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Full title: Objection to (related document(s): 423 Motion for relief from stay / Expedited Motion for Entry of an Order Confirming Inapplicability of the Automatic Stay or, Alternatively, Relief from Automatic Stay to Proceed with State Court Litigation Fee amount $188, filed by Debtor Studio Movie Grill Holdings, LLC) filed by Panterra GP, Inc., Panterra Development, Ltd., LLP. (Roberts, Stephen)

Document posted on Jan 24, 2021 in the bankruptcy, 11 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

Panterra admits the Panterra GP is the sole general partner of Panterra Development and that Panterra GP filed suit against Movie Grill Concepts XX LLC (“Debtor”) on October 4, 2018 to collect sums owed by Debtor under a construction contract.In seeking relief to continue pursuing its claim in the Lawsuit, the Debtor implies that its claim against Panterra Development is the only pending cause of action in the Lawsuit, that the Debtor’s motion for summary judgment is ripe for adjudication,2 and that, if the Court grants the requested relief, which the Debtor contends is “valuable to the reorganization efforts of the Debtors”, the Estate will benefit because the Debtor will prevail on its motion for summary judgment and obtain judgment against Panterra for $7 million.On October 23, 2018, the Debtor also filed a cross-complaint against Panterra Development in the Lawsuit, which alleges that Panterra Development is the party to the contract, not it general partner Panterra GP, and that, since only Panterra GP is a licensed contractor under California law, not Panterra Development, the Debtor is entitled to disgorgement of all sums it paid Panterra Development under California law.However, Rosedale and the Debtor agreed that the Debtor would pay a portion of the amounts due Panterra under the Agreement, but the Debtor and Rosedale failed to pay Panterra GP $2,609,666.53 for general contracting services on the Project.Specifically, Panterra GP’s prevailing on its Writ Proceeding establishes that there is a triable issue of fact as to the identity of the Contractor under the Agreement (Panterra GP vs. Panterra Development Ltd., LLP) the result of which is that Debtor’s motion for summary judgment cannot be granted.

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Texas Bar No. 17019200 sroberts@clarkhill.com CLARK HILL PLC 901 Main Street, Suite 6000 Dallas, TX 75202 Telephone: 214-651-4300 Fax: 214-651-4330 COUNSEL FOR PANTERRA DEVELOPMENT LTD., LLC AND PANTERRA GP, INC. IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: § Chapter 11 § STUDIO MOVIE GRILL HOLDINGS, § Case No. 20-32633-SGJ LLC, et al., § § Debtors1 § (Jointly Administered) OBJECTION TO DEBTORS’ EXPEDITED MOTION FOR ENTRY OF AN ORDER CONFIRMING INAPPLICABILITY OF THE AUTOMATIC STAY OR, ALTERNATIVELY, RELIEF FROM AUTOMATIC STAY TO PROCEED WITH STATE COURT LITIGATION Panterra Development Ltd., LLP (“Panterra Development”) and it sole general partner Panterra GP, Inc. (“Panterra GP”) (collectively “Panterra”), Creditors and Parties in Interest in this bankruptcy case hereby object to the DEBTORS’ EXPEDITED MOTION FOR ENTRY OF AN ORDER CONFIRMING INAPPLICABILITY OF THE AUTOMATIC STAY OR, OBJECTION TO DEBTORS’ EXPEDITED MOTION FOR ENTRY OF AN ORDER CONFIRMING INAPPLICABILITY OF THE AUTOMATIC STAY OR, ALTERNATIVELY, RELIEF FROM AUTOMATIC STAY TO PROCEED WITH STATE

