Ardi Ltd. P'ship v. Buncher Co. (In re River Entm't Co.)

467 B.R. 808

In re RIVER ENTERTAINMENT CO., Debtor.Ardi Limited Partnership, Plaintiff,

v.The Buncher Company, Defendant/Third Party Plaintiff,

v.River Entertainment Co., Third Party Defendant.

Bankruptcy No. 07–024515JAD.

Adversary No. 10–2495JAD.

United States Bankruptcy Court, W.D. Pennsylvania.

March 30, 2012.

Robert O. Lampl, Pittsburgh, PA, for Debtor/Plaintiff/Third Party Defendant.

Robert D. Finkel, Manion McDonough & Lucas, Pittsburgh, PA, for Defendant/Third Party Plaintiff.

MEMORANDUM OPINION

JEFFERY A. DELLER, Bankruptcy Judge.

The matters before the Court are dueling motions for summary judgment. One Motion for Summary Judgment is jointly filed by the Plaintiff, ARDI Limited Partnership (“ARDI”), and the Debtor/Third Party Defendant, River Entertainment Co. (“River Entertainment”). Pursuant to their Motion for Summary Judgment, the movants seek the entry of an order granting ARDI's complaint for conversion of certain assets. Defendant/Third Party Plaintiff The Buncher Company (“Buncher”) has also filed a Motion for Summary Judgment. Pursuant to its motion, Buncher seeks dismissal of that complaint against it. At the center of these motions is a dispute regarding the enforcement of a prior consent order entered by this Court, that will resolve the issue of the ownership and alleged conversion of a certain barge facility moored along the Allegheny River in Pittsburgh, Pennsylvania. For the reasons expressed below, the Motion for Summary Judgment filed by Buncher shall be granted and the Motion for Summary Judgment jointly filed by ARDI and River Entertainment shall be denied.

I.

The Debtor in this case, River Entertainment, operated an entertainment complex commonly known as “The Boardwalk” which included a nightclub and restaurant on a barge facility for approximately seventeen years. The Boardwalk was operated in two buildings which, along with other “Improvements”, sat atop four separate barges that were structurally bound together (the “Barge Facility”). The Barge Facility was moored in the Allegheny River in Pittsburgh, Pennsylvania and was connected to the land by several bridges and utility lines. Buncher owned the adjacent land that allowed access to the Barge Facility. Buncher also held various permits issued by the Department of Environmental Protection that allowed for the mooring of the Barge Facility in the Allegheny River.

Buncher and River Entertainment entered into a Facility Lease Agreement that provided for the lease of the Barge Facility and for the benefits conferred by the various permits that allowed the Barge Facility to be moored in the Allegheny River.¹ ( See Doc. # 35, Buncher's Motion for Summary Judgment, Ex. “1”.) ARDI, along with several other entities, signed a Joinder to the Facility Lease Agreement.² ( Id.) According to counsel for ARDI and River Entertainment, there was common ownership of the two entities. ( See Case No. 07–24515JAD, Doc. # 75, p. 28). For purposes of convenience, the Debtor/Third Party Defendant River Entertainment and Plaintiff ARDI shall be referred to collectively as “ARDI” for the remainder of this Opinion.

Pursuant to the Facility Lease Agreement, ownership of the Barge Facility vested in ARDI during the term of the lease. ( See Doc. # 35, Buncher's Motion for Summary Judgment, Exhibit “1”, ¶ 16.2). If an event of default occurred and was continuing at the end of the lease term, ownership of the Barge Facility then would vest in Buncher without further action. ( Id.) If there was no default at the conclusion of the lease term, title to the Barge Facility would remain in the name of ARDI. ( Id. at ¶ 16.3.) At that point, ARDI was then, at its sole expense, required to remove the Barge Facility within sixty (60) days following the lease expiration. ( Id.) If the Barge Facility remained after that sixty day period, it was deemed to be abandoned and would become the property of Buncher. ( Id.)

On July 16, 2007, the Debtor filed a voluntary Chapter 11 case. On April 3, 2008, a hearing was held on its Disclosure Statement and Plan. ³ Title to the Barge Facility and its fate were at issue in the case. At the April 3, 2008 hearing, ARDI and Buncher entered into a Consent Order regarding the Barge Facility.⁴ The Consent Order bore similarities to the Facility Lease Agreement in terms of a timetable and manner of disposition of the Barge Facility. The Consent Order provided in relevant part at paragraph 3:

If an agreement with a buyer or user, as referenced in Paragraph 2, is not executed within sixty (60) days of the date of this Order, then Debtor and ARDI shall either: A) on or before the date that is sixty (60) days after the date of this Order, give notice to the Buncher Company that they will, at their sole cost and expense, fully and completely remove the Barge facility from its current location including payment of all insurance, security and other costs, which removal shall be accomplished within the date that is ninety (90) days from the date of this Order.* or B) if the notice is not timely given, the Debtor and ARDI shall be deemed to have abandoned the Barge facility to the Buncher Co. and relinquished all rights and interest therein on the date that is sixty (60) from the date of this order. In either event, the bankruptcy case shall be dismissed pursuant to this Order, except that the Court shall retain jurisdiction for any enforcement of or dispute under this Order.

