Walker, Truesdell, Roth & Assocs. v. Blackstone Grp., L.P. (In re Extended Stay, Inc.)

• Decision Date: 10 November 2011
• Docket Number: 11 Civ. 5864 (SAS).Adversary Nos. 11–2398,Bankruptcy No. 09–13764 (JMP).Nos. 11 Civ. 5394 (SAS),11–2259.,11 Civ. 5396 (SAS),11–2256,11 Civ. 5397 (SAS),11 Civ. 5395 (SAS),11–2255,11–2254
• Citation: 466 B.R. 188
• Parties: In re EXTENDED STAY, INC., et al., Debtors.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs, v. The Blackstone Group, L.P., Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P., Blackstone Holdings V L.P., Blackstone Holdings I/II GP, Inc., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV GP L.P., Blackstone Holdings V GP L.P., Blackstone Real Estate Partners IV L.P., Blackstone Capital Partners IV L.P., BHAC IV, LLC, BRE/HV Holdings LLC, Blackstone Hospitality Acquisitions, LLC, Prime Hospitality, LLC, DL–DW Holdings, LLC, Lightstone Holdings LLC, the Lightstone Group, LLC, PGRT ESH Inc., Lightstone Commercial Management, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC, Princeton ESH LLC, Atmar Associates, LLC, Glida One LLC, Ron Invest LLC, Polar Extended Stay (USA) L.P., BHAC Capital IV, LLC, BRE/ESH Holdings, LLC, ABT–ESI LLC, Mericash Funding LLC, Park Avenue Funding LLC, Bank of America, N.A., Citigroup Global Markets Inc., Ebury Finance Limited, Banc of America Securities LLC, David Lichtenstein, Bruno De Vinck, Peyton “Chip” Owen, Jr., Guy R. Milone, Jr., Joseph Chetrit, Josesph Teichman, Joseph Martello, F. Joseph Rogers, David Kim, Gary Delapp, Jonathan D. Gray, William Stein, Michael Chae, Robert L. Friedman, Thomas Burdi, Gary Sumers, Dennis J. McDonaugh, Alan Miyasaki, and John Does 1 through 100, inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs, v. Lightstone Holdings, LLC, Lightstone Commercial Management, DL–DW Holdings, LLC, BHAC Capital IV, LLC, Arbor Commercial Mortgage, LLC, ABT–ESI LLC, Mericash Funding, LLC, Park Avenue Funding LLC, Princeton ESH LLC, Bank of America, N.A., J.P. Morgan Commercial Mortgage Inc., Ashford Hospitality Finance LP, Atlas Ventures I LLC, Barton Equities LLC, BK ESH LLC, CL Ventures LLC, Deuce Properties Limited, Ebury Finance Limited, ESH Funding LLC, FIF V ESA Holdings LLC, FIF V ESA LLC, FOA ESH LLC, GF ESH LLC, Gramercy Warehouse Funding IV LLC, Hospitality F, LLC, JPMorgan Chase Bank, N.A., Individually and in its capacity as administrator, J.P. Morgan Clearing Corp., Legacy ESH LLC, Line Trust Corporation Limited, Merrill Lynch Mortgage Lending, Inc., Merrill Lynch & Co., Inc., SFF ESH LLC, SW ESH LLC, SL Green Funding LLC, WRP ESH LLC, and Does 1 through 100, inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs, v. The Blackstone Group, L.P., Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P., Blackstone Holdings V L.P., Blackstone Holdings I/II GP, Inc., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV GP L.P., Blackstone Holdings V GP L.P., Blackstone Real Estate Partners IV L.P., Blackstone Capital Partners IV L.P., BHAC IV, LLC, BRE/HV Holdings LLC, Blackstone Hospitality Acquisitions, LLC, Prime Hospitality, LLC, DL–DW Holdings, LLC, Citigroup Global Markets, Inc., Bank of America, N.A., and Does 1 through 100, Inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs, v. The Blackstone Group, L.P., Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P., Blackstone Holdings V L.P., Blackstone Holdings I/II GP, Inc., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV GP L.P., Blackstone Holdings V GP L.P., Blackstone Real Estate Partners IV L.P., Blackstone Capital Partners IV L.P., BHAC IV, LLC, BRE/HV Holdings LLC, Blackstone Hospitality Acquisitions, LLC, Prime Hospitality, LLC, DL–DW Holdings, LLC, Lightstone Holdings LLC, the Lightstone Group, LLC, PGRT ESH Inc., Lightstone Commercial Management, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC, Princeton ESH LLC, Atmar Associates, LLC, Glida One LLC, Ron Invest LLC, Polar Extended Stay (USA) L.P., BHAC Capital IV, LLC, BRE/ESH Holdings, LLC, ABT–ESI LLC, Mericash Funding LLC, Park Avenue Funding LLC, Bank of America, N.A., Citigroup Global Markets Inc., Ebury Finance Limited, Banc of America Securities LLC, David Lichtenstein, Bruno De Vinck, Peyton “Chip” Owen, Jr., Guy R. Milone, Jr., Joseph Chetrit, Josesph Teichman, Joseph Martello, F. Joseph Rogers, David Kim, Gary Delapp, Jonathan D. Gray, William Stein, Michael Chae, Robert L. Friedman, Thomas Burdi, Gary Sumers, Dennis J. McDonaugh, Alan Miyasaki, and John Does 1 through 100, inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs, v. Archon Group, L.P., Individually and as Servicer, Starwood Capital Group Global, L.P., Debt U ESH, L.P., Debt II ESH, L.P., Wachovia Bank, National Association, Square Mile Capital Management, LLC, ESH Owner, LLC, Keybank, National Association, U.S. Bank National Association, not individually but solely as Trustee for Maiden Lane Commercial Mortgage–Backed Securities Trust 2008–1, Maiden Lane Commercial Mortgage–Backed Securities Trust 2008–1 and the Federal Reserve Bank of New York, and Does 1 through 100, inclusive, Defendants.
• Court: U.S. District Court — Southern District of New York

