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In re Lazy Days' RV Center Inc.

United States Court of Appeals, Third Circuit

July 30, 2013

In re: LAZY DAYS' RV CENTER INC., et al, Reorganized Debtors Lazy Days' RV Center, Inc. and LDRV Holdings Corp., Appellants

Argued June 13, 2013

On Appeal from the United States District Court for the District of Delaware (D.C. No. 11-cv-00626) District Judge: Honorable Richard G. Andrews

Peter J. Rusthoven [ARGUED] Barnes & Thornburg Maris J. Kandestin Edmon L. Morton Young, Conaway, Stargatt & Taylor Attorneys for Appellants

R. Craig Martin [ARGUED] Stuart M. Brown DLA Piper Ronald S. Holliday DLA Piper Andrew Zaron Attorneys for Appellee

Before: SCIRICA, HARDIMAN and ALDISERT, Circuit Judges.

OPINION

HARDIMAN, Circuit Judge.

Lazy Days' R.V. Center, Inc. and LDRV Holding Corp. (collectively, the Reorganized Debtors) appeal an order of the United States District Court for the District of Delaware that vacated an order of the United States Bankruptcy Court. According to the District Court, the Bankruptcy Court lacked jurisdiction to adjudicate the motion to reopen filed by the Reorganized Debtors. Because we disagree with the District Court's conclusion that the Bankruptcy Court issued an advisory opinion, we will reverse the judgment of the District Court.

I

Appellee I-4 Land Holding Limited Co. owns a parcel of land in Florida. In July 1999, I-4 leased that land to Lazy Days pursuant to a written lease (Lease) that gave Lazy Days an option to purchase the property subject to certain conditions not relevant here. The Lease also prohibited Lazy Days from "assign[ing] or transfer[ring]" its interest in the Lease "without the prior written consent of" I-4, except to related entities under certain circumstances. App. 1249. Beginning in 2008, Lazy Days failed to pay rent as it came due and informed I-4 of its intention to file for Chapter 11 bankruptcy and assign the Lease to LDRV.

Prior to filing a petition under Chapter 11, Lazy Days negotiated with I-4 and reached a settlement agreement in October 2009 (the Settlement Agreement), pursuant to which I-4 consented to Lazy Days's assignment of the Lease to LDRV. As part of the Settlement Agreement, Lazy Days agreed not to "argue against the Bankruptcy Court abstaining from consideration of Lease interpretation issues . . . except to the extent necessary in connection with the assumption and assignment of the Lease as contemplated herein." App. 1485. The Settlement Agreement also provided that "there is no intent to, nor is the Lease modified in any respect and the Lease and all terms and conditions thereof remain in full force and effect." App. 1487. It did not explicitly state whether the purchase option would survive, however.

In November 2009, Lazy Days filed a Chapter 11 petition. The Bankruptcy Court confirmed a reorganization plan incorporating the Settlement Agreement in December 2009 and closed the case in March 2010. Thereafter, the Lease was assigned to LDRV.

On May 12, 2011, LDRV attempted to exercise the purchase option, but I-4 refused to honor it. On June 1 and June 7, 2011, the parties each filed lawsuits in Florida state court seeking a determination of their respective rights under the Lease. Also on June 7, the Reorganized Debtors filed an emergency motion to reopen in the Bankruptcy Court, seeking a ruling that the Lease's anti-assignment provision was unenforceable pursuant to 11 U.S.C. § 365(f)(3), which renders unenforceable any "provision in an . . . unexpired lease of the debtor . . . that terminates or modifies . . . a right . . . under such . . . lease on account of an assignment" of the lease. Nine days later, after allowing I-4 to file an opposition and holding a hearing, the Bankruptcy Court held that the anti-assignment provision was unenforceable and that I-4's refusal to honor the purchase option violated the Settlement Agreement. The Bankruptcy Court then ordered I-4 to honor the option.

I-4 appealed to the District Court, which vacated the Bankruptcy Court's order, holding that the Bankruptcy Court's judgment was an advisory opinion directed at the Florida ...


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