In re Macon Uplands Venture, Bankruptcy No. 79-2-1862-L.

• Decision Date: 22 January 1980
• Docket Number: Bankruptcy No. 79-2-1862-L.
• Citation: 2 BR 444,5 BCD 1279
• Parties: In re MACON UPLANDS VENTURE, a Limited Partnership, Debtor.
• Court: U.S. Bankruptcy Court — District of Maryland

2 B.R. 444 (1980)

In re MACON UPLANDS VENTURE, a Limited Partnership, Debtor.

Bankruptcy No. 79-2-1862-L.

United States Bankruptcy Court, D. Maryland.

January 22, 1980.

Charles M. Tatelbaum, Stephen F. Fruin, Sherbow, Shea & Tatelbaum, Baltimore, Md., for debtor Macon Uplands Venture.

E. Stephen Derby, Piper & Marbury, Baltimore, Md., for Metropolitan Life Ins. Co.

FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDERS WITH RESPECT TO TRANSFER

HARVEY M. LEBOWITZ, Bankruptcy Judge.

On October 17, 1979, Macon Uplands Venture ("Debtor") filed in this court an Original Petition under Chapter 11 of the Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101 et seq. ("Code"). This court has issued two previous Opinions with respect to issues presented in this case, the first on November 5, 1979, 2 B.R. 421, and the other on December 11, 1979, 2 B.R. 435. The facts and the issues involved have been set out at length in those Opinions. The Opinion of November 5, 1979, was issued in response to a Motion to Dismiss, Or, In The Alternative, To Transfer Case filed by Metropolitan Life Insurance Company ("Metropolitan"). In that Opinion, it was determined, inter alia, that this court could entertain and retain jurisdiction over a Chapter 11 case filed under the Code, notwithstanding a pending appeal in the United States District Court for the Middle District of Georgia from a dismissal of a Chapter XII case originally filed in this District by the same debtor under the Bankruptcy Act of 1898, as amended, and then transferred to the Middle District of Georgia. This court further indicated that an evidentiary hearing would be held to determine whether the Chapter 11 case should be retained in this District or transferred to the Middle District of Georgia or some other Bankruptcy Court. In its Opinion of December 11, 1979, this court concluded, inter alia, that it is this court which is to determine if and where the Chapter 11 Code case is to be transferred, that such transfer could not be directed or initiated by the United States District Court for the Middle District of Georgia, and that should the Chapter 11 case be transferred to the Middle District of Georgia, such transfer must be to the United States Bankruptcy Court for that District and could not be transferred to the District Court and consolidated with the appeal pending in that court.

An evidentiary hearing on Metropolitan's Motion with respect to transfer was held in this court on December 28, 1979, at which time witnesses were called, testimony was taken, and evidence was introduced. The following persons appeared: the Debtor, by its attorneys, Charles M. Tatelbaum, Stephen F. Fruin, and Jay Scott Smith; and Metropolitan, by its attorney, E. Stephen Derby. Also present were Lowell H. Hughen and Carol Clark of the Atlanta law firm of Hansell, Post, Brandon and Dorsey, Georgia counsel for Metropolitan, and Christine Wadsworth, an attorney with Metropolitan.

As a part of Metropolitan's opening statement, Mr. Hughen was permitted to make a narrative presentation of the proceedings that have occurred in Georgia in connection with the Chapter XII case. Mr. Tatelbaum, in reserving his opening statement, indicated that Mr. Hughen did a very "presentable job of giving a narrative as to what happened in the prior proceeding and it would be superfluous for him to go through." Mr. Hughen's presentation will be given consideration by this court only to the extent that it describes the nature and extent of the Georgia proceedings in the Chapter XII case.

Counsel have requested the court to take judicial notice of certain documents and pleadings filed in this case. The court, having read and considered those documents and pleadings, as well as other pertinent documents and pleadings filed in these proceedings, the exhibits admitted into evidence at the hearing, the testimony of the witnesses, arguments of counsel, and memoranda of law filed herein, makes the following findings and conclusions:

APPLICABLE LAW

The question of the transfer of a case under Chapter 11 of the Bankruptcy Code is governed by § 1475 of Title 28, United States Code. Section 1475 is to be compared with § 1477, 28 U.S.C.; the former concerns both the change of venue of cases originally filed in either the proper venue or the wrong venue, whereas § 1477 only deals with transfer of cases filed originally in the wrong district. 1 Collier on Bankruptcy ¶ 3.024a at 3-196 (15th ed. 1979). This court by its Memorandum Opinion of November 5, 1979, determined that this case was "properly filed and that this court has jurisdiction over same." Opinion, p. 422. In the circumstances where jurisdiction exists and venue is proper, as here, § 1475 is applicable.