466 B.R. 188

In re EXTENDED STAY, INC., et al., Debtors.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs,

v.The Blackstone Group, L.P., Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P., Blackstone Holdings V L.P., Blackstone Holdings I/II GP, Inc., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV GP L.P., Blackstone Holdings V GP L.P., Blackstone Real Estate Partners IV L.P., Blackstone Capital Partners IV L.P., BHAC IV, LLC, BRE/HV Holdings LLC, Blackstone Hospitality Acquisitions, LLC, Prime Hospitality, LLC, DL–DW Holdings, LLC, Lightstone Holdings LLC, the Lightstone Group, LLC, PGRT ESH Inc., Lightstone Commercial Management, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC, Princeton ESH LLC, Atmar Associates, LLC, Glida One LLC, Ron Invest LLC, Polar Extended Stay (USA) L.P., BHAC Capital IV, LLC, BRE/ESH Holdings, LLC, ABT–ESI LLC, Mericash Funding LLC, Park Avenue Funding LLC, Bank of America, N.A., Citigroup Global Markets Inc., Ebury Finance Limited, Banc of America Securities LLC, David Lichtenstein, Bruno De Vinck, Peyton “Chip” Owen, Jr., Guy R. Milone, Jr., Joseph Chetrit, Josesph Teichman, Joseph Martello, F. Joseph Rogers, David Kim, Gary Delapp, Jonathan D. Gray, William Stein, Michael Chae, Robert L. Friedman, Thomas Burdi, Gary Sumers, Dennis J. McDonaugh, Alan Miyasaki, and John Does 1 through 100, inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs,

