In re Homesteads Cmty. at Newtown, LLC
| Decision Date | 21 August 2012 |
| Docket Number | CASE NO. 04-32365 (ASD),CASE NO. 04-30417 (LMW) |
| Court | U.S. Bankruptcy Court — District of Connecticut |
| Parties | In re: THE HOMESTEADS COMMUNITY AT NEWTOWN, LLC, DEBTOR. In re: NUEVO PUEBLO, LLC, DEBTOR. |
Not For Publication
Ronald I. Chorches, Esq.
Law Offices of Ronald I. Chorches, LLC
Chapter 7 Trustee for Debtor Homesteads
Community at Newtown, LLC
William S. Fish, Jr., Esq.
Amy E. Markim, Esq.
Hinckley, Allen & Snyder, LLP
Attorney for Trustee Ronald I. Chorches
Roberta Napolitano, Esq.
Chapter 7 Trustee for Debtor Nuevo
Pueblo, LLC
Dean W. Baker, Esq.
Law Office of Dean W. Baker
Attorney for Trustee Roberta Napolitano
Patrick W. Boatman, Esq.
Law Offices of Patrick W. Boatman, LLC
Attorney for Debtors Homestead Community
Community at Newtown, LLC and
Nuevo Pueblo, LLC
Gary F. Sheldon, Esq.
McElroy, Deutsch, Mulvaney &
Carpenter/PH, LLP
Attorney for KBE Building Corporation
(f/k/a Konover Construction Company, Inc.)
Douglas S. Skalka, Esq.
Nancy B. Kinsella, Esq.
Jane E. Ballerini, Esq.
Neubert, Pepe & Monteith, P.C.
Attorney for Franklin Construction, LLC;
Mix Avenue, LLC; Eli Whitney, LLC; and
New Haven Mortgage Refinance, LLC
Nicole Liguori Micklich, Esq.
Garcia & Milas, P.C.
Attorney for Andrews Construction Co., LLC
Vincent M. Marino, Esq.
Cohen and Wolf, P.C.
Attorney for the Town of Newtown
Thomas J. O'Neill, Esq.
TRUSTEES' JOINT MOTION FOR APPROVAL OF GLOBAL COMPROMISE
The matters before the court relate to a certain "global compromise" (the "Global Compromise") reached among the chapter 7 trustees (collectively, the "Trustees," individually, the"HCN Trustee" or the "NP Trustee" (as the case may be)) appointed and duly serving in the two above-referenced cases, certain creditors in those cases and certain professional administrative expense claimants in those cases. In each chapter 7 case, the respective Trustee has filed a motion to approve the Global Compromise. In each chapter 7 case, the debtor (collectively, the "Debtors," individually, the "HCN Debtor" or the "NP Debtor" (as the case may be)) has filed an objection to that motion.1 With the consent of the parties and the Honorable Albert S. Dabrowski (presiding judge with respect to Case # 04-32365), proceedings herein with respect to the Global Compromise have been dealt with by the undersigned on a consolidated basis in both chapter 7 cases. (See Oral Record of 6/1/2011 Hearing at 12:13:12 et seq.) This court has jurisdiction over these matters as core proceedings pursuant to 28 U.S.C. §§ 157(b) and 1334(b) and that certain Order dated September 21, 1984 of this District (Daly, C.J.).2 This memorandum constitutes the findings of fact and conclusions of law to the extent mandated by Rule 52 of the Federal Rules of Civil Procedure ().
There are three bankruptcy cases relevant to the Global Compromise (at least for background purposes): Case No. 04-30417 (the "HCN Case");3 Case No. 04-32365 (the "NP Case"); and Case No. 04-34262 (the "THN Case").4
Relevant procedural background for the HCN Case through September 12, 2007 is set forth in the Prior Opinion and is incorporated herein by reference. See Konover, 390 B.R. at 35-37. On July 28, 2009, Michael J. Daly was terminated as chapter 7 trustee in the HCN Case and Richard M. Coan was appointed in his place. (See Case # 04-30417 ECF No. 388.) On August 3, 2009, Ronald I. Chorches became the HCN Trustee in place of Attorney Coan. (See id. ECF No. 390.) On October 22, 2009, the HCN Trustee filed a certain Motion for Court Approval of the Use of Estate Funds for the Purpose of Mediation. (See id. ECF No. 393.) That motion sought the court's approval to compensate a mediator (the "Mediator") from estate funds with respect to a proposed mediation (the "Mediation") of the disputes between the HCN Trustee and Konover Construction Corporation (n/k/a KBE Building Inc., "Konover") in Daly v. Konover Construction Corp., A.P.No. 04-3037 (the "Konover Adversary Proceeding").5 That motion was granted by order dated November 19, 2009. (See id. ECF No. 404.)