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LITIGATION [Doc. 423] (the “Motion”), on the following grounds: I. RESPONSE TO ALLEGATIONS 1. Panterra admits the allegations contained in paragraph 1 of the Motion. 2. Panterra admits the allegations contained in paragraph 2 of the Motion. 3. Panterra admits the allegations contained in paragraph 3 of the Motion. 4. Panterra denies the allegation in paragraph 4 that the automatic stay is inapplicable to the relief sought or that the automatic stay should be lifted to grant the relief sought. Panterra denies that the Debtor has any basis for a claim against Panterra for $7 million. 5. Panterra admits the Panterra GP is the sole general partner of Panterra Development and that Panterra GP filed suit against Movie Grill Concepts XX LLC (“Debtor”) on October 4, 2018 to collect sums owed by Debtor under a construction contract. Panterra denies the remaining allegations of paragraph 5. 6. Panterra admits the allegation in paragraph 6 that Debtor filed a claim against Panterra Development for disgorgement of payments pursuant to Business and Professions Code Section 7031(b). Panterra admits that Debtor filed a motion for summary judgment on its cross-complaint. Panterra denies the remaining allegations in paragraph 6. 7. Panterra denies that the style of the Lawsuit is correctly recited in paragraph 7. The complete style of the pending lawsuit (which reflects that it is consolidated with an earlier lawsuit filed by Panterra GP against the Debtor) is Movie Grill Concepts XX, LLC v. Panterra Development, LLP, Case No. BCV-18-102668, consolidated with Case No. BCV-18-102528, and styled Panterra G P Inc, the Sole General Partner of Panterra Development Ltd., LLP v. Rosedale Bakersfield Retail VI, LLC, et al. in the Superior Court of Kern County, California (the “Lawsuit”) but denies that Petitioning Debtor has a disgorgement claim in excess of $7 million (since the

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amount that Debtor has paid Panterra and Debtor has not paid Panterra anything.) 8. Panterra admits the allegations contained in paragraph 8 of the Motion 9. Panterra admits the allegations contained in paragraph 9 of the Motion. 10. The remaining paragraphs in the Motion consist of legal argument and legal conclusions that do not require a response. To the extent a response is required, Panterra denies that the relief requested by Panterra is warranted or should be granted, II. THE ACTUAL PROCEDURAL POSTURE OF THE LAWSUIT 11. In seeking relief to continue pursuing its claim in the Lawsuit, the Debtor implies that its claim against Panterra Development is the only pending cause of action in the Lawsuit, that the Debtor’s motion for summary judgment is ripe for adjudication,2 and that, if the Court grants the requested relief, which the Debtor contends is “valuable to the reorganization efforts of the Debtors”, the Estate will benefit because the Debtor will prevail on its motion for summary judgment and obtain judgment against Panterra for $7 million. None of this is true. 12. The Lawsuit is currently stayed under California law pending the resolution of a writ proceeding initiated by Panterra GP in the California Court of Appeal.3 The Debtor, who has filed pleadings in the California Court of Appeal contending that the writ proceeding is stayed by the automatic stay, is not seeking relief from the stay to allow Panterra GP to continue to prosecute the writ proceeding. Rather the Debtor contends that the stay does not apply or, alternatively the stay should be lifted to allow it to proceed with its pending motion for summary judgment on its claim in the trial court, as if the writ proceeding did not exist. Despite the representations to this Court, the Debtor’s motion for summary judgment is not ripe for adjudication even if this Court 2 The Debtor states that, “The matter has been fully briefed by the parties to the lawsuit and is ready to proceed subject to the determination of an appeal by Panterra GP. However, the Debtor does not seek to have the stay lifted to allow the predicate appeal to move forward. 3 The writ proceeding is an extraordinary remedy similar to a discretionary interlocutory appeal of a ruling of the trial court. In this case, the court of appeals exercised its discretion to consider Panterra GP’s writ on the merits, contesting

