In re International Picture Show, Inc.
In re International Picture Show, Inc.
Opinion of the Court
DECISION ON DEBTOR’S ORDER TO SHOW CAUSE TO VACATE DEFAULT JUDGMENT
On December 22, 1981, International Picture Show, Inc. (debtor) filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 1101 et seq. Pursuant to § 1108 of the Code, the debtor remained in business as a debtor in possession.
On July 20, 1982, Filmways Associates (Filmways) commenced an action, in this court to enforce a film distribution agreement (agreement) entered into by the debt- or, Filmways and Billion Dollar Limited (Billion Dollar).
On September 3,1982, the parties entered into a stipulation agreement (stipulation) with the consent of the court. The stipulation, superceding the agreement, provided for the debtor to pay all arrearages within ninety days and supply the next quarterly calendar statement and corresponding check by September 30, 1982. On September 30, however, Filmways and Billion Dollar had received only the quarterly calendar statement without the required check.
Filmways then filed with the court a Notice of Motion to Punish for Contempt and an Application for the debtor to cure its defaults and turn over all prints of the films contemplated in the agreements. On the return date of the motion, October 29, 1982, the debtor appeared by an associate of the firm representing the debtor. The associate, not addressing the merits, informed the court that (a) the attorney normally handling the debtor’s case was appearing before another judge; (b) Filmway’s counsel refused to honor a requested adjournment; and (c) he was now requesting an adjournment before the court. Filmways’ counsel refused to consent to any further adjournment
“Generally, default judgments are not favored by this court; we are well aware that every party is entitled to ‘his’ day in court.”
The defaulting party carries the burden of setting forth those facts which substantiate the claim of excusable neglect.
In addition, to successfully vacate a default judgment the debtor must possess a meritorious defense.
For Filmways to obtain the relief requested, proper notice of the debtor’s default must have been given and the debtor must have been given an opportunity to cure it.
Thus, the debtor has a meritorious defense because no adequate notice of the default in payments was ever given. Accordingly, upon the filing of attorney Back-enroth’s affidavit pertaining to his appearance in another court on October 29, the default judgment against the debtor will be vacated.
Settle an appropriate order.
.In regards to all disputes Filmways had with International, Billion Dollar stood in the same position as Filmways. Indeed, the same individual executed the agreements for both Film-ways and Billion Dollar. The only difference was the respective amounts owed to Filmways and Billion Dollar by International.
Upon agreement by the attorneys for both sides, International included Billion Dollar in any settlement negotiated with Filmways for Billion Dollar’s forbearance in commencing any additional actions. Billion Dollar subsequently served an Order to Show Cause upon International to preserve its rights in the event a settlement could not be reached.
. According to the pleadings filed with this court, the attorneys for International requested and received adjournments on August 13, 1982 and August 25, 1982.
. In re Candor Diamond Corp., 21 B.R. 144, 146 (Bkrtcy.S.D.N.Y. 1982).
. Fed.R.Civ.P. § 60(b) provides, in pertinent part:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect;
. In re World Wide Gifts, Inc., 10 B.R. 761, 764 (Bkrtcy.S.D.N.Y. 1981).
. Cott Corp. v. W.F. Funke Dairy Supplies, Inc., 16 B.R. 526, 527-28 (Bkrtcy.D.Conn. 1981). The court in Cott wrote:
[W]here parties are claiming that a default judgment had been entered as a result of attorney neglect, affidavits should be furnished containing reasons why the attorney neglected to ... properly defend the litigation .... [Ijgnorance or carelessness on the part of the attorney will not provide grounds for relief under Fed.R.Civ.P. § 60(b)(1) quoting Mr. Justice Harlan in Link v. Wabash R.R. [370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962)] (citations omitted).
See also, In re Candor Diamond Corp., 21 B.R. 144, 146 (Bkrtcy.S.D.N.Y. 1982); United States v. Cirami, 535 F.2d 736 (2d Cir. 1976).
. Wokan v. Alladin Int., Inc., 485 F.2d 1232, 1254 (3d Cir. 1973), citing 6 J. Moore, Federal Practice ¶ 55.10(1), at 55-125 (2d Ed. 1972); In re Candor Diamond Corp., 21 B.R. 144, 146 (Bkrtcy.S.D.N.Y. 1982); In re Scott, 17 B.R. 375, 377 (Bkrtcy.W.D.Mo. 1982).
Reference
- Full Case Name
- In re The INTERNATIONAL PICTURE SHOW, INC., Debtor
- Status
- Published