Petition for Writ of Certiorari — Paul C. Clark, Sr., et al., Petitioners v. Council of Unit Owners of the 100 Harborview Drive Condominium

Supreme Court briefNov 4, 2021

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No.

In the

Supreme Court of the United States

PAUL C. CLARK, SR.,

REBECCA DELORME and

PAUL C. CLARK, JR,

Petitioners,

COUNCIL OF UNIT OWNERS OF THE

100 HARBORVIEW DRIVE CONDOMINIUM,

Respondent.

-----------------------------------------ON PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

------------------------------------------

APPENDIX TO PETITION FOR

WRIT OF CERTIORARI

------------------------------------------

Brennan C. McCarthy

BRENNAN MCCARTHY &

ASSOCIATES

1116 West Street,

Suite C

Annapolis, MD 21401

(443) 294-1083

Maurice U. Cahn

Counsel of Record

CAHN & SAMUELS, LLP

1100 17th Street, NW,

Suite 401

Washington, DC 20036

(202) 331 8777

Counsel for Petitioners

GibsonMoore Appellate Services, LLC

206 East Cary Street ♦ Richmond, VA 23219

804-249-7770 ♦ www.gibsonmoore.net

APPENDIX

United States Court of Appeals for the

Fourth Circuit, Opinion,

May 27, 2021 ..................................................... 1a

United States Court of Appeals for the

Fourth Circuit, Judgment,

May 27, 2021 ..................................................... 7a

United States District Court for the

District of Maryland, Opinion

September 25, 2019 .......................................... 9a

United States District Court for the

District of Maryland, Amended Order

September 26, 2019 [SAG-18-3542] ............... 23a

United States Bankruptcy Court for the

District of Maryland,

Order Confirming Debtor’s Fifth Amended

Plan of Reorganization,

April 10, 2018 .................................................. 24a

United States Bankruptcy Court for the

District of Maryland, Preliminary Order

Regarding Creditors’ Damages Claim

April 10, 2018 .................................................. 80a

United States Bankruptcy Court for the

District of Maryland, Final Order

Regarding Creditors’ Damages Claim,

October 16, 2018 ........................................... 128a

United States Court of Appeals for the

Fourth Circuit Order,

Denying Petition for Rehearing en Banc

June 22, 2021 ................................................ 145a

United States Bankruptcy Court for the

District of Maryland,

Memorandum in Support of Final Order

Regarding Creditors, Damages Claim

August 17, 2018 ............................................ 147a

[ENTERED MAY 27, 2021]

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

__________

No. 19-2140

__________

PAUL C. CLARK, SR.; REBECCA DELORME;

PAUL CLARK, JR.,

Creditors - Appellants,

COUNCIL OF UNIT OWNERS OF THE

100 HARBORVIEW DRIVE CONDOMINIUM,

Debtor - Appellee.

__________

No. 19-2183

__________

PAUL C. CLARK, SR.; REBECCA DELORME;

PAUL CLARK, JR.,

Creditors - Appellees,

COUNCIL OF UNIT OWNERS OF THE

100 HARBORVIEW DRIVE CONDOMINIUM,

Debtor - Appellant.

__________

Appeals from the United States District Court for

the District of Maryland, at Baltimore. Stephanie A.

Gallagher, District Judge. (1: 18-cv-03542-SAG)

__________

Submitted: December 11, 2020

Decided: May 27, 2021

__________

Before KING, FLOYD, and THACKER,

Circuit Judges.

__________

Affirmed by unpublished per curiam opinion.

__________

Brennan C. McCarthy, BRENNAN MCCARTHY &

ASSOCIATES,

Annapolis,

Maryland,

for

Appellants/Cross-Appellees. Paul Sweeney, James R.

Schraf, Lisa Yonka Stevens, YUMKAS VIDMAR

SWEENEY & MULRENIN, LLC, Columbia,

Maryland, for Appellee/Cross-Appellant.

__________

Unpublished opinions are not binding precedent in

this circuit.

PERCURIAM:

These cross-appeals arise from the Chapter 11

bankruptcy proceedings in the District of Maryland

of the Council of Unit Owners of the 100 Harborview

Drive

Condominium

(the

"Council"),

unincorporated condominium association. The other

parties to these appeals are Paul C. Clark, Sr., and

his family members Rebecca Delorme and Paul

Clark, Jr. (collectively, the "Creditors"). The

Creditors filed claims against the Council - seeking

more than $25 million - related to property damage

to the Creditors' penthouse unit ("Unit PH4A") in a

29-story, 249-unit condominium building managed

by the Council at Baltimore's Inner Harbor. The

elder Clark had purchased Unit PH4A as a family

residence, but the unit sustained water, mold, and

other damage that rendered it uninhabitable.

In early 2018, the bankruptcy court disposed of

various summary judgment motions by, inter alia,

awarding summary judgment to the Council on the

Creditors' claims under the Fair Housing Act (the

"FHA") and awarding summary judgment to the

Creditors insofar as they claimed that the Council

breached its duty to maintain and repair Unit PH4A

after February 23, 2012. In April 2018, following a

four-day trial, the court entered a Preliminary Order

Regarding Creditors' Damages Claim. See In re

Council of Unit Owners of the 100 Harborview Drive

Condo., No. 1:16-bk-13049 (Banlcr. D. Md. Apr. 10,

2018), ECF No. 862 (the "Preliminary Damages

Order"). By its Preliminary Damages Order, the

court found that the Creditors were entitled to

damages for repairs and the loss of use of Unit

PH4A. The court awarded the Creditors $731,000 in

damages as of February 23, 2018, plus $6,000 per

month beginning on February 24, 2018 and "pending

Unit PH4A being substantially remediated." Id. at

33. The court specified that "this monthly amount is

subject to adjustment upward or downward based on

the parties' cooperation in completing the

remediation." Id. Consequently, the court designated

its "Order as a preliminary ruling, subject to a final

Order once all damages are ascertained." Id.

On the same day that it entered its Preliminary

Damages Order, the bankruptcy court also entered

an Order Confirming Debtor's Fifth Amended Plan

of Reorganization. See In re Council of Unit Owners

of the JOO Harborview Drive Condo., No. 1:16-bk-

13049 (Bankr. D. Md. Apr. 10, 2018), ECF No. 861

(the "Confirmation Order"). The court thereby

established the Council's obligations on claims other

than the Creditors' claims. The Creditors did not

request a stay of the implementation of the

reorganization plan (the "Confirmed Plan") approved

by way of the Confirmation Order. Over the months

that followed, the Council paid more than $2.8

million on its obligations pursuant to the Confirmed

Plan. Meanwhile, the bankruptcy court entertained

status reports and conducted an evidentiary hearing

on the remediation of Unit PH4A. In October 2018,

the court entered a Final Order Regarding Creditors'

Damages Claim, awarding the Creditors a total of

$750,552, including $19,552 in damages incurred

after February 23, 2018. See In re Council of Unit

Owners of the JOO Harborview Drive Condo., No.

1:16-bk-13049 (Bankr. D. Md. Oct. 16, 2018), ECF

No. 975 (the "Final Damages Order").

Following the bankruptcy court's entry of the

Final Damages Order, the Creditors and the Council

each appealed to the district court under 28 U.S.C. §

158(a). The Creditors' arguments included that they

were entitled to greater damages, including recovery

on their FHA claims. For its part, the Council

contended that it should have been ordered to pay

less in loss-of-use damages and nothing in repair

costs.

In September 2019, the district court dismissed

the Creditors' appeal, explaining in a Memorandum

Opinion that the appeal was equitably moot. See

Clark v. Council of Unit Owners of the JOO

Harborview Drive Condo., No. 1:18-cv-03542 (D. Md.

Sept. 25, 2019), ECF No. 22. Specifically, the court

applied the four-factor test for equitable mootness

and concluded that "all four factors cut in favor of

dismissing the appeal." Id. at 5 (citing Mac Panel Co.

v. Va. Panel Corp., 283 F.3d 622, 625 (4th Cir.

2002)). The court so ruled because the Creditors "did

not attempt to stay the implementation of the

Confirmed Plan" pending entry of the Final

Damages Order, there had been "substantial

consummation" of the Confirmed Plan since its

effective date, and the relief sought by the Creditors

on appeal threatened to both "nullify the success

that ha[d] already been achieved under the

Confirmed Plan" and "harm the interests of thirdparty creditors and other unit owners." Id. at 5-11.

Shortly thereafter, in October 2019, the district

court disposed of the Council's appeal by affirming

the bankruptcy court's damages award to the

Creditors, for reasons the district court explained in

a second Memorandum Opinion. See Clark v.

Council of Unit Owners of the 100 Harborview Drive

Condo., No. 1:18-cv-03542 (D. Md. Oct. 2, 2019), ECF

No. 25. The district court assessed the Preliminary

Damages Order and the Final Damages Order under

the applicable standards - reviewing the bankruptcy

court's findings of fact for clear error and its

conclusions of law de novo - and discerned no

reversible error. Id. at 3-8 (citing In re Johnson, 960

F.2d 396, 399 (4th Cir. 1992), for standard of

review).

The parties timely noted these further crossappeals, and we possess jurisdiction pursuant to 28

U.S.C. §§ 158(d) and 1291. In the Creditors' appeal

from the dismissal of their prior appeal, we review

the district court's equitable mootness ruling for

abuse of discretion, as that is the standard

advocated by the parties. But see In re Bate Land &

Timber LLC, 877 F.3d 188, 195 n.5 (4th Cir. 2017)

(observing that this Court "has declined to decide

whether we review an equitable mootness

determination de novo or for abuse of discretion"). In

the Council's appeal from the affirmance of the

damages award, "we apply the same standard of

review that was applied by the district court" and

thus "review the bankruptcy court's legal conclusions

de novo" and "its factual findings for clear error." See

Copley v. United States, 959 F.3d 118, 121 (4th Cir.

2020). Having thoroughly examined the record of

these proceedings and carefully considered the

parties' appellate briefs, we are satisfied to affirm

the district court in each appeal.*

AFFIRMED

In resolving the Council's appeal, we reject the Creditors'

arguments that the Council lacks standing to appeal and that

it waived the right to dispute the amount of the damages

awarded to the Creditors.

[ENTERED MAY 27, 2021]

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

__________

No. 19-2140 (L)

(1:18-cv-03542-SAG)

__________

PAUL C. CLARK, SR.; REBECCA DELORME;

PAUL CLARK, JR.,

Creditors - Appellants,

COUNCIL OF UNIT OWNERS OF THE

100 HARBORVIEW DRIVE CONDOMINIUM,

Debtor - Appellee.

__________

No. 19-2183

(1:18-cv-03542-SAG)

__________

PAUL C. CLARK, SR.; REBECCA DELORME;

PAUL CLARK, JR.,

Creditors - Appellees,

COUNCIL OF UNIT OWNERS OF THE

100 HARBORVIEW DRIVE CONDOMINIUM,

Debtor - Appellant.

__________

JUDGMENT

__________

In accordance with the decision of this court, the

judgment of the district court is affirmed.

This judgment shall take effect upon issuance of

this court’s mandate in accordance with Fed. R. Ap.

P. 41

/s/ PATRICIA S. CONNOR, CLERK

[ENTERED SEPTEMBER 25, 2019]

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

PAUL C. CLARK, SR., et al.,

Appellants,

Civil Case No.

SAG-18-3542

COUNCIL OF UNIT OWNERS OF

THE 100 HARBORVIEW DRIVE

CONDOMINIUM,

Appellee.

**************

MEMORANDUM OPINION

This appeal results from the reorganization of the

Council of Unit Owners of The 100 Harborview Drive

Condominium (“Appellee”) in Chapter 11 bankruptcy

proceedings before the United States Bankruptcy

Court for the District of Maryland (“Bankruptcy

Court”). Dr. Paul C. Clark, Sr., Rebecca Delorme,

and Paul C. Clark, Jr. (“Appellants”) appeal several

orders of the Bankruptcy Court. Now pending is

Appellee’s motion to dismiss the appeal on the

grounds of equitable mootness (“the Motion”). ECF

15. I have reviewed the Motion, Appellants’

Opposition, ECF 18, and Appellees’ reply, ECF 20.

No hearing is necessary. See Local Rule 105.6 (D.

Md. 2018). For the reasons set forth below,

Appellee’s motion to dismiss is GRANTED, and the

appeal is DISMISSED as equitably moot.

10a

I. Factual Background

Appellee is an unincorporated condominium

association comprised of “any person, firm,

corporation, trust, or other legal entity … holding

title to a condominium unit” located at 100

Harborview Drive, a 29-story luxury residential high

rise at Baltimore’s Inner Harbor. Order Confirming

Debtor’s Fifth Amended Plan of Reorganization, ECF

6-34 at 2. Appellee filed a petition for Chapter 11

bankruptcy on March 9, 2016. Id. Appellee sought

Chapter 11 reorganization in part to resolve years of

litigation involving two units in the building. Id.

Appellant Paul C. Clark is the owner of one of those

units, a penthouse (“Unit PH4A”), located in the

high rise. Id. Appellee and Appellants have an

extensive, decade-long litigation history concerning

Unit PH4A. Indeed, the Bankruptcy Court noted the

extensive tension between the two parties. See

Preliminary Order Regarding Creditors’ Damages

Claim, ECF 6-35 at 11 (explaining that past lawsuits

have

concerned

the

parties’

“truthfulness,

trustworthiness, and civility”).

Relevant here, Appellants filed several claims

against Appellee as part of the Chapter 11 process,

collectively asserting more than $25 million in

damages. ECF 6-34 at 4–5. The claims related to

pre-petition litigation between the parties, alleging

violations of the Fair Housing Act (“FHA”), property

damage to Unit PH4A, and consequential and other

damages allegedly resulting from these claims. Id.

Appellee filed objections to these claims, id. at 5, and

Appellants, correspondingly, filed an opposition to

the objections. ECF 6-35 at 3. The Bankruptcy Court

granted Appellee’s motion for partial summary

11a

judgment with respect to the FHA Claims. Id. at 4.3

After a multi-day trial on the remaining issues, the

Bankruptcy Court issued its Preliminary Order on

April 10, 2018. ECF 6-35. On the same day, the

Bankruptcy Court issued its order (“Confirmation

Order”) confirming Appellee’s Fifth Amended Plan of

Reorganization (“Confirmed Plan”). ECF 6-34. The

Bankruptcy Court promptly issued a notice setting

May 1, 2018 as the “Effective Date” for the

Confirmed Plan. ECF 6-37.

The Confirmed Plan established Appellee’s

obligations with respect to several classes of

creditors. Since the Effective Date, Appellee has

engaged in numerous transactions with these

parties, totaling more than $2.8 million. ECF 15 at

7. For instance, Appellee was required to make

several lump-sum payments to creditors in Class 1,

including an interest only payment in the amount of

$27,595.23, on or before May 1, 2018. Affidavit of

Michael A. Feltenberger, ECF 15-1 at 2. Appellee

made this payment on April 19, 2018. Id.

Additionally, the Confirmed Plan established

payment schedules with respect to several groups of

creditors,

including:

three

equal

monthly

installments to Class 3 creditors on May 31, 2018,

June 29, 2018, and July 30, 2018, respectively. Id. at

3–4. Appellee completed all of these payments, in an

amount totaling approximately $448,345.77. Id. at 4.

The Confirmed Plan also codified the settlement of

3 The Bankruptcy Court also addressed three other dispositive

motions filed by the parties. The court determined, for example,

that Appellants’ breach of fiduciary duty and breach of contract

claims, arising from conduct prior to February 23, 2012, are

barred under res judicata due to a 2012 state court decision in

Clark v. Zalco Realty, Inc., 24-C-10-007236 (Cir. Ct. Balt. City).

12a

claims with Class 4 creditors involving a second unit

in the building: Unit PH4C. Appellee paid

approximately $1.1 million to the Class 4 creditors,

including a lump-sum payment and several escrowed

monthly payments in 2017 and 2018. Id. at 4. In

accordance with the agreement, the Class 4 creditors

transferred title for Unit PH4C to Appellee’s

designee. Id.

The Confirmed Plan identified Appellants as

Class 7 creditors, and it expressly stated that

damages relating to Appellants’ FHA claims had

been denied and were excluded from the Plan. ECF

6-31 at 30 n.4 (“Class 7 claims exclude damages

denied by the Court pursuant to the Order and

Memorandum Granting Debtor’s Second Motion for

Partial Summary Judgment … and Order and

Memorandum Granting in Part, and Denying in

Part, Debtor’s Third Motion for Partial Summary

Judgment and Creditor’s Motion for Partial

Summary Judgment”). Since Appellants’ claims

involved ongoing damage caused by leakage in Unit

PH4A, the Confirmation Order explained that the

amount of Appellants’ claims “are governed by the

Preliminary Damages Order and any further order

of the Court finalizing the matters addressed by the

Preliminary Damages Order.” ECF 6-34 at 36 n.33.

In the Preliminary Damages Order, the Bankruptcy

Court found that Appellee had breached its contract

with Appellants, and awarded Appellants $731,000

as “set damages” plus $6,000 per month in “ongoing

damages.” ECF 6-35 at 33. This amount was

significantly below Appellants’ request, because the

court found that Appellants had failed to mitigate

damages, and it decreased their award accordingly.

See id. at 22–25. However, “[b]ecause of the potential

13a

adjustments to the future damages award, the Court

issue[d] this Order as a preliminary ruling, subject

to a final Order once all damages are ascertained.”

Id. at 33. After an evidentiary hearing to assess

“substantial remediation” of damage in Unit PH4A,

the Bankruptcy Court issued its Final Order

regarding Appellants’ damages claim on October 16,

2018. ECF 6-51. The Court maintained the set

damages amount at $731,000, and finalized the

ongoing damages at $19,552, for a total aggregate

amount of $750,552.00. Id. at 12–13. Appellants filed

their notice of appeal to this Court on October 30,

2018. ECF 1. Appellee moved to dismiss the appeal

on the grounds of equitable mootness. See Fed. R.

Bankr. P. 8013.

II. Appellee’s Motion to Dismiss

A. Legal Standard

This court has jurisdiction to hear appeals from

final orders of the bankruptcy court. 28 U.S.C. § 158.

On appeal from the bankruptcy court, the district

court acts as an appellate court and reviews the

bankruptcy court’s findings of fact for clear error and

conclusions of law de novo. In re Johnson, 960 F.2d

396, 399 (4th Cir. 1992).

B. Equitable Mootness

Equitable mootness “is a pragmatic doctrine

‘grounded in the notion that, with the passage of

time after a judgment in equity and implementation

of that judgment, effective relief on appeal becomes

impractical, imprudent, and therefore inequitable.’”

