to adjourn the hearing, with the stay remaining in place, until February 23, 1988, when the Debtor's expert, Judith Reynolds, a D.C. real estate appraiser, would be available to appear and testify.
Meanwhile, Reiss filed the second motion before us, seeking to dismiss this case on the ground of improper venue or, alternatively, to change the venue of this case to D.C., on January 19, 1988. A request for expedited disposition of this motion was denied, and a hearing on this matter was also scheduled on February 23, 1988. The parties agreed to continue hearings on both motions until February 24, 1988. We note that, in addition to an Answer from the Debtor, a "motion" in response to Reiss's Motion was filed by the United States Trustee, contending that venue should not be transferred until the Debtor remitted its fee pursuant to 28 U.S.C. § 1930(a)(6) for the most recent quarter.
On February 24, 1988, the parties agreed that we should take evidence on Reiss's motion first, it being important to resolve the venue issue before proceeding to add to the substantive motions before this court if we decided that a venue-change was in order. Hence, we proceeded to complete the hearing on the Reiss motion on that day and thereafter resumed the hearing on the Cavalier motion. At the close of the day, we directed any proponents of the Reiss motion to submit Briefs on or before March 1, 1988, and opponents to submit Briefs on or before March 7, 1988. In addition to receiving the requested Briefs from Reiss and the Debtor, Reiss submitted an unsolicited Supplemental Brief on March 10, 1988. But see In re Jungkurth, 74 B.R. 323, 326 (Bankr.E.D.Pa. 1987) ()
The parties agreed that the hearing on the Cavalier motion would be concluded on March 4, 1988, which in fact transpired. Upon the conclusion, Cavalier expressed a desire to order a transcript of the hearing on an expedited basis. We than entered an order stating that, if the transcript were in fact completed by March 11, 1988, as projected, Cavalier and the Debtor were to submit briefs on or before March 21, 1988, and March 28, 1988, respectively. Unfortunately, preparation of the transcripts and service by mail of the transcripts and Briefs between D.C. and here resulted in a delay, and the Briefs on Cavalier's motion were not filed until April 12, 1988.
At the close of the hearing on March 4, 1988, we expressed an intention to decide both motions simultaneously, irrespective of the outcome of the venue motion. After consultation with the Honorable C. Martin Teel, the newly-appointed D.C. bankruptcy judge, it was mutually agreed that we would decide both motions, even if the case were ultimately transferred to the D.C. court. As will be noted, we hold that a change of venue to the D.C. court is warranted. Therefore, although we decide Cavalier's motion adversely to that creditor, it is obviously within the power of Cavalier to present another such motion to Judge Teel, as he will be faced with the responsibility of handling all aspects of this case in the future.
We shall herein initially address the Reiss motion and thereafter turn to Cavalier's motion. Because these matters are motions rather than adversary proceedings, we shall present our decision in narrative form. See In re Campfire Shop, Inc., 71 B.R. 521, 524-25 (Bankr.E.D.Pa.1987). Resolution of the relatively few factual issues shall be made in the course of our opinion.
The only record made by Reiss on its venue motion was documentary. However, unlike the Cavalier motion, this matter was not fact-determinative, and this did not prove to be a drawback. The first four documents offered and admitted were the Debtor's Certificate of Limited Partnership filed with the D.C. Department of Consumer and Regulatory Affairs on February 4, 1985, and Amendments filed thereto on December 27, 1985, December 31, 1985, and September 16, 1987. The 1985 filings consistently recited that the "character" of the business was administration of the property at 1606 New Hampshire Avenue, N.W., Washington, D.C. and that the partnership's principal place of business was 1074 Thomas Jefferson Street, N.W., Washington, D.C. Named as the sole general partners on the first two documents were Dianna J.R. Brochendorff and James S. Sollins, both with an address in D.C. Adam Kauffman, of Philadelphia, was added as a general partner on December 31, 1985. The sole limited partner listed on all documents was Dupont Circle Historic Associates, of Philadelphia (hereinafter referred to as "Dupont"). In the September 27, 1987, amendment, Dover Administrative Services, Inc. (hereinafter referred to as "Dover"), of Philadelphia, replaced Ms. Brochendorff and Mr. Sollins as the sole general partner, and the latter two parties were relegated to limited partnership status.
The fifth and sixth documents offered and admitted were, respectively, pleadings filed in litigation in D.C. in which the Debtor's counsel identified Ms. Brochendorff and Mr. Sollins as the general partners of the Debtor in a document filed in October, 1987, and in which Mr. Kauffman alleged that the above parties resigned as general partners in "mid-August, 1987."
The final document offered and admitted was the Debtor's statements and schedules filed in this court. These list one priority creditor, the D.C. Department of Finance and Revenue; one secured creditor, Cavalier; and twenty-three unsecured creditors, including Reiss, all indicating D.C.-area addresses except one small creditor whose address is given as Kansas City, Missouri.
Mr. Kauffman, the Vice-President of Dover, was called by the Debtor as its only witness. Although he indicated that Dover hired Pier Associates, a D.C. firm, to perform day-to-day management services in the building, he contended that all major management decisions for the Debtor, as well as its record-keeping, were accomplished by Dover in its Philadelphia office. He testified that he personally had conducted the negotiations for rental of a third-floor suite in the premises and that he was, effectively, the rental agent.
While Mr. Kauffman indicated that Ms. Brochendorff and Mr. Sollins, both situated in D.C., were instrumental in management of the Debtor though spring, 1987, he further stated that thereafter Dover had become increasingly suspicious of irregularities on their part and increasingly active in its own management role as a result. This situation culminated on July 24, 1987, when Ms. Brochendorff visited Dover's Philadelphia office and delivered over certain records and full management responsibility of the Debtor to Dover. Since then, per Mr. Kauffman, Ms. Brochendorff and Mr. Sollins have played no further function with the Debtor, other than serving as a target of investigation as to their role in the Debtor's claims against Cavalier's assignor, Riggs National Bank of Washington, D.C. (hereinafter referred to as "Riggs"), as decribed at pages...
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