Case Doc 1 Filed 03/24/11 Entered 03/24/11 16:24:26 Desc Main Document Page 1 of 8

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1 Document Page 1 of 8 B 104 (FORM 104 (08/07 PLAINTIFFS ADVERSARY PROCEEDING COVER SHEET (Instructions on Reverse FULCRUM CONSTRUCTION, INC. ATTORNEYS (Firm Name, Address, and Telephone No. Travis W. Moon (Bar No Hamilton Moon Stephens Steele & Martin, PLLC 201 South College Street Charlotte Plaza, Suite 2020 Charlotte, North Carolina Telephone: PARTY (Check one box only Debtor Creditor Trustee U.S. Trustee/Bankruptcy Admin. Other DEFENDANTS ADVERSARY PROCEEDING NUMBER (Court Use Only PACIFIC AVENUE, LLC, PACIFIC AVENUE II, LLC, EPF COLLEGE STREET, LLC, REGIONS BANK AND BLUE AIR 2010, LLC ATTORNEYS (If Known PARTY (Check one box only Debtor Creditor Trustee U.S. Trustee/Bankruptcy Admin. Other CAUSE OF ACTION (WRITE A BRIEF STATEMENT OF CAUSE OF ACTION, INCLUDING ALL U.S. STATUTES INVOLVED Avoidance and recovery of preferential transfers pursuant to 11 U.S.C. Sections 547, 550 and 551. Action to determine validity, priority, or extent of lien under Bankruptcy Rule 7001(2 and declaratory judgment under Bankruptcy Rule 7001(9. NATURE OF SUIT (Number up to five (5 boxes starting with lead cause of action as 1, first alternative cause as 2, second alternative cause as 3, etc. FRBP 7001(1 Recovery of Money/Property 11-Recovery of money/property turnover of property 12-Recovery of money/property preference 13-Recovery of money/property fraudulent transfer 14-Recovery of money/property other FRBP 7001(2 Validity, Priority or Extent of Lien 21-Validity, priority or extent of lien or other interest in property FRBP 7001(3 Approval of Sale of Property 31-Approval of sale of property of estate and of a co-owner - 363(h FRBP 7001(6 Diachargeability (continued 61-Dischargeability - 523(a(5, domestic support 68-Disehargeability - 523(a(6, willful and malicious injury 63-Disehargeability - 523(a(8, student loan 64-Disehargeability - 523(a15, divorce or separation Obligation (other than domestic support 65-Disehargeability other FRBP 7001(7 Injunctive Relief 71-Injunctive relief imposition of stay 72-Injunctive relief other FRBP 7001(4 Objection/Revocation of Discharge 41 -Objection / revocation of discharge 727(c,(d,(e FRBP 7001(5 Revocation of Confirmation 51-Revocation of confirmation FRBP 7001(6 Dischargeability 66-Dischargeability - 523(a(1,(14,(14A priority tax claims 62-Disehargeability - 523(a(2, false pretenses, false representation, actual f raud 67-Disehargeability - 523(a(4, fraud as fiduciary, embezzlement, larceny (continued next column FRBP 7001(8 Subordination of Claim or Interest 81-Subordination of claim or interest PREP 7001(9 Declaratory Judgment 91-Declaratory judgment PREP 7001(10 Determination of Removed Action 01-Determination of removed claim or cause Other SS-SIPA Case 15 U.S.C. 78aaa et.seq. 02-Other (e.g. other actions that would have been brought in state court if unrelated to bankruptcy case Check if this case involves a substantive issue of state law Check if this is asserted to be a class action under FRCP 23 Check if a jury trial is demanded in complaint Demand $1,100, Other Relief Sought { DOC V. F ;}

