In re Reading Broadcasting, Inc.

• Decision Date: 12 March 2008
• Docket Number: No. 05-2656bif.,05-2656bif.
• Citation: 386 B.R. 562
• Parties: In re READING BROADCASTING, INC., Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

386 B.R. 562

In re READING BROADCASTING, INC., Debtor.

No. 05-2656bif.

United States Bankruptcy Court, E.D. Pennsylvania.

March 12, 2008.

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MEMORANDUM

BRUCE FOX, Bankruptcy Judge.

On January 17, 2008, an order was entered confirming the chapter 11 trustee's proposed second amended plan of liquidation and denying confirmation of the second amended plan of reorganization filed by the Philadelphia Television Network ("PTN"). The centerpiece of the trustee's confirmed plan was the conditional sale of the debtor's television station assets, including assignment of its FCC license, to WRNN-TV Associates Limited Partnership for $13.5 million, based upon an Asset Purchase Agreement, with the sale free and clear of liens and encumbrances pursuant to 11 U.S.C. § 1123(a)(5)(D), (b)(4).

On Monday, January 28, 2008, within ten days from the entry of this order, see Fed. R. Bankr.P. 9006(a) [Interim¹], PTN filed a motion styled: "To Amend or Make Additional Findings of Fact Pertaining to the Order Dated January 17, 2008 Pursuant to B.R. 7052; To Alter or Amend and For a New Hearing on the Court's Order Pursuant to B.R. 9023; To Admit Newly Discovered Evidence or in the Alternative, to Reconsider the Court's Order Confirming the Trustee's Plan Pursuant to B.R. 9024." PTN acknowledged in open court that its motion does not seek to revisit this court's ruling denying confirmation of its own proposed plan.² Instead, its motion contends that erroneous factual conclusions were made in confirming the trustee's plan of liquidation, and thus approving the asset sale to WRNN, which errors must be corrected to prevent manifest injustice. Furthermore, PTN asserts in its motion that it would present newly discovered evidence that demonstrates the trustee's marketing efforts to sell the station assets were flawed, because prospective bidders were precluded from participating in the sale process.

PTN's motion and the relief it seeks — vacating the order confirming the trustee's proposed plan — is opposed by the trustee, by Gladstone Business Loan, LLC (a secured creditor) and by WRNN, the purchaser of the debtor's assets under the terms of the confirmed plan. All of the objectors maintain, after an evidentiary hearing was held on PTN's motion, that none of the factual findings previously made in connection with the January 17th confirmation order were erroneous, that the legal conclusions drawn — that the trustee's plan met all the requirements of 11 U.S.C. § 1129(b) — were correct, that WRNN has agreed to pay fair value for the assets it is purchasing, that the evidence offered by PTN does not constitute evidence "newly discovered," and, if it were newly discovered, that PTN did not present any evidence adversely reflecting on the trustee's marketing of the station assets.³

Before considering the parties' numerous contentions and the evidence presented at the hearing on the instant motion, a preliminary legal objection should be addressed.

I.

A.

Fed. R. Bankr.P. 7052 incorporates Fed.R.Civ.P. 52. Rule 52(b) states that "[o]n a party's motion filed no later than 10 days after the entry of judgment, the court may amend its findings — or make additional findings — and may amend the judgment accordingly. The motion may accompany a motion for a new trial under Rule 59." Thus, based upon a timely motion, factual findings may be altered or amended by the trial judge without granting a new trial if the changes are warranted. See, e.g., U.S. Gypsum Co. v. Schiavo Bros., Inc., 668 F.2d 172, 180 n. 9 (3d Cir.1981). The decision whether to amend findings of fact or conclusions of law under Rule 52(b) is within the discretion of the trial court. See Dash v. Chicago Insurance Co., 2004 WL 2337021, at *1 (D.Mass.2004). In order to prevail under rule 52(b), "the movant must show that the motion is necessary to correct manifest errors of law or fact." Edwards v. Wyatt, 2007 WL 136687, at *1 (E.D.Pa.2007). The trial record must support the requested alterations, otherwise the movant will not be entitled to the relief requested. U.S. Gypsum Co., 668 F.2d at 180.

