In re Olsen, 04-B-41105 (JMP).

• Decision Date: 05 January 2007
• Docket Number: No. 04-B-41105 (JMP).,04-B-41105 (JMP).
• Citation: 358 B.R. 609
• Parties: In re Ingrid OLSEN, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of New York

358 B.R. 609

In re Ingrid OLSEN, Debtor.

No. 04-B-41105 (JMP).

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

January 5, 2007.

Appeal from the United States Bankruptcy Court for the Southern District of New York, Cornelius Blackshear, J.

COPYRIGHT MATERIAL OMITTED

Reynold Olsen, New York, NY, Appearing pro se.

Warshaw Burstein Cohen Schlesinger & Kuh, LLP, Slava Hazin, Esq., New York, NY, Counsel for 419 Apartment Corp.

MEMORANDUM DECISION REGARDING (I) REMAND FROM THE COURT OF APPEALS TO DETERMINE CONTENT AND MEANING OF SETTLEMENT DISCUSSIONS AND (H) DENIAL OF RECUSAL

JAMES M. PECK, Bankruptcy Judge.

Preliminary Statement

The Debtor's husband Reynold Olsen ("Mr.Olsen") has been remarkably tenacious and occasionally outrageous¹ in his efforts to overturn an order of this Court dated February 16, 2005 (the "Settlement Order") that was supposed to reflect the terms of a "global settlement" of all claims by and between Mr. Olsen, the Debtor (his wife Ingrid Olsen) and their former landlord, 419 Apartment Corp. ("419" or the "Co-op"). Mr. Olsen's challenges to the Settlement Order have included an objection to entry of the order, an appeal of the Settlement Order to the District Court and to the Court of Appeals on multiple grounds and a separate motion (filed after the entry of District Judge Castel's decision affirming the Settlement Order) to set aside the Settlement Order on the basis of an allegedly fraudulent secured proof of claim filed in the Debtor's chapter 11 case by 419. Following this Court's bench ruling of March 22, 2006 denying Mr. Olsen's second motion to set aside the Settlement Order, Mr. Olsen filed a Motion for Reconsideration that was denied in a Memorandum Decision dated April 24, 2006. Mr. Olsen's appeal from that adverse ruling currently is pending in the District Court.

This remand is the latest episode in a six-year battle between the Olsens and 419, characterized by extreme hostilities between the litigants. The current dispute grows out of the alleged disconnect between the settlement agreement reached by the parties during "off the record" settlement discussions that took place on November 9, 2004 and the release language later used in the form of the Settlement Order as entered by Bankruptcy Judge Blackshear on February 16, 2005. Mr. Olsen asserts that the Settlement Order incorrectly includes an express release of 419's agents and attorneys, a release that was never actually discussed by the parties and that is beyond the scope of their agreement made on November 9, 2004. 419 submits that the release of its agents and attorneys was understood, was a necessary and critical element of any settlement with the Olsens and was subsumed within the broad language ("everyone releases everyone else") used by the parties in their discussions regarding a "global" settlement.

The Court of Appeals, in a decision dated November 13, 2006, remanded to the District Court for subsequent remand to this Court the narrow question of whether the Debtor, Mr. Olsen and 419 agreed to release the Co-op's agents and attorneys during those "off the record" settlement discussions that occurred on November 9, 2004. The parties, after conferring for more than four hours that day, reached a "global" settlement agreement that was confirmed on the record by 419's counsel, Mr. Backenroth, using language that did not explicitly mention the release of claims against 419's "agents" and/or "attorneys." The record was "so ordered" with the understanding that Mr. Olsen's counsel thereafter would draft and submit a proposed form of Order to set forth the terms of the agreement with greater precision.

As a result of hearing testimony on December 19, 2006 from the five lawyers who participated in the "off the record" discussions, the Court concludes that the parties did not agree to a separate release of 419's agents and attorneys, although they did agree to end all litigation between the Olsens and 419. Mr. Olsen, who chose not to testify and never put his own credibility at issue, alternatively: (i) never intended to release 419's agents and attorneys; (ii) changed his mind after the settlement was reached; or (iii) exploited an ambiguity in the language so that he could achieve the advantages of a settlement with 419 (a distribution of escrowed proceeds from the sale of-his apartment) while still preserving claims against the Co-op's agents and attorneys.

