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In re Navin

December 19, 2007

IN RE: RICHARD J.F. NAVIN, DEBTOR.
PETER VAN WITT, APPELLANT,
v.
SEAN-MARIENAVIN-OLLER AS EXECUTRIX OF THE ESTATE OF RICHARD J.F. NAVIN, APPELLEE.



The opinion of the court was delivered by: Joseph F. Bianco, District Judge

MEMORANDUM AND ORDER

The instant case is an appeal from the voluntary bankruptcy proceeding of Debtor Richard J.F. Navin ("Debtor"), under Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court for the Eastern District of New York (the "Bankruptcy Court"). Peter Van Witt ("Van Witt" or "Appellant"), tenant of an apartment owned by the now-deceased Debtor's estate (the "Estate"), appeals from an Order of the Honorable Dorothy Eisenberg, United States Bankruptcy Judge, dated September 4, 2007 (the "Order"), holding that Van Witt no longer possessed a right of first refusal in this apartment. Appellee Sean-Marie Navin-Oller ("Appellee" or "Navin-Oller"), is Debtor's daughter and Executrix of the Estate. Van Witt argues that the Bankruptcy Court did not have jurisdiction to determine whether Appellant continued to possess a right of first refusal and, alternatively, that the Bankruptcy Court should have held an evidentiary hearing prior to making its determination. For the reasons set forth below, after a de novo review, the Court finds Appellant's arguments on appeal to be without merit and affirms the Order of the Bankruptcy Court.

I. BACKGROUND

A. Facts

The following facts are not in dispute.

On or about September 15, 1998, Appellant entered into a lease with Debtor (the "1998 Lease") for an apartment located at 160 West 88th Street, New York, New York (the "apartment"). Pursuant to the 1998 lease, which was to expire on April 30, 1999, Van Witt posted a $6400 security deposit.

Debtor and Van Witt "extended and modified" the 1998 lease several times between 1998 and October 30, 2001, according to a Memorandum of Lease Debtor and Van Witt executed on October 30, 2001 (the "Memorandum of Lease").*fn1 (See Memorandum of Lease ¶ 1.) The Memorandum of Lease further extended Appellant's lease until April 15, 2003 and provided Appellant with a "right of first refusal" for the apartment that would "expire twelve (12) months after the expiration of the Lease and any lease modification or extension, provided Tenant be given the option to continue leasing the [apartment] on reasonable terms and conditions. . . ." (Id.)

On August 12, 2003, Debtor filed a voluntary petition under Chapter 11 of the Bankruptcy Code. At the time, Appellant was remitting his rent for the apartment to the Sheriff of the City of New York to satisfy Debtor's obligations in a matrimonial action. However, by letter dated August 26, 2003, Debtor's counsel informed Appellant that "[b]y operation of federal bankruptcy law," Van Witt had to remit rent to Debtor's counsel (the "August 23 Letter"). (See August 23 Letter at 1.)

On May 12, 2004, Van Witt wrote to Debtor regarding the terms of "a new lease agreement." (See Letter by Van Witt, dated May 12, 2004 (the "May 12 Letter").) In the May 12 Letter, Van Witt stated that he was "hesitant" about entering into an agreement because of various repairs he wanted Debtor to undertake in the apartment. (See May 12 Letter at 1.) Van Witt proposed that he would take care of the repairs at his own cost in exchange for a 20-year lease at a fixed price. (Id. at 2.)

In an undated letter in response, Debtor stated: "I am at some loss to understand the direct intent and motivation behind your letter of May 12, 2004, as to whether a lease is now warranted." (See Undated Letter at 1.) Debtor further stated: "The Garden duplex apartment, which you currently occupy, is for rent, as continued, for one more year, through the terms of the past lease, for $3700. . . . The terms proposed by you at the end of your letter are not acceptable in part or in whole." (Id. (emphasis in original).) On November 28, 2004, Van Witt wrote to Debtor (the "November 28 Letter"). Appellant explained that he "received your proposed lease this past Saturday. . . . I am . . . willing to accept the proposed rent of $4,070 per month for the next lease term. You indicated in your phone call to me that the next lease term would become effective January 1, 2006, which I also agree with . . . . I expect the lease term to expire on December 31, 2006." (Id.) Van Witt further stated: "I quickly reviewed the lease itself and expect the lease to be in a form substantially identical to the lease that has been in effect for the past seven years." (Id.)

By letter dated November 18, 2005, Debtor's counsel provided Van Witt - who continued to occupy the apartment - with a copy of an Order of the Bankruptcy Court dated November 13, 2005 (the "November 18 Letter"). As Debtor's counsel explained in the November 18 Letter, this Order mandated that Van Witt begin remitting rent payments directly to Debtor's counsel. Appellant did so.

On December 9, 2005, Van Witt sent Debtor a revised and executed "proposed lease." On December 23, 2005, Debtor's bankruptcy counsel sent Appellant a fullyexecuted lease (the "2005 Lease") and instructed him to "continue sending the rent checks to our office as you have been doing." The 2005 Lease, dated December 8, 2005, did not expressly provide Van Witt with a right of first refusal.

On December 11, 2006, the Bankruptcy Court approved Debtor's Amended Plan of Reorganization (the "Plan"). As the Bankruptcy Court's Order Confirming Amended Plan of Reorganization, dated December 11, 2006 (the "Confirmation Order") reflected, Debtor was able to pay his creditors in full by refinancing the property at which the apartment is located (the "property").

Debtor passed away on January 6, 2007 and Appellee began attempting to sell the property. On May 21, 2007, Navin-Oller emailed Appellant regarding this potential sale (the "May 21 Email"). In the May 21 Email, Appellee explained: "On May 1, 2007, I wrote saying `we are willing to give consideration to an offer you might want to make to purchase the Brownstone.' You responded with a letter including the memorandum of agreement you had/have with my father and now the estate. I am cognizant of your `right of first refusal' and aware of what it means. If you are interested in making an offer, please contact one of the realtors."

(May 21 Email at 1.)

On June 26, 2007, Navin-Oller moved before the Bankruptcy Court for the following relief:

(a) pursuant to § 105 of the Bankruptcy Code, reopening this bankruptcy case; (b) upon the reopening of this case, declaring that the right of first refusal set forth in a Pre-Petition Real Property Lease dated September 30, 1998 is deemed rejected and is not binding upon the Debtor; (c) directing the New York City Register to indicate on the records of the New York City Register that the memorandum of lease dated as of October 30, 2001 . . . is rejected and of no force and effect. . . .

(See Motion dated June 26, 2007 (the "Motion" at 1.) On August 21, 2007, the Bankruptcy Court heard oral argument on the motion and ruled from the bench.*fn2 On September 4, 2007, the Bankruptcy Court memorialized the August 21 ruling by issuing the Order, which is the subject of the instant appeal.*fn3 The Order held as follows:

1) the Pre-Petition Real Proper ty Lease dated September 30, 1998 ("Pre-Petition Lease") expired on April 15, 2003, prior to the date the Debtor filed a petition for relief under Chapter 11. . . 2) pursuant to the month-tomonth tenancy that existed between the Debtor and Mr. Van Witt from April 15, 2003 through December 31, 2006, the right of first refusal set forth in the Pre-Petition Lease and recorded with the New York City Register was not expressly re-affirmed by the Debtor and Mr. Van Witt; and 3) the Debtor and Mr. Van Witt entered into a new lease dated ...


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