Opinion
Case No. 10-30424 (PM) Case No. 10-30437 (PM) Case No. 10-30441 (PM) Case No. 10-30443 (PM) Case No. 10-30444 (PM) Case No. 10-30445 (PM) Case No. 10-30446 (pm) Case No: 11-13720 (PM) Case No: 11-13726 (PM) Case No: 11-13729 (pm)
09-13-2011
In re: FPD, LLC, Debtor. In re: Acorn Land, LLC, Breezewood Homes, LLC, First Development Group, LLC, MD Homes, LLC, NC Homes, LLC, Tidewater Land, LLC, NC Development, LLC, Shadow Brook Farm, LLC, 7800 Philadelphia Road, LLC Debtors.
COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A. Irving E. Walker (MD Bar No. 00179) Attorneys for the Debtors WHITEFORD TAYLOR & PRESTON, L.L.P. Bradford F. Englander (MD Bar No. 11591) Justin P. Fasano, Esquire (MD Bar No. 28659) Attorneys for Ian Cohen LOGAN, YUMKAS, VIDMAR & SWEENEY LLC James D. Vidmar (MD Bar No. 00271) Logan, Yumkas, Vidmar & Sweeney, LLC Attorneys for DE Assessments, LLC K& L GATES, LLP J. Michael Booe_ HOFMEISTER, BREZA & LEAVERS Craig B. Leavers (MD Bar No. 26914) Executive Plaza III Attorneys for Wells Fargo Bank, N.A. SIMCOX AND BARCLAY, LLP David C. Barclay (MD Bar No. 01362) Chad King (MD Bar No. 16888 Attorneys for BankAnnapolis MCNAMEE, HOSEA, JERNIGAN, KIM, GREENAN & LYNCH, P.A. Christopher L Hamlin (MD Bar No. 04597) Robert J. Kim (MD Bar No. 03403) Attorneys for First American Title Company
SO ORDERED
U. S. BANKRUPTCY JUDGE
(Chapter 11)
STIPULATION AND ORDER AMENDING SALE ORDER AND APPROVING
MODIFIED TERMS OF SALE BY FIRST DEVELOPMENT GROUP, LLC OF THE
REAL PROPERTY KNOWN AS CLEARVIEW MEADOW TO IAN COHEN FREE AND
CLEAR OF LIENS, CLAIMS AND INTERESTS
First Development Group, LLC ("First Development" or "Seller"), one of the above-captioned Debtors (collectively, the "Debtors"), Wells Fargo Bank, N.A. ("Wells Fargo"), Ian Cohen ("Cohen" or "Purchaser"), DE Assessments, LLC ("DEA"), BankAnnapolis, and First American Title Company ("First American", and together with the Debtors, Wells Fargo, Cohen, DEA, and BankAnnapolis, the "Parties"), by their respective undersigned counsel, hereby represent and agree as follows:
Background
1. On February 25, 2011, the Debtors filed the Motion of Debtors for Entry of Orders: (I) Approving Sale Procedures Related to the Sale of the Real Properties Subject to the Liens of Wells Fargo Bank, N.A. Free and Clear of Liens, Claims and Interests, and Scheduling An Auction and Hearing, and (II) Approving Sale of the Such Properties Free and Clear of Liens, Claims and Interests [Docket No. 277] (the "Sale Motion").
2. By the Sale Motion, the Debtors requested authority to sell the real properties owned by them that were subject to liens held by Wells Fargo to secure loans obtained by the Debtors prior to the commencement of these Chapter 11 cases. One such property is real property known as Clearview Meadow subdivision, in Dover, Delaware, consisting of 242 recorded building lots plus common areas, excluding completed townhomes sold to other buyers at the auction (the "Property").
The terms of the Purchase & Sale Contract dated May 19, 2011 shall govern the description of the Property to be sold to Cohen.
