Matter of Plunkett
| Citation | 89 BR 776 |
| Decision Date | 16 June 1988 |
| Docket Number | Bankruptcy No. 82-01119,Adv. No. 82-1329. |
| Parties | In the Matter of Oliver PLUNKETT Monica Plunkett, Debtor. Ray J. BELISLE, et al., Plaintiffs, v. Oliver PLUNKETT and Monica Plunkett, Defendants. and Ralph C. ANZIVINO, Trustee, Defendant and Third-Party Plaintiff, v. PAN-AM PAVILION-I, a partnership, et al., Third-Party Defendants. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Eastern District of Wisconsin |
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C., Milwaukee, Wis., for Ralph Anzivino.
Fox, Carpenter, O'Neill & Shannon, S.C., Milwaukee, Wis., for James Rutter, Mary Rutter and Thomas P. Shannon.
Schmidt & Zodrow, Ltd., Milwaukee, Wis., for other third-party defendants.
Robert Berdan, Whyte & Hirschboeck, S.C., Milwaukee, Wis., for Unsecured Creditors' Committee.
John G. Persa, Milwaukee, Wis., for Stephen R. Sazama and Morris Katz.
Steven M. Epstein, Milwaukee, Wis., for Michael J. Marinelle.
Plaintiffs filed this adversary on October 12, 1982, seeking an order directing the trustee to execute and deliver to them an assignment and conveyance of a leasehold estate1 (the "leasehold") in the United States Virgin Islands. The bases for their request were that the leasehold was partnership property rather than estate property or, alternatively, that Plunkett and later the trustee, held the leasehold subject to a constructive trust because Oliver Plunkett (Plunkett) acquired the property by fraud.
The trustee filed his answer and cross-complaint on November 22, 1982, and alleged that as of the petition date, Plunkett held legal title to the leasehold in his individual name and that plaintiffs' interests were avoidable pursuant to 11 U.S.C. § 544(a)(3). On December 23, 1982, the trustee filed a third-party complaint, reiterating the assertion in his cross complaint, but naming additional parties in interest in response to the plaintiffs' defense that indispensable parties had not been joined.
The third-party defendants2 answered on February 4, 1983, and counterclaimed requesting the Court to find that the balance due on a loan3, received by Plunkett and secured by the leasehold and alleged partnership cash, may be set-off from any sums received by the trustee as a result of the continuing interests the trustee claims in the partnerships. This matter is now before the Court on cross motions for summary judgment supported by stipulated facts and supplemental affidavits.
In 1965 W.O.F. Corporation acquired from Joseph Alexander a 50-year leasehold interest in the Pan-Am Pavilion-I ("Pan-Am"), a shopping center complex located in Christiansted, St. Croix, United States Virgin Islands. Subsequently, W.O.F. Corporation assigned its leasehold interest in Pan-Am to W.O.F. Associates. By an agreement dated March 2, 1979, W.O.F. sold its interest in Pan-Am to Plunkett for $1,200,000. (Stipulation, Exhibit 1.) On that date, fee title to Pan-Am was in David Lieberman and Chase Manhattan Bank, Trustees under the will of Joseph Alexander. This purchase contract named Plunkett as purchaser and did not refer to any other interests or persons as purchasers.
During the spring and summer of 1979, Plunkett and Michael Marinelle formed or attempted to form five partnerships which included in their respective names the terms "Pan-Am" or "Pan-Am Pavilion." Plunkett and Marinelle represented to interested parties that these partnerships were formed to raise capital for the acquisition of the Pan-Am shopping center complex. Five different partnership agreements were executed, although Plunkett treated them as one. They had the same business address; they had the same federal employer's identification number; they filed a "consolidated" partnership tax return; and their partners received Schedule K-1 statements based on that return. Several of the partnership agreements purported to create limited partnerships. However, certificates of limited partnership were not filed in Wisconsin or the Virgin Islands. It also appears that from the time the Pan-Am leasehold was acquired through April 15, 1982, the date Plunkett filed his bankruptcy petition, none of the individual partners resided in the Virgin Islands.
W.O.F. Associates conveyed its interest in Pan-Am to Plunkett on October 1, 1979. As part of that transaction Plunkett assumed W.O.F. Associates' $129,166.65 mortgage obligation to First Pennsylvania Bank, executed a mortgage note (Stipulation, Exhibit 2), and an $800,000.00 leasehold mortgage (Stipulation, Exhibit 3), in favor of W.O.F. Associates. Plunkett also tendered W.O.F. $261,495.76 cash, including a prior earnest money deposit of $50,000. At the closing, $211,495.76 was wire transferred to W.O.F. from an account in First Bank, N.A. in Milwaukee under the name of "Oliver Plunkett & Associates". Some of the deposits to that account had come from the various members of the Pan-Am partnerships.
