In Re Lazy Days' RV Center Inc.
724 F.3d 418
| 3rd Cir. | 2013Background
- Lazy Days’ R.V. Center, Inc. and LDRV Holding Corp. (Reorganized Debtors) pursued a lease dispute with I-4 Land Holding Limited Co. over a Florida lease with an option to purchase; anti-assignment clause was at issue.
- Settlement Agreement (Oct 2009) allowed Lazy Days’ assignment of the Lease to LDRV and stated no modification to the Lease, but did not clearly address whether the purchase option would survive.
- Lazy Days filed Chapter 11 (Nov 2009); Bankruptcy Court confirmed a reorganization plan incorporating the Settlement and later closed the case (Dec 2009 plan, Mar 2010 close).
- Lease was assigned to LDRV; in May 2011 LDRV attempted to exercise the option, which I-4 refused to honor.
- June 2011: Florida state actions filed by both sides; Reorganized Debtors moved to reopen in Bankruptcy Court to challenge the Lease’s anti-assignment clause under 11 U.S.C. § 365(f)(3).
- Bankruptcy Court held the anti-assignment clause unenforceable and required I-4 to honor the option; District Court vacated, deeming the ruling advisory; the Reorganized Debtors appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Bankruptcy Court had jurisdiction to reopen | I-4: advisory opinion; lacks jurisdiction | Reorganized Debtors: court could interpret its order under §350(b) | Bankruptcy Court had jurisdiction to reopen |
| Whether the Bankruptcy Court issued an advisory opinion | Order was advisory, not binding | Order had legal effect voiding anti-assignment clause | Order not advisory; it invalidated the clause and commanded action |
| Whether the settlement waived §365(f)(3) protections | Settlement unambiguously eliminated the purchase option | Settlement did not clearly waive §365(f)(3) protections | Settlement did not unambiguously waive §365(f)(3) |
| Whether the decision constitutes an uncompensated taking under the Fifth Amendment | Bankruptcy Court deprived I-4 of property rights | Adjudication of a dispute, not a taking | Not a taking |
| Whether due process was violated by handling via motion rather than adversary proceeding | Rule 7001 required adversary proceeding | Motion to reopen sufficient to enforce prior order | Adversary proceeding not required to reopen; due process satisfied |
Key Cases Cited
- Chafin v. Chafin, 133 S. Ct. 1017 (2013) (advisory opinions cannot affect rights of litigants)
- In re Zinchiak, 406 F.3d 214 (3d Cir. 2005) (bankruptcy court may reopen for interpretation of its orders)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009) (bankruptcy court may enjoin state actions pending in other courts when consistent with its orders)