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Lawsuit will not be heard until there is final disposition of the writ. 13. Moreover, even if the Debtor’s motion for summary judgment were ripe for adjudication, the Debtor has no basis to recover a judgment for $7 million against Panterra Development. 14. Contrary to the Debtor’s claim that allowing the Debtor to go forward on its motion for summary judgment will be “valuable to the reorganization efforts of the Debtor”4, the parties will likely be engaged in extensive litigation for years absent a settlement, as explained below. 15. Prior to the initiation of the Lawsuit at issue here, Panterra served as a general contractor on at least eleven (11) Movie Grill projects for the Debtor in several states. The Lawsuit arises out of Debtor’s failure to pay for Panterra GP’s services as the general contractor on the construction of a new dine-in movie theater on property that Debtor was leasing from Rosedale Bakersfield Retail VI, LLC (“Rosedale”) in Bakersfield, California. On October 4, 2018, Panterra GP commenced the Lawsuit against the Debtor to collect over $2.6 million owed by the Debtor.516. On October 23, 2018, the Debtor filed a Petition against Panterra Development to remove a mechanics lien6 which was later consolidated with the original lawsuit filed by Panterra GP. On October 23, 2018, the Debtor also filed a cross-complaint against Panterra Development in the Lawsuit, which alleges that Panterra Development is the party to the contract, not it general partner Panterra GP, and that, since only Panterra GP is a licensed contractor under California law, not Panterra Development, the Debtor is entitled to disgorgement of all sums it paid Panterra Development under California law. However, the Debtor does not allege that it paid Panterra Development any monies under the contract. And, in fact, Panterra was paid by the sums it did 4 Motion, para. 4. 5Panterra G P Inc, the Sole General Partner of Panterra Development Ltd., LLP v. Rosedale Bakersfield Retail VI, LLC, Movie Grill Concepts XX LLC, And/Or Does 1 through 50,Kern County Superior Court,Case BCV-18-102528.

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Agreement and another entity not party to the Lawsuit.7 17. Panterra GP asserted in its Third Amended Complaint in the consolidated Lawsuit a cause of action for reformation of the contract, seeking to reform the name of entity listed as the “Contractor” in the Agreement from Panterra Development to Panterra GP, the licensed general contractor, to conform to the intent of the parties in forming the Agreement. 18. The California trial court granted Debtor’s demurrer challenging Panterra GP’s Third Amended Complaint and issued an order dismissing the Third Amended Complaint. 19. On December 9, 2019, Panterra GP sought extraordinary relief from the California Court of Appeal to overturn this order and reinstate its Third Amended Complaint by filing a Writ of Mandate in the California Court of Appeal for the Fifth Appellate District Court. 20. On April 10, 2020, the California Court of Appeal exercised its discretion and issued orders accepting Panterra GP’s Writ of Mandate for briefing, oral argument, and decision (the “Writ Proceeding”). 21. In its Order, the Court of Appeals explained its reasons for accepting the writ, stating: “Business and Professions Code section 7031 generally prohibits unlicensed persons from bringing a lawsuit to "collect[]compensation" for work requiring a license. This law has been applied broadly, and expressly prohibits any such action in law or equity. (§ 7031.) …. The present case, however, is not a suit by an unlicensed entity. Rather, it is a claim by a licensed contractor for compensation for work it actually performed. As broadly as it prohibits suits by unlicensed contractors, section 7031 “does not prohibit a licensed contractor from suing to enforce an obligation arising from a construction contract.” (Opp v. St. Paul Fire & Marine Ins. Co. (2007) 154 Cal.App.4th 71, 76 fn. 2, italics added.) [¶] The amended complaint alleges the following facts, which we must accept as true at this point in the proceedings. (Friends of Glendora v. City of Glendora (2010) 182 Cal.App.4th 573, 576 [“a demurrer tests only the legal sufficiency of the pleading, 7 Rosedale, via its property manager, Athena Property Management (“Athena”) administered payments to Panterra from the Construction Allowance set forth in the lease agreement between Rosedale and Debtor. However, Rosedale and the Debtor agreed that the Debtor would pay a portion of the amounts due Panterra under the Agreement, but the Debtor and Rosedale failed to pay Panterra GP $2,609,666.53 for general contracting services on the Project.

