In re Air Nail Co., Inc.
| Decision Date | 08 August 2005 |
| Docket Number | Bankruptcy No. 03-29029-MBM.,Adversary No. 03-3203-MBM. |
| Citation | 329 B.R. 512 |
| Parties | In re AIR NAIL COMPANY, INC., a Pennsylvania corporation, et al., Debtors. Alameda Produce Market, Inc., Plaintiff, v. Air Nail Co., Inc. and Bruce Massman and Martin Massman, Defendants. |
| Court | U.S. Bankruptcy Court — Western District of Pennsylvania |
Paula Schmeck, Lauren Rushak, and Michael Abramson, for Alameda Produce Market, Inc.
Neil Siegel, John Byrne, and Michael Koomer, for Bruce and Martin Massman.
John Steiner, for Air Nail Co., Inc.
Alameda Produce Market, Inc. (hereafter "Alameda") brings the instant multi-count action against Bruce and Martin Massman (hereafter "the Massmans") and Air Nail Company, Inc., the instant debtor-in-possession (hereafter "the Debtor"), so as to exact from such defendants substantial relief relative to Alameda's attempted purchase from the Massmans of commercial realty that is presently occupied by, as well as leased by the Massmans to, the Debtor. In particular, Alameda (a) brings a breach of contract action against the Massmans for their alleged breach of an amended contract to sell such realty to Alameda (Counts 1, 2, 4, 6, and 7), (b) seeks declaratory relief against the Massmans relative to such contract to sell (Counts 3 and 5), and (c) sues the Massmans as well for fraud relative to such sale (Count 8). With respect to the Debtor, Alameda seeks declaratory relief to the effect that the aforesaid lease between the Massmans and the Debtor is null and void (Counts 9 and 10). Alameda pursues against the Debtor as well claims for intentional interference with contractual relations (Counts 11 and 13), and interference with prospective economic advantage (Counts 12 and 14); each such claim pertains to alleged actions that were taken by the Debtor with respect to the realty that is the subject of Alameda's claims against the Massmans.
The Massmans counterclaim against Alameda for breach of the amended contract between themselves regarding the aforesaid sale of realty to Alameda (Counterclaims 1, 2, and 4). The Massmans also seek declaratory relief as against Alameda to the effect that such contract has terminated, and that Alameda thus no longer has any sort of interest in the realty that is the subject of such contract (Counterclaim 3). Finally, the Debtor crossclaims against the Massmans for indemnity in the event that it is found liable to Alameda.
The Court observes that Alameda divides its aforesaid breach of contract cause of action into five separate counts, namely Counts 1, 2, 4, 6, and 7. Notwithstanding such organization, the Court finds that each such count is essentially but part of the same breach of contract cause of action, albeit with different prayers for relief. The Court likewise observes that the Massmans divide their counterclaim for contract breach into three separate claims namely their first, second, and fourth claims. Notwithstanding such organization, the Court finds that each such claim is essentially but part of one counterclaim for contract breach, albeit with different requests for relief.
Presently before the Court is the Massmans' motion for summary judgment on all of Alameda's counts against the Massmans, as well as on all of the Massmans' counterclaims against Alameda. For the reasons set forth below, the Court shall grant the Massmans' summary judgment motion in its entirety.
On August 26, 2002, Alameda and the Massmans entered into a contract to buy and sell, respectively, commercial real property located at and commonly known as 8685 Bowers Avenue, South Gate, California (hereafter "the Realty"). The terms of such contract to buy and sell are those set forth in an August 2, 2002 document drafted by a predecessor in interest to Alameda and entitled "Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate," except to the extent (a) modified by an August 23, 2002 document drafted by the Massmans and entitled "Counter Offer — Seller," and (b) perhaps modified by additional letters dated in October 2002 (hereafter collectively referred to as "the Purchase Agreement"). Pursuant to the Purchase Agreement and the parties' escrow instructions, Alameda paid a deposit of $100,000 for the Realty (hereafter "the $100,000 Deposit") to Commerce Escrow Company, the escrow holder (hereafter "the Escrow Holder"), which deposit remains in escrow at this time. On or about December 27, 2002, the Massmans declared that the Purchase Agreement was terminated, apparently on the ground that Alameda had failed within sixty days of the opening of escrow to enter into an initial lease of the Realty as called for by the Purchase Agreement. Alameda disputed then, and continues to dispute, that the Purchase Agreement was effectively terminated as of December 27, 2002. However, the Massmans refused to perform further under the Purchase Agreement subsequent to December 27, 2002.
