Opinion
Bankruptcy No. 09-23155-CMB
08-08-2014
IN RE: ROCK AIRPORT OF PITTSBURGH, LLC, Debtor. ROCK AIRPORT OF PITTSBURGH, LLC, Movant, v. NO RESPONDENT.
Office of the United States Trustee Natalie Lutz Cardiello, Esq. Kirk B. Burkley, Esq. Rodger L. Puz, Esq., David K. Rudov, Esq., and Gregory C. Michaels, Esq. Robert O. Lampl, Esq. and Thomas E. Reilly, Esq.
Chapter 11
Related to Doc. Nos. 784 & 787
MEMORANDUM ORDER
The matter before the Court is the Expedited Motion for Limited Reconsideration of Order Approving Amended Disclosure Statement of Management Science Associates, Inc. ("Motion for Reconsideration") filed by the Debtor. The Motion for Reconsideration is filed with respect to this Court's Order dated July 21, 2014 ("July 21st Order"), which approved the Amended Disclosure Statement to Accompany Plan Dated July 18, 2014 ("MSA Disclosure Statement"), filed by Management Science Associates, Inc. ("MSA") and scheduled a plan confirmation hearing on both MSA's Amended Plan of Reorganization Dated July 18, 2014 ("MSA's Plan") and on the Debtor's Amended Plan of Reorganization Dated June 20, 2014 ("Debtor's Plan"). The confirmation hearings are scheduled to be held on August 21, 2014. The Motion for Reconsideration seeks clarification of this Court's July 21st Order to the extent it implicitly rules that MSA has standing to prosecute MSA's Plan. MSA filed a memorandum in opposition to the Motion for Reconsideration. A hearing was held on August 6, 2014.
This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§157 and 1334. This is a core matter pursuant to 28 U.S.C. §157(b)(2)(A). If the District Court determines pursuant to the rationale set forth in Stern v. Marshall, 131 S.Ct. 2594 (2011), that this Court does not have the authority to determine and enter an order on this matter, then the Memorandum Order entered shall constitute the Court's proposed findings of fact and conclusions of law and recommendation to the District Court.
The Court notes that, although identified as a Motion for Reconsideration, the motion appears to be more of a request for clarification.
A related matter was also scheduled for hearing on that date. An evidentiary hearing was held on Debtor's Objection to Claim No. 3 of Management Science Associates, Inc., Transferee of the Priscilla Grden Living Trust Claim ("Objection") and MSA's Motion to Estimate Claim and/or for Temporary Allowance of Claim ("Motion to Estimate", collectively "Claim Litigation"). It was MSA's contention that Debtor's Objection was a bad faith attempt to undermine MSA's standing to object to the Debtor's Plan and MSA's standing to pursue MSA's Plan. The Debtor acknowledged that resolution of the Objection may affect this Court's ruling on MSA's standing; however, MSA contended that it would nonetheless qualify as a party in interest notwithstanding any resolution of the Claim Litigation. That litigation was resolved by separate Order entered August 8, 2014, in MSA's favor. The Order provided that MSA has an allowed unsecured claim in the amount of $7,781.73.
Upon consideration of the arguments in support of standing raised in the MSA Disclosure Statement, the objection thereto filed by Debtor, the arguments at previous hearings and on August 6, 2014, the outcome of the Claim Litigation, the Motion for Reconsideration, MSA's memorandum in opposition, the entire record of this case, and for the reasons expressed on the record, this Court finds as set forth herein.
Under the conditions set forth in 11 U.S.C. §1121(c), "[a]ny party in interest, including the debtor, the trustee, a creditors' committee, an equity security holders' committee, a creditor, an equity security holder, or any indenture trustee, may file a plan . . . ." The statute explicitly provides that a creditor may file a plan. A creditor includes an "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor[.]" See 11 U.S.C §101(10)(A). A claim is broadly defined to include "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured[.]" See 11 U.S.C. §101(5)(A). Thus, despite the fact that the claim transferred to MSA was unliquidated and disputed by Debtor, MSA qualified as a creditor when it filed its plan. Furthermore, removing any doubt, this Court resolved the Claim Litigation in MSA's favor. Therefore, MSA is clearly a party in interest under the statute with the right to be heard and standing to propose a plan of reorganization. Nonetheless, in order to thoroughly and completely address MSA's standing, the Court considers the other bases asserted by MSA in support of its standing as a party in interest.
