Centurion Construction Company, Inc. v. RBC Real Estate Finance Inc.

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
NEW BERN DIVISION
IN RE:
SHEARIN FAMILY INVESTMENTS, LLC,
DEBTOR. 	CASE NO. 08-07082-8-JRL
CHAPTER 11
CENTURION CONSTRUCTION
COMPANY, INC.,
Plaintiff, 	ADVERSARY PROCEEDING NO.
v. 	L-09-00051-8-AP
RBC REAL ESTATE FINANCE, INC.,
assignee of RBC BANK (USA), f/k/a
RBC CENTURA,
Defendant.
____________________________________________________________________________
ORDER
This matter is before the court on the plaintiff’s motion for injunctive relief. 	The court
conducted a hearing on this matter on March 5, 2009 in Raleigh, North Carolina.
Centurion Construction Company, Inc. (Centurion) is the general contractor for a 70 unit
SO ORDERED.
SIGNED this 10 day of March, 2009.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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condominium project in Indian Beach, North Carolina known as the Nautical Club. The debtor,
Shearin Family Investments, LLC, (Shearin) is the developer of the project. RBC Bank (RBC) is
the lender.
In early January 2009, Centurion shut down the project due to non-payment. On January 14,
2009, this court conducted a hearing in which RBC sought injunctive relief against Centurion to
force the company back to work. RBC’s motion was denied. On January 16, RBC and Centurion
reached an agreement about terms of funding. The agreed terms included the provision that RBC
would, subject to court approval, lend $830,144.15 for the payment of Centurion’s subcontractors.
In return, Centurion would continue work to complete the building project without further delay or
stoppage. This court entered an order on February 18, 2009, approving post-petition financing in
the amount of $8,000,000.00. The $830,144.15 is a line item in this post-petition financing.
At hearing, it was established that Centurion has yet to receive any payment. Centurion
asserted that it had gone to great lengths to keep the project on schedule, abiding by all terms of the
January 16, 2009 agreement. 	Due to the delay in RBC’s advance of approved post-petition
financing, however, Centurion further asserted that their subcontractors were again threatening to
walk off the job. In addition, Centurion’s bonding capacity has been limited because of the large
receivable owing from the debtor. Centurion moved the court to direct RBC to pay the monies they
had agreed to fund.
RBC asserted that it was not intentionally delaying post-petition financing. 	Condition
precedents were attached to the approval of post-petition financing, and were included in this court’s
order. One such condition was that: “A third party acceptable to the Lender will review the DIP
Budget on behalf of the Lender for its acceptability.” RBC further asserted that the third party was
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supposed to review the budget that morning, but due to the hearing was unable to complete the
review as scheduled. RBC was confident that all preconditions would be met and funding made
available within one week.
The money subject to this action is not a part of a separate agreement between Centurion and
RBC. The $830,144.15 is tied to the $8,000,000.00 post-petition financing agreement reach between
RBC and Shearin and approved by this court. The covenants of the post-petition financing
agreement approved by this court, therefore, are applicable to the $830,144.15. The court cannot
conclude that RBC has acted unreasonably in closing the post-petition financing loan, particularly
in light of its stipulation to fund the Centurion amount by March 13, 2009 at the latest.
Based on the foregoing, the motion for a temporary restraining order is DENIED, contingent
upon the agreement from RBC that funding be made available on or before March 13, 2009.
END OF DOCUMENT
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