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Lester v. Percudani

United States District Court, Third Circuit

October 11, 2013

EDDIE and SHARON LESTER, et al., Plaintiffs,
v.
GENE PERCUDANI, et al. Defendants PABLO ACRE, et al., Plaintiffs.
v.
CHASE MANHATTAN MORTGAGE CORP., et al. Defendants

MEMORANDUM

CHRISTOPHER C. CONNER, Chief District Judge.

Presently before the court are cross-motions (Case No. 3:01-CV-1182, Docs. 515, 517; Case No. 1:04-CV-0832, Docs. 383, 385) to enforce a settlement agreement entered into between plaintiffs and the Percudani defendants, Gene Percudani, Chapel Creek Homes, Inc., Raintree Homes, Inc., Homes by Vintage, Inc., Y-Rent, Inc., and Chapel Creek Mortgage Banker, Inc. (hereinafter "defendants"). This motion comes to the court on remand from the Third Circuit Court of Appeals with instructions to make additional findings concerning whether plaintiffs have fully complied with their obligations under the parties' settlement agreement to provide defendants with certain bankruptcy orders. For the reasons that follow, the court will order plaintiffs to provide bankruptcy orders from the bankruptcy cases of Odell and Stacy Harrison, Robert and Sylvia Johnson, and Richard and Mary Negron. The court will further order plaintiffs to provide defendants new releases from Pedro and Olga Caban, Carol Thompson, and Bernice Williams.

I. Background and Procedural History[1]

Lead plaintiffs Eddie and Sharon Lester, on behalf of a plaintiff class, commenced a class action against real estate developer Gene Percudani and multiple defendants on June 28, 2001. (See Case No. 3:01-CV-1182, Doc. 1). After dismissal of the class action, on April 16, 2004, plaintiffs Pablo and Ivette Acre, along with over 150 others, pursued a civil action against defendants and Chase Manhattan Mortgage Corporation ("Chase"), William K. Spaner, and Dominick P. Stranieri. (Case No. 1:04-CV-0832, Doc. 1). The parties reached an oral settlement agreement on or about February 10, 2009, in which defendants agreed to pay plaintiffs a sum of $300, 000 in return for a release of all claims by plaintiffs against defendants. (Case No. 3:01-CV-1182, Doc. 525 at 8; Case No. 1:04-CV-832, 393 at 8). On February 20, 2009, the court issued an order (Case No. 3:01-CV-1182, Doc. 474; Case No. 1:04-CV-0832, Doc. 331) staying the case and closing it for statistical purposes only in light of the agreement. Thereafter, plaintiffs' counsel began the process of securing written releases from plaintiffs regarding the settlement of claims against defendants. After considerable delay, the parties executed a written settlement agreement on September 3, 2010. (Case No. 3:01-CV-1182, Doc. 511; Case No. 1:04-CV-0832, Doc. 380)

On June 9, 2011, plaintiffs filed a motion (Case No. 3:01-CV-1182, Doc. 515; Case No. 1:04-CV-0832, Doc. 383) to enforce the settlement agreement. Defendants filed a cross-motion (Case No. 3:01-CV-1182, Doc. 517; Case No. 1:04-CV-0832, Doc. 385) to enforce the settlement agreement on June 10, 2011, in opposition to plaintiff's motion. The principal issue addressed in these motions was whether plaintiffs had provided all required releases and bankruptcy orders in accordance with the terms of the settlement agreement. (See Case No. 3:01-CV-1182, Doc. 515 Ex. D, Doc. 516 at 2; Case No. 1:04-CV-0832, Doc. 383 Ex. D, Doc. 384 at 2). On December 8, 2011, the court granted plaintiffs' motion to enforce the settlement agreement. (Case No. 3:01-CV-1182, Doc. 525; Case No. 1:04-CV-0832, Doc. 393). The court found as a factual matter that defendants received all the required releases, and rejected defendants' challenges to the wording of the releases. (Id.) The court also rejected defendants' assertion that plaintiffs violated the express terms of the settlement agreement by asking the parties to sign releases when negotiations of the settlement agreement were still ongoing. (Case No. 3:01-CV-1182, Doc. 525 at 11; Case No. 1:04-CV-0832, Doc. 393 at 11). The court reasoned that plaintiffs' counsel began obtaining signed releases after reaching an oral settlement agreement with defendants on February 10, 2009, and that "it is of no moment that a written agreement was not yet executed." (Id.) Defendants appealed.

The Third Circuit largely affirmed the court's decision, except for one caveat: it could not determine whether plaintiffs provided all required bankruptcy orders to defendants. (Case No. 3:01-CV-1182, Doc. 538-1; Case No. 1:04-CV-0832, Doc. 403-1). The Third Circuit remanded, and it instructed this court to make additional factual findings or to explain its conclusions concerning whether purportedly "missing" bankruptcy orders were required. (Id.)

