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Danner v. Tower Acquisition

March 22, 2007

JOHN R. DANNER, JR., MARTHA E. DANNER, EMMA E. PETERS, RUTH A. THOMPSON, PLAINTIFFS
v.
TOWER ACQUISITION, LLC, DEFENDANT



The opinion of the court was delivered by: William W. Caldwell United States District Judge

MEMORANDUM

I. Introduction

The plaintiffs, John R. Danner, Jr., Martha E. Danner, Emma M. Peters, and Ruth A. Thompson, filed this action in ejectment in state court to oust defendant, Tower Acquisition, LLC, from a four-acre plot of land Plaintiffs own. Plaintiffs had leased the land to a predecessor in interest of Defendant, and it has been used for a cell tower.

Tower Acquisition purchased the right in the leasehold from a debtor in bankruptcy, International Communications Group, Inc. (ICG). It removed the action to this court, asserting we have diversity and bankruptcy jurisdiction to entertain the action. Defendant has also moved to transfer the case to the United States Bankruptcy Court for the Northern District of Texas, where the bankruptcy proceedings are ongoing.

We are considering Plaintiffs' motion to remand to state court for lack of jurisdiction. Plaintiffs argue the amount in controversy does not exceed the $75,000 threshold for diversity jurisdiction and that bankruptcy jurisdiction is lacking here because the lease, having been sold, is no longer part of the bankruptcy estate so that their action in ejectment can have no effect on the estate in bankruptcy. Conversely, Defendant argues that the amount in controversy is in excess of the jurisdictional amount, when viewed from the point of view of Defendant as the tenant. Additionally, bankruptcy jurisdiction exists because resolution of the ejectment action will require interpretation of the bankruptcy court's orders and notices.

We conclude that we have no jurisdiction on either basis and will remand to the state court.

II. Background

On September 7, 1984, Plaintiffs leased a four-acre plot of land to Quest Microwave VII, Inc. (Qwest) for an original term of ten years designated as beginning on September 1, 1984.*fn1 Quest started using the land for a communications tower. The lease gave Qwest the option of extending it for two additional ten-year terms by providing written notice to the Plaintiffs during the last year of each lease period. (Doc. 14- 2, Ex. A, "Ground Lease Agreement," ¶ 2.02, the "Right to Extend" clause). Otherwise, the lease converted to one from month to month. (Id., ¶ 2.03, the "Holding Over" clause). During the first ten-year term, Qwest assigned its interest under the lease to Qwest Communications, Inc. (Qwestcom). Before the original term expired, Qwestcom extended the lease for another ten-year term ending on August 31, 2004. Qwestcom then assigned its interest to Corban Towers, Inc. (Corban Towers).

Corban Towers and an affiliated company, Corban Communications, Inc., filed a voluntary Chapter 11 petition in bankruptcy on March 12, 2004, in the United States Bankruptcy Court for the Northern District of Texas.*fn2 According to Defendant, "[a]s debtors in possession, Corban Towers, Inc. and Corban Communications, Inc. notified Plaintiffs of their intention to assume the ground lease, auction and sell it, and then assign it to the highest and best bidder." (Doc. 19, Defs.' Br. in Opp'n to Remand at p. 2). Defendant asserts that this "written notice . . . sent to Plaintiffs on May 1, 2004," before the end of the second ten-year term on August 31, 2004, also "exercis[ed] the option to extend the lease for the final ten-year term" to end on August 31, 2014. (Id.) According to Defendant, Plaintiffs did not object, and ICG, as the highest bidder, bought the lease.*fn3

On August 12, 2004, the bankruptcy court approved the sale of substantially all the assets of Corban Communications to ICG. At the same time, the court also entered a separate order approving assumption of the lease by Corban Towers, which at that time was owned by ICG. (Doc. 3, Defs.' Br. in Supp. of Transfer at p. 5-6).

Although Defendant asserts here that the lease was renewed for its final ten-year term by the May 2004 notice to Plaintiffs notifying them that the debtors intended to assume the lease, an entity named Corban Networks, Inc. sent a letter to Verna Danner on November 5, 2004, about a month after the second ten-year lease term ended, purporting to exercise "the final renewal option" to extend the lease "for a five (5) year term beginning September 1, 2004."*fn4

(Doc. 14, Ex. B). The letter continued: "We realize this renewal request is in arrears, but have taken the liberty of providing a check for the full amount due for the 2004-2005 rental term at the adjusted rental rate of $2,710.02." (Id.) The letter requested that Verna Danner sign a copy of the letter and return it to Corban Networks, Inc. to indicate acceptance of the renewal. (Id.)*fn5

Nearly one year later, on August 3, 2005, creditors filed an involuntary bankruptcy petition against ICG in the same Texas bankruptcy court. On or about November 15, 2005, the court entered an order for relief. Around this time, Corban Towers filed a second voluntary petition in bankruptcy, and the court consolidated the bankruptcy cases of ICG and Corban Towers into the ICG bankruptcy.

Once again, the debtors, according to Defendant, determined that the lease should be assumed and then sold to the highest bidder. ICG so notified Plaintiffs. Defendant asserts that it: emerged as the highest bidder for a bundle of ICG's assets, including ICG's leasehold interest under the lease, which ICG and Tower Acquisition understood to have a term ending in 2014. Again, the Texas bankruptcy court approved every aspect of the sale process and entered final orders conveying and assigning the ground leasehold and related tower to Tower Acquisition. Again, Plaintiffs received notice of all aspects of the sale and assignment, but failed to appear or raise any concern or objection to the sale or the assignment. (Doc. 19, Defs.' Br. in Opp'n to Remand at p. 2). Specifically, according to Defendant's brief, the bankruptcy court's order of April 3, 2006, allowed the debtors to assume the lease and approved its assignment to Tower Acquisition.

On October 25, 2006, Plaintiffs filed their action in ejectment against Tower Acquisition in the Court of Common Pleas of York County, Pennsylvania. (Doc. 6, Ex. A to notice of removal). The complaint alleges that when Qwestcom held the leasehold, it timely exercised the option to renew for the second ten-year term but that thereafter the term expired on August 31, 2004, without a timely renewal; that on January 16, 2006, Plaintiffs' counsel notified Corban Networks that the lease would be terminated on February 28, 2006; that Corban Networks "purported" to assign the lease to Tower Acquisition on April 3, ...


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