Given the testimony, as described in greater detail in the findings of fact section on pages 6 through 15 of this decision, Mr. Olsen's true state of mind during the off the record discussions is both unknown and irrelevant to the outcome.² The only evidence that matters for purposes of this decision is "what the negotiators, acting with authority, said to each other and the legal significance of the words that they used. Although no one uttered the words "agents" and "attorneys" that day, the parties unambiguously did agree to end all litigation between the Olsens and 419 and to release "everyone." Because a cooperative corporation conducts its business (in contrast with maintaining and servicing its real property) through agents and attorneys, the Court finds, as explained below, that the release by the Olsens of 419 must extend to certain claims against the Coop's agents and attorneys if the tenant-shareholders of 419 are to achieve the benefit of their bargain with the Olsens-namely an end to all litigation for which the Co-op ultimately may have to bear financial responsibility.

This decision discusses the Court's findings and conclusions with respect to the questions remanded by the Court of Appeals and disposes of a recusal request made by Mr. Olsen on December 15, 2006.

Recent Background

The parties are familiar with the decision of the Court of Appeals that vacated a portion of District Judge Castel's Opinion affirming the Settlement Order and remanded to this Court the task of examining the scope of agreements made by the parties in off the record discussions on November 9, 2004. The Court of Appeals has fixed a tight deadline to decide the questions remanded for consideration, thus requiring prompt examination of the content and legal significance of these settlement discussions.

In response to the remand, this Court held a status conference on November 21, a discovery conference on December 4, a hearing on motions filed Mr. Olsen on December 8 and evidentiary hearings on December 15 and December 19. Mr. Olsen has been particularly active since this remand. He has filed and argued a motion seeking eight separate pre-hearing rulings, requested and participated in an informal discovery conference, conducted depositions of witnesses, and asked for adjournments of the evidentiary hearing originally scheduled for December 15 on three separate occasions (orally on December 8 and December 15 and in writing on December 11). Mr. Olsen's papers acknowledge that in certain instances an attorney has assisted in the preparation of his submissions, although Mr. Olsen, who appears to be quite comfortable in the role of unlicensed lawyer, represented himself pro se in connection with this remand at the status conference held on November 21 and at hearings held on December 8, December 15 and December 19. It is doubtful that any lawyer could give Mr. Olsen more zealous representation, but it is also doubtful that any lawyer would permit a client to routinely make the kind of irresponsible and reckless assertions that are contained in Mr. Olsen's various filings and communications with the Court.³

As a result of the combination of Mr. Olsen's claimed illness on the morning of the scheduled evidentiary hearing with respect to the matters remanded by the Court of Appeals and his contemporaneous filing of an affidavit seeking my recusal (the "Recusal Motion") the Court adjourned the evidentiary from December 15 to December 19, 2006. The hearing on December 19 lasted for the entire day, and this decision is based on the record of that hearing, a review of the transcript of the hearing held on November 9, 2004 and the post-hearing written submissions filed by Mr. Olsen and 419.

Findings of fact with respect to the settlement negotiations on November 9, 2004

Mr. Olsen is the husband of the Debtor, Ingrid Olsen. In addition to his other pro se litigation experience, Mr. Olsen himself has been a chapter 13 debtor in this Court on two occasions. His second chapter 13 case was pending at the time of the hearing on November 9, 2004 that led to the settlement discussions and the Settlement Order challenged by Mr. Olsen. Mr. Olsen was represented by the law firm of Robinson Brog Leinwand Greene Genovese & Gluck, P.C. in his wife's chapter 11 case during the settlement discussions and as of the date of entry of the Settlement Order, but Mr. Olsen also was representing his own interests at that time as a pro se debtor in his then pending chapter 13 case.

Mr. Olsen attended the settlement conference on November 9 and was the only nonlawyer who participated in the settlement discussions. The others who took part in the discussions that are the focus of this decision are all attorneys, and they all testified during the evidentiary hearing conducted by the Court on December 19, 2006. These lawyer-witnesses are: Michael Kennedy Karlson, counsel for Ingrid Olsen; A. Mitchell Greene, counsel for Mr. Olsen in his wife's chapter 11 case; Christine Black, one of Mr. Greene's law partners (also representing the Olsens); Bruce Weiner, litigation counsel for 419; and Abraham Backenroth, special bankruptcy counsel for 419.

Mr. Olsen and the Debtor were involved in a protracted and extremely bitter landlord-tenant dispute prior to commencement of the Debtor's chapter 11 case. The parties to that dispute were Mr. and Mrs. Olsen as tenant—shareholders of a cooperative apartment located at 419 East 57^th Street in Manhattan and their landlord, 419, the cooperative corporation. As is...