In In re Global Industrial Technologies, Inc., the Third Circuit addressed standing in bankruptcy cases, in particular party in interest standing under 11 U.S.C. §1109(b). See 645 F.3d 201, 210-11 (3d Cir. 2011). Section 1109(b) addresses the right to appear and be heard, and §1121 uses the same language for the purpose of identifying who may file a plan. If a party can demonstrate a legally protected interest that may be affected, that party satisfied the requirement of party in interest standing, which is intended to create a broad right of participation. Global Indus., 645 F.3d at 210-12. The determination of "whether the prospective party in interest has a sufficient stake in the proceeding so as to require representation" is made on a case-by-case basis. See In re Nickels Midway Pier, LLC, No. 03-49462, 2010 WL 2034542, at *7 (Bankr.D.N.J. May 21, 2010) (quoting In re Amatex Corp., 755 F.2d 1034, 1042 (3d Cir. 1985)). See also In re El Comandante Management Co., 359 B.R. 410, 417 (Bankr.D.P.R.2006). Keeping in mind that the concept of party in interest standing is expansive and broad for the purpose of providing fair representation to a party impacted significantly by a chapter 11 case, this Court considers the standing of MSA.
The court also addressed constitutional standing and the "injury-in-fact requirement", which it characterized as a generous standard. Id. at 210. In comparing that standard with the party in interest standard, the court noted that persuasive authority indicated that the standards "are effectively coextensive." Id. at 211.
MSA set forth its argument in support of party in interest status in the MSA Disclosure Statement and in its subsequently filed memorandum in opposition to the instant Motion for Reconsideration. Generally, MSA's contention that it qualifies as a party in interest derives from its ownership of real estate located in RockPointe. MSA argues that it has been and will continue to be impacted on the basis of Debtor's alleged failure to address certain environmental issues, Debtor's alleged failure to develop the business park, the ongoing litigation with the Debtor regarding placement of a direct electrical supply line from West Penn Power to MSA's property at RockPointe, and the proposed use of the property by Debtor as fly ash disposal site under Debtor's Plan.
It has been argued by Debtor's counsel that this Court previously held that an owner of property at RockPointe did not have party in interest standing and thus this Court must reach the same conclusion here. Debtor's counsel is referring to this Court's decision denying a motion to intervene filed by Trib Total Media, Inc., in Adv. No. 13-2349 (The Huntington National Bank v. Rock Airport of Pittsburgh, LLC, and RPP, LLC). That decision is currently on appeal. First, in that decision, the Court specifically noted: "The Court finds, at this time, Trib has not established itself as a party in interest." See Order dated November 14, 2013, note 2 (emphasis in original). Whether this Court would reach a different decision based upon developments in the case at this time is not before the Court. Second, MSA raises arguments in connection with property ownership at RockPointe that were not raised by Trib (and perhaps are not applicable to Trib) and that were not previously considered by the Court. Accordingly, Debtor fails to demonstrate that the Court is bound to make the same determination in this matter.
As a preliminary matter, MSA has been extremely involved in this bankruptcy case for several years and litigation between the parties predates the bankruptcy case. In addition, the Debtor's Plan contemplates future litigation against MSA which Debtor asserts may assist in the funding of its plan. Thus, as MSA is contemplated as a potential source of funding for Debtor's Plan, MSA asserts an interest in the outcome of these proceedings. Given the history of the case and potential for future litigation between the parties, it is unsurprising that MSA seeks a role in this stage of the case.
