Matter of Willingboro Country Club, Inc.
| Decision Date | 21 January 1987 |
| Docket Number | Bankruptcy No. 84-06572,Adv. No. 85-0206TG. |
| Citation | 69 BR 414 |
| Parties | In the Matter of WILLINGBORO COUNTRY CLUB, INC., Debtor. WILLINGBORO COUNTRY CLUB, INC., Plaintiff, v. LEVITT & SONS, INC., A Delaware Corporation; Theresa Lanzellotti, Willingboro Golf Course, Inc., A New Jersey Corporation; Edward D. Valor and Richard A. Forte, Individually and as Cross Representatives of the Grantees of Levitt and Sons, Inc. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
Markowitz & Zindler by Jeffrey S. Posta, Lawrenceville, N.J., for plaintiff-debtor.
Teich, Groh, Kline & Frost by Carol L. Knowlton, Trenton, N.J., for Willingboro Tp.
Peter A. Cross, Leonia, N.J., for defendant LSI United Holding Corp., f/k/a Levitt & Sons, Inc.
Eleuteri & Wilkins by Elizabeth A. Ryan, Mount Holly, N.J., for Edward Valor & Richard A. Forte.
This matter arises by reason of cross motions for Summary Judgment seeking a determination as to whether or not the conditions of a certain deed dated October 16, 1970, as amended by a contract dated March 10, 1972, with respect to a conveyance from Levitt & Sons, Inc. to Theresa Lanzellotti, restrict the use of certain property owned by the debtor. The plaintiff debtor filed suit against the grantor, the grantee, and two representatives of a class representing all property owners with property adjacent to the lands conveyed. The Township of Willingboro was permitted to intervene on February 4, 1986. This Court certified the class and its representatives on April 25, 1986.
The facts are undisputed. In addition to the facts set forth in the submissions of the parties, the Court inquired of various counsel during the time immediately preceeding the hearing in order to ascertain certain facts which were either known to the parties or available by simple inquiry into the records of the parties and the municipality. In its statement of facts, the Court will rely on certain of these facts. In the event that any such facts are incorrect, the parties shall notify the Court within three days and if appropriate, the Court will supplement or correct its opinion.
As set forth, on October 16, 1970, Levitt & Sons, Inc. conveyed the property in question to Theresa Lanzellotti. The deed recited the fact that the grantor had constructed certain residences in the Township of Willingboro "adjacent and in proximity to the premises conveyed". The deed contained the following statement:
On March, 10, 1972, a supplemental agreement was entered into between Levitt & Sons and Lanzellotti. This agreement was recorded as a deed in the County of Burlington in Book 1821 for deeds of said county at page 950. It contained the further explanation:
The premises conveyed hereunder shall be used for no purpose other than a golf course. This is construed to mean that the premises shall have the use of a golf course perpetually and for no other purpose at any time. Said covenant, however, shall cease and end and terminate in the event that a substantial portion of the premises shall be condemned by any party whatsoever having the power of eminent domain, which condemnation shall be of a sufficient portion of the tract to render the continued use of it as an eighteen hole golf course unpracticable.
The deeds representing the chains of title of the individual defendants in the instant case, as well as other homeowners adjacent to the property, were issued in and around 1966. While the golf course in question existed at that time, no mention of such a golf course was made in those deeds. A declaration of covenants and restrictions dated March 14, 1966 and recorded in Burlington County on March 18, 1966 in Book 1611 for deeds of said county at page 371 likewise contained no mention of a golf course.
On March 29, 1976, the Township of Willingboro gave approval to the construction of a swimming pool and tennis courts on the premises. Construction was completed on May 31, 1976 and those facilities remain on the premises.
Initially, there was no restaurant or bar on the premises since the Township of Willingboro is a "dry" municipality and no liquor is permitted. In 1980 however, a snack bar was constructed at the pool and a gazebo and pool bar were approved. While no specific evidence concerning the use of the restaurant and bar facilities by outsiders has been presented, one of the attorneys has represented to the Court that he attended a Bar Association meeting at the club some years ago.
The records of the municipality reveal that there has never been a denial of a liquor license, and the appropriate food handling licenses have been granted on a regular basis. All parties agree that they know of no litigation concerning the deed restrictions.
In 1984, the debtor filed a petition seeking the protection of this Court under Chapter 11 and the case has been proceeding since that time. The submitted evidence makes it clear that the real estate owned by the debtor will have significantly more value for purposes other than a golf course than it has by abiding by the golf course restriction. In fact, it may reasonably be inferred that little or no dividend to general creditors would result if the restriction remains while if the property may be devoted to its highest and best use, a significant dividend may be realized. Evidence has shown, as well, that removal of the restrictions will diminish the value of the residence property immediately adjacent to the golf course.
Rule 7056 of the Bankruptcy Rules incorporates Rule 56 of the Federal Rules of Civil Procedure governing the entry of Summary Judgment. The law is clear. Where no genuine issue of material fact exists between the parties, the Court may grant Summary Judgment. In the instant case, no genuine issue of material fact exists and the case is ripe for determination. Celotex Corp. v. Catrett, 477 U.S. ____, 106 S.Ct. 2548, 91 L.Ed.2d. 265 (1986), Anderson v. Liberty Lobby, 477 U.S. ____, 106 S.Ct. 2505, 91 L.Ed.2d. 202 (1986), Goodman v. Mead Johnson & Co., 534 F.2d. 566 (3rd Cir.1976), cert. den. 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). See also Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 110 A.2d 24 (1954). In the instant case, all of the preconditions for the issuance of Summary Judgment have been met and failure to enter judgment would result in the unnecessary delay of the proceedings.
The first substantive issue which must be dealt with is whether or not the covenant contained in the 1970 deed is in fact a contract. In New Jersey, a restrictive covenant is a contract. Weinstein v. Swartz, 3 N.J. 80, 68 A.2d 865 (1949). Such a covenant, if appropriate, has all of the incidents of a contract. Urban Farms, Inc. v. Seel, 87 N.J.Super. 177, 208 A.2d 434 (Ch. Div.1965), aff'd. 90 N.J.Super. 401, 217 A.2d 888 (App.Div.1966). See also Mountain Springs Assn. v. Wilson, 81 N.J.Super. 564, 196 A.2d 270 (Ch.Div.1963).
In the instant case, the issue has been raised by all counsel as to whether or not the contract is an executory contract. If the contract is executory, the Bankruptcy Code, 11 U.S.C. § 365, permits the debtor-in-possession to assume or reject the contract based upon whether or not such action is appropriate in its business judgment . The determination of whether or not the instant contract is an executory contract requires an establishment of the appropriate test.
Three tests have been set forth to ascertain the existence of an executory contract. The first appears in Williston on Contracts in 1 Williston on Contracts 27, § 14 (3rd. Ed., Baker, Voorhis & Co., Inc., Mount Kisco, N.Y.1957). By Professor Williston's definition all contracts are really executory. If any performance remains by either side under any circumstances, it is an executory contract. A narrower definition for bankruptcy purposes appears in the extensive discussion of the problem by Professor Vern Countryman, 57 Minn.L.Rev. 439 (1973). Professor Countryman argues that for bankruptcy purposes, an...
To continue reading
Request your trial