In re Remington Park Owners Ass'n, Inc., Case No. 14–71894–FJS

• Decision Date: 24 March 2016
• Docket Number: Case No. 14–71894–FJS
• Citation: 548 B.R. 108
• Court: U.S. Bankruptcy Court — Eastern District of Virginia
• Parties: In re: Remington Park Owners Association, Inc., Debtor.

548 B.R. 108

In re: Remington Park Owners Association, Inc., Debtor.

Case No. 14–71894–FJS

United States Bankruptcy Court, E.D. Virginia, Norfolk Division .

Signed March 24, 2016

Robert V. Roussos, Roussos, Glanzer & Barnhart, P.L.C., Norfolk, VA, for Debtor.

MEMORANDUM OPINION

FRANK J. SANTORO

, United States Bankruptcy Judge

This matter comes before the Court on the Motion for Relief from Order Granting Assumption and Assignment of Contract to Infrastructure Management VA, LLC (the "Motion to Reconsider") filed on behalf of Charter Communications VI, LLC ("Charter") on February 27, 2015. The Motion to Reconsider requests relief from the Court's order authorizing the chapter 7 trustee to assume and assign an executory contract pursuant to 11 U.S.C. § 365(a)

, entered on August 28, 2014. Remington Infrastructure Management, L.L.C. ("RIM") and Infrastructure Management VA, LLC ("IVMA") filed a joint objection to the Motion to Reconsider on March 13, 2015 (the "Objection"). On April 14, 2015, the Court convened a hearing on the Motion to Reconsider and the Objection, at which counsel for Charter, counsel for RIM and IVMA, counsel for Remington Park Owners Association, Inc., and the chapter 7 trustee appeared. At the hearing, the Court considered the arguments and evidence presented by the litigants. In lieu of closing arguments, the Court ordered the submission of briefs, summarizing the arguments and evidence presented at the hearing. See Transcript of April 14, 2015 Hearing at 112, ECF No. 40 (hereinafter "Tr."); see generally Post–Trial Order Setting Briefing Schedule and Making Initial Findings of Fact, ECF No. 44. Charter, RIM and IVMA, and Remington Park Owners Association, Inc., filed post-hearing briefs with the Court.¹

The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 157(b)

and 1334(b). Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409(a). This Memorandum Opinion constitutes the findings of fact and conclusions of law of this Court pursuant to Federal Rule of Civil Procedure 52, as incorporated into the Federal Rules of Bankruptcy Procedure by Rule 7052.

I. Procedural History

Remington Park Owners Association, Inc. (the "Debtor") filed a voluntary petition under chapter 7 of the United States Bankruptcy Code on May 22, 2014. Clara P. Swanson was appointed chapter 7 trustee (the "Chapter 7 Trustee").

On Schedule C—Executory Contracts and Unexpired Leases, filed contemporaneously with the voluntary petition, the Debtor described an executory contract between the Debtor and RIM entitled, "Agreement to Obtain Communications Services," and dated January 10, 2007² See generally Charter's Ex. 2, Agreement to Obtain Communication Services (hereinafter the "Communications Agreement").

The Communications Agreement arranged for the provision of Communication Services³ to the residents of the Remington Park development in Suffolk, Virginia (the "Homeowners"). See Communications Agreement at 1, § 2.1. At all relevant times prior to the filing of the chapter 7 petition in this case, the Debtor engaged RIM as its exclusive agent to coordinate, manage, and monitor the provision of Communication Services to the Homeowners via a third-party service provider, and to coordinate the design, installation, and operation of the telecommunications infrastructure necessary to provide such services. See id. § 2.1. RIM provided this service in exchange for compensation to be included with the price of Basic Services (together, the "Service Fees for Basic Services") paid by the Debtor, less a per residential dwelling unit processing fee remitted by RIM to the Debtor. Id. §§ 2.1, 2.5. The Debtor collected the Service Fees for Basic Services from the Homeowners with the Homeowners' monthly assessments, pursuant to the terms of agreements between the Debtor and each of the Homeowners (each a "Homeowners Agreement" and, collectively, the "Homeowners Agreements"). Id. §§ 2.2.1, 3.1. RIM engaged Charter to be the initial third-party service provider of Communications Services by separate agreement with an effective date of July 24, 2008, under which Charter agreed to provide bulk internet and video services to the Homeowners in exchange for a bulk billing fee paid solely by RIM.⁴ See Charter's Ex. 1, Nonexclusive Installation and Service Agreement (Owner Prewire), Bulk Service Cable Addendum, and Internet Services Bulk Rate Addendum (collectively, hereinafter, the "Bulk Services Agreement") at 9.⁵

On July 21, 2014, the Chapter 7 Trustee moved for authorization to assume and assign the Communications Agreement to IVMA pursuant to 11 U.S.C. § 365

in exchange for payment of $16,100.00 (the "Assignment Motion").⁶ The Chapter 7 Trustee provided notice of the Assignment Motion to counsel for the Debtor, counsel for RIM and IMVA, and the Office of the United States Trustee. See Assignment Motion at 1–2. No other party received notice, and the record reflects that the Court did not direct that any other party receive notice. See Fed. R. Bankr.P. 6006(c). Having received no objections to the Assignment Motion and following the expiration of the notice period, the Court granted the requested relief by order entered August 28, 2014 (the "Assignment Order").

