In re Cousins Restaurants, Inc., Bankruptcy No. 80-21512.

• Decision Date: 15 June 1981
• Docket Number: Bankruptcy No. 80-21512.
• Citation: 11 BR 521
• Parties: In re COUSINS RESTAURANTS, INC., Debtor.
• Court: U.S. Bankruptcy Court — Western District of New York

11 B.R. 521 (1981)

In re COUSINS RESTAURANTS, INC., Debtor.

Bankruptcy No. 80-21512.

United States Bankruptcy Court, W.D. New York.

June 15, 1981.

John J. Keigher, Rochester, N.Y., for Town of Henrietta.

Lloyd H. Relin, Rochester, N.Y., for debtor.

James B. Doyle, Rochester, N.Y., for Creditors' Committee.

MEMORANDUM AND DECISION

EDWARD D. HAYES, Bankruptcy Judge.

A Motion has been made by the debtor to enjoin the Town of Henrietta from seeking to enforce the provisions of its zoning ordinance in the Town of Henrietta Justice Court. Oral arguments have been had on this issue and Memorandums of Law have been submitted by both parties.

The facts follow. Cousins Restaurants, Inc. is the debtor-in-possession and has operated a nightclub disco under the name of Tidbits at 5375 West Henrietta Road in the Town of Henrietta, New York since July of 1980. Before that the debtor operated the property as a restaurant. In November of 1980, Cousins Restaurants, Inc. filed a petition under Chapter 11 of the Bankruptcy Code.

The disco, known as Tidbits, is located in one of the Town's commercial districts. The Town of Henrietta Code does not specifically prohibit the operation of a disco in a commercial district but it does require that operators obtain a special permit for such use. Special permits are also required for restaurants. The debtor had obtained a restaurant permit prior to July of 1980 but when it changed from a restaurant to a nightclub disco in July of 1980 it did not ask for or receive a disco permit.

The Town's position in this matter is that Chapter 11 cannot be used as a sanctuary for debtors who wish to conduct business in derogation of local law. The Town feels that it is properly exercising its police and regulatory powers and that the dispute over land use and zoning regulations is one properly triable in the appropriate State Courts.

The debtor argues that the Town's action is not motivated by public health and welfare considerations but is solely an attempt to interfere with and to frustrate debtor's reorganization. The debtor asks this Court not only to stay the Town's action but to use its broad equitable powers to fashion a just resolution of the land use controversy.

This Court does have subject matter jurisdiction to decide such issues, 28 U.S.C. § 1471, and has the power to fashion a remedy, 11 U.S.C. § 105.

But 11 U.S.C. § 362(b)(4) of the Bankruptcy Code exempts from the automatic stay of 11 U.S.C. § 362(a) "the commencement or continuation of...