In re Thrifty Dutchman, Inc.
Decision Date | 17 August 1988 |
Docket Number | Adv. No. 87-0406-BKC-AJC-A.,Bankruptcy No. 87-02702-BKC-AJC |
Citation | 97 BR 101 |
Parties | In re THRIFTY DUTCHMAN, INC., Debtor. THRIFTY DUTCHMAN, INC., a Florida corporation, Plaintiff, v. FLORIDA SUPERMARKETS, INC., a Florida corporation, Defendant. |
Court | U.S. Bankruptcy Court — Southern District of Florida |
Irving M. Wolff, Rodolfo Pittaluga, Jr., Holland & Knight, Miami, Fla., for plaintiff.
Francis L. Carter, Coll, Davidson, Carter, Smith, Salter & Barkett, Lawrence Metsch, McDermott, Will & Emery, Miami, Fla., for defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
THIS CAUSE came to be tried on February 4, 5, and 12, 1988, upon an adversary proceeding pursuant to Part VII of the Rules of Bankruptcy Procedure and 11 U.S.C. §§ 101(50) and 548(a)(2)(A), and the Court having heard the testimony and examined the evidence presented, observed the candor and demeanor of the witnesses, considered the arguments of counsel, and being otherwise fully advised in the premises, does hereby make the following Findings of Fact and Conclusions of Law.
This Court has jurisdiction pursuant to 11 U.S.C. §§ 101(50) and 548(a), 28 U.S.C. §§ 151, 157, 1334, 2201, and 2202, and Rule 7001, Rules of Bankruptcy Procedure. Moreover, this matter is a core proceeding pursuant to 11 U.S.C. §§ 101(50) and 548(a) and 28 U.S.C. § 157(b)(2)(A) and (H).
1. The Plaintiff, Thrifty Dutchman, Inc. (the "Plaintiff") and the Defendant, Florida Supermarkets, Inc. (the "Defendant"), are corporations organized and existing under the laws of the State of Florida.
2. On December 4, 1956, Alan B. Kessler and his wife, Esther Kessler (collectively, the "Kesslers'), as landlord, and the Irene Corporation, a Florida corporation, as tenant, entered into a Lease whereby the Irene Corporation leased from the Kesslers certain real property located at 3814 Curtiss Parkway, Virginia Gardens, Florida (the "Lease"). See Plaintiff's Exhibit No. 1.
3. The Plaintiff is the successor in interest to the Kesslers' interest in the Lease by virtue of the execution and delivery of a Warranty Deed dated June 15, 1979.
4. The Defendant is the successor to the Irene Corporation's leasehold interest in the Lease having acquired same from a third party.
5. The Defendant is operating a supermarket known as Pantry Pride Store No. 239 on said premises.
6. The property involved herein consists of 19,792 square feet of building and 65,769 square feet of adjacent land.
7. At all times material hereto, the Defendant has attorned to the Plaintiff as its landlord of said premises and at no time has questioned the Plaintiff's status as the landlord.
8. Paragraph 9 of the Lease provides as follows:
9. The First Renewal Period of the Lease commenced on December 1, 1981 and expired on November 30, 1986.
10. Pursuant to the terms of the Lease, the Defendant was reserved the option to extend the Lease for a Second Renewal Period commencing December 1, 1986 and expiring on November 30, 1991.
11. The provisions of the Lease required the Defendant to provide the Plaintiff with written notification of its exercise of the option to extend the Lease for the Second Renewal Period by not later than May 31, 1986.
12. On May 31, 1986, the Defendant was in default of the monthly rental payments for the months of February through May, 1986, and for all months thereafter (June through November, 1986) continued to be in default of the monthly rental payments.
13. The Defendant's default in making the monthly rental payments required under the Lease was never cured, but the Defendant did attempt to cure said default only after it had commenced the State Court action.
14. The Defendant failed to timely exercise the option to extend the Lease for the Second Renewal Period.
15. The Defendant's failure to timely exercise the option and cure the defaults in rental payments terminated the Lease and the enforceability of the Lease's provision, including any and all options contained therein.
16. On September 23, 1986, the Plaintiff sent the Defendant a letter notifying the Defendant that the Lease was terminated as of December 1, 1986, on the grounds that the Defendant had failed to exercise its option to renew and extend the Lease for the Second Renewal Period. See Plaintiff's Exhibit No. 2.
17. At a time when the rent required under the terms and conditions of the Lease had been in default, and with no legal tender thereof, on November 20, 1986, the Defendant filed a Complaint for Declaratory and Injunctive Relief (the "Complaint") with the Circuit Court for the Eleventh Judicial Circuit in and for Dade County, Florida (the "State Court") Case No. 86-50066-28, and in said Complaint, as amended, the Defendant requested the State Trial Court to determine the Defendant's rights, title, and interest in and to said Lease.
Plaintiff's Exhibit No. 4, pp. 1-2.
19. On July 29, 1987, the Plaintiff filed with the United States Bankruptcy Court for the Southern District of Florida, a Voluntary Petition for Relief under Chapter 11 of the Bankruptcy Code, and since that time has been operating the Debtor's business as a Debtor in Possession.
20. On August 14, 1987, the Plaintiff timely filed its Notice of Appeal with the State Court. Plaintiff's Exhibit No. 5.
21. On September 1, 1987, the Plaintiff filed the Adversary Complaint for Declaratory Relief to Avoid a Fraudulent Transfer and for Damages in accordance with 11 U.S.C. § 548(a)(2)(A) and Rule 7001, Rules of Bankruptcy Procedure.
22. The entry of the Final Judgment constituted a "transfer" as that term is defined in 11 U.S.C. § 101(50), for which the Plaintiff received less than "reasonably equivalent value," and which also rendered the Plaintiff "insolvent" as said term is defined in 11 U.S.C. § 101(31). Because this finding is both factual and legal, the Court's reasoning in reaching said finding is more fully discussed in the text of this decision.
The facts in this Adversary Proceeding raise questions of law invoking res judicata, collateral estoppel, and whether a judicial decree can constitue an involuntary fraudulent transfer of property which is avoidable under 11 U.S.C. § 548(a)(2)(A).
Throughout these proceedings, the Defendant has claimed that the State Court already dealt with the issues which are presently before this Court and that therefore, the Plaintiff is barred under the doctrine of res judicata and collateral estoppel from instituting this proceeding. This Court does not agree.
In a recent decision, the Eleventh Circuit summarized the law concerning the doctrine of res judicata and collateral estoppel to be as follows:
To continue reading
Request your trial-
TAX FORECLOSURES AS FRAUDULENT TRANSFERS - ARE AUCTIONS REALLY NECESSARY?
...at the time of sale." Id. at 561 n.13. (22) See. e.g., Thrifty Dutchman, Inc. v. Florida Supermarkets, Inc. (in re Thrifty Dutchman, Inc.), 97 B.R.101, 108 (Bankr. S.D. Fla.1988); Cole v. Sovran Mortgage Corp. (In re Cole), 81 B.R. 326 (Bankr. E.D. Pa. 1988); IPI Liberty Village Assoc, v. S......