In re Spillman Development Group, Ltd.
| Decision Date | 29 January 2009 |
| Docket Number | Bankruptcy No. 05-14415-FM.,Adversary No. 08-1018. |
| Citation | 401 B.R. 240 |
| Parties | In re SPILLMAN DEVELOPMENT GROUP, LTD., Debtor. Spillman Investment Group, Ltd., Stephen W. Gurasich, Jr., Donald C. Walden, Robert H. West, Morton L. Topfer, Alan Topfer, And Richard Topfer, Plaintiffs, v. American Bank of Texas, Ronald E. Ingalls, Trustee, and Fire Eagle, LLC, Defendants. Ronald E. Ingalls, Trustee, Third-Party Plaintiff, v. Palisades Developers, Ltd., Third-Party Defendant. |
| Court | U.S. Bankruptcy Court — Western District of Texas |
Eric J. Taube, Hohmann, Taube & Summers, L.L.P., Mark Curtis Taylor, Hohmann & Taube LLP, Austin, TX, for Debtor.
Ronald E. Ingalls, Austin, TX, for Trustee.
Plaintiffs filed their Motion for Summary Judgment against Defendants on November 3, 2008. Defendant, Fire Eagle, LLC, filed its Motion for Summary Judgment on December 2, 2008. Both Motions require a determination of the legal effect of Fire Eagle's credit bid purchase of assets of Debtor, Spillman Development Group, Ltd., in a § 363 sale conducted by this Court. As such, this Court has jurisdiction of this proceeding pursuant to 28 U.S.C. § 1334(a) and (b), 28 U.S.C. § 157(a) and (b)(1), 28 U.S.C. § 151 and the Standing Order of Reference of all bankruptcy related matters by the United States District Court, Western District of Texas. Although this proceeding involves claims of third parties against Fire Eagle, this is a core proceeding as the claims are dependent upon interpretation of rights created in bankruptcy specifically those rights associated with § 363 of the Bankruptcy Code. In re Stonebridge Technologies, Inc., 430 F.3d 260 (5th Cir.2005).1 This Memorandum Opinion is being issued in accordance with Bankruptcy Rule 7056 as a statement regarding material facts not in genuine dispute and conclusions of law based thereon.
The Plaintiffs instituted this adversary proceeding seeking a determination of the legal effect of a sale of certain of the Debtor's estate's assets in open court pursuant to Final Order of this Court entered in the primary case in which this adversary pends. Specifically, Plaintiffs seek a determination as to the extent to which, if any, certain guarantees of the individual Plaintiffs and a certificate of deposit pledged by Spillman Investment Group, Ltd. still secure the first lien indebtedness which was also secured by the assets so sold. This debt was held on the Petition Date by American Bank of Texas, but as of the date of the sale, November 30, 2006, it had been purchased by and transferred to Fire Eagle LLC, the holder of the second lien indebtedness against the assets sold.
Plaintiff Spillman Investment Group, Ltd. alleges it had pledged a certificate of deposit in the amount of $1,200,000.00 to American Bank of Texas as collateral for the first lien debt and seeks a ruling by this Court that the effect of Fire Eagle LLC's $9.3 million credit bid was to fully pay the first lien indebtedness it had purchased from American Bank of Texas and that the certificate of deposit it had placed as security for that debt should now be released back to it.
Plaintiffs Gurasich, Walden, West, and the three Topfers allege they were guarantors of the first lien debt which Fire Eagle, LLC bought from American Bank of Texas and seek a ruling that the legal effect of the credit bid sale to Fire Eagle was that the first lien indebtedness was fully paid and that their guarantees should be determined to be released and ordered returned to them.
The foregoing relief is sought under the Federal Declaratory Judgment Law as is contained in 28 U.S.C. § 2201-2202.
The Complaint also contains a request for attorney's fees under § 37.009 of the Texas Civil Practice and Remedies Code. The allegation is that such relief has also been requested by Plaintiffs in an interpleader action instituted by American Bank of Texas on October 10, 2006 in the District Court of Travis County, Texas, 201st Judicial District Court, under Cause No. D-GN-06003885. There is a fourth cause of action requesting damages and attorney's fees against Fire Eagle for an alleged breach of contract, to-wit: failure to release the certificate of deposit and the guarantees after the debt was paid which is not the subject of Plaintiffs' Motion for Summary Judgment.
To all of that Fire Eagle filed its Rule 12(b) Motion to Dismiss on April 11, 2008. Such Motion was denied on September 2, 2008. Fire Eagle filed a Motion for Leave to Appeal which was denied by the United States District Court on November 6, 2008.
Fire Eagle has answered and both parties have filed Motions for Summary Judgment alleging there are no issues of material fact but which are contested each by the other on legal grounds. The Motion of Plaintiffs is for Partial Summary Judgment on one discreet issue. Fire Eagle's Motion likewise addresses the same issue.
The following facts are without genuine dispute and the documents where noted as Plaintiffs' Motion for Summary Judgment Exhibits are evidence used by both Plaintiffs and Fire Eagle in their cross Motions.
