WBL SPE II, LLC v. Apsco, Inc. (In re Lane), 19-11901-j13

Decision Date05 August 2021
Docket Number19-11901-j13,Adversary 19-1079-j
PartiesIn re: BELENDA M. LANE, Debtor. v. APSCO, INC., JESSE LANE PROPERTIES, LLC, LANE LAS CRUCES, LLC, and BELENDA M. LANE, Defendants. WBL SPE II, LLC, Plaintiff,
CourtU.S. Bankruptcy Court — District of New Mexico

Robert R. Feuille, Counsel for Plaintiff.

Shay Elizabeth Meagle, Counsel for Plaintiff, Moses, Dunn, Farmer & Tuthill, P.C.

Richard A. Hawthorne, Counsel for APSCO, Jesse Lane Properties, and Lane Las Cruces.

John D. Wheeler, Counsel for Defendant Belenda Lane.

R Trey Arvizu, III, Counsel for Debtor Belenda Lane.

MEMORANDUM OPINION

Robert H. Jacobvitz, United States Bankruptcy Judge.

THIS MATTER is before the Court on Plaintiff's Partial Motion for Summary Judgment ("Summary Judgment Motion"). See Docket No. 27. Defendants APSCO, Inc., Jesse Lane Properties, LLC, and Lane Las Cruces, LLC filed a response[1] to the Summary Judgment Motion ("Response"), and Plaintiff replied ("Reply"). See Docket Nos. 28, 32. After consideration of the arguments and evidence presented by the parties, the Court will deny Plaintiff's Summary Judgment Motion for the reasons set forth below.

I. SUMMARY JUDGMENT STANDARDS

Summary judgment will be granted when the movant demonstrates that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a), made applicable to adversary proceedings by Rule 7056, Fed.R.Bankr.P. "[A] party seeking summary judgment always bears the initial responsibility of informing the . . . court of the basis for its motion, and . . . [must] demonstrate the absence of a genuine issue of material fact." Celotex Corp. v Catrett, 477 U.S. 317, 323 (1986). Only if the properly supported material facts entitle the requesting party to judgment as a matter of law is it appropriate for the Court to grant summary judgment. Id. The Court evaluates a request for summary judgment by drawing "all reasonable factual inferences in favor of the non-moving party." Genberg v. Porter, 882 F.3d 1249, 1253 (10th Cir. 2018). Thus, summary judgment is appropriate "if the evidence points only one way and no reasonable inferences could support the non-moving party's position." Id.

In opposing a motion for summary judgment, a party may establish the existence of a genuinely disputed material fact by: 1) citing to "depositions, documents, electronically stored information, affidavits or declarations, stipulations ... admissions, interrogatory answers or other materials" in the record; or 2) "showing that the materials cited [by the moving party] do not establish the absence ... of a genuine dispute," or that the moving party "cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1)(A) and (B). A dispute is "genuine" where "the evidence is such that a reasonable jury could return a verdict for the non[-]moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" if it "might affect the outcome of the suit under the governing law[.]" Id.

New Mexico Local Bankruptcy Rule 7056-1(c) provides that the party opposing summary judgment must: 1) list the material facts as to which the party contends a genuine fact exists; 2) "refer with particularity to those portions of the record upon which the opposing party relies;" and 3) "state the number of the movant's fact that is disputed." NM LBR 7056-1(c). Properly supported material facts in the movant's motion are "deemed admitted unless specifically controverted" by the party opposing summary judgment. NM LBR 7056-1(c).

II. FACTS NOT SUBJECT TO GENUINE DISPUTE

After review of the documents presented by Plaintiff and Defendants, including an affidavit by Jesse Lane, as well as the Summary Judgment Motion, Response, and Reply, the Court finds that the following facts are not in genuine dispute.

The Parties

1. Plaintiff, WBL SPE II, LLC ("Plaintiff") is a New York limited liability company. [First Amended Complaint ("FAC"), ¶ 1; Answer by APSCO, Inc., Jesse Lane Properties, LLC, and Lane Las Cruces, LLC ("Answer"), ¶ 1 (admitted); Ex. T].

2. World Business Lenders, LLC ("WBL") is a New York limited liability company [Ex. U]. Although WBL was the lender when the loan documents were executed, Plaintiff was the holder of the Notes and Mortgages when Plaintiff filed the complaint in the state court that is the basis of this proceeding. [Ex. RR, SS, TT and UU]

3. Defendant APSCO, Inc. ("APSCO") is a New Mexico corporation. [FAC, ¶ 2; Answer, ¶ 1(admitted)].

4. Defendant Jesse Lane Properties, LLC ("JLP") is a New Mexico limited liability company. [FAC, ¶ 3; Answer, ¶ 1(admitted)].

5. Defendant Lane Las Cruces, LLC ("Lane Las Cruces")[2] is a New Mexico limited liability company. [FAC, ¶ 4; Answer, ¶ 1(admitted)]. 6. Defendant Belenda Lane is an individual and the debtor in the underlying chapter 13 bankruptcy case, case number 19-11901-j13, which is pending. [FAC, ¶ 5; Answer, ¶ 1 (admitted); Case No. 19-11901-j13, Doc. 1].

