Kunica v. St. Jean Financial, Inc.
| Decision Date | 22 April 1999 |
| Docket Number | No. 97 Civ. 3804(RWS).,97 Civ. 3804(RWS). |
| Citation | 233 BR 46 |
| Parties | Richard D. KUNICA, Plaintiff, v. ST. JEAN FINANCIAL, INC. and Walter L. Rogers, Defendants. |
| Court | U.S. District Court — Southern District of New York |
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Hartman Underhill & Brubaker LLP, Lancaster, PA, by Stephen R. Luzan, of counsel, for plaintiff.
Baer Marks & Upham LLP, New York City, by Neal S. Barlia, Jay L. Gottlieb, Alexander D. Widell, of counsel, for defendant.
Defendants St. Jean Financial, Inc. ("St. Jean") and Walter L. Rogers ("Rogers," and collectively the "Defendants") have moved, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for an order granting summary judgment and dismissing the Amended Complaint of plaintiff Richard D. Kunica ("Kunica"). For the reasons set forth below, Defendants' motion is granted.
Kunica is a Canadian resident.
St. Jean is a Delaware corporation with a registered address in Wilmington, Delaware, and principal places of business in New York, New York and London, England.
Rogers is a New York resident and was at all relevant times Director of St. Jean.
The facts and prior proceedings of this action are set forth in a prior opinion of the Court, familiarity with which is assumed. See Kunica v. St. Jean Financial, Inc., 1998 WL 437153 (S.D.N.Y. August 3, 1998). Those facts and proceedings relevant to the instant motion are set forth below.
Kunica commenced this action in the Supreme Court of the State of New York, County of New York, by filing a Summons with Notice on March 27, 1997. On May 23, 1997, the Defendants removed the case to this Court on diversity grounds. Kunica filed the Complaint on October 31, 1997.
Defendants filed a motion to dismiss on December 22, 1997. Kunica then filed an amended complaint (the "First Amended Complaint") on January 30, 1998, and Defendants withdrew their motion to dismiss on February 23, 1998 by stipulation.
On March 6, 1998, Defendants filed a motion to dismiss this action, and to dismiss Kunica's claim for punitive damages. By Opinion and Order dated August 3, 1998, the Court granted the motion to dismiss plaintiff's claims as to breach of oral agreement, fraud and tortious interference with business relations, and dismissed Kunica's claim for punitive damages. Plaintiff's claims for breach of written agreement and promissory estoppel were sustained. See Kunica, 1998 WL 437153.
The instant motion for summary judgment was filed on October 27, 1998, and was heard on February 3, 1999. Additional submissions were received through April 19, 1999, at which time the motion was deemed fully submitted.
Kunica is the alleged assignee of the claims of Sci-O-Tech, Inc. ("Sci-O-Tech"). In Count I of his Amended Complaint, Kunica alleges that St. Jean breached a written agreement with Sci-O-Tech to take out the secured position of its primary lender, Fremont Financial Corporation ("Fremont"). In Count V, Kunica asserts a promissory estoppel claim against Defendants arising out of Rogers' alleged promise to Sci-O-Tech to find a lending source for Sci-O-Tech. Kunica alleges that Defendants' actions caused Sci-O-Tech to suffer damages in excess of $2 million.
I. The Sci-O-Tech Bankruptcy
Sci-O-Tech filed a voluntary Chapter 11 bankruptcy petition (the "Petition") on September 14, 1994, in the United States Bankruptcy Court for the Eastern District of Pennsylvania. At the time Sci-O-Tech filed the Petition, Kunica, Ltd. owned 100% of the outstanding shares of the common stock of Sci-O-Tech, and Kunica was the President of Kunica, Ltd. and Sci-O-Tech.
On September 23, 1994, shortly after Kunica filed the Petition, Kunica, Ltd. consummated an agreement with Tyler E. Scheuler ("Scheuler") for the sale of 75% of the issued and outstanding shares of Sci-O-Tech common stock. As the new majority shareholder, Scheuler assumed full responsibility for the management and day-to-day oversight of Sci-O-Tech's operations.
