State Street Houses, Inc. v. New York State Urban Development Corp. (In Re State Street Houses, Inc.)

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR TH E ELEV ENTH C IRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
JANUARY 15, 2004
No. 03-12246 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________

D. C. Docket Nos. 03-80076-CV-KLR
and 02-33876 BKC-SH

IN RE : STA TE S TRE ET H OUS ES, IN C.,

Debtor,
_________________________________________________

STA TE S TRE ET H OUS ES, IN C.,

Plaintiff- Appe llant.

versus

NEW YOR K ST ATE URB AN D EVE LOP MEN T CO RP.,
LAR RY S UTT ON, S TAT E ST REE T AS SOC IATE S, LP .,

Defendants-Ap pellees.

________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________
(January 15, 2004)
Before AN DERS ON, W ILSON and RON EY, Circuit Judges.

PER CURIAM:

State Street Houses, Inc. (“State Street”) appeals a Southern District of Florida

order affirming a decision of the bankruptcy court dismissing a Chapter 11 petition as

having been filed in bad faith. The facts and rationale for the d istrict court’s decision

are fully set forth in its order. We affirm for the reasons therein set forth.

The only point that nee ds com ment is an argum ent that tw o cases p revious ly

decided by this Court are not controlling because they have been modified by

subsequent legislation.

State Street, the debtor, is a New York Corporation and legal title holder of

Kennedy Plaza A partmen ts in Utica, New York, which is mortgaged to the appellees.

The district court held that the bankruptcy court correctly determined that the evidence

established the factors set forth f or a bad faith filing in In Re Phoenix Piccadilly, Ltd.,

849 F.2d 1393, 1394 (11th Cir. 1988) : (1) the d ebtor ha s only on e asset, the p roperty

at issue; (2) the debtor has few unsecured creditors whos e claims ar e relatively s mall

compared to the claims of the secured creditors; (3) the debtor has few employees;

(4) the prop erty is sub ject to a for eclosure action as a result of arrearages on the debt;

(5) the debtor’s financial problems essentially are a dispute between the debtor and the

secured creditors which can be re solved in the pending state court action; and (6) the

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timing of the de btor’s filin g eviden ces an inte nt to delay or frustr ate the legitim ate

efforts of the debtor’s secured creditors to enforce their rights. 849 F.2d at 1394-95.

See also In Re Albany Partners, Ltd., 749 F.2d 670, 674 (11th Cir. 1984). We find no

error in the district court’s decision. While the factors set forth in Phoen ix Piccad illy

are non-exhaustiv e and no t to be rigid ly applied , the district c ourt did not err in

following the guidelines set forth in Phoen ix Piccad illy and Albany Partners.

State Street argues, however, that the bad faith standard established in Phoen ix

Piccadilly and Albany Partners has been legislatively overruled by the Bankruptcy

Reform Act of 1994, which revised Sections 101 and 362(d) of the Bankruptcy Code

regarding single asset real estate cases. State Street finds support for this argu ment in

a few cases from the Bankruptcy Court of the Midd le District o f Florid a. In Re

Jackson ville Riverfront Development, Ltd., 215 B.R. 239, 243 (Bankr. M.D. Fla. 1997)

(“The application of the Phoen ix Piccad illy factors to the case at hand would no doubt

justify a finding of bad faith filing. The Court finds, however, that the law of Phoen ix

Piccad illy is no longer applicable in light of the Bankruptcy Reform Act of 1994, Pub.

L. No 103-294.”). A later case cited with approval the following quote from In Re

Jackson ville, “The application of the Phoenix Piccadilly factors to a single asset real

estate case produces a result that directly conflicts with Congressional intent.” In Re

Villamont-Oxford Associates Limited Partnership, 230 B.R. 457, 463 (Bankr. M.D.

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Fla. 1998). But in a later decision from the same court, faced with the argument that

“the considerations in Phoen ix Piccad illy are no longer applicable to assist in the

determination,” the court held that “[a] review of the development of ‘bad faith’ as

cause for dismissal leads quickly to the conclusion that § 362(d)(3) does not preempt

this body of law.” In Re Star Trust, 237 B.R. 827, 833 (Bankr. M.D. Fla. 1999). The

Star Trust case cited the throug hly reasoned case of In Re Midway Inv., Ltd., 187 B.R.

382, 388 (B ankr. S .D. Fla. 1995) (concluding that “the Bankruptcy Reform Act of 1994

does not limit the Phoen ix Piccad illy line of cases” in single asset cases).

In our judgment, the district court properly followed the line of cases holding that

the Phoen ix Piccad illy factors are appropriate guidelines for consideration when

evaluating whether a Chapter 11 petition in a single as set real estate case wa s filed in

bad faith. We therefore, in order to settle the dispute found in prior bankruptcy court

cases, hold that the guid elines set fo rth by this Court in In Re Phoenix Piccadilly, Ltd.,

849 F.2d 1393 (11th Cir. 1988) and In Re Albany Partners, Ltd., 749 F .2d 670 (11th

Cir. 1984) have not been modified by the Bankruptcy Reform Act of 1994.

The other argument made by appellants that the “Bankruptcy Court’s factual

findings, upon which it based its finding that Appellant’s Chapter 11 case should be

dismissed, were clearly erroneous, in that they purported to resolve disputed factual

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issues on the basis of disputed affidavits” is due to be rejected without discussion under

our Ru le 36-1. See 11th Cir. R. 36-1.

AFFIRMED.