In re Levitt and Sons, LLC, Case No. 07-19845-BKC-RBR, Jointly Administered (Bankr. S.D.Fla. 7/16/2008)
| Decision Date | 16 July 2008 |
| Docket Number | Case No. 07-19845-BKC-RBR, Jointly Administered. |
| Parties | In re: LEVITT AND SONS, LLC, a Florida limited liability company, <U>et al</U>., Chapter 11 Cases, Debtors. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Southern District of Florida |
This matter is before the Court on the request for relief (the "Homebuyer Lien Motion") filed by Joseph and Jacqueline D'Alessandro (the "D'Alessandros" or the "Homebuyers") (C.P. No. 1669). In the Homebuyer Lien Motion, the Homebuyers claim that they are entitled to a statutory and/or equitable lien on a specific lot in the residential real estate development commonly known as the Seasons at Lake Lanier ("Lake Lanier") and assert that their lien is senior and prior in right of payment to the security deed of Wachovia Bank, National Association ("Wachovia") on the subject property.
In opposition to the Homebuyer Lien Motion, Wachovia filed its objection to the Homebuyer Lien Motion (the "Objection") (C.P. No. 2115), its motion for summary judgment with respect thereto (the "Summary Judgment Motion") (C.P. No. 2280) and its reply in support of its motion for summary judgment (the "Reply") (C.P. No. 2642).
Levitt and Sons of Hall County, LLC, Levitt and Sons of Horry County, LLC, Levitt and Sons of Cherokee County, LLC, Levitt and Sons of Paulding County, LLC, Levitt and Sons at World Golf Village, LLC, and Levitt and Sons of Manatee County, LLC (collectively, the "Wachovia Debtors") joined in Wachovia's Summary Judgment Motion (C.P. No. 2711). The Unsecured Creditors Committee also supported the Summary Judgment Motion at the June 24, 2008 hearing described below.
The Home Purchase Deposit Holders Committee of Creditors (the" Deposit Holders Committee") filed a response to the Homebuyer Lien Motion and the Summary Judgment Motion (C.P. No. 2736).
On June 24, 2008 at 9:30 a.m. in Ft. Lauderdale, Florida, this Court convened a final evidentiary hearing on Homebuyer Lien Motion (the "Hearing"). The documents admitted into evidence at the Hearing include docket entry 237, 320, 733, 836, 941, 1335, 1366, 1669, 1967, 2390, and 2734. The Court also accepted the proffered testimony of Bruce Perrine, a representative of Wachovia. After due deliberation and sufficient cause appearing therefore and for the reasons stated by the Court herein and on the record at the Hearing, the Court hereby makes the following findings of fact and conclusions of law applicable to the Homebuyer Lien Motion (to the extent any findings of fact constitute conclusions of law, they are adopted as such, and vice versa).
1. Wachovia, as lender, and Levitt and Sons, LLC ("LAS"), as borrower, are parties to that certain Revolving Land Acquisition, Development and Residential Construction Borrowing Base Facility Agreement dated as of January 5, 2006 (the "Original LAS Credit Agreement"), pursuant to which Wachovia agreed to make available to LAS a revolving line of credit in a principal amount not exceeding the sum of $100,000,000.
2. Pursuant to the terms of that certain First Amendment to Loan Facility Agreement between Wachovia and LAS dated as of May 31, 2006 (the "First Amendment"), the Original LAS Credit Agreement was amended to, among other things, increase the stated principal amount available to be drawn under said revolving line of credit to the sum of $125,000,000. The Original LAS Credit Agreement, as amended by the First Amendment, is hereinafter referred to as the "Credit Agreement." The $125,000,000 revolving credit facility established by the Credit Agreement is hereinafter referred to as the "Loan."
3. The indebtedness of LAS under the Credit Agreement is evidenced by that certain Amended and Restated Revolving Loan Promissory Note dated as of May 31, 2006, payable by LAS to the order of Wachovia in the original principal amount of $125,000,000 (the "Note"), which Note amends and restates in its entirety that certain Revolving Loan Promissory Note dated as of January 5, 2006, payable by LAS to the order of Wachovia in the original principal amount of $100,000,000.
4. As security for the obligations of LAS to Wachovia with respect to the Loan, Levitt and Sons of Hall County, LLC ("Hall") executed and delivered to Wachovia that certain Deed to Secure Debt, Security Agreement and Assignment of Leases and Rents dated as of January 31, 2006, and recorded in the Office of the Clerk of Superior Court of Hall County, Georgia, in Book 5584, Page 521, as amended by that certain First Modification of Deed to Secure Debt and Notice of Future Advance Agreement dated as of May 31, 2006, and recorded in the Office of the Clerk of Superior Court of Hall County, Georgia, in Book 5738, Page 238 (), granting to Wachovia a first priority security title in and continuing security interest in certain real and personal property assets of Hall more particularly described therein, which includes the Lake Lanier development (the "Property").