An assignment of lease, conveying W.O.F. Associates' leasehold interest in Pan-Am, was also executed by W.O.F. Associates and Plunkett on that date. (Stipulation, Exhibit 4.) All these documents were executed by Plunkett without reference to any other person, interest or possible agency relationship.
The assignment of lease was recorded in the Office of the Recorder of Deeds, St. Croix, United States Virgin Islands, on October 10, 1979. The St. Croix office of Lawyers Title Insurance Corporation issued a policy of title insurance to Plunkett dated October 10, 1979, showing that the leasehold title to Pan-Am was vested in Plunkett individually. (Stipulation, Exhibit 5.)
By a letter dated October 2, 1979, First Pennsylvania Bank, N.A. was notified by W.O.F. Associates that it had sold its interest in Pan-Am to Plunkett. (Stipulation, Exhibit 6.) And on October 17, 1979, Plunkett's counsel informed the Estate of Joseph Alexander that W.O.F. Associates' interest in Pan-Am had been sold to Plunkett. (Stipulation, Exhibit 7.)
In correspondence with various members of the Pan-Am partnerships, Plunkett referred to Pan-Am as partnership property. However, in correspondence with tenants of Pan-Am, Plunkett referred to himself as the owner. (Response Brief in Support of Trustee's Cross-Motion for Summary Judgment, Exhibit A, Affidavit of Patricia A. Purtell, Exhibits A-8 to A-24.) Federal and state tax returns filed by Plunkett listed Pan-Am as a partnership asset and reported rentals from and depreciation of Pan-Am as items of partnership income and deductions. Plunkett's personal property bankruptcy schedule, Schedule B-2, listed Plunkett as holding a partnership interest in a Pan-Am partnership. Other property schedules did not list Plunkett as holding a real property interest in Pan-Am.
The Schedule K-1 statements filed by Plunkett or the trustee as part of the Pan-Am partnership tax returns, listed Plunkett's interest in the Pan-Am partnerships' profits or losses during 1979 to 1983 as ranging from 5% to 6.84%. Plunkett's percentage interest in capital during 1979 to 1983 ranged from 0% to 2.04%.
On January 11, 1980 Plunkett executed a collateral assignment of lease in favor of First Pennsylvania Bank, N.A. as security for a $100,000 loan to Plunkett. (Stipulation, Exhibit 8.) This document specifically recites that Plunkett is the sole owner of the leasehold interest in Pan-Am and the sole owner of the landlord's interest in the leases to the Pan-Am tenants. The proceeds of this loan were used by Plunkett to make improvements to property unrelated to the Pan-Am partnerships. On January 21, 1980 the First Pennsylvania Bank recorded the collateral assignment in the Office of the Recorder of Deeds, St. Croix, United States Virgin Islands.
Between October 1, 1979 and April 15, 1982, the petition date, ten tenants executed leases for space in the Pan-Am. (Stipulation, Exhibits 9-18.) The leases contain conflicting information regarding Plunkett's status. Some were executed by Plunkett as an individual and others were executed by him as a representative of Oliver Plunkett & Associates, a sole proprietorship owned by Plunkett. (Response Brief in Support of Trustee's Cross-Motion for Summary Judgment, Exhibit A, Affidavit of Patricia A. Purtell.) Leases executed by Plunkett did not consistently identify to whom and where rents were to be paid. The rents were payable to Plunkett (Stipulation, Exhibits 14-17), to Oliver Plunkett & Associates (Stipulation, Exhibits 12, 13 & 18), or to Pan-Am (Reply Brief in Support of Plaintiffs' Motion for Summary Judgment, Affidavits of Anne Cartruccio and Maggie Collins), which was an account in Plunkett's name at First Pennsylvania Bank in Christiansted, St. Croix. (Response Brief in Support of Trustee's Cross-Motion for Summary Judgment, Exhibit B, Affidavit of Laurence P. Wielgos.)
On the petition date all tenants of Pan-Am occupied their premises pursuant to leases signed by Plunkett or his predecessor W.O.F. Associates and the record title to Pan-Am was as follows:
DISCUSSION
To continue reading
Request your trial
-
In re Edsall
...... ORDER. ROBERT E. GRANT, Bankruptcy Judge. This matter is before the court on a motion to withdraw filed by Defendants' counsel in this proceeding. The motion was the subject of a hearing attended not ......