Wansdown Props. Corp. v. 29 Beekman Corp. (In re Wansdown Props. Corp.)

626 B.R. 141

IN RE: WANSDOWN PROPERTIES CORPORATION N.V., Debtor.

Wansdown Properties Corporation N.V., Plaintiff,

v.29 Beekman Corp., Defendant.

Case No. 19-13223 (SMB)

Adv. Pro. No. 20-01056 (SMB)

United States Bankruptcy Court, S.D. New York.

Signed January 6, 2021

BLANK ROME LLP, 1271 Avenue of the Americas, New York, New York 10020, Ira L. Herman, Esq., Evan J. Zucker, Esq., Of Counsel, Special Litigation Counsel for Plaintiff.

THE SERBAGI LAW FIRM, 488 Madison Avenue, Suite 1120, New York, New York 10022, Christopher Serbagi, Esq., Of Counsel, Attorney for Defendant.

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR RECONSIDERATION

STUART M. BERNSTEIN, United States Bankruptcy Judge:

This adversary proceeding concerns a dispute over the right to the downpayment ("Downpayment") given by the defendant-buyer ("Beekman") to the plaintiff-seller ("Debtor") in connection with an unconsummated Purchase Agreement¹ to buy real property (the "Townhouse") owned by the Debtor. In Wansdown Props. Corp. N.V. v. 29 Beekman Corp. (In re Wansdown Props. Corp. N.V. ), 620 B.R. 487 (Bankr. S.D.N.Y. 2020) (" Decision "), the Court denied the parties’ cross-motions for summary judgment and identified two factual issues. First, the Purchase Agreement ¶ 51(b) stated that "Seller represents that the net proceeds of a sale under this Contract would be sufficient to satisfy all claims against Seller and, as reasonably projected, Seller's contemplated estate in bankruptcy" (the "Proceeds Representation"). The Proceeds Representation had to be true and correct at closing, (Purchase Agreement ¶ 13(a)(i)), which had been adjourned to February 10, 2020. The closing never occurred as a result of Beekman's breach, subject, however, to the proviso that Beekman's obligation to close was not excused by the failure of the condition, to wit, the truth of the Proceeds Representation at the time of closing. Decision , 620 B.R. at 503. In this regard, the Court ruled that the phrase "as reasonably projected" in the Proceeds Representation was inherently ambiguous. Id. at 504.

Second, if the Debtor could not satisfy the Proceeds Representation at closing, "would the enforcement of the condition cause a disproportionate forfeiture to the Debtor." Id. On the one hand, if the condition was not excused, the Debtor and its creditors would forfeit the Downpayment. On the other hand, the Debtor sold the Townhouse to another buyer following Beekman's breach for significantly more than Beekman had agreed to pay. On a related point, the Court also questioned the materiality of the Proceeds Representation. Thus, the extent of the forfeiture raised a factual question. Id. The parties made a host of other arguments, and to the extent that the Court did not expressly address them, stated that it had "considered the parties’ remaining arguments and concludes that they are without merit." Id. at 505.

Beekman has now moved for reconsideration, (29 Beekman's Motion for Reconsideration on Denial of Its Cross-Motion for Summary Judgment , dated Oct. 19, 2020 ("Motion ") (ECF Doc. # 63); see also 29 Beekman's Reply Memorandum of Law in Support of Its Motion for Reconsideration on Denial of Its Cross-Motion for Summary Judgment, dated Nov. 16, 2020 ("Reply ") (ECF Doc. # 72)), which the Debtor opposes. (See Opposition of Wansdown Properties Corporation N.V. to 29 Beekman's Motion for Reconsideration on Denial of Its Cross-Motion for Summary Judgment , ("Opposition "), dated Nov. 4, 2020 (ECF Doc. # 70).) The Motion identifies numerous purported errors in the Decision that require reconsideration. For the reasons that follow, the Court grants reconsideration in connection with the issue concerning disproportionate forfeiture and otherwise denies the Motion .