Section 241 of the Bankruptcy Reform Act of 1978 enacted § 1475 which is now applicable during the transition period between October 1, 1979, and April 1, 1984, see Bankruptcy Reform Act § 405(b), and which will become permanently effective on April 1, 1984, see Bankruptcy Reform Act § 402(b). Section 1475, entitled "Change of Venue", provides:

A bankruptcy court may transfer a case under title 11 or a proceeding arising under or relating to such a case to a bankruptcy court for another district, in the interest of justice and for the convenience of the parties.

Thus, the test for transferring a properly filed case is twofold: the interest of justice and the convenience of the parties. 1 Collier on Bankruptcy ¶ 3.024b at 3-198 (15th ed. 1979). This standard under § 1475 is the same as it was under Bankruptcy Rule 116(b)(1) and the cases decided thereunder remain persuasive. Id., ¶ 3.024d at 3-202.

Courts of bankruptcy in deciding questions of transfer have long considered several factors including: (1) the proximity of creditors of every kind to the court; (2) the proximity of the debtor to the court; (3) the proximity of the witnesses necessary to the administration of the estate; (4) the location of the assets; and (5) the economical and efficient administration of the estate. In re United Button Co., 137 F. 668, 672-3 (D.Del.1904) (factors for transfer espoused and applied, transfer denied); In re Bankers Trust, 403 F.2d 16, 23 (7th Cir. 1968) (improper venue, factors for transfer applied, transfer denied); In re Theodore Wayne Zonker, et al., 2 Bankr.Ct.Dec. 281, 8 C.B.C. 132 (N.D.Tex.1976) (factors for transfer applied, transfer granted); In re Armando E. Jaconetti, 2 Bankr.Ct.Dec. 661, 9 C.B.C. 96 (W.D.Wisc.1976) (factors for transfer applied, transfer granted); In re Twentieth & Penrose Associates, 4 Bankr. Ct.Dec. 802 (E.D.Pa.1978) (factors for transfer applied, transfer denied). The courts have also used the twin tests of "convenience of parties" and "in the interest of justice" to give consideration to the following factors in connection with the transfer of a particular proceeding within a case such as: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process for attendance of unwilling, and the cost of obtaining the attendance of willing, witnesses; (3) the enforceability of judgment if one is obtained; (4) relative advantages and obstacles to fair trial; (5) a local interest in having localized controversies decided at home; and (6) a trial in the state the law of which will govern the action. 1 Collier on Bankruptcy ¶ 3.024b at 3-200, 3-201 (15th ed. 1979) and cases cited therein. These criteria are relevant under § 1475, id., and are to be applied on a case-by-case basis. The burden of establishing that the case should be transferred is on the moving party, Metropolitan Life Insurance Company, and must be shown by a fair preponderance of the evidence. United Button, 137 F. at 673; In re Triton Chemical Corp., 46 F.Supp. 326, 328 (D.Del.1942). It is the opinion of this court that the facts and circumstances which existed at the time of the filing of the petition in Chapter 11 are those which are significant in determining whether the case should be transferred, not the facts as they existed when the Chapter XII case was filed.

FINDING OF FACTS

1. The Debtor is a limited partnership organized pursuant to the laws of the State of Georgia. Uplands, Inc., the General Partner, is a Maryland corporation, having its principal office in Baltimore. There are six (6) limited partners of the Debtor all of whom reside in Metropolitan Baltimore.

2. The principal asset and the only operating business asset of the Debtor is the Macon Hilton Hotel located in Macon, Georgia (sometimes referred to as the "Hotel"). The Hotel is operated under a franchise from Hilton Inns, Inc.

3. The Macon Hilton Hotel is not managed by the Debtor, but instead, Metropolitan Hotels, Inc., a Maryland corporation having its offices in Baltimore at the same address as that of the Debtor, is employed by the Debtor to supervise the management of the Hotel.

4. The Macon Hilton Hotel is only one of four hotels managed by Metropolitan Hotels, Inc. It also manages the Baltimore Hilton Hotel located in Pikesville, Maryland, the Annapolis Hilton Inn located in Annapolis, Maryland, and the Erie Hilton located in Erie, Pennsylvania.

5. William Siskind is the president of Uplands, Inc. and Metropolitan Hotels, Inc., and has an interest, directly or indirectly, in the other hotels. James Clyde McPherson is employed by Metropolitan Hotels, Inc., not by the Debtor, and has been the comptroller of Metropolitan Hotels, Inc. since September, 1979. He was the assistant comptroller from September, 1978, to September, 1979.

6. Both Mr. Siskind and Mr. McPherson testified at the hearing regarding the procedures currently being utilized with respect to the operation of the Macon Hilton Hotel. According to their testimony, operational and administrative functions are performed both in Baltimore and at the Hotel in Macon. The procedure currently being used is essentially as follows:

(a) The comptroller of Metropolitan Hotels, Inc., Mr. McPherson, is located...