*and upon such removal, the Buncher Co. will relinquish any claim or interest in the Barge facility.

( See Doc. # 38, Plaintiff's Motion for Summary Judgment, Ex. A.). The Consent Order also provided that this Court would retain jurisdiction to enforce the Consent Order or resolve any dispute under the Consent Order. ( Id.)

Pursuant to the Consent Order, ARDI was required to notify Buncher within sixty days, or on or before June 3, 2008, whether or not it had found a buyer for the Barge Facility. If there was no proposed buyer, ARDI was required to completely remove the Barge Facility on or before July 3, 2008. Alternatively, ARDI could do nothing and relinquish any claim or interest in the Barge Facility, which would be effective June 3, 2008.

On May 30, 2008, counsel for ARDI sent notice to Buncher that there was no proposed buyer for the Barge Facility and that ARDI intended to proceed with removing it. Specifically, counsel stated that the Debtor “will, at its sole cost and expense, fully and completely remove the barge facility from its current location, including payment of all insurance, security and other costs.” ( See Doc. # 38, Plaintiff's Motion for Summary Judgment, Exhibit “B”) (emphasis added).

After notice was provided that the Barge Facility would be “fully and completely removed”, ARDI proceeded to remove only the bridges and utility lines that provided land access and utility service to the Barge Facility. In its complaint filed in state court and in its Motion for Summary Judgment, ARDI alleges that it removed the bridges on August 6, 2008. ( See Doc. # 38, ¶ 11). However, Buncher asserts that this is in error and that the bridge removal occurred on July 6, 2008. ARDI admitted to the July 6, 2008 date when it was asserted by Buncher in its Statement of Undisputed Facts ( see Doc. # 37, Statement of Undisputed Facts, ¶ 15; Doc. # 47, Response To Statement of Undisputed Facts, ¶ 15). In either event, the record demonstrates that the bridge removal occurred after the July 3, 2008 deadline for full and complete removal.

On July 7, 2008, Buncher sent a letter to counsel for ARDI stating that ARDI had failed to comply with the Consent Order because ARDI had not removed the Barge Facility. Further, the letter notified ARDI that any rights ARDI may have possessed in the Barge Facility were forfeited due to ARDI's failure to timely remove the Barge Facility. On July 9, 2008, Buncher again wrote to counsel for ARDI reiterating its position that it had not complied with the Consent Order and that ARDI had forfeited any rights in the Barge Facility. Buncher further advised that it would proceed with the dismantling and removal of the Barge Facility.

A final letter was sent by Buncher to counsel for ARDI dated July 24, 2008 again advising of Buncher's position that ARDI had failed to comply with the Consent Order, thereby entitling Buncher to dismantle and remove the Barge Facility. The letter also advised that Buncher would begin the demolition process on July 28, 2008 and if there was any objection by ARDI, it should file a motion with the bankruptcy court.

ARDI did not respond to the July 24, 2008 letter. Nor did it file an objection to the demolition with this Court. Buncher subsequently proceeded to have the Barge Facility dismantled and fully removed. No action was taken by ARDI upon receiving notice prior to, during or after removal of the Barge Facility by Buncher.

Subject to a retention of jurisdiction over any dispute relating to the Consent Order, the bankruptcy case was ultimately dismissed on June 3, 2008. ( See Case No. 07–24515JAD, Doc. # 60, Notice to Creditors and Other Parties in Interest ). On August 2, 2010, approximately two years later, a complaint was filed by ARDI against Buncher in the Court of Common Pleas of Allegheny County alleging conversion of the Barge Facility and seeking punitive damages. The complaint was removed to this Court by Buncher on September 9, 2010 and the bankruptcy case was reopened.⁵ During the course of this adversary proceeding, a third party complaint was filed against ARDI by Buncher.

The parties have each filed motions for summary judgment and supporting briefs. The motions have been orally argued and the matter is now ripe for adjudication.

II.

Motions for summary judgment in adversary proceedings are governed by Fed. R. Bankr.P. 7056 which makes Fed.R.Civ.P. 56 applicable in the instant adversary proceeding. The rule provides, in relevant part, that summary judgment should be rendered “if movan...