UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF LOUISIANA

ALEXANDRIA DIVISION

IN RE: NR GROUP, LLC BANKRUPTCY CASE NO.

DEBTOR 08-81329

CITY OF ALEXANDRIA, PLAINTIFF ADVERSARY CASE NO.

VS.

CAPITAL ONE, N.A. and TED BRETT 09-08045

BRUNSON, CHAPTER 7 TRUSTEE

MEMORANDUM IN SUPPORT OF MOTION BY CITY OF ALEXANDRIA

FOR PARTIAL SUMMARY JUDGMENT REQUESTING DECLARATORY RELIEF AND
JUDGMENT AS TO COUNTS ONE, TWO AND THREE OF THE ORIGINAL COMPLAINT

May it please the court:

I. Facts

A. Historical Background

The City of Alexandria, hereinafter referred to as “City”, is the fee simple owner of a tract located

between Fourth Street, Jackson Street, Main Street and Fisk Street. There is presently located on that tract

a hotel and convention center. In 1983, the City obtained an Urban Development Action Want for the

purpose of buying blighted property and constructing a convention center for lease to a developer who would

construct a hotel on the leased premises under a long term lease.

On January 7,1987, the Sheriff adjudicated the leasehold interest created by the Ground Lease to

Hibernia National Bank (now Capital One), as Trustee for the various lenders. Subsequently, on May 14,

1988, the lenders transferred the leasehold interest to an entity called Alexandria Hotel Property, Inc. by an

Act Of Conveyance And Contribution filed and recorded in Conveyance Book 1231 at Page 767 of the

Rapides Parish records.

On January 11, 1991, the City and Dimension Development Company, Inc. executed a new Amended

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Ground Lease ("the Amended Lease") which restated and revised all of the terms of the Ground Lease. The

Amended Lease was filed and recorded on January 11, 1991 in Mortgage Book 1214 at Page 452 of the

Rapides Parish records. On that same date, Alexandria Hotel transferred all of its leasehold interest in the

property to RT Rapides Hotel Partnership ("Rapides Hotel") and Dimension assigned all of its leasehold

interest in the Amended Lease to Rapides Hotel.

On March 14,1995, the City and Rapides Hotel entered into an Amendment To Ground Lease ("the

Second Amendment") which was filed and recorded in Conveyance Book 1431 at Page 948 and in

Conveyance Book 1370 at Page 1 of the records of Rapides Parish which released from the Amended Lease

two tracts for the. purpose of allowing the City to construct the new Exhibition and Riverfront Center ("the

Exhibition Center").

Effective as of October 25, 1996, the City and Rapides Hotel entered into an amendment to the

Amended Lease ("the Third Amendment") which was filed and recorded on October 28, 1996 under Original

Instrument Number 1,036, 488 and in Mortgage Book 1429 at Page 539 of the Rapides Parish records.

Effective as of October 29,1996 by a Special Warranty Deed And Assumption Of Ground Lease ("the

Deed"), Rapides Hotel conveyed all of its right, title and interest in the Ground Lease and the Amended

Lease to Shaner Hotel Group Limited Partnership ("Shaner").

On December 15, 2003, Shaner assigned, transferred and conveyed to NR Group, the Debtor, all of

Shaner's right, title and interest in and to the Ground Lease and the Amended Lease by an Assignment And

Assumption Of Ground Lease filed and recorded in Conveyance Book 1680 at Page 221 and in Mortgage

Book 1959 at Page 53 of the Rapides Parish records.

B. Current Lease

On December 15, 2003, the City and NR Group L.L.C., hereinafter referred to as NR Group, entered

into an amended lease ("the Fourth Amendment") which was filed and recorded in Conveyance Book 1680

at Page 235 and in Mortgage Book 1959 at Page 67 of the Rapides Parish records to fix the rent for the period

from January 1, 2004 to December 31, 2008 at an annual rent of $35,000.00. Furthermore, on the same date,

the City executed an Estoppel Certificate And Acknowledgment ("the Estoppel") which was filed and

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recorded in Conveyance Book 1680 at Page 237 and in Mortgage Book 1595 at Page 69, which among other

things provided that all notices to N R Group would go to 3727 Kingston Street, Lake Charles, Louisiana

70603. Under the terms of the Estoppel, the City agreed to give notice to any leasehold mortgagee who sent

the City a true copy of its leasehold mortgage, together with written notice specifying the name and address

of the leasehold mortgagee, certain notice of default and termination that would be given to N R Group.