In re Bate Land & Timber LLC, 877 F.3d 188, 195

(4th Cir. 2017) (quoting Mac Panel Co. v. Va. Panel

Corp., 283 F.3d 622, 625 (4th Cir. 2002)). The Fourth

14a

Circuit has identified four factors that courts should

evaluate to determine whether an appeal should be

dismissed as equitably moot:

(1) whether the appellant sought and obtained

a stay; (2) whether the reorganization plan or

other equitable relief ordered has been

substantially consummated; (3) the extent to

which the relief requested on appeal would

affect the success of the reorganization plan or

other equitable relief granted; and (4) the

extent to which the relief requested on appeal

would affect the interests of third parties.

Mac Panel, 283 F.3d at 625.

Courts must consider “the totality of [the]

circumstances,” id. at 625, and the question is

whether these factors, taken together, suggest that it

would be imprudent to disturb the reorganization

plan at this late date,4 see Mar-Bow Value Partners

v. McKinsey Recovery & Transformation Servs. US,

578 B.R. 325, 348 (E.D. Va. 2017). Applied here, all

4 This Court is aware of some recent criticism of the doctrine of

equitable mootness. See In re One2One Commc’ns, LLC, 805

F.3d 428, 438–54 (3d Cir. 2015) (Krause, J., concurring) (urging

court to “revisit” equitable mootness doctrine); but see In re

Allied Nevada Gold Corp., 725 F. App’x 144, 151 (3d Cir. 2018)

(affirming dismissal of claims as equitably moot); In re City of

Stockton, Cal., 909 F.3d 1256, 1265–66 (9th Cir. 2018)

(dismissing direct appeal as equitably moot). Presently, this

doctrine remains viable, and district courts continue to apply it

forcefully within the Fourth Circuit. See, e.g., Dandridge v.

Scott, 2019 WL 4228457, at *3 (W.D. Va. Sep. 5, 2019) (“[E]ven

if the appellant could satisfy the standing requirements, his

appeal would be subject to dismissal as equitably moot.”); Kaur

v. Wells Fargo Bank, 2017 WL 5466812, at *3 (D. Md. Nov. 14,

2017) (“[T]o the extent that Kaur appears to argue that her

appeal is not equitably moot, her argument is unavailing.”).

15a

four factors cut in favor of dismissing the appeal as

equitably moot.

1. Whether the

Obtained a Stay

Appellant

Sought

and

Factor one weighs strongly in favor of a finding of

equitable mootness. Appellants did not attempt to

stay the implementation of the Confirmed Plan.

Case law illustrates the significant weight that

courts place on a party’s diligence in preventing

implementation of a reorganization plan. See In re

Shawnee Hills, Inc., 125 F. App’x 466, 470 (4th Cir.

2005) (per curiam) (“It is well-settled that the failure

of a party to seek a stay of a bankruptcy order can

alone render further appeal moot.”). For example, in

In re U.S. Airways Group, Inc., 369 F.3d 806 (4th

Cir. 2004), U.S. Airways filed a voluntary petition for

Chapter 11 reorganization. Id. at 807. As part of the

reorganization plan, the airline obtained approval to

terminate an existing pension plan and to substitute

it with a new plan for its active and non-retired

pilots. Id. at 809. When the Retired Pilots

Association appealed the bankruptcy court’s

termination order to the district court, the court

dismissed its challenge as equitably moot. Id. On

appeal, the Fourth Circuit affirmed the dismissal for

equitable mootness. Id. at 811. Regarding factor one,

the court found it “significant that appellant never

sought to obtain a stay of any kind.” Id. at 809. The

court elaborated on this omission:

Appellant also did not attempt either to stay

the confirmation order or to prevent

implementation of the reorganization plan.

Instead, appellant sat idly by as U.S. Airways

executed

the

termination

order

and

16a

implemented its reorganization plan by

completing hundreds of transactions with

third parties.

Id. at 809–10.

This case presents a similar situation. In fact,

Appellants had two distinct opportunities to request

a stay. In the Order approving the Confirmed Plan,

the Bankruptcy Court explained that Appellants’

claims would be governed by the Preliminary

Damages Order and, ultimately, by a final order.

Accordingly, the Bankruptcy Court finalized

Appellants’ damages claim on October 16, 2018.

Appellants failed to seek a stay of the Confirmed

Plan’s implementation both (1) after issuance of the

Preliminary Damages Order in April, 2018, and (2)

after issuance of the Final Order in October, 2018.

Appellants suggest that they were unable to seek

a stay after issuance of the Preliminary Damages

Order because the Confirmed Plan did not finalize

the amount they would receive for their claims. See

Appellants’ Response in Opposition to MTD, ECF 18

at 5. However, the Preliminary Damages Order

provided sufficient reason for Appellants to pursue a

stay in the Bankruptcy Court, to the extent they

wished to appeal the ruling on their FHA claims.

The Preliminary Damages Order expressly

incorporated the Bankruptcy Court’s ruling in favor

of Appellee on those claims. ECF 6-35 at 4; see also

Order Granting Debtor’s Second Motion for Partial

Summary Judgment, ECF 1-10. Thus, Appellants

knew that any finalized amount would not include

damages for the FHA claims. And, since the

Preliminary Damages Order finalized Appellee’s

obligations with respect to several other classes of

17a

creditors, Appellants had ample notice to seek a stay

of the reorganization plan’s fulfillment at that time,

to permit the appeal of the FHA ruling Appellants

now seek.

Importantly, courts have deemed factor one to cut

in favor of equitable mootness even when parties

have tried, unsuccessfully, to seek a stay. See, e.g.,

Cadle Co. II v. Calvert Vill., 203 F.3d 819 (4th Cir.

2000) (per curiam) (explaining that implementation

of the reorganization plan continued since the

appellant failed to appeal the denial of its motion for

a stay). In the instances where courts have found

that an appeal is not equitably moot, the appellants

typically have not only sought a stay, but also

obtained one. See, e.g., Behrmann v. Nat’l Heritage

Found., 663 F.3d 704, 713 (4th Cir. 2011) (“First,

Appellants sought and obtained a stay, although

limited in scope, and then were rebuffed in their

efforts to obtain a further stay pending appeal.”).

Here, in the absence of even an attempt to obtain a

stay, Appellee has engaged in numerous

transactions, and has paid over $2.8 million to

various groups of creditors since April, 2018.

2. Substantial

Consummation

Reorganization Plan

Due to the significant steps undertaken by

Appellee since the Effective Date, factor two also

cuts in favor of a finding of equitable mootness.

“Substantial consummation” is defined by statute to

require three events:

(A) Transfer of all or substantially all of the

property proposed by the plan to be

transferred;

18a

(B) Assumption by the debtor or the successor

to the debtor under the plan of the business or

of the management of all or substantially all

of the property dealt with by the plan; and

plan.

11 U.S.C. § 1101(2).

In Mac Panel v. Virginia Panel Corp., 283 F.3d

622 (4th Cir. 2002), MAC Panel initiated Chapter 11

bankruptcy proceedings after the company’s primary

competitor obtained a judgment against it in a

patent infringement case. Id. at 623. After the

bankruptcy

court

approved

the

company’s

reorganization plan, the competitor appealed to the

district court. Id. at 624. However, the district court

dismissed the appeal as equitably moot, and the

Fourth Circuit affirmed. In evaluating the second

factor, the panel found that all three elements of §

1101(2) had occurred. Id. at 626. Specifically, MAC

Panel had settled disputed claims, had paid at least

19 creditors, and, with respect to its operations,

“ha[d] emerged from bankruptcy as a viable

company.” Id.

Similarly, all three elements are satisfied here.

To date, Appellee has disbursed more than $2.8

million among several groups of creditors.

Furthermore, pursuant to the Confirmed Plan,

Appellee paid $1.1 million to Class 4 creditors and,

in exchange, received title to Unit PH4C. In addition

to executing its responsibilities under the Confirmed

Plan, Appellee has continued to operate its

condominium association for more than 15 months

since the Effective Date. See ECF 15-1 (“The

Reorganized Debtor is faithfully executing its

19a

obligations under the Confirmed Plan and is

operating in the ordinary course of business.”).

Appellants do not dispute that Appellee has taken

any of these steps. See ECF 18; see also Alexander v.

Barnwell Cty. Hosp., 498 B.R. 550, 559–60 (D.S.C.

2013) (concluding that § 1101(2) was satisfied where

the appellant did not dispute substantial

consummation). Collectively, these facts illustrate

that the Confirmed Plan has been substantially

consummated.

3. Effects on Success of Reorganization

Plan and Interests of Third Parties

Factors three and four invite similar analysis,

thus courts frequently consider them in tandem. See,

e.g., In re Bate Land & Timber, 877 F.3d at 195–96

(“[T]he third and fourth factors are particularly

important to determining whether it would be

impractical, imprudent, or inequitable to provide the

requested relief.”). In Bate Land & Timber, the

bankruptcy court confirmed Bate’s reorganization

plan after Chapter 11 proceedings. Id. at 194.

Although the district court dismissed the appeal as

equitably moot, the Fourth Circuit reversed. The

court explained that Bate’s reorganization plan

“essentially present[ed] a two-party dispute.” Id. at

196. Since the appellant was Bate’s largest secured

creditor, the “Confirmed Plan would not be disturbed

in any material way” by affording the relief sought.

See id. at 196. Here, by contrast, the Chapter 11

proceedings involved adjudication of claims from

multiple creditors. For instance, the Confirmed Plan

provided for settlement of a million-dollar claim by

the Class 4 creditors. As explained above, Appellee

paid approximately $1.1 million to these creditors in

order to receive title for the PH4C unit. In total,

20a

Appellants’ current award represents a mere

fraction of the more than $2.8 million paid to all

creditors thus far.

The Bate Land & Timber court emphasized that

the interests of other creditors would not be affected.

See 877 F.3d at 196 (“Moreover, the fact that BLC’s

appeal would not alter the recovery of any other

creditor or damage the interests of any party who

has contracted with the Debtor means that the ‘relief

requested on appeal’ would not ‘affect the interests of

third parties.’”). Here, by definition, the requested

relief would adversely impact other creditors.

Appellee has already engaged in transactions,

totaling millions of dollars, with creditors that

finalized their rights in the Confirmed Plan. It would

be inequitable for this Court not only to nullify two

years of Chapter 11 reorganization, but potentially

also to disgorge third-parties of funds already

dispersed to them in accordance with the Confirmed

Plan.

Appellants contend that they seek limited relief,

i.e., an appeal of their own claims, rather than a

complete reversal of the reorganization plan. ECF 18

at 6–7. However, this portrayal is belied by the

nature of their appeal. Appellants seek, inter alia,

reversal of the Bankruptcy Court’s grant of

summary judgment to Appellees for alleged

violations of the FHA. With these FHA claims

included, Appellants have sought more than $25

million in damages. See Appellants’ Br., ECF 13 at

17–20. In fact, Appellants ask this Court to vacate

the Bankruptcy Court’s entire judgment, and to refer

the matter for arbitration. Id. at 14–17 (“[T]he

judgment of the Bankruptcy Court should be vacated

and

this

matter

referred

arbitration

21a

accordingly.”). If this Court and/or subsequent

arbitrators were to grant Appellants the relief they

seek, it would undoubtedly undermine the

reorganization plan and adversely affect the

interests of multiple third parties. Satisfaction of a

judgment of more than $25 million, which would

dwarf the total owed to other creditors, might

require disgorgement of all, or a significant portion

of, the $2.8 million already paid. Disgorgement of

funds paid to Class 4, in particular, would

necessitate the transfer of title — for Unit PH4C —

back to the creditors, which may prove practically

impossible. At best, granting relief to Appellants

would “undo the success of the reorganization plan

and would adversely affect third parties who have

already been paid.” Mac Panel, 293 F.3d at 626.

In addition to potentially impairing the rights of

third-party creditors, granting relief to Appellants

would also undermine the interests of other unit

owners. Unit owners have continued to pay their

annual and special assessments in reliance upon the

Confirmed Plan. ECF 15-1 at 6–7 (explaining that

Appellee collected approximately $4.1 million in

annual assessments in 2018). In U.S. Airways

Group, the court found it critical that affording the

requested relief would frustrate a variety of postbankruptcy reliance interests. 369 F.3d at 810 (“For

example, U.S. Airways has contracted with Bank of

America to process the company’s credit card

transactions.”). Annual assessments are the primary

funding source for Appellee to effectuate the

Confirmed Plan, and unit owners have continued to

pay these fees in reliance upon the “finality of

bankruptcy confirmation orders.” See id. at 810–11.

The Confirmed Plan, in this case, expressly excluded

22a

Appellants’ FHA claims, and putting more than $25

million in damages back in dispute would materially

affect the unit owners’ interests in the finality of the

reorganization.

In sum, providing relief to Appellants would

harm the interests of third-party creditors and other

unit owners, and would nullify the success that has

already been achieved under the Confirmed Plan.

Ultimately, “[i]t is simply too late in the day to

unwind the intricate series of transactions that has

occurred in the reorganization process in order to

grant the requested relief.” See id. at 811.

III.

Conclusion

Because all four Mac Panel factors suggest that

the appeal should be dismissed as equitably moot, I

shall grant Appellee’s Motion to Dismiss, ECF 15. A

separate Order follows.

Dated: September 25, 2019

/s/

Stephanie A. Gallagher

United States District Judge

23a

[ENTERED SEPTEMBER 26, 2019]

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

PAUL C. CLARK, SR., et al.,

Appellants,

Civil Case No.

SAG-18-3542

COUNCIL OF UNIT OWNERS OF

THE 100 HARBORVIEW DRIVE

CONDOMINIUM,

Appellee.

**************

AMENDED ORDER

For the reasons stated in the accompanying

memorandum opinion, it is this 25th day of

September, 2019, ORDERED that Appellee’s Motion

to Dismiss, ECF 15, is GRANTED, and the

Appellant’s appeal is DISMISSED as equitably moot.

Dated: September 25, 2019

/s/

Stephanie A. Gallagher

United States District Judge

24a

[ENTERED APRIL 10, 2018]

IN THE UNITED STATES

BANKRUPTCY COURT

FOR THE DISTRICT OF MARYLAND

at Baltimore

Case No. 16-13049-MMH

Chapter 11

In re:

Council of Unit Owners of the

100 Harborview Drive Condominium

Debtor.

*************

ORDER CONFIRMING DEBTOR’S

FIFTH AMENDED PLAN OF

REORGANIZATION

This chapter 11 case involves only one small

operating entity and a handful of creditors. Yet, the

case was contentious from the start, which made the

path to confirmation particularly difficult. Moreover,

this case has the unusual feature that it impacts not

only the Debtor’s operations and creditors’

recoveries, but also the financial obligations, and

property values, of approximately 249 unit owners.

Thus, it is perhaps not surprising that the Debtor

needed over two years, two attempts at confirmation,

and a little assistance from a competing plan to

25a

present a plan of reorganization that met the

requirements of the Bankruptcy Code.1

Both the Debtor and Howard Bank (the Debtor’s

prepetition secured lender) offered plans of

reorganization with certain advantages and

disadvantages for the Reorganized Debtor (as

defined in the proposed plans). The differences

between these two plans were less striking by the

end of the second confirmation hearing, as both plan

proponents offered amendments to their respective

proposed plans to narrow the gap and address

potential issues. Although the Court is confirming

the Debtor’s proposed plan, that plan (as modified by

the Debtor and in the form approved by this Order)

incorporates key provisions and protections

introduced by Howard Bank’s proposed plan. The

Court firmly believes that the efforts of the parties

and the confirmation process in this case shaped a

plan of reorganization that serves the best interests

of all affected parties. Accordingly, for the reasons

described below and on the terms set forth herein,

the Court confirms the Debtor’s Fifth Amended Plan

of Reorganization.

I. Relevant Background on Chapter 11 Case

and First Confirmation Hearing

The Debtor is an unincorporated condominium

association,

comprising

“any

person,

firm,

corporation, trust, or other legal entity … holding

legal title to a condominium unit” in the building

located at 100 Harborview Drive (the “Building”). D.

Ex. 1, Art. I (q). The Building “is a 29-story luxury

residential high rise that stands on the shore of

1 11 U.S.C. §§ 101, et seq. (the “Code”).

26a

Baltimore’s Inner Harbor.” In re Council of Unit

Owners of the 100 Harborview Drive Condominium,

572 B.R. 131, 135 (Bankr. D. Md. 2017) (J.

Schneider). It “was established in 1993 as a

condominium regime and contains 249 units and a

health club.” Id.

On March 9, 2016, the Debtor filed this chapter

11 case. The Debtor seeks to, among other things,

reorganize its financial affairs and resolve years of

litigation with the owners of two different units in

the Building through a chapter 11 plan. Penthouse

4C, LLC (“Penthouse 4C”) owns penthouse 4C (“Unit

PH4C”) and Dr. Paul C. Clark owns penthouse 4A

(“Unit PH4A)—the two units involved in this

litigation. The Debtor also has a handful of other

creditors, including Howard Bank, which extended a

prepetition secured loan to the Debtor in the amount

of $7,849,782.01.2

On February 13-17, 2017, Judge Schneider

conducted a confirmation hearing on the Debtor’s

proposed plan of reorganization. By an order entered

on June 9, 2017, (the “First Confirmation Order”),

Judge Schneider denied confirmation of that plan

with leave to amend. See 100 Harborview Drive

Condominium, 572 B.R. at 141. In a thoughtful

opinion, Judge Schneider analyzed each of the

contested provisions of the Debtor’s Second Amended

Plan of Reorganization and ultimately determined

that the plan could not be confirmed under section

1129(a) of the Code. Judge Schneider based his

decision on the Debtor’s failure to support the thirdparty releases contained in the plan under the

2 Howard Bank filed a proof of claim for this amount at Claim

No. 26.

27a

standard articulated by the U.S. Court of Appeals for

the Fourth Circuit in Behrmann v. National Heritage

Foundation, 663 F.3d 704, 712 (4th Cir. 2011) and

related decisions. Id. at 137–139.

II. Events Leading to Second Confirmation

Hearing

Subsequent to the First Confirmation Order, the

Debtor focused on trying to resolve—through

litigation or settlement—its disputes with Penthouse

4C and Dr. Clark. It also was required to continue to

work with Howard Bank on, among other things, the

Debtor’s use of Howard Bank’s cash collateral during

the pendency of this case. Each of these matters, the

competing plan solicitation process, and the

documents filed prior to the second confirmation

hearing are described below.3

A. Penthouse 4C and Unit PH4C

Penthouse 4C filed a proof of claim in this case at

Claim No. 45 in the total amount of $10 million

(“PH4C Claim”). On January 24, 2017, the Debtor

commenced an adversary proceeding against

Penthouse 4C with respect to, among other things,

the items underlying the PH4C Claim. See Adv. Pro.

