In re Ravick Corp.
| Decision Date | 30 August 1989 |
| Docket Number | Bankruptcy No. 88-08017. |
| Citation | 106 BR 834 |
| Parties | In re RAVICK CORPORATION, Debtor. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
John W. Hargrave, Voorhees, N.J., for debtor.
Lampf, Lipkind, Prupis & Petigrow by Scott D. Jacobson, West Orange, N.J., for Gary Prisand, Mt. Laurel Development Associates and Union Mill Farms Associates.
Markowitz & Zindler by Michael A. Zindler, for Mainstay Federal Sav. and Loan Assn.
The matter before the court is a motion, filed on April 10, 1989 by Gary Prisand ("Prisand"), Mt. Laurel Development Associates ("MLDA") and Union Mill Farms Associates ("UMFA") (hereinafter referred to collectively, where appropriate, as "Prisand"), (1) for dismissal of Ravick Corporation's (the "debtor") Chapter 11 bankruptcy case pursuant to 11 U.S.C. § 1112(b), (2) for this court to abstain from exercising its jurisdiction over a certain adversary proceeding before it entitled Ravick Corporation v. Gary Prisand, Mt. Laurel Development Associates, and Union Mill Farms Associates, Adversary No. 88-1089, pursuant to 28 U.S.C. § 1334(c)(1) and (2) for modification of the automatic stay pursuant to 11 U.S.C. § 362(d) to allow the continuation of an action entitled Gary Prisand et al. v. Ravick Corporation and Raymond L. Girard Docket No. C-16251-88E, in the Superior Court of New Jersey, Chancery Division, Burlington County. Because the court finds that the debtor's Chapter 11 bankruptcy case was not filed in good faith within the meaning of § 1112(b), and that "cause" exists for dismissal of the petition, the debtor's Chapter 11 case is hereby dismissed. The relevant facts of this matter follow.1
In 1968 Raymond L. Girard purchased 104.158 acres of undeveloped land (hereinafter the "Property"), zoned R-3 residential, described as Lots 1 and 2, Block 278 on the tax map of Mt. Laurel Township, located on Union Mill Road, Mt. Laurel Township, Burlington County, at a cost of $2,000.00 per acre (Deposition Transcript of January 13, 1989 of Raymond L. Girard at pp. 22, 36-37, 62) (hereinafter "Girard Dep. at ___"). Girard apparently contributed the Property to the Ravick Corporation in consideration for his receipt of the debtor's common stock (Girard Dep. at 63). Girard is presently the sole shareholder, officer and employee of the Ravick Corporation (Girard Dep. at 8). In July 1983 Ravick Corporation applied to the Planning Board of Mt. Laurel Township to subdivide and develop 512 dwelling units ("The Project") on the Property (Affidavit of Girard dated August 22, 1988 at ¶ 3) (hereinafter Girard Affidavit # 1 at ___). On May 9, 1985, Ravick received preliminary plat approval for Phase I of the subdivision, Phase 1 consisting of 50 single family units (Girard Affidavit # 1 at ¶ 6).
In 1983 the New Jersey Supreme Court issued the landmark decision of Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel, 92 N.J. 158, 456 A.2d 390 (1983), which decision obligated municipalities to provide low and moderate income housing through the mechanism of land use regulations. Ravick Corporation was made a party to a multi-party litigation in the Superior Court of New Jersey, Atlantic County involving Mt. Laurel Township. The final consent order, issued by The Honorable L. Anthony Gibson on September 12, 1985 directed Mt. Laurel Township to permit Ravick to construct up to 512 dwelling units on the Property and required the developer to reserve 15% of the units to low and moderate income housing.
By way of resolution dated September 26, 1985, the Mt. Laurel Township Planning Board granted to the debtor final approval for development of 50 single family homes on the Property. On October 10, 1985, the Planning Board granted preliminary approval for Phase II (the remainder of the single family detached units) and Phase III (the townhouse units) of the development project (hereinafter referred to collectively as the "Project"). The Planning Board expressly conditioned preliminary approval of Phases II and III on, inter alia, Ravick's procuring a valid and current stream encroachment permit from the New Jersey Department of Environmental Protection ("DEP"). The preliminary approval, however, did not require approval by the United States Army Corps of Engineers ("Army Corps").
According to the Honorable Harold B. Wells, III's letter opinion dated October 18, 1988 (hereinafter "Letter Opinion") in the state court matter of Prisand v. Ravick, C-16251-88E, granting Prisand's motion for partial summary judgment for specific performance of the contract, see infra, Ravick Corp. received preliminary approval for an R-3 single family development of 141 units in 1978. As one of the conditions of preliminary approval, Ravick was required to procure a stream encroachment permit from DEP, which the seller did without applying to the United States Army Corps of Engineers. That plan, however, was never implemented and the permit expired (See Letter Opinion, p. 2).
Ravick contends that in November 1985, it made application to DEP for a stream encroachment permit (Girard Affidavit # 1 at ¶ 11). On March 20, 1986, the debtor's engineers received a letter from the DEP, Division of Water Resources, which stated:
It has been determined that your submission of a revised project delineation on U.S.G.S. scale dated March 14, 1986 accurately represents the project site as shown on the site plan. This delineation indicates that the project borders but does not contain any wetlands, based on U.S. Fish and Wildlife Service\'s National Wetlands Inventory maps. (Emphasis added in Affidavit).
(Girard Affidavit at ¶ 12; See also Letter Opinion at p. 3).
On September 15, 1986 Ravick Corporation and Raymond Girard entered into a written Contract of Sale ("Contract") with Gary M. Prisand for the purchase of the Property by Prisand. The Contract covered 510 fully improved lots and townhouse units which are part of the subdivision known as Union Mills Farms (Agreement at ¶ 1). MLDA is a New Jersey partnership which is the assignee of Gary Prisand's rights under the Contract (See Verified Complaint entitled Gary Prisand, Mt. Laurel Development Associates and Union Mill Farms Associates, L.P. v. Ravick Corporation and Raymond L. Girard at ¶ 2, filed in the Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. C-162-21-88E) (hereinafter "State Court Complaint"). UMFA is a New Jersey partnership and is an assignee of certain of MLDA's interests in the Contract of Sale and is developing the Property. (See State Complaint at ¶ 3).
Paragraph 2 of the Contract sets forth the purchase price and states that Prisand would pay $21,208.23 for each lot and unit. Paragraph 4.1 of the Contract states in relevant part that "the purchase price of $21,208.23 per lot or unit is to be allocated $11,568.23 for the land and governmental approvals and $9,640.00 for the improvements to be made with respect to each lot and unit by Ravick Corporation."
Pursuant to Paragraph 3 of the Contract, the parties scheduled seven closings to consummate the transaction. Paragraph 3 states in relevant part:
Paragraph 9 of the Contract sets forth the seller's representations and covenants wherein the debtor and Girard warranted and represented to Prisand that: (a) the Subject Property was zoned and improved for construction of 510 residential units, consisting of 238 single-family detached units and 272 single-family attached townhouse units; and (b) the debtor and Girard would obtain all of the necessary and non-appealable governmental approvals for The Project by the initial closing. Paragraph 9 of the Contract states in pertinent part:
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