Dillworth v. Mahecha Diaz

CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedApril 15, 2022
Docket20-01079
StatusUnknown

This text of Dillworth v. Mahecha Diaz (Dillworth v. Mahecha Diaz) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Florida. primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Dillworth v. Mahecha Diaz, (Fla. 2022).

Opinion

TAGGED OPINION

oer OS aR’ if * A iL Ss eA □□□ a Ways 6 Ye, AIK gp □□ AR □□□ ‘Disrmict OF OE ORDERED in the Southern District of Florida on April 15, 2022.

Scott M. Grossman, Judge United States Bankruptcy Court

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA FORT LAUDERDALE DIVISION www.flsb.uscourts.gov In re: BAL HARBOUR QUARZO, LLC Case No. 18-11793-SMG a/k/a Synergy Capital Group, LLC, a/k/a Synergy Investments Group, LLC, Chapter 11 Debtor. ef DREW M. DILLWORTH, as Trustee, Plaintiff, V. Adv. No. 20-1079-SMG CARLOS ELIAS MAHECHA DIAZ, MARIA ANASTASIA CASAS MATIZ, FELIPE MAHECHA CASAS, and CAMILO E. MAHECHA, Defendants. ef

ORDER DENYING POST CONFIRMATION CREDITORS’ COMMITTEE’S MOTION TO INTERVENE Bankruptcy Code section 1109(b) allows any “party in interest” – including a creditors’ committee – to “raise and . . . appear and be heard on any issue in a case under” chapter 11. Relying on this statute and Federal Rule of Civil Procedure 24(a)(1),1 a post-confirmation creditors’ committee created by a confirmed chapter 11 plan and related liquidating trust agreement argues that it has “an unconditional

right to intervene” in an adversary proceeding filed by the liquidating trustee over two years ago. Alternatively, the committee seeks to intervene of right under Rule 24(a)(2), arguing that it “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.”2 As a further alternative, the committee argues it satisfies the requirements for permissive intervention under

Rule 24(b)(1)(B), which allows the Court to “permit anyone to intervene who . . . has a claim or defense that shares with the main action a common question of law or fact.”3 Notably, although Rule 24(c) requires that a motion to intervene be accompanied by a pleading that sets out the claim or defense for which intervention is sought, the committee did not attach any pleading to its motion to intervene. In

1 Under Federal Rule of Bankruptcy Procedure 7024, Federal Rule of Civil Procedure 24 applies in bankruptcy adversary proceedings. 2 Fed. R. Civ. P. 24(a)(2). 3 Fed. R. Civ. P. 24(b)(1)(B). fact, the committee admits that “it does not assert ownership of a claim or defense,” but instead seeks to intervene “in its capacity as a consulting/oversight party to the Trustee but reserves the right to take positions on specific issues that may arise

during the course of the Adversary Proceeding, which may require the filing of pleadings.”4 After considering the committee’s motion to intervene5 and its memorandum of law,6 the defendants’ response in opposition,7 and the arguments of counsel at a hearing on April 6, 2022, for the reasons set forth below, the motion to intervene will be denied. BACKGROUND The confirmed chapter 11 plan8 for Debtor Bal Harbour Quarzo, LLC (“BHQ”)

created a liquidating trust9 to which certain causes of action were transferred10 for the benefit of BHQ’s general unsecured creditors, who each received beneficial interests in the liquidating trust.11 The plan appointed Drew Dillworth as trustee of the liquidating trust,12 and vested him with the authority to prosecute these causes of action.13 The plan and liquidating trust also established a post-confirmation

4 ECF No. 149, at 18. 5 ECF No. 143. 6 ECF No. 149. 7 ECF No. 150. 8 Joint Combined Plan of Liquidation (“Plan”), In re Bal Harbour Quarzo, LLC, Case No. 18-11793- SMG (“Main Case”) (ECF No. 233). 9 Bal Harbour Quarzo Liquidating Trust Agreement, Main Case ECF No. 233-1. 10 Plan, §§ 9.8, 9.9.2. See 11 U.S.C. § 1123(b)(3)(B). 11 Plan, § 9.9.4. 12 Liquidating Trust Agreement, § 2.1(b). 13 Id., §§ 4.1, 4.2, 4.4. creditors’ committee to “represent the interests of the Trust Beneficiaries during the existence of the Trust.”14 Mr. Dillworth, as liquidating trustee, commenced this adversary proceeding on

February 14, 2020.15 After initial delays due to efforts to serve the defendants abroad, and then some motion practice, the defendants filed their answer and affirmative defenses on January 31, 2022.16 Shortly after the pretrial scheduling conference17 – but before entry of the scheduling order18 – the committee moved to intervene under Rule 24(a)(1).19 In its separate memorandum of law filed in advance of the hearing on its motion to intervene, the committee then expanded the relief sought to include

intervention of right under Rule 24(a)(2), and permissive intervention under Rule 24(b)(1)(B).20 Mr. Dillworth, as plaintiff, did not file any written opposition to the committee’s motion, but at the outset of the hearing he and the committee announced a proposed resolution (if the Court were to grant the motion), wherein they would agree that: (1) Mr. Dillworth is the party with the right and responsibility to prosecute this adversary proceeding; (2) Mr. Dillworth and his professionals will use

their best efforts to consult with the committee on the prosecution of this adversary proceeding; (3) nothing in any order granting the motion to intervene would serve to

14 Id., § 6.2. The Trust Beneficiaries are the pre-confirmation general unsecured creditors of BHQ. Id., app. A. 15 ECF No. 1. 16 ECF No. 127. 17 ECF No. 128. 18 ECF No. 146. 19 ECF No. 143. 20 ECF No. 149. expand or limit the rights of either Mr. Dillworth or the committee under BHQ’s plan or liquidating trust agreement; (4) the committee may identify for Mr. Dillworth potential witnesses and subjects for document production during discovery, and

would be entitled to consult with Mr. Dillworth thereon and during depositions; (5) the committee would be entitled to attend all depositions and hearings in this adversary proceeding as a party in interest; and (6) the committee must consult with Mr. Dillworth before filing any substantive motion in this adversary proceeding, other than a joinder. The defendants filed a written opposition to the committee’s motion.21 Upon

learning – for the first time at the hearing – of the proposed resolution of the motion as between Mr. Dillworth and the committee, the defendants stood by their legal opposition to the motion, but indicated that they had no strong objection to the proposed resolution. One other Trust Beneficiary, however – Jonathan Feldman, Esq. (who acquired claims in the BHQ case both directly and through an entity) – appeared at the hearing and opposed the committee’s motion, even with the resolution proposed by the committee and Mr. Dillworth.22 Mr. Feldman was particularly concerned about

the potential additional administrative expenses that could be incurred by the committee’s counsel if the Court were to grant the motion, even under the terms agreed to by Mr. Dillworth and the committee.

21 ECF No. 150. 22 Before hearing from Mr. Feldman – who is not a party to, and does not represent any party in, this adversary proceeding – the Court inquired of all parties in interest and none had any objection to the Court hearing from him. DISCUSSION I. Intervention of Right. A. Unconditional Statutory Right to Intervene. Relying on 11 U.S.C.

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