17-00045. Penthouse 4C then filed an objection to

confirmation of the Debtor’s proposed plan of

reorganization [ECF 274] on January 27, 2017. The

First Confirmation Order discussed several of the

issues raised in this objection, and Penthouse 4C

The Court references the transcripts from each day of the

second confirmation hearing in various places throughout this

Order. The following abbreviations are used for such citations:

“Tr. 1” for the March 20, 2018 transcript; “Tr. 2” for the March

22, 2018 transcript; “Tr. 3” for the March 23, 2018 transcript;

and “Tr. 4” for the March 26, 2018 transcript.

28a

timely filed a Notice of Appeal of the First

Confirmation Order [ECF 416] on June 23, 2017.

The District Court denied Penthouse 4C’s appeal on

December 11, 2017 [ECF 577]. Penthouse 4C also

filed a Motion to Convert, Dismiss, or Appoint

Chapter 11 Trustee [ECF 509], which remains

pending before the Court.4

Shortly before filing its amended plan of

reorganization, the Debtor announced that it had

reached a settlement in principle with Penthouse 4C.

The

settlement

involved

the

payment

approximately $4.1 million to Penthouse 4C, the

transfer of Unit PH4C to the Debtor, a second lien on

the Debtor’s assessments and a lien on Unit PH4C to

secure the Debtor’s payments to Penthouse 4C, and

the release and dismissal of all pending disputes

between the parties. That basic settlement, with

some refinements, was finalized and incorporated

into the Debtor’s Fifth Amended Plan of

Reorganization.

B. The Clarks and Unit PH4A

Dr. Clark, his wife (Ms. Rebecca Delorme), and

his minor son (collectively, the “Clarks”) filed proofs

of claim at Claim Nos. 46, 47, and 48 in a total

amount exceeding $25 million (the “PH4A Claims”).

The PH4A Claims largely relate in one way or

another to the parties’ prepetition litigation

involving Unit PH4A and are based on alleged

The Court held status hearings on Penthouse 4C’s and the

Clarks’ (as defined below) Motions to Convert, Dismiss, or

Appoint a Chapter 11 Trustee on January 25, 2018, February

21, 2018, and March 14, 2018. The Court has continued those

motions pending the outcome of the plan solicitation and

confirmation process.

29a

violations of the Fair Housing Act, 42 U.S.C. §§ 3604

(the “FHA Claims”), alleged property damage to Unit

PH4A, and consequential and other damages

allegedly arising from those claims. On January 24,

2017, the Debtor filed objections to the PH4A Claims

[ECF 264–266]. The Clarks then filed an objection to

confirmation of the Debtor’s proposed plan of

reorganization [ECF 273] and opposition papers to

the Debtor’s claim objections [ECF 316–318].

On May 18, 2017, Judge Schneider entered a

Scheduling Order [ECF 393] with respect to the

contested matter involving the PH4A Claims, which

was subsequently amended. The parties conducted

discovery and filed a total of four different

dispositive motions. The Court held a hearing for

purposes of oral argument on three of these

dispositive motions on January 5, 2018.5 The Court

granted the Debtor’s Second Motion for Partial

Summary Judgment on the FHA Claims [ECF 647].

The Court granted in part, and denied in part, the

Debtor’s Third Motion for Partial Summary

Judgment and the Clarks’ Motion for Partial

Summary Judgment [ECF 649]. The Court then

conducted a multi-day evidentiary trial on the PH4A

Claims beginning on February 6, 2018. On April 10,

2018, the Court entered its Preliminary Order

Regarding Creditors’ Damages Claims (the

“Preliminary Damages Order”), which determines

the allowed amount of the PH4A Claims on a

preliminary basis.

By an Order [ECF 502] dated October 26, 2017, the Court

denied the Debtor’s first dispositive motion “without prejudice

to the parties filing dispositive motions with respect to the FHA

Claims in this contested matter on grounds other than claim

and issue preclusion as set forth in the Motion.”

30a

The preliminary nature of the Preliminary

Damages Order is due, in part, to ongoing issues

concerning the repair and remediation of Unit

PH4A. As explained in the Preliminary Damages

Order, Unit PH4A has leaked almost continuously

for a number of years, and the parties have been

unable to remedy the leaks and related water and

mold damage to the unit. The Court has been

monitoring the parties’ collaborative efforts to

accomplish this task, and the final amount of the

Clarks’ damages award will depend on the

substantial completion of the repair and remediation

of Unit PH4A. These issues are also addressed, to a

certain extent, by this Order. Moreover, the Clarks

filed a Motion to Convert, Dismiss, or Appoint a

Chapter 11 Trustee [ECF 662] on January 24, 2018.

C. Howard Bank and Use of Cash Collateral

Howard Bank extended a prepetition loan to the

Debtor, which is secured by a first priority lien on

the Debtor’s assessments. No party has contested

the validity or priority of Howard Bank’s secured

claim, and the Debtor and Howard Bank agree that

Howard Bank’s claim is oversecured. Tr. 4 at 116,

148. Shortly after the filing of this case, on March

11, 2016, the Debtor and Howard Bank entered into

a Consent Order Authorizing the Debtor’s Interim

Use of Cash Collateral [ECF 13]. The Debtor has

continued to use Howard Bank’s cash collateral on a

consensual basis since that time, though Howard

Bank started to voice concerns regarding the

Debtor’s reorganization efforts in late 2017. Those

concerns resulted in Howard Bank filing its own

plan of reorganization for the Debtor and then an

Emergency Motion to Convert, Dismiss, or Appoint a

Chapter 11 Trustee [ECF 759]. The Court held a

31a

hearing on Howard Bank’s Emergency Motion on

February 27, 2018. The Court has continued that

motion pending the outcome of the plan solicitation

and confirmation process.

D. The Competing Plan Solicitation Process

At a status hearing in late December 2017, the

Debtor indicated that it would be filing its Third

Amended Plan of Reorganization in January 2018.

The Debtor ultimately filed that plan [ECF 683] on

February 2, 2018. Howard Bank then filed its own

Chapter 11 Plan of Reorganization for the Debtor

[ECF 686] on February 4, 2018, as well as a Motion

to Establish Confirmation Procedures for Competing

Plans [ECF 687]. The Court held a status hearing

on, among other things, Howard Bank’s request for

confirmation procedures. The Debtor and Howard

Bank generally were able to agree upon a solicitation

process for the competing plans and, on February 13,

2018, the Court entered Orders resolving the motion

to establish confirmation procedures, approving the

plan proponents’ respective disclosure statements on

a preliminary basis, authorizing the transmittal of

the solicitation packages, and setting appropriate

deadlines and hearing dates (collectively, the

“Solicitation Procedures Orders”) [ECF 722, 723,

724].

The Court received six objections to the

confirmation of the competing plans. Three of those

objections were resolved during the course of the

second confirmation hearing and three remain

unresolved as follows:



Alan and Barbara Gamse filed an objection

based on the plans’ proposed treatment of

Class 8 Claims [ECF 807]. This objection was

32a

resolved during the

hearing. Tr. 1 at 140.

second

confirmation



C.A. Lindman, Inc. filed an objection based on

the plans’ proposed treatment of its claim

under Class 3 [ECF 808]. This objection was

resolved during the second confirmation

hearing. Tr. 3 at 8–10.



The Harborview Marina & Yacht Club

Community Association filed a limited

objection based on the plans’ proposed

treatment of its claim in Class 6 [ECF 834].6

This limited objection was resolved during the

second confirmation hearing. Tr. 4 at 47.



The Clarks filed an objection to the plans

based on, among other things, the proposed

treatment of the PH4A Claims under Class 7

and the third-party releases included in the

plans [ECF 810]. The majority of the Clarks’

objections are addressed in Parts V and VI.

Their objection regarding the characterization

of the Debtor as a nonprofit organization was

addressed and corrected during the second

confirmation hearing. See Tr. 1 at 100.



The Debtor objected to Howard Bank’s plan

[ECF 811], and Howard Bank objected to the

Debtor’s plan [ECF 812]. Each of those

objections also raised issues regarding the

plan proponent’s disclosure statement and the

solicitation process. The majority of these

objections are addressed in Parts V and VI.

At the time of the second confirmation hearing,

which began on March 20, 2018, the Debtor had filed

its Fourth Amended Plan of Reorganization [ECF

33a

824] and Howard Bank was proceeding on its First

Amended Chapter 11 Plan of Reorganization [ECF

805]. Howard Bank then filed its Second Amended

Chapter 11 Plan of Reorganization (“Howard Bank’s

Second Amended Plan”) [ECF 835] on March 26,

2018, and the Debtor filed its Fifth Amended Plan of

Reorganization (“Debtor’s Fifth Amended Plan”)

[ECF 841] on March 28, 2018. None of the

modifications made to each iteration of the plan

proponents’ respective plans required a resolicitation

of the plans or otherwise affected the second

confirmation hearing. At the close of the second

confirmation hearing, the Court took both plans

under advisement.

III. Primary

Plans

Differences

the

Competing

Both plans contemplate the reorganization of the

Debtor, with a focus on resolving the litigation and

maintenance issues that have plagued the Debtor for

years. The majority of operative provisions in the

two plans are similar in all material respects or

exactly the same. The primary differences that

separate the two plans are as follows:



Howard Bank’s plan originally contemplated a

Plan Trustee that would possess the powers

currently retained by the Debtor’s Board of

Directors (the “Board”), with the Board

operating in an advisory role. The Debtor’s

plan originally proposed no oversight, but

then added the concept of a Plan Monitor. The

Plan Monitor would have served an advisory

or consulting role, with the Debtor’s Board

retaining all of the control over operations and

plan implementation issues. Howard Bank’s

34a



Second Amended Plan and the Debtor’s Fifth

Amended Plan are much closer on this issue.

Both plans propose a Plan Officer that would

have control over certain aspects of the

Reorganized Debtor’s plan and a voice in

certain ongoing operational issues, such as

budgeting and reserves issues.

The Debtor’s plan proposes to make amortized

payments to Howard Bank at an interest rate

of 4.5% (with an offer to increase to 5%, the

contract rate, if necessary) for a period of nine

years. Howard Bank’s plan proposes level

principal payments on its claim at an interest

rate of 5% (with an offer to decrease to 4.5%)

for a period of nine years.

Both plans contemplate a settlement with

Penthouse 4C to resolve the PH4C Claims, but

each settlement is structured in a slightly

different fashion. For example, Howard

Bank’s initial payment to Penthouse 4C and

the interest rate on ongoing payments are

higher than those proposed by the Debtor.

Howard Bank made these changes in order to,

among other things, avoid granting a lien on

the Debtor’s assessments and achieving

certain other changes relating to the sale of

Unit PH4C.

The two plans treat the PH4A Claims

differently, with the Debtor’s plan proposing

payments to the Clarks over a period of eleven

years and Howard Bank’s plan making those

payments over five years. Although not

initially the case, both plans now account for

the PH4A Claims in the amount awarded by

the Court.

35a



The variances between the plans with respect

to the treatment of claims in Classes 3, 6, and

8 were resolved by the end of the second

confirmation hearing.

The scope of the release and exculpation

provisions contained in each plan varies to

some degree, but Howard Bank noted less

concern with this variance as compared to

others. Tr. 4 at 145.

IV. Jurisdiction and Legal Standards

The Court has jurisdiction over this proceeding

pursuant to 28 U.S.C. § 1334, 28 U.S.C. § 157(a), and

Local Rule 402 of the United States District Court

for the District of Maryland. This proceeding is a

“core proceeding” under 28 U.S.C. § 157(b)(2). This

Order constitutes the Court’s findings of fact and

conclusions of law in accordance with Rule 52 of the

Federal Rules of Civil Procedure, made applicable to

this matter by Rules 7052 and 9014 of the Federal

Rules of Bankruptcy Procedure.

Sections 1125 and 1129 of the Code govern a plan

proponent’s disclosure statement and plan of

reorganization. Section 1125(b) provides that “[a]n

acceptance or rejection of a plan may not be solicited

after the commencement of the case under this title

from a holder of a claim or interest with respect to

such claim or interest, unless, at the time of or

before such solicitation, there is transmitted to such

holder the plan or a summary of the plan, and a

written disclosure statement approved, after notice

and a hearing, by the court as containing adequate

information.” 11 U.S.C. § 1125(b). Section 1129(a) in

turn states that “[t]he court shall confirm a plan only

36a

if all of the … requirements [of that section] are

met.” 11 U.S.C. § 1129(a).

One of the requirements imposed by section

1129(a) of the Code is the acceptance of the plan by

all impaired classes of claims and interests. 11

U.S.C. § 1129(a)(8). If a plan proponent cannot

satisfy this requirement, but can show that at least

one class of impaired claims has accepted its plan,

the plan proponent may nonetheless seek

confirmation of its plan under what is commonly

known as the cramdown provisions of the Code. 11

U.S.C. §§ 1129(a)(10), (b). In a cramdown context,

“[t]he

court

…

shall

confirm

the

plan

notwithstanding the requirements of [11 U.S.C. §

1129(a)(8)] if the plan does not discriminate unfairly,

and is fair and equitable, with respect to each class

of claims and interests that is impaired under, and

has not accepted, the plan.” 11 U.S.C. § 1129(b)(1).

Both plan proponents seek confirmation of their

respective plans under the cramdown provisions of

section 1129(b) of the Code.

V. Findings of Fact

The Court had the opportunity to observe the fact

and expert witnesses during the four days of the

second confirmation hearing. The Court has

considered the witnesses’ testimony, as well as the

documents admitted into evidence, during the

hearing. The Court’s general findings of fact are set

forth in this Part V. The Court’s analysis and

conclusions of law follow in Part VI. Based on the

evidence presented, both the Debtor and Howard

Bank proposed their plans in good faith and not by

any means forbidden by law. See generally Tr. 1 at

30–132, 141–180; Tr. 2 at 15–65; Tr. 3 at 149–223.

37a

See also 11 U.S.C. § 1129(a)(3). Admittedly each plan

proponent was seeking confirmation of the plan that

it believed to be more beneficial to its own interests.

Nevertheless, the evidence also suggested that each

plan proponent proposed terms designed to achieve

results beneficial to the estate and others affected by

the plan.7 See generally Tr. 1 at 30–132, 141–180; Tr.

2 at 15–65; Tr. 3 at 149–223.

The Court also finds that each plan, and each

plan proponent, complies with the applicable

provisions of the Code. See 11 U.S.C. §§ 1129(a)(1),

(2). Both the Debtor and Howard Bank identify

perceived deficiencies in the other’s disclosure

statement and solicitation conduct. The Court has

reviewed those allegations carefully. The Court

determines that the joint disclosure statement and

each plan proponent’s separate disclosure statement

contain adequate information in accordance with

section 1125 of the Code. See, e.g., In re A.H. Robins

Co., Inc., 880 F.2d 694, 696 (4th Cir. 1989) (“The

determination of whether the disclosure statement

has adequate information is made on a case by case

7 The parties made some suggestions that the Debtor was not

fulfilling its obligations under applicable nonbankruptcy law

with respect to certain repair and maintenance issues on

railings at the Building. The Debtor offered evidence, which the

Court found credible, that the Debtor is aware of these issues

and believes that all related regulatory concerns have been

resolved. Tr. 2 at 203–212. The Debtor also acknowledged that

it will comply with the applicable regulations and recognized

that any additional work on the railings may require additional

funds. Tr. 2 at 206, 209–212. The Court is satisfied, based on

the witness testimony, that the plan and the Plan Officer

appointed by this Order will ensure compliance with applicable

nonbankruptcy law in a manner that maintains the feasibility

of the Debtor’s Fifth Amended Plan.

38a

basis and is largely within the discretion of the

bankruptcy court.”). It also does not find any facts

supporting a claim that a plan proponent’s

preconfirmation conduct violated the Code.

This latter allegation rests, in large part, on

communications between the Debtor’s agents and

unit owners in the Building, as well as certain action

or inaction by the parties. The correspondence and

emails discussed by the parties do not support these

claims. See, e.g., Howard Bank’s Objection [ECF 812]

at 28–33; Debtor’s Objection [ECF 811] at 3–5. See

also HB Exs. 144, 145, 147. Rather, they tend to

show that the Debtor shared its understanding of

Howard Bank’s plan with unit owners in the

Building. At the time of those various

communications, the Debtor’s descriptions were

factually accurate and included endorsements for the

Debtor’s own plan. Neither the Code nor applicable

case law require competing plan proponents to

support, market, or give equal air time to the

opposition.8 See, e.g., Century Glove, Inc. v. First

8 Howard Bank pointed out that it requested the Debtor to post

its First Amended Chapter 11 Plan of Reorganization to a

website accessible by all unit owners. Tr. 1 at 117–118. The

Debtor admitted that it did not do so. Tr. 1 at 131. Although

Howard Bank alleged that such conduct could have affected the

voting on the plans, Howard Bank did not file its First

Amended Chapter 11 Plan of Reorganization until the day

before voting closed, on March 15, 2018 at 4:38 p.m. (Voting

closed on March 16, 2018 [ECF 724].) Given the short time

between this filing and the closing of the voting period, and the

substantial support for the Debtor’s plan among unit owners,

the Court does not believe the Debtor’s conduct affected the

solicitation process. The Court also notes that nothing in the

Code or the Solicitation Procedures Orders requires the

opposition to serve or circulate the other party’s competing

39a

American Bank of New York, 860 F.2d 94, 100 (3d

Cir. 1988) (explaining that section 1125 “never limits

the facts which a creditor may receive, but only the

time when a creditor may be solicited”) (emphasis in

original). See also In re Indianapolis Downs, LLC,

486 B.R. 286, 294, 297 (Bankr. D. Del. 2013)

(explaining and following the reasoning of Century

Glove). That said, a plan proponent cannot mislead

or be fraudulent in the solicitation of its plan. See,

e.g., In re Brotby, 303 B.R. 177, 193 (B.A.P. 9th Cir.

2003). The Court did not find any factual allegations

that show actionable or improper conduct under

applicable case law.

During the second confirmation hearing, the

Debtor clarified that all of the Debtor’s professionals’

fees for services provided, and expenses incurred,

prior to the Effective Date (as that term is defined in

the parties’ plans) of the plan are subject to review

and approval by the Court. Tr. 2 at 52. See also 11

U.S.C. § 1129(a)(4). Howard Bank’s plan provides

similar treatment for payments to professionals.

Moreover, this Order specifies the review and

approval process for professionals’ fees in accordance

with section 1129(a)(4) of the Code.

The Debtor identified its current management

team and members of the Board who will serve the

Reorganized Debtor after the Effective Date of the

plan. Tr. 1 at 30, 141. See 11 U.S.C. § 1129(a)(5). The

Court recognizes that Board members may turn over

based on the election process included in the

Debtor’s bylaws and that the management team may

change based on, among other things, personnel

plan. The Court does, however, recognize Howard Bank’s

frustration in this particular instance.