Also, on this day, by a Multiple Indebtedness Mortgage, NR Group mortgaged and hypothecated all of its

right, title and interest in the Ground Lease and the Amended Lease to Hibernia National Bank, now Capital

One, National Association ("Capital One"), which Multiple Indebtedness Mortgage is filed and recorded in

Mortgage Book 1959 at Page 74 of the Rapides Parish records.

On June 9, 2008, the City served N R Group with Written Notice of Default Under Amended Lease

("the Default Notice") which was received by N R Group and Capital One on June 10, 2008. The Default

Notice notified N R Group that N R Group had failed to pay the rent for the months of January through June

of 2008, failed to pay the property taxes to the Parish of Rapides for the year 2007, filed to provide the City

with duplicate originals of policies of insurance and failed to provide the City with a letter of credit

acceptable to the City in the amount of $85,000.00.

The Default Notice gave N R Group 30 days to cure the failure to pay rent and gave N R Group 60

days to cure other defaults. N R Group failed to care the defaults within the time specified in the Default

Notice and on August 18, 2008, the City served N R Group with a Notice To Vacate the leased premises

within 5 days.

The Notice To Vacate was delivered to N R Group before August 25, 2008 and a copy of the Notice

to Vacate was delivered to Capital One on August 19, 2008. N R Group failed to vacate the leased premises

and on October 28, 2008, the City filed in Alexandria City Court a Rule To Evict Tenant ("the Eviction

Proceeding") in the matter entitled "City of Alexandria vs. N R Group, L.L.C."

The Alexandria City Court signed an Order on October 29, 2008 directing N R Group show cause on the 18th

day of November 2008 at 8:00 a.m. why it should not be ordered to vacate the leased premises and deliver

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possession thereof to the City. N R Group was served with the Eviction Proceeding on November 3, 2008.

On November 14, 2008, N R Group filed Chapter 11 Bankruptcy petition.

C. Procedural Posture

Without conceding any rights regarding the termination of the lease pre-petition, the City of

Alexandria and the senior secured lender, Capital One, allowed the hotel to remain open on a month to month

basis, pending a resolution of the lease termination issue, under a Court Appointed Manager. The principals

of the Debtor have not managed the hotel.

The initial 120 day period for assumption or rejection of a non-residential lease under 11 U.S.C.

365(d)(4) expired March 14, 2009. This Court entered an Order signed March 18, 2009 extending the time

for the Debtor to assume or reject the non-residential lease for an additional 90 days (docket #114). The 90

day extension expired June 13, 2009. Just prior to the expiration of the additional 90 day period, the Internal

Revenue Service filed a Motion to Dismiss or Convert the Chapter 11 Case to Chapter 7. No Monthly

Operating Reports had been filed by Debtor or the Manager and the Motion filed by the Internal Revenue

Service indicated that taxes and tax returns had not been filed and paid by the Manager of the hotel.

In accordance with 11 U.S.C. 365(d)(4) the City filed its Ex Parte Motion by City of Alexandria for

Comfort Order Deeming Lease Rejected Post-Petition on June 30, 2009 (docket #153). The Debtor filed a

response to the Ex Parte Motion (docket #154) prompting this Court to enter an Order denying the Ex Parte

Motion and setting same for hearing (docket #156).

This Court entered an Order (docket #185) dated July 17, 2009 granting the Motion of the City to

Deem the Lease Rejected as of July 17, 2009 at midnight. This Court then entered an Order (docket #242)

converting the Chapter 11 case to one under Chapter 7. Brett Brunson was appointed Chapter 7 Trustee.

The City of Alexandria filed an Ex Parte Motion for Aid in Consummation on September 16, 2009

(docket #223), which Motion was granted by Order dated September 18, 2009 (docket #228).

