In re Homesteads Cmty. at Newtown, LLC
| Decision Date | 11 March 2013 |
| Docket Number | CASE NO. 04-30417 (LMW),CASE NO. 04-32365 (ASD) |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut |
| Parties | In re: THE HOMESTEADS COMMUNITY AT NEWTOWN, LLC, DEBTOR. In re: NUEVO PUEBLO, LLC, DEBTOR. |
Not For Publication
528, 530, 560
456, 473
Ronald I. Chorches, Esq.
Law Offices of Ronald I. Chorches, LLC
Chapter 7 Trustee for Debtor Homesteads
Community at Newtown, LLC
William S. Fish, Jr., Esq.
Amy E. Markim, Esq.
Hinckley, Allen & Snyder, LLP
Attorney for Trustee Ronald I. Chorches
Roberta Napolitano, Esq.
Chapter 7 Trustee for Debtor Nuevo
Pueblo, LLC
Dean W. Baker, Esq.
Law Office of Dean W. Baker
Attorney for Trustee Roberta Napolitano
Patrick W. Boatman, Esq.
Law Offices of Patrick W. Boatman, LLC
Attorney for Debtors Homestead Community
Community at Newtown, LLC and
Nuevo Pueblo, LLC
Gary F. Sheldon, Esq.
McElroy, Deutsch, Mulvaney &
Carpenter/PH, LLP
Attorney for KBE Building Corporation
(f/k/a Konover Construction Company, Inc.)
Douglas S. Skalka, Esq.
Nancy B. Kinsella, Esq.
Jane E. Ballerini, Esq.
Neubert, Pepe & Monteith, P.C.
Attorney for Franklin Construction, LLC;
Mix Avenue, LLC; Eli Whitney, LLC; and
New Haven Mortgage Refinance, LLC
Nicole Liguori Micklich, Esq.
Garcia & Milas, P.C.
Attorney for Andrews Construction Co., LLC
Vincent M. Marino, Esq.
Cohen and Wolf, P.C.
Attorney for the Town of Newtown
Thomas J. O'Neill, Esq.
On August 21, 2012, the court issued that certain Partial Memorandum of Decision and Order Re: Trustees' Joint Motion for Approval of Global Compromise (see HCN ECF No. 514 and NP ECF No. 439, collectively, the "Prior Decision")1 in each of the above-referenced chapter 7 cases. The Prior Decision is deemed incorporated herein by reference as if fully set forth. All capitalized terms used but not otherwise defined herein have the meanings ascribed to the same in the Prior Decision.
The Prior Decision was in respect of a certain "Global Compromise" proposed jointly by the Trustees. The Prior Decision did not approve the Global Compromise in toto. The Prior Decision divided the Global Compromise into two segments: a settlement (the "HCN Settlement") among the HCN Trustee and various relevant creditors in the HCN Case; and a settlement between the Trustees (the "Trustees Settlement"). One element of the HCN Settlement was the full and final settlement of the Konover Adversary Proceeding by the payment from the HCN estate of $450,000 to Konover. The Prior Decision approved that settlement (the "Konover Settlement") on an interlocutory basis (see HCN ECF No. 514 at 62 ()), without applying the Iridium Factors (see id. at 67 n.47).2 However, the Prior Decision expressed certain concerns about the TrusteesSettlement and reopened the subject proceedings to "afford the Trustees one last opportunity to persuade the court [on that point at a reopened evidentiary hearing]," (Prior Decision at 67). In response to the Prior Decision, (a) the Debtors filed motions to reconsider (described more fully below) and (b) the Trustees put forward a revised compromise (described more fully below, the "Revised Compromise") which substantially limits the scope of the Global Compromise.
The matters before the court with respect to the HCN Case are: (a) the Trustees' motion to approve the Global Compromise (HCN ECF No. 448, the "HCN Compromise Motion") as modified by (i) the Trustees' proposed revision to the Global Compromise (HCN ECF No. 528) and (ii) post trial clarification filed by the Trustees with respect to the Revised Compromise (HCN ECF No. 560); (b) Paragon's objection to the Global Compromise (HCN ECF No. 460);3 (c) Debtors' objection to the Global Compromise (HCN ECF No. 464); (d) Debtors' motion to reconsider the Prior Decision (HCN ECF No. 519, the "HCN Motion To Reconsider"); and (e) Konover's objection to the HCN Motion to Reconsider (HCN ECF No. 530, the "HCN Reconsideration Objection").