On January 15, 2003, the Massmans entered into a Standard Industrial/Commercial Single-Tenant Lease (Net) with the Debtor pursuant to which the Massmans leased the Realty to the Debtor for a period of ten years and three months (hereafter "the Air Nail Lease"). The Debtor presently occupies, and has at all times since January 2003 occupied, the Realty pursuant to the Air Nail Lease. Attached as an addendum to the Air Nail Lease is a Right of First Refusal to Purchase, wherein the Massmans granted to the Debtor the right to match any sale offer regarding the Realty during the term of the Air Nail Lease (hereafter "the Right of First Refusal"); the Right of First Refusal was to be exercisable by the Debtors only within a twenty day period that would commence upon the provision of notice by the Massmans as to the terms of the offer of a sale regarding the Realty.
On or about February 11, 2003, and in reaction to the Massmans' refusal to perform further under the Purchase Agreement subsequent to December 27, 2002, and the Debtor's entry into the Air Nail Lease and consequent occupation of the Realty, Alameda initiated litigation in a California state court against the Massmans and the Debtor, Alameda Produce Market, Inc. v. Martin Massman and Bruce Massman, et al. (Los Angeles County Superior Court, Case No. BC 290142) (hereafter "the California Action"). The California Action was subsequently stayed as to the Debtor by virtue of the Debtor's commencement of the instant Chapter 11 bankruptcy case on July 18, 2003. Thereafter, in November 2003, Alameda initiated the instant adversary proceeding by filing its original complaint, which complaint (a) named only the Debtor as a party defendant, and (b) sought, inter alia, declaratory relief to the effect that the Air Nail Lease was invalid.
On March 1, 2004, the Massmans and Alameda settled the California Action by entering into a Settlement Agreement and Mutual Release (hereafter "the Settlement Agreement"); the parties entered into such settlement notwithstanding that the California Action had been dismissed without prejudice at a hearing that took place on February 26, 2004. Pursuant to ¶ 4 of the Settlement Agreement, Alameda then waived any right that it had to refile the California Action against the Massmans, and agreed to treat the prior dismissal of such suit as one with prejudice as to the Massmans.
Pursuant to ¶ 1 of the Settlement Agreement, the Massmans and Alameda also agreed that:
[s]ubject to whatever rights Air Nail [(i.e., the Debtor)] has under the Right of First Refusal, the Massmans shall sell the Property [(i.e., the Realty)] to Alameda for a cash purchase price of $6.5 million ("Purchase Price"), in accordance with the terms and conditions of the Purchase Agreement (which shall be deemed in full force and effect), as modified by that certain Amendment No. 3 to Purchase Agreement being executed concurrently herewith.
The Amendment No. 3 to Purchase Agreement referred to in ¶ 1 of the Settlement Agreement (formally entitled "Amendment No. 3 to Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate" and hereafter referred to as "Amendment No. 3") contains the following provisions pertinent to a resolution of the instant matter:
AM3-1. CLOSING DATE. Paragraph 8.8 of the Purchase Agreement shall be deleted in its entirety and replaced with the following:
AM3-3. NO REPRESENTATIONS OR WARRANTIES. All representations and warranties of Seller contained in the Purchase Agreement, in the Property Information Sheet or in any other documents delivered to Buyer under the Purchase Agreement are hereby deleted and shall be of no force and effect. Without in any way limiting the foregoing, Paragraph 12 of the Purchase Agreement shall be deleted in its entirety and replaced with the following:
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