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Brea Union Plaza I, LLC v. Toys "R" US, Inc.

United States District Court, E.D. Virginia, Richmond Division

July 23, 2018

BREA UNION PLAZA I, LLC, Appellant,
v.
TOYS "R" US, INC et al., Appellees.

          MEMORANDUM OPINION

          M. Hannah Lauck, United States District Judge.

         This matter comes before the Court on Appellant Brea Union Plaza I, LLC's ("Brea") Motion to Stay (the "Motion to Stay").[1] (ECF No. 2.) Appellees Toys "R" Us, Inc., et al ("TRU") responded, (ECF No. 10), and Brea replied, (ECF No. 11). The matter is ripe for disposition. The Court exercises jurisdiction pursuant to 28 U.S.C. § 158(a)(1).[2]

         The Court dispenses with oral argument because the materials before it adequately •j present the facts and legal contentions, and argument would not aid the decisional process.[3] For the reasons that follow, the Court will deny the Motion to Stay. (ECF No. 2.)

         I. Factual and Procedural Background

         In 1996, Toys "R" Us Delaware, Inc. ("TRU Delaware") opened a Babies "R" Us store in Brea Union Plaza in California pursuant to a lease between TRU Delaware and Brea Union Partners (the "TRU Lease"). Brea Union Plaza I, LLC ("Brea") is the successor in interest to Brea Union Partners.

         In 2009, Brea entered into a lease with Ross Dress for Less, Inc. ("Ross") for another parcel in the same shopping center (the "Ross Lease"). The Ross Lease includes an exclusive-use provision prohibiting Brea from leasing any parcel to an entity that would sell "off-price" apparel in competition with Ross.

         On February 27, 2018, as part of ongoing bankruptcy proceedings, TRU sought approval from the United States Bankruptcy Court for the Eastern District of Virginia (the "Bankruptcy Court") of bidding procedures to sell certain real property and unexpired real property leases, including the TRU Lease. The Bankruptcy Court approved TRU's proposed bidding process. Following the bidding process, TRU sought the Bankruptcy Court's approval to assign the TRU Lease to Burlington Coat Factory Warehouse Corporation ("Burlington").

         Brea objected to the proposed assignment, claiming it would cause Brea to be in breach of the Ross Lease. The Ross Lease provides:

No tenant or occupant of the Shopping Center (other than [Ross]) may use, and Landlord, if it has the capacity to do so, shall not permit any other tenant or occupant of the Shopping Center to (a) use its premises for the Off Price sale (as hereinafter defined) of apparel....

(Mem. Supp. Mot. Stay ¶ 6 (alterations in original); see also Bankr. Docket No. 3590-7 4, ECF No. 3-2.)

         On April 13, 2018, the Bankruptcy Court entered an order (the "Original Assignment Order") authorizing TRU to "consummate fifteen sale agreements and 28 lease termination agreements." (Resp. ¶ 7 (citing Bankr. Docket No. 2715).) The Original Assignment Order did not authorize the assignment of the TRU Lease from TRU to Burlington. On May 10, 2018, the Bankruptcy Court held a hearing on the proposed lease assignment and on May 25, 2018, the Bankruptcy Court entered a Memorandum Opinion and Order approving the assignment of the TRU Lease to Burlington (the "Burlington Assignment"). On May 30, 2018, the Bankruptcy Court made clerical changes to its original opinion and redocketed the opinion (the "Bankruptcy Opinion"). On May 31, 2018, the Bankruptcy Court entered a supplemental order (the "Supplemental Order") authorizing the assumption and sale of the TRU Lease from TRU to Burlington and specifying that "all the relief granted in the Original [Assignment] Order shall apply to the [Burlington Assignment], as applicable." (Mem. Supp. Mot. Stay ¶ 11 (citing Suppl. Order 3, App. 467, ECF No. 3-5).)

         On June 1, 2018, in accordance with the Bankruptcy Court's Supplemental Order, TRU "executed the assumption and assignment agreement with Burlington and Burlington took possession of and occupied the premises." (Resp. Mot. Stay ¶ 10, ECF No. 10.)

         On June 13, 2018, Brea filed a Notice of Appeal in this Court (the "Appeal"), appealing the Bankruptcy Opinion and the Supplemental Order. (ECF No. 1.) On June 20, Brea moved- in the Bankruptcy Court-for a stay of the Bankruptcy Opinion and Supplemental Order pending the Appeal in this Court. Brea also asked the Bankruptcy Court for an expedited hearing on its Motion to Stay. After a June 25, 2018 hearing, the Bankruptcy Court denied Brea's Motion to Stay.

         On July 3, 2018, more than one month after TRU assigned the TRU Lease to Burlington, Brea filed the Motion to Stay in this Court. Brea sought an expedited ruling on the Motion to Stay, (ECF No. 4), which TRU did not oppose, (ECF No. 7). After full briefing, (ECF Nos. 10, 11), the Motion to Stay is ripe for adjudication. For the reasons that follow, the Court will deny the Motion to Stay.

         II. Analysis

         A. Legal Standard for Stays Pending Appeal

         The United States Court of Appeals for the Fourth Circuit has articulated the following test to determine whether a stay pending appeal should be granted:

a party seeking a stay must show (1) that he [or she] will likely prevail on the merits of the appeal, (2) that he [or she] will suffer irreparable injury if the stay is denied, (3) that other parties will not be substantially harmed by the stay, and[, ] (4) that the public interest will be served by granting the stay.

Long v. Robinson, 432 F.2d 977, 979 (4th Cir. 1970). This test applies to appeals from the Bankruptcy Court. See, e.g., In re Alpha Natural Res., Inc., 556 B.R. 249, 253 (Bankr. E.D. Va. 2016). The first two factors are the most important. Realvirt, LLC v. Lee, 220 F.Supp.3d 704, 706 (E.D. ...


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