The matters before the court with respect to the NP Case are: (a) the Trustees' motion to approve the Global Compromise (NP ECF No. 395, the "NP Compromise Motion") as modified by (i) the Trustees' proposed revision to the Global Compromise (NP ECF No. 454) and (ii) post trial clarification filed by the Trustees with respect to the Revised Compromise (NP ECF No. 473); (b) Debtors' objection to the Global Compromise (NP ECF No. 398); (c) Debtors' motion to reconsider with respect to the Prior Decision (NP ECF No. 442, the "NP Motion To Reconsider,"collectively with the HCN Motion To Reconsider, the "Motion To Reconsider"); and (d) Konover's objection to the NP Motion To Reconsider (NP ECF No. 456, the "NP Reconsideration Objection," collectively with the HCN Reconsideration Objection, the "Reconsideration Objection").
The court has jurisdiction over the foregoing matters (and the authority to enter a final order with respect thereto) for the reasons stated in the Prior Decision. This memorandum constitutes the findings of fact and conclusions of law mandated by Rule 52 of the Federal Rules of Civil Procedure ().
The Debtors filed the Motion To Reconsider (and supporting brief) on August 31, 2012. (See, e.g., HCN ECF Nos. 519, 520.)4 On October 10, 2012, the Trustees caused to be filed a certain Memorandum Regarding Partial Memorandum of Decision and Order Re: Trustees' Joint Motion for Approval of Global Compromise. (See HCN ECF No. 528, the "Trustees Response"). As explained more fully below, the Trustees Response substantially revised the Global Compromise, restructuring the settlement primarily as a settlement of four adversary proceedings in the HCN Case. (See id.) On October 10, 2012, Konover filed the Reconsideration Objection. (See HCN ECF No. 530.)5
The reopened proceedings contemplated by the Prior Decision were convened on October 11, 2012 (the "Second Hearing").6 The Debtor introduced two additional exhibits into the recordat the Second Hearing: Debtor Exh. 1 (); and Debtor Exh. 2 ().7 The Motion To Reconsider was heard at the same time. At the Second Hearing, the settlement proponents articulated the substance of the Trustees Response to the court. At the conclusion of the Second Hearing, the court took the HCN Compromise Motion and the NP Compromise Motion (both as modified by the Trustees Response) and the Motion To Reconsider under advisement "subject to further notification to creditors." (See, e.g., HCN Case Docket Entry for October 11, 2012.) The Debtors complied with the later directive on October 15, 2012. (See, e.g., HCN ECF No. 537.) The Trustees complied with such directive on October 15, 2012. (See, e.g., HCN ECF No. 539.) By order dated October 15, 2012, the court directed the Debtors to file a written reply to the Trustees Response. (See, e.g., HCN ECF No. 538.) The Debtors complied with that order on October 29, 2012. (See, e.g., HCN ECF No. 546.) On December 5, 2012, the court issued a certain Order for Clarification directing that the Trustees clarify certain aspects of the Trustees Response. (See, e.g., HCN ECF No. 557, the "Clarification Order.") The Trustees complied with that order on December 13, 2012. (See, e.g., HCN ECF No. 560.)8
The Debtors seek this court's reconsideration of its interlocutory approval of the Konover Settlement on the following grounds:
• The court erred because it failed to require the Trustees to establish that there is probable cause to sustain the validity of Konover's lien in accordance with Section 49-35b(a) of the Connecticut General Statutes.
• The court erred when it concluded that the HCN Trustee would not have prevailed on the S/J Motion but would have been required to proceed to trial. Specifically, the Debtors argue that the court erred when it concluded that it had the discretion to deny the S/J Motion (and require a full development of the record at trial) with respect to the "Pomarico issue"9 and the "consent issue." Specifically, the Debtors argue, Pomarico at best is limited to "site work" on one lot which benefits the relevant other lot. Finally, the Debtors argue that the court misapprehended the nature of the "consent issue."
• Recently discovered evidence (i.e., the New Exhibits) allegedly not available at trial demonstrates that Konover's claim against the HCN estate was inflated by failure to acknowledge receipt of a bond payment. (See Debtors Exh. 1 and 2.)
As noted above, the court's approval of the Konover Settlement was interlocutory in nature. The standard for reconsideration of an interlocutory order is as follows:
Although Rule 60(b) () do not supply the power or the standard for deciding whether to reconsider an interlocutory order, courts have generally applied criteria that respect the need to grant some measure of finality even to interlocutory orders and which discourage the filing of endless motions for reconsideration. Thus, as the court observed in Rottmund v. Continental Assur. Co., 813 F.Supp. 1104, 1107 (E.D.Pa.1992),...
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