SEA VILLAGE MARINA L.L.C. et al v. ALLEN

Filing 6

OPINION. Signed by Chief Judge Jerome B. Simandle on 12/20/2012. (TH, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
IN RE:
HON. JEROME B. SIMANDLE
Sea Village Marina, LLC,

Civil No. 12-2479 (JBS)

Debtor.
_____________________________

ON APPEAL FROM AN ORDER OF THE
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW JERSEY

Sea Village Marina, LLC,
[Case No. 10-17235/JHW]
Appellant,
v.
OPINION
John B. Allen, et al.,
Appellees.

APPEARANCES:
Albert A. Ciardi, III, Esq.
Nicole M. Nigrelli, Esq.
Daniel S. Siedman, Esq.
Ciardi Ciardi & Austin PC
One Commerce Square
2005 Market St., Suite 1930
Philadelphia, PA 19103
Attorney for Appellant Sea Village Marina LLC
John B. Allen
1344 Radburn Court
Romansville, PA 19320
Pro Se
Steve Smith
125 Margate Blvd.#A10
Northfield, NJ 08225
Pro Se
Maryanna and Dennis Rotella
1790 Somers Point Rd.
Egg Harbor Township, NJ 08234
Pro Se
1

James A. Sanceciz
125 Margate Blvd.
Northfield, NJ 08225
Pro Se
Paul F. and Sharon Swiercynski
225 Burleigh Dr.
Somerdale, NJ 08083
Pro Se

SIMANDLE, Chief Judge:
I.

Introduction
This action comes before the Court on an appeal from the

Bankruptcy Court’s issuance of an order on March 16, 2012
(“March 16, 2012 Order”) [Docket Item 1-2] in Bankruptcy Action
No. 10-17235 allowing certain proofs of claim pursuant to 11
U.S.C. §§ 502(a) and (b). Appellant, Sea Village Marina (“SVM”),
operates a community of floating homes or houseboats in Egg
Harbor Township, New Jersey. Conditions at the marina have
deteriorated; the residents currently suffer from a lack of
potable water, docks in disrepair, and homes that tilt at uneven
angles because they rest on mud at low tides. SVM filed for
bankruptcy under Chapter 11. The Bankruptcy Court’s Order allows
general unsecured claims from certain houseboat owners who lost
value in their homes due to degraded conditions at the marina.
SVM has appealed the portions of the March 16, 2012 Order
that granted general unsecured claims to five different SVM
homeowners for loss of value in their homes. The aspects of the

2

Order that SVM has appealed are: (1) Claim # 21 (Paul F. and
Sharon Swiercynski), allowing a general unsecured claim in the
amount of $45,250.00; (2) Claim # 23 (Maryanne and Dennis
Rotella), allowing a general unsecured claim in the mount of
$33,000.00; (3) Claim # 24 (Steve Smith), allowing a general
unsecured claim in the amount of $37,450.00; (4) Claim # 25
(John B. Allen), allowing a general unsecured claim in the
amount of $67,000.00; and (5) Claim # 27 (James A. Sanceciz),
allowing a general unsecured claim in the amount of $33,000.00.
For the reasons explained herein, the Bankruptcy Court’s
Order will be vacated and the case will be remanded with
instructions for the Bankruptcy Court to provide further
explanation regarding the cause of action that serves as the
basis for relief, the Claimants’ showing of causation, and the
Bankruptcy Court’s calculation of damages.

II.

A Related Case Before This Court

In 2009, SVM filed before this Court an in rem action, Sea
Vill. Marina, LLC v. A 1980 Carlcraft Houseboat, Hull ID No.
LMG37164M80d, Civil Action No. 09-3292 (JBS-AMD), 2009 WL
3379923 (D.N.J. Oct. 19, 2009), to obtain maritime liens against
multiple houseboats whose owners had not paid dockage fees since
2007 (“the maritime lien litigation”). The owners were
participating in a rent strike against SVM due to SVM’s failure
3

to provide certain necessary services, such as potable water.
After first determining that subject matter jurisdiction was
proper because the houseboats were vessels subject to maritime
jurisdiction, the Court then determined that the maritime liens
were proper because “some amount is reasonably owed by the
vessel owners, even if it is small.” Sea Vill. Marina, LLC v. A
1980 Carlcraft Houseboat, 09-3292 (JBS AMD), 2010 WL 338060, at
*12 (D.N.J. Jan. 26, 2010).
At one of the hearings regarding the maritime liens, the
Court became concerned that “the Verified Complaint contained
claims for liens in amounts that were materially false, and that
[SVM] submitted statements of account containing knowingly
inflated amounts of indebtedness.” Id. at *12. The Court ordered
a show cause hearing to address these concerns. Before the show
cause hearing occurred, SVM filed a voluntary petition for
bankruptcy. The Court then issued an order staying the maritime
lien case, including any pending motions for sanctions, pending
developments in the Bankruptcy Court. The maritime lien case is
still stayed.