In their original briefing, defendants provided a list of eleven individuals and thirteen couples who defendants claimed had not provided a bankruptcy order.[2] (See Case No. 3:01-CV-1182, Doc. 518 ¶ 5, Ex. A; Case No. 1:04-CV-832, Doc. 386 ¶ 5, Ex. A; Doc. 388, Ex. E). Upon remand, the court ordered defendants to file a memorandum identifying all plaintiffs for whom there are deficiencies in the settlement documentation, i.e., missing releases or bankruptcy orders. (Case No. 3:01-CV-1182, Doc. 541; Case No. 1:04-CV-832, Doc. 406). In lieu of a memorandum, defendants' counsel wrote a letter to the court listing a variety of complaints regarding the settlement documentation for fifteen individuals and twenty-two couples. (See Case No. 3:01-CV-1182, Doc. 543; Case No. 1:04-CV-832, Doc. 407). The letter is anomalous because the Third Circuit's opinion had foreclosed most of the complaints set forth therein. The letter is also somewhat confounding because it identifies several plaintiffs who were not included on defendants' original list of missing bankruptcy orders[3] and omits several plaintiffs who were included on defendants' original list of missing bankruptcy orders.[4] In light of the inconsistencies hereinabove described, the court directed defendants to clarify their position and to omit any names foreclosed by the Third Circuit's opinion. (Case No. 3:01-CV-1182, Doc. 547; Case No. 1:04-CV-0832, Doc. 408). The court also directed defendants to respond to plaintiffs' assertion that certain bankruptcy orders were unnecessary by operation of law. (Id.) Unfortunately, defendants' reply did not explain the additions or omissions and failed to address two individuals who were included in their letter but not in their original list of missing bankruptcy orders.[5] Despite these anomalies, the court has conducted a thorough review of the record, and the court concludes that this matter is ripe for disposition.

II. Discussion

The court must first determine the specific plaintiffs for whom there are still alleged deficiencies in the bankruptcy order documentation. The court concludes that defendants are satisfied with the bankruptcy order documentation for those plaintiffs who were identified in defendants' original list but subsequently omitted from their letter following remand, namely, Floyd and Merlyn Bennett, Louise and Ambrose Devaux, Robert C. Nichols, and John Williams III. The court also concludes that defendants waived their concerns regarding the plaintiffs who were not included in defendants' original list of missing bankruptcy orders, namely, Robin Altenor, Terry and Flordaliza Burdick, Luis and Amalia Domenech, Merlyn Lewis, and Sharon Warburton. Finally, in the course of providing the court with supplemental briefing, it is apparent that the parties resolved their dispute concerning the settlement documentation for Fran and Robert Hercules. (See Case No. 1:01-CV-1182, Doc. 543 at 7, Doc. 546 at 11, Doc. 546-1 Ex. H, Doc. 548 at 8; Case No. 1:04-CV-0832, Doc. 407 at 7).

Documentation for the following plaintiffs - listed alphabetically - remains at issue: Joy Arcia, Stanley Boots, Pedro and Olga Caban, Francis and Marisol Corchado, Vincent and Michelle Dezonie, Luis and Grace Gonzalez, Odell and Stacy Harrison, Christopher and Tania Hendricks, Robert and Sylvia Johnson, Jeffrey and Miriam Krisiak, Bernard Lewis, Joseph and Grace Mahama, Richard and Mary Negron, Anthony and Evelyn Sanchez, Diana Stanley, Carol and Dwayne Thompson, Bernice Williams, and Camille Williams.[6]

As a preliminary matter, a bankruptcy estate generally includes "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). This definition includes the debtor's interest in a cause of action. Kollar v. Miller , 176 F.3d 175, 178 (3d Cir. 1999). Neither party disputes that each plaintiff's bankruptcy estate initially encompassed the cause of action governed by the subject settlement. When a individual debtor's cause of action belongs to the bankruptcy estate, the bankruptcy trustee has exclusive standing to assert the claim. Matter of Educators Group Health Trust , 25 F.3d 1281, 1284 (5th Cir. 1994).

Property of the bankruptcy estate will remain as such unless it is either administered or abandoned. 11 U.S.C. § 554(d). Under § 554(a), the bankruptcy trustee may abandon any property of the estate that is burdensome or of inconsequential value after notice and a hearing. Under § 554(b), the bankruptcy court may order the trustee to abandon any property of the estate that is burdensome or of inconsequential value upon request of a party in interest and after notice and a hearing.[7] Section 554(c) provides that property appropriately scheduled under 11 U.S.C. § 521(a)(1) that is not administered at the close of the bankruptcy case is abandoned to the debtor and administered pursuant to 11 U.S.C. § 350. If a debtor never listed the cause of action as an asset on the debtor's schedules, that cause of action cannot be abandoned pursuant to § 554. See Krank v. Utica Mut. Ins. Co. , 109 B.R. 668, 669 (E.D. Pa. 1990), aff'd, 908 F.2d 962 (3d Cir. 1990).

Plaintiffs allege that a number of plaintiffs were not required to provide bankruptcy orders because the trustee or the court abandoned the plaintiffs' claims in the litigation pursuant to 11 U.S.C. § 554(a) or (b). (Case No. 3:01-CV-1182, Doc. 546). Plaintiffs also contend that several plaintiffs did not need to provide bankruptcy orders due to ...


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