Court Opinion

ID: 995036
Source: CourtListenerOpinion
Date Created: 2013-07-04 00:31:33.963109+00
Date Added: 2024-06-11T10:05:45.967612
License: Public Domain

Filed:   May 20, 1998

                    UNITED STATES COURT OF APPEALS

                        FOR THE FOURTH CIRCUIT

                              No. 96-2200
                   (CA-96-1745-6-20, BK-95-71435-B)

Greenville     Plaza      Investors       Limited
Partnership,

                                                 Plaintiff - Appellee,

          versus

Corporate Real Estate Service, etc.,

                                              Defendant - Appellant.

                              O R D E R

     The Court amends its opinion filed May 11, 1998, as follows:

     On page 3, first paragraph, lines 6-7 -- the word "identify"

is corrected to read "identi ty."
                                       For the Court - By Direction

                                           /s/ Patricia S. Connor
                                                        Clerk
UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: GREENVILLE PLAZA INVESTORS
LIMITED PARTNERSHIP,
Debtor.

GREENVILLE PLAZA INVESTORS
LIMITED PARTNERSHIP,
Plaintiff-Appellee,                                  No. 96-2200

v.

CORPORATE REAL ESTATE SERVICE,
INCORPORATED, formerly known as
The Webb-Stevenson Company,
d/b/a Plaza Executive Suites,
Defendant-Appellant.

Appeal from the United States District Court
for the District of South Carolina, at Greenville.
Henry M. Herlong, Jr., District Judge.
(CA-96-1745-6-20, BK-95-71435-B)

Submitted: April 15, 1998

Decided: May 11, 1998

Before WIDENER and MOTZ, Circuit Judges, and
HALL, Senior Circuit Judge.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________
COUNSEL

Charles Benjamin Patterson, ARRINGTON, HOLLOWELL & PAT-
TERSON, L.L.P., Greenville, South Carolina, for Appellant. Helen
Elizabeth Burris, NEXSEN, PRUET, JACOBS & POLLARD, L.L.P.,
Greenville, South Carolina, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Corporate Real Estate Services, Inc., (Corporate) appeals from the
district court's order affirming the bankruptcy court's order granting
summary judgment in favor of Greenville Plaza Investors (Greenville)
avoiding a lease between the parties pursuant to 11 U.S.C. §§ 544(a),
550 (1994) and S.C. Code Ann. §§ 30-7-10, 27-33-30 (Law. Co-op
1976). Corporate contends that the bankruptcy court erred by (1) fail-
ing to apply the appropriate federal and state law in reaching its deci-
sion; (2) failing to address its counterclaim; and (3) failing to take into
consideration Greenville's discovery abuses. For the reasons that fol-
low, we affirm.

Greenville, a South Carolina limited partnership, filed a petition
under Chapter 11 of the Bankruptcy Code on March 20, 1995. Its pri-
mary asset was real estate known as Nationsbank Plaza in Greenville,
South Carolina. Corporate claimed a possessory interest in the prop-
erty based on a lease agreement (Agreement) dated March 31, 1994,
and amended on March 1, 1995. The Agreement purports to grant a
leasehold interest in Nationsbank Plaza to Corporate from June 1,
1994, through August 31, 1997. Neither the Agreement nor the
Amendment were recorded prior to Greenville's filing of its bank-
ruptcy petition.

                     2
Greenville sought to avoid the lease under S.C. Code Ann. §§ 30-
7-10, 27-33-30, which provide that if a document evidencing a lease-
hold interest in real estate for a period of longer than twelve months
is not recorded it is invalid and unenforceable against certain bona
fide purchasers and/or subsequent creditors. Under 11 U.S.C. § 544(a)
(the "strong-arm" clause), a trustee in bankruptcy may take the iden-
tity of a hypothetical entity that could, under state law, defeat a
claimed interest in the debtor's property.* Greenville, as debtor in
possession, has the same rights and powers as a trustee. See 11 U.S.C.
§ 1107(a) (1994).

Section 544(a)(3) confers upon the trustee the rights of a bona fide
purchaser when, as in this case, real property is at issue. The extent
of the trustee's strong arm powers is defined by the law of the state
where the property is located. See 4 Lawrence P. King, Collier on
Bankruptcy, ¶ 544.02 at 544-5, 544-14 (1996). Contrary to Corpo-
rate's assertions, the bankruptcy court and the district court properly
applied South Carolina law to determine that the Agreement was sub-
ject to avoidance under § 544(a)(3). See S.C. Code Ann. § 30-7-10
(providing that a leasehold interest in real estate for a period greater
than twelve months is invalid and unenforceable against certain bona
fide purchasers and/or subsequent creditors without notice); In re
Kitchin Equip. Co. of Virginia, Inc., 960 F.2d 1242, 1245 (4th Cir.
1992) ("a debtor in possession, without regard to any knowledge, is
empowered to avoid any transfer of property of the debtor or any obli-
gation of the debtor that is voidable by a hypothetical lien creditor").
_________________________________________________________________

* Section 544(a)(3) provides that:

        (a) The trustee shall have, as of the commencement of the case,
        and without regard to any knowledge of the trustee or of any
        creditor, the rights and powers of, or may avoid any transfer of
        property of the debtor or any obligation incurred by the debtor
        that is voidable by--

...

        (3) a bona fide purchaser of real property, other than fix-
        tures, from the debtor, against whom applicable law permits
        such transfer to be perfected, that obtains the status of a bona
        fide purchaser and has perfected such transfer at the time of
        the commencement of the case, whether or not such a pur-
        chaser exists.

                    3
Corporate next claims that the bankruptcy court erred by failing to
address its counterclaims in ruling on Greenville's motion for sum-
mary judgment. However, as the district court properly found, Corpo-
rate failed to raise these counterclaims at the hearing on Greenville's
motion for summary judgment. And, in any event, none of Corpo-
rate's counterclaims were supported by the record.

Finally, Corporate contends that the bankruptcy court failed to take
into account alleged discovery abuses committed by Greenville. Spe-
cifically, Corporate claims that Greenville delayed producing certain
documents and scheduling of depositions that it needed to adequately
oppose Greenville's summary judgment motion. Even assuming that
Corporate's allegations are true, Corporate is precluded from arguing
that inadequate discovery made summary judgment inappropriate
because it did not submit an affidavit informing the district court that
additional discovery was necessary for it to respond to Greenville's
summary judgment motion. See Fed. R. Civ. P. 56(f); see also Evans
v. Technologies Applications & Serv. Co., 80 F.3d 954, 961 (4th Cir.
1996) (holding that on appeal, a party must have submitted a Rule
56(f) affidavit in order to argue that summary judgment was inappro-
priate because of inadequate discovery).

Accordingly, we affirm.

AFFIRMED

                    4