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In re Kenilworth Systems Corp.

Citations: 55 B.R. 58; 1985 Bankr. LEXIS 5678Docket: Bankruptcy No. 882-82273-20

Court: District Court, E.D. New York; July 22, 1985; Federal District Court

Narrative Opinion Summary

In a bankruptcy proceeding, the court adjudicated disputes concerning claims by Wille against the debtor, Kenilworth Systems Corporation. Wille sought $28,000 as unpaid wages and $150,000 as a finder’s fee. The court rejected Wille’s wage claim, finding no substantiating evidence of an employment contract with Kenilworth's president, along with a lack of typical employment indicators such as formal documentation or an office. Despite attempts to reclassify this wage claim in bankruptcy, the court found Wille's assertions of lifetime employment implausible. Conversely, Wille successfully substantiated his claim for a finder’s fee, presenting documentation that confirmed his role in organizing a substantial sale involving the Holiday International Casino. The court acknowledged the letter confirming the fee and dismissed counterclaims that the letter was intended for other purposes, such as payments related to gaming equipment. The court also assumed Wille was appropriately licensed under Nevada Gaming Law, thereby affirming his right to the finder’s fee. The decision resulted in the approval of the $150,000 claim, while the wage claim was denied, reflecting the court’s reliance on documentary evidence and statutory interpretations.

Legal Issues Addressed

Entitlement to Finder’s Fees

Application: The court upheld Wille's claim for a $150,000 finder’s fee based on documentary evidence supporting his role in facilitating a substantial transaction, notwithstanding contestations regarding the interpretation of the involved agreements.

Reasoning: For the $150,000 finder’s fee, Wille provided a letter confirming that he would be compensated for facilitating the sale of the Holiday International Casino to Kenilworth.

Interpretation of Contractual Terms in Business Agreements

Application: The court found that the terms of the letter executed on December 21, 1981, were sufficiently clear to affirm Wille's claim, dismissing alternative interpretations that were unsupported by documentation.

Reasoning: The letter itself does not mention any agreement regarding gaming equipment or Mr. Shenker, and Wille's rights under his contract with Kenilworth are unaffected by any misrepresentations made to third parties.

Licensing Requirements for Finder’s Fee Claims under State Law

Application: The court assumed compliance with Nevada Gaming Law regarding brokerage fees, indicating that Wille was presumed to be a licensed broker eligible to receive such fees absent evidence to the contrary.

Reasoning: The court has assumed Wille is a licensed broker eligible to receive such fees, with no evidence to dispute this assumption.

Recharacterization of Wage Claims in Bankruptcy Proceedings

Application: Wille's attempt to recharacterize his wage claim as a non-priority claim was rejected due to lack of credible evidence of an employment contract, particularly one suggesting lifetime employment.

Reasoning: The debtor further claimed that the letter was intended to shield potentially dubious transactions from SEC scrutiny.

Validity of Oral Employment Agreements

Application: The court determined that an oral agreement for employment claimed by Wille was not substantiated due to insufficient evidence of a formal contract and lack of employment indicators such as wage or tax documents.

Reasoning: Wille asserted he had an oral agreement with Kenilworth's president, Herbert Lindo, for a salary in exchange for advisory services.