3. Pursuant to an Order entered by the Court on March 16, 2011 [Docket No. 314] which approved the procedures to be followed for the sale, the Debtors conducted auction sales of the real properties covered by the Sale Motion. At the auction held on May 19, 2011 for the Debtors' Maryland and Delaware properties covered by the sale, Cohen was the successful bidder for the Property. At the auction, Cohen and First Development signed a Purchase & Sale Contract dated May 19, 2011 (the "Contract"), which set forth the terms and conditions for the sale of the Property to Cohen.
4. After a hearing held on May 23, 2011, the Court granted the Sale Motion and entered the Order Approving the Debtors' Sale of the Real Properties Subject to the Liens of Wells Fargo Bank, N.A. Free and Clear of Liens, Claims and Interests (the "Sale Order") [Docket No. 414]. The Sale Order included approval of the sale of the Property to Cohen pursuant to the terms and conditions of the Contract.
5. Closing of the sale of the Property was scheduled to be held on June 30, 2011, and later postponed by agreement to July 15, 2011. Due to a dispute between First Development and Cohen, Cohen did not close on the sale, and litigation ensued between the parties.
6. Specifically, on July 18, 2011, Cohen filed a Complaint for Declaratory Relief, designated as Adversary Proceeding No. 11-00571 (the "Cohen Complaint"), initiating an adversary proceeding (the "Adversary Proceeding") against First Development, DEA, Wells Fargo, BankAnnapolis and First American, seeking a determination that Cohen was not in default under the Contract and that the Contract entitled Cohen to receive title to the Property free and clear of a certain Amended Declaration of Restrictions ("Amended Declaration") recorded in the land records of Kent County, Delaware on June 18, 2007, which, among other things, established certain front foot benefit and capital improvement assessment rights with respect to each lot in the Property, which are referred to in the Complaint, and herein, as "Front Foot Benefits". First Development, DEA, Wells Fargo, BankAnnapolis and First American each answered the Complaint, asserting, among other things, that Cohen in fact was in breach of the Contract for his failure to close, and that the Contract expressly provides that Cohen agreed to accept title to the Clearview Property subject to the Amended Declaration and the Front Foot Benefits.
7. On July 21, 2011, First Development Group and the other Debtors filed their Motion of Debtors to Enforce Order Approving the Debtors' Sale of Clearview Meadow by Directing Release of Defaulting Buyer's Earnest Money Deposit for the Benefit of the Debtor, to Wells Fargo, in Accordance with Terms of Contract (the Debtors' Motion to Enforce Order") [Docket No. 438], asking the Court to enforce the Contract and to direct First American to pay Cohen's deposit under the Contract to Wells Fargo, and to award the Debtors' reasonable attorneys' fees incurred in connection with their litigation with Cohen.
8. The Court scheduled a hearing on the Debtors' Motion to Enforce Order for September 1, 2011, beginning at 10:00 A.M. (the "Hearing").
9. Immediately prior to the Hearing, and after extensive negotiations, the Parties reached an agreement to settle the controversy among them arising from the Contract, including the Cohen Complaint and the Debtors' Motion to Enforce Order, the terms of which were read into the record at the Hearing, and in their final form, are set forth in this Stipulation and Order with the intent that this Stipulation and Order, upon entry by the Court, shall be binding upon each of the Parties and shall completely resolve all of the issues raised, and that could have been raised, in the Cohen Complaint and the contested matter initiated by the Debtors' Motion to Enforce Order.
10. Accordingly, the Parties hereby stipulate and agree as follows:
Stipulation
11. The terms and conditions of the Sale Order with respect to the sale of the Property are hereby amended by this Stipulation and Order. Except as expressly modified by this Stipulation and Order, all terms and conditions of the Sale Order shall remain in full force and effect.
12. The terms and conditions of the Contract are hereby amended and supplemented by the following terms and conditions:
All capitalized terms not otherwise defined in this Stipulation and Order shall have the meanings ascribed to them in the Contract.