40a

decisions at Barkan Management or a subsequent

management company. Those potential changes

exist for most reorganized debtors. The Court is

satisfied, based on the testimony of the Debtor’s

witnesses, that the five identified board members

(two of whom were appointed within the past two

years) will serve the Debtor immediately following

the Effective Date of the plan. The Court also

accepts the Debtor’s representations concerning its

current general manager from Barkan Management

and the individual assuming the responsibilities of

Mr. Feltenberger, as well as the Debtor’s

representations that Mr. Feltenberger will remain

available to the Reorganized Debtor to help as

needed. Tr. 2 at 121. The Court notes that Howard

Bank’s plan contemplates the same management

structure and that both plans now propose the same

individual to serve as the Plan Officer.

The Debtor presented evidence that its proposed

plan would provide a better alternative for creditors

than any recoveries that they might receive in a

hypothetical chapter 7 liquidation. 11 U.S.C. §

1129(a)(7). Specifically, Michael Wolff, a lawyer with

experience in both bankruptcy matters and

distressed condominium projects, opined that a

liquidation of the Debtor would realize nominal

value for creditors.9 Tr. 2 at 131–133. Mr. Wolff

based this position on the limited assets owned

outright by the Debtor and the secured claim of

Howard Bank.10 Id. at 132. No party presented

The Debtor originally identified Mr. Wolff as its proposed

Plan Monitor under its amended plan, but that changed in the

Debtor’s Fifth Amended Plan.

10 Howard Bank did not offer any evidence in support of a

hypothetical liquidation analysis, but presumably the analysis

41a

evidence to contradict Mr. Wolff’s testimony, and the

Court found Mr. Wolff knowledgeable and credible.

The Debtor offered expert testimony and

financial projections in support of the feasibility of

its plan. See, e.g., Tr. 2 at 232–251; D. Exs. D-77, D80, D-81, D-82, D-85C. Robert Christopher

Rosenthal testified that he had reviewed the

Debtor’s plan and the projections attached to the

plan as Exhibit G. Tr. 2 at 233–235. See 11 U.S.C. §

1129(a)(11). Mr. Rosenthal opined that the Debtor

had the financial ability to meet its projected costs of

operations and obligations under the plan. Tr. 233–

238. He also explained that, to the extent the

Debtor’s obligations under the plan exceed current

estimates in the projections, the Debtor has the

ability to meet those obligations, particularly if not a

lump sum payment obligation. Tr. 2 at 252–256. See

also Tr. 1 at 45–47. On this point, Mr. Rosenthal

noted the Debtor’s ability to increase ongoing

assessments, as well as to declare a special

assessment, to satisfy unexpected increases in

costs.11 Mr. Feltenberger’s testimony supported and

offered by Mr. Wolff would apply with similar force to Howard

Bank’s plan.

11 The Debtor and its experts acknowledged that the budget

and projected financials are tight and that an increase in

assessments might be necessary to meet unexpected increases

in costs, depending on the amount and timing of those

increases. See, e.g., Tr. 1 at 38–40; Tr. 4 at 62–66. The Debtor’s

evidence, however, also showed that the Debtor has a good

collection rate on its assessments and the ability to increase

assessments marginally on an annual basis (i.e., increasing the

ongoing assessments as opposed to a special assessment). See,

e.g., Tr. 1 at 117. The Court found the Debtor’s experts

knowledgeable and well informed. The Debtor also submitted a

reserve study and analysis, as did Howard Bank. See, e.g., D.

Exs. D-77, D-80, D-86; HB Exs. 140-B, 141-B. The Debtor

42a

aligned with that of Mr. Rosenthal. See, e.g., Tr. 1 at

102; Tr. 4 at 49–50. Overall, the Debtor’s evidence

demonstrated the feasibility of the Debtor’s Fifth

Amended Plan.12 See also Part VI.F.

Howard Bank offered the testimony of Wendy

Andrus, a senior vice president with Howard Bank,

in support of various elements of Howard Bank’s

plan, including its feasibility. Tr. 3 at 149–197. See

also HB Exs. 139, 140B. Ms. Andrus explained how

the funding levels in the Howard Bank plan differ

from those in the Debtor’s plan and how the bank’s

plan proposed the Reorganized Debtor would meet

those obligations. Tr. 3 at 148–197. In general,

Howard Bank’s plan contemplates slightly higher

assessments during the initial years and a potential

continuance of an assessment level sufficient to pay

the claim of Penthouse 4C (if the Debtor is unable to

sell Unit PH4C in the near term). Tr. 3 at 167–172,

175–177. The Court found the testimony of Ms.

Andrus informative, credible, and adequate to

adequately supported its ability to increase assessments and

noted that it has done so when necessary in the past. Moreover,

with respect to the evaluation and treatment of the Class 6

Claims, Mr. Feltenberger explained the indemnification

available for those claims and the protections afforded unit

owners with respect to any related assessments. See, e.g., Tr. 1

at 88–92. The Court is satisfied that the Debtor’s plan

appropriately accounts for potential variances in claim

amounts and that the evidence supports the plan’s feasibility.

12 Although Mr. Rosenthal’s testimony addressed primarily the

terms of the Debtor’s Fourth Amended Plan of Reorganization,

much of his testimony translated to the Debtor’s Fifth

Amended Plan, particularly his testimony regarding some

flexibility in the payment structures offered to creditors. Tr. 2

at 234, 255. In addition, Mr. Feltenberger testified concerning

certain changes incorporated into the Debtor’s Fifth Amended

Plan. Tr. 4 at 49–50.

43a

support the feasibility of Howard Bank’s Second

Amended Plan.

Despite their similarities, the two competing

plans received very different levels of support from

creditors. The Debtor achieved acceptance of its plan

from every class of creditors and interest holders,

other than Howard Bank (Class 1) and the Clarks

(Class 7). See Debtor’s Ballot Tally [ECF 823].

Howard Bank, on the other hand, received

acceptance from a more limited number of classes,

one of which is disputed by the Debtor.13 See

Howard

Bank’s

Ballot

Tally

[ECF

822].

Nevertheless, based on a review of the record and

applicable case law, it appears that each plan

proponent garnered acceptance of its plan by one

class of impaired claims. See 11 U.S.C. §§ 1129(a)(8),

(10). Accordingly, the Court analyzes below whether

either plan is confirmable under the cramdown

provisions of section 1129(b) of the Code.14

VI.Analysis and Conclusions of Law

As explained above, section 1129 governs the

confirmation of a chapter 11 plan. 11 U.S.C. § 1129.

That section does not, however, address the standard

of proof applicable in the confirmation process. See,

e.g., In re Bate Land & Timber, LLC, 523 B.R. 483,

489 (Bankr. E.D. N.C. 2015). Courts generally find

that the plan proponent bears the burden of proof

and must satisfy that burden by a preponderance of

the evidence. See, e.g., id. (“‘In the face of this

silence, courts may not imply a higher standard than

the preponderance standard normally applied in civil

proceedings.’”) (quoting In re Combs, 838 F.2d 112,

116 (4th Cir. 1988)). For the reasons explained in

Part V, the Court concludes that the Debtor and

44a

Howard Bank have satisfied their respective

burdens of proof with respect to the requirements for

confirmation under section 1129(a) of the Code,

except for subsection (8).

The failure of the plan proponents to achieve

acceptance of their respective plans from all classes

of claims and interests does not necessarily prevent

confirmation of either plan. The plan proponent can

seek confirmation of its plan under the cramdown

provisions of section 1129(b) of the Code. And that is

the case for both the Debtor’s Fifth Amended Plan

and Howard Bank’s Second Amended Plan. The

Court analyzes each plan, and the remaining

objections to those plans, below under section 1129

of the Code and applicable case law.

A. Treatment of Howard Bank Claim

Howard Bank objects to the treatment of its

claim under the Debtor’s Fifth Amended Plan.

Howard Bank basically asserts that the interest rate

is too low and that, upon implementation of the plan,

the Reorganized Debtor will immediately default

under the prepetition loan documents. Howard Bank

points to several items to suggest a post-Effective

Date default, including the granting of a second lien

in the Debtor’s assessments and the use of its cash

collateral to pay junior claims. Tr. 3 at 156–157, 174.

See also Howard Bank’s Objection [ECF 812] at 10–

12, 18–23. The Court is not persuaded by Howard

Bank’s arguments. Indeed, if the Court accepted

Howard Bank’s position, a debtor that had granted a

prepetition blanket lien to a secured creditor would

never be able to confirm a chapter 11 plan absent the

consent of the secured lender, which defeats the

policy underlying, and contradicts the language of,

45a

section 1129(b) of the Code. See, e.g., In re

Philadelphia Newspapers, LLC, 599 F.3d 298, 304

(3d Cir. 2010) (“Section 1129(b) provides

circumstances under which a reorganization plan

can be confirmed over the objection of secured

creditors—a process referred to as a ‘cramdown’

because the secured claims are reduced to the

present value of the collateral, while the remainder

of the debt becomes unsecured, forcing the secured

creditor to accept less than the full value of its claim

and thereby allowing the plan to be ‘crammed down

the throats of objecting creditors.’”) (quoting Kham &

Nate’s Shoes No. 2, Inc. v. First Bank of Whiting, 908

F.2d 1351, 1359 (7th Cir.1990)).

Section 1129(b) requires that a plan not

discriminate unfairly and be fair and equitable with

respect to dissenting creditors. 11 U.S.C. §

1129(b)(1). For a secured creditor like Howard

Bank,15 the “fair and equitable” standard generally

15 The unfair discrimination component of section 1129(b) is

satisfied with respect to Howard Bank as any difference

between its treatment and that afforded the secured claims in

Class 2 of the Debtor’s Fifth Amended Plan (or any other class)

is not unfair. The Debtor articulated reasons for its proposed

nine-year amortization of the loan, how those payments worked

with its budget and projected financial statements, and the

importance of the modifications to its reorganization efforts.

See, e.g., Tr. 1 at 72–73, 83–84; Tr. 4 at 49–50. See also, e.g.,

Ownby v. Jim Beck, Inc. (In re Jim Beck, Inc.), 214 B.R. 305,

307 (W.D. Va. 1997), aff’d per curiam, 162 F.3d 1155 (4th Cir.

1998); In re TCI 2 Holdings, LLC, 428 B.R. 117, at 157 (Bankr.

D. N.J. 2010). The Court notes that the amortized payment

structure proposed by the Debtor is not prohibited by the Code

or applicable nonbankruptcy law and generally comports with

the payment structure under the parties’ prepetition

agreement. The Court also finds that the Debtor has proposed

the Class 1 treatment in good faith.

46a

requires the debtor to establish one of the following

three treatment alternatives: (i) the secured creditor

retains its lien and receives the allowed amount of

its claim in deferred cash payments under the plan;

(ii) a sale of the secured creditor’s collateral with the

secured creditor’s lien attaching to the sale proceeds;

or (iii) the secured creditor receives the indubitable

equivalent of its claim. 11 U.S.C. § 1129(b)(2)(A).

The Debtor’s Fifth Amended Plan proposes to allow

Howard Bank to retain its first priority lien in

assessments and to pay Howard Bank the present

value of its allowed claim in deferred cash payments

over a nine-year period. The Court finds that this

treatment satisfies section 1129(b)(2)(A) of the Code,

provided that the Debtor pays interest at the

contract rate of 5% per annum.16

16 See Claim No. 26, Ex. A (setting forth prepetition contract

interest rate). See also HB Exs. 126–131. The Court notes that

no party presented evidence of an efficient market for the size

and kind of private loan extended by Howard Bank to the

Debtor. See e.g., Till v. SCS Credit Corp., 541 U.S. 465, 479 &

n.14 (2004) (noting, in a footnote, that when picking “a cram

down rate in a Chapter 11 case, it might make sense to ask

what rate an efficient market would produce”). See also In re

MPM Silcones, L.L.C., 874 F.3d 787, 800 (2d Cir. 2017)

(explaining that, under Till, most courts consider first whether

an efficient market exists and, if not, then apply the formula

approach of Till). The Court notes that the national prime rate

during the solicitation process and the second confirmation

hearing was between 4.5% and 4.75%. The Treasury rate on

longer-term debt during this same period was generally

between 2.77% and 2.94% (for 10-year notes) and between

2.68% and 2.86% (for 7-year notes). See, e.g., In re Tapang, 540

B.R. 701, 707 (Bankr. N.D. Cal. 2015) (noting that some courts

have considered the Treasury rate under the Till formula

approach in chapter 11 cases). Although Howard Bank

suggested that it has more risk exposure post-Effective Date

than it did under the prepetition loan documents, the Court

47a

The Court reaches this conclusion because it

interprets the treatment for the Class 1 Claim as a

modification to the parties’ prepetition loan

documents.17 Courts generally recognize that a

debtor may unilaterally modify its prepetition

agreements with a secured creditor, provided that

the proposed treatment of the secured creditor

complies with the Code. See, e.g., In re American

Trailer & Storage, Inc., 419 B.R. 412, 440–441

(Bankr. W.D. Mo. 2009) (observing that “‘[t]he

covenants to be included in the loan documents of a

finds that Howard Bank’s risk exposure is substantially the

same or lower given the oversight and control vested in the

Plan Officer and the nature of Howard Bank’s collateral—i.e.,

assessments. Cf. In re Capitol Station 65, 2018 WL 333863 at

*11 (Bankr. E.D. Ca. Jan. 8, 2018) (explaining that “there is

significantly more risk to a postpetition, preconfirmation lender

than there is to a postconfirmation lender where risk is

diminished by the stability of a confirmed plan”) (collecting

cases on issue). As explained below, the Plan Officer can

declare a special assessment if needed to fund payments to

Howard Bank under the plan. The Court thus concludes that

an interest rate of 5% comports with the principles articulated

by the U.S. Supreme Court in Till. The Court also is satisfied

that the Debtor can make the proposed payments to Howard

Bank under the Debtor’s Fifth Amended Plan with an increase

in the interest rate to 5%. Tr. 4 at 49–50.

17 The Court notes that the Debtor uses the terms “cure” and

“reinstatement” in the treatment provision for the Class 1

Claim, perhaps suggesting that it was invoking the

reinstatement provisions of section 1124 of the Code. 11 U.S.C.

§ 1124(2). The Debtor did not, however, classify Howard Bank’s

claim as unimpaired, which is part of the reinstatement process

under section 1124. Id.; Debtor’s Fifth Amended Plan § 5.1(C).

Accordingly, the Court finds that the plan contemplates

modifying the rights of the Class 1 creditor to the extent

necessary to implement the plan, but otherwise leaves the

parties’ prepetition agreements (and the protections provided

therein) in place for the benefit of both parties.

48a

cramdown need not precisely track the covenants in

the parties’ existing loan agreement.’”) (citations

omitted); In re Seatco, Inc., 259 B.R. 279, 287

(Bankr. N.D. Tex. 2001) (concluding that “the

Bankruptcy Code clearly permits a modification of

the prepetition loan agreement of a secured creditor

who advance[s] monies under a prepetition revolving

line of credit”). Indeed, section 1123(b)(5) specifically

provides that the chapter 11 plan may “modify the

rights of holders of secured claims.” 11 U.S.C. §

1123(b)(5). That said, in the cramdown context, any

proposed modifications to the rights of a secured

creditor must still meet the general fair and

equitable standard and not unduly subject the

secured creditor to increased risk.

The treatment for Class 1 would modify the

parties’ prepetition loan documents to permit an

adjustment to the repayment terms, allow the

granting of a second lien on the assessments, and

permit the payment of junior creditors from the

proceeds of assessments—i.e., Howard Bank’s cash

collateral. See, e.g., American Trailer & Storage, 419

B.R. at 440–441; Seatco, 259 B.R. at 287. See also In

re Charles Street African Methodist Episcopal

Church of Boston, 578 B.R. 56, 98 (Bankr. D. Mass.

2017) (explaining that “[i]t is not ‘an act forbidden by

law’ for a chapter 11 plan to modify the rights of

holders of secured claims. … [n]or is the proposed

modification, by the granting of a junior Plan

mortgage in violation of a prepetition mortgage

covenant, an act of bad faith”). The loan documents

basically are modified to accommodate the

implementation of the plan, but otherwise would

remain in full force and effect. Thus, Howard Bank

would retain its lien on the Debtor’s assessments

49a

and the right to foreclose on that lien in the event of

a post-Effective Date default by the Reorganized

Debtor (other than a default caused by the

Reorganized Debtor’s compliance with the plan or

this Order). Courts have acknowledged that such

treatment accords with the requirement that the

secured creditor retain its lien under section

1129(b)(2)(A)(i). See, e.g., In re Briscoe Enters., Ltd.,

II, 994 F.2d 1160, 1169 (5th Cir.), cert. denied, 510

U.S. 992 (1993) (“We interpret the plan as ensuring

[retention of a lien] if the debtor fails to comply with

its debt service obligations, [and the secured

creditor] would have the right to foreclose.”). See also

In re TCI 2 Holdings, LLC, 428 B.R. 117, 159

(Bankr. D.N.J. 2010) (citing Collier on Bankruptcy

for the proposition that “‘[t]here is no requirement

that the lender's prepetition security agreement or

mortgage, with all its various terms and obligations,

be used in order for the lender to retain its lien’” and

the foregoing principle from Briscoe in approving

proposed treatment of secured creditor under section

1129(b)) (citations omitted).

Howard Bank also objects to the payment of

junior creditors from its collateral prior to the

payment in full of its allowed claim. Tr. 3 at 156–

157, 174. See also Howard Bank’s Objection [ECF

812] at 10–12, 18–23. Again, the Court disagrees

with Howard Bank’s interpretation of the cramdown

requirements of section 1129(b). First, several courts

have held that the absolute priority rule does not

apply to secured creditors like Howard Bank. See,

e.g., In re Trenton Ridge Inv’rs, LLC, 461 B.R. 440,

503 (Bankr. S.D. Ohio 2011) (collecting cases).

Second, even if the absolute priority rule did apply,

Howard Bank is receiving the full present value of

50a

its allowed claim under the terms of the plan. There

is nothing in the Code that requires all payments to

be made to, and received by, a secured creditor prior

to distributions to junior creditors. As one court

explained, “the application of the [absolute priority]

rule does not require sequential distributions (i.e.,

cash payment in full to senior creditors before any

distribution is made to junior creditors), but merely

that the values represented by the higher-ranking

claims are fully satisfied by the values distributed

under the Plan.” TCI 2 Holdings, 428 B.R. at 169

(internal quotations omitted).