On October 21, 1994, Sci-O-Tech filed its Schedules of Assets and Liabilities (the "Schedules"). On January 25, 1995, Sci-O-Tech filed its plan of reorganization (the "Plan"). In the Plan, Sci-O-Tech expressly reserved the right to initiate litigation with respect to any claim or cause of action maintainable by Sci-O-Tech, to modify the Plan, and to revoke or withdraw the Plan before the confirmation date. Simultaneously with the filing of the Plan, Sci-O-Tech filed a proposed disclosure statement. (The "Original Disclosure Statement"). Notice of the filing of the Plan and the Original Disclosure Statement was provided to all creditors and parties in interest, who were instructed to file their objections to the Original Disclosure Statement no later than February 17, 1995. In its Original Disclosure Statement, Sci-O-Tech stated that:
Litigation against third parties who defaulted on commitments to lend or invest in the Debtor is quite likely to occur. The outcome of that litigation is uncertain, so no recovery amount is included in the projections attached to Article 4.01. Some recovery on these Causes of Action may be required just to offset higher than anticipated Allowed Claims.
(Original Disclosure Statement at 12). Sci-O-Tech also stated in a footnote that:
The Debtor believes that Causes of Action may exist against one or more of the defaulting lenders/equity partners, but the feasibility of expensive litigation against out-of-state defendants is unclear. Nevertheless, these Causes of Action have not been waived and are expressly preserved under the Plan.
On February 17, 1995, Kunica and Mrs. Kunica filed an objection to the Original Disclosure Statement. The Kunicas maintained that the Original Disclosure Statement was deficient because it did not contain adequate information concerning:
(f) the existence, likelihood and possible success of non-bankruptcy litigation, including potential lender liability claims and conflict of interest claims (the Kunicas believe that several such claims exist, that such claims may have significant value, and that, if such claims are not disclosed, the Debtor may be equitably estopped from later prosecuting such claims in a non-bankruptcy forum).
(Kunicas' Objections to Disclosure Statement for Debtor's Plan of Reorganization ¶ 7).
Kunica avers that from February 9, 1995 through February 22, 1995, during several telephone conversations the Kunicas' counsel negotiated with counsel for Sci-O-Tech and counsel for the Official Unsecured Creditor's Committee (the "Committee") concerning the Kunicas' proposed revisions to the Plan and the Original Disclosure Statement. According to Kunica, during those telephone conversations, Sci-O-Tech's potential claims against St. Jean, Rogers and Arthur Andersen & Co. (the "Claims") were openly discussed and fully disclosed.
On February 23, 1995, immediately prior to the hearing on the Original Disclosure Statement, Scheuler, counsel for Sci-O-Tech, counsel for Sci-O-Tech's landlord, the McKesson Corporation, counsel for the Committee, and counsel for the Kunicas, met at the bankruptcy court to discuss, "among other things," the Kunicas' objections to the Original Disclosure Statement and the Plan. (Plaintiff's Rule 56.1 Statement ¶ 11).
Kunica submits that at the meeting on February 23, the parties reached the following understanding:
(Plaintiff's Rule 56.1 Statement ¶ 13).
On February 24, 1995, Sci-O-Tech filed an amended disclosure statement for the Plan (the "Amended Disclosure Statement"). The Amended Disclosure Statement states that:
By Order dated February 24, 1995, the Bankruptcy Court approved Sci-O-Tech's Amended Disclosure Statement and directed Sci-O-Tech to distribute the Amended Disclosure Statement, Plan of Reorganization and balloting materials to its creditors and parties in interest. Thereafter, Sci-O-Tech distributed its Plan and Amended Disclosure Statement, but on March 17, 1995, Sci-O-Tech withdrew its Plan because it believed that it would not be able to fulfill its obligations thereunder.
On April 27, 1995, Sci-O-Tech and Lumex Bed Systems, Inc. ("Lumex") executed an agreement for the sale to Lumex of substantially all of Sci-O-Tech's assets (the "Agreement"). Paragraph 10 of the Agreement provides that: "Not included in the assets to be sold pursuant to the Asset Purchase...
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Gray v. City of New York, 2008 NY Slip Op 30978(U) (N.Y. Sup. Ct. 4/1/2008), Index Number: 0116607/2004
...to disclose a claim in bankruptcy proceedings from asserting such claim after emerging from bankruptcy (Kunica v St. Jean Financial, Inc., 233 BR 46, 58-59 [SDNY 1999]). Thus, in Whelm v Longo, 7 NY3d 821 (2007), the fact that the plaintiff failed to disclose her cause of action within her ......
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Gray v. City of New York, 2008 NY Slip Op 50758(U) (N.Y. Sup. Ct. 4/1/2008)
...fails to disclose a claim in bankruptcy proceedings from asserting such claim after emerging from bankruptcy (Kunica v. St. Jean Financial, Inc., 233 BR 46, 58-59 [SDNY 1999]). Thus, in Whelan v. Longo, 7 NY3d 821 (2007), the fact that the plaintiff failed to disclose her cause of action wi......
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