2 Document Page 2 of 8 BANKRUPTY CASE IN WHICH THIS ADVERSARY PROCEEDING ARISES NAME OF DEBTOR PACIFIC AVENUE, LLC DISTRICT IN WHICH CASE IS PENDING WESTERN DIVISIONAL OFFICE CHARLOTTE BANKRUPTCY CASE NO and NAME OF JUDGE GEORGE R. HODGES RELATED ADVERSARY PROCEEDING (IF ANY PLAINTIFF DEFENDANT ADVERSARY PROCEEDING NO. DISTRICT IN WHICH ADVERSARY IS PENDING DIVISION OFFICE NAME OF JUDGE SIGNATURE OF ATTORNEY (OR PLAINTIFF /s/ Travis W. Moon DATE March 24, 2011 PRINT NAME OF ATTORNEY (OR PLAINTIFF Travis W. Moon INSTRUCTIONS The filing of a bankruptcy case creates an estate under the jurisdiction of the bankruptcy court which consists of all of the property of the debtor, wherever that property is located. Because the bankruptcy estate is so extensive and the jurisdiction of the court so broad, there may be lawsuits over the property or property rights of the estate. There also may be lawsuits concerning the debtor s discharge. If such a lawsuit is filed in a bankruptcy court, it is called an adversary proceeding. A party filing an adversary proceeding must also must complete and file Form 104, the Adversary Proceeding Cover Sheet, unless the party files the adversary proceeding electronically through the court s Case Management Electronic Case Filing system (CM/ECF, (CM/ECF captures the information on Form 104 as part of the filing process. When completed, the cover sheet summarizes basic information on the adversary proceeding. The clerk of court needs the information to process the adversary proceeding and prepare required statistical reports on court activity. The cover sheet and the information contained on it do not replace or supplement the filing and service of pleadings or other papers as required by law, the Bankruptcy Rules, or the local rules of court. The cover sheet, which is largely self-explanatory, must be completed by the plaintiff s attorney (or by the plaintiff if the plaintiff is not represented by an attorney. A separate cover sheet must be submitted to the clerk for each complaint filed. Plaintiffs and Defendants. Give the names of the plaintiffs and defendants exactly as they appear on the complaint. Attorneys. Give the names and addresses of the attorneys, if known. Party. Check the most appropriate box in the first column for the plaintiffs and the second column for the defendants. Demand. Enter the dollar amount being demanded in the complaint. Signature. This cover sheet must be signed by the attorney of record in the box on the second page of the form. If the plaintiff is represented by a law firm, a member of the firm must sign. If the plaintiff is pro se, that is, not represented by an attorney, the plaintiff must sign. { DOC V. F ;}

3 Document Page 3 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA (Charlotte Division In re: Chapter 11 PACIFIC AVENUE, LLC Case No and Jointly Administered Debtor, FULCRUM CONSTRUCTION, INC. Plaintiff, v. Adversary Proceeding No. 10- PACIFIC AVENUE, LLC, PACIFIC AVENUE II, LLC, EPF COLLEGE STREET, LLC f/k/a EPP COLLEGE STREET, LLC, REGIONS BANK, and BLUE AIR 2010, LLC, Defendants. COMPLAINT Fulcrum Construction, LLC ( Fulcrum, complaining of Pacific Avenue, LLC ( Pacific, Pacific Avenue II, LLC ( Pacific II, EPF College Street, LLC f/k/a EPP College Street, LLC ( EPF, Regions Bank ( Regions, and Blue Air 2010, LLC ( Blue Air alleges as follows: INTRODUCTION As provided for by Rules 3001 and 7001(2 of the Federal Rules of Bankruptcy Procedure, this is an action by the Plaintiff to determine the validity, priority, and extent of liens or other interest in payments made, and to be made, by the City of Charlotte to Pacific, Pacific II, and/or EPP under a Reimbursement Agreement dated December 17, 2004, as amended, related to

4 Document Page 4 of 8 certain improvements to real property made by Fulcrum at what is commonly known as the EpiCentre Project. THE PARTIES AND JURISDICTION 1. Plaintiff Fulcrum Construction, LLC ( Fulcrum is a limited liability company organized and existing under the laws of the State of Georgia, authorized to do business in the State of North Carolina, and at all times relevant to this action has been licensed as a General Contractor by the North Carolina Licensing Board for General Contractors. 2. Upon information and belief, Defendants Pacific and Pacific II are limited liability companies organized and existing under the laws of the State of North Carolina, each with their principal place of business in Mecklenburg County, North Carolina. 3. Upon information and belief, Defendant EPF is a limited liability company organized and existing under the laws of the State of North Carolina, with its principal place of business in Mecklenburg County, North Carolina. 4. Upon information and belief, Defendant Regions is a state-chartered bank incorporated under the laws of Alabama. It has branches in several states, including North Carolina, and at all times relevant to this action has transacted business in Charlotte, Mecklenburg County, North Carolina. 5. Upon information and belief, Defendant Blue Air is a limited liability company organized and existing under the laws of the State of North Carolina, with its principal place of business in Mecklenburg County, North Carolina. 6. On November 29, 2010, a Transfer of Claim other than for security was filed by Blue Air (Doc. No. 207, giving notice pursuant to Rule 3001(e(2 of the Federal Rules of Bankruptcy Procedure of the transfer of a Claim in the amount of $93,970,