Finally, with respect to the use of Howard Bank’s

cash collateral to pay junior creditors under the

terms of the Debtor’s Fifth Amended Plan, the Court

acknowledges that some courts have looked

unfavorably on such treatment under proposed

chapter 11 plans. See, e.g., In re Couture Hotel Corp.,

536 B.R. 712, 748–749 (Bankr. N.D. Tex. 2015)

(collecting cases on issue). As most of the courts

recognize, however, the real issue is whether the use

of the secured creditor’s cash collateral to implement

a chapter 11 plan exposes the secured creditor to

increased risk. Courts often analyze this issue either

as one of adequate protection or under the

indubitable

equivalent

standard

section

1129(b)(2)(A)(iii). See id. (approving use of

preconfirmation cash collateral under plan where

secured creditor received the indubitable equivalent

of such collateral) (and cases cited therein). See also

In re Alaska Fur Gallery, Inc., 2011 WL 4904425, at

*14–*15 (Bankr. D. Alaska Apr. 29, 2011) (analyzing

the use of cash collateral for plan payments under an

adequate protection standard).

51a

Under the Debtor’s Fifth Amended Plan and this

Order, Howard Bank will retain its lien (and its

right to foreclose on that lien) and receive deferred

cash payments at the contract rate of 5%, thereby

giving Howard Bank the present value of its entire

allowed claim. See supra note 16. Howard Bank also

is oversecured and is receiving the additional

protection of having a Plan Officer oversee and

implement the Debtor’s plan with respect to its

claim.18 Tr. 4 at 116, 148. See also Part VI.D. This

latter protection is relevant to this inquiry because

of the nature of Howard Bank’s collateral—i.e.,

assessments. As set forth more fully below, by this

Order, the Plan Officer will have sole responsibility

for ensuring that the Class 1 Claim is paid in

accordance with the plan. She also will have a

sufficient role in the Debtor’s budgeting and

operational responsibilities to protect the rights of

creditors and other stakeholders under the Debtor’s

Fifth Amended Plan and this Order. More

specifically, the Plan Officer will be monitoring the

use of assessments to pay claims under the plan,

including Howard Bank’s claim, and she has the

18 Whether termed adequate protection or the indubitable

equivalent, the Court finds that the treatment afforded Howard

Bank under Class 1 of the Debtor’s Fifth Amended Plan

satisfies the requirements of the Code. The Court also notes

that the parties’ prepetition loan documents generally allowed

the Debtor to collect and use assessments for purposes other

than paying off Howard Bank’s loan in full, provided that the

Debtor made its monthly payments to the bank and was not in

default under the loan documents. See, e.g., Claim No. 26, Ex.

D; HB Exs. 126–131. Upon confirmation and the Effective Date,

the Debtor will not be in default of its obligations to Howard

Bank, provided it complies with the terms of the plan and this

Order. If the Debtor does not comply, Howard Bank retains its

rights to call a default and foreclose on its collateral.

52a

ability to declare a special assessment to ensure the

payment of those claims. Accordingly, the Court

determines that the treatment of Howard Bank’s

claim in Class 1 of the Debtor’s Fifth Amended Plan,

as set forth in this Order, complies with section

1129(b)(2)(A), does not unfairly discriminate, and is

fair and equitable as to Howard Bank.19

B. Settlement of PH4C Claims

As described above, both plans propose a

settlement of the PH4C Claims. Section 1123(b) of

the Code contemplates such settlements, as it

provides that a plan may “provide for—(A) the

settlement or adjustment of any claim or interest

belonging to the debtor or to the estate.” 11 U.S.C. §

1123(b)(3). Although some courts require a separate

motion under Bankruptcy Rule 9019 to approve a

proposed settlement relating to a chapter 11 plan,

other courts have permitted debtors to seek approval

of the settlement through the plan confirmation

process.20 Given that the Debtor and Howard Bank

19 Howard Bank obviously does not object to the proposed

treatment of its claim under its Second Amended Plan. As such,

the Court does not need to analyze the proposed treatment

under section 1129(b). Nevertheless, the Court observes that

nothing in the Code requires the level principal payments

proposed by Howard Bank’s plan or precludes the amortized

payments proposed by the Debtor’s plan. As discussed in Part

VI.F, the Court does consider this difference in treatment in

assessing the cost of, and the totality of the circumstances

surrounding, each plan. See Part VI.F. See also Tr. 4 at 49–50.

20 See, e.g., American Bankruptcy Institute Commission to

Study the Reform of Chapter 11, Final Report and

Recommendations, 23 AM. BANKR. INST. L. REV. 1, 290–291

(2015) (explaining different approaches of courts with respect to

approving settlements and compromises relating to chapter 11

plans).

53a

provided appropriate notice of the proposed

settlement through the plan solicitation materials

and have met the standard for evaluating proposed

settlements under Bankruptcy Rule 9019 and

applicable case law, the Court finds approval of the

settlement with Penthouse 4C under either plan

appropriate and warranted.

In general, compromises and settlements must be

“fair and equitable.” Protective Comm. for Indep.

Stockholders of TMT Trailer Ferry, Inc. v. Anderson,

390 U.S. 414, 424 (1968). Courts have developed a

variety of factors to assist in the evaluation of

proposed settlements under the fair and equitable

standards. These factors include “(i) the probability

of success in litigation; (ii) the potential difficulties

in any collection; (iii) the complexity of the litigation

and the expense, inconvenience, and delay

necessarily attending it; and (iv) the paramount

interest of the creditors.” In re Alpha Natural

Resources, Inc., 544 B.R. 848, 857 (Bankr. E.D. Va.

2016) (citations omitted). As with plan confirmation

generally, the proponent of the settlement bears “the

burden of proving that the settlement is fair and

equitable.” Id.

The record of the second confirmation hearing

demonstrates that the proposed settlement with

Penthouse 4C under either plan is fair and equitable

and in the bests interests of this estate. See, e.g., Tr.

1 at 97–99, 133–139; Tr. 3 at 177–179. The PH4C

Claim is filed in the amount of $10 million (with

approximately $5 million marked as a claim secured

by a judgment lien) and represents over ten years of

litigation and disputes between the Debtor and

Penthouse 4C. See Claim No. 45. The attachments to

the PH4C Claim, which were admitted into evidence

54a

during the second confirmation hearing, illustrate

the complexity of the issues, the time and expense

associated with the ongoing disputes, and the

significant amounts due and owing to Penthouse 4C

under final, nonappealable state court orders. Id.

The witness testimony offered by both the Debtor

and Howard Bank establishes that the value being

exchanged between the parties to facilitate the

settlement is reasonable under the circumstances.

See, e.g., Tr. 1 at 97–99, 133–139; Tr. 3 at 177–

179.21 Moreover, although Howard Bank raised

questions regarding the Debtor’s assumptions and

valuations underlying the Debtor’s settlement with

Penthouse 4C, the Debtor offered more than

adequate evidence to support the reasonableness

and fairness of its position. See supra note 21.

C. Treatment of PH4A Claims

The Debtor’s Fifth Amended Plan and Howard

Bank’s Second Amended Plan offer different

treatment for Class 7 Claims, i.e., the PH4A Claims

asserted by the Clarks. As described in Part II.B, the

litigation underlying the PH4A Claims is significant

and different in several ways from the litigation

brought by Penthouse 4C against the Debtor22 or the

Debtor’s other disputes with claimants.23 The

22 For example, the Debtor’s litigation with Penthouse 4C did

not include any claims under the Fair Housing Act, and the

Penthouse 4C litigation was much farther along than the

litigation concerning the PH4A Claims at the time of the

Debtor’s chapter 11 filing. In addition, Penthouse 4C had final,

nonappealable judgments and a judgment lien, which

distinguishes its claims from others.

23 The claims included in Class 3 generally are claims

associated with contracts or leases being assumed by the

Debtor under section 365 of the Code. As set forth in that

section, the Debtor must promptly cure any defaults under

55a

different kinds of claims asserted by the Clarks, the

status of their prepetition litigation against the

Debtor, and kinds of relief being sought justify the

Debtor’s and Howard Bank’s separate classification

of the PH4A Claims. See, e.g., In re Deep River

Warehouse, Inc., 2005 WL 2319201, at *5 (Bankr.

M.D.N.C. Sept. 22, 2005) (“[I]t must be observed

that, in the Fourth Circuit, the separate

classification of even substantially similar claims is

permissible if the debtor can offer any reason ‘which

will withstand scrutiny,’ which means not ‘for the

purpose of manipulating voting.’”) (quoting Travelers

Ins. Co. v. Bryson Properties, XVIII (In re Bryson

Properties, XVIII), 961 F.2d 496, 502 (4th Cir. 1992)).

The ability to separately classify the PH4A

Claims, however, does not necessarily justify

significantly different treatment of those claims,

particularly as compared to other general unsecured

creditors under the plan. See, e.g., In re Sea Trail

Corp., 2012 WL 5247175, at *8 (Bankr. E.D. N.C.

Oct. 23, 2012) (explaining that “Section 1129(b)(1)

permits discriminatory treatment as long as the

discrimination is not unfair”) (collecting cases on

issue). Cf. In re Health Diagnostic Lab., Inc., 551

B.R. 218, 230 (Bankr. E.D. Va. 2016) (“As between

two classes of claims or two classes of interests,

there is no unfair discrimination if the classes are

assumed contracts and leases. The claims included in Class 5

generally are trade and service provider claims, including the

Debtor’s utility provider, BG&E. The claims included in Class 6

relate to a specific incident that caused damage to a pier

located nearby the Building. The claims included in Class 8

assert damages relating to the maintenance and repair of

common elements, but not to the same extent as the PH4A

Claims or with the same litigation history.

56a

comprised of dissimilar claims or interests.”). Each

plan proposes to pay the Clarks $125,000.00 in a

relatively short period of time, but then proposes

different schemes for the remaining amounts owed

on the PH4A Claims. Howard Bank’s plan would pay

the remainder in five equal installments, which

accords generally with the treatment of general

unsecured claims in Class 5. The Debtor would pay

$3,000.00 on the first anniversary of the Effective

Date, then $25,000.00 in each of the next four years,

and then $50,000.00 or 1/6 of the remaining claim in

each of the next six years. The Debtor’s proposed

treatment, which contemplates unequal payments to

the Clarks and makes them the very last creditors to

be paid in full under the plan, must compensate the

Clarks— through an appropriate interest rate—for

the value of their deferred payments.24

Accordingly, the Court concludes that under

either plan, the Plan Officer (acting for the

Reorganized Debtor) must pay the PH4A Claims in

Class 7 through an initial cash payment of

$125,000.00 within 60 days of the PH4A Claims

24 In general, courts find unfair discrimination “when there is a

large discrepancy in the percentage recovery between similarly

situated creditors.” Sea Trail, 2012 WL 5247175, at *8 (citing

cases). Although the Clarks will, like all other creditors, receive

full payment of their allowed claims under the Debtor’s plan, a

proposal to pay those claims over eleven years, while paying

other unsecured creditors in five years, introduces a disparity

in recoveries. With respect to the fair and equitable

requirement and junior interests, the Court finds that the

treatment of Class 9 under the Debtor’s Fifth Amended Plan is

appropriate under section 1129(b) given the new value being

contributed by the holders of interests in that class to fund the

plan. See, e.g., Bank of Am. Nat. Tr. & Sav. Ass’n v. 203 N.

LaSalle St. P’ship, 526 U.S. 434, 442 (1999).

57a

being allowed on a final basis by a final,

nonappealable order or a settlement reached among

the parties (a “Final Determination”), and then

either: (i) five equal cash payments in each of the

first five years following the Effective Date, or (ii)

deferred cash payments on terms no less favorable

than the Debtor’s Fifth Amended Plan with interest

accruing on those payments at the rate of 5%.25 The

requirement of a Final Determination prior to any

distribution on account of the PH4A Claims accords

with the treatment of other disputed claims under

section 10.1 of the Debtor’s Fifth Amended Plan (and

the bankruptcy claims allowance process generally).

In addition, to ensure fair and equitable

treatment of the holders of Class 7 Claims (the

Clarks) and as further explained below, the Plan

Officer shall have sole and exclusive authority over

any claims or causes of action that the Debtor or the

Reorganized Debtor might have against the Clarks,

and the Plan Officer, in her sole discretion, may

choose to pursue, release, or settle any such claims

or causes of action, as she determines is in the best

interests of the Reorganized Debtor and the creditors

and other stakeholders under the plan and this

Order.

25 The Court uses an interest rate of 5% as an appropriate rate

to compensate the Clarks for the time value of their money and

the risk of nonpayment of their allowed claims under the plan.

See, e.g., Till, 541 U.S. at 470. See also supra note 16. As

previously noted, the Court finds the risk of nonpayment

mitigated by the appointment of the Plan Officer and the

authority of the Plan Officer under this Order. See supra note

16. That rate also accords with the rate applied to Howard

Bank’s claim, which will be paid over a nine-year period under

the Debtor’s plan.

58a

D. The Appointment of a Plan Officer

The Court finds the suggested appointment of a

Plan Officer prudent and warranted under the

circumstances of this case. As described in Part III,

both plans before the Court now contemplate the

appointment of a Plan Officer, and each plan

proponent suggests Monique Almy, Esq., as the

individual best suited to serve in that role. The

Court agrees in all respects.26

The Debtor has struggled to manage the various

litigation and other issues facing it since well before

the commencement of this case. The Court is

satisfied that the Debtor’s current Board and

management team are committed to implementing

whatever plan the Court confirms and to helping the

Debtor succeed. Nevertheless, this Debtor has an

uphill climb ahead of it, which will involve, among

other things, difficult decisions and a need to be firm

yet reasonable in the resolution of disputes, some of

which have affected this Debtor since 2010. The

Court thus finds that the Plan Officer will serve as

an invaluable tool to the Reorganized Debtor,

offering her expertise and fresh perspective on the

issues most critical to the Reorganized Debtor’s

success.

The Court further finds that both plans provide a

meaningful and proper role for the Plan Officer. To

avoid any confusion, however, the Court emphasizes

the following points: (i) the Plan Officer shall have

sole and exclusive control over the implementation of

the Plan with respect to Classes 1, 4, and 7, and the

Reorganized Debtor shall cooperate with her in these

26 Ms. Almy testified on the last day of the second confirmation

hearing. See Tr. 4 at 8–43.

59a

efforts; (ii) the Plan Officer is a fiduciary, not only in

her capacity as an officer appointed by the Board,

but also under the terms of this Order with duties to

implement the plan and protect the interests of

creditors and other stakeholders thereunder; (iii) the

Plan Officer shall have sole and exclusive control

over any claims or causes of action reserved by the

Debtor or the Reorganized Debtor under the plan to

the extent those claims or causes of action relate to

creditors or claims included in Classes 1, 4, or 7

under the plan; (iv) the Plan Officer and her service

under the plan and this Order shall be covered by

the limited liability and indemnity provision set

forth in the plan and Article VII of the Debtor’s

bylaws; and (v) the Court retains exclusive

jurisdiction to the fullest extent as is legally

permissible over, among other things, any issues

involving the Plan Officer’s role with the

Reorganized Debtor or in the implementation of the

plan.27

E. Third Party Releases and Exculpation

Both plans contain provisions purporting to (i)

discharge claims, debts, and liabilities against the

Debtor, the Reorganized Debtor, and the Debtor’s

estate; (ii) release and exculpate certain parties,

including nondebtor parties, for actions taken in

Neither proposed plan contemplates the appointment of a

substitute Plan Officer in the event Ms. Almy is unable to

complete her term as Plan Officer under the plan. The Court

finds that, if such an event should occur, the Reorganized

Debtor should file a motion to appoint a substitute Plan Officer

with the Court, giving all parties in interest notice and an

opportunity to be heard. The Court then would resolve any

issues and appoint a qualified and appropriate substitute Plan

Officer.

60a

connection with this chapter 11 case; (iii) incorporate

the terms of the limited liability and indemnification

provided to certain nondebtor parties under the

Debtor’s bylaws and applicable nonbankruptcy law;

and (iv) enjoin actions relating to the foregoing. The

Fourth Circuit has counseled that “non-debtor

releases, while allowable, should be granted

‘cautiously and infrequently.’” In re Nat’l Heritage

Found., Inc., 478 B.R. 216, 225 (Bankr. E.D. Va.

2012), aff’d sub nom. Nat’l Heritage Found. Inc. v.

Behrmann, 2013 WL 1390822 (E.D. Va. Apr. 3,

2013), aff’d sub nom. Nat’l Heritage Found., Inc. v.

Highbourne Found., 2014 WL 2900933 (4th Cir.

June 27, 2014), on reh’g, 760 F.3d 344 (4th Cir.

2014), and aff’d sub nom. Nat’l Heritage Found., Inc.

v. Highbourne Found., 760 F.3d 344 (4th Cir. 2014)

(quoting Behrmann, 663 F.3d at 712). The Court is

mindful of the standards governing third-party

releases, but also notes that applicable case law

draws a meaningful distinction between discharge

provisions, release provisions, and exculpation.28

Section 11.1 of the Debtor’s Fifth Amended Plan

is a standard discharge provision, facilitating the

discharge of claims, debts, and liabilities under

section 1141(d) of the Code, to the fullest extent

permitted by applicable law. Section 1141(d)

provides, among other things, that “the confirmation

28 The Court also notes that the provisions of Article 11 of the

Debtor’s Fifth Amended Plan (and those proposed under

Howard Bank’s Second Amended Plan) are different in several

meaningful ways from the releases in the Debtor’s Second

Amended Plan of Reorganization and discussed in the First

Confirmation Order. The Court also analyzed these provisions

based on the evidence presented at the second confirmation

hearing.

61a

of a plan—(A) discharges the debtor from any debt

that arose before the date of such confirmation ….”

11 U.S.C. § 1141(d)(1). The section 1141(d) discharge

is not dependent on a creditor accepting the debtor’s

plan; rather, confirmation acts as a bar to all

prepetition debt, except as otherwise provided in the

Code, the plan, or the confirmation order. Id. The

Court concludes that section 11.1 of the Debtor’s

Firth Amended Plan (and the corresponding

provision in Howard Bank’s Second Amended Plan)

complies with the Code.

Section 11.2 of the Debtor’s Fifth Amended Plan

purports to “release and exculpate” the Reorganized

Debtor, and its directors, officers, attorneys,

consultants, advisors, and agents (acting in such

capacity), from any liability for actions taken in

connection with this chapter 11 case. The section

also includes an appropriate carveout for acts or

omissions resulting from gross negligence, willful

misconduct, or bad faith. Section 11.2, although

labeled a release, appears to align with what courts

traditionally label “exculpation” and commonly

approve in the context of a chapter 11 plan. See, e.g.,

Nat’l Heritage Found., Inc., 478 B.R. at 233

(distinguishing exculpation provisions from third

party releases and noting that exculpation

provisions “generally are permissible, so long as they

are properly limited and not overly broad”); In re

Alpha Natural Resources, Inc., 556 B.R. 249, 260

(Bankr. E.D. Va. 2016) (distinguishing and

approving exculpation provisions). As the court in

Alpha Natural Resources explained, “[a]s a policy

matter, exculpations are necessary to ensure that

capable, skilled individuals are willing to assist in

the reorganization.” 556 B.R. at 260. That court also

62a

observed that “‘[t]he practical effect of a proper

exculpation provision is not to provide a release for

any party, but to raise the standard of liability of

fiduciaries for their conduct during the case.’” Id. at

261 (citations omitted).

