IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION ) ) ) ) ) ) ) )

Transcription

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION In re: MOVIE GALLERY, INC., et.al. 1 Debtor. ) ) ) ) ) ) ) ) Case No.: DOT Chapter 11 Jointly Administered RESPONSE OF MARIO AND RITA ZEPPIERI TO OBJECTION TO PROOF OF CLAIM #6191 INCLUDED IN THE THIRTEENTH OMNIBUS OBJECTION TO CLAIMS NOW COME Mario and Rita Zeppieri (hereinafter Zeppieri ), and respond as follows to the Objection to their Proof of Claim (#6191) included in the Debtor s Thirteenth Omnibus Objection to Claims (Docket Entry 1792). In support hereof, Zeppieri states as follows: 1. At the time of the commencement of this case on February 2, 2010, Zeppieri was the lessor of non-residential real property located at 515 S. Centerville 1 The Debtors in the cases are Movie Gallery, Inc., Hollywood Entertainment Corporation, Movie Gallery US, LLC, MG Real Estate, LLC and HEC Real Estate, LLC Daniel M. Press, VSB# Chung & Press, P.C Whittier Ave., Suite 200 McLean, VA (703) Counsel for Mario and Rita Zeppieri -1-

2 Road, Sturgis, Michigan, Store # (formally #1518) ( leased premises ) to Debtor Movie Gallery US, LLC pursuant to a lease, a copy of which, with amendments, was attached to the Proof of Claim ( POC ). This Claim was filed by Zeppieri on September 1, A copy of the POC with the lease is attached hereto as Exhibit A. 2. On or about March 26, 2010, Debtor induced Zeppieri to enter into a Rent Modification Agreement claiming that if they agreed to modify the rent, the Debtor would be less likely to terminate the lease. A copy of this Lease Modification Agreement is attached hereto as Exhibit B. 3. As of June 14, 2010 the lease had not been rejected, and the Debtor was still operating its business and in possession of the Leased premises. Except for the February post-petition stub-rent, the Debtors had been paying their base rent in accordance with the Rent Modification Agreement. There was no basis to file a proof of claim as of that date. 4. In fact, the Rent Modification Agreement allowed for a payment plan of the stub-rent and released all pre-petition rent owed. 5. The Debtor occupied, operated its business, and continued to sell merchandise from the leased premises from the commencement of the case through at least July 24,

3 6. Based on the Debtor s representations there was no basis to file a proof of claim as of the general bar date of June 14, Zeppieri is informed and believes that the debtor also continued to operate the location and continued to sell merchandise and generally conduct business out of the location until sometime between July 24, 2010 through August 10, In accordance with the Lease Agreement and the Rent Modification Agreement, the rent payment was due on the first day of each month, but payable by the tenth day of each month. 9. Debtor s had paid their rent for July 2010 in accordance with the Rent Modification Agreement. 10. Prior to August 10, 2010, Zeppieri was never contacted by the Debtors that they were seeking rejection of the lease or had vacated the property. In fact prior to August 10, 2010, the Debtor s rent was current. 11. When Zeppieri had not received the full rent for August 2010 by August 10, 2010, Zeppieri s counsel attempted to contact the Debtor s General Counsel Donato Capobianco to find out the status of the rent payment by and by telephone with no response. 12. Zeppieri made additional inquires by calling the Leased Premises, found that the phone number was disconnected, and then contacted the Debtor s -3-

4 former store manager and discovered that she had been terminated, the store had closed, and the Debtor had vacated the Leased premises. 13. Zeppieri did not have any keys to the Leased premises and these keys were never sent to Zeppieri when the Debtor vacated the Leased premises. Since no notice was given to Zeppieri regarding the termination and rejection of the lease, Zeppieri was unaware that they could now legally enter the property and maintain, secure and preserve the Leased Premises. As a result, Zeppieri made further inquiry and later learned of the rejection order in late August, when their counsel was advised of the rejection. 14. Zeppieri was not properly served with notice of the Notice of Rejection of Certain Executory contracts and Unexpired Leases and Abandonment of Personal Property Filed July 15, 2010 [docket #1451, see page 26] and the Order Authorizing Rejection of Executory Contracts and Unexpired Leases and Abandonment of Personal Property Filed July 15, 2010 [docket # 1585]. 15. Instead, Zeppieri is informed and believes that the Notice of Rejection of Certain Executory contracts and Unexpired Leases and Abandonment of Personal Property Filed July 15, 2010 and the Order Authorizing Rejection of Executory Contracts and Unexpired Leases and Abandonment of Personal Property Filed July 15, 2010 were served on Forbes Devco, LLC and Larry L. Kirchner and Patricia G. Kirchner, citing the property as 515 South -4-

