In re Parkland Props., LLC
| Decision Date | 16 July 2019 |
| Docket Number | Bankruptcy No. 13 B 22702 Jointly Administered |
| Parties | IN RE: PARKLAND PROPERTIES, LLC, et al., Debtors. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois |
Joshua D. Greene, Springer Larsen Greene, LLC, Wheaton, IL, Michael V. Ohlman, Michael V. Ohlman, P.C., August Anthony Pilati, Law Office of August A. Pilati, Chicago, IL, for Debtors.
This matter is before the Court on the motion of Parkland II, LLC, the Reorganized Debtor ("Parkland II"), to enforce the order entered on October 13, 2015 confirming and modifying, in part, Parkland II's Sixth Modified Plan of Reorganization (the "Confirmation Order") against Bridgeview Bank Group ("Bridgeview") and to award damages to Parkland II. For the following reasons, the Court denies the motion.
The Court first concludes that it has jurisdiction to hear this motion, despite the long passage of time since confirmation of Parkland II's plan of reorganization. A bankruptcy court retains post-confirmation jurisdiction to protect the confirmation order, to prevent interference with the execution of the plan, and to aid in the plan's operation. In re Kmart Corp. , 359 B.R. 189, 195 (Bankr. N.D. Ill. 2005) ; see also In re Am. Consol. Transp. Cos. , 470 B.R. 478, 494 (Bankr. N.D. Ill. 2012) (); Levine v. Telco Sys., Inc. (In re World Access, Inc.) , 324 B.R. 662, 680 (Bankr. N.D. Ill. 2005) (same). Article XII of the plan specifically provides that the Court will retain jurisdiction over all matters, including any necessary interpretation or enforcement of the terms and conditions of the plan. (Dkt. No. 506, Art. XII.) Because resolution of this motion requires interpretation of the plan and Confirmation Order, the Court has jurisdiction to hear this motion.
On June 18, 2013, Parkland II filed a voluntary Chapter 11 bankruptcy petition (13 B 25121). Between May 31, 2013 and July 2, 2013, five related entities of Parkland II also filed voluntary Chapter 11 petitions: Parkland Properties, LLC (No. 13 B 22702); Parkland III, LLC (No. 13 B 25125); Parkland IV, LLC (No. 13 B 26018); Parkland V, LLC (No. 13 B 27098); and Parkland VI, LLC (No. 13 B 26811) (collectively, the "Debtors"). On August 26, 2013, the Court entered an order directing joint administration of these related Chapter 11 cases and requiring all documents in the cases to be filed under the caption of "Parkland Properties, LLC, et al., Debtor, Case No. 13-22702." (Dkt. No. 43.)
Before these bankruptcies, Bridgeview had filed separate lawsuits against several of the Debtors in the Illinois Circuit Court of Cook County (the "State Court"). In each of these suits, Bridgeview also named Glenn M. Brettner and James D. Brettner (collectively, the "Brettners"), the principals of the Debtors, as defendants. Bridgeview received a judgment in its favor in every suit. On May 7, 2013, the State Court entered the first judgment against Parkland V, LLC and the Brettners jointly and severally, in the amount of $717,804.41. (Bridgeview Resp. Ex. No. 1.) On May 10, 2013, Bridgeview recorded a memorandum of judgment with the Cook County Recorder of Deeds—creating a judgment lien against property located at 1508 North Artesian, Chicago, Illinois (the "Artesian Property"). (Id. at Ex. No. 2.)
On May 10, 2013, the State Court entered a second judgment against Parkland II and the Brettners, jointly and severally, in the amount of $44,466.27. (Id. at Ex. No. 3.) On May 23, 2013, Bridgeview recorded a memorandum of judgment with the Cook County Recorder of Deeds thereby creating a second judgment lien against the Artesian Property. (Id. at Ex. No. 4.)
On May 10, 2013, the State Court entered the third judgment against Parkland III, LLC and the Brettners, jointly and severally, in the amount of $107,254.22. (Id. at Ex. No. 5.) On May 30, 2013, Bridgeview recorded a memorandum of judgment with the Cook County Recorder of Deeds thereby creating another judgment lien against the Artesian Property. (Id. at Ex. No. 6.)
On May 10, 2013, the State Court entered the fourth judgment against Parkland VI, LLC and the Brettners, jointly and severally, in the amount of $599,391.46. (Id. at Ex. No. 7.) On June 14, 2013, Bridgeview recorded a memorandum of judgment with the Cook County Recorder of Deeds thereby creating a fourth judgment lien against the Artesian Property. (Id. at Ex No. 8.)