Capital One filed its Motion for Reconsideration (docket #237) and this Court granted the Motion

for Reconsideration by Order dated September 29, 2009 (docket #244) and ordered that the matter be set for

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hearing on October 14, 2009.

Subsequently, the City of Alexandria filed the above adversary case on October 30, 2009. This Court

consolidated the Objection by City of Alexandria to the Proof of Claim by Capital One with this Adversary

Complaint by Order dated November 12, 2009 (docket #260).

The City attaches hereto and incorporates herein as Exhibit “A” a time line of events and

relevant factors to assist the Court.

II. Law & Argument

A. Standard for Granting Summary Judgment

Under Federal Rules of Bankruptcy, Rule 7056 as it incorporates Federal Rules of Civil Procedure

Rule 56(c), summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue

as to any material fact and that the moving party is entitled to judgment as a matter of law.” A fact is

“material” if it may affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is “genuine” if there is sufficient

evidence so that a reasonable jury could return a verdict for either party. Id.

The moving party bears the initial responsibility of informing the court of the basis for its motion,

and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions, and/or

affidavits which it believes demonstrates the absence of a genuine issue of material fact. Celotex Corp. v.

Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Lawrence v. Univ. of Tex. Med. Branch

at Galveston, 163 F.3d 309 (5th Cir. 1999). The moving party is not required to negate the elements of the

non-moving party’s case. Lawrence, 163 F.3d at 311. However, where the moving party bears the burden

of proof on an issue, it must produce evidence that would, if uncontroverted at trial, warrant a judgment as

a matter of law. Int’l Short Stop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991).

Once the moving party carries its initial burden, the burden then falls upon the non-moving party to

demonstrate the existence of a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio

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Corp., 475 U.S. 574, 584-88, 106 S.Ct. 1348, 1355-56 (1986). The non-moving party “must go beyond the

pleadings and designate specific facts in the record showing that there is a genuine issue for trial.” Wallace

v. Texas Tech. Univ., 80 F.3d 1042, 1047 (5th Cir. 1996) (citations omitted). This burden is not satisfied with

some metaphysical doubt as to the material facts, by conclusory or unsubstantiated allegations, or by a mere

scintilla of evidence. Little v. Liquid Air. Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). In

the absence of any proof, the court will not assume the non-moving party could or would prove the necessary

facts. Id.

B. Count One - Declaratory Relief is Appropriate

11 U.S.C. 365(d)(4)(A) provides that

“(A) Subject to subparagraph (B), an unexpired lease of nonresidential

real property under which the debtor is the lessee shall be deemed
rejected, and the Trustee shall immediately surrender that
nonresidential real property to the lessor, if the Trustee does not
assume or reject the unexpired lease by the earlier of -

(i) the date that is 120 days after the date of the order for relief; or (ii) the date
of the entry of an order confirming a plan.” (emphasis added)

Subparagraph (B) provides that:

“(i) the court may extend the period determined under subparagraph
(A), prior to the expiration of the 120-day period, for 90 days on the
motion of the trustee or lessor for cause.

(ii) if the court grants an extension under clause (i), the court may
grant a subsequent extension only upon prior written consent of the
lessor in each instance.” (emphasis added)

As shown on Exhibit “A” the initial 120 day period lapsed on March 14, 2009. This Court entered

an Order extending the time for the Debtor to accept or reject the lease for an additional 90 days on March

18, 2009. The extension began to run on March 15, 2009 and expired June 13, 2009.

It should be noted that the City filed a separate motion seeking a determination by this Court that the

lease terminated pre-petition. (docket #33). That motion was set for hearing in September, 2009 and was

subsequently withdrawn after this Court granted the Order deeming the lease rejected. The 90 day extension

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order entered March 18, 2009 (docket #114) recognizes and acknowledges the City’s position raised in the

alternate motion and preserves the City’s right to continue to assert that the lease terminated pre-petition.

However, the City did not raise those issues in its Adversary Complaint.

