In re T 2 Green, LLC

• Decision Date: 12 February 2007
• Docket Number: Bankruptcy No. 05-05781-jw.,Adversary No. 05-80154-jw.
• Citation: 364 B.R. 592
• Court: U.S. Bankruptcy Court — District of South Carolina
• Parties: In re T 2 GREEN, LLC, d/b/a Kings Grant Golf Course, Debtor. King's Grant Golf Acquisition, LLC as successor to T 2 Green, LLC, Plaintiff, v. J.L. Abercrombie, et al., Defendants.

364 B.R. 592

In re T 2 GREEN, LLC, d/b/a Kings Grant Golf Course, Debtor King's Grant Golf Acquisition, LLC as successor to T 2 Green, LLC, Plaintiff, v. J.L. Abercrombie, et al., Defendants.

Bankruptcy No. 05-05781-jw.

Adversary No. 05-80154-jw.

United States Bankruptcy Court, D. South Carolina.

February 12, 2007.

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Julio E. Mendoza, Jr., Suzanne Taylor Graham Grigg, Nexsen Pruet Adams Kleemeier, LLC, Columbia, SC, for Debtor and Plaintiff.

Mark W. McKnight, Charleston, SC, for Plaintiff.

Charles Pelot Summerall, IV, Buist, Moore, Smythe & McGee, PA, Charleston, SC, Richard R. Gleissner, Columbia, SC, for Defendants.

JUDGMENT

JOHN E. WAITES, Bankruptcy Judge.

Based upon the Findings of Fact and Conclusions of Law made in the attached Order of the Court, the Motion to Reconsider filed by John Atkinson, Elisabeth Beebe, Tammy Bang, Mike Thomas, and Dan Gaudreault is denied.

ORDER DENYING MOTION FOR RECONSIDERATION

This matter comes before the Court on the Motion for Reconsideration ("Motion") filed by the following defendants: Elisabeth J. Beebe Trust (which, according to the Motion, is listed as Defendants Robert Beebe, Sr., Robert Beebe, Jr., Betty Beebe, Elizabeth Beebe and Monica Beebe) (collectively, the "Beebe Trust"), Tammy Lynn Hale-Bang (who, according to the Motion, is listed as Defendant Tami Bang), Michael B. Thomas (who, according to the Motion, is listed as Defendant Mike Thomas), Debra Thomas, and Dan Gaudreault (collectively referred to herein as the "Movants"). An Objection and Response (the "Objection") to the Motion was filed, by the King's Grant Homeowners Association, Inc. (the "HOA") and the property owners within the King's Grant on the Ashley Subdivision listed on Exhibit A to the Answer and Counterclaim filed on August 2, 2005, less and except the Movants. The HOA and the homeowner defendants described in the Objection are collectively referred to herein as the "Objecting Defendants". KG Golf Acquisition, LLC ("KGGA" or "Plaintiff'), the substitute plaintiff in this adversary proceeding, joined in the Objecting Defendants' positions at the hearing on the Motion.

This Court has jurisdiction over this proceeding pursuant to 28 U.S.C.A. §§ 1334(a) and (b). Pursuant to Fed. R.Civ.P. 52, made applicable to this proceeding by Fed. R. Bankr.P. 7052,¹ the Court makes the following Findings of Fact and Conclusions of Law.²

FINDINGS OF FACT

1. King's Grant on the Ashley is a residential subdivision (the "Subdivision") in Dorchester County, South Carolina. The individual defendants, including the Movants, are property owners within the Subdivision.

2. Adjacent to the Subdivision is a large tract of land, approximately 177 acres (the "Property"), that was owned and operated by T 2 Green, LLC ("Debt or") and its predecessors as a country club with certain amenities, including an 18 hole golf course.

3. The Property and the Subdivision were developed by Debtor's predecessor in the early 1970s and are the subject of certain restrictive covenants. These covenants provide residents of the Subdivision with the right to use certain amenities located on some unspecified, portion of the Property upon the payment of dues to the owner of the Property.

4. Pursuant to the terms of these covenants, the restrictions on the Property may be amended by a vote of fifty-one (51%) percent of the property owners within the. Subdivision and the owner of the Property.

5. Debtor filed a voluntary bankruptcy petition under chapter 11 with this Court on May 17, 2005 (the "Bankruptcy Case") and the Property became property of the bankruptcy estate pursuant to 11 U.S.C. § 541. The Bankruptcy Case was assigned case number 05-05781.

6. Neither the Movants nor any other homeowner within the Subdivision individually filed a claim against Debtor's estate. The HOA filed an unliquidated proof of claim.

7. Shortly after Ming its petition, Debtor commenced this adversary against the Movants and the other named defendants (the "Adversary"). Debtor sought to have this Court interpret the restrictive covenants and find that the covenants did not require Debtor to maintain the amenities on the Property in perpetuity for the benefit of the homeowners within the Subdivision under various theories.