v.Lightstone Holdings, LLC, Lightstone Commercial Management, DL–DW Holdings, LLC, BHAC Capital IV, LLC, Arbor Commercial Mortgage, LLC, ABT–ESI LLC, Mericash Funding, LLC, Park Avenue Funding LLC, Princeton ESH LLC, Bank of America, N.A., J.P. Morgan Commercial Mortgage Inc., Ashford Hospitality Finance LP, Atlas Ventures I LLC, Barton Equities LLC, BK ESH LLC, CL Ventures LLC, Deuce Properties Limited, Ebury Finance Limited, ESH Funding LLC, FIF V ESA Holdings LLC, FIF V ESA LLC, FOA ESH LLC, GF ESH LLC, Gramercy Warehouse Funding IV LLC, Hospitality F, LLC, JPMorgan Chase Bank, N.A., Individually and in its capacity as administrator, J.P. Morgan Clearing Corp., Legacy ESH LLC, Line Trust Corporation Limited, Merrill Lynch Mortgage Lending, Inc., Merrill Lynch & Co., Inc., SFF ESH LLC, SW ESH LLC, SL Green Funding LLC, WRP ESH LLC, and Does 1 through 100, inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs,

v.The Blackstone Group, L.P., Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P., Blackstone Holdings V L.P., Blackstone Holdings I/II GP, Inc., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV GP L.P., Blackstone Holdings V GP L.P., Blackstone Real Estate Partners IV L.P., Blackstone Capital Partners IV L.P., BHAC IV, LLC, BRE/HV Holdings LLC, Blackstone Hospitality Acquisitions, LLC, Prime Hospitality, LLC, DL–DW Holdings, LLC, Citigroup Global Markets, Inc., Bank of America, N.A., and Does 1 through 100, Inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs,

v.The Blackstone Group, L.P., Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P., Blackstone Holdings V L.P., Blackstone Holdings I/II GP, Inc., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV GP L.P., Blackstone Holdings V GP L.P., Blackstone Real Estate Partners IV L.P., Blackstone Capital Partners IV L.P., BHAC IV, LLC, BRE/HV Holdings LLC, Blackstone Hospitality Acquisitions, LLC, Prime Hospitality, LLC, DL–DW Holdings, LLC, Lightstone Holdings LLC, the Lightstone Group, LLC, PGRT ESH Inc., Lightstone Commercial Management, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC, Princeton ESH LLC, Atmar Associates, LLC, Glida One LLC, Ron Invest LLC, Polar Extended Stay (USA) L.P., BHAC Capital IV, LLC, BRE/ESH Holdings, LLC, ABT–ESI LLC, Mericash Funding LLC, Park Avenue Funding LLC, Bank of America, N.A., Citigroup Global Markets Inc., Ebury Finance Limited, Banc of America Securities LLC, David Lichtenstein, Bruno De Vinck, Peyton “Chip” Owen, Jr., Guy R. Milone, Jr., Joseph Chetrit, Josesph Teichman, Joseph Martello, F. Joseph Rogers, David Kim, Gary Delapp, Jonathan D. Gray, William Stein, Michael Chae, Robert L. Friedman, Thomas Burdi, Gary Sumers, Dennis J. McDonaugh, Alan Miyasaki, and John Does 1 through 100, inclusive, Defendants.Walker, Truesdell, Roth & Associates, as Trustee for and on behalf of the Extended Stay Litigation Trust, Hobart Truesdell, as Trustee for and on behalf of the Extended Stay Litigation Trust, and the Extended Stay Litigation Trust, Plaintiffs,

v.Archon Group, L.P., Individually and as Servicer, Starwood Capital Group Global, L.P., Debt U ESH, L.P., Debt II ESH, L.P., Wachovia Bank, National Association, Square Mile Capital Management, LLC, ESH Owner, LLC, Keybank, National Association, U.S. Bank National Association, not individually but solely as Trustee for Maiden Lane Commercial Mortgage–Backed Securities Trust 2008–1, Maiden Lane Commercial Mortgage–Backed Securities Trust 2008–1 and the Federal Reserve Bank of New York, and Does 1 through 100, inclusive, Defendants.

Bankruptcy No. 09–13764 (JMP).Nos. 11 Civ. 5394 (SAS)

11 Civ. 5395 (SAS)

11 Civ. 5396 (SAS)

11 Civ. 5397 (SAS)

11 Civ. 5864 (SAS).Adversary Nos. 11–2398

11–2256

11–2255

11–2254

11–2259.

United States District Court, S.D. New York.

Nov. 10, 2011.