III. Factual Background
The Swiercynskis, the Rotellas, Smith, Allen, and Sanceciz
all filed claims in the SVM bankruptcy proceeding. The claims
were similar. They stated that the creditor owns a floating home
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purchased and located at SVM. The claims then list affirmative
defenses, which appear related to the maritime lien litigation,
not the bankruptcy case. For example, the Claimants assert
affirmative defenses that the floating homes are not vessels;
that the court lacks subject matter jurisdiction; that plaintiff
SVM did not rely upon the credit of the floating home; and that
the materials and services provided by plaintiff SVM are not
“necessaries” within the meaning of the Federal Maritime Lien
Act. The claims also assert that SVM breached contracts with the
Claimants. They assert that SVM defrauded the subject vessels
and their owners by inducing the owners to purchase the vessels,
inducing them not to sell the vessels when a resale market
existed, and making false statements regarding plans to improve
the marina’s facilities. During the hearings upon these claims,
a related theory of recovery appears to have emerged, namely,
that the Debtor SVM breached its duty to these Claimants to
maintain the marina premises in tenantable condition and good
repair, causing loss of the value of the houseboats and, in some
cases, inability to resell the Claimant’s houseboat.
In support of their claims, several claimants included
copies of this Court’s Jan. 26, 2010 Opinion in the maritime
lien case in which the Court ordered a show cause hearing to
determine the veracity of SVM’s statements regarding monies owed
and in which the Court held that SVM’s maritime liens against
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the houseboats were proper because the subject homeowners in
that case owed some money to SVM in an amount to be determined.
The only Claimant in the bankruptcy case whose vessel is also
involved in the maritime lien case is John B. Allen, who filed
Claim # 25.
SVM filed the Second Omnibus Objection of the Debtor and
Debtor-in Possession to Certain Proofs of Claim and challenged
the houseboat owners’ claims. SVM argued that the homeowners had
no basis to support their claims.
The Swiercynskis, the Rotellas, Smith, Allen, and Sanceciz
then filed responses to SVM’s objection. They noted that SVM had
not fulfilled its promises to repair and maintain the marina.
Many of the Claimants attached photographs showing conditions at
the marina. Several homeowners, such as the Rotellas, also
attached property listings for houseboats in other places, such
as Seattle, Wash. or Sausalito, Cal. For one such listing, the
Rotellas wrote a note, “NOTICE CONDITION OF DECKS ETC AND THE
COST TO THE TENNANT [SIC] IS FAR LESS DON’T HAVE TO WAIT FOR
REPAIRS MARINA PRISTINE.” (Rotellas’ Answer to Second Omnibus
Objection, Tab 8, Appellate Record.) The Rotellas also attached
a September 7, 1986 New York Times article, “Houseboats Emerge
as a Cheaper Form of Housing.” (Id.) Several Claimants noted
improvements they had made to the boats and monthly expenses.
For example, the Swiercynskis attached an excel chart listing
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expenses for docking, insurance, registration, sewer, repairs,
and legal from 2005-2011. (Swiercynskis’ Answer to Second
Omnibus Objection, Tab 7, Appellate Record.)
Several Claimants also attached a survey conducted of
Claimant Smith’s home in which the surveyor found that Smith’s
home had lost almost all of its value. This survey was also
referenced repeatedly at the hearing before the Bankruptcy
Court. Because the survey is relevant evidence regarding loss of
value, the Court has summarized it extensively.
On September 27, 2011, Captain Rob Cozen, a marine surveyor
and consultant, inspected the floating home of Stephen Smith and
wrote Smith a letter summarizing his findings. (Tab 8, Appellate
Record, attached to Rotella’s Resp. to Second Omnibus
Objection.) Cozen noted that Smith had purportedly purchased his
home on May 20, 2004 for $107,000 and, at that time, the home
appraised for $107,000. (Id. at 1.) According to Cozen, Smith
had also purportedly entered into a long term lease with SVM
that “guaranteed the provision of essential services (water,
sewage, security, etc), recreational amenities and facilities,
as well as a high standard of ongoing maintenance of the overall
marina complex.” (Id.)
Cozen’s letter stated that SVM “has been grossly negligent”
in providing the services. (Id.) Cozen then outlined the poor
conditions at SVM, including lack of potable water, lack of
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dredging to ensure that the homes continually float on water,
and docks that are in disrepair. The fresh water system is
contaminated. (Id.) The salt and mineral content of the water
supply is so high that it has corroded, clogged, and rendered
plumbing systems unusable. (Id.) The condition (and ongoing
maintenance) of the bulkheads, walkways, and ramps is
substandard and, in some locations, “should be considered
unsafe.” (Id.) There is no ongoing dredging program to remove
the build-up of mud beneath the homes and, as a result, “the
majority of the floating homes sit either partially or
completely out of the water twice a day at mid-to-low tide.”
(Id.) When the homes are resting on mud, instead of water, they
can tilt and there is “significant stress on the wood and
fiberglass foundation” that can cause structural damage. (Id.)
Cozen’s letter then addressed the value of Smith’s home.
Cozen noted that “this floating home was purchased at the height
of the real estate bubble,” and that “when the real estate
market began to collapse, these floating homes also lost a good
percentage of their value.” (Id. at 2.) Cozen asserted that the
decline in value “was further exacerbated by the . . .
deplorable conditions at the marina.” (Id.) Cozen also stated
that “[t]he situation is worsened by the fact that, even if the
owners chose to move out of Sea Village Marina, there is no
other marina or facility on the east coast that will accept
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them.” (Id.) Cozen noted that all of the homes are 30 years old
and that Smith’s home “sits on it’s [sic] original foundation
that had a life expectancy of 20+- years (in good conditions).”
(Id.) Cozen stated that all the SVM homes are selling for 40-50
percent less than their previous values. He noted that Smith
cannot sell or rent the home independent of SVM’s management,
that the ongoing litigation requires that profits from any sale
must go directly to Sea Village for back rent. Cozen concludes
that “[t]aking all of these conditions into account, your
floating home has virtually lost most or all of it’s [sic]
market value.” (Id.)
After the parties made their submissions, the Bankruptcy
Court held a hearing that, inter alia, assessed the SVM
homeowners’ claims. The Swiercynskis, the Rotellas, Smith,
Allen, and Sanceciz all testified under oath. The homeowners
lacked representation; they were examined by the Bankruptcy
Court and cross-examined by SVM’s counsel. They described SVM’s
broken promises that dredging would occur, that the potable
water problems would be remedied, and that their houseboats
would increase in value. They described frustrating damage to
their homes. For example, Smith testified that his plumbing
system was corroded and leaking and that he had replaced four

