Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Rain Tree Healthcare of Winston Salem, LLC

United States District Court, M.D. North Carolina

May 1, 2018

In re RAIN TREE HEALTHCARE OF WINSTON-SALEM, LLC, Debtor,
v.
J & F PARTNERS, LLC, and WILLIAM P. MILLER, Appellees. RAIN TREE HEALTHCARE OF WINSTON-SALEM, LLC, Appellant,

          MEMORANDUM OPINION AND ORDER

          OSTEEN, JR., District Judge

         Appellant Rain Tree Healthcare of Winston-Salem, LLC (“Rain Tree”) filed a voluntary petition for Chapter 11 Bankruptcy in the United States Bankruptcy Court for the Middle District of North Carolina. (Bankruptcy R. on Appeal pt. 1, Attach. 10, Voluntary Pet. (Doc. 5-10).) On June 1, 2017, the Bankruptcy Court announced its ruling on the motion to dismiss. (Tr. of June 1, 2017 Hr'g before Judge Benjamin A. Kahn (Doc. 9).) The Bankruptcy Court then entered a written order adopting its oral findings and formally dismissing the case. (Bankruptcy R. on Appeal pt. 1, Attach. 4, Order (Doc. 5-4) at 1.) Rain Tree then filed a motion to stay, (Bankruptcy R. on Appeal pt. 1, Attach. 26, Mot. to Stay Pending Appeal (Doc. 5-26)), which was denied, (Opp'n Br. of Appellee J & F Partners, LLC (“Appellee's Br.”), Ex. 19, Mem. Order Denying Mot. for Stay Pending Appeal (Doc. 28-33) at 7, 29). Rain Tree then appealed the order dismissing the case to this court. (Doc. 1.)

         Appellant Rain Tree has filed its brief, (Doc. 12), to which Appellee J & F Partners, LLC (“J & F”), responded in opposition, (Doc. 28), and Appellee William P. Miller, Bankruptcy Administrator, also responded in opposition, (Doc. 31). No. reply was filed. This court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158. This matter is ripe for adjudication and, for the reasons stated below, this court finds that the Bankruptcy Court's order dismissing the case should be affirmed.

         I. PROCEDURAL HISTORY AND FACTUAL BACKGROUND

         The relevant procedural history of this case goes back to December 2016, and is outlined below.

         A. Western District Bankruptcy Petition

         Rain Tree first filed a voluntary petition for Chapter 11 Bankruptcy in the United States Bankruptcy Court for the Western District of North Carolina on December 30, 2016. (Bankruptcy R. on Appeal pt. 2, Attach. 1, Amendment to Voluntary Pet. (Doc. 7-1) at 1.)[1] On January 13, 2017, the bankruptcy trustee moved to dismiss this case for failure to provide proof of adequate insurance. (Bankruptcy R. on Appeal pt. 2, Attach. 3, Mot. to Dismiss (Doc. 7-3).) On March 1, 2017, J & F moved to dismiss this case for cause under 11 U.S.C. § 1112(b). (Bankruptcy R. on Appeal pt. 2, Attach. 11, Mot. to Dismiss Case (Doc. 7-11) at 1.) On March 15, 2017, the Western District Bankruptcy Court held a hearing on the motions, and on March 31, 2017, it issued a written order dismissing the case. (Bankruptcy R. on Appeal pt. 1, Attach. 5, Order on Mots. to Dismiss (Doc. 5-5) at 5-6.)

As relevant to this case, the Western District Bankruptcy Court found that it is clear to this Court that the Debtor has violated the Chapter 11 Operating Order of this Court. While, typically, each one of the cited violations is not, in and of itself, sufficient to warrant a dismissal of a case, in this case all of the violations and deficiencies taken together are undoubtedly enough to warrant a dismissal. . . . The Debtor has been playing “catch-up” since the beginning of the case and this Court has made it clear that such would not be tolerated. All of these deficiencies taken together establish a basis for granting the [Bankruptcy Administrator's] Motion to Dismiss.

(Appellee's Br., Ex. 11, Order on Mots. to Dismiss (Doc. 28-15) at 5.) The Western District Bankruptcy Court further found that

cause exists for dismissal based on substantial continuing loss to the estate and the absence of a reasonable likelihood of reorganization. The budget presented by the Debtor reflects a net operating loss for February through April, 2017. In addition, the budget includes payments of only $6, 500 per month for Chapter 11 payments yet the Debtor offered no evidence that this payment amount would be sufficient under a Plan of Reorganization. Furthermore, this Court does not believe there is reason to believe that the numbers are realistic.

(Id. at 6.) The relevant factual findings leading to these legal conclusions will be addressed as necessary hereafter in this court's analysis. No. appeal was taken from the Western District Bankruptcy Court order, and that order is final.

