In re W.B. Care Center, LLC

497 B.R. 604, 2013 WL 4718932
CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedAugust 30, 2013
DocketNo. 09-26196-BKC-JKO
StatusPublished
Cited by3 cases

This text of 497 B.R. 604 (In re W.B. Care Center, LLC) 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.

Bluebook
In re W.B. Care Center, LLC, 497 B.R. 604, 2013 WL 4718932 (Fla. 2013).

Opinion

Chapter 7

ORDER DENYING TIMOTHY REAR-DON’S MOTION AND AMENDED MOTION [ECF No.’s 736, 744] SEEKING PERMISSION TO SUE MARCUM LLP ET AL. IN DISTRICT COURT CASE NO. 12-20829-CTV-LENARD

John K. Olson, Judge United States Bankruptcy Court

This Chapter 7 case came on for hearing on August 21, 2013, on the Motion [ECF 736] and Amended Motion [ECF 744] filed by Timothy Patrick Reardon (“Reardon”) seeking authority to sue Marcum LLP d/b/a MarcumRachlin (“Marcum”) and its partner John L. Heller, CPA (“Heller”) in a civil case pending in the United States District Court for the Southern District of Florida styled Reardon v. Lake Worth Enterprises, LLC, et al., Case No. 12-20829-cv-Lenard/O’Sullivan (the “District Court Action”). For the reasons set forth below, the Motion and Amended Motion are denied.

W.B. Care Center, LLC, d/b/a West Broward Care Center (the “Debtor”) filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on August 5, 2009. Reardon signed the petition as Managing Member of the Debtor. The Debtor operated a nursing home in Bro-ward County, Florida, and Reardon was its duly-licensed administrator.

By Application [ECF 109] filed October 1, 2009, the Debtor sought to retain Alan R. Barbee, Heller and Marcum as accountants. The Application was granted at a hearing held October 6, 2009, and ultimately embodied in an Order [ECF 207]. Issues relating to the Debtor’s financial operations were first raised with the Court by the Debtor’s secured lender, Institutional Leasing I, LLC (“Institutional”), at a hearing on October 9, 2009, at which Heller testified that Reardon had restricted Heller’s access to the Debtor’s bank account information, thereby preventing Heller from determining the validity vel non of Institutional’s concerns that the Debtor, under Reardon’s management, was engaged in financial improprieties. The Court conducted a further hearing on those and related issues on October 27, 2009, as a result of which the Court entered an Order [ECF 143] directing the appointment of an Examiner under 11 U.S.C. § 1104 to conduct an investigation into the Debtor’s financial management for periods before and after the petition date. The United States Trustee appointed So-neet R. Kapila to serve as Examiner [ECF 145]. That appointment was confirmed by the Court by Order [ECF 156] entered November 6, 2009.

By Order [ECF 164] entered November 10, 2009, the Examiner was granted additional powers in order to facilitate and conduct a settlement conference among the Debtor, Institutional, Reardon, and Heller who was, by then, functioning as the Debtor’s Chief Restructuring Officer. That settlement conference, held November 11-12, 2009, resulted in a settlement [607]*607agreement among the parties (the “First Settlement Agreement”), the terms of which were announced on the record in open court on November 12, 2009, and which was attached as an exhibit to a motion to compromise [ECF 170] filed November 13, 2009. The Court entered an Order [ECF 178] preliminarily granting the motion to compromise on November 13, 2009. A further hearing was scheduled for November 19, 2009, continued by Order [ECF 187] to December 14, 2009, and further continued by Order [ECF 221] to December 30, 2009.

Under the terms of the First Settlement Agreement, Reardon resigned as administrator of the Debtor’s nursing home and a temporary nursing home administrator with appropriate license, Zev Shamesh, was substituted as administrator, all effective as of the November 12th hearing. The Examiner thereafter shared co-signatory authority on the Debtor’s bank accounts with Mr. Shamesh. For his part, Reardon was to receive $500,000 in settlement of his interests in the Debtor and on account of claims he held against, inter alia, Institutional.

By Applications [ECF 194 and 195], the Debtor sought to modify the duties of Marcum and the Examiner by (among other things) deleting the Examiner from, and by adding Heller to, signatory authority on the Debtor’s bank accounts. These changes were approved by Orders [ECF 230 and ECF 244],

At the hearing conducted December 14, 2009, evidence was presented that Rear-don had attempted to remove some $50,000 from the Debtor’s bank accounts on or about December 11, 2009 (a full month after his authority to administer the nursing home had been terminated under the First Settlement Agreement), and to cause those funds to be deposited in his own personal bank accounts, clear violations of the First Settlement Agreement, the preliminary approval Order [ECF 178], multiple provisions of the Bankruptcy Code and other federal laws. As a result of these developments, the Court entered an Order [ECF 230] designating Heller as the Debt- or’s sole representative with full authority to act for and to execute documents on behalf of the Debtor. The Debtor thereafter negotiated an amended settlement (the “Second Settlement Agreement”) with, inter alia, Institutional. The Second Settlement Agreement did not provide for any payment to Reardon, let alone the $500,000 payment to Reardon provided for in the First Settlement Agreement. The Debtor sought approval of the Second Settlement Agreement by motion [ECF 236] which was granted by Order [ECF 256] entered January 7, 2010. That Order found, on the basis of the evidence presented, that Reardon had attempted to embezzle $50,000 from the Debtor’s estate, had materially breached the First Settlement Agreement, and was in breach of the implied covenant of good faith and fair dealing implicit in any settlement agreement. Mount Sinai Medical Center of Greater Miami, Inc. v. Struggles, Inc., 329 F.Supp.2d 1309 (S.D.Fla.2004). Reardon’s objections to the Second Settlement Agreement were overruled, the Second Settlement Agreement was approved, and all claims asserted by the Debtor and Institutional against one another in various litigation were ordered to be dismissed with prejudice, other than claims against Reardon and related entities controlled by him.

A notice of appeal [ECF 264] was filed by Reardon on January 20, 2010, addressed to the Order [ECF 256] which approved the Second Settlement Agreement. That appeal, styled Reardon v. W.B. Care Center, LLC, Case No. 10-60360-CIV-MOORE/SIMONTON, was [608]*608dismissed by the District Court by Order [ECF 15] entered by District Judge Moore on May 26, 2010. Prior to the dismissal of that appeal, Reardon1 had sought by motion [ECF 8] a variety of fantastic relief, including (1) withdrawal of the reference of the main bankruptcy case from the Bankruptcy Court to the District Court; (2) a declaration that the Debtor is “an enterprise engaging in or affecting interstate commerce under section 1962(c)” of the RICO Act; (S) a jury trial; and (4) a provision indicating that he did not consent to the conduct of a jury trial by the Bankruptcy Court. Judge Moore denied the relief sought by paperless Order [ECF 18] which noted, among other things, that the District Court “only has appellate jurisdiction over this matter and no authority to add original proceedings to this case.”

Meanwhile, the Examiner was directed by this Court in an Order [ECF 256] entered in the Debtor’s main bankruptcy case to undertake the sale of the Debtor’s nursing home. He thereafter moved [ECF 271] to sell the nursing home free and clear of all liens, claims and encumbrances.

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Cite This Page — Counsel Stack

Bluebook (online)
497 B.R. 604, 2013 WL 4718932, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-wb-care-center-llc-flsb-2013.