DISCUSSION

A. Standard Governing the Motion

A motion for reargument or reconsideration is governed by Local Bankruptcy Rule ("LBR") 9023-1.² "The movant must show that the court overlooked controlling decisions or factual matters that might have materially influenced its earlier decision." In re Asia Glob. Crossing, Ltd. , 332 B.R. 520, 524 (Bankr. S.D.N.Y. 2005) (internal quotation marks omitted). Alternatively, the movant must demonstrate "the need to correct a clear error or prevent manifest injustice." Perez v. Progenics Pharms., Inc. , 46 F. Supp. 3d 310, 314 (S.D.N.Y. 2014) ; accord In re Asia Glob. Crossing, Ltd. , 332 B.R. at 524. A manifest injustice exists when a "verdict is wholly without legal support," ING Glob. v. United Parcel Serv. Oasis Supply Corp. , 757 F.3d 92, 97 (2d Cir. 2014), and the error is obvious to all who view it. Green Goblin, Inc. v. Simons (In re Green Goblin, Inc. ), Adv. No. 09-067, 2012 WL 1971143, at *1 n.2 (Bankr. E.D. Pa. May 31, 2012), aff'd , Civ. No. 12-4076, 2014 WL 5800601 (E.D. Pa. Nov. 6, 2014). "These criteria are strictly construed against the moving party so as to avoid repetitive arguments on issues that have been considered fully by the court," Griffin Indus., Inc. v. Petrojam, Ltd. , 72 F. Supp. 2d 365, 368 (S.D.N.Y. 1999) ; accord Liberty Media Corp. v. Vivendi Universal, S.A. , 861 F. Supp. 2d 262, 265 (S.D.N.Y. 2012), and a motion for reargument is not an opportunity to present the case under new theories, secure a rehearing on the merits, or otherwise take a "second bite at the apple." Sequa Corp. v. GBJ Corp. , 156 F.3d 136, 144 (2d Cir. 1998) ; see also Liberty Media Corp. , 861 F. Supp. 2d at 265 ("A motion for reconsideration is not an opportunity for making new arguments that could have been previously advanced, nor is it a substitute for appeal.") (citations and internal quotation marks omitted).

B. Admissions

Several of the arguments raised by Beekman center on so-called admissions, "deemed admissions," or "judicial admissions" by the Debtor that the Court supposedly ignored. Beekman argues at various points that the Debtor judicially admitted that the sufficiency of proceeds was a material condition precedent when it failed to properly respond to 29 Beekman's Statement of Undisputed Facts in Support of Its Cross-Motion for Summary Judgment , dated May 7, 2020 ("SOF") (ECF Doc. # 29). (Motion at 7-13.) Furthermore, the law of judicial admissions does not permit the Debtor to now take the inconsistent position that it should be excused from the condition it had argued it fulfilled. (Motion at 16-18.) In addition, the Debtor never took the position that the Proceeds Representation was ambiguous, and the Court's conclusion would change the law of judicial admissions because Debtor already repeatedly argued that it understood the language perfectly well and had fulfilled the language. (Motion at 18-19.)

Beekman's argument confuses "judicial admissions," "judicial estoppel," and "deemed admissions." "Judicial admissions are ... ‘formal concessions ... by a party or counsel that have the effect of withdrawing a fact from issue and dispensing wholly with the need for proof of the fact. Thus, a judicial admission ... is conclusive in the case.’ " Hoodho v. Holder , 558 F.3d 184, 191 (2d Cir. 2009) (quoting 2 MCCORMICK ON EVID. § 254 (6th ed. 2006) ). Hence, "judicial admissions" concern conceded facts and their proof. "Judicial estoppel," on the other hand, prevents a party in certain circumstances from changing positions or arguments and protects the integrity of the judicial process. New Hampshire v. Maine , 532 U.S. 742, 749-50, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001). Courts generally recognize three elements: (i) "a party's later position must be clearly inconsistent with its earlier position"; (ii) a court accepted the "earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled"; and (iii) "the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped." Id. at 750-51, 121 S.Ct. 1808 (internal quotation marks and citations omitted). Finally, "deemed admissions" in this case relate to the operation of Rule 56 of the Federal Rules of Civil Procedure (" Rule 56"), made applicable to this adversary proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure, discussed in more detail below.

That the Debtor argued that the Purchase Agreement is unambiguous does not give rise to a "judicial admission." Ambiguity is a question of law, not fact, so it cannot support a "judicial admission," see Decision , 620 B.R. at 499, and the Court rejected the position, so it does not give rise to "judicial estoppel." Moreover, that both parties moved for summary judgment does not prevent the Court from concluding that there are issues of fact precluding summary judgment.³ Union Ins. Soc'y of Canton, Ltd. v. William Gluckin & Co., Inc., 353 F.2d 946, 950 (2d Cir. 1965) ("The case cannot be taken from the trier of fact simply because ‘The lawyers for the respective parties, by the cross-motions (for summary judgment), superinduced the idea that no factual questions were involved.’ ") (citation omitted); cf. Vermont Teddy Bear Co. v. 1-800 BEARGRAM Co. , 373 F.3d 241, 242 (2d Cir. 2004) ("We hold that Fed. R. Civ. P. 56, governing summary judgment motions, does not embrace default judgment principles. Even when a motion for summary judgment is unopposed, the district court is not relieved of its duty to decide whether the movant is entitled to judgment as a matter of law."). Similarly, the Debtor's position that it had complied with all conditions to closing and was ready, willing, and able to close is not a concession of fact or a position on which it prevailed.

C. "Deemed Admissions"

The main thrust of Beekman's "admissions" argument is based on the Debtor's purported failure to respond to Beekman's statement of undisputed facts. Under Rule 56, the party moving for summary judgment must cite to evidence in the record supporting the facts it...