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Vanacore Perkins Coie LLP 30 Rockefeller Plaza, 25th Floor New York, NY 10112 Phone: 212.262.6900 Fax: 212.977.1649 and David M. Neff (admitted pro hac vice) PERKINS COIE LLP 131 S. Dearborn, Street, Suite 1700 Chicago, IL 60603-5559 Phone: 312.324.8400 Fax: 312.324.9400 Attorneys for CWCapital Asset Management LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Innkeepers USA Trust, et al., Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 Jointly Administered
CWCAPITAL ASSET MANAGEMENT LLC'S RESPONSE TO DEBTORS SIXTH OMNIBUS OBJECTION TO CLAIMS (WRONG DEBTOR CLAIMS) Wells Fargo Bank, N.A., not individually but solely as trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-C5 (Lender), by and through CWCapital Asset Management LLC ("CWCAM"), by its undersigned counsel, hereby responds to Debtors Sixth Omnibus Objection to Claims (Wrong Debtor Claims) (the Claim Objection) and in support thereof respectfully represents as follows:
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BACKGROUND FACTS A. The Loan 1. On or about June 14, 2005, GMAC Commercial Mortgage Bank (Original
Lender) made a loan to RLJ Anaheim Suites Hotel, L.P. (Original Borrower) in the principal amount of $13,700,000 (the Loan). The Loan is evidenced by that certain Deed of Trust Note dated as of June 14, 2005 made by Original Borrower in favor of Original Lender in the principal amount of $13,700,000 (the Note). 2. The Loan is secured by, among other things that certain Deed of Trust, Leasehold
Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Filing (the Deed of Trust) dated as of June 14, 2005 by Original Borrower, as borrower, and RLJ Anaheim Suites Hotel Lessee, L.P. ("Original Operating Lessee"), as accommodation grantor, in favor of Commonwealth Land Title Insurance Company, as trustee for the benefit of Original Lender, as beneficiary, which was recorded in the Official Records of Orange County, California (the Official Records) on June 15, 2005 as Document No. 2005000462710. The Deed of Trust encumbers, among other things, the real property known as the Hilton Suites Anaheim with the common address of 400 N. State College Boulevard, Orange, California, as more particularly described in the Deed of Trust (the Property). A true and correct copy of the Deed of Trust is attached hereto as Exhibit A. 3. In connection with the Loan, RLJ Urban Lodging Fund, L.P. and RLJ Urban
Lodging Fund (PF #1), L.P. (together, Original Guarantors) executed that certain Guaranty of Recourse Obligations and Capital Expenditures dated as of June 14, 2005 in favor of Original Lender (the Guaranty and together with the Note, the Deed of Trust and all other documents that evidence, secure or relate to the Loan, the Loan Documents). A true and correct copy of the Guaranty is attached hereto as Exhibit B.
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4.
The Original Lender transferred all of its right, title and interest in the Loan
Documents to Lender pursuant to that certain Assignment of Deed of Trust, Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Financing Statement and Assignment of Assignment of Leases and Rents dated as of November 9, 2005 and recorded in the Official Records on January 13, 2006 as Document No. 2006000028576. Consequently, Lender is the holder and owner of the Note, the beneficiary of the Deed of Trust, and owner of all of the other Loan Documents. 5. Pursuant to that certain Loan Assumption and Modification Agreement dated as
of October 4, 2006 and recorded in the Official Records on October 5, 2006 as Document No. 2006000661947, KPA HS Anaheim LLC (Borrower) and KPA Anaheim Orange Lessee LLC (Subsequent Operating Lessee) assumed all of the respective obligations of the Original Borrower and the Original Operating Lessee under the Loan Documents. 6. Pursuant to that certain Loan Assumption, Affirmation and Modification
Agreement dated as of June 29, 2007 and recorded in the Official Records on August 14, 2007 as Document No. 2007000504429, Grand Prix Anaheim Orange Lessee LLC (Operating Lessee) assumed all of the obligations of Subsequent Operating Lessee under the Loan Documents. 7. Pursuant to that certain Substitution of Indemnitor and Assumption of Obligations
of Indemnitor dated as of October 4, 2006, Innkeepers USA Trust (Subsequent Guarantor) assumed all of the obligations of Original Guarantors under the Guaranty. 8. Pursuant to that certain Substitution of Indemnitor and Assumption of Obligations
of Indemnitor dated as of June 29, 2007, Grand Prix Holdings LLC (Guarantor) assumed all of the obligations of Subsequent Guarantor under the Guaranty.
