In re: Euro-American Lodging Corp.

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. [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 non27 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. [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