On April 29, 2011, the Trustees filed that certain Trustees' Joint Motion for Approval of Global Compromise with KBE Building Company, Inc. F/K/A Konover Construction Corp., Franklin Construction, LLC and Other Parties in Interest. (See Case # 04-30417 ECF No. 448, the "HCN Compromise Motion.") On June 1, 2011, the Debtors filed that certain Debtors' Objection to Trustees' Joint Motion for Approval of Global Compromise. (See id. ECF No. 464, the "HCN Compromise Objection.") On June 29, 2011, the Trustees and the Debtors filed a Joint [Factual] Stipulation in connection with the HCN Compromise Motion and the HCN Compromise Objection. (See id. ECF No. 466, the "HCN Stipulation.") All the above-referenced matters in HCN Case came on for hearing (the "Hearing") on June 28, 2011. At the conclusion of the Hearing, the HCN Compromise Motion, the HCN Compromise Objection and the Paragon Objection were taken under advisement (subject to briefing, which now is completed, and subsequent proceedings, discussed below).
Relevant background for the NP Case through September 12, 2007 is set forth in the Prior Opinion and is incorporated by reference herein. See Konover, 390 B.R. at 37-40. On March 14, 2010, the NP chapter 11 trustee filed a motion to convert the NP Case to a case under chapter 7 of the Bankruptcy Code. (See Case # 04-32365 ECF No. 357.) That motion was granted and the NP Case was converted to a chapter 7 case by order dated April 15, 2010. (See id. ECF No. 362.) TheNP chapter 11 trustee became the NP Trustee. On June 9, 2010, Mix Avenue, LLC ("Mix") filed a motion to have its allegedly secured claim paid from the proceeds of the sale of the NP Property (as hereafter defined). (See id. ECF No. 381.) The NP Debtor objected to that motion. (See id. ECF No. 386.) Hearing on the motion (and objection) were continued from time to time until March 17, 2011, when it was marked off without prejudice.
On April 29, 2011, the Trustees filed a duplicate of the HCN Compromise Motion in the NP Case. (See Case # 04-32365 ECF No. 395, the "NP Compromise Motion," collectively with the HCN Compromise Motion, the "Joint Compromise Motion.") The NP Debtor filed an objection to the NP Compromise Motion on June 1, 2011. (See id. ECF No. 398, the "NP Compromise Objection," collectively with the HCN Compromise Objection, the "Compromise Objection.") Those two matters first came on for a hearing on June 2, 2011. The Trustees and the Debtors filed a duplicate of the HCN Stipulation in connection with the NP Compromise Motion and the NP Compromise Objection on June 28, 2011. (See id. ECF No. 400, collectively with the HCN Stipulation, the "Stipulation.")6 Those matters were litigated at the Hearing and, at the conclusion thereof, were taken under advisement (subject to briefing, which now is complete, and subsequent proceedings, discussed below).7
Relevant history with respect to the THN Case is set forth in the Prior Opinion which is incorporated by reference herein. See Konover, 390 B.R. at 40-42. As noted therein, the THN Case was closed with no relevant distributions to creditors.
The relevant adversary proceedings discussed below are: the Konover Adversary Proceeding; A.P. No. 04-3038 (the "Franklin Adversary Proceeding"); A.P. No. 04-3039 (the "Mix Adversary Proceeding"); and A.P. No. 04-3048 (the "Eli Whitney Adversary Proceeding"). Relevant claims (and claims objections) also are discussed below.
As discussed in the Prior Opinion, in addition to its proof of claim filed in the HCN Case, on August 10, 2010 Konover timely filed a proof of unsecured claim in the NP Case in the amount of $1,290,606 (plus legal fees and interest incurred from October 20, 1999 to February 2, 2004) on the theory that the HCN Case and the NP Case should be substantively consolidated. (See id. POC No. 10-1.)8
Relevant background for the Konover Adversary Proceeding through the issuance of the Prior Opinion is set forth therein and is incorporated by reference herein. On July 2, 2009, a default for failure to plead was entered against the HCN Trustee with respect to the Counterclaim. (See A.P. # 04-3037 ECF No. 136.) On October 28, 2009, the HCN Trustee was substituted for his predecessor as plaintiff. (See id. ECF No. 160.) By a consent order dated January 28, 2010, the Konover Adversary Proceeding was referred to the Mediation. (See id. ECF No. 162.) On March 8, 2010, a "no settlement" report was filed by the Mediator with respect to the Mediation. (See id. ECF No. 164.)
On May 14, 2010, the HCN Trustee filed that certain Motion for Summary Judgment Concerning Count Six of the Amended Complaint. (See A.P. # 04-3037 ECF No. 180, collectively with ECF Nos. 181 and 184, the "S/J Motion.")9 On July 16, 2010, the HCN Trustee filed a motion to set aside the Clerk's entry of default referred to above, and a Motion To Dismiss or Strike the Counterclaim. (See id. ECF Nos. 203, 204.) The hearing on those two motions was continued from time to time until September 15, 2010, when that hearing was marked off. The time for Konover to respond to the motion to dismiss or strike and to the S/J Motion was extended from time to time, the last dates set being February 23, 2011 (with respect to the motion to dismiss or strike) and March 14, 2011 (with respect to the S/J Motion). (See id. ECF Nos. 240, 241.)
On February 16, 2011, Konover ...
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