PNC Bank, N.A. v. Rolsafe Int'l, LLC (In re Rolsafe Int'l, LLC)

• Decision Date: 22 August 2012
• Docket Number: Adversary No. 9:09–ap–00142–FMD.,Bankruptcy No. 9:09–bk–04714–FMD.
• Citation: 477 B.R. 884
• Parties: In re ROLSAFE INTERNATIONAL, LLC, Debtor. PNC Bank, N.A., as successor-in-interest by merger to National City Bank, Plaintiff, v. Rolsafe International, LLC, Joseph Kafka, as trustee for Tomar Investment Trust, and Joseph Kafka, individually, Defendants.
• Court: U.S. Bankruptcy Court — Middle District of Florida

477 B.R. 884

In re ROLSAFE INTERNATIONAL, LLC, Debtor.PNC Bank, N.A., as successor-in-interest by merger to National City Bank, Plaintiff,

v.Rolsafe International, LLC, Joseph Kafka, as trustee for Tomar Investment Trust, and Joseph Kafka, individually, Defendants.

Bankruptcy No. 9:09–bk–04714–FMD.

Adversary No. 9:09–ap–00142–FMD.

United States Bankruptcy Court,

M.D. Florida,

Fort Myers Division.

Aug. 22, 2012.

Cheryl Thompson, John A. Anthony, Anthony & Partners, LLC, Tampa, FL, for Plaintiff.

Susan H. Sharp, Stichter, Riedel, Blain & Prosser, P.A., Cheryl Thompson, Anthony & Partners, LLC, Tampa, FL, Douglas B. Szabo, Luis E. Rivera, II, Henderson, Franklin, Starnes & Holt PA, Ft. Myers, FL, for Debtor and Defendants.

MEMORANDUM OPINION

JEFFERY P. HOPKINS, Bankruptcy Judge.

Introduction

We hold in this adversary proceeding that the parties entered into a valid, binding, and enforceable settlement agreement which resolves all of the claims in Plaintiff's Amended Complaint filed against each of the named Defendants. In order to understand how the Court arrived at this ruling, however, a detailed explanation of the parties' relationships with one another is necessary. Additionally, because the Court's ultimate conclusion regarding settlement resolves litigation between non-debtor entities, the Court believes it is necessary to include a detailed analysis of why it had jurisdiction over this proceeding before providing its findings on the dispositive settlement issue.

With these considerations in mind, the Court has divided its Opinion into three primary sections. Section I explains the factual background and relationship between the parties, as well as the history of the underlying litigation between the parties which has given rise to the causes of action alleged in the instant adversary proceeding. Section II details the facts related to the parties' settlement negotiations and ultimate agreement. Section III contains the Court's legal analysis and is further divided into five subsections.

The Court begins its legal analysis in Section III with a detailed jurisdictional section. In sum, the Court finds that, at a minimum, it had “related to” jurisdiction over all of the claims for relief alleged in the Plaintiff's Complaint and Amended Complaint at the time those pleadings were filed. Because a bankruptcy court's jurisdiction is determined at the time the adversary proceeding commences, and because subsequent events cannot divest the bankruptcy court of jurisdiction once it has properly been exercised, the Court concludes that it had jurisdiction over this proceeding. Further, even though the Court's “related to” jurisdiction appears now to have attenuated upon the occurrence of certain events, the Court concludes, consistent with controlling law, that it has appropriately exercised its discretion to retain jurisdiction over the proceeding. This is so even though the ultimate resolution of this proceeding will arguably not have any conceivable impact on the Debtor's bankruptcy estate.

The Court further concludes that Florida law applies to the determination of the ultimate issue regarding settlement in this case. Florida law recognizes that parties can enter into a valid, binding, and enforceable settlement via email, provided that they have agreed on all essential terms of the settlement. In this case, the parties engaged in settlement negotiations via email, which led to an agreement on the essential terms of a settlement. Therefore, the Court finds that the parties have entered into an enforceable settlement of all the claims alleged in this proceeding. Accordingly, the Court will enforce the parties' settlement according to the agreement reached by the parties. As a result, the Plaintiff's claims will be dismissed.

I. Factual Background & Litigation History

The Debtor, Rolsafe International, LLC (“the Debtor”), filed its bankruptcy case on March 13, 2009. Plaintiff, PNC Bank, N.A., as successor-in-interest to National City Bank (“the Bank”), initiated this adversary proceeding one week later on March 20, 2009 by filing its two-count Complaint against the Debtor and Joseph Kafka, as trustee for Tomar Investment Trust (Doc. No. 1). The Bank later filed an Amended Complaint (Doc. No. 87) alleging five claims for relief against (i) the Debtor; (ii) Joseph Kafka, as trustee of the Tomar Investment Trust; and (iii) Joseph Kafka, individually. The first two counts sought the same relief as the initial Complaint, while the remaining counts were added to include Kafka, in his individual capacity, as a defendant.

