In re 231 Fourth Ave. Lyceum, LLC

• Decision Date: 17 July 2014
• Docket Number: Case No. 13-42125 (CEC)
• Citation: 513 B.R. 25
• Parties: In re: 231 Fourth Avenue Lyceum, LLC, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of New York

513 B.R. 25

In re: 231 Fourth Avenue Lyceum, LLC, Debtor.

Case No. 13-42125 (CEC)

United States Bankruptcy Court, E.D. New York.

Signed July 17, 2014

David M. Blum, Esq., 286 Madison Avenue, Suite 2200, New York, New York 10017, Counsel for Debtor.

Glenn P. Warmuth, Esq., Stim & Warmuth, P.C., 2 Eighth Street, Farmingville, New York 11738, Counsel for P.B. # 7 LLC.

Chapter 11

DECISION

CARLA E. CRAIG, Chief United States Bankruptcy Judge

This matter comes before the Court on the motion of the debtor, 231 Fourth Avenue Lyceum, LLC, to reargue the Court's decision and order granting the motion of P.B. # 7 LLC (“P.B.”) to lift the automatic stay, pursuant to 11 U.S.C. § 362(d)(3). Because the motion to reargue fails to provide grounds for relief under Federal Rule of Civil Procedure 60(b) and because it raises arguments already considered and rejected, the motion to reconsider is denied.

JURISDICTION

This Court has jurisdiction of this core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A) and (G), 28 U.S.C. § 1334, and the Eastern District of New York standing order of reference dated August 28, 1986, as amended by order dated December 5, 2012. This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

BACKGROUND

231 Fourth Avenue Lyceum, LLC (the “Debtor”) commenced this case under chapter 11 of the Bankruptcy Code on April 11, 2013. The Debtor's principal asset is real property located at 227–231 4th Avenue, Brooklyn, New York (the “Property”), which is encumbered by a mortgage held by P.B. The Debtor defaulted on the mortgage and P.B. obtained a judgment of foreclosure and sale on September 28, 2012 (the “Foreclosure Judgment”). The amount of P.B.'s secured claim, calculated in accordance with the Foreclosure Judgment, is approximately $6.6 million. (Affirmation in Supp. of Mot. for Relief from Stay Exs. E and F, 13–42125–CEC, ECF Nos. 56–5 and 56–6.)

On the eve of the foreclosure sale, the Debtor filed this bankruptcy case. Since filing, the Debtor's operating reports have shown that the Debtor has generated no income. (Monthly Operating Reports, 13–42125–CEC, ECF Nos. 16, 22, 23, 32, 62, 63, 64, 65, 73, 74, 89, and 90.) On July 8, 2013, P.B. filed a motion to designate the Debtor as a single asset real estate debtor. (Mot. to Authorize/Direct that this case is a Single Asset Real Estate Case, 13–42125–CEC, ECF No. 17.) On November 1, 2013 the Court entered an order designating the Debtor as a single asset real estate Debtor and directing the Debtor to comply with the provisions of § 362(d)(3) by filing “a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time”, or by commencing monthly payments that “are in an amount equal to the then applicable nondefault contract rate of interest on the value of the creditor's interest in the real estate.” (Order Granting Mot. for a Determination that this Case is a Single Asset Real Estate Case, 13–42125–CEC, ECF No. 42 at 1–2) (quoting § 362(d)(3).)

On November 22, 2013, the Debtor filed a first amended chapter 11 plan and disclosure statement (its initial disclosure statement having been rejected as insufficient by order dated November 1, 2013), as well as a motion seeking approval of the first amended disclosure statement and plan, which motion was amended on November 25, 2013. (Am. Proposed Disclosure Statement, 13–42125–CEC, ECF No. 47; Am. Proposed Chapter 11 Plan, 13–42125–CEC, ECF No. 48; Mot. to Authorize/Direct Entry of an Order Approving the Adequacy of the Debtor's Am. Proposed Disclosure Statement and Am. Proposed Reorganization Plan, 13–42125–CEC, ECF No. 46; Am. Notice of Mot. to Authorize/Direct Entry of an Order Approving the Adequacy of the Debtor's Am. Proposed Disclosure Statement and Am. Proposed Reorganization Plan, 13–42125–CEC, ECF No. 50.) On December 18, 2013, the Debtor filed a second amended chapter 11 Plan (the “Plan”), a second amended proposed disclosure statement (the “Disclosure Statement”), and an affirmation in further support of the Disclosure Statement and Plan. (Proposed Am. Disclosure Statement, 13–42125–CEC, ECF No. 59; Proposed Am. Chapter 11 Plan, 13–42125–CEC, ECF No. 60; Affirmation in Further Supp., 13–42125–CEC, ECF No. 61.)

On December 4, 2013, P.B. filed an objection to the Debtor's first amended disclosure statement and filed a motion seeking relief from the stay (the “Lift Stay Motion”). (Affirmation in Opp'n to Disclosure Statement, 13–42125–CEC, ECF No. 53; Mot. for Relief from Stay, 13–42125–CEC, ECF No. 55; Affirmation in Supp. of Mot. for Relief from Stay, 13–42125–CEC, ECF No. 56.) On December 11, 2013, the United States Trustee also objected to the Debtor's first amended disclosure statement. (Objection of the United States Trustee to the Approval of the Debtor's Disclosure Statement, 13–42125–CEC, ECF No. 58.) A hearing was held on December 18, 2013.

