In re: McINTYRE BUILDING COMPANY Inc.
| Decision Date | 14 April 2011 |
| Docket Number | Case No. 10-30558-WRS,Adv. Pro. No. 10-3029-WRS |
| Parties | In re: McINTYRE BUILDING COMPANY INC., Debtor McINTYRE LAND COMPANY INC., Plaintiff v. McINTYRE BUILDING COMPANY INC., et al, Defendants |
| Court | U.S. Bankruptcy Court — Middle District of Alabama |
OPINION TEXT STARTS HERE
This Adversary Proceeding came before the Court for hearing on Plaintiff McIntyre Land Co., Inc.'s Motion to Stay Pending Appeal on March 22, 2011. (Doc. 66). McIntyre Land seeks to stay proceedings in this Adversary Proceeding pending its interlocutory appeal of this Court's Order of February 7, 2011, (Docs. 57, 58) which, among other things, denied McIntyre Land's motion to remand its civil action to State Court. For the reasons set forth below, the Plaintiff's Motion to Stay Pending Appeal is DENIED.
McIntyre Building Company, Inc., (McIntyre Building) filed a petition in bankruptcy pursuant to Chapter 11 of the Bankruptcy Code on March 6, 2010. (Case No. 10-30558, Doc. 1).1 In schedules filed with the court, McIntyre Building reports holding assets which it values at $9.5 million, almost all of which is real property. It also reports owing more than $20 million in debt, most of which is secured by real property. (Case No. 10-30558, Doc. 25). On Schedule A, McIntyre Building claims to own 12 parcels of real property, including a parcel on County Road 85 in Prattville, Alabama, described as 165 acres, (actually 161 acres) which McIntyre Building valued at $330,000.2 This Adversary Proceeding centers on the 161 acre parcel. McIntyre Building converted its Chapter 11 case to a case under Chapter 7 on September 20, 2010. (Case No. 10-30558, Doc. 87). Shortly thereafter, Susan S. DePaola was appointed as Trustee. (Case No. 10-30558, Doc. 88).3
On April 15, 2010, McIntyre Land Company, Inc., filed a complaint (first complaint) in this Court, initiating this Adversary Proceeding against McIntyre Building, Innes McIntyre, IV and Branch Banking and Trust Co., Inc. (Doc. 1). The complaint alleges that Colonial Bank issued a loan commitment to Innes McIntyre, McIntyre Building and McIntyre Land to renew a loan to McIntyre Building. ). McIntyre Land alleges that the commitment provided that the 161 acre parcel owned by McIntyre Building was to be encumbered by a mortgage and that the Prattville Square Shopping Center, which is owned by McIntyre Land, was to be released. (Doc. 1, para 9-10). The existing loan was $3.1 million. (Doc. 1, para 12). In the first complaint, McIntyre Land sought a declaration that the Colonial mortgage does not encumber the Prattville Square Shopping Center and that the $3.1 million indebtedness to Colonial encumbers the 161 acre parcel in Autauga County. This declaration, if granted, would have the effect of encumbering property of the estate of McIntyre Building and freeing property owned by McIntyre Land.
As the relationship among the parties is important here, it is appropriate to provide some background on them and describe their relationships to one another. Innes McIntyre, IV is an individual who resides in Montgomery, Alabama and has been in the business of developing real estate. Innes McIntyre filed a petition in bankruptcy on March 8, 2010, two days after McIntyre Building filed its petition. (Case No. 10-30570). Innes McIntyre has filed schedules in his bankruptcy case claiming that he owns McIntyre Building. (10-30570, Doc. 16, Sch. B). He does not claim any ownership interest in McIntyre Land. Id. At a hearing held June 8, 2010, the Court inquired of counsel as to who owned McIntyre Land and was advised that it was Mrs. McIntyre, the wife of Innes McIntyre.4 If we disregard for a moment the corporate fictions, the Adversary Proceeding is really Mrs. McIntyre versus Mr. McIntyre and the Bank. Mrs. McIntyre and McIntyre Land are not in bankruptcy, while Mr. McIntyre and McIntyre Building are.
