In re Foster

• Decision Date: 24 September 2013
• Docket Number: Case Number 11-30021
• Parties: IN RE: WILLIAM M. FOSTER, JR., Debtor
• Court: U.S. Bankruptcy Court — Southern District of Georgia

IN RE: WILLIAM M. FOSTER, JR., Debtor

Case Number 11-30021

UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF GEORGIA Dublin Division

Dated: September 24, 2013

Chapter 11

OPINION AND ORDER

Before the Court is an Objection to the Claim of Wilmington Plantation, LLC ("Wilmington Plantation") filed by William M. Foster, Jr. ("Debtor" or "Foster") and Debtor's motion for partial findings pursuant to Federal Rule of Civil Procedure 52(c) made applicable to bankruptcy matters by Federal Rule of Bankruptcy Procedure 7052. This is a core matter pursuant to 28 U.S.C. §157(b)(2) and the Court has jurisdiction under 28 U.S.C. §1334. For the foregoing reasons, Debtor's motion is granted and his objection is sustained.

FINDINGS OF FACT

This dispute centers around the creation and development of Wilmington Plantation Condominium on Wilmington Island located in Chatham County, Georgia and the ownership of various portions of the property. As a way of background, Wilmington Plantation Condominium contains approximately 19.846 acres which conceptually can bedivided into two areas of land. In the center of the 19.846 acres is a multi-story old historic hotel building containing developed condominium units previously sold to third parties by Debtor. Surrounding the center property is about 10 acres of undeveloped land. It is this surrounding land that is at the heart of the dispute between Wilmington Plantation and Debtor. Under the condominium declaration, Debtor purportedly placed the entire 19.846 acres into the condominium which purportedly caused Debtor to be unable to properly convey title to this property to Wilmington Plantation.

Before entering into the sales contract with Wilmington Plantation, Debtor, as Declarant, executed a Declaration of Condominium (the "Declaration") covering the entire 19.846 acre site. Trial April 3-5, 2013, Ex. No. 5. The Declaration was filed with the Clerk of the Superior Court of Chatham County on December 5, 2002 and recorded in Deed Book 243 V, Page 688. Exhibit A to the Declaration contains the following description of the Property:

All that certain tract or parcel of land containing 19.846 acres of high land and being known as a portion of lots 37, 38, and 39 of the former Walthour Tract, General Oglethorpe Hotel Site, Chatham County, 5th G.M. District, Wilmington Island State of Georgia, upon a map or plat prepared for William M. Foster, Chicago Title Insurance Company, Exchange Bank, By John S. Kern, Dated May 5, 1998 and recorded in plat record book 15P, Folio 58 of the Chatham CountyRecords/ express reference is hereby made to the above-stated plat for better determining the metes, bounds and dimensions thereof;

And also, without of warranty of title, all that certain land, lying between the above-referenced property and the low water mark of the Wilmington River and Turner's Creek; subject, however, to the rights or claims of the State of Georgia within the estuarine area as defined in the 'Coastal Marshlands Protection Act of 1970.'

Trial April 3-5, 2013, Ex. No. 5 at Exhibit "A". The Declaration makes reference to, and incorporates, a certain 2002 plat drawn by Kern & Coleman Co. (the "Plat"). Trial April 3-5, 2013, Ex. No. 5, p. 1. The Plat is recorded in Condominium Plat Book 2, Page 12, Chatham County Superior Court. Trial April 3-5, 2013, Ex. No. 4. The Declaration sets forth the following relevant definitions:

'Submitted Property,' as 'the property lawfully submitted to the provisions of the [Georgia Condominium] Act by the recording of condominium instruments pursuant to the provisions of the Act or this Declaration, said property being more particularly described in Exhibit "A".' [Dckt. No. 485, Ex. No. 4, p. 5 at ¶1 (w)];

'Additional Property,' as 'any property which may be added to this expandable condominium in accordance with the provisions of the Declaration and the Georgia Condominium Act and shall include that portion of the property described in Exhibit "A" and designated as "RESERVED FOR FUTURE DEVELOPMENT" or similarly designated . . . .' [Dckt. No. 485, Ex. No. 4, p. 2 at ¶1(b))];'Unit' as a portion of the condominium intended for any type of independent ownership and use. [Id. at ¶1(x)]; and

'Common Elements' as all portions of the Condominium other than the Units, and shall include the common areas and facilities. Id. at ¶1(e). All unit owners are to own an undivided joint interest in the common elements. [Id. at ¶6(c))].