9

water heaters in eight years. (Hr’g Tr. 54:5-7.)

1

The homeowners

described homes that were resting on mud and tilting for several
hours a day when tide was low. The homeowners also testified
that there were similar houseboats in California and other
locations selling for half a million dollars or more.
SVM’s attorney made a presentation, noting that the
homeowners had not presented appraisals or other evidence, that
comparisons to purchase prices were inapt because there was no
evidence regarding whether the homeowners paid fair prices. In
addition, she noted the lack of evidence regarding how much
effort the homeowners expended to sell their boats and that no
Claimant testified that she had retained an outside broker.
Counsel also disputed that the houseboats lacked value because,
she noted, several homeowners had rented their homes to tenants.

IV.

The Bankruptcy Court’s Opinion and Order

The Bankruptcy Court issued an oral opinion and an order.
SVM has appealed the portions of the Order that granted general
unsecured claims to five different SVM homeowners for loss of
value in their homes. The aspects of the Order that SVM has
appealed are: (1) Claim # 21 (Paul F. and Sharon Swiercynski),
1

SVM submitted two different copies of the hearing transcript to
the Court. The first copy had 27 lines per page and lacked page
numbers. The second copy had 25 lines per page and had page
numbers. The Court’s citations are to the second copy, the
pagination of which differs from the first copy.
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allowing a general unsecured claim in the amount of $45,250.00;
(2) Claim # 23 (Maryanne and Dennis Rotella), allowing a general
unsecured claim in the mount of $33,000.00; (3) Claim # 24
(Steve Smith), allowing a general unsecured claim in the amount
of $37,450.00; (4) Claim # 25 (John B. Allen), allowing a
general unsecured claim in the amount of $67,000.00; and (5)
Claim # 27 (James A. Sanceciz), allowing a general unsecured
claim in the amount of $33,000.00. 2
In its oral opinion, the Bankruptcy Court explained its
reasoning. First, the Bankruptcy Court noted that it was
“focusing on the amount of claims without deciding any offsets,
without deciding the claims that the marina may have against
each owner.” (Hr’g Tr. 84:12-14.) The Bankruptcy Court also
noted that it had no record of consumer fraud; it had “a record
of failure of responsibility on the part of the marina to
maintain the grounds in good repair over many years.” (Hr’g Tr.
97:20-23.) Because the Bankruptcy Court found that there was no
fraud, it also found that there was no basis in the record to
support treble damages. (Hr’g Tr. 98:3-4.)
The Bankruptcy Court focused “on whether the claimants have
claims against the debtor regarding loss of value of their
2

SVM appealed the Sanceciz claim “out of an abundance of
caution” even though SVM and Sanceciz had entered into a consent
order, whereby Sanceciz waived his right to the claim. (SVM Br.
at 23.) Upon remand, the parties should clarify whether the
Sanceciz claim is moot.
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property by reason of the actions or omissions of Sea Village
Marina over the many years.” (Hr’g Tr. 100:19-22.) The
Bankruptcy Court noted that there was no expert testimony, which
is customary in cases involving proof of value or reductions in
value. (Hr’g Tr. 101:2-7.) But the Bankruptcy Court found that
“the conclusion is inescapable that some loss has been suffered
by these claimants. . . .” (Hr’g Tr. 101:8-10.)
The Bankruptcy Court made several findings regarding the
marina’s general condition. The Bankruptcy Court noted SVM
failed to perform its responsibility to provide its tenants with
