Summit Investment Management, et al. v. Connolly
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 22-1297 (10th Circuit, Feb 16,2024) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Tenth Circuit (Circuit) affirmed the order of the U.S. District Court for the District of Colorado (DC) for the same reasons cited by the latter in its order affirming two rulings by that district's U.S. Bankruptcy Court (BC) in the bankruptcy of Fog Cap Retail Investors LLC (DR): granting the trustee’s amended motion for approval of claims subordination stipulation with Foot Locker Retail, Inc. (FLR) and authorization to make an interim distribution to creditors and approving stipulations between trustee and FLR and Stratford Holdings LLC (Strat).
- Procedural context:
- In 2016, the DR filed for voluntary relief under chapter 11 in Colorado, resulting in an automatic stay of the litigation launched by Strat, a creditor and owner of the property at issue in this case, against FLR and the DR in the U.S. District Court for the Western District of Oklahoma (Oklahoma litigation) to recover costs and damages from certain remediation efforts, with both Summit Investment Management LLC (Summit), and SBN Edge, LLC (SBN Edge), creditors of the DR, named as codefendants. After significant proofs of claim were filed against the DR by Strat and FLC, and after the DR filed objections, the BC granted relief from the automatic stay on January 12, 2017, allowing the parties to pursue their claims in the Oklahoma litigation. In April 2017, the BC converted the DR's chapter 11 case into a chapter 7 liquidation and appointed Tom H. Connolly, the appelle, as the trustee (TR). Eventually, the TR filed, and the BC approved, a first stipulation between the TR and Summit and SBN FCCG LLC (SBN FCCG), the DR's sole member (and thus owner), an amended stipulation between FLR, an interim distribution to creditors, and a third stipulation with Strat. The BC entered judgment, and Summit, SBN FCCG, and SBN Edge appealed. When the DC affirmed, the same trio again appealed
- Facts:
- Formed to hold leasehold interests for investment purposes, the DR's sole member (and thus owner) was SBN FCCG LLC, and owed a number of obligations to Summit and SBN Edge, two other interrelated entities simultaneously related to the DR. Decades ago, Strat's predecessor-in-interest entered into a 30-year lease with FLR's predecessor-in-interest; in 1995, FLC subleased the property to a dry-cleaning business. In 2002, FLC sold and assigned all its interests in the property to the DR while the DR assumed all of FLC's obligations under its original lease agreement with Strat pursuant to an assignment and assumption agreement. Six years later, the DR evicted the dry-cleaning tenant; after the property sat vacant for four years, the DR surrendered its entire leasehold interest to Strat. Unfortunately, the property had been contaminated by toxic dry-cleaning chemicals, prompting Oklahoma to initiate an environmental enforcement action against Strat and the former dry cleaner in 2012. In response, Strat launched the Oklahoma Litigation.
- Judge(s):
- Paul J, Kelly Jr.; Scott Matheson Jr.; and Allison H. Eid
ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!