Recognized as Unconstitutional

28 U.S.C.A. § 157(b)(2)(C)

Marc Dennis Powers, Esq., Benjamin David Pergament, Esq., Baker & Hostetler LLP (N.Y.C), New York City, NY, Michael John Connolly, Esq., Forman Holt Eliades & Ravin, LLC, Paramus, NJ, for Plaintiffs.

Paul Basta, Esq., Kirkland & Ellis LLP (N.Y.C), New York, NY, Daniel T. Donovan, Esq., Kirkland & Ellis LLP, Washington, DC, for Defendants Blackstone Group, L.P., Blackstone Holding I L.P., Blackstone Holding II L.P., Blackstone Holding III L.P., Blackstone Holding IV L.P., Blackstone Holding V L.P., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV GP L.P., Blackstone Capital Partners IV L.P., Blackstone Hospitality Acquisitions, LLC, and Blackstone Holdings V GP L.P.Adina Giselle Storch, Esq., Christopher Paul Johnson, Esq., Howard W. Schub, Esq., Robert M. Novick, Esq., Kasowitz, Benson, Torres & Friedman, LLP (N.Y.C), New York, NY, for Defendants Lightstone Holdings, LLC, The Lightstone Group, LLC, Lightstone Commercial Management, DL–DW Holdings, LLC, BHAC Capital IV, LLC, Park Avenue Funding LLC, David Lichtenstein, Bruno De Vinck, Peyton Chip Owen, Jr., and Joseph Teichman.Edward Kevin Lenci, Esq., Hinshaw & Culbertson LLP, New York, NY, for Defendant PGRT ESH, Inc.Benjamin S. Kaminetzky, Esq., Davis Polk & Wardwell LLP, New York, NY, for Defendants Bank of America, N.A., Banc of America Securities LLC, and JPMorgan Chase Bank, N.A., individually and in its capacity as administrator.Thomas Joseph Hall, Esq., Chadbourne & Parke LLP (N.Y.), New York, NY, for Defendant Citigroup Global Markets, Inc.Deborah H. Devan, Esq., Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., Baltimore, MD, for Defendants Deuce Properties Limited and Line Trust Corporation Limited.Judith Elkin, Esq., Haynes and Boone, LLP (N.Y.), New York, NY, for Defendant Archon Group, L.P.Gary D. Ticoll, Esq., Greenberg Traurig, LLP (N.Y.C), New York, NY, for Defendants Starwood Capital Group Global, L.P., Debt U ESH, LP, Debt II ESH, LP, Square Mile Capital Management, LLC, and ESH Owner, LLC.James E. Hough, Esq., Rachel M. Wertheimer, Esq., Brett H. Miller, Esq., LaShann M. DeArcy, Esq., Morrison & Foerster LLP, New York, NY, for Defendant Wachovia Bank, National Association.Kristi Akins Davidson, Esq., Buchanan Ingersoll & Rooney P.C. (N.Y.C), New York, NY, for Defendant Keybank, National Association.Howard S. Zelbo, Esq., Cleary Gottlieb Steen & Hamilton LLP, New York, NY, for Defendants U.S. Bank National Association, not individually but solely in its capacity as Trustee for Maiden Lane Commercial Mortgage–Backed Securities Trust 2008–1, Maiden Lane Commercial Mortgage–Backed Securities Trust 2008–1, and the Federal Reserve Bank.

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.I. INTRODUCTION

Plaintiffs, Walker, Truesdell, Roth & Associates and Hobart Truesdell, as Trustees for and on behalf of the Extended Stay Litigation Trust (the “Trust”), and the Trust bring these motions to withdraw the reference, pursuant to section 157(d) of Title 28 of the United States Code, of five adversary actions filed in connection with the bankruptcy of Extended Stay, Inc., and its affiliated entities, from the United States Bankruptcy Court to this Court. Plaintiffs argue that all five cases meet the standards for mandatory and permissive withdrawal of the reference. The gravamen of plaintiffs' argument is that an Article III court must adjudicate these adversary actions under the Supreme Court's recent decision in Stern v. Marshall. ¹ Defendants argue that withdrawal of the reference is neither required by the mandatory withdrawal standard nor appropriate under the permissive withdrawal standard. For the reasons set forth below, plaintiffs' motions to withdraw the...