United States District Court, W.D. Virginia, Abingdon Division
James P. Jones United States District Judge Robert T.
Copeland, Copeland Law Firm, P.C., Abingdon, Virginia, for
E. Shmidheiser, III, Lenhart Pettit, Harrisonburg, Virginia,
P. Jones, United States District Judge.
bankruptcy adversary proceeding, the debtor and appellant,
Terry Properties, LLC (the “Debtor”), appeals the
judgment of the bankruptcy court granting summary judgment as
to the appellee, Farm Credit of the Virginias, ACA
(“Farm Credit”), denying summary judgment as to
the Debtor, and denying the motion of the Debtor to amend its
Complaint. For the reasons described below, I will affirm the
judgment of the bankruptcy court.
November 2016, the Debtor filed a voluntary petition for
relief under Chapter 12 of the Bankruptcy Code in the United
States Bankruptcy Court for the Western District of Virginia
(the “Bankruptcy Court”). Shortly thereafter, the
Debtor commenced the present adversary proceeding against
Farm Credit, seeking to avoid a transfer by the Debtor in
October 2015 pursuant to 11 U.S.C. § 548(a)(1)(B). Farm
Credit subsequently moved for summary judgment. In response,
the Debtor cross-moved for summary judgment. It then moved to
amend its original Complaint. All three motions were fully
briefed and orally argued in a hearing before the Bankruptcy
the hearing, the Bankruptcy Court (Paul M. Black, J.) issued
a Memorandum Opinion in which it granted summary judgment as
to Farm Credit, denied summary judgment as to the Debtor, and
denied the Debtor' request to amend its Complaint. The
Debtor appealed to this court, which has jurisdiction under
28 U.S.C. § 158(a)(1) . The appeal has been fully
briefed and orally argued. For the reasons that follow, I
will affirm the decision of the Bankruptcy Court.
Standard of Review.
this case is a “core proceeding, ” the Bankruptcy
Court had the power to, and did, enter a final judgment.
See 28 U.S.C. § 157(b)(1) & (b)(2)(H);
see also Stern v. Marshall, 564 U.S. 462, 474
(2011). I therefore review this appeal under
“traditional appellate standards, ” id.
at 475; that is, I defer to the Bankruptcy Court's
findings of fact unless clearly erroneous, and I review the
Bankruptcy Court's conclusions of law de novo.
Fed.R.Bankr.P. 8013; see also Stern, 564 U.S. at 515
(Scalia, J., concurring).
Bankruptcy Court noted in its Memorandum Opinion, the facts
underlying this case are clear from “the record and the
documents filed by the parties, none of which have been
called into legitimate question.” Mem. Op., R. at 67,
ECF No. 2. I agree with and adopt the Bankruptcy Court's
findings of fact as described in its Memorandum Opinion. A
recitation of these facts is below.
The present dispute stems from a Loan Restructure Agreement
dated October 19, 2015 (the “Agreement”) . . . .
The Agreement is between Farm Credit as Lender; the Debtor;
Terry Dairy, LLC (“Dairy LLC”); David Wilmer
Terry (“David Terry”) and Jacob Jerome Terry
(“Jacob Terry”), trustees of the Ernest Epperson
Terry Trust, a testamentary trust (the “Trust”);
and David Terry, Jason B. Terry, Jacob Terry, and Levi Ernest
Terry individually. The individual Terrys and the Trust are
jointly and severally defined as the “Borrower”
in the Agreement.
As of the date of the Agreement, the Borrower . . . was
indebted to Farm Credit in connection with five different
obligations: (1) a 2015 Non Revolver Loan in the original
principal amount of $200, 000.00, (2) a 2015 Fixed Rate Loan
in the original principal amount of $1, 034, 189.35, (3) a
2012 Fixed Rate Loan in the original principal amount of
$110, 000.00, (4) a 2010 Non Revolver Loan in the original
principal amount of $1, 400, 000.00, and (5) a 2009 Fixed
Rate Loan in the original principal amount of $518, 000.00,
all as modified or extended.
R. at 67-68.
five obligations were secured by, among other things, three
credit line deeds of trust (the “Deeds of Trust”)
on real property located in Wythe and Smyth Counties,
Virginia (the “Property”). Each of the Deeds of
Trust named the Trust as the Grantor and secured any and all
indebtedness of the “Grantor” - that is, the
Trust - to Farm Credit. R. at 68. The Deeds of Trust
secured maximum principal amounts of (1) $518, 000, (2) $1,
400, 000, and (3) $110, 000, respectively. Id.;
Agreement, R. at 29, ECF No. 3.
to the Agreement, the Borrower had sought to restructure its
loans with Farm Credit in March 2015. Farm Credit denied the
application as submitted, and the parties subsequently
negotiated a “mutually agreeable restructure plan,
” which is captured in the Agreement. R. at 30. In the
Agreement, the Borrower indicated to Farm Credit that the
Trust would be “dissolve[d] and liquidate[d] . . . with
its assets and liabilities (including the liabilities of the
Trust to Lender with respect to the Loans and Loan Documents)
being divided between, transferred to and assumed by the
Dairy LLC and [the Debtor].” Id.
Agreement also set forth the terms and conditions under which
Farm Credit agreed to the dissolution of the Trust and the
transfer of its assets to the Debtor and Dairy LLC. One
Property shall be transferred to [the Debtor] by deed of
assumption acceptable to [Farm Credit] in form and substance,
pursuant to which [the Debtor] acknowledges and agrees by
countersignature to assume all obligations of the Trust under
and with respect to the Deeds of Trust, the Notes and the
other loan Documents.
Id. The Agreement also provided that:
Upon transfer of the real estate from the Trust to [the
Debtor] (which shall occur by deed of assumption approved by
[Farm Credit] as described . . . above), [the Debtor] shall
take title subject to the lien of the Deeds of Trust, which
it acknowledges. [The Debtor] agrees to perform all
obligations under the Deeds of Trust, and will execute and
deliver any and all documents and instruments requested by
[Farm Credit] to evidence, replace, or restate and
consolidate the Deeds of Trust.
R. at 34. In addition, the Agreement further stated:
To facilitate such transfer and as a condition to the
restructure of the Loans under this Agreement, Dairy LLC and
[the Debtor], jointly and severally, hereby expressly assume
and promise to pay and perform all obligations of the Trust
under the Notes, Deeds of Trust, and other Loan Documents to
which the Trust is a party.
to the Agreement, on October 19, 2015, a Deed of Assumption
was executed by which the Trust conveyed the Property,
subject to the Deeds of Trust, to the Debtor. See Deed of
Assumption, R. at 54, ECF No. 3. On the same day, the Debtor
executed a Credit Line Deed of Trust Modification and
Substitution of Trustee for each of the three Farm Credit
Deeds of Trust (“Deed of Trust Modifications”).
Importantly, the Bankruptcy Court determined that the
execution of the Deed of Trust Modifications occurred
“[c]ontemporaneously with the execution of the Deed of
Assumption.” Mem. Op., R. at 69, ECF No. 2. It also
found that the Deed of Trust Modifications:
[C]hanged the definition of “Grantor” to Terry
Properties, LLC (the Debtor), confirmed that the indebtedness
secured included, without limitation, all indebtedness and
obligations of the Terrys individually, the new Grantor,
Terry Dairy, LLC and/or the Trust to Farm Credit, as well as
any modifications, extensions or renewals thereto. The