In re Pennsylvania Footwear Corp.
| Citation | 199 BR 534 |
| Decision Date | 14 August 1996 |
| Docket Number | Bankruptcy No. 95-19785DAS. Adv. No. 96-0342DAS. |
| Parties | In re PENNSYLVANIA FOOTWEAR CORPORATION, Debtor. PENNSYLVANIA FOOTWEAR CORPORATION, Arthur P. Liebersohn, Trustee, Plaintiffs, v. MIDLANTIC BANK, N.A., Defendant. |
| Court | United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania |
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Mark S. Karpo, Philadelphia, PA, for Debtor.
James W. Hennessey, West Conshohocken, PA, for Defendant.
Arthur Liebersohn, Philadelphia, PA, Trustee-Plaintiff.
Frederic Baker, Asst. U.S. Trustee, Philadelphia, PA.
Presently before this court is a motion for summary judgment () of MIDLANTIC BANK, N.A. ("the Movant") in its favor as to the Complaint for Money ("the Complaint") brought against the Movant in the above-captioned adversary proceeding ("the Proceeding") in which PENNSYLVANIA FOOTWEAR CORPORATION ("the Debtor") and "ARTHUR P. LIEBERSOHN, As Chapter 7 Bankruptcy Trustee" ("the Trustee"), are the Plaintiffs.
The Complaint alleges the Movant's failure to have certain real estate owned by the Debtor removed from a February 21, 1992, sheriff's sale list, per a forbearance agreement between the parties. The Complaint demands, as damages, uncollected rents and compensation for a steep reduction in the market value of the real estate arising from the Movant's alleged breach of the forbearance contract.
The Motion is based on the contention that the Complaint, not having been filed until March 12, 1996, is time-barred under even the longest possibly applicable statute of limitations. Finding that the applicable statute of limitations is four years; that the Plaintiffs have properly alleged (if not proven) March 4, 1992, as the date of discovery of the Debtor's cause of action; and that a recitation of the claims set forth in the Complaint in a summarily-dismissed counterclaim to the Movant's unsuccessful motion to dismiss this case filed on March 4, 1992, appears to constitute a "proceeding . . . timely commenced" within the pertinent Pennsylvania "savings statute," 42 Pa.C.S. § 5535(a)(1), the Motion is denied.
On December 14, 1995, the Debtor filed the underlying voluntary Chapter 7 bankruptcy case pro se, by Joel Karpo ("Joel"), its President and only officer. On January 17, 1996, the Movant filed a motion not only to dismiss this case, but also to preclude the Debtor from re-filing another similar bankruptcy case within the next 180 days. In support of the 180-day filing bar, the Movant alleged that the Debtor, per Joel, had filed previous cases on June 17, 1994; January 1, 1995; and June 15, 1995, all of which, like the instant case, had stayed a sheriff's sale of the Debtor's Maple Plaza Shopping Center, located at 4233 Edgmont Avenue, Brookhaven, Pennsylvania 19015 ("the Property"), scheduled by the Movant in execution on its foreclosure judgment, and all had been dismissed when the Debtor failed to file the Schedules. A hearing was scheduled on the motion to dismiss ("the MTD") on February 13, 1996. Possibly the imposing nature of the MTD spurred Joel to engage Mark S. Karpo, Esquire ("Mark"), apparently a relative, as the Debtor's counsel for the first time.
The parties agreed to a continuance of the February 13 hearing until March 5, 1996. Then, on March 4, 1996, the Debtor, per Mark, filed all necessary Schedules and an answer to the MTD with a counterclaim ("the CC;" the entire pleading is referenced as "the Answer & CC"). The Answer & CC properly addressed all the averments to the MTD and further, in the CC portion, alleged basically the same facts and requested the same relief as is alleged and requested in the Complaint, as described at pages 538-40 infra.
On March 12, 1996, the Debtor, per Mark as in all of its subsequent pleadings, filed the instant Proceeding, naming the Trustee as a co-plaintiff with the Debtor. The trial was scheduled on April 30, 1996. On April 11, 1996, the Movant filed an answer to the Complaint ("the Answer") and a demand for a jury trial. The Answer admitted an averment that the Proceeding is core, which in our view constitutes express consent for us to determine it. See In re St. Mary Hospital, 117 B.R. 125, 131 (Bankr.E.D.Pa. 1990). The trial was mutually continued until June 25, 1996.