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with the plaintiff's ability to prove its factual allegations”].) Petitioner, Panterra GP, Inc., is an entity licensed as a general contractor by the California Contractors State Licensing Board. Petitioner and real party in interest, Rosedale Bakersfield Retail VI, LLC (“Rosedale”), agreed petitioner would construct a project for Rosedale, and act as the project’s contractor. Petitioner performed the construction work under the contract and is listed as the general contractor of record in the building permit issued by the City of Bakersfield. Petitioner contends all parties involved intended for petitioner to be the contractor, but the written contract fails to reflect that reality. Petitioner seeks, among other things, to reform its contract with Rosedale because it “does not represent the true agreement of the parties because it does not identify that [Petitioner] was contracting to perform the general contracting services under the Agreement. 22. On October 29, 2020 Debtor filed a Notice of Filing of Chapter 11 Bankruptcy with Notice Of Automatic Stay in the Writ Proceeding notifying the court of its Chapter 11 Bankruptcy filing in this Court and contending that the automatic stay under 11 U.S.C. 362 stayed the Writ Proceeding. Debtor also filed notices of automatic stay in each of the five (5) proceedings pending in the California trial court, which includes the action where Debtor’s motion for summary judgment is pending against Panterra Development.8 23. On November 5, 2020, the Court of Appeal issued a stay order, stating that “The Petition for Writ of Mandate in the above entitled action is hereby ordered temporarily stayed pending resolution of respondent's and real parties in interest's claim and further order of this court.” The Court ordered Panterra to timely file an opposition to the stay order if Panterra contends that the automatic stay does not apply and that, if such an opposition was filed, that the Debtor would be entitled to reply. 8 The automatic stay notices were filed in: - Bakersfield Glass & Window, Inc. v. Panterra Development Ltd, LLP, et al., Kern Sup. Ct. No. BCV-19-102960; - Don Kinzel Construction, Inc. v. Panterra GP, Inc., Kern Sup. Ct. No. BCL-19-013867; - Holder’s Air Conditioning & Heating, Inc. v. Panterra Development Ltd., LLP, et al., Kern Sup. Ct. No. BCV-19-101319; - Johnson Controls Fire Protection, LP v. Panterra Development Ltd, LLP, et al., Kern Sup. Ct. No. BCV-19-1000181, and - Movie Grill Concepts XX, LLC v. Panterra Development Ltd, LLP, Kern Sup. Ct. No. BCV-18-102668

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automatic stay applies to the Writ Proceeding. Panterra GP pointed out that the Debtor and Panterra have competing claims against each other arising out of the same contract, each disputing the impact of the same statute on both side’s ability to recover, and that Panterra and Debtor both agreed, and the trial court ruled, that Debtor’s motion for summary judgment cannot be heard by the trial court until the California Court of Appeal has resolved the competing statutory interpretations. In this circumstance, Panterra contends that disaggregation under § 362 requires that both Debtor’s claims against Panterra, and Panterra’s claims against Debtor be stayed, so as to not prejudice Panterra by tying its hands and preventing it from defending against the Debtor’s claims on summary judgment while staying Panterra’s Writ Proceeding against Debtor under §362. 25. Thereafter, Debtor filed a reply brief contending that the trial courts separately issued automatic stay orders but did not address the merits of the disaggregation issue raised by Panterra GP. 26. The Court of Appeals has not issued any further orders and so that Court’s preliminary order staying the Writ Proceeding remains in place. III. THE AUTOMATIC STAY APPLIES TO THE LAWSUIT 27. 11 U.S.C. § 362(a)(1) stays the continuation of an action against the Debtor that was or could have been commenced before the commencement of this case. The Debtor’s contention that it can proceed with its cross-complaint unbarred by the automatic stay while maintaining the stay to prevent Panterra from proceeding with its claim for affirmative relief on the same contract in the pending Writ Proceeding is without merit. The Debtor has offered no support for the principle of law that the Debtor may proceed with an affirmative claim against a creditor while maintaining the stay in place to prevent the creditor from proceeding with its affirmative claims on the same contract. One cannot be adjudicated without adjudicating the other. In fact, as explained above, the opposing claims of the parties are so intertwined that Debtor cannot

