In re Petroleum Piping Contractors, Inc.

Citation211 BR 290
Decision Date28 February 1997
Docket NumberBankruptcy No. 96-61379.
PartiesIn re PETROLEUM PIPING CONTRACTORS, INC., Debtor.
CourtUnited States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana

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Samuel T. Miller, Highland, IN, for Debtor-In-Possession.

Debra Moss, Highland Park, IL, for WaterPro Supplies.

MEMORANDUM OPINION AND ORDER1

KENT LINDQUIST, Chief Judge.

I STATEMENT OF PROCEEDINGS

This case is before the court on the "Motion to Obtain Relief from Stay of Claim Enforcement and/or for Determination of Abandonment of Assets and for Statement of Lack of Interest" (hereinafter: "Motion") filed on June 27, 1996 by WaterPro Supplies Corp. (hereinafter: "WaterPro") versus the Chapter 11 Bankruptcy Estate of Petroleum Piping Contractors, Inc., Debtor-in-Possession (hereinafter: "Debtor").2 At the prehearing conference on this matter held on July 31, 1996, the parties orally agreed that the case could be decided based on a Stipulation of Facts. After the prehearing conference on this matter, the Court on August 1, 1996, ordered the parties to file a Stipulation of Facts by September 2, 1996 regarding WaterPro's Motion. The parties submitted their Stipulation of Facts to the Court on October 28, 1996 (hereinafter: "Stipulation").

II STATEMENT OF FACTS
A. The Motion by WaterPro

WaterPro's Motion seeks relief as to two separate, and unrelated construction projects in the State of Illinois: (1) the New Lenox Project; and, (2) the Arbury Project. Rhetorical Paragraphs One through Five of the Motion, sets out the contractual relationship between WaterPro and the Debtor as to both projects as follows:

1. That this is a Motion to obtain relief from stay provided in § 362(d) of Title 11, United States Code, and Fed R. Bankr.P. 4001 and/or for determination of abandonment pursuant to § 554(b).
2. That on June 13, 1996, the Debtor above named filed a Petition for relief under Chapter 11 of Title 11, United States Code.
3. That WaterPro is a supplier of underground utility material, doing business at 220 Westgate, Carol Stream, IL.
4. That WaterPro is the holder of certain secured claims in construction project funds.

5. On or about January 22, 1993 WaterPro entered into a contract with Petroleum Piping Contractors to provide and furnish underground utility material to the Debtor for use on construction projects on which the debtor was performing. A true and correct copy of the credit application submitted by debtor is attached hereto as Exhibit "A". WaterPro furnished Debtor with all of the materials required by Debtor's contracts and the materials were accepted upon the premises where said projects were being constructed and incorporated in and formed a part of said improvements.

WaterPro's Motion, as it relates to the Village of New Lenox Project ("New Lenox Project"), states as follows:

The New Lenox Project 6. (a) Water-Pro provided underground utility materials to the debtor for use on the construction project commonly known as the Wastewater Treatment Plant No. 2 Expansion for the Village of New Lenox, Illinois, Project No. 72824 ("the New Lenox Project") under the prime contract of Semford Contracting Co., Inc. with the Village of New Lenox dated May 8, 1995.
(b) On or about February 1, 1996 WaterPro completed all of the work required of it under the terms of its contract with Debtor on the New Lenox Project and there became due to Movant the sum of $16,431.25 on this project. After all just credits have been deducted, the sum of $16,431.25 still remains due and owing to Movant.
(c) Pursuant to Sections 770 ILCS 60/23 and 30 ILCS 550/1 and 2 of the Illinois Compiled Statutes, WaterPro has filed a Mechanics\' Lien claim against the project funds and a claim against the payment bond submitted by Semford Contracting and United States Fidelity and Guaranty Company.
(d) Attached hereto as Exhibits "B" and "C" are copies of the Movant\'s mechanics\' lien claim and bond claim on the New Lenox Project.

WaterPro's Motion, as it relates to the Arbury Waste Water Reclamation Facility Project ("Arbury Project"), states as follows:

The Arbury Wastewater Reclamation Facility
7. (a) WaterPro provided underground utility materials to the debtor for use on the construction project commonly known as the Arbury Wastewater Reclamation Facility at Frankfort, IL (the "Arbury Waste Water Reclamation Facility") under the prime contract of Jay Dee Contractors with the Citizens Utilities of Illinois.
(b) On or about March 21, 1996 WaterPro completed all of the work required of it under the terms of its contract with Debtor on the Arbury Waste Water Facility Project and there became due to Movant the sum of $4,791.14 on this project. After all just credits have been deducted, the sum of $3,425.99 still remains due and owing to Movant.
(c) Pursuant to Sections 770 ILCS 60/23 and 30 ILCS 550/1 and 2 of the Illinois Compiled Statutes, WaterPro has filed a Mechanics\' Lien claim against the project and a claim against the payment bond submitted by Jay Dee Contractors and Liberty Mutual Insurance Company.
(d) Attached hereto as Exhibits "D" and "E" are copies of the Movant\'s mechanics\' lien claim and bond claim on the Arbury Waste Water Reclamation Facility Project.
8. WaterPro and the general contractors and owners have now reached a tentative settlement of the aforementioned claims and it is understood that the Debtor does not dispute that WaterPro\'s claims are valid, due and owing.
9. That by operation of § 362(a) of Title 11, Movant is stayed from enforcing its Mechanics\' Lien and bond claims against the aforementioned projects, the proceeds thereof and/or against all necessary parties to be named and served notice thereof as required pursuant to the Illinois Mechanics\' Lien and bond claim statute.
10. That relief from the automatic stay is necessary for the following reasons: The owners and general contractors described herein are holding funds which have been earned by WaterPro by the delivery of building material to the construction projects identified above. Such funds have been earmarked by said parties for the payment of the materials supplied by WaterPro. Prior to the debtor filing its petition in the instant cause said owners and contractors were ready and willing to pay to WaterPro the amounts claimed by Movant or in the alternative Movant is prepared to proceed to foreclose on its mechanics lien and bond claims. Even though the debtor has no proper or sustainable interest in the project funds it seeks to claim those funds as its own as the assets of the estate. Only by modification of the order can WaterPro be assured, through foreclosure or settlement, of receiving the payment for the materials supplied to the projects described above.
11. That movant does not have, nor has it been offered, adequate protection for its interest in the project proceeds specified herein.
12. That the Debtor herein is not known to claim or possess any equity in the project proceeds identified herein.
13. That the property that is identified herein as the debtor due to Movant is not necessary to an effective reorganization.
14. If Movant is not permitted to foreclose its mechanics\' lien and bond claims as hereinabove set forth, it will suffer irreparable injury, loss and damage.
15. Except as set forth herein, WaterPro seeks no additional relief by either its lien and/or bond claims.

The Motion requests that the court grant WaterPro the following relief:

(1) Modify the automatic stay so as to permit WaterPro to continue to foreclose its mechanics\' lien and bond claims against the project commonly known as the Wastewater Treatment Plant No. 2 Expansion for the Village of New Lenox, Illinois, Project No. 72824, the proceeds of this project and/or the surety, or in the alternative for the Debtor to provide adequate protection to WaterPro Supplies Corporation;
(2) Modify the automatic stay so as to permit WaterPro to continue to foreclose its mechanics\' lien and bond claims against the project commonly known as the Arbury Wastewater Reclamation Facility at Frankfort, IL. the proceeds of this project and/or the surety, or in the alternative for the Debtor to provide adequate protection to WaterPro Supplies Corporation;
(3) Order Debtor and/or the Trustee to Abandon as its own those construction project funds and job proceeds against which Movant claims and authorizing and/or directing Debtor and/or Trustee to confirm their lack of interest therein; and
(4) For all other relief the Court deems proper.

Exhibit "A" to the Motion is a copy of the Credit Application executed by the Debtor's Secretary/Treasurer on January 22, 1993 and given to WaterPro at the initiation of their contractual relationship (hereinafter: "Agreement").

Exhibit "B" to the Motion is a copy of the "Public Lien Notice" dated April 30, 1986 by WaterPro to the Debtor as Subcontractor on the New Lenox Project, the General Contractor, Semford Construction Co., Inc. (hereinafter: "Semford"), several officials of the Project Owner, the Village of New Lenox (hereinafter: "New Lenox"), and the Bonding Company, United States Fidelity and Guaranty Company (hereinafter: "USF & G"). The Notice was then sent prior to the filing of the Debtor's Petition on June 13, 1996. This Notice states:

You are hereby notified that WaterPro Supplies Corporation, located at 220 S. Westgate Drive, Carol Stream, IL 60188, doing business as an underground utility material supplier (hereinafter referred to as "Claimant") has been employed by Petroleum Piping Contractors under a subcontract between said parties dated October 12, 1995, for the amount of $32,391.47 to provide underground utility materials under the contract of SEMFORD CONTRACTING CO., INC., with you, VILLAGE OF NEW LENOX (hereinafter referred to as "PRIME CONTRACT"), said PRIME CONTRACT is dated May 8, 1995 for Wastewater Treatment Plant No. 2
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