The next developments were spurred by a colloquy with interested counsel at a hearing of June 13, 1996, to show cause why the case should not be dismissed because the Debtor failed to appear at the meeting of creditors on February 7, 1996. In light of Joel's condition as a double amputee of both of his legs due to a severe diabetic condition, the Debtor was permitted, in an order of that date, to answer written interrogatories in lieu of appearance by Joel at the meeting of creditors. However, we also noted that, on June 12, 1996, the Movant had filed the Motion before us. We therefore entered an Order of June 14, 1996, allowing the Debtor until July 5, 1996, to answer the Motion, and, when both parties consented to our conducting the duly-requested jury trial of the Proceeding, see 28 U.S.C. § 157(e), we set back the potential jury trial until July 25, 1996. We also entered, with the parties' concurrence, an order appointing Bruce E. Hartman, Esquire, as a mediator ("the Mediator"), pursuant to our court-authorized mediation program, to attempt to avoid the cost and necessary efforts potentially needed to conduct a jury trial.
Briefs were timely filed. On July 15, 1996, we entered an order allowing the Mediator to go forward when both parties waived a potential conflict; permitting the Movant to file a reply brief by July 19, 1996;1 requesting the Movant to reconsider its jury demand; and re-establishing the July 25, 1996, trial date as a date for a conference.
As a result of that conference, upon withdrawal of the Movant's jury demand, we allowed the Debtor until August 1, 1996, to file a counter-reply brief; scheduled a status hearing to receive a further report from the Mediator on August 22, 1996; and, in the event of his lack of success in reaching a resolution, scheduled the trial before this court on a must-be-tried basis on September 12, 1996. We have decided that issuing this Opinion denying the Motion may assist the parties and the Mediator in reaching an amicable resolution of the Proceeding.
The facts surrounding the Complaint began on May 29, 1981, when Lincoln Bank, the predecessor to Continental Bank, which is in turn the predecessor of the Movant, loaned the Debtor $200,000, evidenced by, inter alia, a mortgage ("the Mortgage") against the Property. Apparently payments under the obligation were made until October 1990, when the Debtor defaulted. The Movant then initiated a foreclosure proceeding against the Property, and it was listed for a sheriff's sale on April 19, 1991.
On April 18, 1991, the parties entered into a written Forbearance Agreement ("the 1st Forbearance"), executed on May 8, 1991. Pursuant to the terms of the 1st Forbearance, the Debtor made a lump-sum payment to the Movant of $38,000 in consideration for which the Movant agreed to stay the sheriff's sale of the Property for a period of four months to allow the principals of the Debtor to actively market the sale of the Property. However, the 1st Forbearance further provided that, if the sale of the Property did not take place at the conclusion of the four-month period, the Property would be relisted for a sheriff's sale or the Debtor would be required to pay all outstanding principal and interest on the debt to the Movant.
During this four-month period, any and all rents due and payable to the Debtor from its (apparently four) tenants leasing space at the Property were to be assigned to the Movant by Joel to be applied against the Mortgage. An assignment of rents to the Movant was also provided by the Debtor under the terms of the 1st Forbearance, and shortly thereafter the tenants were notified of the assignment in writing by both parties.
The Debtor failed to sell the Property and did not make the required payment to the Movant within the four-month period. Therefore, in October 1991, the Movant proceeded with foreclosure and the Property was relisted for a sheriff's sale on December 20, 1991. The exact details of the events thereafter are stated less than clearly by the parties and appear to be disputed in several respects.
The parties agree that in December, prior to the December 20, 1991, sheriff's sale, by some type of agreement, the Property was taken off the sheriff's sale list. It appears that, during December, there were discussions between Anthony D. Reagoso, Esquire ("Reagoso"), and Joseph Higgins, Esquire ("Higgins"), on behalf of the Movant and the Debtor, respectively, regarding the postponement of the December 20, 1991, sheriff's sale. There was also a conversation between Reagoso and Joel which appears to have occurred on December 19, 1991. All of these discussions ultimately resulted in an agreement ("the 2nd Forbearance") whereby the Movant promised that the Property would be taken off the sheriff's sale list in exchange for the Debtor's promise to pay the Movant the proceeds from the anticipated sale ("the Transaction") of two other properties which the Debtor owned, located at 13 East Maple Avenue and 15 East Maple Avenue, Brookhaven, Pennsylvania ("the Other Properties").
These discussions resulted in a number of writings, none of which individually make the details of the 2nd Forbearance perfectly clear, but which collectively enable us to understand the basic features of that agreement. First, there is a letter dated December 10, 1991, from Reagoso to Higgins, stating that the Movant should provide a more definite projected date of when the Transaction would close. As evidenced by a responsive letter from Higgins to Reagoso dated December 11, 1991, the Transaction was supposed to take place...
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