In re Doctors Hosp. of Hyde Park, Inc.
| Decision Date | 25 July 2007 |
| Docket Number | Adversary No. 02 A 00363.,Bankruptcy No. 00 B 11520. |
| Citation | 373 B.R. 53 |
| Parties | In re DOCTORS HOSPITAL OF HYDE PARK, INC., Debtor. Doctors Hospital of Hyde Park, Inc., Plaintiff, v. Dr. James H. Desnick, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Dixon, Chicago, IL, Scott A. Semenek, for Plaintiff.
Gus A. Paloian, Seyfarth, Shaw, Chicago, IL, trustee.
Michael D. Warner, Simon Warner & Doby LLP, Fort Worth, TX, Adam P. Silverman, Howard L. Adelman, Adelman & Gettleman, Ltd., Chicago, IL, for LaSalle Bank National.
David J. Tecson, Michael N. Ripani, Chuhak & Tecson, Chicago, IL, for Michael Nelson.
Jane B. McCullough, Kimberly M. DeShano, Nancy A. Peterman, Greenberg Traurig PC, Chicago, IL, for Asset Securitization Corporation/Nomura Asset Capital Corporation.
Kathryn M. Gleason, Office of U.S. Trustee, Chicago, IL.
Lewis T. Stevens, Michael Warner, Warner Stevens LLP, Fort Worth, TX, for LaSalle Bank.
James M. Witz, Frances Gecker, Freeborn & Peters, Chicago, IL, for Stephen Weinstein.
David Audley, Michael T. Benz, Richard Wohlleber, Chapman and Cutler LLP, for LaSalle Bank N.A.
John L. Conlon, Robert D. Nachman, Schwartz Cooper Greenberger & Krauss Cht., Chicago, IL, for James H. Desnick.
Neville N. Reid, Mayer Brown Rowe & Maw, LLP, Chicago, IL, for Unsecured Creditors Committee.
Janine M. Garguilo, William J. McSherry, Jr., Arent Fox Kinter Plotkin & Kahn, PLLC, New York City.
Peter Isakoff, Weil, Gotshal & Manges, LLP, Washington, DC.
Michael J. Kralovec, Joseph R. Lemersal, Sara J. Rowden, Nash, Lalich & Kralovec, Chicago, IL, for Robert Krasnow.
Gary J. Cruciani, Charles W. Cunningham, David Sochia, McKool Smith, Dallas, TX.
Margaret H. Weging, Law Offices of Jeffery M. Leving, Ltd., Chicago, IL.
ADDITIONAL FINDINGS OF FACT AND CONCLUSIONS OF LAW
(Counts VIII, IX, X ("LaSalle Counts"))
This Adversary proceeding relates to Counts VIII, IX, and X of the case filed by Debtor Doctors Hospital of Hyde Park, Inc. ("Doctors Hospital") under Chapter 11 of the Bankruptcy Code, Title 11 U.S.C. It is now being pursued by the Chapter 11 Trustee in those Counts against LaSalle Bank N.A., f/k/a LaSalle National Bank as Trustee for Certificate holders of Asset Securitization Corporation Commercial Mortgage Pass-Through Certificates, Series 1997, D-5 ("Defendant," "Trust," or "LaSalle Trust").
Following trial, all parties having rested, Findings of Fact and Conclusions of Law were made and entered herein on March 2, 2007 ("Findings and Conclusions"). 360 B.R. 787 (Bankr.N.D.Ill.2007). On March 23, 2007 the following Amended Final Judgment ("Judgment") was entered pursuant to the Findings and Conclusions:
1. On Count VIII of the Complaint, judgment was entered in favor of Plaintiff (now the Chapter 11 Trustee of the bankruptcy estate of Debtor Doctors Hospital) ("Plaintiff") and against Defendant declaring void the Guaranty, the Assignment, the Pledge and Security Agreement, and the Equity Pledge Agreement (all as defined in Exhibit A appended to the Judgment); (b) declaring void any lien or any assets of Doctors Hospital created by or arising from the voided documents, including but not limited to any lien in or to the proceeds realized from sale of assets of Doctors Hospital that formed collateral associated with the voided documents and any lien in or to any other assets or their proceeds of Doctors Hospital or the bankruptcy estate that formed collateral associated with the voided documents.
