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In re Land Conservancy of Elkins Park, Inc.

United States District Court, Third Circuit

February 11, 2013




Debtor-Appellant Land Conservancy of Elkins Park, Inc. appeals from the Bankruptcy Court’s Order dated February 21, 2012. For the following reasons, and having considered fully the briefs and the record on appeal, and determined that oral argument is not necessary in this case, [1] the Court will affirm the order of the Bankruptcy Court.

I. Background

On November 1, 2010, Debtor filed voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code[2] in the Bankruptcy Court for the Eastern District of Pennsylvania.[3] On November 30, 2010, Debtor initiated an adversary proceeding against Defendant/Appellee the Dominican Congregation of Saint Catherine de’ Ricci (“the Congregation”), concerning real property located at 1750 Ashbourne Road in Elkins Park, Pennsylvania (“the Property”), which Debtor purchased from the Congregation.[4] Debtor and the Congregation reached a settlement of the adversary proceeding in April 2011.[5] However, Debtor defaulted under this initial settlement agreement and the Congregation retained ownership of the property.

Following this default, the parties continued their attempts to resolve the dispute without litigation and on December 9, 2011, Debtor filed a motion on behalf of Debtor and the Congregation, requesting that the Bankruptcy Court approve a second settlement (“Revised Settlement” or “Revised Settlement Agreement”).[6] On December 22, 2011, after a hearing on the motion, the Bankruptcy Court approved the Revised Settlement, which required Debtor to pay the Congregation $300, 000 by December 31, 2011.[7] Debtor failed to make this payment. On January 18, 2012, Debtor filed a motion to vacate the December 22, 2011 Order approving the Revised Settlement and the Congregation filed a motion for relief from the automatic stay to permit it to file an action to eject Debtor from the property.[8] The Bankruptcy Court held a hearing on both motions on February 15, 2012, and on February 21, 2012, the Bankruptcy Court entered an order denying Debtor’s motion to vacate and granting the Congregation’s motion for relief from the stay.[9] Debtor has appealed, seeking review of this February 21, 2012 Order.[10]

II. Jurisdictional Statement

Bankruptcy courts have jurisdiction to hear and determine all core proceedings under Title 11 of the United States Code.[11] An adversary proceeding which concerns, inter alia, administration of the estate, property of the estate, and dischargeability of particular debts is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (E), and (I); the Bankruptcy Court had jurisdiction under these sections. This Court has jurisdiction under 28 U.S.C. § 158(a) to consider Debtor’s appeal from the final order of the Bankruptcy Court entered February 21, 2012.[12]

III. Standard of Review

A district court reviewing the decision of a bankruptcy court on appeal “may affirm, modify, or reverse a bankruptcy judge’s judgment, order, or decree or remand with instructions for further proceedings.”[13] The Court reviews the bankruptcy court’s “legal determinations de novo, its factual findings for clear error, and its exercise of discretion for abuse thereof.”[14]“Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.”[15] A finding of fact is “clearly erroneous” when it is “completely devoid of minimum evidentiary support displaying some hue of credibility or bears no rational relationship to the supporting evidentiary data.”[16] “A bankruptcy court abuses its discretion when its ruling is founded on an error of law or a misapplication of law to the facts.”[17]

A district court’s review of a bankruptcy appeal is limited to the record before the bankruptcy court.[18] In its recitation of the facts, Debtor fails to cite to the record in this case and some of the facts stated are not evident from the record. This Court considers only those facts that can be gleaned from the record before the Bankruptcy Court.

IV. Statement of Facts

On February 23, 2009, Debtor purchased the Property from the Congregation for a total purchase price of $8, 500, 000.[19] The Congregation provided financing to Debtor for the purchase in an aggregate principal amount of $6, 900, 000, which was secured by a promissory note and mortgage on the property.[20] Debtor failed to make timely payments and as a result on November 1, 2010, the Congregation recorded a Deed in Lieu of Mortgage Foreclosure on the Property.[21]That same day Debtor filed its voluntary Chapter 11 petition.[22] Debtor initiated an adversary proceeding against the Congregation on November 30, 2010.[23]

As stated, the parties reached a settlement of the adversary proceeding in April 2011, and then the Revised Settlement, which was approved by the Court on December 22, 2011, and required Debtor to make a $300, 000 payment to the Congregation by December 31, 2011.

At the time of the initial settlement agreement, Debtor contemplated securing a loan from Atlantic Rim Fund, a Bankruptcy Court approved lender, and using loan proceeds to satisfy its obligations to the Congregation under the initial settlement agreement.[24] Atlantic Rim, however, failed to fund the loan and this failure caused Debtor to default under the initial settlement.[25]Debtor’s ability to make payments under the Revised Settlement was contingent upon Atlantic Rim’s returning a $600, 000 deposit to Debtor, [26] ...

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