On March 3, 2014, the Court entered a decision (the “Decision”) and order (the “Order”) granting the Lift Stay Motion. (Decision and Order, 13–42125–CEC, ECF Nos. 76 and 77.) The Decision found that the Debtor had failed to file a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time, as required by § 362(d)(3), because no evidence was provided to show that the Debtor would be able to meet its obligations under the Plan, and because the record showed that the Debtor could not meet its obligations under the Plan. In re 231 Fourth Ave. Lyceum, LLC, 506 B.R. 196, 203 (Bankr.E.D.N.Y.2014). The Court rejected the Debtor's argument that the New York State Supreme Court, Kings County lacked jurisdiction to enter the Foreclosure Judgment. Id. at 207–208. The Court also held that the Rooker–Feldman doctrine and res judicata prevented the Court from reviewing the validity of the Foreclosure Judgment. Id. at 206–208.

On March 18, 2014, Mr. Eric Richmond, the Debtor's principal, filed a motion to reargue the Lift Stay Motion on behalf of the Debtor. (Mot. to Reargue or Renew, 13–42125–CEC, ECF No. 80.) On March 27, 2014, P.B. filed an affirmation in opposition to Mr. Richmond's motion. (Affirmation in Opp'n, 13–42125–CEC, ECF No. 84.) On April 2, 2014, Mr. Richmond filed a reply and addendum to his motion to reargue. (Reply and Addendum, 13–42125–CEC, ECF No. 87 and 88.) The Court held that Mr. Richmond's filings were improper, because a limited liability company may only appear in federal court through a licensed attorney. (Order, 13–42125–CEC, ECF No. 91) (citing Lattanzio v. COMTA, 481 F.3d 137, 140 (2d Cir.2007)). On April 10, 2014, the Court issued an order providing that Mr. Richmond's filings on behalf of the Debtor would be stricken from the record unless adopted by the Debtor's counsel by April 11, 2014. Id.

On April 11, 2014, a motion to reargue (the “Motion to Reargue”), an affirmation in support (the “Affirmation”), a reply (the “Reply”), and an addendum to the motion to reargue (the “Addendum”) (collectively, the “Motion”) were filed. (Mot. to Reargue or Renew, Affirmation in Supp., Reply, and Addendum, 13–42125–CEC, ECF Nos. 92–95.) All of the documents, except the Motion to Reargue, were signed by the Debtor's counsel.¹ On May 2, 2014, P.B. filed a supplemental affirmation in opposition to the Motion. (Supplemental Affirmation in Opp'n, 13–42125–CEC, ECF No. 96.)

ARGUMENTS

The Debtor raises three arguments in the Motion: (1) that the Court did not address the fact that P.B. did not allege any excuse for its delay in pursuing a default judgment in its foreclosure action against the Property; (2) that the New York State Supreme Court, Appellate Division's decision regarding the Debtor's claimed air rights and rights to an adjacent parcel of property was a nullity on which this Court should not have relied; and (3) that the Court failed to consider the Debtor's “counterclaims of equity interest” before the New York State Supreme Court, which issued a post-petition decision.

P.B. asserts that the Motion was not timely under Rule 59(e), as it was filed outside the 14–day period allowed under the Rule.² Further, P.B. argues that the Debtor is barred by the Rooker–Feldman doctrine and res judicata, and that the Debtor's other arguments are without merit.

LEGAL STANDARD

The Motion to Reargue fails to identify the Bankruptcy Rule which is claimed to provide a basis for the Motion. Bankruptcy Rule 9023, which incorporates Rule 59(e), provides that a motion to alter or amend a judgment must be filed no later than 14 days after the entry of the judgment. Fed. R. Bankr.P. 9023. Pursuant to Rule 54(a), made applicable by Bankruptcy Rule 7054, the Order constitutes a “judgment” that may be reconsidered under Rule 59 because it is an “order from which an appeal lies.” Fed.R.Civ.P. 54(a); Fed. R. Bankr.P. 7054.

P.B. argues that the Motion is not timely because it was filed more than 14 days from the entry of the Order. (Affirmation in Opp'n, 13–42125–CEC, ECF No. 84 at 2.) The Order was signed on February 28, 2014 and was entered on March 3, 2014. The 14–day period is computed by excluding the day the Order was entered and counting every day, including weekends and holidays. Fed.R.Civ.P. 6(a)(1). The last day of the period is included, unless it is a Saturday, Sunday, or legal holiday. Fed.R.Civ.P. 6(a)(1)(C). The last day for the Debtor to file a timely motion to reargue pursuant to Bankruptcy Rule 9023 would have been the 14th day after the entry of the Order, which was Monday, March 17, 2014. Mr. Richmond's motion to reargue was filed on March 18, 2014. Even assuming that the motion papers later filed by the Debtor's counsel relate back to the date of filing of Mr. Richmond's motion to reargue, the Motion is untimely under Bankruptcy Rule 9023.

The Debtor's counsel argues that an additional 3 days are added to the time period provided under Bankruptcy Rule 9023 based upon Rule 6(d) an...