Phoenician Mediterranean Villa, LLC v. Swope (In re J & S Props., LLC)

• Decision Date: 05 October 2015
• Docket Number: Bankruptcy No. 13–70512–JAD,Adversary No. 14–07004–JAD
• Citation: 545 B.R. 91
• Parties: In re: J & S Properties, LLC, Debtor. Phoenician Mediterranean Villa, LLC, Plaintiff, v. Lisa M. Swope, Trustee of the Bankruptcy Estate of J & S Properties, LLC, James Focht, and J & S Properties, LLC, Defendants.
• Court: U.S. Bankruptcy Court — Western District of Pennsylvania

545 B.R. 91

In re: J & S Properties, LLC, Debtor.Phoenician Mediterranean Villa, LLC, Plaintiff,

v.Lisa M. Swope, Trustee of the Bankruptcy Estate of J & S Properties, LLC, James Focht, and J & S Properties, LLC, Defendants.

Bankruptcy No. 13–70512–JAD

Adversary No. 14–07004–JAD

United States Bankruptcy Court, W.D. Pennsylvania.

Signed October 5, 2015

Mary Bower Sheats, Frank,Gale, Bails, Murcko & Pocrass, P.C., Pittsburgh, PA, for Plaintiff.

James Focht, Altoona, PA, pro se.

J & S Properties, LLC, Altoona, PA, pro se.

MEMORANDUM OPINION

JEFFERY A. DELLER

, Chief U.S. Bankruptcy Judge

The matter before the Court is the Motion to Dismiss Complaint Against Trustee (the "Motion") filed by one of the Defendants, Lisa M. Swope, Esquire, the Chapter 7 Trustee of the Bankruptcy Estate of J & S Properties, LLC) (the "Trustee").

By the Motion, the Trustee seeks to have the complaint against her dismissed on the grounds of quasi-judicial immunity.

For the reasons more fully expressed below, the Court finds that the Trustee is protected by the doctrine of immunity and dismissal of the Complaint filed by Plaintiff Phoenician Mediterranean Villa, LLC against the Defendant Lisa M. Swope is appropriate under the unique facts and circumstances of this case.¹

I.

J & S Properties, LLC ("J & S") filed a Chapter 7 bankruptcy petition on July 10, 2013. The following day, Lisa M. Swope, was appointed as Chapter 7 Trustee.

This adversary proceeding has been highly contentious, with the plaintiff Phoenician Mediterranean Villa, LLC ("Phoenician") alleging that the Trustee, acting in concert with J & S and its principal—Mr. James Focht—wrongfully evicted Phoenician from its leasehold located at 1302–08 Logan Boulevard, Altoona, PA (the "Estate Property").

While some facts may be disputed between the parties, the facts necessary for determination of the applicability of the quasi-immunity defense are generally not in dispute.

Specifically, from the petition date up to at least January 15, 2014, Phoenician was in possession of the Estate Property as it was the tenant occupying the premises by virtue of a lease agreement (which the Trustee previously rejected by way of an order of the Court dated November 5, 2013).

The record reflects that the Trustee sought to reject the lease because the Trustee desired to sell the Estate Property. Phoenician, however, opposed the Trustee's placement of a "for sale" sign on the premises. Indeed, at times up and until the Court authorized the rejection of the lease in November of 2013, Phoenician refused to cooperate with the placement of such a sign by the Trustee (or her real estate broker) to market the sale of the Estate Property to the general public. During this time period and thereafter, however, Phoenician (through its principal Mr. Husam Obeid) was interested in purchasing the property albeit at some price that less than what the Trustee thought was the market value of the Estate Property. (See Transcript of November 5, 2013 Hearing at pp. 23–40 (Bankruptcy No. 13–70512–JAD at Dkt. # 189); Transcript of January 24, 2014 Hearing at p. 76 (Adversary No. 14–7004–JAD at Dkt. # 40)). In addition, Phoenician desired to remove items of personal property from the leasehold over the objection of the Trustee (who had concerns regarding the fact that ownership of the assets had yet to be sorted out in the Bankruptcy Court). Id.

Against this backdrop, the events giving rise to Phoenician's claim of wrongful eviction arose. In this regard, the record reflects that in early January of 2014 the city of Altoona was hit with below freezing temperatures. Given the arctic blast that hit the region, the Trustee had some concerns regarding the preservation and protection of the Estate Property.

At a January 24, 2014 hearing on a request of Phoenician for injunctive relief, the Trustee testified under oath that Mr. Focht informed her that the restaurant was shut down and that he was concerned about the heat at the premises. Mr. Focht also informed the Trustee that insurance had been cancelled at the premises. Transcript of January 24, 2014 Hearing at p. 148 (Adversary No. 14–7004–JAD at Dkt. # 40)).