The Bankruptcy Code as revised by BAPCPA clearly and unequivocably provides that a lease of non-

residential real property is rejected on the earlier of 120 days after the date of order for relief or an order

confirming the plan. If the time period is extended by the Court it can only be extended for an additional 90

days without the written consent of the lessor. Section 365(d)(4) provides that if the lease is not assumed

or rejected it “shall be deemed rejected, and the trustee shall immediately surrender that non-residential real

property to the lessor, if the trustee does not assume or reject the unexpired lease” by the deadlines

established in the code section. The Court in In re Tubular Technologies, LLC 362 B.R. 243(D.SC 2006)

finds that “Section 365(d)(4), as revised by BAPCPA, appears to be self executing like the previous version

of Section 365(d)(4).” 362 B.R. 243 at 246. The Court continues stating that:

“Debtor failed to timely act under § 365(d)(4)(A) and failed to timely

obtain an extension under §365(d)(4)(B). The court therefore finds
that the Debtor’s Motion should be denied as a matter of law because
the relief requested cannot be provided to Debtor after the lapse of the
applicable deadline pursuant to the plain language of §365(d)(4)(B)(i).
This result is consistent with other changes to the Bankruptcy Code
where Congress enacted self-executing provisions that deny a debtor
relief if a debtor does not timely act.” 362 B.R. 243 at 246.

In support of its position regarding the self-executing provisions of Revised Section 365(d)(4) the
Court in In re Tubular Technologies, LLC, supra, cites In re Esmizadeh 272 B.R. 377, 386 (E.D.N.Y. 2002),
In re Lifequest of Mt. Pleasant, Inc. C/A No. 97-06957-W, Slip Op. 1997 WL33344252 (D.S.C. 1997) and
In re Cartledge C/A No. 06-00119-JW, 2006 WL3068829, Slip Op. (D.S.C. 2006).
Although the Debtor in Tubular raised an excusable neglect argument for not timely extending the
lease, no such argument has been raised by NR Group herein. However, the Court in Tubular after finding
that no such excusable neglect standard existed, stated that “the Court rejects debtor’s excusable neglect
argument, assuming it could apply, because § 365(d)(4)(B)(i) provides that the debtor is required to obtain
an order before the lapse of the deadline and it is counsel’s responsibility to ensure that hearings are timely
scheduled before the deadline lapses.” 362 B.R. 243 at 246. The Court concludes that:

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 “Because debtor failed to timely assume the lease, the lease is deemed
rejected. Pursuant to § 365(d)(4)(A), debtor shall immediately
surrender the leased premise to S-2... The Court realizes that this
order may greatly affect debtor’s ability to successfully reorganize;...”
362 B.R. 243 at 247.

The debtor sought a stay of the Order in the matter and the Bankruptcy Court denied the stay. The

debtor then appealed to the United States District Court and the District Court found the denial of the stay

proper and denied the appeal. In re Tubular Technologies, LLC, 348 B.R. 699 (D.S.C. 2006). In affirming

the Bankruptcy Court in the denial of the stay, the District Court stated “on the other hand, providing a stay

would harm S-2 because a stay would further delay S-2's ability to exercise its interests in the leased

premises, including leaving undetermined for a potentially long period of time whether debtor ultimately

choose to assume or reject the lease, a result Congress expressly wished to avoid.” Tubular, 348 B.R. 699

at 707. The District Court further finds that the provisions of 11 U.S.C. 365(d)(4) requiring the debtor to

immediately turnover the property to the landlord are self enforcing and supercede state law with no

requirement for further relief from the automatic stay.

“Section 365(d)(4) clearly occupies this area of the law in the context
of debtors’ relationships with their landlord, and it requires debtor,
without regard to debtor’s rights at state law, to surrender the leased
premise upon the rejection of the lease. The result produced by the
rejection order is constitutional and consistent with the supremacy
clause.” 348 B.R. 699 at 713-714.

Clearly the lease has been rejected. In support of its Motion for Reconsideration filed in the main

case, Capital One maintained a position that the lease, although “rejected”, had not “terminated.” Capital

One cited jurisprudence relying heavily upon the opinion of the United States Fifth Circuit Court of Appeals

in In re Austin, 19 F.3d 1077 (5th Cir. 1994). Capital One asserted a position but that while the lease had

been deemed rejected it was not terminated and certain rights existed between Capital One and the City of

Alexandria under the lease after rejection by this Court. The City of Alexandria asserts that a review of the

lease by this Court and the supporting exhibits and affidavit will quickly reveal that any such claimed rights

in favor of Capital One have expired and been extinguished, entitling the City of Alexandria to the relief

requested herein.