The JLP Operating Agreement

7. Under JLP's Operating Agreement (the "Operating Agreement") effective at the time of the transactions at issue, Ms. Lane and Jesse Lane are managers of JLP. [Ex. DD, p. 8, § 6.2)].

8. The Operating Agreement provides:

if more than one [m]anager is then serving, notwithstanding that any reference herein to the [m]anagers may be stated in the plural, either shall have the power, without the consent of the other, to take any action hereunder that is within the authorized powers of the [m]anager hereunder.

[Ex. DD, p. 8, § 6.2 (A) (2)].

9. The Operating Agreement gives Ms. Lane, as a manager, the authority to borrow money "for [JLP]" and to encumber and grant security interests against its property to secure loans for JLP. [Ex. DD, p. 9, § 6.3(A)(2)].

10. WBL received a copy of the Operating Agreement prior to closing of the loans and mortgages at issue. [MSJ, ¶ 33; Response, ¶ 19].

The Notes and Mortgages

11. On September 23, 2016, Ms. Lane signed a document entitled Business Promissory Note and Security Agreement ("Note 1") in the original principal amount of $329, 000.00 in favor of WBL. [Ex. A].

12. APSCO and JLP were named as the borrowers in Note 1. [Ex. A].

13. Ms Lane signed Note 1 as "Corp. Sec" of both APSCO and JLP. [Ex. A]. 14. In connection with Note 1, Ms. Lane signed a "Business Loan Purpose Affidavit" as "Corp. Sec." of JLP stating that the loan proceeds "will be used for business purposes only, and not for personal, consumer, family or household purposes or to purchase personal, consumer, family or household goods." [Ex. I].

15. Also on September 23, 2016, Ms. Lane executed a mortgage ("Mortgage 1"), which also contained an assignment of rents and a security agreement granting a security interest in fixtures in favor of WBL, granting WBL a mortgage on real property, a lien against rents, and a lien against fixtures affixed to the property as security for repayment of the debt evidenced by Note 1. [Ex. B].

16. Ms. Lane signed Mortgage 1 as a manager of JLP. [Ex. B].

17. By its terms, Mortgage 1 encumbers the real property commonly known as 406 Fairgrounds Rd., Alamogordo, NM 88311, all improvements located thereon, and all other property described in such Mortgage 1 (collectively, the "Property"), and was recorded with the Otero County, New Mexico Clerk's Office on September 27, 2016 as Instrument No. 201607676. [Ex. B].

18. WBL subsequently transferred Note 1 to Plaintiff and Plaintiff was the holder thereof on the date this case was filed in the state court. [Ex. SS, TT and UU].

19. Mortgage 1 was subsequently assigned by WBL to WBL SPO I, LLC on April 13, 2017. [Ex. C]. 20. WBL SPO I, LLC subsequently assigned Mortgage 1 to WBL SPE II on June 29, 2017. [Ex. D].

21. After this case was filed in the state court, WBL SPE II, LLC assigned Mortgage 1 to WBL SPO I, LLC on October 24, 2019. [Ex. E]. 22. On November 11, 2016, Ms. Lane executed another document entitled Business Promissory Note and Security Agreement ("Note 2") in the original principal amount of $40, 000.00 in favor of WBL. [Ex. J].

23. Ms. Lane signed Note 2 as "Corp. Sec." of APSCO and JLP. [Ex. J, p. 7].

24. In connection with Note 2, Ms. Lane signed a "Business Loan Purpose Affidavit" as "Corp. Sec." of JLP stating that the proceeds of Note 2 "will be used for business purposes only, and not for personal, consumer, family or household purposes or to purchase personal, consumer, family or household goods." [Ex. S].

25. On November 14, 2016, as security for repayment of Note 2, Ms. Lane signed a mortgage ("Mortgage 3")[3], which also contained an assignment of rents and security agreement, in favor of WBL, granting WBL a mortgage on the Property. [Exh. K].

26. Mortgage 3 was recorded with the Otero County, New Mexico Clerk's Office on November 15, 2016 as Instrument No. 201609081 ("Mortgage 3"). [Ex. K].

27. Ms. Lane signed Mortgage 3 as manager of JLP. [Ex. K, p. 11].

28. WBL subsequently transferred Note 2 to Plaintiff, and Plaintiff was the holder thereof on the date this case was filed in the state court. [Ex. RR, TT and UU].

29. WBL subsequently assigned Mortgage 3 to WBL SPO I, LLC on April 6, 2017. [Ex. L]. 30. WBL SPO I, LLC subsequently assigned Mortgage 3 to WBL SPE II on June 29, 2017. [Ex. M]. 31. After this case was filed in the State Court, WBL SPE II, LLC assigned Mortgage 3 to WBL SPO I, LLC. [Ex. N].

32. After WBL inquired about Ms. Lane's authority to enter into the Notes and Mortgages on behalf of the Entities, WBL was provided an attorney opinion letter purportedly issued by a law firm in Albuquerque (the "Purported Opinion Letter"). [Ex. CC].

33. Notes 1 and 2 (hereinafter referred to together as the "Notes") granted a security...

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