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First Western SBLC, Inc. v. Mac-Tav

April 19, 1999

FIRST WESTERN SBLC, INC.,
APPELLANT,
V.
MAC-TAV, INC.,
APPELLEE.



On Appeal From the United States Bankruptcy Court for the District of New Jersey Bankruptcy No. 93-37406 (WHG) (Honorable William H. Gindin)

FOR PUBLICATION

MEMORANDUM OPINION

COOPER, District Judge

This matter comes before the Court on appeal of the Order of the United States Bankruptcy Court for the District of New Jersey dated June 30, 1998. For the reasons expressed herein, the Order of the bankruptcy court is affirmed.

BACKGROUND

Mac-Tav, Inc. ("Mac-Tav") filed a petition for relief under Chapter 11 of the United States Bankruptcy Code on December 8, 1993. (Appellee's Br. at 3.) Mac-Tav owns a tavern located at 1704 F Street, South Belmar, New Jersey (the "Property"). (Id.) Appellant First Western, SBLC, Inc. ("First Western") retains a mortgage on the Property. (Appellant's Appendix ("App.") at 31.) The bankruptcy court entered an Order (the "Confirmation Order") confirming the reorganization plan (the "Confirmed Plan") of Mac-Tav on April 22, 1996. (Id. at 1-37.) The bankruptcy court incorporated the Confirmed Plan into the Confirmation Order. (Id. at 3.)

The Confirmation Order stated that "the Court will retain jurisdiction over the implementation and interpretation of this Order." (Id.) The Confirmation Order also provided that the bankruptcy court would retain jurisdiction:

i. to enable the Debtor to consummate the Plan of Reorganization and to resolve any disputes arising with respect thereto. . . .

x. to make such Orders as are necessary or appropriate to carry out the provisions of this Plan to the extent authorized by § 1142 of the Bankruptcy Code. . . .

xi. to hear any other matter not inconsistent with the Bankruptcy Code. (Id. at 25-26.)

Mac-Tav and First Western entered into a Stipulation of Settlement ("Stipulation"), which the bankruptcy court also incorporated into both the Confirmation Plan and the Confirmation Order. (Id. at 31-36.) The Stipulation provided that Mac-Tav would remit monthly mortgage payments of $349.81 to First Western. The Stipulation also stated that in the event of default, the full mortgage owed by Mac-Tav, as well as a deficiency lien, would become due. (Id. at 35.) First Western could then proceed with a foreclosure action in state court and Mac-Tav would not "in any way frustrate the foreclosure action or sale of the property." (Id.) Mac-Tav had a 7-day grace period on all its responsibilities and an additional 10-day period to cure any defaults. (Id.)

Mac-Tav bounced a mortgage check that was due in January, 1998. (Appellant's Br. at 5.) Thomas P. McCann, the President of Mac-Tav, alleges that First Western did not return the check to Mac-Tav and that he believed the check had been redeposited. (App. at 41: Certif. of Thomas P. McCann dated 4-7-98 ("McCann Certif.") ¶ 10.) First Western alerted Mac-Tav that First Western was proceeding with a state foreclosure action based on Mac-Tav's failure to remit payments for February and March, 1998. (Id., Ex. D.) Mac-Tav provided proof that it had paid the February, March and April mortgage payments. (Id., Ex. E.) First Western then informed Mac-Tav that Mac-Tav had bounced the check due in January, 1998. (Id., Ex. F.) Mac-Tav quickly delivered a replacement check to cover the January payment. (Id. ¶ 10.)

Mac-Tav then filed with the bankruptcy court a Motion to Compel First Western to comply with the Confirmed Plan. (App. at 38.) The bankruptcy court reopened the case. (Id. at 84.) In response, First Western filed a motion for an order declaring that the bankruptcy court was without jurisdiction to address Mac-Tav's alleged default. (Id. at 86.) After hearing oral argument, the bankruptcy court determined that it had jurisdiction over Mac-Tav's motion and ordered First Western to comply with the Confirmed Plan by not proceeding with the foreclosure action on the Property. (App. at 240: Order dated 6-30-98.) First Western filed a timely notice of appeal. (App. at 241.)

First Western argues that the bankruptcy court lacked jurisdiction over Mac-Tav's Motion to Compel. (Appellant's Br. at 7.) According to First Western, a bankruptcy court should play a limited role in the affairs of a reorganized debtor, and a state court should interpret the Stipulation. (Id. at 9-14.) First Western also maintains that if the bankruptcy court had jurisdiction, it should have abstained and ...


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