The Court agrees with the reasoning of the court

in Alpha Natural Resources and finds that a properly

crafted exculpation provision serves a meaningful

and important role in the chapter 11 reorganization

process. Here, the Debtor proposes only to exculpate

nondebtor parties for actions taken in connection

with this case that do not rise to the level of gross

negligence, willful misconduct, or bad faith. In other

words, the Reorganized Debtor and those associated

with it will not be subjected to litigation or claims for

their good faith efforts to try to help the Debtor

reorganize, which benefits both the Debtor and its

creditors. Moreover, parties in interest have had

standing and the ability to raise concerns or issues

regarding the conduct of the Debtor and others in

this case throughout the pendency of the

reorganization. Accordingly, the Court concludes

that section 11.2 of the Debtor’s Fifth Amended Plan

(and the corresponding provision in Howard Bank’s

Second Amended Plan) complies with applicable law,

serves an important role in the implementation of

the plan, and is in the best interests of the Debtor’s

estate.

Section 11.3 of the Debtor’s Fifth Amended Plan

is labeled a “release” but in effect only incorporates

Article VII of the Debtor’s bylaws. That provision,

titled “Limited Liability and Indemnity of Officers

and Directors,” provides limited liability and

indemnification to the Debtor’s officers and directors

for actions taken in such capacity, other than acts

63a

attributable to willful misconduct or bad faith.

Section 11.3 is consistent with the Debtor’s bylaws

and the Maryland Condominium Act. See D. Ex. 2;

Maryland Condominium Act § 11-109. Thus, section

11.3 continues the rights and remedies of the parties

as they existed prior to the chapter 11 case under

applicable nonbankruptcy law. The Court finds the

scope of section 11.3 (and the corresponding

provision in Howard Bank’s Second Amended Plan)

consistent with applicable nonbankruptcy law and

thus in accordance with section 1129(a)(3).

That said, even if the Code somehow enlarged the

rights of creditors to receive greater protection than

available under applicable nonbankruptcy law

(which it does not), the Court still finds section 11.3

acceptable under the standards established by the

Fourth Circuit and the particular facts of this case.

For example, the Fourth Circuit has endorsed the

following sixfactor test to evaluate third-party

releases:

(1) There is an identity of interests between

the debtor and the third party ...; (2) The nondebtor has contributed substantial assets to

the reorganization; (3) The injunction is

essential to reorganization …; (4) The

impacted class, or classes, has overwhelmingly

voted to accept the plan; (5) The plan provides

a mechanism to pay for all, or substantially

all, of the class or classes affected by the

injunction; [and] (6) The plan provides an

opportunity for those claimants who choose

not to settle to recover in full.

Nat’l Heritage Found., Inc. v. Highbourne

Foundation, 760 F.3d 344, 347 (4th Cir. 2014). The

64a

Debtor offered adequate testimony that the Debtor’s

officers and directors share an identity of interest;

individuals serving as the Debtor’s officers and

directors act as agents of the Debtor, implement

decisions on behalf of the Debtor, are subject to

lawsuits brought against the Debtor, and have

indemnification rights back against the Debtor. See,

e.g., Tr. 1 at 148–150; Tr. 2 at 262–263; D. Ex. 2 at

10–11. Many (if not all) of the Debtor’s officers and

directors own units in the Building and will be

paying assessments to fund the plan. The injunction

is absolutely essential to the success of the plan; the

Debtor cannot afford to continue to waste time and

resources on additional litigation, particularly for

matters addressed by the plan. See, e.g., Tr. 1 at 40–

43, 55–56, 63, 73–74, 148–150. And the only party

objecting to the “third-party releases” in the plan—

the Clarks—will receive payment in full of their

allowed claims.

As such, the only factor not definitively met here

is the one regarding acceptance of the plan by the

affected class. The Court notes that, with respect to

the Debtor’s Fifth Amended Plan, every class of

claims and interests (save Howard Bank and the

Clarks) overwhelmingly voted to accept the plan.

The Clarks did not vote on either plan, and

therefore, they are deemed to reject both plans.

Nevertheless, on balance, and considering the

importance of the injunction to the plan’s success

and the fact that the plan provides for full payment

of the Clarks’ (and other creditors’) allowed claims,

the Court determines that, to the extent applicable,

65a

section 11.3 is warranted under applicable case law

in this circuit.29

F. Competing Plan Analysis

As suggested by the foregoing, the Court

concludes that both the Debtor’s Fifth Amended Plan

and Howard Bank’s Second Amended Plan meet the

technical requirements for confirmation under

sections 1129(a) and (b) of the Code. Nevertheless,

the Court can confirm only one plan. See, e.g., In re

Valley View Shopping Ctr., L.P., 260 B.R. 10, 40

(Bankr. D. Kan. 2001). Section 1129(c) specifically

provides that “[i]f the requirements of subsections (a)

and (b) of this section [1129] are met with respect to

more than one plan, the court shall consider the

preferences of creditors and equity security holders

in determining which plan to confirm.” 11 U.S.C. §

1129(c). Moreover, courts considering competing

chapter 11 plans have noted that, “[b]eyond

considering the preferences of creditors and equity

security holders, the court must consider: ‘(1) the

type of plan; (2) the treatment of creditors and

equity security holders; (3) the feasibility of the

plan.’” TCI 2 Holdings, 428 B.R. at 182 (citations

omitted).

The voting results filed by each plan proponent

show that creditors and interest holders

overwhelmingly support and prefer the Debtor’s

plan. [ECF 822, 823]. In fact, all classes of claims

and interests voted to accept the Debtor’s plan,

The Court also finds that the injunctions provided for in

sections 11.4 and 11.5 of the Debtor’s Fifth Amended Plan

essentially implement the provisions of sections 11.1, 11.2, and

11.3 of the plan and are likewise permissible under the

particular facts of this case, the Code, and applicable case law.

66a

except for Howard Bank (rejected) and the Clarks

(did not vote; deemed to reject). This result is

understandable given that most of the Debtor’s

creditors and interest holders have a relationship

(and are familiar with) the Debtor and not Howard

Bank.

Although the Court, as it must, considers

creditors’ and interest holders’ preferences, it is most

persuaded by the treatment of creditors and interest

holders under, and the feasibility of, the Debtor’s

Fifth Amended Plan, as compared to Howard Bank’s

Second Amended Plan.30 See also Part V. The

Debtor’s plan, as approved by this Order with

respect to Class 1 and Class 7, treats all classes of

30 Courts generally hold that the feasibility requirement of

section 1129(a)(11) “does not require that the debtor’s plan is

guaranteed to be successful, but must merely ‘present a

workable scheme of organization and operation from which

there may be a reasonable expectation of success.’” In re GyroTrac (USA), Inc., 441 B.R. 470, 482–483 (Bankr. D. S.C. 2010)

(quoting In re Walker, 165 B.R. 994, 1004 (E.D. Va. 1994)). For

purposes of this analysis, courts can assess “‘whether the

things which are to be done after confirmation can be done as a

practical matter under the facts.’” Id. at 483 (citations omitted).

Here, the Debtor presented sufficient evidence to show the

reasonableness of its financial projections, budget, and reserve

study. See generally Tr. 1 at 76, 84–89, 102–103, 143, 154, 161;

Tr. 2 at 92, 99, 234; Tr. 4 at 48–50. The Court found the

Debtor’s experts credible and forthcoming about the Debtor’s

proposed plan and what the Debtor needs to do post-Effective

Date to implement that plan successfully. The Debtor’s

evidence far exceeded “‘visionary promises’ with respect to its

plan,” and the Court finds that the Debtor has met its burden

on feasibility. Gyro-Trac (USA), 441 B.R. at 483. See also 100

Harborview Drive, 572 B.R. at 140 (finding that the Debtor’s

Second Amended Plan of Reorganization was feasible because,

among other things, “[t]he Plan authorizes additional special

assessments ‘at any time’ if additional funds are required…”).

67a

claims in a fair and equitable manner. No party is

getting more than it is arguably entitled to under

either section 1129(a) or (b), and the proposed

treatment will pay all creditors in full in a timely

manner (or, as described herein, pay an appropriate

interest rate for any extended payment schedule).

The treatment afforded creditors under the Debtor’s

plan also makes the plan more sustainable for unit

owners in the Building, who are interest holders in

Class 9 and are the primary source of funding for

any plan in this chapter 11 case.31 The Debtor’s plan

correlates the amount of assessments more closely to

what is actually needed to pay creditors in

accordance with the Code (and continue to operate),

and it more appropriately allocates the burden

associated with the Debtor’s reorganization. These

factors, in turn, support the feasibility of the

Debtor’s plan. See supra notes 30 and 31.

Based on the entirety of the record in this case,

the Court concludes that the Debtor’s Fifth Amended

Plan satisfies the requirements of section 1129 of the

Code and is in the best interests of the Debtor, its

stakeholders, and the estate.

31 The evidence showed that the use of assessments to fund the

plan, while necessary, must be done in a thoughtful manner to

ensure the collectability of those payments and to maintain the

value of the Building and the units within the Building. See,

e.g., Tr. 1 at 34–35, 42–47; Tr. 2 at 99, 139–140; Tr. 3 at 98,

102, 110–112, 140, 146. (The Court also notes testimony

suggesting that large assessments can be beneficial in certain

circumstances, and it has considered that testimony as well.

See, e.g., Tr. 3 at 132–134.) Based on the entirety of the record,

the Court concludes that the level of assessments proposed in

the Debtor’s plan is more sustainable and strikes a more

appropriate balance for funding the plan and rebuilding value

in the Building, which insures to the benefit of all stakeholders.

68a

ACCORDINGLY, IT IS, BY THE UNITED

STATES BANKRUPTCY COURT FOR THE

DISTRICT

MARYLAND,

HEREBY

ORDERED, ADJUDGED, DECREED, AND

DETERMINED THAT:32

1. Findings of Fact and Conclusions of Law. The

above-referenced findings of fact and conclusions

of law are hereby incorporated by reference as

though fully set forth herein and shall constitute

findings of fact and conclusions of law pursuant

to Bankruptcy Rule 7052, made applicable herein

by Bankruptcy Rule 9014. To the extent that any

finding of fact shall be determined to be a

conclusion of law, it shall be deemed so, and vice

versa.

2. Confirmation Hearing Notice. The notice of the

second confirmation complied with the terms of

the Solicitation Procedures Orders, was

appropriate and satisfactory based upon the

circumstances of this chapter 11 case, and was in

compliance with the applicable provisions of the

Code, the Bankruptcy Rules, and the Local Rules

of this Court.

3. Solicitation. The solicitation of votes on the

Debtor’s Fifth Amended Plan complied with the

Solicitation Procedures Orders, was appropriate

and satisfactory based upon the circumstances of

this chapter 11 case, and was in compliance with

the applicable provisions of the Code, the

Bankruptcy Rules, and the Local Rules of this

Court.

32 Capitalized terms used in this section of the Order and not

otherwise defined herein have the meanings given to them in

the Debtor’s Fifth Amended Plan.

69a

4. Approval of the Disclosure Statement. The Joint

Disclosure Statement and the Debtor’s Disclosure

Statement included in the Solicitation Package

[ECF 726] are hereby approved in all respects as

providing adequate information and complying

with section 1125 of the Code, the Bankruptcy

Rules, and the Local Rules of this Court.

5. Confirmation of the Plan. The Debtor’s Fifth

Amended Plan, in accordance with and on the

terms set forth in this Order, is hereby

CONFIRMED under section 1129 of the Code.

The terms of the Debtor’s Fifth Amended Plan,

and all exhibits and schedules thereto, are

incorporated by reference into and are an integral

part of this Order; provided, however, that this

Order governs in the event of any inconsistencies

between this Order and the terms of the Debtor’s

Fifth Amended Plan or any exhibit or schedule

thereto.

6. Appointment of Plan Officer. The Court hereby

appoints Monique Almy, Esq. to serve as the Plan

Officer under section 6.4 of the Debtor’s Fifth

Amended Plan, effective upon the entry of this

Order. In addition to the terms of section 6.4 of

the Debtor’s Fifth Amended Plan, the following

terms shall apply with respect to the Plan Officer:

(i) the Plan Officer shall have sole and exclusive

control over the implementation of the plan with

respect to Classes 1, 4, and 7, and the

Reorganized Debtor shall cooperate with her in

these efforts; (ii) the Plan Officer is a fiduciary,

not only in her capacity as an officer appointed by

the Board, but also under the terms of this Order

with duties to implement the plan and protect the

interests of Creditors and other stakeholders

70a

thereunder; (iii) the Plan Officer shall have sole

and exclusive control over any claims or causes of

action reserved by the Debtor or the Reorganized

Debtor under the plan to the extent those claims

or causes of action relate to Creditors or claims

included in Classes 1, 4, or 7 under the plan; (iv)

the Plan Officer and her service under the

Debtor’s Fifth Amended Plan and this Order

shall be covered by the limited liability and

indemnity provision set forth in section 11.3 of

the Debtor’s Fifth Amended Plan and Article VII

of the Debtor’s Bylaws; and (v) the Court retains

exclusive jurisdiction to the fullest extent as is

legally permissible over, among other things, any

issues involving the Plan Officer’s role with the

Reorganized Debtor or in the implementation of

the plan. In the event that Ms. Almy is unable to

complete her term as Plan Officer in accordance

with the Debtor’s Fifth Amended Plan, the

Debtor shall file a motion with the Court seeking

to appoint a substitute Plan Officer and, after

notice and a hearing, the Court will appoint a

qualified and appropriate individual to serve that

role. The Court retains exclusive jurisdiction to

appoint any substitute Plan Officer. The term

“Plan Officer” as used in the Debtor’s Fifth

Amended Plan and this Order means Ms. Almy

or any substitute Plan Officer appointed by the

Court.

7. Class 1 Claim. The treatment of Howard Bank’s

claim in Class 1 under section 5.1 of the Debtor’s

Fifth Amended Plan is hereby modified to provide

for an annual interest rate of 5%, in lieu of the

proposed rate of 4.5%.

71a

8. Settlement of PH4C Claims (Class 4). Pursuant to

sections 105(a) and 1123 of the Code, Bankruptcy

Rule 9019, and section 5.4 of the Debtor’s Fifth

Amended Plan, the Debtor’s Fifth Amended Plan

incorporates a detailed settlement of the claims

and issues between Penthouse 4C and the

Debtor, which settlement is fair and equitable

and in the best interest of the Debtor’s Estate.

The entry of this Order shall constitute the

Court’s approval, as of the Effective Date, of the

settlement between the Debtor and Penthouse 4C

memorialized in section 5.4 of the Debtor’s Fifth

Amended Plan.

9. Class 7 Claims. The treatment of the Clarks’

PH4A Claims in Class 7 under section 5.7 of the

Debtor’s Fifth Amended Plan is hereby modified

to authorize the Plan Officer (acting for the

Reorganized Debtor) to pay the PH4A Claims in

Class 7 through an initial cash payment of

$125,000.00 within 60 days of a Final

Determination, and then either: (i) five equal

cash payments in each of the first five years

following the Effective Date, or (ii) deferred cash

payments on terms no less favorable than the

Debtor’s Fifth Amended Plan with interest

accruing on those payments at the rate of 5%.33

The amount of the Clarks’ allowed PH4A Claims and the

parties’ respective rights and responsibilities concerning the

tear out, remediation, and repair/rebuild of Unit PH4A are

governed by the Preliminary Damages Order and any further

order of the Court finalizing the matters addressed by the

Preliminary Damages Order (collectively, the “PH4A Damages

Order”). The PH4A Damages Order governs in the event of any

inconsistencies between that order and the terms of the

Debtor’s Fifth Amended Plan or any exhibit or schedule

thereto.

72a

The PlanOfficer (acting for the Reorganized

Debtor) shall make her election for the treatment

of Class 7 Claims on or within 60 days following

the Effective Date or a Final Determination,

whichever is later, and shall notify the Clarks of

that election in writing. In accordance with

section 10.1 of the Debtor’s Fifth Amended Plan,

no payments shall be made on account of Class 7

Claims until the PH4A Claims are allowed by a

Final Determination. If a Final Determination

has not yet occurred by the Effective Date, the

Plan Officer (acting for the Reorganized Debtor)

shall hold any payments due under the plan to

the Clarks under Class 7 in trust for the Clarks

pending a Final Determination. In addition, the

Plan Officer shall have sole and exclusive

authority over any claims or causes of action that

the Debtor or the Reorganized Debtor might have

against the Clarks, and the Plan Officer, in her

sole discretion, may choose to pursue, release, or

settle any such claims or causes of action, as she

determines is in the best interests of the

Reorganized Debtor and the Creditors and other

stakeholders under the plan and this Order.34

10. Executory Contracts and Unexpired Leases. The

treatment and procedures proposed by the Debtor

for Executory Contracts and Unexpired Leases in

Article 8 of the Debtor’s Fifth Amended Plan are

approved in all respects under section 365 of the

Code and this Order, and the Debtor, the

Reorganized Debtor, and the Plan Officer, as

34 Nothing in this Order is intended to suggest that any such

claims or causes of action exist. This provision operates only to

clarify that the Plan Officer has sole and exclusive control over

any such claims or causes of action. See Part VI.C.

73a

applicable, may take any and all steps necessary

to implement those provisions.

11. Plan Classification Controlling. The classification

of claims for purposes of the Distributions to be

made under the Debtor’s Fifth Amended Plan

shall be governed solely by the terms of the plan

and this Order.

12. Modifications to the Plan. The modifications

made to the Debtor’s Third Amended Plan of

Reorganization, following solicitation of votes

thereon and resulting in the Debtor’s Fifth

Amended Plan, satisfy the requirements of

section 1127 of the Code and Bankruptcy Rule

3019 and do not adversely affect or change the

treatment of any claims and, accordingly, neither

require additional disclosure under section 1125

of the Code or resolicitation of votes under section

1126 of the Code, nor do they require that

Holders of claims be afforded on opportunity to

change previously cast acceptances or rejections

of the plan.

13. Objections. All objections to the Debtor’s

proposed amended plan of reorganization that

have not been withdrawn, waived, settled, or

deferred, and all reservations of rights pertaining

to confirmation of the plan, other than those

withdrawn with prejudice in their entirety prior

to, or on the record at, the second confirmation

hearing are hereby overruled on the merits.

14. Fee Claims. Any professional or other person

seeking awards by the Court of compensation for

services rendered or reimbursement of expenses

incurred through and including the Effective

Date under sections 327, 328, 330, 331, or 503 of

74a

the Code shall (i) file and serve on the

Reorganized Debtor and the Plan Officer, on or

before the date that is 45 after the Effective Date,

their respective applications for final allowances

of compensation for services rendered and

reimbursement of expenses incurred and (ii) be

paid in such amounts as are allowed by the Court

or authorized to be paid in accordance with the

orders relating to or allowing any such fee claim.