5 Document Page 5 of 8 7. On July 22, 2010 (the Petition Date, Debtor, Pacific Avenue, LLC, filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11.U.S.C. 101 et seq. (the Bankruptcy Code. 8. This is a core proceeding under, without limitation, 20 U.S.C. 157(b(2(K. GENERAL ALLEGATIONS The City of Charlotte Reimbursement Agreement 9. The City of Charlotte (the City and EpiCentre Associates, LLP ( EpiCentre entered into a Reimbursement Agreement dated December 17, 2004 (the Reimbursement Agreement. The Reimbursement Agreement called for the City to reimburse EpiCentre for a portion of the costs for all improvements, relocation or closings to be made to roads, sewers, streets, drainage, utilities and other public facilities or otherwise required in connection with the EpiCentre Project including sidewalks, pedestrian amenities, pedestrian passage from the Light Rail to college street ( Infrastructure Improvements. 10. The City agreed to reimburse EpiCentre in the amount of $2,200, representing a portion of the cost of the Infrastructure Improvements. This reimbursement was payable $550, upon the opening of the Project and like amounts 12 months, 24 months and 36 month thereafter. 11. Originally, these payments contemplated that the Infrastructure Improvements would be fully completed before the first payment came due. However, as of May 28, 2008, the Reimbursement Agreement was amended to delete the requirement that all Infrastructure Improvements be completed prior to the first payment. As amended, the Reimbursement Agreement provides that the first three payments would be due only after the City inspected and accepted those portions of the Infrastructure Improvements which had been completed. Those 3

6 Document Page 6 of 8 three payments would be in 12 month increments. The final payment would be due only after completion of all of the Infrastructure Improvements. 12. EpiCentre assigned its interests in the Reimbursement Agreement to Pacific by assignment dated December 17, Pacific later assigned the Reimbursement Agreement to EPP College Street, LLC by assignment dated January 1, The first $550, installment was paid by the City to Pacific in May The second $550, installment was paid to Pacific in May The third $550, payment was paid to EPP College Street, LLC in June 2010, which is being held in trust pending this action. The fourth $550, installment will not become due until June 2011 at which time all the Infrastructure Improvements will have to be fully completed. 14. After the Petition Date, Fulcrum completed the Infrastructure Improvements at Fulcrum s expense to ensure that the fourth $550, installment would be paid by the City. FIRST CLAIM FOR RELIEF (Equitable Lien upon Funds City Reimbursement 15. Fulcrum incorporates herein by reference the allegations of the preceding paragraphs as of fully set forth herein. 16. Under North Carolina law, a general contractor like Fulcrum can obtain an equitable lien against funds to be paid to an owner for improvements made to the owner s property that is enforceable by a direction to pay the contractor out of the fund. 17. In this case, a condition to Pacific, and subsequently EPF, of obtaining the Reimbursement Agreement payments is that the Infrastructure Improvements must be completed under the terms of the Reimbursement Agreement. 4

7 Document Page 7 of Accordingly, Fulcrum s completion of the Infrastructure Improvements allows the Reimbursement Agreement payments to be made. If these are paid to Pacific, EPF or any other party instead of Fulcrum, those parties would be unjustly enriched. 19. Moreover, in completing the Infrastructure Improvements, Fulcrum detrimentally relied upon assurances from Pacific that it would be paid for the Infrastructure Improvements. 20. Having received the full benefit of Fulcrum s performance of the construction contracts that have improved the real property to which Regions claims a first position lien priority, Regions would be unjustly enriched if it were allowed to receive and maintain the benefits of Fulcrum s work without bearing the burden of payment. 21. Fulcrum is therefore entitled to an equitable lien on the amount remaining in the third $550, Reimbursement Agreement payment that was paid to EPP College Street, LLC in June 2010, which is being held in trust pending this action, and the fourth $550, that will not become due until June 2011, which equitable lien is enforceable by a direction to pay Fulcrum out of those funds. SECOND CLAIM FOR RELIEF (Declaratory Judgment 22. Fulcrum incorporates herein by reference the allegations of the preceding paragraphs as of fully set forth herein. 23. An actual controversy exists between Fulcrum and the Defendants with respect to the validity, priority, and extent of liens or other interest in payments made, and to be made, by the City of Charlotte to Pacific, Pacific II, and/or EPP under the Reimbursement Agreement. 60. Fulcrum is entitled to a declaratory judgment finding that: (a Fulcrum has a valid first priority lien in and to the third $550, Reimbursement Agreement payment that was paid to EPP College Street, LLC in June 2010, 5

8 Document Page 8 of 8 which is being held in trust pending this action and the fourth $550, that will not become due until June WHEREFORE, Plaintiff prays the Court as follows: 1. That the Court declare that Fulcrum has a valid first priority lien in and to both (a the third $550, Reimbursement Agreement payment that was paid to EPP College Street, LLC in June 2010, which is being held in trust pending this action and the fourth $550, that will not become due until June 2011 and (b the more than $3 million of unfunded construction loan proceeds under Regions agreements with Pacific and Pacific II (collectively the Liened Funds 2. That the Court enter an Order and Judgment directing the holders of the Liened Funds to pay such funds to Fulcrum; 3. That Fulcrum have and recover its costs in this action, including a reasonable attorney s fee as by law allowed: 4. For such other and further relief as to which the Court deems proper and just. This the 24 th day of March HAMILTON MOON STEPHENS STEELE & MARTIN, PLLC By: /s/ Travis W. Moon Travis W. Moon (Bar No Mark R. Kutny (Bar No South College Street, Suite 2020 Charlotte, NC Telephone: ( TeleFax: (