Aldrich v. Old Point National Bank

35 Va. Cir. 545, 1993 Va. Cir. LEXIS 196
CourtHampton County Circuit Court
DecidedMay 13, 1993
DocketCase No. (Law) 28506
StatusPublished
Cited by3 cases

This text of 35 Va. Cir. 545 (Aldrich v. Old Point National Bank) is published on Counsel Stack Legal Research, covering Hampton County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aldrich v. Old Point National Bank, 35 Va. Cir. 545, 1993 Va. Cir. LEXIS 196 (Va. Super. Ct. 1993).

Opinion

By Judge J. Michael Gamble

I am writing this opinion letter to rule on the Demurrer and Motion to Dismiss which has been filed by the Defendant. Prior to ruling on this Demurrer and Motion, I have reviewed the briefs and considered the oral arguments which have been presented.

This case arises out of a banking relationship between Old Point National Bank of Phoebus (“OPNB” or “Bank”) and a Virginia General Partnership known as Alson, Ltd., in which James Aldrich and Jeffrey Aldrich were general partners. Alson owned land and buildings at 32 E. Queen’s Way, Hampton, Virginia.

Transparencies, Inc. (“TT”) was a corporation formed by James and Jeffrey Aldrich, who were sole shareholders. H functioned as a photography lab business on the premises at 32 E. Queen’s Way owned by Alson.

The real estate owned by Alson was subject to two deeds of trust with the secured indebtedness payable to OPNB. It was alleged in the Motion for Judgment that OPNB claimed a security interest in furniture, fixtures, equipment, and inventory of Alson by virtue of a security agreement and financing statement given by Alson to secure a note dated November 1, 1984, which was also secured by one of the deeds of trust.

[546]*546Alson began having difficulties meeting its debt service to OPNB in 1990. OPNB took certain actions in an effort to protect itself with reference to the troubled loan with Alson. Ultimately, OPNB attempted to possess certain personal property upon which it had an alleged lien and instituted foreclosure proceedings against the real estate.

The Plaintiffs allege that OPNB attempted to wrongfully possess personal property owned by H upon which OPNB did not have any lien.

Eventually, H filed for bankruptcy relief under Chapter 11 of the United States Bankruptcy Code. While in Chapter 11, U assigned for $10.00 consideration its right of action against OPNB to the Aldriches. Although this assignment was made during the period of time that Tl was in bankruptcy, no effort was made to secure the approval of the Bankruptcy Court for such transfer.

Tl was voluntarily dismissed from the Chapter 11 proceeding in 1992.

The Aldriches, individually, as partners of Alson, and as assignees of Tl, have filed an eleven count Motion for Judgment against OPNB seeking monetary relief. OPNB has filed a general Demurrer and a Demurrer to each count of the Motion for Judgment.

This Court, of course, for purposes of the Demurrer, assumes that all of the allegations and the reasonable inferences from such allegations, in the Motion for Judgment, are true.

The Court will address the issues raised by the Demurrer in the same order as set forth in the Demurrer.

(1) Standing of Plaintiffs as Individuals

The Court partially grants the Demurrer on this ground. The relationship between OPNB and Alson, Ltd., was that of debtor and creditor. Alson owned the real estate and also gave a lien on certain personal property. Accordingly, any right of action vested in James Aldrich and Jeffrey Aldrich as partners rather than as individuals under Counts Three, Four, Seven, Eight, Nine, Ten, and Eleven.

Likewise, as the Court has ruled below, the Aldriches do not own the claim of IT against OPNB. By virtue of the dismissal of the Chapter 11 proceeding, the right to this claim was revested in 11. There has been no allegation of any additional assignment of TT’s claim against OPNB to the Aldriches since the date of the dismissal of the Chapter 11 bankruptcy proceeding. Only TT or Alson would have any right of action under Counts Three, Four, Seven, Eight, Nine, Ten, and Eleven.

[547]*547In order for an individual to have a right of action, he must have some interest in the property at issue. Keepe v. Shell Oil, 220 Va. 587, 591, 260 S.E.2d 722 (1979); Cemetery Cons. v. Tidewater Funeral Directors, 219 Va. 1001, 1003, 254 S.E.2d 61 (1979).

Because the Aldriches have no interest in the property sought to be seized (under the allegations of the Plaintiffs), they have no claim for violation of § 8.9-503 under Count Three. Additionally, because they have no interest in the property (the Motion for Judgment alleges 17 owns the property), they have no claim for wrongful seizure under Count Four. Likewise, because they have no interest in the personal property or the real estate as individuals (as alleged in the Motion for Judgment), they have no individual claim under Counts Seven, Eight, Nine, and Ten. The litigation complained of in Count Eleven is litigation against either 17 or Alson, and not the Aldriches individually. Therefore, they have no claim as individuals under this count Accordingly, the Demurrer to the Aldriches’ being a proper party is sustained as to Counts Three, Four, Seven, Eight Nine, Ten, and Eleven.

(2) Standing of Plaintiffs as Assignees of Transparencies, Inc.

The Motion for Judgment alleges that the Plaintiffs have sued as assignees of any rights of which TI may have against OPNB. The Defendant maintains that the assignment is not valid because it was made during the period of time that 17 was in Chapter 11 proceedings in Bankruptcy Court and no approval of the Bankruptcy Court was secured.

Clearly § 8.01-26 of the Code of Virginia (1950), as amended, allows assignment of claims for damage to real or personal property. The problem in this case, however, is that the assignment was made during a period of time that 17 was under the jurisdiction of the United States Bankruptcy Court Die bankruptcy statutes do not allow a transfer of property without approval of the court It is clear that D did not secure the approval of the court. The effect of an order of bankruptcy dismissal is set forth under 11 U.S.C. § 349. This section of the Bankruptcy Code provides in part:

(b) Unless the court, for cause, orders otherwise, a dismissal of a case other than under § 742 of this title ... (3) revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case under this title.

[548]*548Clearly, if H had any cause of action against OPNB, that cause of action existed prior to the time it filed the Chapter 11 proceeding. Therefore, any claim of IT against OPNB revested in IT upon the voluntary dismissal of the bankruptcy proceeding because IT failed to obtain approval of the assignment by the Bankruptcy Court. Accordingly, the Aldriches do not have any standing to bring this action as assignees of any right of action of IT since this right revested in IT under the provisions of the Bankruptcy Code. Therefore, the Demurrer is granted as to IT, and IT is dismissed as a party.

(3) Standing of Plaintiffs as Partners in Alson, Ltd.

As noted above, the Aldriches have brought this action individually, as partners of Alson, and assignees of Transparencies. The Demurrer of the Defendant complains that Alson has not properly brought suit in the partnership name.

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Cite This Page — Counsel Stack

Bluebook (online)
35 Va. Cir. 545, 1993 Va. Cir. LEXIS 196, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aldrich-v-old-point-national-bank-vacchampton-1993.