2. On each of Counts IX and X of the Complaint, judgment was entered under 11 U.S.C. § 550 in favor of Plaintiff and against Defendant in the principal amount of $2,668,746.35 as the total of rent paid in excess of market rate of rental prior to July of 1998, plus pre-judgment interest thereon in the amount of $1,672,492.08, for a total of $4,341,238.43 with post-judgment interest to accrue on the entire total judgment in accordance with provisions of 28 U.S.C. § 1961. Collection on either dollar judgment entered in Count IX or Count X is to be credited against the dollar judgment entered in the other Count.
3. On Count IX of the Complaint, judgment was entered in favor of Defendant on Plaintiffs prayer to void the Lease (as defined in Exhibit B appended to the Judgment Order) and on Plaintiffs prayer for additional recovery of lease payments.
Following entry of Judgment, the Defendant filed a Motion to Alter, Amend and Reopen Judgment pursuant to Bankruptcy Rule 9023 ("Defendant's Motion to Amend"). The Defendant's Motion to Amend first seeks to amend and reopen the Judgment as to Counts IX and X so that new Findings and Conclusions can be made and entered to specify that the pre-July 1998 payments made by Doctors Hospital were payments of "debt" rather than "rent." In a certain post-trial filing, Plaintiff expressly abandoned any right to recovery of Nomura Loan payments. Defendant argues in its Motion to Amend that if the pre-July 1998 payments are determined to be payments of "debt" and not payments of "rent," it follows that a new judgment should be entered denying recovery against Defendant for the excess rent since Plaintiff abandoned his claims to recovery of debt payments.
The Defendant also seeks to amend and reopen the Findings and Conclusions to specify that the pre-July 1998 payments found to be excess rent were passed through to the Certificate holders by Defendant. Defendant argues that this would compel the conclusion that Defendant was not the initial transferee of the pre-July 1998 payments under § 550 of the Bankruptcy Code but rather was a "conduit" or financial intermediary. Thus, according to Defendant, it should follow that a new judgment should be entered denying money damages against Defendant, since Defendant would not then be liable for money damages under § 550 of the Bankruptcy Code.
The Plaintiff also filed a Motion to Alter and Amend Judgment ("Plaintiff's Motion to Amend"). Plaintiff argues therein and in his briefs that the Findings and Conclusions should be amended to conclude that Doctors Hospital was the true borrower on the Daiwa Loan. Therefore, Plaintiff argues it should follow that the post-July 1998 rent transfers were transfers of Debtor assets, that they were fraudulent transfers to the extent of being rent in excess of market rate, and that Plaintiff is entitled to judgment under 11 U.S.C. § 550 for the excess rent attributable to those post July 1998 transfers, thereby substantially increasing the Plaintiffs recovery.
The following briefs were filed in support of and response to the foregoing motions:
1. Defendant's Memorandum in Support of Motion to Alter, Amend and Reopen Judgment Pursuant to Bankruptcy Rule 9023 filed on April 13, 2007 2. Plaintiff's Memorandum in Opposition to Defendant's Motion to Alter, Amend and Reopen Judgment Pursuant to Bankruptcy Rule 9023 filed on April 27, 2007
3. Defendant's Reply Memorandum in Support of Motion to Alter, Amend and Reopen Judgment Pursuant to Bankruptcy Rule 9023 filed on May 4, 2007
4. Plaintiff's Memorandum in Support of Plaintiff's Motion to Amend Findings of Fact and Conclusions of Law filed on April 13, 2007
5. Defendant's Memorandum in Response to Plaintiff's Motion to Amend Findings of Fact and Conclusions of Law filed on April 27, 2007
6. Plaintiff's Reply Memorandum in Support of Motion to Amend Findings of Fact and Conclusions of Law filed on May 4, 2007
7. Plaintiff's Sur-Reply brief filed on June 26, 2007
8. Defendant's Sur-Response brief filed on July 16, 2007
Neither party sought to offer additional evidence, and all arguments were based on the trial record. Both parties are essentially rearguing evidence and legal issues already analyzed following trial, with some new arguments thrown in to support contentions that there were errors in the earlier Findings and Conclusions.
