Opinion
ADVERSARY NO. 05-01808.
March 14, 2008
Kenneth S. Kaufman, Esquire, Garson Claxton LLC, Bethesda, MD. Attorney for Clark Construction Company.
Mark S. Saudek, Esquire, Gallagher Evelius Jones LLP, Baltimore, Maryland, Attorney for Bozzuto Construction Company.
Michael G. Rinn, Esquire, Law Office of Michael G. Rinn, Cockeysville, MD. Special Counsel to Chapter 7 Trustee.
STIPULATION AND CONSENT ORDER RESOLVING AND SETTLING DISPUTED CLAIMS
Upon consideration of the consents of the undersigned Trustee, Marc H. Baer, Chapter 7 Trustee of Bateson Construction, Inc. ("Trustee"), Clark Realty Builders, LLC ("Clark"), and Bozzuto Construction Co. (" Bozzuto") and as reflected by their signatures or the signatures of their respective counsel to the entry of an Order Resolving and Settling Disputed Claims, in the following format, after notice and good cause having been shown, the following Stipulation and Consent Order Resolving and Settling Disputed Claims is approved and Ordered.
RECITALS I. The Bankruptcy Filing
On July 6, 2005, Debtor, Bateson Construction, Inc. ("Bateson Construction"), filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code and commenced the above-captioned Chapter 7 case. The case proceeded in this Court as Case No. 05-25290 DK.
On July 7, 2005, the Court provided notice that it had duly appointed Trustee Marc H. Baer as Chapter 7 Trustee of Bateson Construction, Inc.
II. The Adversary Action
On July 26, 2005, Debtor-Related Parties Dean Bateson, Cynthia Bateson, and Bateson Construction Carolina, LLC filed a notice of removal of an action then pending in the Circuit Court of Maryland for Howard County, styled Clark Realty Builders, LLC v. Bateson, Case No. 13-C-05062352.
On July 27, 2005, the Court ordered the removal, and the case proceeded in this Court as Adversary No. 05-01808 DWK.
On February 13, 2006, by stipulation of the parties, the Court in Adversary No. 05-01808 DWK lifted the automatic stay of 11 U.S.C. § 362(a) applicable to the counts of Clark's removed State Court action against the Debtor for the purpose of allowing Clark to proceed against the debtor for damages as asserted in Clark's proof of claim, in order to determine Clark's allowable claims in the bankruptcy case.
Also on February 13, 2006, the Court substituted the Trustee as plaintiff with respect to Clark's claim for fraudulent conveyance against the Debtor and Bateson Construction Carolina, LLC, and added the Trustee as plaintiff to Clark's claims of alter ego liability against Dean Bateson and Cynthia Bateson.
On February 28, 2006, Bateson Construction filed an answer to Clark's complaint and filed counterclaims against Clark.
On May 2, 2006, Bateson Construction, Dean Bateson, and Cynthia Bateson filed a notice of removal of an action then pending in the Circuit Court of Maryland for Howard County, styled Bozzuto Construction Company v. Bateson, Case No. 13-C-05-061383.
On May 9, 2006, the Court ordered the removal, and the case proceeded in this Court as Adversary No. 06-01399 DWK.
On July 7, 2006, Bateson Construction filed an answer to Bozzuto's complaint and filed counterclaims against Bozzuto.
On July 27, 2006, upon consideration of Bozzuto's motion, the Court consolidated Adversary No. 06-01399 DWK with Adversary No. 05-01808 DWK, and both adversaries proceeded as Adversary No. 05-01808 DWK.
On January 31, 2007, the Court granted Bozzuto leave to file a second amended complaint, in which Bozzuto asserted claims against, inter alia, Bateson Construction. Bateson Construction has not filed an answer to Bozzuto's second amended complaint.
On January 18, 2008, the Court stayed Bozzuto's causes of action against Bateson Construction in Adversary No. 05-01808 DWK. The claims brought by Clark against Bateson Construction in that action have not been stayed.
III. Bozzuto's and Clark's Bankruptcy Claims against Bateson Construction
Bozzuto filed a Proof of Claim as Claim No. 3, which it amended on December 14, 2006, asserting a claim against Debtor in the amount of $2,611,302.51 (the "Bozzuto Claim"), pursuant to and arising out of Bateson Construction's breaches of a series of construction service agreements between Debtor and Bozzuto.
Clark filed a Proof of Claim as Claim No 15, asserting a claim against Debtor in the amount of $5,891,995.19 (the "Clark Claim"), pursuant to and arising out of Bateson Construction's breaches of a series of construction service agreements between Debtor and Claimant.
The Trustee filed objections to both the Clark Claim and the Bozzuto Claim (the "Trustee Objections").
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, Trustee, Marc H. Baer Chapter 7 Trustee of Bateson Construction, Inc ("Trustee"), Clark and Bozzuto have agreed to settle all claims, litigation, causes of action and controversies by, between and among the undersigned upon the terms and conditions set forth herein, and hereby agree and stipulate as follows:
1. The Trustee stipulates, consents, and agrees to a lifting of the stay currently in place with respect to all claims brought against Bateson Construction by Bozzuto in the above-captioned adversary action, Case No. 05-01808 DWK, except as otherwise provided in this stipulation and consent order.
2. The Trustee, Clark, and Bozzuto stipulate, consent, and agree that, by separate stipulation and Order, the Trustee shall be substituted for Bozzuto Construction Co. as sole Plaintiff as to Count III of the Bozzuto Second Amended Complaint against Dean Bateson, Cynthia Bateson and Bateson Construction Carolina, LLC.