15. Discharge, Exculpation, Limited Liability, and

Injunction Provisions. Sections 11.1, 11.2, 11.3,

11.4, and 11.5 of the Debtor’s Fifth Amended

Plan are hereby approved in all respects, and the

terms of each such section are incorporated by

reference into and are an integral part of this

Order.35

16. Binding Effect. On and after entry of this Order

and subject to the occurrence of the Effective

Date, the provisions of the Debtor’s Fifth

Amended Plan (on the terms set forth in this

Order) shall be binding on the Debtor, the

Reorganized Debtor, the Plan Officer, any entity

receiving property or a distribution under the

Debtor’s Fifth Amended Plan, every Holder of a

claim against or interest in the Debtor, any and

all nondebtor parties to executory contracts and

unexpired leases with the Debtor, any other

Party in Interest in this chapter 11 case, and the

respective heirs, executors, administrators,

successors, estates, or assigns, if any, of any of

the foregoing regardless of whether the claim or

interest of such Holder is impaired under the

plan or whether such Holder has accepted or

rejected (or is deemed to have accepted or

rejected) the plan.

75a

17. Continued Condominium Existence; Vesting of

Assets. The Reorganized Debtor shall continue to

exist after the Effective Date as an association

under the condominium laws of the State of

Maryland, with all the powers of a condominium

thereunder and pursuant to the Condominium

Documents in effect prior to the Effective Date.

Except as otherwise explicitly provided in the

Debtor’s Fifth Amended Plan or in this Order, on

the Effective Date, all property comprising the

Debtor’s Estate shall vest in the Reorganized

Debtor and shall be distributed in accordance

with the terms of the Debtor’s Fifth Amended

Plan and this Order.

18. Causes of Action. Section 6.2.5 of the Debtor’s

Fifth Amended Plan is hereby modified to provide

that the Plan Officer shall have sole and

exclusive control over any claims or causes of

action relating to, or involving, Creditors or

claims included in Classes 1, 4, or 7 under the

plan, including the exclusive right to pursue,

release, or settle such claims or causes of action.

19. Matters Relating to Implementation of the Plan;

General Authorization. On the Effective Date, all

actions contemplated by the Debtor’s Fifth

Amended Plan (on the terms set forth in this

Order) shall be deemed authorized and approved

in all respects by virtue of the entry of this Order,

in accordance with the Code and applicable

nonbankruptcy law and without requirement of

further action by the Debtor, the Reorganized

Debtor, or the Plan Officer. On the Effective

Date, all matters provided for under the Debtor’s

Fifth Amended Plan (on the terms set forth in

this Order) involving the structure of the Debtor

76a

or the Reorganized Debtor, or any formal action

to be taken by or required of the Debtor, the

Reorganized Debtor, or the Plan Officer in

connection with that plan, shall be deemed to

have occurred and shall be in effect pursuant to

the Code, without any requirement for further

action by the Debtor, the Reorganized Debtor, or

the Plan Officer. On the Effective Date, the

Debtor, the Reorganized Debtor, and the Plan

Officer, as applicable, are authorized and directed

pursuant to sections 1123(a)(5) and 1142(b) of the

Code to implement the provisions of the Debtor’s

Fifth Amended Plan (and any other agreements,

documents, and instruments contemplated by or

necessary for the consummation of that plan) in

accordance with the terms of the Debtor’s Fifth

Amended Plan and this Order.

20. Cancellation Certain Instruments. Except as

otherwise provided in the Debtor’s Fifth

Amended Plan or this Order, as of the Effective

Date, and whether or not surrendered by the

Holder thereof, all instruments evidencing or

relating to any claim shall be deemed

automatically cancelled and deemed void and of

no further force or effect, without any further

action on the part of any person, and any claims

evidenced by or relating to such instruments

shall be deemed discharged.

21. Cancellation of Liens. Except as otherwise

provided in the Debtor’s Fifth Amended Plan or

this Order, as of the Effective Date, any Lien

securing an Allowed Secured Claim shall be

deemed released and discharged, and the Holder

of each such Allowed Secured Claim shall be

authorized and directed to release any Collateral

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or other property of the Debtor (including,

without limitation, any cash collateral) held by

such Holder and to take such actions as may be

reasonably requested by the Reorganized Debtor

or the Plan Officer to evidence the release of such

Lien, including without limitation, by the

execution, delivery, and filing or recording of such

releases as may be requested by the Reorganized

Debtor or the Plan Officer.

22. Retention of Jurisdiction. Notwithstanding the

entry of this Order or the occurrence of the

Effective Date, pursuant to sections 105 and 1142

of the Code, this Court shall retain exclusive

jurisdiction over all matters arising out of, and

related to, this chapter 11 case to the fullest

extent as is legally permissible, including

jurisdiction over the matters set forth in Article

12 of the Debtor’s Fifth Amended Plan.

23.

Exemption from Certain Transfer Taxes.

Pursuant to section 1146(a) of the Code, the

assignment or surrender of any lease or sublease,

or the delivery of any deed or other instrument of

transfer under, in furtherance of, or in connection

with the Debtor’s Fifth Amended Plan, including

any deeds, bills of sale, or assignments executed

in connection with any disposition of assets

contemplated by the plan, shall not be subject to

any stamp, real estate transfer, mortgage

recording, sales, use, or other similar tax.

24. Conflicts. In the event of an inconsistency

between the Debtor’s Fifth Amended Plan and

any other agreement, instrument, or document

intended to implement the provisions of the

Debtor’s Fifth Amended Plan, the provisions of

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the Debtor’s Fifth Amended Plan shall govern

unless otherwise expressly provided for in such

agreements, instruments, or documents. In the

event of any inconsistency between the Debtor’s

Fifth Amended Plan and any agreement,

instrument, or document intended to implement

the plan and this Order, the provisions of this

Order shall govern.

25. Effectiveness of Plan Provisions. The failure to

specifically describe, include, or reference any

particular provision of the Debtor’s Fifth

Amended Plan in this Order shall not diminish or

impair the effectiveness of such provision, it

being the intent of this Court that the Debtor’s

Fifth Amended Plan be approved and confirmed

in its entirety in accordance with, and on the

terms set forth in, this Order.

26. Remedy of Defects or Omissions. After the entry

of this Order, the Debtor, the Reorganized

Debtor, or the Plan Officer, with the approval of

the Court, and subject to the provisions of section

1127 of the Code, may remedy any defect or

omission, or reconcile any inconsistencies in the

Debtor’s Fifth Amended Plan or amend the plan,

in such a manner as may be necessary to carry

out the purposes and effect of the plan.

27. Notice of Confirmation. In accordance with

Bankruptcy Rules 2002 and 3020(c), within 10

days after entry of this Order, the Debtor shall

give notice of the entry of this Order by serving a

copy of this Order and a copy of Article 11 of the

Debtor’s Fifth Amended Plan by first class mail,

postage prepaid, to all Creditors, the United

States Trustee, and other Parties in Interest at

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their last known address of record. The notice

described herein is adequate under the particular

circumstances of this chapter 11 case and no

other or further notice is necessary.

28. Notice of Occurrence of Effective Date. Within 10

days after the Effective Date, the Debtor shall

give notice of the Effective Date by serving a copy

of a Notice of Effective Date by first class mail,

postage prepaid, to all Creditors, the United

States Trustee, and other Parties in Interest at

their last known address of record. The notice

described herein is adequate under the particular

circumstances of this chapter 11 case and no

other or further notice is necessary.

29. Plan Consummation. The Debtor and the Plan

Officer are authorized to consummate the

Debtor’s Fifth Amended Plan (on the terms set

forth in this Order) at any time after entry of this

Order.

30. No Stay of Confirmation Order. Pursuant to

Bankruptcy Rule 3020(e), this Order shall not be

stayed and shall be effective upon entry on the

docket of this Court.

Copies to: All Parties

All Creditors

Monique Almy

END OF ORDER

80a

[ENTERED APRIL 10, 2018]

IN THE UNITED STATES

BANKRUPTCY COURT

FOR THE DISTRICT OF MARYLAND

at Baltimore

Case No. 16-13049-MMH

Chapter 11

In re:

Council of Unit Owners of the

100 Harborview Drive Condominium,

Debtor.

*************

PRELIMINARY ORDER REGARDING

CREDITORS’ DAMAGES CLAIM

A debtor’s breach of its prepetition contractual

obligations gives rise to a damages claim under

applicable nonbankruptcy law. Although the nonbreaching party may be confined to collect any

resulting claim through the chapter 11 claims

distribution process, that process generally does not

define the scope of the claim. In this case, the

primary dispute centers on causation and the

amount of the alleged damages flowing from the

above-captioned Debtor’s breach of its contractual

obligations under certain governance documents.

The Creditors assert that the Debtor caused,

81a

through its actions and inaction, in excess of $1.7

million of damages to their condominium unit, which

damages continue to accrue on a daily basis.1 The

Debtor, on the other hand, denies that any damage

to the unit is attributable to its conduct and suggests

that the Creditors are the source of most, if not all,

of the damages.

The Court has reviewed the record in this

contested matter, including the evidence and

arguments presented by the parties during a multiday trial. The Court finds that the Creditors have

established a claim for damages, but the amount of

that claim is determined only on a preliminary basis

by this Order. The Court cannot enter a final Order

resolving the Creditors’ damages claim until the

parties substantially complete the remediation of the

unit and the appropriate experts and the Plan

Officer2 have certified to that fact. Accordingly, the

Court enters this preliminary Order, which grants

damages in the amount of $731,000.00 (as of

February 23, 2018), plus $6,000.00 in potential

ongoing monthly damages (which monthly amount

may be adjusted upward or downward based on the

As explained in Part V.D, the Creditors’ alleged damages

appear to account for damages from February 23, 2012,

through February 23, 2019 (i.e., 84 months), which calculation

exceeds the applicable time period (i.e., through February 23,

2018 or 72 months).

2 Pursuant to the Court’s Order Confirming Debtor’s Fifth

Amended Plan of Reorganization (the “Confirmation Order”),

entered on April 10, 2018, the Court appointed a Plan Officer

to, among other things, implement the plan with respect to

Class 7 Claims, which is the class designated for the Creditors’

Claims. This preliminary Order, any related final order, and

the Confirmation Order collectively govern the treatment of the

Creditors’ Claims in Class 7 under the plan.

82a

parties’ cooperation in, and action with respect to,

the remediation of the unit).3 Once the ongoing

monthly damages are determined, the Court will

enter a further Order of the Court resolving the total

amount of the Creditors’ damages claim on a final

basis.

I. Relevant Background on Chapter 11 Case

The Debtor is an unincorporated condominium

association,

comprising

“any

person,

firm,

corporation, trust, or other legal entity … holding

legal title to a condominium unit” in the building

located at 100 Harborview Drive (the “Building”). D.

Ex. 1, Art. I (q). The Building “is a 29-story luxury

residential high rise that stands on the shore of

Baltimore’s Inner Harbor.” In re Council of Unit

Owners of the 100 Harborview Drive Condominium,

572 B.R. 131, 135 (Bankr. D. Md. 2017) (J.

Schneider). It “was established in 1993 as a

condominium regime and contains 249 units and a

health club.” Id.

On March 9, 2016, the Debtor filed this chapter

11 case. The Debtor seeks to, among other things,

reorganize its financial affairs and resolve years of

litigation with the owners of two different units in

the Building through a chapter 11 plan. Dr. Paul C.

Clark owns one of the units involved in this

litigation—penthouse 4A (“Unit PH4A”). He

purchased Unit PH4A as a residence for his family,

As explained in Part V.D, this damages award does not

include the funds already devoted to, or required to complete,

the tear out and remediation of the unit, which the Debtor has

accounted for thus far in its cash collateral budget. See infra

note 34.

83a

Ms. Rebecca Delorme and Paul Clark,

(collectively with Dr. Clark, the “Creditors”).

Jr.

II. Relevant Background on Contested Matter

The Creditors and the Debtor have been

litigating various issues relating to Unit PH4A for

several years.4 Many, if not all, of those disputes are

now part of this chapter 11 case. The Creditors’

proofs of claim, at Claim Nos. 46, 47, and 48 (the

“Claims”), collectively assert in excess of $25 million

in damages against the Debtor. The Claims largely

relate in one way or another to the parties’

prepetition litigation and are based on alleged

violations of the Fair Housing Act (“FHA”), 42 U.S.C.

§§ 3604 (the “FHA Claims”), alleged property

damage to Unit PH4A, and consequential and other

damages allegedly arising from those claims. On

January 24, 2017, the Debtor filed objections to the

Claims [ECF 264–266]. On February 23, 2017, the

Creditors each filed an opposition to the Debtor’s

objections [ECF 316–318].

On May 18, 2017, Judge Schneider entered a

Scheduling Order [ECF 393] with respect to the

contested matter involving the Claims (the

“Contested Matter”). The Court and the parties have

subsequently amended that Scheduling Order

several times. The parties have conducted discovery

and filed a total of four different dispositive motions

The Court detailed the relevant litigation history in its

Memorandum Opinion [ECF 650], dated January 18, 2018 (the

“Contract Memorandum Opinion”), relating to the Contract

Order (as defined herein) and incorporates that information

herein by reference. Contract Memo. Op. at 4–6. The parties

also stipulated at trial to their extensive litigation history. Tr. 1

(February 6, 2018) at 109.

84a

in the Contested Matter. The Court held a hearing

for purposes of oral argument on three of these

dispositive motions on January 5, 2018 (the

“Hearing”).5 The Court granted the Debtor’s Second

Motion for Partial Summary Judgment on the FHA

Claims [ECF 647] (the “FHA Order”). The Court

granted in part, and denied in part, the Debtor’s

Third Motion for Partial Summary Judgment and

the Creditors’ Motion for Partial Summary

Judgment [ECF 649] (the “Contract Order”). The

Contract Order is of particular relevance to this

Order. By the Contract Order, the Court determined

that: (i) the Creditors’ breach of fiduciary duty and

breach of contract claims, and any related damages,

based on facts, allegations, or conduct arising on or

prior to February 23, 2012, are barred under the

doctrine of res judicata by a 2012 decision of the

Baltimore City Circuit Court in the action captioned

Clark v. Zalco Realty, Inc., et al., 24-C-10-007236

(Circ. Ct. Balt. City) (the “First State Court

Decision”); (ii) the Debtor breached its duty to

maintain and repair the common elements

associated with the unit, but only as to facts and

conduct occurring after February 23, 2012; and (iii)

the Creditors do not have sustainable claims for

attorney’s fees or punitive damages. The Contract

Order did not resolve the remaining aspects of the

parties’ contract dispute, including whether Ms.

Delorme or Paul Clark, Jr. is a third party

beneficiary of the contract, or whether the Debtor

By an Order [ECF 502] dated October 26, 2017, the Court

denied the Debtor’s first dispositive motion “without prejudice

to the parties filing dispositive motions with respect to the FHA

Claims in this contested matter on grounds other than claim

and issue preclusion as set forth in the Motion.”

85a

has any valid defenses to the breach of contract

claim or, if no comprehensive defense, the amount of

the Creditors’ damages. The Court indicated that

those issues would proceed to trial.

Subsequent thereto, the Court entered pre-trial

Orders governing the submission of pretrial briefing

and certain related matters. The parties filed a Joint

Pre-Trial Statement [ECF 659], pre-trial briefs [ECF

677, 670], and three motions in limine [ECF 678,

681, 689].6 The trial on the Contested Matter began

on February 6, 2018. The Court conducted the

evidentiary portions of the trial on February 6-9,

2018.7 The parties filed post-trial briefs, and the

Court heard the parties’ closing arguments on

February 26, 2018. The Court then took this matter

under advisement.

III.Jurisdiction and Legal Standards

The Court has jurisdiction over this proceeding

pursuant to 28 U.S.C. § 1334, 28 U.S.C. § 157(a), and

Local Rule 402 of the United States District Court

for the District of Maryland. This proceeding is a

“core proceeding” under 28 U.S.C. § 157(b)(2). This

Order constitutes the Court’s findings of fact and

conclusions of law in accordance with Rule 52 of the

Federal Rules of Civil Procedure, made applicable to

The Court resolved the motions in limine at trial and by

separate Orders at ECF 694, 695, 696.

7 The Court references the transcripts from each day of this

trial in various places throughout this Order. The following

abbreviations are used for such citations: “Tr. 1” for the

February 6, 2018 transcript; “Tr. 2” for the February 7, 2018

transcript; “Tr. 3” for the February 8, 2018 transcript; “Tr. 4”

for the February 9, 2018 transcript; and “Tr. 5” for the

February 26, 2018 transcript.

86a

this matter by Rules 7052 and 9014 of the Federal

Rules of Bankruptcy Procedure.

The Claims filed by the Creditors represent the

Creditors’ “statement as to the amount and

character of the claim.” Stancill v. Harford Sands,

Inc. (In re Harford Sands, Inc.), 372 F.3d 637, 640

(4th Cir. 2004); 11 U.S.C. § 501(a). Under section 502

of the Code, the Claims are “deemed allowed, unless

a party in interest … objects.” 11 U.S.C. § 502(a). As

the U.S. Court of Appeals for the Fourth Circuit

explained in Harford,

The Bankruptcy Code establishes a burdenshifting framework for proving the amount

and validity of a claim. The creditor’s filing of

a proof of claim constitutes prima facie

evidence of the amount and validity of the

claim. 11 U.S.C. § 502(a); Fed. R. Bankr. P.

3001(f). The burden then shifts to the debtor

to object to the claim. 11 U.S.C. § 502(b);

Finnman, 960 F.2d at 404. The debtor must

introduce evidence to rebut the claim's

presumptive validity. Fed. R. Bankr. P. 9017;

Fed. R. Evid. 301; 4 Collier at ¶ 501.02[3][d].

If the debtor carries its burden, the creditor

has the ultimate burden of proving the

amount and validity of the claim by a

preponderance of the evidence.

Harford, 372 F.3d at 640 (certain citations omitted).

See also In re Herron, 381 B.R. 184, 188 (Bankr. D.

Md. 2008). Accordingly, the claims allowance process

is a fact-intensive inquiry that determines the

creditor’s right to participate in distributions from

the bankruptcy estate. Harford, 372 F.3d at 640.

87a

IV.Findings of Fact

The Court had the opportunity to observe the fact

and expert witnesses during the first four days of the

trial in this Contested Matter. The Court has

considered the witnesses’ testimony, as well as the

documents admitted into evidence, during the trial.

The Court’s general findings of fact are set forth in

this Part IV. The Court’s analysis and conclusions of

law follow in Part V.