As a result, the Trustee requested that Mr. Obeid, a contractor invited by Mr. Focht, and counsel to Mr. Obeid meet her at the premises on January 3, 2014 so that the Estate Property could be adequately preserved during the anticipated arctic blast. The Trustee testified that at that meeting Mr. Obeid did not dispute that he was considering closing of his business, buying the building, or purchasing some other property to house his restaurant. Id. at 148–149. In addition, Mr. Obeid was adamant that all the property inside the premises was his to the exclusion of everyone else, even though no determination of ownership had yet to be made by the Bankruptcy Court. Id. at 149.

At that juncture, the Trustee had no key to the premises. In addition, at that juncture, the relationship between Mr. Focht and Mr. Obeid had deteriorated to such a degree that neither party trusted the other. In fact, Mr. Obeid had concerns regarding whether Mr. Focht was going to take Phoenician's alleged property. Id. As a result, Mr. Obeid instructed that he desired that Mr. Focht have no access to the leased premises. Id. at 151. The Court would parenthetically note that perhaps Mr. Obeid's concern here was justified, as Mr. Focht (who through other corporate entities owned a neighboring building and adjacent parking lot) went to great lengths (such as placing concrete barriers in the adjacent parking lot) to make business operations difficult for Phoenician. No matter what, it is uncontested that the Trustee found herself essentially caught between this dispute between warring factions all the while she needed to protect the bankruptcy estate's largest asset.

At the January 3, 2014 meeting, Mr. Obeid furnished the Trustee with a key to the front door of the premises and, to ensure that the pipes did not freeze, the contractor suggested that the temperature be set inside the building at a temperature of at least 60 degrees Fahrenheit.

Mr. Obeid, however, did not place the temperature at 60 degrees. The testimony is that he set the thermostat at some temperature less than the temperature recommended by the contractor. Ultimately, by January 13, 2014, the pipes burst and the Estate Property was flooded. Id. at 153.

The flood caused a flurry of activity by the Trustee, Mr. Focht and Mr. Obeid. Id. at 152–163. Mr. Obeid apparently contacted a disaster restoration company, named ServiceMaster, who ultimately refused to remediate the premises citing many factors including: problems of insurance coverage, the acrimony between the parties, and that no one agreed to provide the restoration company with a lien on the Estate Property to the extent any fees went unpaid. Id. at 163.

As a result, the Trustee requested that the parties meet at the premises on January 15, 2014 to assess the situation and determine the status of insurance and how remediation could begin immediately. At the January 15, 2014 meeting at the premises, neither Mr. Obeid nor his counsel appeared. Despite the urgent nature of the situation occasioned by the bursting pipes, Mr. Obeid through counsel requested that the meeting be "rescheduled." They also indicated that they did not want Mr. Focht in the premises as they did not want Mr. Focht to take any property that was located at the premises.

Given the urgent nature of the situation, the Trustee declined the "rescheduling" request of Mr. Obeid and proceeded to attempt to inspect the premises. Once the Trustee arrived, she found that she had no access to the premises because an interior door was surprisingly locked and Mr. Obeid did not provide the Trustee with a key to this additional door. Id. at 169–70. As a result, Mr. Focht caused the locks to be replaced, and provided the Trustee with the key.

It is the fact that the locks were changed and the Trustee had the sole key that is the gravamen of Phoenician's cause of action against the Trustee. Thereafter, the Trustee maintained control of the premises and was only willing to provide parties-in-interest with supervised access to the property while it was remediated (and while disputes as to ownership of personal property were adjudicated or resolved)—although there is dispute as to whether Phoenician ever requested access to the premises after January 15, 2014. The record reflects that the Trustee has testified by way of affidavit that Mr. Obeid and Phoenician never requested access to the premises after January 15, 2014; and Mr. Obeid has filed an affidavit whereby he avers that he requested access which was denied. However, resolution of this issue is irrelevant for purposes of deciding the Motion on immunity grounds.²

II.

On April 7, 2015, the Trustee filed her Motion to Dismiss Complaint Against Trustee, seeking to have the Complaint dismissed on the grounds of quasi-judicial immunity. Thereafter, the Court took judicial notice of the evidentiary record made at numerous hearings before the Court and, accordingly, afforded the parties an opportunity to put the record in perspective by way of supplemental briefs or affidavits. The Court also advised that it was considering the Motion to Dismiss pursuant Fed.R.Bankr.P. 7012

(which incorporates Fed.R.Civ.P. 12 into bankruptcy adversary proceedings)) and also Fed.R.Bankr.P. 7056 (which incorporates Fed.R.Civ.P. 56 into bankruptcy adversary proceedings as well). Because the supplemental filings are complete, the matter is now ripe for adjudication.

III.

Summary judgment is to be granted if it shown that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a)

. A party genuinely disputing a fact must support such assertion by citing to particular parts of the record or show that the materials cited do not establish the absence or presence of a material fact. See Fed.R.Civ.P. 56(c)(1). A...