3. The Trustee stipulates, consents, and agrees to the entry of judgment on all claims brought by Clark against Bateson Construction in the above-captioned adversary action, Case No. 05-01808 DWK, in favor of Clark in the amount of $4,772,516.10. The Trustee, Bozzuto, and Clark agree that the judgment referenced in this paragraph shall not be enforceable against the bankruptcy estate of Bateson Construction absent further order of the Court. Notwithstanding the foregoing and absent further order of the Court, the judgment referenced in this paragraph shall not constitute a lien against any property of the bankruptcy estate and the automatic stay shall continue to stay any lien or execution of such judgment against the bankruptcy estate.
4. The Trustee and Clark stipulate, consent, and agree to the dismissal with prejudice of all counterclaims that Bateson Construction filed against Clark in the above-captioned adversary action, Case No. 05-01808 DWK.
5. The Trustee stipulates, consents, and agrees to the entry of judgment on all claims brought by Bozzuto against Bateson Construction in the above-captioned adversary action, Case No. 05-01808 DWK, in favor of Bozzuto in the amount of $2,611,302.51. The Trustee, Bozzuto, and Clark agree that the judgment referenced in this paragraph shall not be enforceable against the bankruptcy estate of Bateson Construction absent further order of the Court. Notwithstanding the foregoing and absent further order of the Court, the judgment referenced in this paragraph shall not constitute a lien against any property of the bankruptcy estate and the automatic stay shall continue to stay any lien or execution of such judgment against the bankruptcy estate.
6. The Trustee and Bozzuto stipulate, consent, and agree to the dismissal with prejudice of all counterclaims that Bateson Construction filed against Bozzuto in the above-captioned adversary action, Case No. 05-01808 DWK.
7. The entry of this Order shall serve as a factual predicate to resolution of the Trustee's Objections to Claim No. 3, as amended, filed by Bozzuto, and to Claim No. 15, filed by Clark.
8. The Trustee, Clark, and Bozzuto stipulate, consent, and agree that, by separate stipulation and Order in Bankruptcy Case No. 05-25290 DK, the Clark Claim shall be reduced from $5,891,995.19 to $4,772,516.10, and Clark shall have an allowed non-priority, general unsecured claim against Bateson Construction in the amount of $4,772,516.10.
9. The Trustee, Clark, and Bozzuto stipulate, consent, and agree that, by separate stipulation and Order in Bankruptcy Case No. 05-25290 DK, the Trustee's Objection to the claim of Clark in the amount of $5,891,995.19, as modified herein, shall be withdrawn.
10. The Trustee, Clark, and Bozzuto stipulate, consent, and agree that, by separate stipulation and Order in Bankruptcy Case No. 05-25290 DK, the Bozzuto Claim shall be reduced from $2,611,302.51 to $2,115,155.03, and Bozzuto shall have an allowed non-priority, general unsecured claim against Bateson Construction in the amount of $2,115,155.03.
11. The Trustee, Clark, and Bozzuto stipulate, consent, and agree that, by separate stipulation and Order in Bankruptcy Case No. 05-25290 DK, the Trustee's Objection to the amended claim of Bozzuto in the amount of $2,611,302.51, as modified herein, shall be withdrawn.
12. The terms set forth herein shall not in any way limit, prejudice, waive, or serve as an estoppel of the rights of Bozzuto, Clark, the Trustee, or any combination of them to pursue claims for damages of any amount or type against any person or entity, including without limitation Dean Bateson, Cynthia Bateson, and Bateson Construction Carolina, LLC, including but not limited to the causes of action presently pending in Adversary No. 05-01808 DWK, with the exception of (i) any claims against the bankruptcy estate of Bateson Construction, Inc., and (ii) any claims stayed by Order of the Court, including claims stayed by Order dated January 18, 2008.
13. The terms set forth herein and the settlement of claims in this adversary proceeding shall not be deemed an admission by Bozzuto, Clark, the Trustee, or any combination of them that their respective entitlements to damages from any person or entity, other than the Bankruptcy Estate of Bateson Construction, Inc are in any way limited to the amount of the allowance of their claims.
14. The entry of this Order shall for all purposes terminate and conclude any and all of Clark's and Bozzuto's causes of action against Bateson Construction pending before this Court in Adversary No. 05-01808 DWK. The entry of this Order shall for all purposes terminate and conclude any and all of Bateson Construction's causes of action against either Clark or Bozzuto pending before this Court in Adversary No. 05-01808 DWK.
15. The Trustee, Clark and Bozzuto shall cooperate and coordinate the prosecution of their respective claims and causes of action against any person or entity, other than the Bankruptcy Estate of Bateson Construction, Inc, Clark and Bozzuto. To facilitate the prosecution of claims of the Bankruptcy Estate against Dean Bateson, Cynthia Bateson and Bateson Construction Carolina, LLC, the Trustee shall seek an Order of Court authorizing the employment of Counsel for Clark and Bozzuto as additional Special Litigation Counsel to the Trustee upon the conditions and terms set forth in this paragraph.
(a) As a condition of their employment as Additional Special Litigation Counsel Counsel for Clark and Bozzuto shall agree to represent and prosecute the claims of the Bankruptcy Estate against Dean Bateson, Cynthia Bateson and Bateson Construction Carolina, LLC upon a general retainer, all fees and expenses incurred after the specific authorization of their employment by the Court shall be subject to payment, after notice and further Court Order, only from funds received by the Estate from recoveries against Dean Bateson, Cynthia Bateson and Bateson Construction Carolina, LLC.
(b) All funds received by the Estate from recoveries against Dean Bateson, Cynthia Bateson and Bateson Construction Carolina, LLC. shall be held by the Trustee for distribution