Roughly a decade before the State Court litigation between Bridgeview and the Debtors, the Brettners had executed a note in the amount of $253,000.00 in favor of Countrywide Home Loans, Inc ("Countrywide") on May 16, 2003. (Bridgeview Resp. at p. 4.) That note was secured by a mortgage against the Artesian Property. The mortgage was recorded with the Cook County Recorder of Deeds on May 16, 2003 (the "Countrywide Mortgage"). (Id. ) Bank of America ("BOA"), as successor in interest to Countrywide, released the Countrywide Mortgage on May 16, 2013 through a mortgage release filed with the Cook County Recorder of Deeds. (Id. ) On May 6, 2013, the Brettners executed a new note in the amount of $216,400.00, secured by a mortgage against the Artesian Property and held by BOA (the "BOA Mortgage"). (Id. ) BOA recorded the BOA Mortgage with the Cook County Recorder of Deeds on May 30, 2013, which occurred two weeks after Bridgeview recorded its judgment liens against the Artesian Property. (Id. at pp. 4-5.)
On October 18, 2013, Bridgeview filed a foreclosure action in the State Court on the Artesian Property against the Brettners and BOA (the "Foreclosure Action"). (Id. at p. 5.) BOA challenged the priority of Bridgeview's liens in the Foreclosure Action. (Id. ) Bridgeview filed a motion for summary judgment as to lien priority. (Id. ) On March 26, 2015, the State Court granted Bridgeview's motion for summary judgment for Bridgeview and ruled that Bridgeview's judgment liens against the Artesian Property had priority over BOA's Mortgage lien. (Id. ) On April 24, 2015, BOA moved to reconsider that summary judgment order. (Id. ) BOA's motion was denied on March 29, 2018. (Id. at p. 8.)
On November 5, 2013 and July 25, 2014, the Brettners each filed voluntary Chapter 7 bankruptcy petitions (13 B 43328 and 14 B 27382). On February 21, 2014 and August 18, 2014, the Court entered orders lifting the automatic stay in both bankruptcy cases to permit Bridgeview to continue with the Foreclose Action. (Bridgeview Resp. Group Ex. No. 9.) On April 7, 2015, the Debtors filed an adversary proceeding against Bridgeview to recover the Artesian Property (15 A 00238). In the complaint, the Debtors sought to avoid the transfer of the Artesian Property from Parkland II to the Brettners as fraudulent and Bridgeview's judgment lien against the Artesian Property as a preferential transfer. (15 A 00238, Dkt. No. 1.)
The Debtors alleged in the complaint that Parkland II originally owned the Artesian Property. (Id. at ¶ 14.) According to the Debtors, to effectuate a 2013 financing transaction, BOA required Parkland II to deed the Artesian Property to the Brettners individually. (Id. at ¶¶ 15 & 16.)
But BOA also gave assurances to the Debtors that they could transfer the Artesian Property back to Parkland II after the closing. (Id. at ¶ 15.) On June 1, 2015, the Court entered an agreed judgment providing, among other things, that the Debtors could avoid the transfer and recover ownership of the Artesian Property on behalf of their bankruptcy estates. (Id. at Dkt. No. 19.) The agreed judgment also provided that Bridgeview's liens on the Artesian Property would remain unaffected by transferring the Artesian Property to the Debtors' bankruptcy estates. (Id. ) As a result of the agreed judgment, Parkland II recovered title to the Artesian Property, which became property of its bankruptcy estate under 11 U.S.C. § 541(a)(3). As another result of that judgment, Bridgeview's Foreclosure Action in the Parkland II's bankruptcy case was automatically stayed under 11 U.S.C. § 362. Bridgeview and Parkland II ultimately resolved the adversary proceeding through a series of stipulations and agreed orders. (Id. at Dkt. Nos. 28 & 29.)
On August 17, 2015, Parkland II filed its Sixth Modified Plan of Reorganization (the "Sixth Modified Plan"). (Dkt. No. 506.) On September 25, 2015, Parkland II filed a notice of "Proposed Non-Material Modifications to the Debtors' Plan of Reorganization." (Dkt. No. 538.) With Bridgeview's agreement, § 3.07 of the Sixth Modified Plan was further modified as follows:
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