In re Bridge Information Systems, Inc.
| Decision Date | 24 August 2001 |
| Docket Number | Bankruptcy No. 01-41593-293.,Adversary No. 01-4177-293.,Adversary No. 01-4178-293.,Adversary No. 01-4176-293.,Adversary No. 01-4179-293.,Adversary No. 01-4217-293. |
| Parties | In re BRIDGE INFORMATION SYSTEMS, INC., et al., Debtors. Sachs Electric Company, et al., Plaintiffs, v. Bridge Information Systems, Inc., et al., Defendants. Jacobsmeyer-Mauldin Construction Co., Inc., Plaintiffs, v. Bridge Information Systems, Inc., et al., Defendants. McCarthy Building Companies, Inc., Plaintiff, v. Bridge Information Systems, Inc., et al., Defendants. Murphy Company, Plaintiff, v. Bridge Information Systems, Inc., et al., Defendants. Siemens Building Technologies, Inc., Plaintiff, v. Bridge Information Systems, Inc., et al., Defendants. |
| Court | United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Eastern District of Missouri |
Gregory D. Willard, Bryan Cave, St. Louis, MO, Thomas J. Moloney, Deborah S. Whang, Sean A. O'Neal, David H. Herrington, Deborah M. Buell, New York City, for Bridge Information Systems, Inc.
Peter Lumaghi, Assistant U.S. Trustee, St. Louis, MO, Office of U.S. Trustee.
Leonora S. Long, St. Louis, MO, Office of U.S. Trustee.
This case is before the Court on the motion of Bridge Information Systems, Inc. and its subsidiaries (the "Debtors") to consolidate five adversary proceedings pursuant to Bankr.R. 7042 and to order that certain parties be joined in the consolidated adversary proceeding as necessary parties for just adjudication of the adversary proceeding pursuant to Bankr.R. 7019. Debtors' motion is granted in part and denied in part.
This Court has jurisdiction over the parties and subject matter of these proceedings pursuant to 28 U.S.C. §§ 1334, 151, and 157 and Local Rule 9.01(B) of the United States District Court for the Eastern District of Missouri. This is a "core proceeding" pursuant to 28 U.S.C. § 157(b)(2)(A), which the Court may hear and determine. Venue is proper in this District under 28 U.S.C. § 1409(a).
Debtors filed a petition with this Court on February 15, 2001 for relief under Chapter 11 of Bankruptcy Code. The Debtors conducted an auction of their assets in mid-April. This Court entered an Order on May 3, 2001 and a Supplemental Order on May 11, 2001 approving the Debtors' sale of substantially all of its assets to Reuters America, Inc. and Reuters, S.A. (collectively "Reuters") free and clear of any liens pursuant to 11 U.S.C. § 363 (the "Sale Order"). The sale to Reuters will close sometime on or after August 31, 2001.
The Sale Order mandates that as adequate protection under 11 U.S.C. § 363(e), a portion of the proceeds of the sale shall be placed in a segregated account in favor of certain creditors who had filed mechanics' lien statements pursuant to Missouri's Mechanics' Lien Act, Mo.Rev.Stat. §§ 429.005-429.360 (2000) on five tracts of land that are subject to the sale to Reuters (the "Real Property"). (Sale Order ¶ 36). The Sale Order specifically provides that the asserted liens of the following creditor will attach to a segregated account funded by sale proceeds as follows:
Amount of Sale Property Subject to
Lien Claimant Proceeds Segregated the Asserted Lien
Air Master Corporation $ 269,097.09 Unknown1
("Air Master")
Sachs Electric Company $2,945,142.50 700 Parkway Office
("Sachs") 708 Office Parkway
717 Office Parkway
795 Office Parkway
Jacobsmeyer-Mauldin Construction $ 207,600.16 587 James S
Company, Inc. ("JMC") McDonnell Blvd
Murphy Company Mechanical $ 730,454.75 587 James S.
Contractors & Engineers McDonnell Blvd.
("Murphy")
McCarthy Building Companies $ 507,821.23 700 Office Parkway,
("McCarthy") 788 Office Parkway
Siemens Building Technologies $ 139,579.20 587 James S.
("Siemens") McDonnell Blvd.
These segregated funds will be held in trust for the benefit of each specified lienholder and the Debtors' estate, including any other lienholder claiming an interest in such funds. (Sale Order ¶ 36). Further, the segregated funds will be paid to the respective lien claimant to the extent that such claimant's asserted lien on the Debtors' property is valid and senior to any other lien, irrespective to any lien that may be pari passu to the claimant's lien. (Supplemental Sale Order p. 2).
After this Court entered the Sale Order on May 11, 2001, several other entities have asserted mechanic's liens claims or have sent notice to the Debtors as required by Missouri law indicating its intention to file a mechanic's lien claim on the Real Property. The Debtors did not list at least some, if not all, of these entities as creditors because these entities were subcontractors and were not in privity of contract with the Debtors. Therefore, it is likely that these entities did not receive notice of the hearing on the Debtors' proposed sale to Reuters beyond the publication notice in the national edition of the April 4, 2001 Wall Street Journal.
