In re Golden Mane Acquisitions, Inc.

Decision Date01 June 1999
Docket NumberBankruptcy No. 96-08754-BGC-11. Adversary No. 97-00410.
Citation243 BR 773
PartiesIn re GOLDEN MANE ACQUISITIONS, INC., Debtor. Golden Mane Acquisitions, Inc., Plaintiff, v. 100 Wall Street Associates; Arthur Bienenstock; and Arthur G. Cohen as General Partners, Defendants.
CourtU.S. Bankruptcy Court — Northern District of Alabama



Eric Breithaupt, Birmingham, Alabama, for plaintiff/debtor.

William Ratliff, Birmingham, Alabama, for defendants.


BENJAMIN COHEN, Bankruptcy Judge.

The plaintiff is suing the defendants for reimbursement of funds it paid for property taxes that accrued during the period the property was owned by one of the defendants, 100 Wall Street Associates.

Mr. Eric J. Breithaupt, the attorney for the plaintiff and Mr. William Ratliff, the attorney for the defendants, appeared at a scheduling conference held on April 20, 1998. At that conference, the parties agreed to file a joint stipulation of facts and cross motions for summary judgment, and to submit the issues on those pleadings. Shortly thereafter, the parties filed their motions and the Summary Judgment Stipulation. In addition, each party filed an affidavit. The joint stipulation consisted of copies of 19 separate documents.1 The plaintiff's affidavit was that of Eric J. Breithaupt, the plaintiff's attorney, who also acted as auctioneer for the sale of the subject property at a foreclosure. The defendants' affidavit was that of Mr. Arthur Bienenstock, one of the general partners of the defendant, 100 Wall Street Associates. Both parties filed legal arguments.

A status hearing was held on November 9, 1998. Mr. Breithaupt and Mr. Ratliff appeared and presented oral arguments. Written communications and other informal conferences were held in an attempt to narrow the issues and define the facts. All matters were taken under advisement on February 5, 1999.

The matters now before the Court are the cross motions for summary judgment in the form of the plaintiff's Motion for Summary Judgment and the Defendants' Motion for Summary Judgment. After consideration of those motions, the joint stipulation of the parties', the documents attached to the stipulation, the affidavits, the pleadings on file, the record in this case, and the briefs and oral arguments of counsel, the Court finds that there are no genuine issues as to any material facts and that, pursuant to Rule 56(c) of the Federal Rules of Civil Procedure (applicable to these matters by Rule 7056 of the Federal Rules of Bankruptcy Procedure) the defendants are entitled to judgment as a matter of law.

I. Findings of Fact

The property generating the tax liability is a parcel of land in Birmingham, Alabama occupied by a high-rise office building.

Prior to construction of the office building, B.S.T. Corporation (hereinafter "BST") owned the unimproved property. BST leased the unimproved property to Morris Avenue Corporation (hereinafter "MAC"). MAC borrowed approximately five million dollars from New York Life Insurance Company (hereinafter "NYLIC") to build the office building. To secure the loan, both BST and MAC granted NYLIC a mortgage lien on BST's fee simple interest in the property and MAC's leasehold estate. The mortgage deed executed by BST and MAC in favor of NYLIC provides, in relevant part:

And Mortgagor covenants with Mortgagee that it is lawfully seized of a leasehold estate in and to Tract I of the property hereinabove described and is lawfully seized in fee of Tract II above described, and B.S.T. Corporation covenants that it is seized in fee of Tract I of the property above described subject only to the said leasehold estate owned by Mortgagor, and Mortgagor and B.S.T. Corporation covenant that they have a good right to sell and convey the same as aforesaid; that the said premises are free of all encumbrances except above set out and the leases executed by Mortgagor with tenants that occupy space in the building on the mortgaged premises and which are described in an assignment of leases executed by Mortgagor in favor of Mortgagee and delivered contemporaneously herewith, and that they will warrant and forever defend the title to said premises unto Mortgagee, its successors and assigns, against the lawful claims of all persons whomsoever.
This mortgage is made and accepted on the understanding that the following covenants, conditions and agreements shall continue in effect so long as any portion of the indebtedness hereby secured remains unpaid, to-wit:
. . . .
(3) That said premises and the improvements thereon shall be kept in good condition and no waste committed or permitted thereon, natural wear and tear excepted, and all taxes and assessments or other charges which may be levied upon or accrue against said premises, as well as all other sums which may be or become liens or charges against same, shall be paid and discharged by Mortgagor promptly as and when so levied or assessed, and shall not be permitted to become delinquent or to take priority over the lien of this mortgage.
. . . .
(7) If Mortgagor fails to insure said property as hereinabove provided, or to pay all or any part of the taxes or assessments levied, accrued or assessed upon or against said property or the indebtedness secured thereby, or any interest of the Mortgagee in either, or fails to pay immediately and discharge any and all liens, debts, and/or charges which might become liens superior to the lien of this mortgage, Mortgagee may, at its option, insure said property and/or pay said taxes, assessments, debts, liens, and/or charges, and any money which Mortgagee shall have so paid or become obligated to pay shall constitute a debt to Mortgagee additional to the debt hereby specifically secured, shall be secured by this mortgage, shall bear legal interest from the date paid or incurred and, at the option of the Mortgagee, shall be immediately due and payable.