“quiet enjoyment and to maintain the property at the appropriate
level of maintenance and repair despite continuous promises. . .
.” (Hr’g Tr. 101:21-23.) The Bankruptcy Court held, “Admittedly
the exercise of identifying that loss in each case is arbitrary,
but it’s also true that some loss has been established in each
case, and expunging each claim is not warranted.” (Hr’g Tr.
101:11-14.) The Bankruptcy Court noted that “potable water has
not been available on the premises for years perhaps back to
2006, maybe even earlier.” (Hr’g Tr. 102:4-6.) In addition,
“[t]here is a serious dredging problem causing damage to the
floating homes in various degrees.” (Hr’g Tr. 102:6-7.) Finally,
the Bankruptcy Court noted the disrepair of the bulkheads and
docks and problems with the swimming pool and parking lot. (Hr’g
Tr. 102:8-11.) The Bankruptcy Court concluded that “these
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conditions caused a reduction in the general habitability of the
marina, and certainly the quality of life there.” (Hr’g Tr. 1213.)
The Bankruptcy Court held that the houseboats retained some
value because some of the homeowners have successfully rented
their homes and because Sanceciz testified that his home was in
“pristine” condition. (Hr’g Tr. 103:10-18.)
In terms of Allen’s claim, the Bankruptcy Court found that
Allen purchased his houseboat in 2003 for approximately
$133,900, that the house is now sitting in mud at a severe
angle, and that no one is living in the home. (Hr’g Tr. 1032023.) Allen was able to rent the home for $1,600.00 for one
month, July, in 2011. (Hr’g Tr. 104:1-2.) The Bankruptcy Court
concluded that “under these circumstances, a 50 percent
reduction in our starting point, arbitrary as it is since it was
so long ago, would be appropriate to assign as the amount of the
claim, so this claim will be $67,000.” (Hr’g Tr. 104:11-14.) The
Bankruptcy Court later explained that “I’ve been viewing the
various percentages of losses in a relative way” by comparing
the different homeowners to each other. (Hr’g Tr. 107:6-7.)
In terms of Rotella’s claim, the Bankruptcy Court noted
that her husband had purchased the property approximately 30
years ago for $72,000, that she had listed the property “some
time ago” at $165,000, and that she had been unable to sell.
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(Hr’g Tr. 104:17-21.) The Bankruptcy Court held that the
$165,000 asking price was the appropriate starting point for
consideration of Rotella’s claim. The Bankruptcy Court also
noted that Rotella had been renting the property for $950 per
month for a year. The Bankruptcy Court concluded, “In light of
these circumstances, it seems to me that a 20 percent loss in
value is appropriate from the $165,000 starting point that
produces a claim of $33,000.” (Hr’g Tr. 105:8-10.)
For Smith, the Bankruptcy Court used the purchase price of
$107,000 in 2004 as a starting point and noted that Smith’s home
had lost structural integrity and angled on the mud during
certain tides. Compared to the other homeowners’ losses, the
Bankruptcy Court found that a 35 percent loss in value was
appropriate for Smith, thus amounting to a $37,450 claim. (Hr’g
Tr. 107:10-11.)
For Sanceciz, the Bankruptcy Court began with the 2002 or
2003 purchase price of $110,000 combined with the $55,000 that
Sanceciz had invested in improvements. (Hr’g Tr. 107:12-14.)
Because the Sanceciz residence was “pristine in condition” but
subject to the continuing problems in the marina and unable to
be sold, the Bankruptcy Court held that a 20 percent loss was
appropriate, resulting in a $33,000 claim. (Hr’g Tr. 15-22.)
And finally, for the Swierczynskis, the Bankruptcy Court
began with the purchase price of $156,000 plus $25,000 in
14