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 The City of Alexandria attaches hereto and incorporates herein as Exhibit “B”, the lease agreement

formerly existing between the City and the Debtor, as amended. The City acknowledges that upon rejection

of the lease by the Debtor and the Order of this Court dated July 17, 2009, the lease governed and controlled

any rights remaining to the City, the Debtor (and now the Chapter 7 Trustee) and Capital One as leasehold

mortgagee. These rights included rights to recover damages for the breach of the lease, rights for the Debtor

and/or Capital One as leasehold mortgagee to cure any breach of the lease and further - and most importantly

- any rights of Capital One to preserve its leasehold mortgage. Since the leasehold mortgage relates directly

to the validity of the secured claim of Capital One in the bankruptcy case, this Court retains jurisdiction to

determine the extent and validity of the leasehold mortgage and the extent of any secured claim in favor of

Capital One.

The salient provisions of the lease relative to the claim of Capital One and its leasehold mortgage

are found in paragraph 10 of the lease, as amended. Paragraph 10 of the lease is entitled “ASSIGNMENT,

SUBLETTING AND MORTGAGE OF LEASEHOLD ESTATE;”. Subparagraph F of paragraph 10

provides that:

“If the LEASE shall terminate by reason of the occurrence of any default
mentioned herein, and if LANDLORD shall obtain possession of the Demised
Premises therefore, LANDLORD agrees that any leasehold mortgagee shall
have the right, for a period of sixty (60) days subsequent to the termination of
this LEASE to elect to demand a new lease of the Demised Premises, and when
executed and delivered, possession of the Demised Premises. ...” (see Exhibit
“B”)

As stated in the Affidavit of John Munsterman attached hereto and incorporated herein as Exhibit

“C”, Capital One has taken no action to appoint a lease designee or to demand a new lease of the Demised

Premises. The lease provides that if no notice demanding a new lease is timely given, the lease is terminated

and the property and all improvements revert to the owner, the City of Alexandria. As shown on the time

line attached as Exhibit “A” and as supported by the Affidavit of John Munsterman, multiple notices of

default were transmitted pre- and post-petition to Capital One and Capital One failed to request a new lease

or to take over and operate the hotel property. Capital One participated throughout these bankruptcy

proceedings with counsel, Gary Tillman, and was represented at each substantive hearing in this matter

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regarding the lease. All parties including the City of Alexandria were at all times subject to the provisions

of the United States Bankruptcy Code once the case was filed and this Court is most familiar with the

operation of the Bankruptcy Code regarding nonresidential property leases.

While the City and the Debtor entered into an agreement entitled “Estoppel Certificate and

Acknowledgment” attached hereto and incorporated herein as Exhibit “D”, Capital One was not a party to

the agreement. Although the agreement set forth certain rights in favor of Capital One, neither the Debtor

nor Capital One sought to enforce the Estoppel Agreement or perform thereunder. Just as in the lease and

as stated above, the Estoppel Agreement granted the same rights to Capital One to give notice to the City of

Alexandria that it intended to appoint a lease designee and take over the leasehold to preserve its leasehold

mortgage under the terms of a new lease. As evidenced by the Affidavit of John Munsterman, no such action

was taken on behalf of Capital One and no notice or request for a new lease was given. Any rights alleged

to exist in favor of Capital One under that agreement have likewise expired. As a result of the failure of

Capital One to exercise its rights to preserve its leasehold mortgage and as a result of the failure of Capital

One to cancel its leasehold mortgage or agreement to have same canceled on the public records, the City of

Alexandria has been prevented from proceeding with the execution of any new lease of the property and has

continued to operate the property at great expense. The responsive pleadings filed on behalf of Capital One

and its Counter Claim make no allegations that Capital One has taken any action under the lease to preserve

its leasehold mortgage, to appoint a lease designee or take over operation of the hotel as leasehold mortgagee,

all as required under the terms of the lease agreement. While not at issue in this Motion for Partial Summary

Judgment, Capital One alleges damages in its Counter Claim arising out of alleged agreements by and

between Capital One and the City of Alexandria which agreements are not alleged to alter the terms of the

lease and are wholly unsupported by the bankruptcy record.

