15-3844-bk

In re: Emmons‐Sheepshead Bay Dev.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.  CITATION TO A SUMMARY

ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE

OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.  WHEN CITING A

SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE

FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ).  A

PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED

BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in

the City of New York, on the 6th day of December, two thousand sixteen.

PRESENT: JOHN M. WALKER, JR.,

ROBERT D. SACK,

DENNY CHIN,

Circuit Judges.

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IN RE: EMMONS‐SHEEPSHEAD BAY  

DEVELOPMENT, LLC,

Debtor,

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METROPOLITAN ESTATES, INC., ALBERT WILK,

derivatively on behalf of Emmons Avenue, LLC,

DBA Wilk Real Estate, Ltd., ALEX DIKMAN,

Plaintiffs‐Appellants,

v. 15‐3844‐bk

EMMONS‐SHEEPSHEAD BAY DEVELOPMENT,  

LLC,

Defendant‐Appellee.

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FOR PLAINTIFFS‐APPELLANTS: Karamvir Dahiya, Dahiya Law Offices LLC,

New York, New York.

FOR DEFENDANT‐APPELLEE: Lori Schwartz, Robinson Brog Leinwand

Greene Genovese & Gluck, P.C., New York,

New York.  

Appeal from the United States District Court for the Eastern District of

New York (Gleeson, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.  

Plaintiffs‐appellants appeal the district courtʹs judgment entered

November 18, 2015 affirming the orders of the bankruptcy court dismissing their

amended complaint in an adversary proceeding against defendant‐appellee Emmons‐

Sheepshead Bay Development, LLC (ʺEmmonsʺ).  By order entered December 19, 2014,

the bankruptcy court (Stong, B.J.) dismissed the amended complaint with prejudice for

failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).  By order entered

April 24, 2015, the bankruptcy court denied plaintiffsʹ motion to vacate, alter, or

reconsider the dismissal.  On November 17, 2015, following oral argument, the district

court affirmed the bankruptcy courtʹs orders, ruling from the bench.  We assume the

partiesʹ familiarity with the underlying facts, procedural history, and issues on appeal.

Plaintiff‐appellant Metropolitan Estates, Inc. (ʺMetropolitanʺ) invested in a

condominium development known as ʺThe Breakers at Sheepshead Bay Condominiumʺ 
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(the ʺPropertyʺ).   Plaintiffs‐appellants Alex Dikman and Albert Wilk are principals of

Metropolitan.  The Property was conveyed to Emmons in 2007.  The amended

complaint identifies non‐party Jacob Pinson as a member of Emmons.   

In August 2012, Pinson filed for bankruptcy protection under Chapter 11

on behalf of Emmons and, according to plaintiffs, undervalued the Property at $14

million when it was actually worth more than $30 million.  In July 2013, the bankruptcy

court confirmed Emmonsʹs proposed plan of reorganization despite plaintiffsʹ objection

that the plan had not been proposed in good faith.  The bankruptcy court denied

plaintiffsʹ motion for reconsideration in August 2013, and the district court (Mauskopf,

J.) denied their appeal of that denial in September 2014.   

Meanwhile, plaintiffs initiated this action as an adversary proceeding in

the bankruptcy court and thereafter filed an amended complaint.  Plaintiffs sought to

revoke the confirmation order and rescind the discharge of the Property under 11 U.S.C.

§ 1144 on the grounds that (1) the order was procured by fraud, (2) the Property was

fraudulently conveyed and held in a constructive trust, (3) the plan of reorganization

benefitted the debtor but not the unsecured creditors, and also facilitated the secret sale

of the Property to a sham purchaser, and (4) plaintiffs were denied due process because

the bankruptcy court issued the confirmation order despite their lack of access to certain

material discovery.  The bankruptcy court dismissed the amended complaint with

prejudice for failure to state a claim in December 2014 and, after convening a hearing in
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April 2015, denied plaintiffsʹ motion to vacate, alter, or reconsider the dismissal or its

findings.  The district court (Gleeson, J.) affirmed the bankruptcy courtʹs orders and

decisions in November 2015.   

  ʺIn an appeal from a district courtʹs review of a bankruptcy court decision,

we review the bankruptcy court decision independently, accepting its factual findings

unless clearly erroneous but reviewing its conclusions of law de novo.ʺ  In re Enron Corp.,

419 F.3d 115, 124 (2d Cir. 2005) (quoting In re AroChem Corp., 176 F.3d 610, 620 (2d Cir.

1999)).1   

I. Dismissal of the Amended Complaint

The sufficiency of a complaint in an adversary proceeding is evaluated

under Federal Rule of Civil Procedure 12(b)(6).  Fed. R. Bankr. P. 7012(b).  We review

the dismissal of a complaint pursuant to Rule 12(b)(6) de novo while construing the

complaint liberally, accepting all factual allegations as true, and drawing all reasonable

inferences in the plaintiffʹs favor.  Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d

Cir. 2002).  To survive a motion to dismiss under Rule 12(b)(6), the complaint must

plead ʺenough facts to state a claim to relief that is plausible on its face.ʺ  Bell Atl. Corp.

v. Twombly, 550 U.S. 544, 570 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).   

