Buckskin Realty Inc. v. Windmont Homeowners Ass'n, Inc. (In re Buckskin Realty Inc.)

In re: Buckskin Realty Inc., Debtor.

Buckskin Realty Inc., Plaintiff, v. Windmont Homeowners Association, Inc., Eva Halpern, an individual, Allyson Phillips,an individual, Edward I. Kaplan, an individual, Young & Sommer, P.C., Cathy Hennessy, Defendants.

Case No. 1-13-40083-nhl

Adv. Pro. No. 1-15-01004-nhl

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK

March 24, 2017

Chapter 11

OPINION AND ORDER ON MOTION FOR RECONSIDERATION

Appearances:

Frederick Cains

430 East 86th Street

New York, New York 10028

Attorney for Plaintiff

Barry G. Margolis

Abrams Garfinkel Margolis Bergson LLP

1430 Boradway

17th floor

New York, NY 10018

Attorney for Defendants Windmont

Homeowners Association, Inc.; Eva Halpern;

Cathy Hennessy

Rey Olsen

41-26 27th Street

Long Island City, New York 11101

Pro Se

Peter T. Shapiro

Lewis Brisbois Bisgaard & Smith LLP

77 Water Street

New York, New York 10005

Attorney for Defendants Allyson Phillips and

Young & Sommer, P.C.

Jonathan B. Bruno

Rivkin Radler LLP

477 Madison Ave.

20th floor

New York, NY 10022

Attorney for Defendant Edward I. Kaplan

NANCY HERSHEY LORD UNITED STATES BANKRUPTCY JUDGE

Before the Court is plaintiff Buckskin Realty Inc.'s ("Buckskin") motion for reconsideration (the "Reconsideration Motion") of the Court's decision entered on September 23, 2016 (the "Decision"), ECF No. 102, which dismissed all but one of Buckskin's causes of action in its amended complaint (the "Amended Complaint"), ECF No. 104. For the reasons articulated below, Buckskin's Reconsideration Motion is denied.

Jurisdiction

This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334(b), and the Eastern District of New York standing order of reference dated August 28, 1986, as amended by order dated December 5, 2012. This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

Background

The Court assumes the parties' familiarity with the underlying facts, and will only briefly address the events leading up Buckskin's Reconsideration Motion. Buckskin brought the instant adversary proceeding in order to, in part, vacate a state foreclosure judgment and sale of two unimproved lots located in Green County, New York, and retitle those lots to its bankruptcy estate. The Amended Complaint made various claims against defendants Windmont Homeowners Association ("Windmont"); Eva Halpern ("Halpern") and Cathy Hennessy ("Hennessy"), who are officers of Windmont; Young & Sommer LLC ("Young/Sommer") and Allyson Phillips ("Phillips"), who represented Windmont in the foreclosure proceedings; and Edward Kaplan ("Kaplan"), the state court foreclosure referee (collectively, the "Defendants").

The Defendants filed separate motions to dismiss Buckskin's claims under Fed. R. Civ. P. 12(b)(1) and (6), which the Court granted to the extent that all but Buckskin's claim against Windmont under 11 U.S.C. § 547 were dismissed. In large part, the Decision found that theRooker-Feldman doctrine barred the Court from vacating the state foreclosure judgment, and denied Buckskin's first three causes of action for that reason.

Buckskin has now moved for the Court to reconsider its Decision on nine separate grounds, all pursuant to Federal Rule of Civil Procedure 59.¹ Responses were filed by Windmont, Halpern, and Hennessy, ECF No. 111; Young/Sommer and Phillips, ECF No. 112; and Kaplan, ECF No. 109. In essence, the responses filed argue that Buckskin has impermissibly used its Reconsideration Motion as a vehicle for presenting arguments that it had not previously raised, and that are nevertheless without merit. Buckskin replied to each response in advance of a hearing on the Reconsideration Motion, and in each instance defended its use of new cases and arguments. See ECF Nos. 113-15. After the hearing on the Reconsideration Motion held on December 6, 2016, Buckskin filed six additional letters, mostly related to its argument that Rooker-Feldman does not bar this Court's review of the state foreclosure judgment.

