Gallivan v. Springfield, 1st Cir. (1997)
Gallivan v. Springfield, 1st Cir. (1997)
Gallivan v. Springfield, 1st Cir. (1997)
____________________
No. 96-1819
Appellants,
v.
Appellees.
____________________
____________________
Before
____________________
____________________
April 7, 1997
____________________
COFFIN,
district
court judgment
approving a
This
appeal
is
from a
bankruptcy judge's
orders
denying
Smith
the
motions of
appellant real
estate brokers
Gallivan and
debtors-in-possession
administrative
recover
from a
as
Chapter
expenses under
their respective
506(c),
in
11
secured party,
shares of
"reasonable,
11
U.S.C.
503(b);1
MBL Life
and (2)
as
to
Assurance Corporation,
necessary
proceedings,
under 11
cost[]
of
U.S.C.
preserving"
debtors' property.2
cited provision
gave appellants a
priority claim
but only
the
We agree.
The findings
of fact of
affirmed by
the
district
court, are
the following.
One of
the debtors,
____________________
-2-
strip
type shopping
remaining
debtor,
mall
in Springfield,
Route
constituting part of
20-21 Associates,
Massachusetts.
a ground lease
Inc.
The
The
to the other
president
of both
In the spring of
broker
specializing
buyers or
in
finding national
restaurant
real estate
chains as
mall's buildings.
Getlan agreed
payable
on the
another
broker with
Gallivan pursued
as
commencement
to pay a
seven
of construction.
experience
in finding
a division of General
commission of
lease,
Through
restaurant
Smith,
chains,
Gallivan and
After two
1993 and
signed by debtors on
May 17,
one.
The
that
issuance of a liquor
site plan
Conditions included
by Marshall's,
the debtors'
of a
the
by prior mortgagees.
in possession.
Smith
The
On June 25,
and continued
claiming to
have
-3-
the
construction of
The
most
critical
findings
lease
was signed
and
that
appellants
after
the
that,
commission was to
and was
commenced;"
were
to
Chapter
services
11
the
be earned when
become payable
whatever
under
the
when construction
were
petitions
oral
performed
were
filed
by
were
in
their
own
interest
to
"facilitate
consummation
of
the
transaction."
The
respect to
the claim
under
503(b),
by
the brokerage
costs"
agreement,
of preserving
rendered
after the
findings
dictated an
between
the
estate or
commencement of
alternate
the debtors
executory
they were
"commissions for
the case."
The
conclusion, that
and plaintiffs
not "actual,
could not
the
necessary
services
same fact
contract
be viewed
of filing, which
as an
could later be
The
apply
506(c):
post-petition
since
(1)
in support of
its refusal to
services; (2)
that
plaintiffs
lacked
required
standing,
-4-
as was the case in In re Parque Forestal, Inc., 949 F.2d 504, 511
___________________________
of
intended beneficiaries
any services were the debtors, not the secured party; and (4)
The
court
alternative
did
claim for
not
reach
or
deal
restitution, since
with
the
this depended
debtors'
on the
prior existence
of an executory
court had
rejected.
Discussion
Before commencing
place
our analysis, we
metes and
point
whether
able,
not only
lessee,
to assure
but worked
conditions
of
the
lease,
the
least
unfair
is useful
The issue
to consider
think it
That is, it
is not one
established
is beside the
persistent, resourceful
found a ready,
willing, and
the satisfaction
are entitled
to
to
of a
their
real
able
number of
commission.
within the
in making
allocation
of
inadequate
resources
among
contesting creditors.
____________________
Cir. 1991), we agreed with two other circuits that third parties
may recover where they have equitably come to stand in the
trustees' shoes, especially where a colorable claim exists and
where a third party is the only one likely to pursue it.
-5-
unsecured
claim to
those
other
of
a priority
unpaid
claim that
pre-petition
must be
suppliers
paid before
of
goods
and
services.
We
begin
proposition
our
having
analysis
to do
by
addressing
with our
standard
appellants'
legal
of review.
They
of
only
the brokers
is not
(Massachusetts) law.
a question
of law,
but of
state
cases as Bennett v.
___________
McCabe, 808 F.2d 178 (1st Cir. 1987) and Tristram's Landing, Inc.
______
________________________
v. Wait,
________
367 Mass.
622 (1975)
for
the proposition
that real
when the
purchase and
This proposition,
court,
sale (or
lease)
say appellants,
agreement is
is binding on
executed.
the bankruptcy
finding, is reviewable
de novo, and
__ ____
We disagree.
the thrust of
governing law.
In
as well as
misconceived
the source
of
sole question
seller's default
would
justify
resulting in
the
broker's commission.
the frustration of
seller's refusal
to
honor
a transaction
an
agreed upon
at 179-80.