For the purposes of identification, the parties referred to are Spillman Development Group, Ltd. ("Debtor" or "SDG"), Spillman Investment Group, Ltd. ("SIG"), Steven W. Gurasich, Jr. ("Gurasich"), Donald G. Walden ("Walden"), Robert H. West ("West"), Morton L. Topfer, Richard Topfer, Alan Topfer (collectively the "Topfers"), American Bank of Texas ("ABT"), Ronald E. Ingalls ("Chapter 7 Trustee") and Fire Eagle, LLC ("Fire Eagle").
1. ABT, as Senior Lender, and Fire Eagle, as Junior Lender, entered into an Inter-Creditor Agreement ("Inter-Creditor Agreement") October 29, 2001. The Inter-Creditor Agreement defined the relationship and creditor rights of ABT, which was to provide a loan for $7,200,000.00 ("the Senior Loan") to SDG and Fire Eagle which was to provide a loan of $4,100,000.00 ("the Junior Loan") to SDG all for the development of an 18-hole golf course, clubhouse and related facilities and amenities in Bee Cave, Texas located on property more particularly described in The Inter-Creditor Agreement.
2. Thereafter, SDG, as Borrower, and ABT, as Lender executed a Development Loan Agreement ("Loan Agreement") effective November 20, 2001. Plaintiffs' MSJ Exhibit 1.
3. Pursuant to the terms of the Loan Agreement, SDG executed a Promissory Note ("First Note") dated November 20, 2001, in the original principal sum of $7,200,000.00 and payable to the order of ABT. Plaintiffs' MSJ Exhibit 2.
4. Payment of the First Note was secured by a Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing ("Deed of Trust") entered into as of November 20, 2001, executed by SDG for the benefit of ABT, and covering Land, Ground Lease, Fixtures, Improvements, Personalty, Contracts, Leases and Rents as therein described. Plaintiffs' MSJ Exhibit 3.
5. The security interest in personal property retained in the Deed of Trust was perfected by the filing of a UCC Financing Statement in the Official Public Records of Travis County, Texas, on November 21, 2001.
6. The security interest in personal property retained in the Deed of Trust was also perfected by the filing of a UCC Financing Statement with the Texas Secretary of State on November 26, 2001.
7. The UCC Financing Statement was re-recorded with the Texas Secretary of State to complete the legal description attached thereto on January 7, 2002.
8. Payment of $2,786,160.00 of the principal of the First Note was guaranteed by Gurasich pursuant to the terms of a Limited Guaranty executed as of November 20, 2001 by Gurasich. ("Gurasich Limited Guaranty of the First Note"). Plaintiffs' MSJ Exhibit 24.
9. Payment of $971,280.00 of the principal of the First Note was guaranteed by Walden pursuant to the terms of a Limited Guaranty executed as of November 20, 2001, by Walden ("Walden Limited Guaranty of the First Note"). Plaintiffs' MSJ Exhibit 25.
10. On or about April 1, 2002, SIG provided SDG with $1,200,000.00. This transaction was evidenced by a promissory note ("CD Note") dated April 1, 2002, in the original principal sum of $1,200,000.00 executed by SDG and payable to the order of SIG. The CD Note provided that it would be payable in full on May 7, 2003. Plaintiffs' MSJ Exhibit 4.
11. On or about April 1, 2002, SDG used the $1,200,000.00 obtained from SIG to purchase a certificate of deposit ("SDG CD") in the amount of $1,200,000.00 from ABT, being Certificate of Deposit Account No. 98117250. This certificate of deposit was used to collateralize the First Note with ABT pursuant to the Loan Agreement. The SDG CD had a maturity date of May 20, 2003. Plaintiffs' MSJ Exhibit 5.
12. Payment of the First Note was further secured by an Assignment and Pledge of Deposits ("SDG Assignment") executed April 1, 2002 by SDG in favor of ABT covering all of SDG's right, title and interest in the SDG CD.
13. The Loan Agreement was amended by a First Amendment to Development Loan Agreement ("First Amended Loan Agreement") entered into effective May 30, 2002, by SDG as Borrower and ABT as Lender. The First Amended Loan Agreement, among other changes, changed the guarantors to Bischoff (not a party to this action) Gurasich, Walden, West and the Topfers and changed the requirement for a certificate of deposit from $2,700,000.00 to $1,200,000.00.
14. Gurasich executed an Amended and Restated Limited Guaranty ("Amended Gurasich Limited Guaranty of the First Note") dated May 30, 2002, which amended the Gurasich Limited Guaranty of the First Note to limit Gurasich's guaranty of the First Note to principal of $2,000,000.00. Plaintiffs' MSJ Exhibit 26.
15. Walden executed an Amended and Restated Limited Guaranty ("Amended Walden Limited Guaranty of the First Note") dated May 30, 2002, which amended the Walden Limited Guaranty of the First Note to limit Walden's...
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