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B.
The Borrowers Defaults 9. Commencing in May 2010, Borrower defaulted under the terms of the Loan
Documents by, among other things, failing to make timely monthly payments when due to the Trust. 10. On June 14, 2010, Lender, through its counsel, wrote a letter to Borrower
providing formal notice of Borrower's defaults and accelerating all obligations under the Loan Documents. 11. C. On July 1, 2010, the Loan matured by its terms.
The Bankruptcy Case 12. On July 19, 2010 (the "Petition Date"), Innkeepers USA Trust and certain of its
affiliates (collectively, the Debtors), including the Borrower, Operating Lessee and Guarantor, filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code with this Court. 13. On September 16, 2010, the Court entered its Order Establishing Deadlines and
Procedures for Filing Proofs of Claim and Approving Form and Manner of Notice Thereof, establishing, among other things, a bar date of October 29, 2010 for filing proofs of claims against the Debtors. See Docket No. 440. 14. On October 28, 2010, Lender filed the following proofs of claim: (a) Claim No.
1081 in the amount of $13,235,270.42 against Borrower (the Borrower Claim); (b) Claim No. 1085 in the amount of $13,235,270.42 against the Operating Lessee (the Operating Lessee Claim); and (c) Claim No. 1091 in the amount of $13,235,270.42 against Guarantor (the Guarantor Claim).
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15.
On April 20, 2011, Debtors filed the Claim Objection, wherein Debtors object to
the Operating Lessee Claim and Guarantor Claim as duplicate claims asserted against the wrong debtor entities. See Claim Obj. at 12. LEGAL ARGUMENT 16. A proof of claim is prima facie evidence of the validity and amount of the claim.
See Fed. R. Bankr. P. 3001(f). As such, a claim is deemed allowed unless a party in interest objects. See 11 U.S.C. 502(a). Consequently, an objecting party bears the burden of producing sufficient evidence to rebut the proof of claim. See In re G. Marine Diesel Corp., 194 B.R. 306, 310 (Bankr. E.D.N.Y. 1996). The objecting party may not merely state that the proof of claim is invalid; it must present evidence of probative force at least equal to that of the proof of claim. See In re Hutter, 207 B.R. 981, 990 (Bankr. D. Conn. 1997). Absent any evidence to rebut a claim's prima facie validity, a debtor's objection to the claim cannot be sustained. See Guccione v. First Federal Savings & Loan Assn of Suffern (In re Guccione), 41 B.R. 289, 29596 (Bankr. S.D.N.Y. 1984). Only after the debtor presents evidence sufficient to overcome the presumed validity of a properly filed proof of claim does the creditor have the burden of demonstrating the validity of its claim by a preponderance of evidence. See In re Chateaugay Corp., 154 B.R. 29, 32 (Bankr. S.D.N.Y. 1993). 6. The Claim Objection does not rebut the prima facie validity of the Operating
Lessee Claim or the Guarantor Claim. The Debtors have not offered any evidence in support of the Claim Objection. Rather, without providing any supporting documentation or explaining the circumstances under which Operating Lessee and Guarantor have become obligated to Lender under the Loan Documents, Debtors merely state that these claims are duplicative of another legitimate claim against Borrower and thus should be disallowed and expunged. See Claim Obj.
