Patel v. Shubh Hotels, LLC (In re Shubh Hotels Pittsburgh LLC)

476 B.R. 181, 2012 WL 3020091, 2012 Bankr. LEXIS 3406, 56 Bankr. Ct. Dec. (CRR) 230
CourtUnited States Bankruptcy Court, W.D. Pennsylvania
DecidedJuly 24, 2012
DocketNo. 10-26337JAD
StatusPublished
Cited by4 cases

This text of 476 B.R. 181 (Patel v. Shubh Hotels, LLC (In re Shubh Hotels Pittsburgh LLC)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Patel v. Shubh Hotels, LLC (In re Shubh Hotels Pittsburgh LLC), 476 B.R. 181, 2012 WL 3020091, 2012 Bankr. LEXIS 3406, 56 Bankr. Ct. Dec. (CRR) 230 (Pa. 2012).

Opinion

MEMORANDUM OPINION

JEFFERY A. DELLER, Bankruptcy Judge.

The matter before the Court consists of two motions for summary judgment on the Objection of Dr. Kiran C. Patel and Pittsburgh Grand, LLC to Claim of Shubh Hotels, LLC. The matter is a core proceeding over which this Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 157(b)(2)(B) and 1334(b). For the reasons set forth below, the Court finds that no genuine issue of material fact exists to move the issue to trial. Consequently, summary judgment shall be granted and the claim disallowed.

I.

This Court shall grant a motion for summary judgment only if the moving party shows that there are no genuine disputes as to material facts and that it is entitled to judgment as a matter of law. See Fed. R.Civ.P. 56 (applicable in bankruptcy proceedings through Fed. R. Bankr.P. 7056); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A factual dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When deciding a motion for summary judgment courts may consider all materials of record including depositions, documents, affidavits or declarations, stipulations, admissions and interrogatory answers. Fed.R.Civ.P. 56(c). All inferences drawn from underlying facts are to be viewed in the light most favorable to the nonmoving party. Rosen v. Bezner, 996 F.2d 1527, 1530 (3d Cir.1993) [183]*183(citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). In the instant matter, the following facts are undisputed.1

II.

Shubh Hotels, LLC (“Shubh Hotels”) is a limited liability company that at the direction of its sole managing member, Atul Bisaría (“Bisaría”), transferred funds between various hotel entities in which Bisa-ría maintained an interest. (See Doc. # 2148, ¶ 28; see also Doc. # 2193, ¶¶ 3, 10).2 At all times relevant to the instant litigation, Bisaría had full authority to act on behalf of Shubh Hotels and was the decision maker for Shubh Hotels Pittsburgh, LLC (the “Debtor”). (See Doc. # 2193, ¶¶ 3, 17-18). The Debtor is a limited liability company consisting of two members: Shubh Hotels Pittsburgh Investments, LLC and Shubh Hotels Pittsburgh Acquisitions, LLC that formerly operated the Pittsburgh Hilton Hotel at 600 Commonwealth Place, Pittsburgh, Pennsylvania. (See id. ¶¶ 3,14-15).

On September 7, 2010, the Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. (See id. ¶ 1). Shubh Hotels filed a proof of claim against the Debtor (the “Claim”) on January 18, 2011, asserting a general unsecured claim in the amount of $15,227,670.09 for “Loans to corporation.” (See Doc. # 2148, ¶ 4). In support of the Claim, Shubh Hotels attached a list of funds transferred in and out of the Debtor’s accounts between January 7, 2007 and July 29, 2009 (the “Advances”). (See id. ¶ 7). No loan agreements, promissory notes, term sheets, payment schedules, bank records, canceled checks, or other documents are attached to the list. (See id.).

On April 6, 2011, Dr. Kiran C. Patel and Pittsburgh Grand, LLC (the “Plan Proponents”) filed a Modified Second Amended Chapter 11 Plan [Doc. # 927] and a Modified Second Amended Disclosure Statement in Connection with Modified Second Amended Plan of Reorganization Dated April 6, 2011 [Doc. # 929]. (See id. ¶ 8). On April 22, 2011, the Plan Proponents objected to the Claim. (Doc. # 991). The objection asserted that, to the extent the funds were transferred from Shubh Hotels to the Debtor, they constituted equity contributions and not loans. (See Doc. # 991 ¶ 15). The objection also asserted a right of setoff in the Debtor. (See id. ¶ 17). The Official Committee of Unsecured [184]*184Creditors of Shubh Hotels Pittsburgh, LLC joined in the Plan Proponents’ objection to the Claim for the limited purpose of preventing Shubh Hotels from voting on the proposed plan. (See Doc. # 1070, ¶11).

On May 4, 2011, Shubh Hotels filed a motion seeking temporary allowance of its Claim for voting purposes only. (See Doe. # 1083). Following a hearing held May 12, 2011, this Court denied said motion. (See Doc. # 1340). This Court entered an order confirming the plan on May 20, 2011. (Doc. # 1390).

Through its response to the Plan Proponents’ objection to the Claim, Shubh Hotels conceded that the amount of its original claim should be reduced to $13,314,084.42. (See Doc. # 1447, unnumbered p. 1, n. 1). Shubh Hotels also asserted that the transfers to the Debtor’s accounts were not investments because Shubh Hotels was not an equity holder of the Debtor and denied any right to setoff. (See Doc. # 1447).

Subsequent to the effective date of the plan (June 9, 2011), a Creditor Trust was created that appointed Meridian Financial Advisors, Ltd. as trustee. The Creditor Trust filed a supplemental objection to the Claim asserting that as the possible recipient of fraudulent transfers or recoverable property, Shubh Hotels’ claim should be denied pursuant to 11 U.S.C. § 502(d). (See Doc. # 1954).

In February of 2012, both the Plan Proponents and the Creditor Trust (collectively, the “Objectors”) filed motions for summary judgment. The Motion for Partial Summary Judgment on Objection to Claim No. 68 of Shubh Hotels, LLC filed by the Creditor Trust requests this Court limit the allowed amount of Claim to $337,216.11, representing the total amount of Advances sent directly from Shubh Hotels to the Debtor, and reserves the right to assert an objection for complete disal-lowance of the Claim at trial. (See Doc. #2146, p. 6). The Objectors’ Motion for Summary Judgment on Objection to Claim # 68 of Shubh Hotels, LLC (“Summary Judgment Motion”), primarily alleges that no issue of material fact exists as to whether the Shubh Hotels’ fund transfers were equity contributions as opposed to “loans” to the Debtor. (See Doc. # 2153, pp. 15-23). The Summary Judgment Motion also asserts that there is no genuine issue of material fact that the Debtor has a complete setoff defense against the Claim. (Id. at pp. 23-24).

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476 B.R. 181, 2012 WL 3020091, 2012 Bankr. LEXIS 3406, 56 Bankr. Ct. Dec. (CRR) 230, Counsel Stack Legal Research, https://law.counselstack.com/opinion/patel-v-shubh-hotels-llc-in-re-shubh-hotels-pittsburgh-llc-pawb-2012.