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to determine whether Panterra GP is entitled to proceed on its claim for contract reformation. 28. Moreover, the proceedings in the trial court are stayed under California law until the Writ Proceeding initiated by Panterra GP to reform the contract is resolved. So even if this Court were to grant the requested relief, the Debtor would not be able to proceed with its motion for summary judgment, contrary to its representations in its Motion. IV. CAUSE DOES NOT EXIST TO MODIFY THE AUTOMATIC STAY 29. The only manner in which the Lawsuit can go forward, given its present procedural posture, is to lift the automatic stay to allow Panterra to go forward with the Writ Proceeding and, if the writ is granted, to proceed with its affirmative claims against the Debtor. Debtor is not seeking this relief. Panterra is not seeking such relief either. 30. As the Court is aware, the ownership of the Debtor will change in the near future. The Debtor and its Co-Debtors are fully engaged in the process of either selling all of their assets pursuant to the current sales procedure approved by this Court or pursuant to the confirmation of its proposed plan which provides that either the Debtors’ assets will be sold, or the ownership of the Debtors will change. As discussed below, there is no end to the Lawsuit in sight, absent settlement. In light of the aggressive posturing and continuing misrepresentations of current California counsel for the Debtor in the Lawsuit, Panterra contends that all the parties are best served by allowing the future owners of the Debtor to determine the best course of action in the Lawsuit before the Lawsuit proceeds. 31. Ironically, the Debtor’s argument that “cause’ exists to lift the stay flatly contradicts the argument it is making contemporaneously in opposing the Motion of Vicki L. Uloth to Modify Stay to Permit Continuation of State Court Litigation [ECF # 381]. There the Debtor writes: 13. Debtors assert that there is no “cause” to lift the automatic stay at this time and that Uloth has established even a prima facie case thereof. First, the Debtors, their Estates, and their creditors would be substantially prejudiced if the

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focusing their efforts on both a sale process and a plan of reorganization with the goal of exiting chapter 11 within mere months. It is necessary for the Debtors to focus their efforts on their Chapter 11 Cases at this time to ensure compliance with bankruptcy obligations and to maximize value for all creditors and parties-in-interest. Allowing Uloth to proceed with the Litigation against the Debtors in State Court will divert limited human and economic resources at a critical juncture in this case. 32. The Debtor’s argument that “cause’ exists here essentially boils down to its quixotic contention that lifting the stay will not divert limited human and economic resources at a critical juncture in this case here, as the Uloth litigation would, because the Debtor will simply proceed to a hearing on its summary judgment and obtain a $7 million judgment against Panterra Development. 33. Such a contention does not bear close scrutiny. If the stay is lifted and: (a) Panterra GP prevails in the Writ Proceeding, then its Third Amended Complaint is reinstated, and Panterra GP will litigate its contract reformation action in the California trial court, seeking a determination that Panterra GP was the Contractor in the Agreement. Specifically, Panterra GP’s prevailing on its Writ Proceeding establishes that there is a triable issue of fact as to the identity of the Contractor under the Agreement (Panterra GP vs. Panterra Development Ltd., LLP) the result of which is that Debtor’s motion for summary judgment cannot be granted. Panterra can be expected to engage in extensive discovery of the Debtor’s records and to take depositions of the Debtor’s officers to prove its case. (b) If the Writ Proceeding is denied, the Lawsuit will recommence in the California trial court. If Debtor’s motion for summary judgment is denied, discovery will be conducted and the case will proceed to trial. Due to court closures caused by Covid-19, there is an enormous backlog of criminal and priority civil matters pending in the Kern County Superior Court that will have to be tried before the Lawsuit. (c) If the Writ Proceeding is denied, the Lawsuit returns to the California trial court, and Debtor’s motion for summary judgment is granted, Panterra will appeal both determinations. This will result in a lengthy appeal process, likely spanning several years. Unlike Texas, Panterra will not be required to file a supersedeas bond pending an appeal. Since the issue presented in the dispute

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any adverse appellate ruling by the California Court of Appeal will be accepted for review by the California Supreme Court. 34. Accordingly, the Debtor’s Expedited Motion fails to show sufficient cause for the Court to grant the relief sought and the requested relief does not provide a benefit to the Estate or its creditors. WHEREFORE, the Panterra respectfully requests that this Court enter an Order denying the Debtor’s Motion. Respectfully submitted, CLARK HILL PLC By: /s/ Stephen A. Roberts Stephen A. Roberts Texas Bar No. 17019200 CLARK HILL PLC 901 Main Street, Suite 6000 Dallas, TX 75202 Telephone: 214-651-4300 Fax: 214-651-4330 sroberts@clarkhill.com ATTORNEYS FOR PANTERRA DEVELOPMENT LTD., LLC and PANTERRA GP, INC.

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I hereby certify that on January 25, 2021, a true and correct copy of the foregoing document has been served upon all parties consenting to electronic service of this case via the Court’s ECF system for the Northern District of Texas and via United States Mail, first class postage prepaid on the Debtors’ Service List on January 26, 2021. /s/ Stephen A. Roberts Stephen A. Roberts