In re Tousa, Inc.

• Decision Date: 01 January 2014
• Docket Number: Case No. 08–10928–JKO Jointly Administered
• Citation: 503 B.R. 499
• Court: U.S. Bankruptcy Court — Southern District of Florida
• Parties: In re: TOUSA, Inc., et al., Debtors.

503 B.R. 499

In re: TOUSA, Inc., et al., Debtors.

Case No. 08–10928–JKO Jointly Administered

United States Bankruptcy Court, S.D. Florida. Fort Lauderdale Division

Filed 01/16/2014

Kristopher Aungst, Esq., Douglas A. Bates, Esq., Paul Steven Singerman, Esq., Miami, FL, Padmavathi G. Hinrichs, West Palm Beach, FL, for Debtor TOUSA, Inc.

Mark D. Bloom, Esq., Greenberg Traurig, P.A., Miami, FL, for Special Counsel Mark D. Bloom.

Jessica S. Budoff, Akin Gump Strauss Hauer & Feld LLP, New York, NY, for Special Counsel Jessica S. Budoff.

Howard D. DuBosar, Esq., Boca Raton, FL, for Special Counsel Heather J. Panko.

James P.S. Leshaw, Esq., Greenberg Traurig, P.A., Miami, FL, for Special Counsel James P.S. Leshaw.

Lauren L. Garner, Phoenix, AZ, for Defendant Outdoor Environmental Systems.

Steven D. Schneiderman, Office of the U.S. Trustee, Miami, FL, for U.S. Trustee.

Chapter 11 Cases

ORDER GRANTING IN PART DEBTOR'S AMENDED MOTION [ECF 9518] FOR SUMMARY JUDGMENT ON TOUSA'S OBJECTION TO CLAIM 7574 OF SUPERIOR HOMES AND INVESTMENTS, INC., AND SETTING STATUS CONFERENCE ON JANUARY 28, 2014

John K. Olson, Judge, United States Bankruptcy Court

This matter came before the Court for hearing on the Debtor's Amended Motion [ECF 9518] for Summary Judgment on Objection to Claim 7574 of Superior Homes and Investments, Inc., (the “Motion for Summary Judgment”), filed by the Trustee of the TOUSA Liquidation Trust (“TOUSA”). TOUSA contends, inter alia, that Superior Homes and Investments, Inc. (“Superior”) is not entitled to an allowed claim as brought by Robert B. Morrison as Superior's Chapter 7 Trustee (the “Superior Trustee”), because Superior contractually waived its right to seek monetary damages against TOUSA, Inc. and its affiliated debtors in these consolidated and confirmed Chapter 11 cases. The issue before the Court on the Motion for Summary Judgment is whether Superior's Claim 7574 should be allowed. This in turn requires (a) interpreting the extent to which undisputed contract language limits Superior's ability to assert monetary damages for breach of specific performance and (b) reconciling any contractual limitations with the potential right to payment so as to create an allowable claim under applicable bankruptcy law. After full briefing, a hearing on the matter and a careful review of the record, the Trustee's Motion for Summary Judgment is GRANTED as to any claim for money damages and is CONTINUED as to any claim for the return of contractual deposits.

PROCEDURAL HISTORY

TOUSA and Superior were both large and sophisticated builders and sellers of residential housing. Starting in 2003, TOUSA contracted with Superior to construct and sell homes directly to Superior. The parties entered into two separate contracts which were amended from time to time: ¹ the Oakmont Contract (“Oakmont Contract”) and the Regal Oaks Contract (“Regal Oaks Contract”) (collectively, the “Contracts”). As the years progressed, both TOUSA and Superior failed. TOUSA filed for bankruptcy protection on January 29, 2008; a year later, on February 20, 2009, an involuntary bankruptcy case was commenced against Superior in the Middle District of Florida, where the Superior Trustee was appointed. SeeCase No. 09–1955–KSJ. As part of its reorganization efforts, TOUSA filed a Third Motion to Reject Certain Unexpired Leases and Executory Contracts [ECF 1248] which sought permission to reject the Oakmont Contract, and a Fourth Motion to Reject Certain Unexpired Leases and Executory Contracts [ECF 1369] which requested the same relief for the Regal Oaks Contact (collectively, the “Rejection Motions”). Orders granting TOUSA's Rejection Motions were entered by the Court after notice to Superior and a hearing (the “Orders Granting Rejection Motions”) [ECF 1399, 1597].

