In re Holy Hill Community Church

563 B.R. 6, 2017 WL 57775, 2017 U.S. Dist. LEXIS 2352
CourtDistrict Court, C.D. California
DecidedJanuary 5, 2017
DocketCASE NO. CV-16-5739-MWF, CASE NO. CV-16-5828-MWF-MRWx
StatusPublished
Cited by1 cases

This text of 563 B.R. 6 (In re Holy Hill Community Church) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Holy Hill Community Church, 563 B.R. 6, 2017 WL 57775, 2017 U.S. Dist. LEXIS 2352 (C.D. Cal. 2017).

Opinion

OPINION AFFIRMING THE BANKRUPTCY COURT [16-CV-5739]; AND DENYING PETITION FOR WRIT OF MANDAMUS [16-CV-5828, DOCKET NO. 2]

MICHAEL W. FITZGERALD, United States District Judge

Before the Court is a bankruptcy appeal from the Bankruptcy Court in case number 16-cv-5739 (the Honorable Julia W. Brand, United States Bankruptcy Judge) (the “Bankruptcy Court”). Appellants Palisades Capital Partners LLC and 1111 Sunset Boulevard, LLC, filed an Opening Brief on October 3, 2016. (Docket No. 23). Richard Laski, acting as the Principal of the Reorganized Debtor, filed an Opening Brief on October 3, 2016. (Docket No. 26). Appellee 1111 Sunset, LLC filed an Answering Brief on October 27, 2016. (Docket No. 29). Appellee Metropolitan Water District of Southern California filed a Joint Answering Brief with 1111 Sunset, LLC on October 28, 2016. (Docket No. 31). Appellants Palisades Capital Partners LLC and 1111 Sunset Boulevard, LLC filed a Reply Brief on November 14, 2016. (Docket No. 38). Appellant Laski filed a Reply Brief on November 16, 2016. (Docket No. 41).

Also before the Court is a Petition for Writ of Mandamus filed by Palisades Capital Partners LLC and 1111 Sunset Boulevard, LLC on August 4, 2016, in case number 16-cv-5828. (Docket No. 2). A Supplement to the Petition was filed on September 2, 2016. (Docket No. 13). The Court held a telephonic status conference on November 14, 2016, during which the parties agreed the merits of the Writ and the appeal overlapped to such a degree that no responsive filings to the Petition should be required from Appellees. The Court accordingly will address the Petition and the appeal in this Order.

The Court AFFIRMS the Bankruptcy Court on the basis of standing. The Court will not reach the Bankruptcy Court’s alternative basis of res judicata. The action is REMANDED for the limited purpose of correcting the scope of the dismissal, as the parties have already agreed. The Petition-is DENIED.

I. BACKGROUND

Holy Hill Community Church (“HHCC”) filed a voluntary Chapter 11 petition on June 5, 2014. After proceedings in the Bankruptcy Court, the Trustee’s Second Amended Chapter 11 Plan became effective on January 1, 2016. HHCC then became the Reorganized Debtor and the Chapter 11 Trustee, Richard Laski, be[8]*8came the Principal of the Reorganized Debtor.

Appellants then contracted to purchase the real property located at 1111 Sunset Blvd., Los Angeles, CA 90012, which had been previously owned by HHCC, from Laski. This parcel is referred to by the parties as “Parcel B.”

The purchase and sale agreement (the “PSA”) for the purchase of Parcel B provided for the purchase of additional property and rights, and included an option for the purchase of claims described as “any claims related to transfers that are preferences under the Bankruptcy Code and claims related to the enforceability of the Reciprocal Use Agreements,” which claims were referred to in the PSA and are also referred to in the Second Amended Verified Complaint (“SAC”) as the “Reserved Claims.” (Appellants’ Appendix, Ex. 3 ¶ 175).

The PSA defined the “Reciprocal Use Agreements” as “that Reciprocal Use Agreement recorded as Instrument No. 01-1906087 in the Official Records of Los Angeles County, California, as alleged to be amended by that First Amendment to Reciprocal Use and Easement Agreement recorded as Instrument No. 20121064483 in the Official Records of Los Angeles County, California.” That definition includes a two-page Reciprocal Use Agreement dated on or about September 28, 2001 (the “RUA”) and the “First Amendment to the Reciprocal Use and Easement Agreement dated on or about May 10, 2012 (the “Amendment”).” (Id. ¶ 177).