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at 12. Debtors conclusory argument fails to meet the burden required to rebut the prima facie validity of the Operating Lessee Claim and the Guarantor Claim. A. Operating Lessee Claim 17. Operating Lessee is an accommodation grantor under the Deed of Trust, pursuant
to which Operating Lessee absolutely and unconditionally assigned its right, title and interest in all leases and rents generated by the Property to Lender subject to a revocable license to operate and manage the Property to collect the leases and rents. See Exhibit A at 9(a). 18. After an event of default occurred under the Loan Documents in May 2010,
Operating Lessees license to collect the leases and rents under the Deed of Trust was automatically revoked and Lender became entitled to collect all leases and rents held by Operating Lessee to the full extent of the outstanding indebtedness owed under the Loan Documents, equal to $13,235,270.42 as of the Petition Date. See id. 19. Accordingly, the Operating Lessee Claim represents a valid and enforceable claim
by Lender against Operating Lessee. B. Guarantor Claim 20. Guarantor is a guarantor of the Loan pursuant to the Guaranty. Section 1(a) of the
Guaranty provides that Guarantor shall have full joint and several recourse liability for the full amount of the outstanding indebtedness under the Loan Documents in certain situations, including when Borrower commences a voluntary bankruptcy case. See Exhibit B at 1(a). 21. Consequently, when Borrower filed its voluntary petition for bankruptcy relief on
the Petition Date, Guarantor became fully liable for the outstanding indebtedness under the Loan Documents, equal to $13,235,270.42.
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22.
Courts have uniformly enforced springing guarantees such as the Guaranty in this
case. See Blue Hills Office Park, LLC v. J.P. Morgan Chase Bank, 477 F. Supp. 2d 366 (D. Mass. 2007); 111 Debt Acquisition LLC v. Six Ventures, Ltd., 2009 WL 414181 (S.D. Ohio Feb. 18, 2009). See also First Nationwide Bank v. Brookhaven Realty Assocs., 223 A.D.2d 618 (N.Y. App. Div. 1996) (holding that the enforceability of a springing guaranty is not prohibited by section 365(e)(1) of the Bankruptcy Code). 23. Therefore, the Guarantor Claim also represents a valid and enforceable claim by
Lender against Guarantor. 24. Finally, the fact that the Borrower Claim, Operating Lessee Claim and Guarantor
Claim are all derived from the outstanding indebtedness owed to Lender under the Loan Documents is insufficient to sustain Debtors objection at this stage of Debtors cases. CWCAM acknowledges that it will only be entitled to one satisfaction of its claim under the Loan Documents. However, Debtors bankruptcy cases have not been substantively consolidated and no plan of reorganization has been confirmed. Accordingly, it is premature to disallow either the Operating Lessee Claim or Guarantor Claim as duplicative claims.
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25.
Based upon the foregoing, Lender respectfully requests that the Court deny the
Claim Objection as it relates to the Operating Lessee Claim and the Guarantor Claim. Dated: May 17, 2011 Respectfully Submitted, /s/ David M. Neff Schuyler G. Carroll Jeffrey D. Vanacore PERKINS COIE LLP 30 Rockefeller Plaza, 25th Floor New York, NY 10112 Phone: 212.262.6900 Fax: 212.977.1649 scarroll@perkinscoie.com jvanacore@perkinscoie.com David M. Neff (admitted pro hac vice) PERKINS COIE LLP 131 S. Dearborn, Street, Suite 1700 Chicago, IL 60603-5559 Phone: 312.324.8400 Fax: 312.324.9400 dneff@perkinscoie.com Attorneys for CWCapital Asset Management LLC
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EXHIBIT A
EXHIBIT B
Schuyler G. Carroll Jeffrey D. Vanacore PERKINS COIE LLP 30 Rockefeller Plaza, 25th Floor New York, NY 10112 Phone: 212.262.6900 Fax: 212.977.1649 and David M. Neff (admitted pro hac vice) PERKINS COIE LLP 131 S. Dearborn, Street, Suite 1700 Chicago, IL 60603-5559 Phone: 312.324.8400 Fax: 312.324.9400 Attorneys for CWCapital Asset Management LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Innkeepers USA Trust, et al., Debtors. ) ) ) ) ) ) Chapter 11 Case No. 10-13800 Jointly Administered
CERTIFICATE OF SERVICE David M. Neff hereby certifies that on May 17, 2011 he caused a true and correct copy of CWCapital Asset Management LLC's Response to Debtors Sixth Omnibus Objection to Claims (Wrong Debtor Claims) (the Response) to be filed and served via the courts ECF system on all parties registered to receive notice. The Response was also served on the Master Service List via electronic mail to the parties listed on Exhibit A and via first-class U.S. Mail, postage prepaid, to the parties listed on Exhibit B.
