Agri Star Meat & Poultry, LLC v. Nevel Properties Corp.

Citation:
Agri Star Meat & Poultry, LLC v. Nevel Properties Corp., 8th Cir. Court of Appeals, No. 13-1161, August 28, 2014
Tag(s):
Ruling:
The 8th Circuit Court of Appeals upheld the ruling by the 8th Circuit district court and the bankruptcy court which concluded that SHF did not have any rights to a well located on land owned by Nevel. The bankruptcy court explained that SHF was never a party to the contract and as such did not have any rights to the contract. The contract was between Agriprocessors and Nevel—not SHF and Nevel—and, while Agriprocessors was in bankruptcy protection under the control of a court-appointed trustee, the contract was deemed rejected as a matter of law under 11 U.S.C. § 365(d)(4)(A). By the time SHF acquired Agriprocessors’ assets, the contract was already broken and SHF never acquired any rights to the well as it was not an asset of Agriprocessor at the time of the acquisition.
Procedural context:
This appeal arises from SHF’s objections to the reorganization plan’s handling of the deep water well. According to SHF, Nevel and SHF were parties to a “Deep Water Well Lease -- Water Line and Access Easements” (contract or lease) giving SHF (1) the exclusive right to use the deep water well in exchange for an annual payment, and (2) a non-exclusive right to access the well for maintenance and other purposes incident to the well’s operation. The bankruptcy court dismissed SHF's objection explaining that SHF was not a party to the contract for the well and that the contract was deemed rejected as a matter of law under 11 U.S.C. § 365(d)(4)(A) by the Chapter 11 Trustee. SHF appealed to the district court, which affirmed the bankruptcy court’s decision. The district court was “satisfied that the Bankruptcy Court did not err in finding the totality of the substance of this economic transaction . . . to be an ‘unexpired lease’ within the meaning of 11 U.S.C. §[ ]365.” SHF now appeals to our court.
Facts:
This bankruptcy case is another chapter in the legal saga of Sholom Rubashkin’s meteoric rise and spectacular fall. See United States v. Rubashkin, 655 F.3d 849, 853-54 (8th Cir. 2011) (affirming Rubashkin’s conviction and prison sentence of 324 months for “86 counts of bank, wire, and mail fraud; making false statements to a bank; money laundering; and violations of an order of the Secretary of Agriculture”). Before unethical and criminal practices led to federal prosecution and bankruptcy, Sholom Rubashkin’s business in Postville, Iowa, included Agriprocessors, a kosher meatpacking company, and Nevel, which owns and leases property to employees of the meatpacking faciltiy. Nevel owned a piece of non-residential property with a deep water well used by the meatpacking facility. Agriprocessors leased the well from Nevel. Nevel Properties Corporation (Nevel), is currently owned by Sholom Rubashkin’s brother Tzvi “Heshy” Rubashkin. /p/ /p/ /p/ Nevel filed for bankruptcy under Chapter 11 on March 2, 2009, and lengthy proceedings unfolded in the Bankruptcy Court for the Northern District of Iowa. Nevel filed an amended reorganization plan, which SHF found objectionable. SHF’s objections to the reorganization plan’s centers on the handling of the deep water well. According to SHF, Nevel and SHF were parties to a “Deep Water Well Lease -- Water Line and Access Easements” (contract or lease) giving SHF (1) the exclusive right to use the deep water well in exchange for an annual payment, and (2) a non-exclusive right to access the well for maintenance and other purposes incident to the well’s operation. The bankruptcy court held that SHF was not a party to the contract. The bankruptcy court explained the contract was between Agriprocessors and Nevel—not SHF and Nevel—and, while Agriprocessors was in bankruptcy protection under the control of a court-appointed trustee, the contract was deemed rejected as a matter of law under 11 U.S.C. § 365(d)(4)(A). By the time SHF acquired Agriprocessors’ assets, the contract for the well was already broken, rejected as a matter of law 11 U.S.C. § 365(d) and was no longer property of or an asset of Agriprocessors bankruptcy estate.
Judge(s):
RILEY, Chief Judge, MELLOY and BENTON, Circuit Judges.

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About us in numbers

3174 in the system

3056 Summarized

0 Being Processed