In re Bennett

• Decision Date: 05 January 1993
• Docket Number: Bankruptcy No. 91-03017,Misc. No. 3020,Adv. No. 92-60049A.
• Citation: 149 BR 16
• Parties: In re Donald R. BENNETT, Debtor. Donald R. BENNETT and Robert E. Littlefield, Jr., as Chapter 12 Trustee, Plaintiffs, v. GENOA AG CENTER, INC., Richard Sharp, Sandra Sharp, Douglas Van Benschoten, Marjorie Van Benschoten and Farm Credit of Western New York, ACA, Defendants.
• Court: U.S. District Court — Northern District of New York

149 B.R. 16 (1993)

In re Donald R. BENNETT, Debtor Donald R. BENNETT and Robert E. Littlefield, Jr., as Chapter 12 Trustee, Plaintiffs, v. GENOA AG CENTER, INC., Richard Sharp, Sandra Sharp, Douglas Van Benschoten, Marjorie Van Benschoten and Farm Credit of Western New York, ACA, Defendants.

Misc. No. 3020, Bankruptcy No. 91-03017, Adv. No. 92-60049A.

United States District Court, N.D. New York.

January 5, 1993.

Hinman Howard & Kattell, Binghamton, NY, for plaintiffs; M. Elizabeth Bradley, Albert J. Millus, Amy Shapiro, of counsel.

Williamson Clune & Stevens, Ithaca, NY, for defendants Genoa Ag Center, Richard Sharp, Sandra Sharp, Douglas Van Benschoten and Marjorie Van Benschoten; Robert J. Clune, of counsel.

Karpinski Stapleton & Fandrich, Auburn, NY, for Farm Credit of Western New York, ACA; Marck H. Fandrich, of counsel.

MEMORANDUM-DECISION AND ORDER

McCURN, Chief Judge.

INTRODUCTION

Presently before the court is the Bankruptcy Court's recommendation respecting plaintiff's eleventh cause of action against Genoa Ag. The Bankruptcy Court held an adversary proceeding concerning plaintiff's fifth, eighth, tenth, and eleventh causes of action between September 16, 1992 and October 1, 1992. Due to the interrelated factual predicates underlying plaintiff's numerous causes of action, the Bankruptcy Court, sua sponte, ordered that these causes of action be tried by an advisory jury pursuant to Federal Rule of Civil Procedure 39(c). Furthermore, the Bankruptcy Court determined that plaintiff's eleventh cause of action, among others, although triable by a jury, was a non-core matter upon which the Bankruptcy Court, pursuant to 28 U.S.C. § 157(c)(1), could not enter a final order without the consent of all the parties. Genoa Ag would not consent to the entry of a final order with respect to the eleventh cause of action, thus precipitating the need for this court to review the Bankruptcy Court's findings of fact and conclusions of law pertaining to this cause of action.

DISCUSSION

Pursuant to 28 U.S.C. § 157(c)(1),

a bankruptcy judge may hear a proceeding that is not a core proceeding but that is otherwise related to a case under title 11. In such proceedings, the bankruptcy judge shall submit proposed findings of fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district judge after considering the bankruptcy judge\'s proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected.

28 U.S.C. § 157(c)(1) (West 1992 Supp.).

In the present case, none of the parties has submitted any objections to the matter presently before the court. Thus, the court's task is limited to its consideration of the Bankruptcy Court's findings and conclusions with respect to plaintiff's eleventh cause of action.¹

In order to understand the claims that form the basis for plaintiff's eleventh cause of action, it is necessary to review the circumstances that precipitated the underlying bankruptcy proceeding. Plaintiff, a farmer in Cayuga County, New York, for more than thirty years, had, during that time, acquired various parcels of farmland and modernized his equipment and machinery. In order to facilitate this expansion, plaintiff obtained more than $140,000 in loans from Farm Credit. In the mid-1980's, plaintiff consolidated his Farm Credit loans, and Farm Credit took a mortgage on two parcels of plaintiff's farmland. By 1990, plaintiff began to experience difficulty making payments on his mortgage obligation to Farm Credit. In this regard, he failed to make an interest payment due on March 1, 1990, and thereafter failed to make other payments of interest and principal. As a result of plaintiff's failure to pay, Farm Credit commenced a foreclosure action on the mortgage, which at that time secured an outstanding balance of approximately $161,312.

In addition to his dealings with Farm Credit, plaintiff had purchased farm supplies from Genoa Ag during the 1980's, usually on credit terms. By 1990, plaintiff was experiencing trouble making payments on his credit account with Genoa Ag which had an outstanding balance of more than $50,000. Due to plaintiff's failure to pay, Genoa Act obtained a default judgment against plaintiff in the amount of $51,307.39. Plaintiff subsequently made a partial payment on this judgment in September 1990. Despite this payment, Genoa Ag placed a restraint on plaintiff's checking account on October 1, 1990. Subsequently, on October 5, 1990, plaintiff entered into an agreement with Genoa Ag whereby Genoa Ag agreed to release the restraint on plaintiff's checking account in exchange for a promissory note, mortgage, and security agreement giving Genoa Ag a lien against plaintiff's real and personal property.

In an effort to avert foreclosure, plaintiff entered into two separate contracts to sell two tracts of farmland. Neither sale could proceed, however, without both Farm Credit and Genoa Ag releasing their liens. Both Farm Credit and Genoa Ag released their liens on one tract of land, and plaintiff sold that tract and paid the $31,805 in proceeds to Farm Credit.

Thereafter, plaintiff arranged for the sale of a second tract of land for $85,000. Farm Credit agreed to release its lien on this piece of land on the condition that it receive all of the proceeds from the sale. Initially, Genoa Ag also agreed to release its lien on this parcel. When plaintiff refused to pay Genoa Ag approximately $3,700 for fertilizer he had previously purchased, however, Genoa Ag reneged on its agreement to release its lien. In an attempt to resolve this dilemma, plaintiff asked Farm Credit to accept $3,700 less than the entire amount of the proceeds from the sale, so that plaintiff could pay that amount to Genoa Ag in exchange for Genoa Ag's release of its lien. Farm Credit, however, refused to accept less than the full amount of the sale proceeds. Accordingly, plaintiff was unable to pay $3,700 to Genoa Ag, and Genoa Ag refused to release its lien. Thereafter, the foreclosure sale proceeded.²

Plaintiff's eleventh cause of action is based upon plaintiff's claim that Genoa Ag breached its contract with him when it refused to release its lien on...