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(a) In addition to the Purchase Price set forth in the Contract, in the amount of $ 2,247,000, Cohen shall pay at Closing the sum of $ 125,000, for a total Purchase Price of $ 2,372,000. Sheldon Good & Company's commission for the sale of the Property shall continue to be based on the High Bid Price of $ 2,100,000.
(b) Seller shall deliver title to the Property free and clear of liens, claims and encumbrances, as set forth in the Sale Order, provided that the Purchaser shall take title to the Property subject to the Amended Declaration and the Front Foot Benefits, which are referenced in Item 13 of Exhibit B - Section II of the Contract, and which are currently held and owned by DEA.
(c) Closing shall be held and completed on or before September 21, 2011.
(d) At Closing, BankAnnapolis shall be paid from the sale proceeds the sum of $ 150,000.
(e) At Closing, after deducting from the sale proceeds the required and appropriate Seller closing expense (consistent with the terms of the Contract), the net sale proceeds remaining after the payment to BankAnnapolis shall be paid to Wells Fargo.
(f) Upon completion of Closing, the Debtors' Motion to Enforce Order shall automatically be deemed to be settled and withdrawn without the need for any further action by any of the Parties.
(g) Prior to Closing, all Parties will execute and deliver to the settlement agent a Stipulation of Dismissal with Prejudice of the Adversary Proceeding (in form and substance reasonably acceptable to all Parties), which counsel for Cohen shall file with the Court within three (3) business days following the completion of Closing, The Parties each will bear their own respective attorneys' fees and costs.
(h) At Closing, the Seller and DEA shall execute and deliver such assignments and amendments to (a) the Declaration of Restrictions for the Clearview Meadow Subdivision, as amended ("Declaration"), and (b) the Certificate of Incorporation and By-Laws for the Clearview Meadow Subdivision Homeowners Association, as amended, as may be necessary to confirm that, following Closing, Purchaser shall possess all rights of the Seller as the Declarant with respect to the Clearview Meadow Subdivision, all in a form reasonably acceptable to the Seller, DEA and Cohen; provided, however, that such amendments shall clearly and expressly provide that Purchaser shall not be permitted to amend the Declaration or Amended Declaration, or to take any other actions, that would amend the Declaration or Amended Declaration to transfer, eliminate, or impair the rights of DEA or BankAnnapolis with respect to the Front Foot Benefits for the 61 lots within the Clearview Meadow Subdivision that Seller sold to purchasers other than Cohen (the "61 Lots"). For the avoidance of doubt, no provision of this Stipulation and Order, or any other document prepared in connection with Closing, shall impair or otherwise affect DEA's or BankAnnapolis' rights with respect to the Front Foot Benefits for the 61 Lots.
(i) At Closing, DEA shall execute and deliver to Cohen or his designee an assignment, in recordable form acceptable in form and substance to DEA and Cohen, of all Front Foot Benefits appurtenant to the Property. For the avoidance of doubt, no provision of this Stipulation and Order, or any other document prepared in connection with Closing, shall impair or otherwise affect DEA's or BankAnnapolis' rights with respect to the Front Foot Benefits for the 61 Lots.
(i) At Closing, Wells Fargo and BankAnnapolis shall deliver the documents, in recordable form and substance mutually acceptable to such lenders and Cohen, necessary to release the lenders' respective liens and security interests on the Property and the Front Foot Benefits appurtenant thereto, provided that DEA and BankAnnapolis shall retain all of their respective rights with respect to the Front Foot Benefits on the 61 Lots.
(j) In lieu of complying with Paragraph 44 of the Contract at Closing, Purchaser shall procure, on or before September 30, 2011 a release of the letter of credit (without any draw thereunder) obtained by First Development Group to secure First Development's obligations to the Delaware Department of Transportation ("DelDOT") to complete certain work on the Property, failing which Purchaser shall comply with the requirements of Paragraph 44 by no later than the close of business on September 30, 2011. First Development's agreement to this provision is based on its reliance on e-mails provided by Cohen which indicate that Cohen has an agreement with DelDOT for replacement of the letter of credit for which First Development currently is liable by a bond for which Cohen and/or his designee shall be liable.