As described in the MSA Disclosure Statement, the Trustee entered into an asset purchase agreement with Alaskan Property Management Company ("Alaskan"), an entity with common ownership to MSA. Based upon that agreement, the Trustee filed a motion to sell substantially all of the Debtor's assets to Alaskan. The plan proposed by MSA adopts the purchase agreement. Both the Trustee's motion to sell and MSA's Plan are scheduled for hearing on August 21, 2014, along with the Debtor's Plan.
The Court notes that in In re Nickels Midway Pier, LLC, an entity which was both a tenant of the debtor-in-possession and proposed purchaser under a sale agreement was found to be a party in interest with standing to file a plan. See 2010 WL 2034542, at *7. There is some similarity in this case as MSA is a property owner at RockPointe and, although MSA and Alaskan are not the same entity, they are certainly related. The determination in Nickels appears to support a finding of party in interest standing in this case.
Among the multiple disputes between the parties, MSA contends that Debtor has failed to address environmental issues at RockPointe thereby impacting its ability to develop its own property. While it is apparently acknowledged by the parties that environmental issues exist at RockPointe, each party accuses the other of being the cause of such problems. Although the Court makes no determination of the source of the problems, MSA certainly has an interest as a property owner at RockPointe in seeing said problems resolved. MSA seeks to accomplish this through MSA's Plan as it is not satisfied that the Debtor will resolve the issues. Similarly, MSA raises concerns regarding the disposal of fly-ash on the property under Debtor's Plan, and the Court finds these concerns may be warranted as MSA is an owner of property at RockPointe.
Most notably, however, this Court finds that MSA has a legal stake in the outcome of these proceedings based upon what is likely the most hotly contested issue between the parties, which is the need for an easement on Debtor's property to permit MSA to transition its electrical service to West Penn Power. This Court's Memorandum Opinion dated December 3, 2013, thoroughly addressed this particular dispute between the parties. Consistent with that Opinion, the Court ordered the parties to cooperate in moving forward with the transition, which included the granting of an easement to accomplish the necessary result. That decision was appealed by the Debtor. Although affirmed by the District Court, the matter has been appealed to the Court of Appeals for the Third Circuit. In the meantime, MSA's transition of electrical service to West Penn Power is in jeopardy. Meanwhile, MSA is forced to pay RPP, LLC, an affiliate of Debtor, for electrical service pending the transition. If Alaskan is able to purchase the property pursuant to the MSA Plan, MSA will likely no longer be faced with the Debtor's resistance to providing the easement. Significant funds are at stake for MSA until it is able to accomplish this transition to West Penn Power. Furthermore, MSA has a clear interest in obtaining a stable, sufficient source of electricity for its business, unaffected by its contentious relationship with the Debtor and RPP, LLC.
Accordingly, for these reasons, this Court finds MSA to be a party in interest under §1121(c) as MSA is a creditor and as it has otherwise shown a sufficient stake in this case. MSA has demonstrated significant interests that could be affected by this proceeding and Debtor's Plan. Furthermore, it is this Court's belief that proceeding with two competing plans of reorganization is in the best interest of the creditors in this case.
Therefore, based upon the foregoing, it is hereby ORDERED, ADJUDGED, and DECREED that the Expedited Motion for Limited Reconsideration of Order Approving Amended Disclosure Statement of Management Science Associates, Inc. is GRANTED IN PART AND DENIED IN PART as follows:
1. The motion is DENIED to the extent it seeks reconsideration of the July 21st Order.Date: August 8, 2014
2. The motion is GRANTED to the extent it seeks clarification of the July 21st Order.
3. The July 21st Order is clarified to provide that MSA is a party in interest under 11 U.S.C. §1121(c) and has standing to file a plan of reorganization in this case.
/s/ Carlota M. Böhm
Carlota M. Böhm
United States Bankruptcy Judge
CASE ADMINISTRATOR TO MAIL TO:
Office of the United States Trustee
Natalie Lutz Cardiello, Esq.
Kirk B. Burkley, Esq.
Rodger L. Puz, Esq., David K. Rudov, Esq., and Gregory C. Michaels, Esq.
Robert O. Lampl, Esq. and Thomas E. Reilly, Esq.