In re Packard Square LLC

• Decision Date: 01 December 2017
• Docket Number: Case No. 17–52483
• Citation: 577 B.R. 533
• Parties: IN RE: PACKARD SQUARE LLC, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Michigan

577 B.R. 533

IN RE: PACKARD SQUARE LLC, Debtor.

Case No. 17–52483

United States Bankruptcy Court, E.D. Michigan, Southern Division.

Signed December 1, 2017

I. Matthew Miller, Swistak & Levine, P.C., Farmington Hills, Michigan, Attorney for Debtor.

ORDER DENYING THE DEBTOR'S MOTION FOR RECONSIDERATION (DOCKET # 159) OF THE COURT'S ORDER DISMISSING THIS BANKRUPTCY CASE

Thomas J. Tucker, United States Bankruptcy Judge

This case is before the Court on the Debtor's motion entitled "Debtor Packard Square, LLC's Motion for Reconsideration of the Court's Dismissal of Packard Square's Chapter 11 Bankruptcy," filed October 30, 2017 (Docket # 159, the "Motion"), which the Court construes as a motion for reconsideration of, and for relief from, the October 13, 2017 Order entitled "Order Denying Debtor's Turnover Motion; Granting Canyon's Cross–Motion; Dismissing Case, and Barring the Filing of Any New Bankruptcy Case by or Against the Debtor for a Period of Two Years" (Docket # 145, the "Dismissal Order").

The Court will deny the Motion, for the following reasons.¹

First, the Court finds that the Motion fails to demonstrate a palpable defect by which the Court and the parties have been misled, and that a different disposition of the case must result from a correction thereof. See E.D. Mich. LBR 9024–1(a)(3).

Second, the Court finds that the Motion does not demonstrate any valid ground for relief from the Dismissal Order under Fed. R. Civ. P. 59(e), Fed. R. Bankr. P. 9023, or any other valid ground for relief from the Dismissal Order.

Third, the Motion, in part, "merely presents the same issues ruled upon by the [C]ourt, either expressly or by reasonable implication," and "will not be granted" on the basis of any such issues. See E.D. Mich. LBR 9024–1(a)(3).

Fourth, the Motion, in part, seeks to present new arguments not made, and new evidence not presented, before the Court entered the Dismissal Order. The Debtor cannot make such arguments or present such evidence on a motion for reconsideration, or in a Civil Rule 59(e) motion; but rather, has waived them. As the United States Court of Appeals for the Sixth Circuit held, in affirming a district court's denial of a motion under Civil Rule 59(e) and a motion for reconsideration,

It is well-settled that "parties cannot use a motion for reconsideration to raise new legal arguments that could have been raised before a judgment was issued."

Roger Miller Music, Inc. v. Sony/ATV Publ'g, 477 F.3d 383, 395 (6th Cir.2007). Additionally, reconsideration motions cannot be used as an opportunity to re-argue a case. Furthermore, a party may not introduce evidence for the first time in a motion for reconsideration where that evidence could have been presented earlier. See, e.g., Sommer[v. Davis], 317 F.3d [686,] 691 [ (6th Cir. 2003) ] ; CGH[Transp. Inc. v. Quebecor World, Inc.], 261 Fed.Appx. [817,] 824 [ (6th Cir. 2008) ] (affirming denial of reconsideration and stressing: "It is hard to imagine how an affidavit from one of [plaintiff's] own witnesses would have been previously unavailable to [plaintiff], and [plaintiff] has not explained why it failed to introduce this evidence in opposition to summary judgment.").

Bank of Ann Arbor v. Everest Nat'l Ins. Co., 563 Fed.Appx. 473, 476 (6th Cir. 2014) (emphasis added); see also Riverview Trenton R.R. Co. v. DSC, Ltd.(In re DSC, Ltd.), 486 F.3d 940, 947 (6th Cir. 2007) (citing with approval, and applying, Wiley v. United States, 20 F.3d 222, 226 (6th Cir. 1994) for the proposition that "objections raised for the first time in a reconsideration motion are deemed to have been waived"); Evanston Ins. Co. v. Cogswell Props., LLC, 683 F.3d 684, 692 (6th Cir. 2012) (citations omitted) ("Arguments raised for the first time in a motion for reconsideration are untimely and forfeited on appeal.");² In re Madison Heights Grp., LLC, 506 B.R. 734, 736 (Bankr. E.D. Mich. 2014) and cases cited therein (arguments raised for the first time in a motion for reconsideration are untimely, waived, and forfeited on appeal).

Fifth, the Debtor is incorrect in its argument that it did not have proper notice regarding the possible dismissal of this case. This is so for several reasons, including the following.

The first reason is that Canyon's motion seeking suspension of this bankruptcy case under Bankruptcy Code § 305(a) sufficiently raised the issue of possible dismissal. As the Court pointed out in its October 13 opinion (Docket # 144), § 305(a) is an abstention provision, under which the Court has discretion to either suspend or dismiss a bankruptcy case. A motion seeking abstention under § 305(a), such as the one filed by Canyon, inherently raises the possibility of either suspension or dismissal.

And when Canyon's written motion sought a "suspension" of this case, what it sought was a "suspension of all proceedings in this bankruptcy case... pending further order of the Court to allow the receivership case to proceed in Washtenaw County Circuit Court," paired with relief from the automatic stay "to permit all parties in interest to proceed in the receivership case." (Docket # 28–1 (proposed order) at 2) (emphasis added). Such "suspension" relief under § 305(a) would have been the practical equivalent of a dismissal of this bankruptcy case.

This Court chose dismissal because it was a clearer, simpler form of obtaining in substance the same result requested by Canyon's motion, and one less likely to lead to "any needless confusion or doubt about the ability of the Receiver and the state court in the receivership case to carry on, as if no bankruptcy had been filed." (Docket # 144 at 25).

A second reason why the Debtor's notice argument fails is that at the September 13, 2017 hearing, Canyon argued for suspension or dismissal of this bankruptcy case under § 305(a), as part of the relief it sought. (See 9/13/17 Tr. (Docket # 150) at 120, lns. 21–24, 127, lns. 5–8).

And during the September 13 hearing, the United States Trustee argued that if the Court granted Canyon's motion under Bankruptcy Code § 543(d) to excuse turnover by the Receiver, the Court should either dismiss or convert this bankruptcy case to Chapter 7. The United States Trustee argued that under § 305(a), as between suspension or dismissal, the Court should dismiss because suspension would not be workable. Counsel for the United States Trustee argued as follows:

Certainly from our position if the receiver was left in control, so if the Court did basically suspend the case and allow the receiver to be in control, then essentially the [Debtor] is in possession of nothing. And actually at that point this case would be in a position where we believe then the best interest would be for it to be dismissed, possibly converted to a Chapter 7. It probably would be not worth it to appoint a Chapter 11 trustee because again the Chapter 11 trustee would have presumably nothing to oversee because there would be nothing to be in possession over by a debtor.... I think you can tell suspension we don't believe is going to work in this case.

(Id. at 159) (emphasis added).

Thus, the Debtor had ample notice that one of the issues before the Court was whether to dismiss (rather than "suspend") this case under § 305(a).

Sixth, the Debtor's Motion fails to demonstrate that the state court in the receivership case cannot hear and determine, fairly and fully, all of the issues and disputes the Debtor raises. The Court addressed this at pages 23–24 of its October 13 opinion (Docket # 144). The Debtor's Motion does not show any particular reason why litigating all the many disputes in this Court would be more speedy, efficient, or complete than...