Leasing Innovations, Inc. et al v. Tartan Fields Golf Club, Ltd. et al

Filing 48

OPINION AND ORDER Doc. No. 43 , isGRANTED. The Gerb, LLC, is ORDERED SUBSTITUTED as Plaintiff in this action. The Receivers Suggestion of Stay, Doc. No. 40 , is GRANTED. This action is STAYED as to Defendant Tartan Fields Golf Club, Ltd. The Receiver is ORDERED to report on the status of the Delaware County state court action no later than August 31,2011. Signed by Magistrate Judge Norah McCann King on 6/06/11. (rew1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

LEASING INNOVATIONS, INC., et al.,
Plaintiffs,

v.

Case No. 2:08-CV-1190
JUDGE SMITH
MAGISTRATE JUDGE KING

TARTAN FIELDS GOLF CLUB, LTD., et al.,
Defendants.

OPINION AND ORDER
This matter is before the Court for consideration of the Suggestion of Stay, filed on behalf
of the Receiver for Defendant Tartan Fields Golf Club, Doc. No. 40, and Plaintiffs’ Motion to
Substitute Parties and Counsel, Doc. No. 43. For the reasons that follow, both motions are
granted.
I.
Plaintiffs, Leasing Innovations, Ed Falkowitz and Mary Ann Reifsnyder
[“Plaintiffs”], commenced this action against Tartan Fields Golf Club, Ltd., Thomas D.
Anderson and Timothy J. Herman, to enforce an alleged guaranty in connection with Plaintiffs’
extension of credit to the Tartan Development Company (“Corazon”), LLC.
In March and May 2007, Plaintiff Leasing Innovations entered into a Master Lease
Agreement and eight separate Rental Schedules with Corazon, upon which Corazon allegedly
defaulted. Complaint, Doc. No. 1, at ¶¶ 9-15. In October 2008, Corazon was placed in
receivership by the Court of Common Pleas for Union County, Ohio. Id., at ¶ 18; Exhibit 8,

attached to Complaint. According to Plaintiffs, Corazon’s alleged failure to make payments
under the Master Lease Agreement and the Order of Receivership constitute a default under the
Master Lease Agreement. Id., at ¶¶ 21-22. Defendants allegedly executed guaranties of
Corazon’s performance, and those guaranties form the basis of the instant action. Id., at ¶¶ 1617. Specifically, Count I of the Complaint alleges breach of guaranty against Defendant Tartan
Fields Golf Club, Count II alleges breach of guaranty against Defendant Anderson and Count III
alleges breach of guaranty against Defendant Herman.
In May 2009, Defendant Anderson filed a voluntary petition under Chapter 7 of the
United States Bankruptcy Code and Defendant Tartan Fields was placed in receivership by the
Court of Common Pleas for Delaware County, Ohio in General Electric Capital Corp. v. Tartan
Fields Golf Club, Ltd., et al., 2009 CVE 050709. On January 13, 2010, the District Judge
stayed proceedings in this case. Order, Doc. No. 30. On February 22, 2011, Plaintiffs dismissed
their claims against Defendant Herman, with prejudice, and against Defendant Anderson,
without prejudice, pursuant to Fed. R. Civ. P. 41(a)(1)(A)(I). Doc. Nos. 41 and 42. Thus, Tartan
Fields Golf Club is the only remaining defendant.
With this background in mind, the Court proceeds to consider the merits of the motions
presently before the Court.
II.
A. Motion to Substitute Parties and Counsel
On February 22, 2011, Plaintiffs filed a Motion to Substitute Parties and Counsel, Doc.
No. 43. In support of the motion, Plaintiffs represent that, pursuant to an agreement with
nonparty The Gerb, LLC [“The Gerb”], “all of Plaintiffs’ interest in and to the underlying lease

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documents and related documents and claims in this action” have been acquired by The Gerb.
Motion to Substitute, at 1. Thus, Plaintiffs request that The Gerb and its counsel be substituted
as Plaintiff and Plaintiff’s counsel, pursuant to Fed. R. Civ. P. 25(c). The motion is unopposed.
Fed. R. Civ. P. 25 addresses the substitution of parties. In particular, subsection (c)
provides:
(c) Transfer of Interest. If an interest is transferred, the action may be continued
by or against the original party unless the court, on motion, orders the transferee
to be substituted in the action or joined with the original party. The motion must
be served as provided in Rule 25(a)(3).
Under the circumstances presented, the Court concludes that substitution of The Gerb as
Plaintiff in this action is warranted.

