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In re Bataa/Kierland LLC

United States District Court, D. Arizona

June 24, 2014

In re: BATAA/KIERLAND LLC, Debtor.
v.
BATAA/KIERLAND LLC, Appellee. JPMCC 2007-CIBC 19 EAST GREENWAY, LLC, Appellant,

MEMORANDUM DECISION

JOHN W. SEDWICK, District Judge.

JPMCC 2007-CIBC 19 East Greenway, LLC timely appeals from the bankruptcy court's Order Awarding Attorneys' Fees to Defendants in the adversary proceeding. The bankruptcy court had jurisdiction under 28 U.S.C. §§ 157(a), (b)(2), and 1334. This court has jurisdiction under 28 U.S.C. § 158(a)(1), (c)(1)(A).

Dean C. Waldt and Grant L. Cartwright of Ballard Spahr LLP, Phoenix, Arizona, appeared on behalf of the Appellant JPMCC 2007-CIBC 19 East Greenway, LLC.

Richard W. Hundley, Scottsdale, Arizona, appeared on behalf the Appellee Bataa/Kierland LLC.

John R. Clemency, Julie Rystad, and Janel M. Glynn of Gallagher & Kennedy, P.A., Phoenix, Arizona, appeared on behalf of Appellee Bankers Trust, N.A.

The court has determined that oral argument would not materially assist in the resolution of the issues before the court. Accordingly, the request for oral argument is denied, and the matter is submitted for determination on the briefs of the parties.

I. BACKGROUND/ISSUES PRESENTED

Once again this court must address this case.[1] Accordingly, the parties are familiar with the facts, and they are not repeated herein except to the extent necessary to an understanding of this decision. Bataa/Kierland LLC (hereinafter "Debtor") filed a petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code. After holding a hearing, the Bankruptcy Court confirmed the plan of reorganization proposed by Debtor over the objections of JPMCC 2007-CIBC 19 East Greenway, LLC (hereinafter "JPMCC"). JPMCC appealed from the confirmation order, and this court vacated the decision of the bankruptcy court and remanded for further consideration consistent with the court's decision.[2]

JPMCC had also filed an adversary action against Debtor, Bataa/Kierland II (hereinafter "Kierland II"), and Bankers Trust (collectively referred to herein as "Appellees") challenging the post-petition parking agreement between Debtor and Kierland II. Because it was an integral part of the plan of reorganization, the bankruptcy court conflated resolution of the adversary proceeding into the confirmation hearing, and approved the parking agreement.[3] Subsequently, the bankruptcy court held a hearing on JPMCC's motion for summary judgment in the adversary proceeding, and entered judgment in favor the Appellees sua sponte. Upon the motions of the Appellees, the bankruptcy court awarded attorneys' fees under Arizona law as the prevailing parties to Debtor in the amount of $44, 571.50, to Kierland II in the amount of $21, 763.50, and to Bankers Trust in the amount of $62, 046.50: totaling $128, 381.50. It is from this order that JPMCC appeals.

On appeal JPMCC raises six issues. These can be essentially conflated into two: (1) Arizona law does not apply; and (2) even if it did, Appellees were not the prevailing parties.

II. STANDARD OF REVIEW

A District Court sitting in its bankruptcy appellate capacity reviews findings of fact for clear error and conclusions of law de novo. [4] The bankruptcy court's findings of fact must be accepted "unless the court is left with the definite and firm conviction that a mistake has been committed."[5] "Mixed questions of fact are reviewed de novo."[6] The interpretation of a contract is governed by state (Arizona) law and is reviewed de novo. [7]

III. DISCUSSION

Initially the court notes that the issue presented by this appeal has reached the court via a somewhat unorthodox procedural path. As noted above, the subject of the adversary action-the parking agreement-was conflated into and decided in conjunction with the confirmation hearing in the main case. That substantive issue was also the subject of the appeal to this court, which resulted in a reversal of the confirmation order, in part based upon the erroneous approval of the parking agreement. Normally, the award of attorney's fees, although frequently decided by the trial court after a notice of appeal has been filed, is part of the action in which the substantive issue is resolved, and an appeal from that order is resolved as part of the main ...


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