Tristram's
__________
-6-
until
the transaction
Mass. at
not
626.
is
completed.
entitled to a commission
Tristram's Landing,
__________________
367
that it was
to earn his
commission."
Id. at 627.
__
This difference
Ltd.,
____
and
In re Munple,
_____________
where a purchase
delayed by a
differences
agreement free
then sought
and clear of
to assume
their
the purchase
for commission.
The
broker argued that the agreement was executory, and thus had
been
This
argument
confuses
conditions precedent. . .
performance
obligations
and
[seller's]
further
which
obligations
would have
commission.
[broker],
excused
Because
required of
on
[seller]
[broker]
it to earn the
had
nonperformance
from
done
paying
of
the
everything
We therefore do
appellants'
claims.
Moreover, the
503(b).
governing statute in
this case is
11 U.S.C.
-7-
536
F.2d at 1130.
F.2d 950,
It
is . . .
under a
As we have held
954
(1st Cir.
1976)
with
503(b),
clear that a
contract prior to
the filing of
in In re
_____
the petition
benefit to the
What is not
which may be
foreclosed under
generally settled
contract: "a
bankrupt
and
503(b)
is an executory
Federal
of an executory
the
unperformed that
other
party
the failure
to
the
of either to
contract,
contract
of both the
are
so
far
complete performance
would constitute
other."
a material
Cir. 1995)(citation
We
been
of the
omitted).
had
done
as
of the
filing
of
the
petitions and
work
that
Gallivan's
seven percent,
but that in
where a tenant
must construct
perform .
. . .
dealing with
ground leases
[s]uch as site
fee set at
on the
land
a broker has to
(leases
A broker is,
in this
he further
testified, entitled to a
-8-
met.
referred to
and
I have done a
common in our
number of restaurant
industry."
agreement
to a seven percent
fee, payable on
specific
conditions were
identified as
The lease
itself, signed
some dozen
construction.
having
No
been discussed.
discussions, contained
Getlan
testified that
he had
never accepted
had agreed
commission
finding a
normal for
brokers to
interest.
He, however,
he
was different.
addition to
of
time of payment; on
a letter
a live tenant
As for
discussing services
do
what they
settle on
could
that it
in their
own
in
was
best
chain had
When asked
if he discussed
with Gallivan
help in
getting
THE
WITNESS:
He volunteered
to help,
if necessary,
or what.
He volunteered
for that
THE COURT:
-9-
THE WITNESS:
anything
personally.
On
in the court's
sense that they had done all that they were obligated to do prior
to
the debtors'
gratuitous.
to
filing
and
We have already
that
approval
were
efforts
as liquor licenses.
their further
approval of Marshalls to
the court,
execution of the
the
the basic
occasioned by a complete
of
Marshalls.
necessary
Similarly,
to
agreements,
get
the
mortgagees
insofar as
Getlan performed
to
the mortgagees
relevant office
whatever work
execute
was
nondisturbance
were involved.
Smith's
And there is
no
others, were
evidence that
these services,
as well
as the
requested by Getlan.
The
efforts
reminiscent of
expended
by
those of the
appellants,
post petition,
F.2d at 1131:
[Broker]
contends
that
"authorized" it to render
"strong
incentive"
payment of
to
are
the
purchase
agreement
the
deal
contingent on
it a
because
closing.
[Citation
omitted.]
Even if
-10-
after
it had
critical question
produced the
buyer.
. .
. [T]he
required to
________
[Emphasis in original.]
In short, we are
of
the
bankruptcy court
that
appellants
in the finding
had completed
their
services
This also
means that, as of the filing date, the brokerage contract was not
As
the Third
In
cases
where the
nonbankrupt party
performed, it
makes no sense to
or rejection.
. . .
has fully
Rejection is meaningless
in this
be of no benefit
to the
first
priority expense
of
the state
at
the
In
__
We
address
briefly
the
claim
under
506(c).
Without
sufficient
payments
not suffice to
creditor
assists
allows debtor
meet mortgage
F.3d 321,
327 (3d
debtor
to reduce
in continuing
operation,
indebtedness to secured
-11-
Cir.
by trade
and thereby
creditor, does
not entitle
trade creditor
to reimbursement from
collateral of
secured creditor.)
including
authority,
Cir. 1991),
would
allow standing
in
some instances
to
third
The
direct
benefit
provision
of
from
goods
a secured creditor
the
[or
rendition
services]
of
by
who received a
services
an
of
the
administrative
for
the benefit
existence
and
Bankruptcy Manual
_________________
amount
of
received.
The burden
the recovery to
the
benefit.
of
demonstrate
2
Collier
_______
3d ed. 1996).
Even
their burden
of establishing
the
existence and
amount of
the
benefit to MBL.
Finally,
Affirmed.
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