In response to the Orders Granting Rejection Motions, Superior filed four separate proofs of claims seeking damages relating to the rejection of the Contracts [Proofs of Claim 2411, 3479, 4185 and 4193]. On May 17, 2010, Superior filed Claim 7574 seeking $33,840,263.67 (the “Claim”) consolidating and superceding its previously filed Claims. Included in total claim amount is a $2,341,002.02 deposit paid by Superior to TOUSA to purchase properties under the Oakmont Contact and a $1,929,843.75 deposit to purchase properties under the Regal Oaks Contract. In response to Superior's Claim 7574, TOUSA filed a Sixth Omnibus Objection to Claims (“Objection to Claim”) [ECF 8950]. Superior filed a Response to the Objection to Claim [ECF 8980], requesting that the Court overrule TOUSA's objection to Claim 7574. TOUSA filed a Motion for Summary Judgment on Objection to Claim 7574 (“Motion for Summary Judgment”) [amended at ECF 9518] to which Superior filed an Opposition to Debtor's Amended Motion for Summary Judgment on Objection to Claim 7574 (the “Response”) [ECF 9562] and both parties filed an Amended Joint Stipulation of Undisputed Facts (the “Joint Stipulation”) [ECF 9629]. On November 11, 2013, the Court heard oral arguments on the matter.²

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Legal Standard for Summary Judgment

Under Rule 56 of the Federal Rules of Civil Procedure, incorporated into bankruptcy proceedings by Rule 7056 of the Federal Rules of Bankruptcy Procedure, summary judgment is proper if the pleadings, deposition, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material facts that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The moving party bears the initial burden of showing the Court that there are no genuine issues of material fact that should be decided at trial. Jeffery v. Sarasota White Sox, 64 F.3d 590, 593 (11th Cir.1995); Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). The Supreme Court explained in Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) that when assessing whether the movant has met this burden, the court should view the evidence and all factual inferences in the light most favorable to the party opposing the motion and resolve all reasonable doubts in that party's favor. See alsoSamples on behalf of Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir.1988). The Eleventh Circuit has explained the reasonableness standard:

In deciding whether an inference is reasonable, the court must “cull the universe of possible inferences from the facts established by weighing each against the abstract standard of reasonableness.” The opposing party's inferences need not be more probable than those inferences in favor of the movant to create a factual dispute, so long as they reasonably may be drawn from the facts. When more than one inference reasonably can be drawn, it is for the trier of fact to determine the proper one.WSB–TV v. Lee, 842 F.2d 1266, 1270 (11th Cir.1988) (internal citations omitted). A moving party discharges its burden on a motion for summary judgment by “showing” or “pointing out” to the Court that there is an absence of evidence to support the non-moving party's case. Celotex, 477 U.S. at 325, 106 S.Ct. 2548.

The party opposing a motion for summary judgment may not simply rest upon mere allegations or denials of the pleadings. After the moving party has met its burden of coming forward with proof of the absence of any genuine issue of material fact, the non-moving party must make a sufficient showing to establish the existence of an essential element to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 324, 106 S.Ct. 2548; Poole v. Country Club of Columbus, Inc., 129 F.3d 551, 553 (11th Cir.1997). If the record presents factual issues, the court must not decide them; it must deny the motion and proceed to trial. Environmental Defense Fund v. Marsh, 651 F.2d 983, 991 (5th Cir.1981).

The record here is clear and supported by documentation attached to TOUSA's Motion for Summary Judgment [ECF 9518], Superior's Response to the Objection to Claim [ECF 8950], Response to the Motion for Summary Judgment [ECF 9562] and the Joint Stipulation [ECF 9629]. The parties agree that “every version of the Regal Oaks and Oakmont Contracts for which the Trustee or Superior has obtained a copy contained identical language regarding the rights of Superior in the event of a Default.” Joint Stipulation at 2. While there are additional facts in the Joint Stipulation that are deemed disputed by the parties, by its terms the standard for summary judgment provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is “genuine” if the “evidence is such that a reasonable [finder of fact] could return a verdict for the nonmoving party.” Id. at 248, 106 S.Ct. 2505. For purposes of the issues ruled on in this Order, there are no genuine issues of material fact and this dispute is ripe for adjudication as a matter of law.

Relevant Terms of the Contracts

The Contracts (including the various amended versions of both the Oakmont and Regal Oaks Contracts) contain language that states in the event of a default, Superior as the Buyer:

in Buyer's sole discretion as a Buyer's sole and exclusive remedy for any such failure or breach, shall be entitled to either (i) terminate this Contract and receive from Escrow Agreement an immediate refund of so much of the Deposit as has not been applied to the Aggregate Purchase Price or (ii) exercise any and all rights and remedies available to Buyer in equity, including, without limitation, the right of specific performance ... provided, however, Buyer hereby waives any...