Dr. Clark is the owner of Unit PH4A. Cr. Ex. 1;

Tr. 1 at 58. Ms. Delorme is Dr. Clark’s wife, and was

formerly a resident of Unit PH4A. Tr. 1 at 57; Tr. 2

at 11; Contract Memo. Op. at 6.8 Paul C. Clark, Jr.,

is the minor son of Dr. Clark and Ms. Delorme, and

was formerly a resident of Unit PH4A. Tr. 1 at 58;

Contract Memo. Op. at 6. Dr. Clark purchased Unit

PH4A as a home for his family.

Prior to purchasing Unit PH4A, the Creditors

noted the presence of a small leak in the ceiling of

the unit. Tr. 1 at 59. They discussed this leak with

Ms. Giselle Rivera, the Building’s general manager

at the time, and were informed that this item would

be fixed. Contract Memo. Op. at 6. The Creditors

then moved into Unit PH4A in early November,

2009. The leak continued after that time. Tr. 1 at 60.

The Creditors retained various professional firms to

evaluate the condition of Unit PH4A. Contract

Memo. Op. at 6–7. Based on the Creditors’ concerns

regarding the condition of the unit and the reports

from their professionals, the Creditors ultimately

8 Certain relevant facts are undisputed and set forth more fully

in the Contract Memorandum Opinion and the related

pleadings filed by the parties, as cited in that opinion.

88a

moved out of Unit PH4A on March 30, 2010. Tr. 1 at

137; Tr. 2 at 11.

The Creditors thereafter moved back into Unit

433 at Pierside. Contract Memo. Op. at 6. The

Creditors were intending to sell this unit, but took it

off the market given this development. Tr. 2 at 16;

Contract Memo. Op. at 6. The Creditors have resided

in Unit 433 at Pierside since that time, which is an

approximately 1000 square foot unit while Unit

PH4A is approximately 4000 square feet. Tr. 2 at 16;

Contract Memo Op. at 6. Dr. Clark has purchased

additional units in the Pierside condominium

building to try to replicate the space his family

enjoyed in Unit PH4A. Tr. 1 at 89–91.

Dr. Clark testified that Unit PH4A has

continuously leaked. Tr. 1 at 62–63. He specifically

stated that the unit was leaking on February 23,

2012, and that it continued to leak after that date.

Id. He indicated that the leaks in the unit worsened

over time. Tr. 1 at 63, 136. Dr. Clark’s testimony is

consistent with the testimony of Mr. Guedelhoefer

(the

Creditors’

structural

engineer).

Mr.

Guedelhoefer explained the changes in the condition

of Unit PH4A in between his visits to the unit in

August 2013 and February 2015. Tr. 2 at 38–39. For

example, he described some of these changes as

follows: “I think the most pronounced observation

was that things were continuing to leak. There were

more openings that had been made, there was more

evidence of water. The evidence of staining and so

forth in areas. There was a description of leaks that

the owners had identified that were not seen before,

or had been continuing on a periodic basis ….” Id. at

38. Mr. Guedelhoefer provided extensive testimony

concerning the leaks that existed during his various

89a

visits since 2013, including leaks that remained as of

the date of the trial.9 Tr. 2 at 29–31, 38, 80–95.

In addition to water leaks, the Creditors

presented evidence concerning the presence of mold,

and the infiltration of pigeon feces through one of the

leaks, in Unit PH4A. The Creditors’ environmental

hygienist, Mr. Jacobs, testified concerning the extent

of mold and pigeon feces in the unit. Tr. 2 at 135–

140. He also explained that his testing identified

microbial contamination related to the water

intrusion, and that testing related to the pigeon feces

revealed a pathogen that “is known to cause various

diseases.” Tr. 2 at 137–138. Mr. Jacobs first

identified mold in the unit in 2011, but he testified

that his subsequent visits to the unit uncovered

additional mold growth and contamination. Tr. 2 at

172–175. Moreover, he testified that mold remained

in Unit PH4A as of the date of the trial. Tr. 2 at 148–

150.

The Debtor’s evidence did not necessarily dispute

the existence of water leaks or mold growth in Unit

PH4A. Rather, the Debtor’s evidence was directed

more at the Debtor’s access to the unit and the cause

and timing of the water leaks and related damage.

The Debtor entered into a contract with Simpson

of Maryland on January 12, 2012, to repair the roof

of the Building. D. Ex. 48. On February 23, 2012, the

Debtor sent a letter to the Creditors concerning the

repair of the roof over Unit PH4A. D. Ex. 51. That

letter stated that the repairs to the roof were

completed. Id.

9 The Debtor’s expert witness, Mr. Coleman, generally agreed

with Mr. Guedelhoefer’s description of leaks existing as of the

date of the trial. Tr. 3 at 250–253.

90a

As noted above, Dr. Clark testified that Unit

PH4A has leaked continuously since February 23,

2012. He further testified that the Creditors notified

the Debtor of these leaks periodically, including after

the Debtor’s February 23, 2012, letter. For example,

Dr. Clark stated, “They were taken up to the unit

subsequent to 2012 to observe leaks …. And I know

that Peoples, the subsequent property manager, got

her hair all wet with going up there. So I know they

know it leaked after this.” Tr. 1 at 146.

The Debtor’s witnesses did not deny knowing

about the leaks, but asserted that the Debtor could

not get access to evaluate or repair any problems,

including leaks, in Unit PH4A. For example, when

asked to describe his experience in terms of having

access to Unit PH4A to complete tasks, Mr. Coleman

(the Debtor’s structural engineer) explained that

“[p]rior to the involvement of Raths, Raths &

Johnson in the fall of 2016 our experience was that it

was simply not something that could be done. It was

impossible to get the necessary permissions and

access to perform the work.” Tr. 3 at 259–260. Mr.

Wills (the owners’ representative at the Building for

a period of time) described an incident in October

2012 in which the Debtor had a contractor onsite to

address some drywall issues in Unit PH4A, and the

Debtor was not given access to the unit because the

Debtor did not have a protocol regarding the work.10

10 The Creditors objected to Mr. Wills serving as a witness for

the Debtor because the Creditors did not believe the Debtor

provided sufficient information regarding Mr. Wills’ potential

involvement at trial in response to the Creditors’

interrogatories. Tr. 2 at 185. Mr. Wills was offered as a fact

witness, and the Creditors knew of his existence. Tr. 2 at 186–

187. Cr. Ex. 49. The Court thus allowed the Debtor to proceed

91a

Tr. 3 at 208–209; D. Ex. 61 (providing notice of the

October 2012 visit). The Debtor’s governance

documents do not require a protocol for work done by

the Debtor on the common elements. D. Ex. 2 at 18–

19; Tr. 3 at 211. Likewise, Ms. Peoples (the Debtor’s

general manager for a time period) testified to the

difficulties in obtaining access to Unit PH4A. Tr. 4 at

125. She explained, “Initially I would contact Ms.

Delorme for access or anything that we needed to do

in or around the unit, then I was always redirected

at some level. It was don’t call, don’t contact my wife,

contact my attorneys. Then don’t contact my

attorneys, contact me. So I was always being run

around when it came to dealing with things

pertaining to that unit.” Id.

Dr. Clark did not deny requiring the Debtor to

coordinate access to Unit PH4A through him or his

attorneys. Dr. Clark explained that he padlocked his

unit for a short period of time to change the lock on

the front door to the unit. Tr. 1 at 114. After that,

the Creditors did not provide the Debtor with a key

to the unit, but would open the unit for the Debtor.

Tr. 1 at 63–64. As Dr. Clark explained, “I became

frustrated after several years, as I said, of no notice

and break-ins and everything else. And so, I directed

them to go through counsel so that we would have a

record. And then I [would arrange] for contractors to

and indicated that it would “consider the testimony offered in

light of the disclosures made.” Tr. 2 at 189. In light of similar

testimony from other witnesses and the disclosures made prior

to trial, the Court finds it appropriate to consider Mr. Wills’

testimony as part of the record in the Contested Matter. The

Court notes, however, that Mr. Wills’ testimony is not

necessary to the Court’s ultimate ruling in this Contested

Matter, as the record contains more than adequate evidence on

the relevant points without Mr. Wills’ testimony.

92a

go in.” Tr. 1 at 142. Both Dr. Clark and Ms. Delorme

testified that they never denied the Debtor access to

Unit PH4A. Tr. 1 at 63–64; Tr. 2 at 22. The Debtor

disputed this assertion. See infra note 12. As

discussed in Part V.A, the Court finds that the

Creditors controlled the Debtor’s access to the unit.

Dr. Clark testified that neither the Debtor nor

the Creditors made any significant repairs to Unit

PH4A during the 2012-2017 timeframe. He noted

that the Debtor did repair a certain drainpipe, which

affected many units in the Building. Tr. 1 at 69. See

also Tr. 2 at 32; Tr. 3 at 203–204. He did not recall

any other significant repairs, and the Debtor did not

offer evidence of any significant repairs in this time

period (other than the drainpipe project previously

mentioned). Dr. Clark also did not recall

undertaking any maintenance (other than the repair

of one window broken by the Debtor), sanitation, or

detailed cleaning of the unit. Tr. 1 at 123–125; 152–

153. In response to a question concerning whether

any mold remediation, drying, or decontamination

was performed in Unit PH 4A, Dr. Clark then

explained, “No, the unit still leaked. You can’t

remediate or dry while the water and the pigeon

feces are still coming in.” Tr. 1 at 125.

Both parties appear to agree that access issues

and progress on evaluating and repairing items in

Unit PH4A improved after the hearing before Judge

Schneider on the Creditors’ Motion for Relief from

Stay in June 2016, and then the hearing before the

Court on the Creditors’ Objection to the Debtor’s Use

of Cash Collateral in November 2017. Mr.

Guedelhoefer testified that in the fall of 2016 he

obtained access from the Debtor to the exterior of the

Building, received the building plans and other

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drawings from the Debtor that he had been

requesting for years, and was able to observe testing

and work directly with Mr. Coleman. Tr. 2 at 39.

Likewise, Mr. Coleman testified that he was able to

gain access to the interior of Unit PH4A once he and

Mr. Guedelhoefer coordinated their efforts in late

2016. Tr. 3 at 256.

V. Analysis and Conclusions of Law

The Clarks and the Debtor have been involved in

various lawsuits relating, in one way or another, to

Unit PH4A since 2010. The parties do not dispute

their extensive litigation history. Tr. 1 at 108–109.

See also supra note 4. The litigation between these

parties has included various allegations by the

parties concerning, among other things, each party’s

truthfulness, trustworthiness, and civility. Thus, the

lawsuits have been messy and truly adversarial.

Indeed, the Court has observed on several occasions

the tension that exists between these parties.

One of these lawsuits is particularly relevant to

this decision, in that it sets the relevant timeframe

for the Creditors’ breach of contract claim against

the Debtor. As more fully explained in the Contract

Memorandum Opinion, the First State Court

Decision and the doctrine of res judicata (claim

preclusion) under Maryland law preclude the

Creditors from seeking breach of contract damages

for conduct prior to February 23, 2012. Contract

Memo. Op. at 17–19. The allegations underlying the

First State Court Decision included the leak first

noticed by the Clarks prior to their purchasing Unit

PH4A, as well as their various attempts to have the

Debtor remedy the leak and mold observed in the

unit at that time. Contract Memo. Op. at 17–19. The

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First State Court Decision also references “the leak”

in discussing the facts relevant to that decision,

demonstrating that the existence of the leak was

raised and considered in those proceedings. Tr. 5 at

22.

Despite the Debtor’s arguments to the contrary,

the Court finds that the Creditors adequately

identified leaks and damage to Unit PH4A occurring

after February 23, 2012. Both parties acknowledge

that Unit PH4A still leaked, and that the mold

within the unit had not been remediated, as of the

date of the trial. See, e.g., Tr. 1 at 62–63, 116–117;

Tr. 2 at 80–95, 148–150.11 The Court finds the

testimony of Dr. Clark, Mr. Guedelhoefer, and Mr.

Jacobs concerning the increase in water leaks and

related damages from 2012-2017, which was not

directly disputed by the Debtor’s evidence,

persuasive. See, e.g., Tr. 1 at 62–63, 116–117; Tr. 2

at 38–39, 45, 75–80, 135, 139–140, 143–144; Tr. 3 at

250–251, 255–258. In addition, the Court notes that

the Debtor, by its own evidence, stated that repairs

relating to leaks in the ceiling of Unit PH4A were

completed prior to February 23, 2012. Specifically,

the Debtor’s February 23, 2012, letter reads, “As you

are aware, on January 31, 2012, Simpson of

Maryland began removal and replacement of each of

the ten (10) roofs over your unit, Penthouse (PH) 4A.

The work was completed during the first two weeks

of February, 2012, ‘test flooded’ with two inches of

water for two days and did not leak. Harborview is

satisfied that the roof over your unit has been

completed.” D. Ex. 51. This letter at a minimum

The Debtor’s experts, Mr. Washington and Mr. Coleman,

both acknowledged continued issues with Unit PH4A as of the

date of the trial. See, e.g., Tr. 3 at 136–137; 250–251.

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suggests that, from the Debtor’s perspective, any

leaks in Unit PH4A emanating from the roof were

repaired; thus, the leaks identified during the trial

arguably were new or at least related to conduct

occurring after the date of the letter—i.e., February

23, 2012.

Based on a review of all of the testimony and

evidence admitted during trial, the Court finds that

the Creditors established conditions within Unit

PH4A that relate to the Debtor’s conduct and breach

of contract after February 23, 2012, and that may

support a damages award. Before determining the

amount of any damages award, however, the Court

must resolve certain disputed issues relating to

causation and mitigation. The Court is mindful that

the Debtor also raised a defense that the Creditors’

conduct prevented the Debtor from fulfilling its

contractual obligations. The Court considers that

defense in the context of analyzing causation and

mitigation, as many of the same facts pertain to all

three concepts. Consequently, the Court’s analysis of

the remaining issues below overlaps in many

respects, but ultimately answers the key question

concerning the Debtor’s liability (and the allocation

of responsibility between the Creditors and the

Debtor) for damages in this Contested Matter.

A. Access to Unit PH4A Generally

Both parties raised access issues during the trial.

The Debtor alleged that the Creditors prevented the

Debtor from entering the unit—or at least made it

extremely difficult for the Debtor to enter the unit—

to effect necessary repairs. The Creditors argued

that they requested (but were denied) access to the

exterior of the Building and the building plans and

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drawings, which they were seeking in order to assess

the issues within Unit PH4A, as well as to help the

Debtor make necessary repairs. The evidence

supports each party’s claims to a certain extent,

suggesting that both parties contributed to the

delays in the repair and remediation of the unit.

For example, it is beyond dispute that the Debtor

did not have open access to Unit PH4A.12 See Part

12 The Creditors asserted that they never denied the Debtor

access to the unit. Tr. 1 at 63–65. The Debtor offered evidence,

however, suggesting that access was not always provided, or at

least not provided in a timely manner when requested. For

example, several of the Debtor’s exhibits that were admitted

into evidence show a chain of correspondence whereby the

Debtor would indicate a willingness to make a repair, and the

Creditors either would not permit access to the unit or permit

the repair to be done as scheduled by the Debtor. See, e.g., D.

Exs. 61, 63, 68, 69, 70, 71, 82, 85. Mr. Wills, Ms. Peoples, Mr.

Coleman, and Mr. Feltenberger all testified concerning the

challenges posed by Dr. Clark’s control over access to the unit

and instances in which access was denied. See, e.g., Tr. 3 at

209, 272–273, 136–137, 175. Although the Debtor’s governance

documents and Ms. Peoples’ testimony suggest that, with

respect to unit owners generally, the Debtor would provide

reasonable notice when requesting access, the governance

documents do not require or entitle a unit owner to be present

when the Debtor is working on common elements associated

with a unit. See, e.g., D. Exs. 1, 2; Tr. 4 at 131, 164. Notably, in

response to one notice sent by Ms. Peoples to the Creditors

indicating the date and time of a repair, Dr. Clark responded,

“As you are aware and been informed on multiple occasions, by

law you are not authorized to enter our home except in case of

emergency. Please proceed at your own peril.” D. Ex. 85. The

Court did not find this kind of limitation in the governance

documents, and the Creditors’ counsel did not provide any

support for Dr. Clark’s assertion in either the governance

documents or the Maryland Condominium Act. Again, the

Court understands that Unit PH4A is the Creditors’ home, but

in a condominium project, the unit owners agree to the terms of

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IV. Dr. Clark made the decision to control access to

the unit and to use only his contractors for work

done within the unit.13 Tr. 1 at 65–66; 142. Although

the Court acknowledges the reasons offered by Dr.

Clark for this decision,14 it may have consequences

under the Debtor’s governance documents and

applicable law. The Debtor’s Declaration generally

gives the Debtor unfettered access to units for

purposes of assessing and repairing common

elements. Article IV of the Declaration reads, in

relevant part, that the Debtor “shall have the

irrevocable right and perpetual easement to enter

any unit … to inspect the common elements and to

maintain, repair or replace any common element

located in or upon, near, or accessible from any unit

…, whether or not such common element is also

the governance documents and there may be consequences to

the Creditors’ decisions, even if well-intentioned with respect to

protecting their home and family.

13 The Court acknowledges the evidence in the record that, with

respect to certain disputed access, the Creditors ultimately

allowed the Debtor to enter the unit and do the repair. For

example, the evidence shows strong resistance to the Creditors

granting the Debtor access in the fall of 2012, and in fact

preventing the Debtor from doing certain work in the unit. See,

e.g., D. Exs. 61, 63, 68, 69, 70, 71. Mr. Wills testified to these

matters, and he also noted that eventually the Debtor did get

access to the unit in January 2015 and the Creditors were

cooperative at that time. See Tr. 3 at 216–221, 230, 237; Cr. Ex.

34. Yet, the evidence also includes an email dated February 24,

2015, in which Dr. Clark informs the Debtor that it is not

authorized to enter the unit. D. Ex. 85.

14 For example, Dr. Clark testified that the Debtor’s agents had

previously “destroyed his unit.” Tr. 1 at 122. He also testified

that the Debtor would make request for access at the last

minute or around holidays, which is why he asked that all

requests for access be made through his counsel. Id. at 65. The

Court also discerned Dr. Clark’s general distrust of the Debtor.

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accessible from another unit or common element.” D.

Ex. 1 at 8–9. That provision also provides that

“except in cases involving manifest danger to public

safety or property,” the Debtor “shall make a

reasonable effort to give notice to the unit owner who

owns the unit … which is to be entered for the

purpose of such inspection, maintenance, repair or

replace.”15 Id. at 9.

Dr. Clark’s failure to allow the Debtor to operate

freely in accordance with the governance documents,

at a minimum, made it more difficult for the Debtor

to discharge its obligations to maintain and repair

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