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/s/ David M. Neff_ _________ David M. Neff (admitted pro hac vice) PERKINS COIE LLP 131 S. Dearborn, Street, Suite 1700 Chicago, IL 60603-5559 Phone: (312) 324-8400 Fax: (312) 324-9400 dneff@perkinscoie.com and Schuyler G. Carroll Jeffrey D. Vanacore PERKINS COIE LLP 30 Rockefeller Plaza, 25th Floor New York, NY 10112 Phone: 212.262.6900 Fax: 212.977.1649 scarroll@perkinscoie.com jvanacore@perkinscoie.com Attorneys for CWCapital Asset Management LLC
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Goldenbock Eiseman Assor Bell & Peskoe LLP Attn: Jonathan L. Flaxer, Esq. jflaxer@golenbock.com
Haynes and Boones, LLP Attn: Lenard M. Parkins, Esq. Mark Elmore lenard.parkins@haynesboone.com mark.elmore@haynesboone.com
Kasowitz, Benson, Torres & Friedman LLP Attn: Adam L. Shiff, Esq. ashiff@kasowitz.com
Kasowitz, Benson, Torres & Friedman LLP Attn: Daniel A. Fliman dfliman@kasowitz.com
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Law Offices of Robert E. Luna, P.C. Attn: Andrea Sheehan, Esq. sheehan@txschoollaw.com
Linebarger Goggan Blair & Sampson, LLP Attn: Elizabeth Weller dallas.bankruptcy@publicans.com
Lowndes, Drosdick, Doster, Kantor & Reed, P.A. Attn: Zachary Bancroft, Esq. zachary.bancroft@lddkr.com
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Paul, Weiss, Rifkand, Wharton & Garrison, LLP Attn: Alan W. Kornberg, Esq. akornberg@paulweiss.com
Paul, Weiss, Rifkand, Wharton & Garrison, LLP Attn: Andrew J. Ehrlich aehrlich@paulweiss.com
Paul, Weiss, Rifkand, Wharton & Garrison, LLP Attn: Lauren Shumejda lshumejda@paulweiss.com
Sheppard Mullin Richter & Hampton LLP Carren Shulman, Esq. cshulman@sheppardmullin.com
Sheppard Mullin Richter & Hampton LLP Attn: Jane Qin jqin@sheppardmullin.com
Wilmer Cutler Pickering Hale & Dorr LLP Attn: Philip Anker, Esq. philip.anker@wilmerhale.com
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American Hotel Register Co. 16458 Collections Center Drive Chicago, IL 60693 Capmark Finance Inc. Attn: Portfolio Manager, Specialty Asset Management 1600 Tysons Blvd Suite 1100 McLean, VA 22102 CSE Mortgage, LLC 4445 Willard Avenue 12th Floor Chevy Chase, MD 20815
Best Western International Inc. 6201 North 24th Parkway Phoenix, AZ 85016
Deutsche Banc Mortgage Capital, LLC Attn: Director, Mortgage Backed Securities 60 Wall Street 10th Floor New York, NY 10005
Deutsche Bank Securities Inc. Attn: General Counsel 60 Wall Street New York, NY 10005-2858
Doubletree Hotel Systems, Inc. 9336 Civic Center Drive Attn: General Counsel Beverly Hills, CA 90210
Global Restaurant Design, Corp 31368 Via Colinas Suite #108 Westlake Village, CA 91362
Hilton Inns, Inc. 9336 Civic Center Drive Attn: General Counsel Beverly Hills, CA 90210
Internal Revenue Service P.O. Box 7346 Philadelphia, PA 19104 LaSalle Bank National Association Attn: Global Securities and Trust Services LB-UBS Commercial Mortgage Trust 2007-C6 135 South LaSalle Street Suite 1625 Chicago, IL 60603
Jenkins/Gales & Martinez 5933 West Century Blvd Suite #1000 Los Angeles, CA 90045
