Court Opinion

ID: 2648800
Source: CourtListenerOpinion
Date Created: 2014-01-10 15:19:35.17526+00
Date Added: 2024-06-11T12:55:06.669735
License: Public Domain

13-1308-bk
     In re: Euro-American Lodging Corp.

                          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 COURT’S 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 “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 10th day of January, two thousand fourteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                DENNY CHIN,
 8                SUSAN L. CARNEY,
 9                              Circuit Judges.
10
11       - - - - - - - - - - - - - - - - - - - -X
12       IN RE: EURO-AMERICAN LODGING CORP.,
13                Debtor,
14
15       LEON COHEN,
16                Appellant,
17
18                    -v.-                                               13-1308-bk
19
20       CDR CREANCES S.A.S.,
21                Appellee.
22       - - - - - - - - - - - - - - - - - - - -X
23
24       FOR APPELLANT:                        DAVID LANDE (with Benjamin
25                                             Brafman on the brief), Brafman &
26                                             Associates, P.C., New York, New
27                                             York.
28

                                                  1
 1   FOR APPELLEE:              DOUGLAS A. KELLNER, Kellner
 2                              Herlihy Getty & Friedman LLP,
 3                              New York, New York.
 4
 5        Appeal from a judgment of the United States District
 6   Court for the Southern District of New York (Nathan, J.).
 7
 8        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
 9   AND DECREED that the judgment of the district court be
10   AFFIRMED.
11
12        Leon Cohen appeals from a judgment of the United States
13   District Court for the Southern District of New York
14   (Nathan, J.), affirming the Bankruptcy Court’s denial of
15   Cohen’s application to reopen a Chapter 11 proceeding (the
16   “Application”). We assume the parties’ familiarity with the
17   underlying facts, the procedural history, and the issues
18   presented for review.
19
20        “Our review of an appeal that proceeds from the
21   bankruptcy court to the district court is plenary and
22   independent. We affirm factual findings unless clearly
23   erroneous and review legal conclusions de novo.” State Bank
24   of India v. Chalasani (In re Chalasani), 92 F.3d 1300, 1306
25   (2d Cir. 1996).
26
27        Under section 350(b) of the Bankruptcy Code, “[a] case
28   may be reopened in the court in which such case was closed
29   to administer assets, to accord relief to the debtor, or for
30   other cause.” 11 U.S.C. § 350(b); see also Fed. R. Bankr.
31 P. 5010 (“A case may be reopened on motion of the debtor or
32   other party in interest pursuant to § 350(b) of the Code.”).
33   A bankruptcy judge’s decision to grant or deny a motion to
34   reopen pursuant to 11 U.S.C. § 350(b) shall not be disturbed
35   absent an abuse of discretion. In re Chalasani, 92 F.3d at
36   1307. “A district court has ‘abuse[d] its discretion if it
37   based its ruling on an erroneous view of the law or on a
38   clearly erroneous assessment of the evidence,’ or rendered a
39   decision that ‘cannot be located within the range of
40   permissible decisions.’” Sims v. Blot (In re Sims), 534
41 F.3d 117, 132 (2d Cir. 2008)(internal citations omitted,
42   alteration in original).
43
44        Cohen seeks to reopen the Chapter 11 proceedings of
45   Euro-American Lodging Corporation (“EALC”), a Delaware
46   corporation formed in 1990 for the purpose of acquiring and
47   developing a certain real property in New York City. The

                                  2
 1   Chapter 11 proceeding was commenced as an involuntary
 2   bankruptcy by appellee CDR Creances, S.A.S. (“CDR”) in 2006.
 3   EALC’s estate has been fully administered, and EALC received
 4   a full discharge from the plan of reorganization.
 5
 6        Cohen, who once served as President of EALC, is now
 7   serving a prison term for tax fraud, and faces civil fraud
 8   actions filed against him by CDR (in the state courts of New
 9   York and Florida), some of which have already ended in
10   judgment against Cohen. The Application seeks (1) an order
11   enjoining CDR from pursuing any claims against him, on the
12   ground that his debts and other civil liabilities were
13   discharged by EALC’s plan of reorganization, and (2) a range
14   of additional relief intended to bar, undermine, or
15   completely restructure the state court actions. For
16   example, Cohen seeks orders from the bankruptcy court
17   enjoining CDR’s claims based on New York’s “Out-of-Pocket
18   Rule,”1 Appellant’s Br. 11, 22-23, and an “anti-litigation
19   injunction” against CDR on the ground that CDR’s fraud
20   claims against him are derivative of claims that CDR made
21   against EALC in bankruptcy.
22
23        Cohen is not the debtor in the closed bankruptcy
24   proceeding, and he does not contest how the assets of EALC’s
25   estate are administered. Accordingly, Cohen must
26   demonstrate “cause” to reopen the bankruptcy proceedings.
27   11 U.S.C. § 350(b).
28
29        The Bankruptcy Court did not abuse its discretion in
30   denying the Application. The release or discharge of a
31   nondebtor is permissible only upon a finding by the
32   Bankruptcy Court that “truly unusual circumstances render
33   the release terms important to success of the plan.”
34   Deutsche Bank AG, London Branch v. Metromedia Fiber Network,