Approximately six months after entry of the Assignment Order, Charter filed the Motion to Reconsider pursuant to Federal Rule of Civil Procedure 60

, as incorporated into the Federal Rules of Bankruptcy Procedure by Rule 9024. See Motion to Reconsider at 1. The Motion to Reconsider does not clearly specify which subsection(s) of Federal Rule of Civil Procedure 60 forms the basis for the relief sought by Charter, though it recites the majority of the substance of subsections (b)(1)-(3) and (6).⁷

See id. ¶ 18. In support of its request for relief from the Assignment Order, Charter alleges that neither Charter nor the Homeowners were served with notice of the Assignment Motion, which "materially affect[ed] their rights and interests," see id. ¶ 6, and deprived Charter and the Homeowners of due process, see id. ¶ 19. More specifically, Charter contends that, because the Homeowners were advised to discontinue payment of the Service Fee for Basic Services and because the Debtor's rights to bill the Homeowners under their respective Homeowners Agreements were not assumed and assigned by the Chapter 7 Trustee to any entity, Charter established individual service agreements with some Homeowners. Id. ¶ 14–15. However, Charter further contends that confusion subsequently arose because RIM maintained that Charter was obligated to provide bulk services under the Bulk Services Agreement. Id. ¶ 16.

At the hearing held on the Motion to Reconsider on April 14, 2015, Charter's representative testified that Charter stopped providing bulk services to the Homeowners—or "debulked"—and began establishing individual service agreements with Homeowners based upon its belief that "the bulk agreement was no longer in place, that it had been voided because of the bankruptcy." Tr. at 68; see also id. at 69–70, 81. Charter's understanding was based in large part upon a letter from Debtor's counsel to the Homeowners dated June 2, 2014, advising the Homeowners to cease making payments to the Debtor for Basic Services and, instead, arrange for services directly. Id. at 70; see also Charter's Ex. 3, Letter from Robert V. Roussos dated June 2, 2014. Accordingly, because the Debtor was no longer willing to collect any monies from the Homeowners pursuant to the Homeowners Agreements, Charter was no longer willing to provide services in bulk.⁸ Tr. at 71–72; see also Motion to Reconsider ¶ 14. Although the testimony of Charter's representative and that of RIM's representative differ as to whether Charter ultimately debulked in November 2014 or January 2015, the testimony from both representatives was consistent on the point that Charter had received payment from RIM for all of the months for which Charter provided bulk services, including any post-petition months. See Tr. at 79, 105.

The Objection filed by RIM and IVMA was the only response to the Motion to Reconsider. Principally, RIM and IVMA respond that (1) Charter lacks standing to seek reconsideration on the basis of any argument it asserts on behalf of the Homeowners, see Objection ¶ 6; and (2) Charter lacks standing to seek reconsideration because Charter is neither a party to nor a third-party beneficiary of the Communications Agreement, see id. ¶ 19.

II. Standing to Seek Relief Pursuant to Federal Rule of Bankruptcy Procedure 9024

and Federal Rule of Civil Procedure 60(b)

Before the Court can consider the merits of Charter's request for relief from the Assignment Order, the Court must first determine whether Charter has standing to seek reconsideration of the Assignment Order pursuant to Federal Rule of Civil Procedure 60(b)

, as incorporated into the Federal Rules of Bankruptcy Procedure by Rule 9024. Federal Rule of Civil Procedure 60(b) provides that ‘[o]n motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding .... ‘ (emphasis added). Fed.R.Civ.P. 60(b). Accordingly, under its plain language, Federal Rule of Civil Procedure 60(b) limits standing to a party or a party's legal representative. See id. While the term ‘party‘ speaks for itself, the term "legal representative" refers to individuals in a position tantamount to that of a party. Heyman v. M.L. Mktg. Co., 116 F.3d 91, 95 (4th Cir.1997) (holding that a chapter 7 trustee had standing to bring a Federal Rule of Civil Procedure 60(b) motion because ‘[the chapter 7 trustee] is the ‘ 'party's legal representative’ ‘ because ‘[h]is fault is tantamount to the fault of a party‘); see also Kem Mfg. Corp. v. Wilder, 817 F.2d 1517, 1520 (11th Cir.1987) (‘The cases make clear that the term legal representative was intended to reach only those individuals who were in a position tantamount to that of a party or whose legal rights were otherwise...