For reasons stated in the original Findings of Fact and Conclusions of Law and for additional reasons stated below which will stand as Additional Findings of Fact and Conclusions of Law, Plaintiffs Motion to Amend and Defendant's Motion to Amend will each be denied and the Judgment will stand as entered.
The Plaintiff's Motion to Amend seeks amendment of the Findings and Conclusions and consequent expansion of the Judgment on Counts IX and X to include excess rent paid after July, 1998, based on one issue:
The issue is whether excess rent payments to the Trust after July 7, 1998, were property of the Debtor. Plaintiffs legal theory is that the payments became property of the Debtor because the parties to the Daiwa Loan transaction modified their agreement by post-contract conduct so that Doctors Hospital became the borrower on the Daiwa Loan.
(Mem. in Supp. of Pl.'s Mot. to Amend 2.)
As discussed below, Doctors Hospital never became the borrower through "conduct" or any contract change. Therefore the post July 1998 rent payments were not transfers of Debtor's assets and therefore were not fraudulent transfers.
Plaintiff argued, in an attempt to show that Doctors Hospital acted as and became borrower under the Daiwa Loan, that MMA Funding only had a limited role as a special purpose entity. Plaintiff argues that because MMA Funding did not perform each and every one of its permitted functions under its Operating Agreement, it should not be treated as a separate entity. However, the following was already observed in the original Findings and Conclusions:
MMA Funding was not an operating company. Robinson (the manager of Doctors Hospital) acknowledged that it was never intended to be an operating company. (Tr. II, p. 24.) However, its lack of operations (and...
To continue reading
Request your trial
-
LaSalle Nat. Bank Ass'n v. Paloian
...denied in the bankruptcy court's Additional Findings of Fact and Conclusions of Law dated July 25, 2007. In re Doctors Hosp. of Hyde Park, Inc., 373 B.R. 53 (Bankr.N.D.Ill.2007). Defendant and Plaintiff appealed separately from the bankruptcy court's judgment and claim denial orders, and th......
-
Gus A. Paloian, Chapter 11 Tr. of Doctors Hosp. of Hyde Park, Inc. v. Lasalle Bank Nat'Lass'N (In re Doctors Hosp. of Hyde Park, Inc.)
...the judgment, which were denied in Additional Findings of Fact and Conclusions of Law dated July 25, 2007. In re Doctors Hosp. of Hyde Park, Inc., 373 B.R. 53 (Bankr.N.D.Ill.2007). Separate appeals were filed and were consolidated by a District Court Judge. That Judge affirmed all Findings ......
-
Paloian v. LaSalle Bank Nat'l Ass'n (In re Doctors Hosp. of Hyde Park, Inc.)
...the judgment, which were denied in Additional Findings of Fact and Conclusions of Law dated July 25, 2007. In re Doctors Hosp. of Hyde Park, Inc., 373 B.R. 53 (N.D. Ill. 2007). Separate appeals were filed and were consolidated by a District Court Judge. That Judge affirmed all Findings and ......
-
Tabiti v. LVNV Funding, LLC
...2013 WL 677986, at *3-4 (N.D. Ill. Feb. 25, 2013) (plain language of contract partially assigned debt); In re Doctors Hosp. of Hyde Park, Inc., 373 B.R. 53, 68 (Bankr. N.D. Ill. 2007) (partial assignment of right to receive certain payments based on agreement's plain language). Furthermore,......
-
Chapter 8 Expert Witnesses in Recurring Substantive Disputes in Bankruptcy Litigation
...(Am. Inst. of Certified Pub. Acct. 2007).[432] In re Doctors Hosp. of Hyde Park Inc., 360 B.R. 787, 840 (Bankr. N.D. Ill.), supplemented, 373 B.R. 53 (Bankr. N.D. Ill. 2007), aff'd sub nom., LaSalle Nat. Bank Ass'n v. Paloian, 406 B.R. 299 (N.D. Ill. 2009), vacated and remanded sub nom., Pa......