518 B.R. 212
E.D.N.Y2014Background
- Metropolitan, a creditor, contested plan confirmation in a Chapter 11 proceeding for Emmons-Sheepshead Bay Development, LLC.
- Metropolitan filed a single, limited objection to plan confirmation claiming lack of good faith under §1129(a)(3).
- Bankruptcy Court held an evidentiary hearing on June 27, 2013 and confirmed the plan over Metropolitan’s objections.
- Metropolitan moved for reconsideration on July 17, 2013, raising new due process and constructive trust arguments for the first time.
- Bankruptcy Court denied reconsideration on August 28, 2013; Metropolitan appealed to the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Metropolitan properly raised reconsideration grounds | Metropolitan argues reconsideration allowed new due process and constructive trust theories. | Debtor contends new theories were improper for reconsideration and waived on appeal. | Reconsideration grounds improperly raised and waived; affirmed denial on this basis. |
| Whether the plan was proposed in good faith | Metropolitan challenged good faith of plan under §1129(a)(3). | Bankruptcy court held the plan was negotiated and proposed with honesty and reasonableness. | Plan proposed in good faith; lower court’s finding upheld. |
| Whether Metropolitan received due process during the confirmation hearing | Metropolitan contends it was deprived of essential discovery and adjournment. | Court protected due process; Metropolitan had ample notice and participation; discovery stayed within reason. | Due process rights satisfied; claims rejected on the merits. |
| Whether a constructive trust existed to defeat estate property claims | Constructive trust claim alleged ownership issues prevented estate inclusion. | No constructive trust; contract governs rights and there is an adequate remedy at law. | Constructive trust not imposed; inadequate state-court record and remedies cited. |
| Whether the appellate record was sufficiently complete to review | Incomplete record hampered review; transcript of August 15, 2013 hearing missing. | Record sufficient to review merits despite missing transcript; merits resolved on available materials. | Court proceeded with merits review; affirmed on the record before it. |
Key Cases Cited
- In re Harris, 464 F.3d 263 (2d Cir. 2006) (record completeness and transcript considerations in appeal)
- In re McCarthy, 230 B.R. 414 (9th Cir. BAP 1999) (mandatory designation of transcripts when findings of fact and law are rendered)
- Hall v. Galie, 354 F. App’x 715 (3d Cir. 2009) (affirming where missing transcript; preservation and limitations on appeal)
- In re Omegas Group, Inc., 16 F.3d 1449 (2d Cir. 1994) (constructive trust and when it attaches without a verdict)
- In re Bd. of Directors of Telecom Argentina, S.A., 528 F.3d 162 (2d Cir. 2008) (abuse of discretion standard in reconsideration context)