Sachs, JMC, Murphy, McCarthy and Siemens have filed individual adversary complains naming the Debtors and the respective mortgagees on the various parcels of Real Property seeking a determination from this Court that their respective mechanics' liens are valid and have first priority, notwithstanding any other mechanics' lien that may be pari passu with such lien. Accordingly, each entity is claiming that it is entitled to the amount in the segregated accounts established in ¶ 36 of the Sale Order.
Debtors filed this motion requesting that this Court (i) consolidate all of the adversary complaints into one proceeding pursuant to Bankr.R. 7042; and (ii) require the joinder pursuant to all parties with any interest in any of the parcels of the Real Estate pursuant to Bank. R. 7019. All of the Plaintiffs in the adversary complaints, excluding Siemens, objected to this motion. For the following reasons, this Court will grant the Debtors' motion in part and deny it in part.
The Debtors base their motion on the premise that Missouri law governs with respect to the validity and priority of mechanics' lien claims within bankruptcy. Neither party disputes that under Missouri's Mechanics' Lien Act, a party wishing to enforce its mechanic's lien against a piece of property must join all parties with an interest in the property into one consolidated action. State ex. rel. Clayton Greens Nursing Center v. Marsh, 634 S.W.2d 462, 465 (Mo. banc 1982); Mo.Rev.Stat. § 429.270 (2000). Because the Debtors' motion to consolidate and join necessary parties, however, relates to the particular mechanism of enforcing the Plaintiffs' mechanics' liens, federal law, not state law applies with respect to the Debtors' motion.
It is true that disputes related to the validity and priority of a mechanic's lien within a bankruptcy proceeding are governed by state law. Ritz-Craft Corp., Inc. v. National Electric Benefit Fund (In re Elm Ridge Assoc.), 234 F.3d 114, 120 (2d Cir.2000). However, as the Plaintiffs point out, they are not seeking to enforce their mechanics' liens under the Missouri Mechanics' Lien Act. Rather, in filing their adversary complaints, the Plaintiffs are attempting to enforce their respective rights under 11 U.S.C. § 363(e) and ¶ 36 of the Sale Order. Thus, although the substance of Plaintiffs' rights is governed by Missouri law, the enforcement of those rights in a Federal Court is a matter of federal law. See See v. Emhart Corp., 444 F.Supp. 71, 73 (W.D.Mo.1977). Accordingly, Missouri's enforcement statute, Mo.Rev.Stat. § 429.270, is not applicable to the instant proceedings.
Although Missouri's enforcement statute is not applicable, this Court must still examine federal law to determine whether consolidation is appropriate. Fed. R. Civ. Proc. 42 governing the consolidation of claims is made applicable to all adversary proceedings under the Bankruptcy Code by Bankr.R. Proc. 7042. Rule 42(a) gives trial courts broad discretion and flexibility in consolidating separate actions. Fed. Deposit Insurance Corp. v. Union Entities (In re Be-Mac Trans. Co.), 83 F.3d 1020, 1025 (8th Cir.1996); Pittman v. Mem'l Herman Healthcare, 124 F.Supp.2d 446, 449 (S.D.Tex.2000). This includes consolidating some, but not all, of the underlying issues in separate actions. Harcon Barge Co., Inc. v. D & G Boat Rentals, Inc., 746 F.2d 278, 287 (5th Cir.1984) quoting 5 Moore's Federal Practice ¶ 42.03[3] rehg. granted on other grounds 760 F.2d 86 (5th Cir.1985); aff'd 784 F.2d 665 (5th Cir.) (en banc) cert. denied 479 U.S. 930, 107 S.Ct. 398, 93 L.Ed.2d 351 (1986).
A prerequisite for consolidation of separate actions under Rule 42(a) is the presence of common questions of law and fact in those actions. Lyons v. Andersen, 123 F.Supp.2d 485 (N.D.Iowa 2000). Once the moving party establishes the presence of common questions of law and fact, the court must weigh the savings of time and effort that consolidation would promote against any inconvenience, delay or expense that consolidation would cause to the parties and the Court. Tower Cranes of America v. Public Service Co., 702 F.Supp. 371, 376 (D.N.H.1988). Ultimately, the movant must demonstrate that consolidating the two actions will promote judicial convenience and economy. Lyons, 123 F.Supp.2d at 488.
Here, there is a common question of fact with respect to some of the...
To continue reading
Request your trial
-
Angel v. Tauch (In re Chiron Equities, LLC)
...in this adversary proceeding, and Fed. R. Civ. P. 19 allows this Court to require him to be a plaintiff. Sachs Elec. Co. v. Bridge Info. Sys., 288 B.R. 548, 555–56 (E.D.Mo.2001) (“Rule 19(a) requires that any necessary party be joined in the action if such joinder does not deprive the court......
-
In re Cook
...because the bankruptcy court had jurisdiction over allowance and secured status of claim); Sachs Elec. Co. v. Bridge Info. Sys., Inc. (In re Bridge Info. Sys., Inc.), 288 B.R. 548 (Bankr.E.D.Mo.2001) (although disputes arising from validity and priority of mechanic's lien are governed by st......
- In re Stilwell