         1
              “In an action to recover damages for fraud . . .
     [t]he true measure of damage is indemnity for the actual
     pecuniary loss sustained as the direct result of the wrong
     or what is known as the ‘out-of-pocket’ rule. . . . Damages
     are to be calculated to compensate plaintiffs for what they
     lost because of the fraud, not to compensate them for what
     they might have gained. Under the out-of-pocket rule, there
     can be no recovery of profits which would have been realized
     in the absence of fraud.” Lama Holding Co. V. Smith Barney
     Inc., 88 N.Y.2d 413, 421 (1996) (internal quotation marks
     and citations omitted).
                                  3
 1   Inc. (In re Metromedia Fiber Network, Inc.), 416 F.3d 136,
 2   143 (2d Cir. 2005). Cohen has provided no evidence or
 3   argument that such a release was granted by the plan of
 4   reorganization (indeed, Cohen fails even to provide the plan
 5   of reorganization for our review). Notably, the Bankruptcy
 6   Court itself stated that the plan “clearly didn’t grant a
 7   discharge to [Cohen].” Tr. of Proceedings at 13, Apr. 17,
 8   2012. Therefore, no order to that effect could have been
 9   issued, and granting the Application to consider such relief
10   would have been “meaningless.” In re Chalasani, 92 F.3d at
11   1307.
12
13        Second, the Bankruptcy Court did not abuse its
14   discretion in finding that it lacked jurisdiction to issue
15   the remaining relief sought by the Application. A party may
16   invoke the authority of the bankruptcy court to exercise
17   post-confirmation jurisdiction only if the matter has a
18   close nexus to the bankruptcy plan, see Reese v. Beacon
19   Hotel Corp., 149 F.2d 610, 611 (2d Cir. 1945) (limiting
20   reservation of post-confirmation jurisdiction to that
21   “requisite to effectuate a plan of reorganization”), and the
22   plan provides for the retention of such jurisdiction, Hosp.
23   & Univ. Prop. Damage Claimants v. Johns-Manville Corp. (In
24   re Johns-Manville Corp.), 7 F.3d 32, 34 (2d Cir. 1993).
25
26        CDR’s state court actions are disputes between non-
27   debtors and do not implicate assets of EALC’s estate or the
28   administration of the plan of reorganization--indeed, EALC’s
29   estate has been fully administered. There is no indication
30   that the plan of reorganization contemplated that any of
31   CDR’s potential future claims against Cohen would be limited
32   or precluded as a condition or result of confirmation;
33   again, the Bankruptcy Court emphatically rejected any such
34   notion. See Tr. of Proceedings at 8, 13, Apr. 17, 2012.
35   Accordingly, the Bankruptcy Court did not abuse its
36   discretion in ruling it lacked jurisdiction to issue the
37   remaining relief sought by the Application.
38
39        We agree with the Bankruptcy Court that Cohen’s
40   Application is, in essence, an attempt to argue that the
41   effect of EALC’s plan of reorganization has “worked some
42   sort of a discharge or satisfaction [of CDR’s fraud claims]
43   under non-bankruptcy law.” Id. at 13 (emphasis added).
44   Cohen may raise such arguments in state court, but they do
45   not provide a basis to reopen EALC’s Chapter 11 bankruptcy
46   proceeding.
47

                                  4
1        We have considered all of Cohen’s additional arguments
2   and find them to be without merit. Accordingly, the
3   judgment of the District Court is AFFIRMED.
4
5                              FOR THE COURT:
6                              CATHERINE O’HAGAN WOLFE, CLERK
7
8
9

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