June 1, 2017
from the United States District Court for the Central
District of Illinois. No. 13-cv-1064 - James E. Shadid, Chief
Bauer, Posner/ and Hamilton, Circuit Judges.
Hamilton, Circuit Judge.
central issue in this appeal is whether plaintiff Banco
Panamericano has a better claim than the City of Peoria to
the gas collection system and certain electrical
infrastructure at the Peoria landfill. We agree with the
district court that Peoria has the better claim under the
terms of the lease that governed the installation and
operation of the gas collection system and electrical
of introduction, in 1995 Peoria signed a lease with Resource
Technology Corporation (RTC) that allowed the company to
construct and operate a gas conversion project at the
city's landfill. The system collected the gasses
generated as byproducts by the landfill and helped convert
those gasses into electricity. The agreement provided that
when the lease terminated, the city had an absolute right to
retain, at no cost, the "structures" and
"below-grade installations and/or improvements"
that RTC installed at the city's landfill.
years later, RTC entered bankruptcy proceedings. Banco
Panamericano provided the company with postpetition financing
secured with liens and security interests in effectively all
of RTC's assets. RTC later defaulted on its loan from
Banco Panamericano. Litigation ensued, and the city notified
RTC that it was terminating the lease and had elected to
retain the structures and installations as provided in the
lease. After RTC stopped operating the gas conversion project
itself, the city modified the system to stay in compliance
with environmental regulations for methane and other landfill
gasses, and continued to use the property.
Panamericano then filed this suit against the city (and
others, but for simplicity's sake, we refer only to the
city) for unjust enrichment. The bank alleged that it had a
better claim to the property because its loan was secured by
a lien on all of RTC's assets and the bankruptcy court
had given its loan "super priority" status. On
cross-motions for summary judgment, the district court ruled
in favor of the city. We affirm. No matter the priority of
the bank's claim to RTC's assets, the undisputed
facts show that the bank has no claim to the city's
assets. By the terms of the lease between RTC and the city,
the disputed structures and installations are city property.
The lease gave RTC no post-termination property interest in
the disputed property.
Factual and Procedural History
The Gas Conversion Project
City of Peoria entered a lease agreement with RTC on November
30, 1995. The lease permitted RTC as lessee to install and
manage a gas-to-energy conversion project at lessor
Peoria's landfill. The gas collection system is a network
of underground wells and pipes that collect and transport the
landfill's gas byproducts to a central point. A plant
then converted the gas into electricity, which RTC sold to
the local electric utility. The transmission of electricity
between the gas conversion project and the electric utility
used three miles of utility poles, cables, and associated
infrastructure built by RTC (the "interconnect").
The property in dispute here is the gas collection system and
the interconnect. The plant that converted gas to electricity
is not part of this case.
lease granted RTC the exclusive right to develop the gas
conversion project. The construction, operation, and
maintenance of the project were to be at RTC's sole
expense. In exchange, RTC agreed to pay the city a royalty of
six percent on its energy sales. The lease also allowed the
city to retain all "structures" and
"below-grade installations and/or improvements" at
"no cost" after the lease terminated. The initial
term was for ten years, with various options to extend. The
lease also provided grounds for early termination.
RTC's Bankruptcy and Banco Panamericano's
November 15, 1999, RTC entered involuntary bankruptcy
proceedings under Chapter 7 of the Bankruptcy Code. On
January 18, 2000, RTC consented to convert its case to a
Chapter 11 petition. After the conversion, RTC continued to
operate its business as a debtor in possession pursuant to 11