8. The Movants did not file an answer to the Adversary but rather they, and numerous other residents of the Subdivision granted a Special Limited Power of Attorney ("POA") to the HOA so that the HOA could defend the Adversary on behalf of the Movants and take any and all actions within the Adversary or the Bankruptcy Case deemed by the HOA necessary to protect the Movants' rights.

9. The POA granted the HOA the right to settle the Adversary subject to the settlement being approved by voting requirements contained in the restrictive covenants and in the HOA's by-laws.

10. The Movants were allowed to revoke the POA by filing a "Notice of Revocation" in the "Bankruptcy Case," defined by the POA as bankruptcy case number 05-05781.

11. Prior to settlement of the Adversary, the Movants did not file a Notice of Revocation in the Bankruptcy Case.

12. At all times prior to the Motion in the Adversary and the Bankruptcy Case, HOA and its HOA's attorneys were authorized to act and acted on behalf of the Movants in the Bankruptcy Case and Adversary.

13. The HOA filed a timely answer to the complaint in the Adversary and filed a counterclaim against Debtor seeking a declaration that the entire portion of the Property was restricted in use to that of a country club and golf course with related recreational amenities.

14. Debtor and the HOA subsequently filed competing motions for summary judgment.

15. After a lengthy hearing, the Court entered a detailed order which granted in part and denied in part the HOA's motion for summary judgment (the "Partial Summary Judgment Order"). The Partial Summary Judgment Order determined:

a. that the Court had jurisdiction over the Adversary pursuant to 28 U.S.C. §§ 1334(a) and (b), and 157(a) and (b), that the Adversary was a core proceeding pursuant to 28 U.S.C.A. § 157(b)(2)(A), (M)," and (0), and that venue of the Adversary was proper in this Court pursuant to 28 U.S.C.A. § 1409(a);

b. that some portion of the Property was restricted to recreational use but that the Court could not determine the size, scope, location, and quality of the restriction on a motion for summary judgment leaving open the question as to whether all of the Property was restricted or whether some lesser portion of the Property was restricted; and

c. that Debtor's defenses to the enforcement of the restrictions raised issues of fact that could not be determined on a motion for summary judgment.

16. The Court reserved jurisdiction to determine the remaining issues, together with the Debtor's equitable defenses, at trial.

17. After entry of the Partial Summary Judgment Order, Debtor filed its Disclosure Statement and Plan of Liquidation on March 15, 2006. The proposed plan provided for the sale of the Property to KGGA. Debtor filed an Amendment to Plan of Liquidation on April 12, 2006 (as amended, the "Plan"). Debtor's Plan contained the following provisions pertaining to the Debtor's transfer of the Property to KGGA and this Adversary:

a. As provided in Section 2.2 of the Plan, the sale of the Debtor's Property to KGGA was subject to all restrictions on the Property found by the Court to exist under the Partial Summary Judgment Order or otherwise in the Adversary, and KGGA reserved the right to contest the scope and enforceability of the restriction(s) on the. Property.

b. Pursuant to Section 2.4:

"Notwithstanding any other provision of this Plan, confirmation of the Plan and transfer of the Property will be without prejudice to the rights of the Defendants in the Adversary Proceeding, and the Defendants reserve all of their rights asserted in the Adversary Proceeding or otherwise. Post-confirmation, the Court will retain jurisdiction of the core Adversary Proceeding (despite closure of the Case). The Purchaser (or its successor or assign, if applicable) will, upon recordation of the deed to the Property from T2 Green and the payment of the cash payments contemplated by this Plan, become T2 Green's successor in interest for purposes of the Adversary Proceeding. The Purchaser will `step into the shoes of', and be substituted for, T2 Green as Plaintiff in the Adversary Proceeding, for all intents and purposes. The parties will be bound by and receive the benefit of all prior proceedings including, without limitation, the Order and Judgment entered on February 28, 2006.

The Purchaser and the Defendants will jointly ask the Bankruptcy Court to schedule, a status conference approximately 45 days after the deed to the Property is recorded (or as soon thereafter as Judge Waites can schedule a status conference in Charleston). If, by the date of the status conference, the Purchaser and the Defendants have not entered into a written agreement resolving the Adversary Proceeding, which agreement will be subject to approval by this Court (without the necessity of any further notice), either the Purchaser and/or the Defendants may ask the Court to address any necessary pre-trial matters and schedule the Adversary Proceeding for trial."

c. Pursuant to Section 7.2:

"... pursuant to Section 2.4 the Debtor will no longer be a party to the Adversary Proceeding after the transfer of the Property is completed."

18. The Plan was confirmed by Order entered on April 14, 2006 and Order Supplementing Order Finally Approving Disclosure Statement and Confirming Chapter 11 Plan entered on April 28, 2006. After confirmation of the Plan and Debtor's transfer of the Property to KGGA, monetary distributions to creditors were paid and the underlying bankruptcy case Was closed on June 30, 2006.

19. As reflected in the Order entered on May 19, 2006, KGGA became...