improvements. (Hr’g Tr. 107:24.) The Bankruptcy Court noted that
the “boat is somewhat tilted but not too bad” and that the
Swierczynskis use the property infrequently. (Hr’g Tr. 107:25108:2.) The Bankruptcy Court assigned a 25 percent loss,
resulting in a claim of $45,250. (Hr’g Tr. 108:3-4.)

V.

Parties’ Arguments on Appeal
Appellant SVM argues that the Bankruptcy Court erred in

allowing the homeowners’ general unsecured claims because the
Claimants failed to meet their burden to provide evidence to
substantiate their claims. Appellant argued that the Bankruptcy
Court inserted a loss of value claim into the proceedings, when
the Claimants had only made claims arising under the New Jersey
Consumer Fraud Act, damages for goods and services, or breach of
contract. Appellant argues that the claimants did not present
evidence sufficient to support claims under the New Jersey
Consumer Fraud Act, damage for goods and services, breach of
contract, willful misconduct, or gross negligence. Appellant
noted that there was no third-party appraisal or valuation of
the homes and that the Bankruptcy Court did not address the fact
that floating homes are depreciable assets.
Paul F. and Sharon Swierczynski were the only Claimants who
filed a response to SVM’s appeal. The Swierczynskis noted that
they were proceeding pro se, that they have suffered the total
15

market value loss of their floating home, and that they have
suffered substantial hardships from the degraded conditions at
the marina.

VI.

Standard of Review

Bankruptcy Rule 8013 provides that a district court “may
affirm, modify, or reverse a bankruptcy judge's judgment, order,
or decree or remand with instructions for further proceedings.”
Fed. R. Bankr. P. 8013. The Rule further provides that
“[f]indings of fact, whether based on oral or documentary
evidence, shall not be set aside unless clearly erroneous, and
due regard shall be given to the opportunity of the bankruptcy
court to judge the credibility of the witnesses.” Fed. R. Bankr.
P. 8013. Essentially, the district court must “review the
bankruptcy court's legal determinations de novo, its factual
findings for clear error and its exercise of discretion for
abuse thereof.” In re Am. Pad & Paper Co., 478 F.3d 546, 551 (3d
Cir. 2007).

VII. Analysis
The Bankruptcy Judge has demonstrated considerable skill
and patience in dealing with the presentation of these claims by
pro se Claimants. The record demonstrates that a plethora of
facts and data were amassed in the relatively informal proof
16

hearing. The Bankruptcy Court paid close attention to these
details among the five Claimants and promptly rendered a lengthy
oral opinion. Perhaps due to the informality of this setting,
there are gaps in the resulting oral opinion that make review
difficult.
The Court cannot assess either the Bankruptcy Court’s legal
conclusions or its factual findings absent an opinion that
explains more of the Bankruptcy Court’s reasoning. See In re J.
Allan Steel Co., 336 B.R. 226, 229 (W.D. Pa. 2005) (“I simply
cannot determine whether the Bankruptcy Court clearly erred in
its factual findings, abused its discretion, or misconstrued the
law absent more a more detailed Opinion.”) Specifically, the
Court requests more explanation regarding the cause of action
that serves as the basis for relief, the Claimants’ showing of
causation, and the Bankruptcy Court’s calculation of damages.
A. Cause of Action
The Court is uncertain as to the legal theory that
supported the Bankruptcy Court’s allowance of loss of value
claims. Appellant argues that “[b]ecause no independent cause of
action exists for loss of value, in order to analyze a claim
under a loss of value theory, the most relevant and applicable
analysis is contained within the case law of the Consumer Fraud
Act. . . .” (SVM Br. at 17.) But the Bankruptcy Court