Debtor intended for the condominium development to be an expandable condominium, and in the Declaration he reserved the right to expand the condominium for the maximum initial statutory period, pursuant to O.C.G.A. §44-3-77(b)(2), of seven (7) years. Trial April 3-5, 2013, Ex. No. 5, ¶23. The Declaration further states that the legal descriptions of any additional property which may be added at Debtor's option to expand the condominium "shall be the property described in Exhibit 'A'. . . and designated as Reserved for Future Development or similarly designated." Id.

In an effort to accomplish this, the Plat, which is referenced in the Declaration, depicts nine building pads of different shapes and sizes, labeled as "PROPOSED" and "NOT YET BEGUN." Trial April 3-5, 2013, Ex. No. 4. The Plat further depicts the proposed number of units and stories and designates that there will be parking under each of the buildings labeled as "NOT YET BEGUN." Id. However, there are no metes and bounds legal description for the nine building pads on the Plat. Trial April 3-5, 2013, Ex. No. 4. The Plat also divides the property into three separate lots. Id. The Plat includes the following three notations:

[U]tility, parking and access easement over Lot 1 as required to serve Lots 1, 2, & 3;

[A]11 areas not covered by buildings to be common for use of Parking Access and Utilities; and

[T]his Property is subject to any and all easements, covenants, or restrictions either recorded or unrecorded.

Id. The Plat also states: "SPECIAL NOTE: Proposed buildings and easements pertaining to water and sewer will be shown on this plat when the information becomes available to us." Id.

Between May 2003 and March 2011, after the Declaration and the Plat were recorded, Debtor sold to various third parties 44 separate condominium units in the old historic hotel building located in the center of the 19.846 acres. Dckt. No. 485, Ex. No. 6.

In August 2004, Debtor also executed a purchase and sale agreement (the "Agreement" or "PSA") with Plantation Group, LLC who assigned the Agreement to Wilmington Plantation. Trial April 3-5, 2013, Ex. No. 6. In the Agreement, Debtor agreed to sell, and Wilmington Plantation agreed to purchase, the following property for $13.2 million dollars:

All that certain lot, tract or parcel of real estate, lying and being in Chatham County, 700 Wilmington Island Road Savannah, Georgia, and more particularly described in [the attached exhibit], consisting of nine (9) condominium pad sites or a two hundred twenty unit (220) expansion of Wilmington Plantation, a horizontal property regime, together with all furniture, fixtures, and equipment, plants, shrubs and trees located thereon, and together with all rights, ways and easements appurtenant thereto, including, without limitation, all of [Debtor's] right, title, and interest in and to the land underlying and air space overlying any public or private ways or streets crossing or abutting said real estate.

All of the right, title, interest, powers, privileges, benefits and options of [Debtor], or otherwise accruing to the owner of the Property [as defined by the PSA], in and to (i) any impact fee credits with, or impact fee payments to, any county or municipality in which the Land [as defined by the PSA] is located arising from any construction of improvements, or dedication or contribution of property, by [Debtor], or its predecessor in title or interest, related to the Land, (ii) any development rights, allocations of development density or other similar rights allocated to or attributable to the Land or the Improvements, whether the matters described in the preceding clauses (i), (ii) and (iii) arise under or pursuant to governmental requirements, administrative or formal action by governmental authorities, or agreement with governmental authorities or third parties.

All of [Debtor's] right, title, interest, powers, privileges, benefits and options of [Debtor] under any master deed, declaration of covenants, conditions and restrictions, architectural review board, homeowner's association (specifically including anydeclarant rights thereunder), all of which [Wilmington Plantation] shall be deemed the successor to the [Debtor], with all rights and authorities possessed by Debtor.

All of [Debtor's] right, title and interest in and to all assignable service contracts or agreements pertaining to the use, operation or maintenance of the Land or any improvements thereon.

All of [Debtor's] right, title and interest in and to the 20 +/- acre parcel as described in survey recorded in Plat Book 2 at Page 12, Chatham County, Savannah Georgia.

All of [Debtor's] right, title and interest in the 41 +/- acre marsh area which enjoins the land.

All of [Debtor's] right, title and interest in the proposed marina to be located on Wilmington Plantation, which adjoins the Land, provided that the obligation to complete the marina improvements shall be the obligation of the Buyer.

Trial April 3-5, 2013, Ex. No. 6, PSA Ex. C, at ¶1(a) - (g).

Under the terms of the Agreement, Debtor agreed to convey to Wilmington Plantation "good and marketable fee simple title" to the property. Id. at ¶7(a). The Agreement defines "good and marketable fee simple title" as fee simple ownership that is: (i) free of all claims, liens and encumbrances of any kind or nature whatsoever other than the "Permitted Exceptions"; and (ii) insurable by a title insurance company reasonably acceptable to Plantation Group. Id. at ¶7(a). "Permitted...