450 B.R. 461
Bankr. S.D.N.Y.2011Background
- Park Avenue Radiologists, P.C. filed an adversary action against former employee Melnick in the SDNY Bankruptcy Court after Park's plan confirmation.
- Park, a reorganized debtor, had a plan confirmed August 26, 2010 and effective November 15, 2010, with limited post‑confirmation jurisdiction consistent with the plan.
- Melnick was employed under a 2004 employment contract containing a restrictive covenant restricting post‑termination work in a defined NYC area; an addendum reduced the covenant to two years.
- Messina and Liebeskind settled shareholder disputes in March 2010; Messina resigned and Park redeemed his interests under the March 12 Settlement.
- Melnick allegedly negotiated and began working for a competing radiology practice, LHR, in March–April 2010, in violation of the restrictive covenant.
- Park sought to avoid the Addendum and claimed Melnick breached the covenant, breached fiduciary duties, defamed Park, and caused other harms, seeking damages and attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Post-confirmation jurisdiction | Park contends post‑confirmation jurisdiction exists to resolve actions related to the plan. | Melnick argues the court’s post‑confirmation jurisdiction is limited or non‑existent for these claims. | Lack of post‑confirmation subject matter jurisdiction. |
| Close nexus to plan | Claims relate to plan interpretation/consummation and the covenant as estate property. | No close nexus to the plan; claims do not affect the plan’s implementation. | No sufficiently close nexus to the plan. |
| Plan retention of jurisdiction | Plan §11.1(f) purports to retain jurisdiction over actions pending on the Effective Date. | Section 11.1(f) does not provide post‑effective date jurisdiction for this dispute; Section 7.8 is not jurisdictional. | Plan did not retain jurisdiction over this adversary proceeding. |
Key Cases Cited
- Binder v. Price Waterhouse & Co., LLP (In re Resorts Int'l, Inc.), 372 F.3d 154 (3d Cir.2004) (post‑confirmation nexus must affect the estate; insufficient nexus here)
- In re General Media, Inc., 335 B.R. 66 (Bankr.S.D.N.Y.2005) (post‑confirmation jurisdiction shrinks; close nexus plus retention required)
- North Am. Car Corp. v. Peerless Weighing & Vending Mach. Corp., 143 F.2d 938 (2d Cir.1944) (tutelage and post‑reorganization jurisdiction concerns)
- In re Neptune World Wide Moving, Inc., 111 B.R. 457 (Bankr.S.D.N.Y.1990) (plan retention and post‑confirmation jurisdiction principles)
- In re Rickel & Assocs., Inc., 272 B.R. 74 (Bankr.S.D.N.Y.2002) (post‑confirmation jurisdiction considerations in SDNY cases)
- In re Petrie Retail, Inc., 304 F.3d 223 (2d Cir.2002) (close nexus and interpretation of plan concerns)