17

specifically disallowed consumer fraud claims. Therefore, a New
Jersey Consumer Fraud Act analysis is inapposite.
The Bankruptcy Court noted that it observed “a record of
failure of responsibility on the part of the marina to maintain
the grounds in good repair over many years.” (Hr’g Tr. 97:2023.) This failure may be the basis of the Claimants’ legal cause
of action, but the Court is uncertain as to whether the failure
is rooted in the marina’s contractual obligations, the marina’s
obligations as a putative landlord, the marina’s negligence, the
marina’s reckless conduct, or some other theory. Absent more
explanation regarding the legal basis for the relief allowed,
the Court cannot assess whether the Bankruptcy Court
misconstrued the law. The Court respectfully asks the Bankruptcy
Court to outline the cause of action that serves as the basis
for relief and the elements that Claimants proved to establish
such cause of action.
B. Causation
The Court also requests more explanation regarding the
Claimants’ showing of causation and, specifically, how much of
the loss of value in Claimants’ homes is specifically
attributable to the marina conditions. For example, in its
briefing and at oral argument, Appellant SVM argued that the
houseboats should be considered as boats that depreciate in
value over time, as opposed to real property that does not
18

depreciate over time. The oral opinion is silent on the issue
whether the property at issue is normally a depreciating asset,
like most vessels, or whether these houseboats would have likely
held their value but for the neglect, actions, or omissions of
the marina.
Many of the Claimants referenced Marine Surveyor Cozen’s
report regarding the value of Smith’s boat. Cozen concluded that
“[t]aking all of these conditions into account, your floating
home has virtually lost most or all of it’s [sic] market value.”
(Cozen letter at 2.) Cozen’s letter noted many conditions that
reflected his assessment of the houseboat’s value. For example,
Cozen noted that no other marina or facility on the east coast
would accept the floating homes from SVM, but he did not
indicate that Appellant SVM is responsible for the fact that the
homeowners cannot move the houseboats elsewhere. He also noted
that ongoing litigation required that profits from any sale must
go directly to SVM for back rent. It appears that the likelihood
that sale profits would have to pay back rent impacted Cozen’s
assessment of Smith’s potential sale profits. Cozen also noted
that Smith’s boat was 30 years old and that it rested on a
foundation intended to last 20 years. And he noted that Smith
purchased his houseboat at the height of the real estate market
bubble.

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Essentially, the record contains references to many factors
that may have caused depreciation in the houseboats’ value. The
Court requests further explanation of the Bankruptcy Court’s
findings regarding the extent of the depreciation specifically
attributable to the conditions at the marina, as opposed to the
percentages that are attributable to the collapse of the
relevant market in houseboat properties, the depreciation of a
30-year-old home sitting on a foundation intended to last 20
years, the depreciation of a vessel, the fact that no other
marina will accept the houseboats, and the fact that sale
proceeds would be lost to litigation over unpaid rent.
C. Damages
The Bankruptcy Court acknowledged that its loss of value
calculations were “arbitrary” and based on comparisons of the
relative damage that each homeowner experienced. Its
calculations do not appear to consider the unique
characteristics of each home and the expenses incurred by each
homeowner in fixing damage, such as corroded pipes, attributable
to SVM. Before the Court can determine whether the Bankruptcy
Court’s factual findings were clearly erroneous, the Court
requests more explanation regarding the Bankruptcy Court’s
reasoning in determining the amount of the claims. The Court
does not suggest that it would ever be possible to determine
loss of value with mathematical precision; like any verdict,
20

such a determination must reasonably rest upon a preponderance
of the credible evidence and it may be derived from reasonable
inferences from the evidence.

VIII.

Conclusion

After careful consideration, the aspects of the Bankruptcy
Court’s March 16, 2012 Order allowing general unsecured claims
for loss of value to the Swiercynskis, the Rotellas, Smith,
Allen, and Sanceciz are vacated. The case is remanded to the
Bankruptcy Court for further proceedings consistent with this
opinion. Specifically, the Court asks the Bankruptcy Court to
clarify the legal basis for allowing loss of value claims, to
make findings as to whether the Claimants have shown causation
of loss, and to explain its reasoning on the amount of damages.
The accompanying Order will be entered.

December 20, 2012
Date

_s/ Jerome B. Simandle__
JEROME B. SIMANDLE
Chief U.S. District Judge

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