B. Suggestion of Stay
On February 8, 2011, Reg Martin of Martin Management Services, Inc., the Receiver of
Defendant Tartan Fields Golf Club, filed a Suggestion of Stay. Doc. No. 40. According to
Martin, a stay of this case as against Tartan Fields Golf Club is warranted pursuant to paragraph
29 of the Revised Entry and Order issued by the Delaware County Common Pleas Court on June
12, 2009.
All creditors, claimants, bodies public, parties in interest, and all sheriffs,
marshals, and other officers, and their respective attorneys, servants, agents, and
employees and all other firms, persons and corporations be, and they hereby are,
jointly and severally enjoined and stayed from commencing or continuing any
action at law or suit or proceeding in equity to foreclose any lien or enforce any
claim against said Mortgaged Property or its business operations, or against the
Receiver, in any court. Without further order from this Court, all such entities or
individuals are further stayed from executing or issuing or causing the execution
or issuance out of any court of any writ, process, summons, attachment, subpoena,
replevin, execution or other process for the purpose of impounding or taking
possession of or interfering with, or enforcing any claim or lien upon said
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Mortgaged Property in the possession of the Receiver, and from doing any and all
things whatsoever to interfere with the Receiver in the discharge of his duties in
this proceeding or with the exclusive jurisdiction of this Court over said
Mortgaged Property and the Receiver.
Exhibit A, attached to Suggestion of Stay, Doc. No. 40, ¶29.
Plaintiff The Gerb argues that this state court order does not address its prosecution of
this action because this action “does not involve or pertain to the real property [of Tartan Fields
Golf Club] or the Receiver therefor.” Memorandum contra Suggestion of Stay, Doc. No. 46, at
1. Rather, this action simply seeks to determine Tartan Fields’ obligation under the CrossCorporate Lease Guaranty and “[n]either the Receiver nor the Mortgaged Property [are] in any
way involved or implicated in this claim.” Id., at 2.
The Receiver disagrees and argues that, should this action proceed, the state court
foreclosure action would be disrupted. “Unless [The Gerb] can establish that its claim of
guarant[y] is entitled to a secured position higher than that of General Electric Credit
Corporation, the prosecution of this matter appears to be a waste of client money and judicial
time.” Reply Memorandum, Doc. No. 47, at 2.
Although this action, which addresses the guaranty allegedly executed by Defendant
Tartan Fields Golf Club, does not specifically involve the mortgaged property that is the subject
of the action in state court, the claim asserted in this Court can nevertheless reasonably be
construed as a claim against the “business operations” of Tartan Fields Golf Club, within the
meaning of ¶ 29 of the state court’s Revised Entry and Order. At a minimum, this Court
concludes that its discretion is better exercised in staying the prosecution of this action pending
resolution of the state court action.

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III.
WHEREUPON, Plaintiffs’ Motion to Substitute Parties and Counsel, Doc. No. 43, is
GRANTED. The Gerb, LLC, is ORDERED SUBSTITUTED as Plaintiff in this action. The
Receiver’s Suggestion of Stay, Doc. No. 40, is GRANTED. This action is STAYED as to
Defendant Tartan Fields Golf Club, Ltd.
The Receiver is ORDERED to report on the status of the Delaware County state court
action no later than August 31, 2011.

June 6, 2011
DATE

s/ Norah McCann King
NORAH McCANN KING
UNITED STATES MAGISTRATE JUDGE

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