The relationship between the parties and the fact that the relief requested would have the effect of transferring property out of a bankruptcy estate to an entity controlled by a debtor's wife naturally piqued the interest of the Court. At the time of the June 8, 2010 hearing, McIntyre Building was still in a Chapter 11 case and acting as debtor in possession. In other words, no trustee had been appointed to look after the interests of the creditors of McIntyre Building. Insofar as Mrs. McIntyre was in effect suing Mr. McIntyre to get property out of the estate, the Court was concerned that Mr. McIntyre might be less than zealous in defense of the interests of the creditors and roll over, permitting his wife to win. Schedule I in the Innes McIntyre bankruptcy case indicates that Mrs. McIntyre shares a residence with Mr. McIntyre and several minor children and that Mrs. McIntyre is the sole breadwinner for the family. (10-30570, Doc. 16, Sch. I). The undersigned expressed his concern, during the June 8, 2010 hearing, that the transfer contemplated by the complaint might, in effect, be a fraudulent conveyance, as property would be transferred out of a bankruptcy estate for no consideration. The Court's concern that the creditors of McIntyre Building might not be adequately represented has been ameliorated by the appointment of Chapter 7 Trustee Susan DePaola. However, the underlying concern-that the relief requested may be a fraudulent conveyance-remains.
The complaint also alleges a loan commitment made by and a mortgage in favor of Colonial Bank. ). The complaint does not describe how BB&T came to hold the Colonial mortgage, however, BB&T is named as a Defendant. For purposes of the subject motion to stay proceedings it is not important to distinguish, however, BB&T has a motion to dismiss pending, which the Court will take up at a later time. Therefore, all references will be to BB&T without any effort to distinguish between it and Colonial, the original holder of the mortgage and related indebtedness.
On August 12, 2010, McIntyre Land filed an Amended Complaint without first seeking leave of court or the agreement of other parties. (Doc. 18). BB&T promptly moved to strike the Amended Complaint. (Doc. 21). In response to BB&T's motion to strike, McIntyre Land moved to voluntarily dismiss its complaint, without prejudice. (Doc. 30). The Court granted McIntyre Land's motion for voluntary dismissal on October 21, 2010. (Docs. 35, 36). At the time the Court entered the order of dismissal, the undersigned was not aware that BB&T had filed an Answer and Counterclaim. (Doc. 34). Within a few hours of entry of the order of dismissal, the undersigned learned of the Answer and Counterclaim. On October 22, 2010, the Court entered a notice of hearing, sua sponte, to hear argument on the question of whether it should reconsider its dismissal in light of the BB&T counterclaim. On February 7, 2011, the Court entered an order vacating its order of dismissal. (Docs. 57, 58).
On October 26, 2010, McIntyre Land filed a complaint in the Circuit Court of Montgomery County, Alabama.5 McIntyre Land alleges that BB&T holds a mortgage on the Prattville Square Shopping Center as successor in interest to Colonial Bank. ). The complaint further states that: In 2006, co-Defendants McIntyre Building Company and Innes McIntyre as well as MLC entered into an agreement with BB&T. That agreement required BB&T to release its mortgage on Prattville Square Shopping Center and, in turn, McIntyre Building agreed to encumber a 165 acre parcel of property located in Prattville, Alabama with a mortgage loan with BB&T.
(10-3084, Doc. 1, Complaint, para 8). Careful examination of the compliant filed in State Court reveals that it seeks to enforce the same agreement as was referenced in the complaint which referenced this Adversary Proceeding. The State Court complaint is ambiguous in that it does not name, in its caption, either McIntyre Building or Innes McIntyre, however, both parties are described as co-defendants in the body of the State Court complaint. Id. The State Court complaint seeks a determination which would encumber property of the bankruptcy estate of McIntyre Building and would bind the Trustee.
BB&T promptly removed the State Court proceeding to this Court, which was renumbered Adversary Proceeding 10-3084. McIntyre Land responded, moving to remand to State Court. (10-3084, Doc. 8). BB&T opposed remand and moved to consolidate Adversary Proceeding 10-3084 with 10-3029, contending that both proceedings involve the same subject matter. (Doc. 41). On February 7, 2011, this Court entered an order vacating its prior order of voluntary dismissal, granting BB&T's motion to consolidate this Adversary Proceeding with 103084 and denying McIntyre Land's Motion to Remand. (Docs. 57, 58). On February 22, 2011, McIntyre Land filed a motion for interlocutory appeal (Doc. 65) and a Motion to Stay Pending Appeal. (Doc. 66). For the reasons set forth below, the Motion to Stay Pending Appeal is DENIED.
McIntyre Land seeks to stay proceedings in this Adversary Proceeding pending its interlocutory appeal to the District Court, and perhaps beyond. To obtain its stay, McIntyre Land must satisfy two sets of requirements. First, it must satisfy the four-part test applicable to any stay of an order of judgment of a court. These requirements apply both to stays pending interlocutory appeals and stays pending appeal of final orders. The four-part test will be discussed in part II(A) below. Second, in part II(B) below, McIntyre Land must also show that it is entitled to bring an interlocutory appeal. These requirements are in addition to and not in lieu of the requirements in part II(A). The three-part test for an interlocutory appeal must be satisfied in addition to the four part test. The...
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