Fed.R.Civ.P. 59 is incorporated by Fed. R. Bankr. 9023, and complements Rule 52(b). U.S. Gypsum Co., 668 F.2d at 180. Rule 59(e) allows the court to revisit a judgment to correct "manifest errors of law or fact or to present newly discovered evidence." Blue Mountain Mushroom Co., Inc., v. Monterey Mushroom, Inc., 246 F.Supp.2d 394, 398 (E.D.Pa.2002) (quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir.1985)). The standard for altering or amending a court's order to make additional findings of fact or conclusions of law under Rule 59(e) is virtually the same as under Rule 52(b). See, e.g., FINOVA Capital Corp. v. Richard A Arledge, Inc., 2007 WL 1965335, at *2 (D.Ariz.2007) ("The standard for altering or amending a judgment under Rule 59(e) is nearly identical to the standard for granting similar relief under Rule 52."); In re Smith, 2006 WL 2709763, at *1 (holding that the same standard applies to motions to amend under rules 59 and 52(b)). And as with Rule 52(b), relief under Rule 59(e) is committed to the trial court's discretion. See Nutrition Management Services Co. v. Harborside Healthcare Corp., 181 Fed.Appx. 315, 318 (3d Cir.2006) (non-precedential); Adams v. Gould, Inc., 739 F.2d 858, 864 (3d Cir.1984).

A motion under Rule 59(e) may be granted on one of three grounds: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the challenged judgment or order was entered; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice. See, e.g., Max's Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999); North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir.1995).

Newly discovered evidence refers to evidence that: (1) is material and not merely cumulative; (2) was not discoverable before trial through the exercise of reasonable diligence; and (3) would probably have changed the outcome of the trial. Compass Technology, Inc. v. Tseng Laboratories, Inc., 71 F.3d 1125, 1130 (3d Cir. 1995). The movant bears a "heavy burden," which requires "more than a showing of the potential significance of the new evidence." Bohus v. Beloff 950 F.2d 919, 930 (3d Cir.1991) (quoting Plisco v. Union R. Co., 379 F.2d 15, 17 (3d Cir.1967), cert, denied, 389 U.S. 1014, 88 S.Ct. 590, 19 L.Ed.2d 660 (1967)). Relief should only be granted when extraordinary justifying circumstances are present. Id.

Fed.R.Civ.P. 60(b), incorporated by Fed. R. Bankr.P. 9024, also allows a party to seek relief from a judgment, order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud..., misrepresentation, or other misconduct of an adverse party;

(4) the judgment is void;

(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or

(6) any other reason justifying relief from the operation of the judgment.

Fed.R.Civ.P. 60(b). The purpose of Rule 60(b) is "to strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice must be done." Moss v. Potter, 2007 WL 1726519, at *1 (WD.Pa.2007) (quoting Boughner v. Secretary of Health, Education, and Welfare, 572 F.2d 976, 977 (3d Cir. 1978)). As with motions made pursuant to Rules 52 and 59, the decision to grant or deny relief pursuant to Rule 60(b) is committed to the discretion of the trial court. Id.

The standards for relief from an order or judgment under rules 59(e) and 60(b) on the grounds of newly discovered evidence are the same. See Compass Technology, Inc. v. Tseng Laboratories, Inc., 71 F.3d 1125, 1130 (3d Cir.1995); Banco Central Del Paraguay v. Paraguay Humanitarian Foundation, Inc., 2007 WL 2493684, at *3 n. 2 (S.D.N.Y.2007) ("Although the court in Fidelity Partners, Inc. was citing to the requirements for reconsideration on the grounds of new evidence under Rule 60(b)(2), the standard for newly discovered evidence under Rule 59(e) is identical."). These two procedural rules differ, however, in that Rule 59 motions must be filed within 10 days from the date the judgment was rendered. Additionally, Rule 60(b)(2) dictates that if a party is moving for reconsideration based upon newly discovered evidence, the evidence must not have been discoverable in time to move for a new trial pursuant to Rule 59(b).

Rule 60(b) provides additional grounds for relief that are not provided for pursuant to Rule 59, which grounds are not at issue in this contested matter. More relevant to PTN's motion is that, like its counterpart under Rule 59, a timely Rule 9023 motion extends the time to file an appeal. See Fed. R. Bankr.P. 8002(b); In re Griffin, 310 B.R. 610, 616-17 (8th Cir. BAP 2004); Marta Group, Inc. v. County Appliance Co., Inc., 79 B.R. 200, 203 (E.D.Pa.1987); Creative Data Forms, Inc. v. Pennsylvania Minority Business Development Authority, 72 B.R. 619, 621-22 (E.D.Pa.1985). It does so because "[a] timely motion under Rule 59 destroys the finality of the judgment...." Coquillette, et al, 12 Moore's Federal Practice, § 59.12[1] at 59-38 (3d ed.2007). As explained by one court: A judgment is said to be final if it conclusively determines the rights of the parties to the litigation and leaves nothing for the court to do but execute the order ... or resolve collateral issues. ... However, certain types of postjudgment motions interrupt the judgment's finality because judicial efficiency is improved by postponing appellate review of the judgment "until the District...