Discussion

A. Standard for Reconsideration Under Fed. R. Civ. P. 59

Rule 59 permits a party to make a motion "to alter or amend a judgment," Fed. R. Civ. P. 59(e), and is properly invoked only where: (1) there is an intervening change of controlling law; (2) new evidence becomes available; or (3) there is a need to correct a clear error or prevent manifest injustice, In re Hassan, 527 B.R. 97, 100 (Bankr. E.D.N.Y. 2015) (quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992), cert. denied, 506 U.S.820 (1992)); In re CPJFK, LLC, 496 B.R. 65, 67 (Bankr. E.D.N.Y. 2011) (quoting United States v. Sessa, Nos. 92-CR-351(ARR), 97-CV-2079(ARR), 2011 WL 867175, at *1 (E.D.N.Y. Mar. 8, 2011)). The standard under Rule 59 is strict; under the "clear error" basis, raised here, reconsideration will generally be denied unless a party can show that a court "overlooked controlling decisions or factual matters that were put before [it] on the underlying motion." Lichtenbrg v. Besicorp Gr. Inc., 28 F. App'x 73, 75 (2d Cir. 2002) (quoting Fulani v. Brady, 149 F.R.D. 501, 503 (S.D.N.Y. 1993), aff'd sub nom. Fulani v. Bentsen, 35 F.3d 49 (2d Cir. 1994)); Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). A party may not use Rule 59 as a means to "repeat[] old arguments previously rejected," or to "mak[e] new arguments that could have been previously advanced." CPJFK, 496 B.R. at 67 (quoting Associated Press v. U.S. Dep't of Def., 395 F. Supp. 2d 17, 19 (S.D.N.Y. 2005)); see also Gem Fin. Serv., Inc. v. City of New York, No. 13-CV-1686(MKB), 2015 WL 1475853, at *2 (E.D.N.Y. Mar. 31, 2015) ("It is thus 'well-settled' that a motion for reconsideration is 'not a vehicle for relitigating old issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise taking a "second bite at the apple."'" (quoting Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012))).

Buckskin's argument, made both in its papers and during the hearing, that it may submit any controlling precedent for the first time in the context of a motion for reconsideration, is simply not supported by the case law. See Rep. Br. to Windmont 2, ECF No. 113; Dec. 6 Tr. 20:4-5, ECF No. 174. The party moving under Rule 59 must point to a controlling decision that was "overlooked," see Henderson v. City of New York, No. 05-CV-2588 (FB)(CLP), 2011 WL 5513228, at *1 (E.D.N.Y. Nov. 10, 2011) ("In order to have been 'overlooked,' the decisions or data in question must have been 'put before [the court] on the underlying motion . . . and which,had they been considered, might have reasonably altered the result before the court.'" (quoting Range Rd. Music, Inc. v. Music Sales Corp., 90 F. Supp. 2d 390, 392 (S.D.N.Y. 2000))), or, at the very least, that directly affects the validity of an argument already raised before a decision is issued, see Analytical Surveys, 684 F.3d at 52-53 (rejecting a motion for reconsideration raising an argument not previously advanced).

B. Substantive Grounds for Reconsideration

1. Appeal Exception to Rooker-Feldman

In the Decision, the Court found that the Rooker-Feldman doctrine left it without jurisdiction to entertain Buckskin's first three causes of action. See Decision 7-12, ECF No. 102. The Court applied the test for Rooker-Feldman used in the Second Circuit since the Supreme Court's decision in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005): (1) the federal-court plaintiff lost in state court; (2) the plaintiff "must complain of injuries caused by a state-court judgment;" (3) the plaintiff "must invite district court review and rejection of that judgment;" and (4) "the state-court judgment must have been rendered before the district court proceedings commenced." Green v. Mattingly, 585 F.3d 97, 101 (2d Cir. 2009) (quoting Hoblock v. Albany Cty. Bd. of Elections, 422 F.3d 77, 85 (2d Cir. 2005)); see Decision 7-8, ECF No. 102. Application of the test led the Court to conclude that its requirements were satisfied on the facts presented. See Decision 8, ECF No. 102.

Buckskin disputes the applicability of the doctrine in its first argument for reconsideration. Buckskin contends that the Supreme Court's decisions in Exxon Mobil and, more recently, in Lance v. Dennis, 546 U.S. 459 (2006), mandate that Rooker-Feldman has no application where a state court decision was appealed prior to commencement of the federal suit. As Buckskin explains, those circumstances fall within a settled exception to Rooker-Feldman: the appealed statecourt judgment is not final, and the state and federal litigations are therefore parallel. See Lance, 546 U.S. at 464 (citing Exxon Mobil, 544 U.S. at 292 (noting that Rooker-Feldman does not apply to "parallel" state and federal litigation)). Buckskin then states that because it appealed the state court's judgment denying its motion to vacate the foreclosure judgment on January 2, 2013, six days prior to filing its bankruptcy petition, the relief sought in this adversary proceeding falls within this exception.

The Court declines Buckskin's invitation to reconsider its application of Rooker-Feldman on those grounds. As set out above, Rule 59 is not a vehicle for "making new arguments that could have been previously advanced." CPJFK, 496 B.R. at 67. Nevertheless, that is precisely what Buckskin has done here. The majority of the case law cited in support of Buckskin's position was available to it in advance of the Decision's publication.² Despite this, Buckskin did not raise this argument in its original responses to the Defendants' motions to dismiss, or at any time before the Decision was issued. Accordingly, it may not do so for the first time now. See Analytical Surveys, 684 F.3d at 52.

Even if Buckskin's new argument were not barred for this reason, its position would still not warrant reconsideration of the Decision's Rooker-Feldman analysis. Despite...