                                                 

1   Emmons argues that plaintiffs lack standing to pursue certain claims, and that

their claims are equitably moot.  We need not reach these issues, as we decide the appeal on the

merits.
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To revoke a confirmation order under 11 U.S.C. § 1144, a plaintiff must

show the order was procured by fraud.  11 U.S.C. § 1144.  Moreover, Federal Rule of

Civil Procedure 9(b) requires plaintiffs alleging fraud to ʺstate with particularity the

circumstances constituting fraud or mistake,ʺ In re Motors Liquidation Co., 462 B.R. 494,

505 (Bankr. S.D.N.Y. 2012) (applying Rule 9(b) to a § 1144 claim in a bankruptcy case),

and to ʺallege facts that give rise to a strong inference of fraudulent intent,ʺ Shields v.

Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir. 1994).

We conclude that the bankruptcy court properly dismissed the amended

complaint because plaintiffs failed to sufficiently allege that the confirmation order was

procured by fraud.  The amended complaint presents only conclusory allegations that

defendants fraudulently and intentionally misled the bankruptcy court by

underreporting the value of the Property, obscuring the ownership history of the

Property, and manufacturing a false sense of urgency in the bankruptcy proceedings.  

There are no factual allegations to substantiate those claims or to support an inference,

let alone a strong inference, of fraudulent intent.  Plaintiffsʹ claims as to incomplete

discovery, the partiesʹ unsuccessful settlement negotiations, the priority of creditors, the

post‐order sale of the Property, and the lack of due process are inapposite because

§ 1144 expressly limits the basis for revocation to procurement by fraud.  The amended

complaint thus fails to state a claim under § 1144.  See In re Motors Liquidation, 462 B.R. at
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508 (dismissing the complaint in an action brought under § 1144 for failure to plead

fraud with sufficient particularity).

II. Denial of Plaintiffsʹ Motion to Vacate, Alter, or Reconsider

Motions to vacate, alter, or reconsider a bankruptcy courtʹs decisions or

findings are governed by Federal Rules of Civil Procedure 52(b), 59(e), and 60(b), which

apply to adversary proceedings through Federal Rules of Bankruptcy Procedure 7052,

9023, and 9024, respectively.  Rule 52(b) allows a court to make amended or additional

findings that are supported by the record and to amend the judgment accordingly.  Fed.

R. Civ. P. 52(b); Sequa Corp. v. GBJ Corp., 156 F.3d 136, 143‐44 (2d Cir. 1998).  Rule 59(e)

permits a court to ʺalter or amend judgment to correct a clear error of law or prevent

manifest injustice.ʺ  ING Glob. v. United Parcel Serv. Oasis Supply Corp., 757 F.3d 92, 96

(2d Cir. 2014) (quoting Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 153 (2d Cir. 2008)).  

Rule 60(b) authorizes a court to grant relief from a judgment on specific grounds such

as mistake, inadvertence, surprise, or excusable neglect; newly discovered evidence that

could not have been discovered earlier with reasonable diligence; fraud,

misrepresentation, or misconduct by the opposing party; and a void, satisfied, released,

or discharged judgment.  Fed. R. Civ. P. 60(b).  Although Rule 60(b) ʺstrikes a balance

between serving the ends of justice and preserving the finality of judgments[,] . . . final

judgments should not be lightly reopened.ʺ  Tapper v. Hearn, 833 F.3d 166, 170 (2d Cir.

2016) (quoting Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986)).   
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We review rulings on motions under Rules 52(b), 59(e), and 60(b) for

abuse of discretion.  ING Glob., 757 F.3d at 97 (Rule 59(e)); Motorola Credit Corp. v. Uzan,

561 F.3d 123, 126 (2d Cir. 2009) (Rule 60(b)); Sequa, 156 F.3d at 143 (Rule 52(b)).  

In this case, plaintiffs sought to have the dismissal of their amended

complaint vacated, altered, or reconsidered.  A review of their submissions and the

transcript of the April 21, 2015 hearing, however, demonstrates that they merely

rehashed the arguments that they raised at the motion to dismiss stage without

establishing a basis under Rules 52(b), 59(e), or 60(b) for amending or altering the

findings or judgment of the bankruptcy court.  Accordingly, the bankruptcy court did

not abuse its discretion in denying their motion to vacate, alter, or reconsider.

We have considered all of plaintiffsʹ additional arguments and find them

to be without merit.  For the reasons stated herein, the judgment of the district court is

AFFIRMED.

FOR THE COURT:

     Catherine OʹHagan Wolfe, Clerk