Exhibit 3 to the joint Summary Judgment Stipulation, at pages 5, 7-8.

The mortgage deed was later amended by the parties to provide that the property subject to the mortgage would also secure a loan subsequently made by NYLIC to MAC. Both the original mortgage instrument and the amended mortgage specifically provided that BST was not personally responsible for the sums borrowed by MAC from NYLIC.

The office building was constructed in 1962.

On December 13, 1973, BST quitclaimed its interest in the property to MAC. By warranty deed dated May 31, 1979, MAC transferred the property to Hexalon Real Estate, Inc. (hereinafter "Hexalon"), which, in turn, transferred the property by "Limited Warranty Deed" dated May 31, 1984, to the defendant, 100 Wall Street Associates (hereinafter "WSA"), a partnership. The defendants Arthur Bienenstock and Arthur G. Cohen are general partners in WSA.

The deed from Hexalon to WSA provides that Hexalon did "grant, bargain, transfer, exchange and convey. . . ." the property to WSA, "to have and to hold, to the said grantee, its successors and assigns forever," and further that:

And said Grantor Hexalon does for itself, its successors and assigns, covenant with said Grantee WSA, its heirs and assigns, that it is lawfully seized in fee simple of said premises, that they are free from all encumbrances except those described in Exhibit "B" attached hereto and incorporated herein, that it has a good right to convey the same as aforesaid, and that it will, and its successors and assigns shall, warrant and defend the same to the Grantee, its successors and assigns forever, against the lawful claims of all persons claiming by, through, or under Grantor.

Photocopy of "Limited Warranty Deed" attached to Exhibit 1 of Defendants' Motion for Summary Judgment.

The mortgage and amended mortgage from BST and MAC to NYLIC are described in "Exhibit B" referred to in the deed from Hexalon to WSA.

In his affidavit attached to the Defendants' Motion for Summary Judgment, Arthur Bienenstock states that he is a general partner of WSA, that WSA did not assume the mortgage indebtedness owed by MAC to NYLIC, and that WSA neither requested the plaintiff to pay real property taxes assessed against the property for the years 1992, 1993, and 1994, nor did it ratify the plaintiff's payment of those taxes.

On September 14, 1994, NYLIC assigned the note from MAC and the mortgage which secured that note, to a Mr. Glenn I. Mazer. That same date, Mr. Mazer assigned the note and mortgage to the plaintiff, Golden Mane Acquisitions, Inc.

On October 6, 1994, WSA transferred the property to South Wall Street Corporation (hereinafter "SWSC"). The deed from WSA to SWSC provides that WSA "does grant, bargain, sell and convey. . . ." the property to SWSC, "to have and to hold, to said South Wall Street Corporation, an Alabama Corporation heirs, assigns and successors forever," and further that:

And said grantor WSA does for itself and for its successors, assigns, and partners with the said South Wall Street Corporation and its heirs, assigns and successors, that it is lawfully seized in fee simple of said premises; that they are free from all encumbrances except the mortgage recorded in Real Volume 366, Page 93, and amended in Real Volume 1374, Page 186 in the Probate Office of Jefferson County, Alabama, as assigned that it has a good right to sell and convey the same as aforesaid; that it will, and its assigns and successors and administrators shall, warrant and defend the same to said South Wall Street Corporation, an Alabama Corporation he is sic, assigns and successors forever, against the lawful claims of all persons.

Exhibit 20 to Plaintiff's and Defendants' joint Summary Judgment Stipulation, pages 5, 7-8. The mortgage referred to in the deed from WSA to SWSC is the mortgage from BST and MAC to NYLIC.

On January 27, 1995, the plaintiff, pursuant to the power of sale contained in the mortgage instrument,...

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