         B. Middle District Bankruptcy Petition

         Rain Tree filed a second voluntary petition for Chapter 11 Bankruptcy in the United States Bankruptcy Court for the Middle District of North Carolina on April 1, 2017, (Bankruptcy R. on Appeal pt. 1, Attach. 10, Voluntary Pet. (Doc. 5-10)), just one day after the Western District's written order was entered. On April 4, 2017, J & F filed a motion to dismiss arguing that dismissal was warranted on grounds of res judicata and further arguing that reorganization was objectively futile and the filing was in bad faith. (Bankruptcy R. on Appeal pt. 1, Attach. 13, Mot. to Dismiss (Doc. 5-13) at 1.) On April 5, 2017, the Bankruptcy Administrator filed his motion to dismiss on similar grounds, arguing, inter alia, that no changed circumstances existed to justify the second Chapter 11 petition. (Bankruptcy R. on Appeal pt. 1, Attach 17, Mot. to Dismiss Case (Doc. 5-17) at 1.)

         The Middle District Bankruptcy Court held an evidentiary hearing on the motions to dismiss on May 4, 2017, and following that hearing, took the matter under advisement. (Tr. of May 4, 2017 Hr'g before Judge Benjamin A. Kahn (Doc. 8) at 192-93.) On June 1, 2017, the Bankruptcy Court issued oral findings, concluding that the case should be dismissed. (Tr. of June 1, 2017 Hr'g before Judge Benjamin A. Kahn (Doc. 9) at 13-14.) The Bankruptcy Court found that (1) Rain Tree failed to establish a sufficient change in circumstances to avoid the res judicata effect of the dismissal order of the Western District; (2) that there were adequate grounds to dismiss the case for “cause” under Section 1112(b) of the Bankruptcy Code due to continuing loss and diminution of the estate and an absence of the reasonable likelihood of reorganization; and (3) further support for dismissal existed given a finding of bad faith. (Id. at 5-19.) On June 16, 2017, the Bankruptcy Court issued its written order dismissing the case and barring Rain Tree from refiling for 180 days. (Bankruptcy R. on Appeal pt. 1, Attach. 4, Order (Doc. 5-4) at 1.)

         On June 16, 2017, Appellant filed a Notice of Appeal to this court. (Notice of Appeal (Doc. 1).) The Bankruptcy Court's Record on Appeal was docketed on August 28, 2017. (See Docs. 3-7.)

         C. State Court Proceedings

         One of the assets Rain Tree listed in its Voluntary Petition before the Middle District Bankruptcy Court was a lease agreement with J & F. (Bankruptcy R. on Appeal pt. 1, Attach. 10, Voluntary Pet. (Doc. 5-10) at 12.) According to Debtor's schedule that lease “provides the Debtor with a 5 year Right of Renewal and a Right of First Refusal.” (Id.) No. value was listed. (Id.)

         Following dismissal of the case in the Western District, J & F filed a Motion for Relief from Automatic Stay, which the Western District Bankruptcy Court granted. (Bankruptcy R. on Appeal pt. 2, Attach. 2, Mot. for Relief from the Automatic Stay (Doc. 7-2)); Bankruptcy R. on Appeal pt. 1, Attach. 7, Order Granting Relief (Doc. 5-7).) After the Western District Bankruptcy Court entered its order granting relief from the automatic stay on January 30, 2017, J & F filed a Complaint in Summary Ejectment in the Forsyth County, North Carolina General Court of Justice on January 31, 2017. (Br. in Supp. of Mot. to Dismiss Appeal (“Appellee's Mot. to Dismiss Br.”), Ex. A, Ejectment Complaint (Doc. 18-1).) This Complaint asserted that Rain Tree failed to pay rent, was holding over, and demanded, among other things, to be put into possession of the premises. (Id.)

         Following dismissal of the second bankruptcy case in the Middle District Bankruptcy Court on June 16, 2017, (Bankruptcy R. on Appeal pt. 1, Attach. 4, Order (Doc. 5-4) at 1), J & F filed a Motion for Summary Judgment in the summary ejectment action on September 18, 2017, (Appellee's Mot. to Dismiss Br., Ex. B, Motion for Summary Judgment (Doc. 18-2)). On October 4, 2017, the Honorable Denise S. Hartsfield, North Carolina District Court Judge, granted the Motion for Summary Judgment on J & F's claim for summary ejectment. (Id., Ex. C, Ejection Order (Doc. 18-4).) On October 16, 2017, a Writ of Possession was entered directing the Forsyth County Sheriff's Office to remove Rain Tree from the 5100 Lansing Drive, Winston Salem, North Carolina premises. (Id., Ex. D, Writ of Possession (Doc. 18-5).) According to J & F, on October 18, 2017, the Forsyth County Sheriff's Office executed on the Writ of Possession, removing Rain Tree from the premises and returning possession to J & F. (Appellee's Br. (Doc. 28) at 13.)

         II. STAND ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.