5. The Property is situated in Hall County, Georgia.
6. The Security Deed encumbers the entirety of Lake Lanier, except for those parcels released by Wachovia. The lot at issue in the Homebuyer Lien Motion has not been released by Wachovia.
7. On May 11, 2007, Hall, as seller, and the D'Alessandros, as buyers entered into a purchase and sale agreement for lot 136 in the Lake Lanier development (the "Lot").
8. On May 12, 2007 and June 11, 2007, respectively, the D'Alessandros tendered payments to Hall for the deposit required by the purchase and sale agreement, which said payments totaled $ 69,041.00 (the "Deposit").
9. The Deposit was not escrowed by Hall or otherwise segregated and is not available for return to the D'Alessandros.
10. On November 9, 2007 (the "Petition Date"), Hall, LAS and certain of its affiliates (collectively, the "Debtors") filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. § 101, et seq. (the "Bankruptcy Code").
11. The Debtors continue to operate their businesses and manage their assets as debtors in possession pursuant to 11 U.S.C. §§ 1107 and 1108.
12. On December 3, 2007, the D'Alessandros filed a motion (C.P. No. 286) requesting return of the Deposit and further requesting that the court cancel their contract with Hall.
13. On January 4, 2008, the Wachovia Debtors filed a motion (the "DIP Financing Motion") (C.P. No. 692) requesting entry of an order under 11 U.S.C. §§ 105, 362, 363, and 364 and Fed. R. Bankr. P. 2002, 4001 and 9014 (i) authorizing the Wachovia Debtors to obtain secured post-petition financing from Wachovia on a superpriority secured and priming basis; (ii) modifying the automatic stay pursuant to Section 362 of the Bankruptcy Code; (iii) approving home sales in the ordinary course of business with liens to attach to sale proceeds; (iv) approving Soneet R. Kapila as Chief Administrator of Borrower; (v) granting interim relief; and (vi) scheduling a final hearing.
14. On January 9, 2008 at 9:30 a.m. in Ft. Lauderdale, Florida, the Court conducted a preliminary hearing (the "Interim Hearing") on the DIP Financing Motion, and entered an interim order (the "Interim Order") (C.P. No. 836) approving the financing requested in the DIP Financing Motion, pending a final hearing on the DIP Financing Motion.
15. On January 10, 2008, the Court entered an order (C.P. No. 767) denying the D'Alessandros request to cancel their contract, without prejudice, at the request of the D'Alessandros.
16. On January 18, 2008, the D'Alessandros filed a motion to continue the final hearing on the DIP Financing Motion (C.P. No. 941), which was denied in open court as reflected by court paper number 1411.
17. The Court convened a final evidentiary hearing on the DIP Financing Motion, commencing January 23, 2008 at 9:30 a.m. and concluding on January 24, 2008, in Ft. Lauderdale, Florida (the "Final Hearing").
18. At the Final Hearing, Larry Young, the Debtors' chief restructuring officer, testified that there is no equity in the Wachovia Projects over and above Wachovia's pre-petition liens on the Wachovia Projects.
19. On February 13, 2008, the Court entered its Memorandum Opinion Approving Wachovia Debtors' DIP Financing Motion (the "Memorandum Opinion") (C.P. No. 1335) and its final order (the "Final DIP Financing Order") (C.P. No. 1366), granting the relief requested in the DIP Financing Motion.
20. The Memorandum Opinion states on page 12:
The Court finds Young's testimony credible and convincing. Based on his credible testimony, the Court announced at the hearing that it found as a matter of fact that the value of assets securing each of Wachovia's credit facilities was less than the amount owed to Wachovia on each of the respective Loans. As a result, it is a factual reality that there is no equity in any of the Wachovia Projects to secure any putative liens of any junior lien holder on any of the Wachovia Projects.
21. Six related orders were entered by the Court on February 13, 2008 (C.P. Nos. 1370, 1371, 1372, 1373, 1374 and 1375), each of which is entitled Order Approving Sales of Property In The Ordinary Course Of Business, Establishing Procedure For Determination Of Lien Priorities, Setting Deadline For the Assertion Of Lien Claims And Converting Junior Liens To Unsecured Claims (the "Ordinary Course Sale Orders").
22. The Final DIP Financing Order provides on page four that" all liens, claims, interests, and encumbrances against any assets of the Borrower that are junior to Wachovia's interest are hereby stripped off the respective assets of Borrower in their entirety."
23. In the Final DIP Financing Order, the Court set a deadline of March 10, 2008 for any party claiming a lien superior to Wachovia's pre-petition lien to file a statement setting forth the nature of the lien and the legal basis for the assertion that the lien is superior to Wachovia's...
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