Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Revel opened an Atlantic City resort-casino, costing $2.4 billion. Revel entered into a 10-year lease with IDEA to run two nightclubs and a beach club. IDEA contributed $16 million of the projected cost of construction in addition to monthly rental payments. The Casino did not turn a profit. Revel filed a “Chapter 22” bankruptcy, seeking permission to sell its assets free of all liens and interests (including leases). The Bankruptcy Court approved and set an auction date. IDEA, concerned that the proposed sale would eliminate the value of its lease notwithstanding its $16 million investment, filed objections. No qualified buyer appeared. The court postponed the auction. A month later, Revel closed the Casino’s doors and barred tenants, IDEA gave notice that it intended to continue operating its beach club and nightclub and expected Revel to honor its obligations to provide uninterrupted utility service. In the meantime Polo agreed to buy the Casino for $90 million. Days before the sale hearing, Revel replied to IDEA’s objections. IDEA appealed an unfavorable order and sought a stay pending appeal, noting that, if the decision were not stayed, its appeal would be moot under 11 U.S.C. 363(m) once the sale closed. The district court denied the motion. The Third Circuit reversed, staying that part of the order that allowed Revel to sell the Casino free of IDEA’s lease. View "In re: Revel AC Inc" on Justia Law

A 2010 fire at an apartment in Erie, Pennsylvania took the lives of a tenant and her guest. The third-floor bedroom purportedly lacked a smoke detector and an alternate means of egress, both of which are required under the Section 8 housing choice voucher program (42 U.S.C. 1437f) in which Richardson participated. The district court rejected a defense of qualified immunity in a suit under 42 U.S.C. 1983 by the estates of the deceased. The Third Circuit reversed. State officials’ approval and subsidization of the apartment for the Section 8 program, even though the apartment allegedly failed to comply with Section 8’s standards, did not constitute a state-created danger toward the apartment’s tenant and her guest in violation of their constitutional substantive due process rights. View "Henry v. City of Erie" on Justia Law

In 1999, I-4 leased Florida land to Lazy Days, with an option to purchase, prohibiting assignment without written consent. In 2008, Lazy Days notified I-4 of its intention to file for Chapter 11 bankruptcy and assign the lease to LDRV. The parties negotiated a settlement agreement in 2009. I-4 consented to assignment. Lazy Days agreed not to “argue against the Bankruptcy Court abstaining from consideration of Lease interpretation issues ... except to the extent necessary in connection with the assumption and assignment of the Lease.” The agreement provided that “there is no intent to, nor is the Lease modified in any respect,” but did not state whether the purchase option survived. The Bankruptcy Court confirmed a reorganization plan incorporating the agreement and closed the case in 2010. In 2011, LDRV attempted to exercise the option. The parties each filed state court lawsuits and LDRV moved to reopen in Bankruptcy Court, which held that the anti-assignment provision was unenforceable and that refusal to honor the option violated the agreement. The district court vacated. The Third Circuit reversed, holding that the Bankruptcy Court properly exercised jurisdiction; the agreement’s exception applied because the proceeding was “in connection with ... assignment of the Lease.” The court rejected arguments that the parties agreed to waive application of 11 U.S.C. 365(f)(3) and that the Bankruptcy Court committed an unconstitutional taking and denied I-4 due process. View "In Re: Lazy Days' RV Ctr., Inc." on Justia Law