In re Premier Golf Props., LP

Decision Date27 May 2016
Docket NumberBANKRUPTCY NO. 15–01068–CL11
Citation564 B.R. 660
Parties IN RE: PREMIER GOLF PROPERTIES, LP, Debtor.
CourtU.S. Bankruptcy Court — Southern District of California

Darvy Mack Cohan, La Jolla, CA, Jack Fitzmaurice, Fitzmaurice & Demergian, Chula Vista, CA, for Debtor.

Garrick A. Hollander, Peter W. Lianides, Winthrop Couchot, P.C., Newport Beach, CA, Richard M. Kipperman, La Mesa, CA, for Trustee.

Haeji Hong, Office of the U.S. Trustee, San Diego, CA, for United States Trustee.

ORDER OVERRULING DEBTOR'S OBJECTION TO CLAIM NO. 10 OF COTTONWOOD CAJON ES, LLC
Christopher B. Latham, Judge, United States Bankruptcy Court

IT IS HEREBY ORDERED as set forth on the continuation page(s) attached, numbered two (2) through forty-nine (49).

The court has considered Premier Golf Properties, LP, Edgewood Distributors & Management, Inc., R.H. Rodriguez, Inc., and Premier Golf Property Management, Inc.'s (collectively, "Debtor") combined motion for reconsideration and supplemental objections to Cottonwood Cajon ES, LLC's ("Claimant") proof of claim number 10–1 (the "Claim"), Claimant's opposition, Debtor's reply, the respective supporting evidence, its own docket, and the parties' oral argument at the hearing on this matter. For the following reasons, the court: (1) overrules without prejudice Debtor's objection that the Claim is overstated; and (2) overrules the remainder of the claim objection.

Background
Factual Background and Procedural History

The parties are familiar with the material facts. Debtor owns and operates a golf course and related concerns in Rancho San Diego. On December 21, 2007, Debtor gave Far East National Bank ("FENB") a $11,500,000 promissory note (ECF No. 193–1, p. 1). On December 24, 2007, the parties entered into a loan agreement evidencing the promissory note and underlying obligation (ECF No. 193–1, pp. 21–45) (the "Loan Agreement"). Henry Gamboa ("Mr. Gamboa") personally guaranteed the loan, promissory note, and the Loan Agreement. A first position trust deed secures Debtor's obligations under the Loan Agreement and promissory note. On December 24, 2007, as additional security for the loan, the parties executed a security agreement in FENB's favor (ECF No. 193–1, pp. 10–17) (the "Security Agreement"). Under the Security Agreement's terms, all of Debtor's present and future obligations owed to FENB are secured by all of its present and after-acquired personal property. In relevant part, the Loan Agreement provides:

Section 1.3(a): Subject to Section 1.3(b), Borrower shall pay interest on the unpaid principal amount of the Loan from the Closing Date until such principal amount is paid in full, at a rate per annum equal to the Prime Rate plus one-half of one percent (0.50%);
Section 1.3(b): Notwithstanding Section 1.3(a), after the occurrence and during the continuance of a Default or Event of Default, Borrower shall pay interest on the outstanding Obligations at a rate per annum equal to (i) the interest rate calculated in accordance with Section 1.3(a), plus (ii) five percent (5.00%) (the "Default Rate") from the date such Default or Event of Default first occurred. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand;
Section 1.4: The Loan shall mature on December 26, 2009 (the "Maturity Date") or any earlier date on which the Loan shall be required to be paid in full, whether by acceleration or otherwise;
Section 6.16: To the extent Borrower becomes obligated on any subordinated indebtedness, Borrower shall enter into a subordination agreement in form and substance satisfactory to Lender and Borrower shall not, directly or indirectly, make any payment of principal, interest or other obligations with respect to any subordinated loan (including any redemption, purchase, prepayment, retirement, defeasance or other acquisition for value);
Section 7.2: Borrower shall not, without Lender's prior written consent, incur, permit or suffer to exist additional indebtedness for borrowed money or liability under guarantees or reimbursement obligations except for ... (b) subordinated loans which comply with Section 6.16 and which do not exceed One Million Five Hundred Thousand Dollars ($1,500,000) in aggregate outstanding principal amount ....;

The Loan Agreement. Section 8.1 sets forth 12 independent "events of default," including:

(a) Failure of Borrower to pay when due (i) the principal balance of the Loan, or (ii) within five (5) days of the due date, any of the other payment or deposit obligations of Borrower to Lender, including, without limitation, any monthly payment of principal and interest, failure to make a Ratio Coverage Deposit as required by Section 6.14 or any other payment due under this Agreement; or
(c) Breach of any covenant other than as set forth in subsections (a) and (b) above which is not cured within thirty (30) days after written notice; provided, however, if such breach cannot by its nature be cured within thirty (30) days, and Borrower diligently pursues the curing thereof (and then in all events cures such failure within sixty (60) days after the original notice thereof), Borrower shall not be in default hereunder; or
(d) A petition under any Chapter of Title 11 of the United States Code or any similar law or regulation is filed by or against Borrower, General Partner or Guarantor (and in the case of an involuntary petition in bankruptcy, such petition is not discharged within sixty (60) days of its filing); or
(f) The occurrence of a default and the expiration of any cure period available to Borrower applicable thereto under any Loan Document; or
(g) Borrower shall default in the payment of any indebtedness (other than the Obligations) and such default is not cured within the time, if any, specified therefor in any agreement governing the same ....;

Id . In addition, § 9.9 provides that the covenants and agreements contained in the loan documents shall bind both Debtor and FENB's successors and assigns. Id . Both parties' representatives signed the Loan Agreement. A February 1, 2010 amendment to the Loan Agreement and promissory note extended the note's maturity date to March 24, 2010.

On March 25, 2010, Debtor defaulted under the Loan Agreement by, inter alia , failing to repay the entire outstanding balance by the maturity date. FENB then took steps to foreclose on the property. On January 28, 2011, Debtor responded by bringing a complaint against FENB in San Diego County Superior Court (Case No. 37–2011–00065341–CU–BT–EC) seeking an injunction preventing FENB from foreclosing (the "State Court Action"). Debtor submitted a voluntary Chapter 11 petition on May 2, 2011 (Case No. 11–07388–PB11) (the "First Bankruptcy Case"). On April 16, 2012, after receiving stay relief, FENB responded with a cross-complaint against Mr. Gamboa for breach of the guaranty.

The First Bankruptcy Case remained pending for slightly under three years before its May 26, 2014 dismissal, but Debtor never confirmed a plan. The case was dismissed by a March 18, 2014 stipulation between Debtor and FENB. But the decision to dismiss it arose from a December 23, 2013 Settlement and Release Agreement (ECF No. 193–1, pp. 2–9) (the "Settlement Agreement")—not to be confused with the July 10, 2015 Forbearance and Settlement Agreement between Debtor and Claimant that was the subject of extensive litigation in the present case (ECF No. 79–1) (the "Forbearance Agreement").

In relevant part, the Settlement Agreement states that Debtor defaulted under the Loan Agreement on March 25, 2010 by, viz ., failing to repay the entire outstanding balance of the loan upon maturity. In addition, the parties agreed that the total amount Debtor or Mr. Gamboa owed FENB as of November 18, 2013 was $15,379,362.49, consisting of $10,874,610.79 in principal, plus $3,082,144.61 in interest, and $1,422,607.09 in legal fees and costs (the "Total Indebtedness"). Further:

Section 3.1: Premier shall pay the amount of Eight Million Five Hundred Thousand and 00/100 Dollars ($8,500,000.00) (the "Lump Sum Payment") to Lender on or before March 1, 2016 (the "Payment Date"). During the time between the execution date of this Agreement and the Payment Date, Premier and Mr. Gamboa agree to the following terms:
Section 3.1.1: Premier and/or Mr. Gamboa shall pay all amounts necessary to bring current all past due real property taxes, which are estimated to total approximately One Million Seven Hundred Thousand and 00/100 Dollars ($1,700,000.00), by no later than December 31, 2013 or within 90 days of the execution of this Agreement, whichever date is later ....;
Section 3.1.1.1: Premier and Mr. Gamboa further agree that, upon repayment of the past due taxes, they shall keep any and all new taxes assessed to the Property paid current, up until the time they make the Lump Sum Payment to Lender;
Section 3.1.1.2: If, for any reason, the relevant taxing authorities notice a sale of the Property based upon the existing delinquent taxes, Lender may advance the amounts necessary to be paid to cancel the tax sale. Premier shall pay Lender for the amounts advanced, if any, by December 31, 2013 or within 90 days of the execution of this Agreement, whichever is later ....
Section 3.1.2: Premier and/or Mr. Gamboa shall make interest-only payments beginning on January 10, 2014, and continuing on the tenth day of each month thereafter until the Payment Date, with such monthly payments calculated based upon the principal amount of Eight Million Five Hundred Thousand and 00/100 Dollars ($8,500,000.00), at a fixed interest rate of six percent (6%) per annum (the "Monthly Payments"); and
Section 3.1.5: The amount due and owing under the Loan Documents shall remain at the amount of the Total Indebtedness until such time as Premier makes the Lump Sum Payment. Upon payment of the Lump Sum Payment, and so long as there has been no other Event of Default under this Agreement,
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