LaSalle Bank National Association c/o Wells Fargo Comm Mortgage Servicing 1320 Willow Pass Road #150 Concord, CA 94520-7910
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LNR Property Corporation 1601 Washington Avenue, Suite 800 Miami Beach, FL 33139
Marriott International, Inc. 10400 Fernwood Road Franchise Attorney Law Department 52/923.25 Bethesda, MD 20817 Midland Loan Services, Inc. 10851 Mastin Suite 700 Overland Park, KS 66210
Marriott International, Inc. 10400 Fernwood Road VP Owner and Franchise Services Bethesda, MD 20817
Merrill Lynch Mortgage Lending Inc. Four World Financial Center 16th Floor New York, NY 10080
Midland Loan Services, Inc. Attn: President P.O. Box 25965 Shawnee Mission, KS 66225
Office of the Attorney General State of Florida The Capitol PL-01 Tallahassee, FL 32399-1050
Office of the Attorney General 100 West Randolph Street Chicago, IL 60601
Office of the Attorney General 1300 I Street, Suite 1740 Sacramento, CA 95814
Office of the Attorney General 900 East Main Street Richmond, VA 23219
Office of the Attorney General 9001 Mail Service Center Raleigh, NC 27699-9001
Office of the Attorney General California Department of Justice Attn: Public Inquiry Unit P.O. Box 944255 Sacramento, CA 94244-2550 Office of the Attorney General McCormack Building One Ashburton Place Boston, MA 02108
Office of the Attorney General Deputy AG Jeff Koziar 25 Market Street CN 080 Trenton, NJ 08625
Office of the Attorney General G. Mennen Williams Building, 7th Floor 525 W. Ottawa St. P.O. Box 30212 Lansing, MI 48909
Office of the Attorney General The Capitol 2nd Floor Albany, NY 12224-0341
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Romala Stone, Inc. 315 S. Beverly Drive Suite 506 Beverly Hills, CA 90212-4316
Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Summerfield Hotel Company LLC Attn: SVP Franchising 71 S. Wacker Drive FI 14 Chicago, IL 60606 Texas Attorney Generals Office Hal F. Morris & Ashley F. Bartram Bankruptcy & Collections Div. P.O. Box 12548, MC-008 Austin, TX 78711-2548
Starwood Hotels & Resorts Worldwide Inc. Attn: Sandy Olson 9841 Airport Blvd., Ste 812 Los Angeles, CA 90045
Swank Audio Visuals, LLC 639 E. Garvois Bluffs St. Louis, MO 63026 The Sheraton LLC c/o Starwood Hotels and Resorts Worldwide 1111 Westchester Ave Attn: General Counsel White Plains, NY 10604 Us Wall Decor 7703 Kingspointe Parkway Suite 600 Orlando, FL 32819 Wells Fargo, N.A. c/o Capmark Finance Inc. Attn: Portfolio Managers Three Ravina Drive, Suite 200 Atlanta, GA 30346
The Sheraton LLC 600 Galleria Parkway Suite 1700 Attn: General Counsel Franchise Division Atlanta, GA 30339 United States Trustees Office Region 2 33 Whitehall Street, 21st Floor New York, NY 10004
Wells Fargo Bank Carol Anderson, Asset Manager 1901 Harrison St, 2nd Floor Oakland, CA 94612 York Credit Opportunities Fund, L.P. c/o York Capital Management Attn: General Counsel 767 Fifth Avenue, 17th Floor New York, NY 10153
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