The only matter raised by motion of Capital One during the bankruptcy case related to the

appointment of a hotel manager and the post-petition use of cash collateral. This Court entered an Order

dated December 31, 2008 (docket #75) authorizing the use of cash collateral and continuing replacement

liens in favor of Capital One as security for the post-petition use of Cash Collateral and further granting

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Capital One an administrative expense priority claim for the post-petition financing. The Order grants no

new liens and simply continued the liens in favor of Capital One that it held pre-petition. Capital One was

given no greater or new rights regarding the leasehold interest of the Debtor as lessee of the City. The City

of Alexandria submits that the post-petition continuation of the leasehold mortgage expired upon the

rejection and ultimate termination of the lease. While the City of Alexandria acknowledges that Capital One

continues to hold a secured interest in movables by virtue of its UCC-1 Financing Statement, the City of

Alexandria submits that any leasehold mortgage in favor of Capital One has terminated. The City of

Alexandria submits that it is entitled to summary judgment on Count One of the Complaint and submits that

this Court should enter judgment declaring that the City of Alexandria is authorized to lease the hotel

property and all improvements free and clear of any leasehold mortgage in favor of Capital One and further

that the Clerk of Court be directed to cancel the recordation of the lease by and between the City and NR

Group and the leasehold mortgage of Capital One on the public record.

C. Count Two - Property is Not Property of the Bankruptcy Estate

The Chapter 11 case converted to one under Chapter 7 by Order of this Court dated September 29,

2009. Ted Brett Brunson was appointed Chapter 7 Trustee on that date and the Chapter 7 Meeting of

Creditors was held November 17, 2009.

As stated above and as evidenced by the attached exhibits and affidavit, the immovable property at

issue has at all times been owned by the City of Alexandria and has not constituted property of the

bankruptcy estate during the course of the bankruptcy case. While the furniture, fixtures and inventory

located on the leased property were owned by the Debtor and subject to the UCC lien in favor of Capital

One, the immovable property and improvements were leased to the Debtor under the terms of the lease

between the City and the Debtor. (see Exhibit “B”). As stated above, the provisions of 11 U.S.C. 365

operated to deem the lease by and between the Debtor and the City rejected as of July 17, 2009. The

conversion of the case to Chapter 7 and the appointment of the Chapter 7 Trustee provided no option for the

Chapter 7 Trustee to reconduct the lease.

Count Two of the Complaint was filed as a result of repeated assertions by counsel for Capital One

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during a pretrial conference held before this Court that the Chapter 7 Trustee somehow continued to exercise

control over the property and could in fact could list the hotel property for sale. In his responsive pleadings,

the Trustee makes no such assertions but alleges that he adopts the responses of Capital One with regards

to the allegations of “City’s Count Two.”

Pursuant to 11 U.S.C. 365 and 541, the City shows that the Trustee holds no ownership interest in

the immovable property or improvements and the City of Alexandria submits that it is entitled to judgment

of this Court declaring that the Chapter 7 Trustee retains no marketable interest in the immovable property

or the rejected lease and further declaring that the City is authorized to enter into a new lease or dispose of

the property, as it deems appropriate, without the concurrence of the Chapter 7 Trustee.

D. Count Three

Capital One filed a secured Proof of Claim in the bankruptcy case, claim number 43, in the amount

of $3,081,916.62. The claim contains only summary sheets and no security documents, account statements

or notes are attached to the claim. See Exhibit “E” attached hereto and incorporated herein. The claim

indicates that the security for the debt is “Hotel Tower, furniture, fixtures & equipment, elevators & accounts

receivable.” The claim indicates no secured interest in any leasehold and further claims no secured interest

in any real estate. The security documents filed and recorded on the public records of Rapides Parish clearly

indicate that Capital One held a secured interest in “all right, title and interest of the Lessee under the

following lease and amended lease affecting the immovable (real) property therein respectively described.