5 Centerville Road, Sturgix (sic.), MI rather than 515 South Centerville Road, Sturgis, MI A copy of the Notice of Rejection of Certain Executory contracts and Unexpired Leases and Abandonment of Personal Property Filed July 15, 2010 [ docket #1451] ( Rejection of Lease ) and Order Authorizing Rejection of Executory Contracts and Unexpired Leases and Abandonment of Personal Property Filed July 15, 2010 ( Order Authorizing Lease Rejection ) are attached hereto as Exhibit C and Exhibit D. 16. Because the Leased premises city was misspelled as well as the fact that Mario and Rita Zeppieri s name was not listed on the Rejection of Lease and the Order Authorizing Lease Rejection, finding the notice of rejection applicable to Zeppieri from the court s docket was difficult. 17. The Court s Order Authorizing Rejection of Executory Contracts and Unexpired Leases and Abandonment of Personal Property Filed July 15, 2010 was entered on July 30, 2010, and as a result, the Rejection Claim Bar Date was August 29, 2010 (30 days after entry of the Order). The proof of claim was filed 3 days later, on September Once Zeppieri learned of the termination and rejection of their lease, they promptly assessed their damages and filed their POC on September 1, 2010, as quickly and diligently as they could, seeking payment for one year of rent -5-

6 and estimated CAM, Taxes and Insurance from August 1, 2010 through July 31, 2011 in the amount of $48, pursuant to 11 U.S.C. Section 502(b)(6)(A). 19. Pursuant to 11 U.S.C. Section 726(a), Zeppieri did not receive proper notice that the lease would be rejected, nor notice of the applicable Rejection Claim Bar Date. A late-filed claim may be allowed in a Chapter 11 case if the claimant shows that the failure to timely file the claim was the result of excusable neglect. Bankr. R. 9006(b)(1). See Pioneer Investments Services Company v. Brunswick Associates Limited Partnership, 507 U.S. 380 (1993); Jones v. Chemetron Corp., 212 F.3d 199 (3rd Cir. 2000). Under Pioneer, the Court must consider factors "which include... the danger of prejudice to the debtor, the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." There is no prejudice to the debtor or impact on the proceedings in the 3-day delay here; the delay was caused by the Debtor's sending notice to the wrong party, not due to any fault of Zeppieri, and as a result it was not within the control of Zeppieri; and there is no question that Zeppieri acted in good faith. As such, there is just cause for Zeppieri to be allowed their late-filed proof of claim. -6-

7 WHEREFORE, Zeppieri respectfully requests that the Objection to its Proof of Claim be overruled, and that the claim be allowed as filed. Dated: October 21, _/s/ Daniel M. Press Daniel M. Press, Va. Bar #37123 CHUNG & PRESS, P.C Whittier Ave., Suite 200 McLean, VA (703) Respectfully submitted, Mario and Rita Zeppieri By counsel DECLARATION I declare under penalty of perjury and on personal knowledge that the facts as set forth herein and in the POC filed by Zeppieri are true and correct. Executed on: October 21, 2010 /s/ Rita Zeppieri Rita Zeppieri, creditor landlord for Mario and Rita Zeppieri -7-

8 CERTIFICATE OF SERVICE I hereby certify that on this 21st day of October 2010, I caused the forgoing document to be served on counsel for Debtors, the U.S. Trustee, and all persons requesting notice by CM/ECF. /s/ Daniel M. Press Daniel M. Press -8-

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87 Jul /s/ Douglas O. Tice Jr. Entered on Docket: Jul

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89 Contract Counterparty Address Debtor Entity Contra ct Type Rejecti on Effecti ve Date

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