Appellants closed on the purchase under the PSA and acquired Parcel B. (Id. ¶ 176). On November 18, 2015, Appellants exercised the option to purchase the Reserved Claims, acquiring all of the claims related to the enforceability of the RUA and the Amendment. (Id. ¶ 177).

A. Prior History of the Property

The property at issue was subdivided in 2001 into two parcels, Parcel A and Parcel B, the parcel discussed above. (Id. ¶ 32). Parcel A was originally leased and then sold to Mr. and Mrs. De Young Kim. Parcel B was owned by HHCC. In 2001, HHCC and the Kims entered into the RUA discussed above, which dealt with HHCC’s use of parking spaces and a cafeteria located in Parcel A’s basement. (Id.). Parcel A was sold by the Kims to the Simi Valley Shopping Center, which subsequently sold it to Appellee 1111 Sunset LLC’s predecessor-in-interest in September 2007. (Id. ¶ 41).

In June 2010, Appellee filed a lawsuit against HHCC in Los Angeles County Superior Court. (Appellants’ Appendix, Ex. 7 at 528). Appellee alleged HHCC had failed to abide by the terms of the RUA and sought damages. Specifically, Appellee claimed HHCC had breached the RUA by parking in spaces designated solely for Parcel A under the RUA. HHCC filed a cross-complaint alleging Appellee had breached the RUA by failing to grant HHCC access to Parcel A’s cafeteria. HHCC sought declaratory relief in the form of a judicial determination of its rights under the RUA. (Id. at 602).

On May 10, 2012, HHCC and Appellee entered in a Settlement Agreement that resolved all disputes and claims related to the RUA. (Id., Ex. 3 at 336). Pursuant to this Agreement, the parties agreed to enter into a First Amendment to the RUA, as discussed above. The parties also filed a stipulation to have the terms of the amendment confirmed by a judicial confirmation. (Id. at 339). Entering into the Amended RUA was a condition precedent to HHCC’s ability to obtain a new loan to refinance the property. Appellee was required under the Amended RUA to release [9]*9garnishment levies held against HHCC’s Parcel B and file a satisfaction of judgment in its favor in a separate 2008 action. (Id. at 339). HHCC represented in the Settlement Agreement that it had the “full right, legal power and actual authority” to enter into the Agreement. (Id. at 342). A Judgment and Permanent Injunction was entered by the Superior Court on August 17, 2012, and provided that the RUA was “hereby amended as set forth in the Amendment.” (Id. at'291). This Judgment and the Amended RUA were recorded with the Los Angeles County Recorder’s Office on September 7,2012.

B. The Current Litigation and Accompanying Lis Pendens

In 2013, HHCC filed a Complaint and First Amended Complaint in state court against Appellee and its principal, Yuval Bar—Zemer, as well as several other defendants. (Id., Ex. 24 at 940). The suit alleged various causes of action arising out of the Amended RUA and a loan agreement it had entered into with defendant Downtown Capital, LLC. HHCC then filed for bankruptcy, resulting in the current adversarial proceeding. The suit was removed to the Bankruptcy Court on August 31, 2015. (Id., Ex. 2).

Along with the filing of its First Amended Complaint, HHCC filed and recorded a Notice of Lis Pendens and Notice of Action Pending and recorded a lis pendens against Appellee’s property. After the bankruptcy proceedings were initiated, the Bankruptcy Court granted Appellee’s motion to expunge the lis pendens on the grounds that HHCC had not alleged any real property claim and its claims were barred by res judicata. (Appellee’s Supplemental Appendix at 40). The court allowed Appellants leave to amend the First Amended Complaint. (Id.).

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Bluebook (online)
563 B.R. 6, 2017 WL 57775, 2017 U.S. Dist. LEXIS 2352, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-holy-hill-community-church-cacd-2017.