That certain ground lease between the City of Alexandria, as Lessor, and the Alexandria Convention Centre,

Ltd., as Lessee, executed February 28, 1983....” Although the public records do not reflect the reason for

the request, Debtor/Lessee requested that the City of Alexandria enter into an Estoppel Certificate and

Acknowledgment which was signed by the Mayor of the City of Alexandria December 15, 2003 and recorded

on the public records of Rapides Parish. Capital One is not a party to the agreement and Capital One failed

to exercise any possible rights it might have under the agreement including failure to provide the City with

notice of its leasehold mortgage and a true copy of same. The lease, as amended, between the City and the

Debtor/Lessee provides that “...landlord agrees that any leasehold mortgagee shall have the right, for a period

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of sixty (60) days subsequent to the termination of this lease, to elect to demand a new lease of the Demised

Premises,....” Again, Capital One failed to exercise its rights and failed to give any notice to the City

regarding its intention to execute a new lease. Counsel for Capital One did acknowledge the intent of Capital

One to honor the Estoppel Agreement between the City and the Debtor and subsequent counsel for Capital

One informed the City that the Estoppel Agreement was not binding and that Capital One was not a party

to the agreement. It is apparent from the public record that Capital One failed to provide any notice to the

City under the terms of the Estoppel Agreement. The lease was deemed rejected by Order dated July 17,

2009 and more than sixty (60) days have lapsed since the rejection of the lease.

Based upon the exhibits attached and the Affidavit of John Munsterman, Capital One has taken no

action post-petition or post-rejection of the lease to exercise its rights under the lease or the Estoppel

Agreement to preserve its leasehold mortgage. The City of Alexandria shows that it is entitled to judgment

of this Court granting the relief requested under Count Three and deeming the leasehold mortgage canceled

and extinguished. The City requests no relief as to the lien of Capital One secured by the furniture, fixtures,

equipment and movable property of the Debtor and the Chapter 7 bankruptcy estate.

No genuine issue of material fact exists which would prevent this Court from granting summary

judgment in favor of the City of Alexandria. All of the facts are undisputed and uncontested. All

conceivable time delays have run for any action on the part of Capital One which would have allowed Capital

One to maintain its leasehold mortgage. The City of Alexandria requests that this Court enter declaratory

judgment in favor of the City of Alexandria granting the relief requested in Counts One, Two and Three of

the original Complaint.

Respectfully submitted,
WHEELIS & ROZANSKI

By: /s/ Stephen D. Wheelis

Stephen D. Wheelis #17205
Richard A. Rozanski #22583
P.O. Box 13199
Alexandria, Louisiana 71315-3199
318/445-5600
ATTORNEYS FOR CITY OF ALEXANDRIA,
LOUISIANA

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 CERTIFICATE OF SERVICE

I HEREBY CERTIFY that the above and foregoing Memorandum in Support of Motion for Partial
Summary Judgment has been served upon Debtor, NR Group, LLC, 701 Fourth Street, Alexandria, LA
71301; Debtor’s attorney, Wade N. Kelly, 1777 Ryan Street, P.O. Box 2065, Lake Charles, LA 70601;
Chapter 7 Trustee, Ted Brett Brunson, P.O. Box 12, Natchitoches, LA 71457; John Luster, Attorney for
Chapter 7 Trustee, 448 Jefferson St., Natchitoches, LA 71457; Capital One, N.A. c/o Gary Tillman, P.O. Box
12729, Alexandria, LA 71315-3199; Capital One, N.A. c/o Patrick Johnson, Lemle & Kelleher, L.L.P., Pam-
American Life Center, 601 Poydras St., Ste. 2100, New Orleans, LA 70130; Wesley Plaisance, 601 Poydras
St., Ste. 2100, New Orleans, LA 70130; Mr. Charles E. Johnson, Jr., City Attorney, City of Alexandria, LA,
P.O. Box 71, Alexandria, Louisiana 71309-0071, by placing a copy of same in the United States mail
postage prepaid.
Alexandria, Louisiana this 8th day of February, 2010.

/s/ Stephen D. Wheelis

OF COUNSEL

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