The Debtor was engaged in the business of designing, manufacturing, and installing hurricane protection systems for homes, condominiums, and commercial buildings. Tomar Investment Trust (“the Landlord”) served as the landlord of the commercial space which the Debtor had leased and occupied to run its business. Prior to its bankruptcy filing, the Debtor defaulted on rent payments to the Landlord. As a result, the Landlord commenced an eviction action in state court. The Landlord eventually obtained an eviction judgment against the Debtor and proceeded to have the local sheriff post a Writ of Possession at the leased premises. That Writ of Possession required the Debtor to be “all out” of the premises by December 31, 2008.

While the eviction action was pending, the Landlord also filed a separate distress action for unpaid, past-due rent. Although the Landlord later dismissed that suit, during its pendency, the Landlord did obtain a Distress Writ, which ordered the Debtor not to damage, dispose of, conceal, or remove any of its property from the leased premises until such time as the sheriff levied on the property or the writ was vacated. The Debtor filed a motion to vacate the Distress Writ, but that motion was never set for hearing and the state court never resolved that motion prior to the Landlord's dismissal of the case.

Because of the eviction and express terms of the Distress Writ, the Debtor was unable to remove certain of its property from the leased premises. On the basis of an asserted landlord's lien under chapter 83 of the Florida Statutes and the purported abandonment by the Debtor of its property that remained at the leased premises (such property being referred to hereinafter as the “Collateral”), the Landlord utilized Florida's abandoned property statute ¹ to dispose of some of the Collateral. Allegedly, the Landlord sold the Collateral to Kafka, one of the defendants in this proceeding, who then allegedly re-sold the Collateral to third parties, including scrap dealers and certain of the Debtor's competitors.

The Bank asserts a competing—and allegedly senior—lien interest in the Collateral and disputes the validity of the Landlord's disposition of the Collateral. In March of 2008, pursuant to a series of loan documents, the Bank created a security interest in virtually all of the Debtor's assets, including the Collateral. After the Debtor defaulted on its obligations to the Bank under the loan documents, the Bank obtained a judgment in the State of Ohio against the Debtor in the amount of $2,134,518.82. When the Debtor filed its bankruptcy petition, the Bank filed its proof of claim in the foregoing amount based on the Ohio judgment. Prior to the petition date, the Bank allegedly had been seeking to recover the Collateral, or the proceeds thereof, as part of its security interest in order to reduce the balance on its judgment against the Debtor.

The Bank has at all times asserted a senior lien interest in the Collateral, while the Landlord contends that its landlord's lien under chapter 83 of the Florida Statutes has priority over the Bank's lien. Based on the Bank's asserted senior lien position in the Collateral, the Bank also contends that the Landlord's sale of the Collateral was impermissible and that the sale (and Kafka's subsequent sales to third parties) damaged the Bank by dissipating assets that would have otherwise been available to reduce the balance on its judgment against the Debtor and the amount of its claim against the estate.

Given the competing lien interests in the Collateral, Count I of the Bank's Amended Complaint seeks a determination of the validity, priority, and extent of the various lien interests in the Collateral. Similarly, Count II seeks a declaratory judgment pursuant to Florida Statutes section 86.011 establishing the parties' respective rights in the Collateral.² In Counts III, IV, and V, the Bank sued only Kafka, in both his capacity as trustee of the Landlord and individually (collectively, “Kafka”), for conversion, violation of chapter 818 of the Florida Statutes, and conspiracy.

Kafka filed an Amended Answer (Doc. No. 136) to the Amended Complaint, in which he raised settlement as an affirmative defense. Specifically, Kafka contends that during the course of his settlement negotiations with Michael Davis, a former Vice President of the Bank ³ (“Davis”), the Bank offered to settle the causes of action comprising the instant adversary proceeding for a certain sum of money. Kafka further submits that he accepted the Bank's offer, but that the Bank subsequently repudiated its agreement by reneging on its deal and refusing to dismiss this proceeding. The Bank disagrees with Kafka's assertions, arguing instead that no settlement was ever reached because the settlement communications between Kafka and Davis did not include all the essential terms of a settlement. The Bank also argues that Davis lacked the ultimate authority to bind the Bank because any offer Davis made would have been subject to the Bank's completion of its due diligence process and approval by a credit committee pursuant to the Bank's internal operating procedures.

Prior to the final evidentiary hearing which this Court conducted,⁴ Kafka filed a motion for summary judgment (Doc. No. 140), in which he re-asserted the position that the parties had reached a settlement, thereby...