Preview:

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

In Re: EQUIMED, INC. Debtor

* * *

*

*

*

*

* * * * * * * * o0o * * * CIVIL NO. H-00-3487 Bankruptcy No. 00-1-1147-PM Adversary No. 00-1469-PM

KEYSTONE ONCOLOGY, LLC Plaintiff vs. MERRILL COHEN, CHAPTER 7 TRUSTEE FOR EQUIMED, INC.; TREATMENT CENTERS LIMITED PARTNERSHIP and PFG CAPITAL CORPORATION, Defendants * * *

MEMORANDUM AND ORDER

Bankruptcy proceedings involving EquiMed, Inc. ("EquiMed") were commenced on February 4, 2000 when certain creditors filed an involuntary petition in bankruptcy in the United States Bankruptcy Court for the No. District of Maryland. Merrill In re EquiMed, was Inc.,

Bankruptcy

00-1-1147-PM.

Cohen

thereafter

appointed Trustee for the bankruptcy estate of the debtor EquiMed. On April 27, 2000, the Trustee filed in the Bankruptcy Court an adversary proceeding naming as defendants some 89 persons and entities. Adversary No. 00-1180-PM (the "Trustee Adversary

Proceeding"). On May 2, 2000, this Court entered an Order withdrawing reference of the EquiMed bankruptcy case with respect to all matters which the proposed settlement in the related Rahman action1 had designated for Bankruptcy Court review and with respect to the Trustee Adversary Proceeding. As withdrawn, that case has been

docketed herein as In re EquiMed, Inc., Civil No. H-00-1216 (the "EquiMed case"). In its Memorandum and Order of July 24, 2000

entered in the Rahman case, in the EquiMed case and in Civil No. H00-1469, this Court, inter alia, denied motions seeking to vacate its Order withdrawing from the Bankruptcy Court reference of the Trustee Adversary Proceeding. In re EquiMed, Inc., 2000 WL 1074304 (D. Md. 2000). In that same Memorandum and Order, this Court also

denied a motion filed by Dr. Douglas R. Colkitt seeking to withdraw reference of the entire bankruptcy case. Id. at *6.

On August 31, 2000, Keystone Oncology, LLC ("Keystone") filed a complaint in the EquiMed bankruptcy case which was docketed therein as Adversary In No. 00-1469 (the "Keystone primarily had a Adversary sought a

Proceeding"). declaratory

that

action,

Keystone which

judgment

determining

party

sublease

interest in certain real property located at 775 South Arlington Avenue, Harrisburg, Pennsylvania (the "Premises"). Named as

defendants in the Keystone Adversary Proceeding are EquiMed's Trustee Merrill Cohen, Treatment Centers Limited Partnership

United States ex rel. Rahman v. Oncology Associates, P.C., et al., Civil No. H-95-2241. 2

1

("Treatment Centers") and PFG Capital Corporation ("PFG").2 The Trustee has now filed in this Court a motion to withdraw reference of the Keystone Adversary Proceeding and to consolidate that case with Civil No. H-00-1216. The Trustee contends that the

Keystone Adversary Proceeding and the Trustee Adversary Proceeding should be consolidated for reasons of judicial economy and because common legal and factual issues are involved in the two cases. In support of his motion, the Trustee has submitted a

memorandum of law and various exhibits. Trustee's motion has been filed by

An opposition to the and a separate

Keystone

opposition has been jointly filed by Treatment Centers and PFG. Memoranda and exhibits in support of and in opposition to the pending motion to withdraw reference have been submitted by the parties. The Court has now had an opportunity to review the parties' submissions and has determined that no hearing is necessary for a decision. See Local Rule 105.6. For the reasons stated herein, the Trustee's motion to withdraw reference of the Keystone Adversary Proceeding and to consolidate that case with Civil No. H-00-1216 will be denied. I Background Facts Keystone presently operates the Greater Harrisburg Cancer Center (the "Center") which is located at the Premises in

Harrisburg, Pennsylvania.

Treatment Centers and PFG are together

the owner of the Premises (hereinafter referred to jointly as "the
2

PFG is presently a general partner of Treatment Centers. 3

Landlord").

Keystone claims to be the sublessee of the Premises According to Keystone,

which had earlier been sublet to EquiMed.

the Landlord consented in February of 1999 to the transfer of EquiMed's interest in the Premises to Keystone. However, although

having earlier indicated that it would approve the transfer, the Landlord in May of 1999 advised EquiMed that it was not approving EquiMed's subletting of the Premises to Keystone. In the complaint filed by it in the Adversary Proceeding, Keystone has asked the Bankruptcy Court to declare that it is entitled to continued possession of the Premises pursuant to the terms of the EquiMed sublease and to further declare that the EquiMed sublease does not constitute property of EquiMed's bankruptcy estate. Litigation of the Keystone Adversary Proceeding is well under way in the Bankruptcy Court. November 2, 2000, and dates A pretrial conference was held on were set for the completion of

discovery and for a trial of the case.

The discovery deadline has

now been extended by consent until March 15, 2001, and the deadline for the submission of dispositive motions has been set for April 13, 2001. The trial has been scheduled for June 7, 2001.3

According to Keystone, the trial is scheduled to last less than one-half day. Pursuant to Scheduling Order II entered by this Court on November 29, 2000 in Civil No H-00-1216, depositions and all other discovery in the Trustee Adversary Proceeding must be completed by

In its opposition to the Trustee's motion, Keystone indicated that February 1, 2001 was the discovery deadline in the case and that the trial date was May 31, 2001. These dates have recently been extended by agreement of the parties. 4

3

August 31, 2001. Motions for summary judgment or other substantive motions must be filed by September 10, 2001, and a pretrial conference has been scheduled in the EquiMed case for September 20, 2001. No trial date has been set pending the filing by the parties

of dispositive motions and the scheduling of a hearing on such motions. II Discussion In his motion to withdraw reference and to consolidate, the Trustee asserts that determination of the ownership of the

leasehold interest in the Premises is integral to both the Keystone Adversary Proceeding and the Trustee Adversary Proceeding. Trustee debtor's argues that for the efficient there administration be a of The the

bankruptcy

estate,

must

consistent

determination of that issue.

In the Trustee Adversary Proceeding,

he has sought to avoid and recover for the estate of the debtor EquiMed fraudulent transfers of property, and it is argued that the sublease under which Keystone away is from operating the the Center The was

fraudulently

transferred

debtor.

Trustee

maintains that common issues of fact and law are before the Court both in the Keystone Adversary Proceeding and in the Trustee Adversary Proceeding, and he asks that following withdrawal of reference of the Keystone Adversary Proceeding, the two matters be consolidated pursuant to Bankruptcy Rule 7042 and Rule 42(a) of the Federal Rules of Civil Procedure. Keystone, Treatment Centers and PFG all oppose the Trustee's motion. They claim that the Trustee has not shown proper cause for

5

withdrawal of the Keystone Adversary Proceeding.

According to

these three parties, the case is well under way in the Bankruptcy Court. They maintain that withdrawal and consolidation would delay a determination of the issues raised by

inordinately

Keystone's complaint, with resulting prejudice to each of them. The parties agree that the Keystone Adversary Proceeding is a core proceeding pursuant to 28 U.S.C.

Download Keystone Oncology, LLC v Merrill Cohen, Chapter 7 Trustee for Equimed Inc..pdf

Maryland Law