(k) Paragraph 45 of the Contract is hereby deleted.
(l) First Development, Cohen and Wells Fargo hereby confirm their agreement and understanding that under the Contract, all transfer taxes payable for the transfer of title to the Property from Seller to Purchaser shall be paid by Purchaser.
(m) Effective upon the completion of Closing, each of the Parties hereby release all of their respective claims and causes of action against each other that relate in any way to the Contract, the Cohen Complaint and the Debtors' Motion to Enforce Order.
13. This Stipulation and Order shall be effective immediately upon entry pursuant to Rule 7062 and 9014 of the Federal Rules of Bankruptcy Procedure, and no automatic stay of execution, pursuant to Rule 62(a) of the Federal Rules of Civil Procedure or Rule 6004(h) the Federal Rules of Bankruptcy Procedures applies with respect to this Order. THE UNDERSIGNED CONSENT AND
AGREE TO THE ENTRY OF
THE ORDER APPROVING THIS
STIPULATION:
COLE, SCHOTZ, MEISEL, FORMAN &
LEONARD, P.A.
Irving E. Walker (MD Bar No. 00179)
Attorneys for the Debtors
WHITEFORD TAYLOR & PRESTON, L.L.P.
Bradford F. Englander (MD Bar No. 11591)
Justin P. Fasano, Esquire (MD Bar No. 28659)
Attorneys for Ian Cohen
LOGAN, YUMKAS, VIDMAR &
SWEENEY LLC
James D. Vidmar (MD Bar No. 00271)
Logan, Yumkas, Vidmar & Sweeney, LLC
Attorneys for DE Assessments, LLC
K& L GATES, LLP
J. Michael Booe_
HOFMEISTER, BREZA & LEAVERS
Craig B. Leavers (MD Bar No. 26914)
Executive Plaza III
Attorneys for Wells Fargo Bank, N.A.
SIMCOX AND BARCLAY, LLP
David C. Barclay (MD Bar No. 01362)
Chad King (MD Bar No. 16888
Attorneys for BankAnnapolis
MCNAMEE, HOSEA, JERNIGAN, KIM,
GREENAN & LYNCH, P.A.
Christopher L Hamlin (MD Bar No. 04597)
Robert J. Kim (MD Bar No. 03403)
Attorneys for First American Title Company
I HEREBY CERTIFY that the terms of the copy of the Stipulation submitted to the Court are identical to those set forth in the original Stipulation, and the signatures represented by the /s/ on the copy of the Stipulation submitted to the Court reference the signatures of consenting parties obtained on the original Stipulation.
Irving E. Walker
cc: Irving E. Walker, Esquire
Cole, Schotz, Meisel, Forman & Leonard, P.A.
300 East Lombard Street, Suite 2000
Baltimore, Maryland 21292
Lynn Kohen, Esquire
Office of the U.S. Trustee
6305 Ivy Lane, Suite 600
Greenbelt, MD 20770
Christopher L. Hamlin, Esquire
McNamee Hosea
6411 Ivy Lane, Suite 200
Greenbelt, MD 20770
J. Michael Booe, Esquire
K&L Gates, LLP
214 North Tryon Street, Suite 4700
Charlotte, North Carolina 28202
Craig B. Leavers, Esquire
Hofmeister, Breza & Leavers
Executive Plaza III
11350 McCormick Road, Suite 1300
Hunt Valley, Maryland 21031
Bradford F. Englander, Esquire
Whiteford Taylor & Preston, LLP
3190 Fairview Park, Ste. 300
Falls Church, Virginia 22042
David Barclay, Esquire
Simcox & Barclay, LLP
888 Bestgate Road, Suite 313
Annapolis, MD 21401
Alan M. Grochal, Esquire
Tydings & Rosenberg
100 E. Pratt Street, 26th Floor
Baltimore, MD 21202