Mannucci v. Cabrini Medical Center (In re Cabrini Medical Center)
Mannucci v. Cabrini Medical Center (In re Cabrini Medical Center)
Opinion of the Court
OPINION AND ORDER
I. INTRODUCTION
Three doctors — Mannuccio Mannucci, Angelo Taranta, and Guido Padula — as well as Dilva Salvioni, the widow of a fourth doctor, Daniele Salvioni (“Appellants”) appeal a Bankruptcy Court decision refusing to lift the automatic stay instituted by the bankruptcy proceedings of Cabrini Medical Center (“Cabrini”). Appellants allege that Cabrini is an alter-ego of the Missionary Sisters of the Sacred Heart of Jesus (“Missionary Sisters”), and seek to lift the stay so that they may add Cabrini as a nominal defendant in a state court action against Missionary Sisters.
II. BACKGROUND
A. The State Court Complaints
Cabrini is a domestic not-for-profit corporation organized under the laws of New York that operated a hospital in New York but in March 2008 ceased hospital operations.
On August 6, 2008, the Appellants commenced an action in the Supreme Court of the State of New York, New York County, against Cabrini, Missionary Sisters, and Merrill Lynch, seeking to recover the funds allegedly looted from the Plans.
After the Chapter 11 proceedings and the automatic stay (discussed below) were instituted, the state court action was dismissed with leave to re-plead and, on March 1, 2010, the Appellants filed an amended complaint, which was substantially identical to the earlier complaint but dropped Cabrini as a defendant.
B. The Bankruptcy Proceedings
On July 9, 2009, Cabrini filed for bankruptcy under Chapter 11,
Appellants did not file a complaint during this ninety day window. The Creditors’ Committee, though, filed a complaint against Missionary Sisters in the Bankruptcy Court on October 28, 2009, seeking to set aside and/or subordinate various claims of the Missionary Sisters.
On November 19, 2009, the doctors each filed proof of claims in the bankruptcy case reflecting the monies they asserted they were owed under the Plans.
Through the Settlement Agreement, the Missionary Sisters renounced a portion of their secured claims for the benefit of the unsecured creditor class, and in exchange received a release from all claims against it by Cabrini, its estate, or the Creditors’ Committee.
With all loose ends seemingly tied up, Cabrini and the Creditors’ Committee filed a joint plan of reorganization, incorporating the Settlement, and sought approval of a disclosure statement on December 22, 2010.
That same day-twenty-one days after their state court action had been dismissed — the Appellants moved the Bankruptcy Court to lift the automatic stay to allow them to add Cabrini as a defendant in the state court action.
On March 30, 2011, the plan confirmation hearing went forward, opposed only by Appellants.
C. The Bankruptcy Court Decisions
Thereafter, the parties initiated respective adversary proceedings over control of the funds, which were subsequently procedurally consolidated, and each side moved for summary judgment.
An appeal of the Summary Judgment Opinion was taken and heard by the Honorable Lewis A. Kaplan.
On March 14, 2012, after the Appellate Division affirmed the dismissal of their state court complaint, the Appellants renewed their motion to lift the stay.
The New York arm of the Missionary Sisters opposed the motion, arguing that: (1) any action against them or Cabrini would violate the Plan Injunction and/or the Settlement; (2) lifting the stay could lead to a ruling inconsistent with the pending appellate review of the Summary Judgment Opinion if the question of the ownership of the funds were raised in state court; and (3) the Missionary Sisters would be prejudiced by the state court action, because Cabrini would have to be found primarily liable to find the Missionary Sisters liable as an alter-ego, but Cabrini did not have any incentive to defend the action.
In his opinion, Bankruptcy Judge Allan Gropper held that: (1) the Appellants’ claims against the Missionary Sisters were generalized, not specific to the Appellants, and as such belonged to the estate; (2) these generalized claims had not been abandoned to the Appellants, but rather settled and released; and (3) in any event, the Bankruptcy Court was without jurisdiction to lift the stay, because the issue of the ownership of the funds was a subject of the Summary Judgment appeal and might be implicated by the state court action.
D. The Bases for This Appeal
Appellants designate two issues for this appeal: (1) “[whether] the Bankruptcy Court err[ed] when it refused to lift the stay despite Cabrini’s consent to lifting the stay and despite Appellants’ representation that they were not seeking damages from the bankrupt entity”; and (2) “[whether] the Bankruptcy Court err[ed] when it held that Appellants ... suffered no direct particularized harm by virtue of [the Missionary Sisters’] domination and control of Cabrini....”
III. STANDARD OF REVIEW
A district court functions as an appellate court in reviewing judgments rendered by bankruptcy courts.
“The decision to lift an automatic stay is left to the discretion of the bankruptcy court... ,”
IV. APPLICABLE LAW
A. The Automatic Stay
Pursuant to 11 U.S.C. § 362(a)(1), the filing of a bankruptcy petition stays the commencement or continuation of judicial proceedings against the debtor. However, “Section 362 lists several circumstances in which the court ‘shall grant relief from the stay ... such as by terminating, annulling, modifying, or conditioning such stay.’ ”
(1) whether relief would result in a partial or complete resolution of the issues; (2) lack of any connection with or interference with the bankruptcy case; (3) whether the other proceeding involves the debtor as a fiduciary; (4) whether a specialized tribunal with the necessary expertise has been established to hear the cause of action; (5) whether the debtor’s insurer has assumed full responsibility for defending it; (6) whether the action primarily involves third parties; (7) whether litigation in another forum would prejudice the interests of other creditors; (8) whether the judgment claim arising from the other action is subject to equitable subordination; (9) whether movant’s success in the other proceeding would result in a judicial lien avoidable by the debtor; (10) the interests of judicial economy and the expeditious and economical resolution of litigation; (11) whether the parties are ready for trial in the other proceeding; and (12) impact of the stay on the parties and the balance of harms.64
B. Veil-Piercing Claims in Bankruptcy
The filing of a bankruptcy petition creates a bankruptcy estate, encom
“Piercing the corporate veil is a narrow exception to the doctrine of limited liability for corporate entities, and ... courts should permit veil-piercing only under ‘extraordinary circumstances.’ ”
There is some authority that federal common law determines whether the corporate veil may be pierced in connection with an ERISA claim.
A creditor has standing to bring an alter-ego claim when the harm alleged in support of the claim is personal to them; a creditor lacks standing to bring such a claim when the harm alleged is general.
V. DISCUSSION
A. The Bankruptcy Court Had Jurisdiction to Lift the Stay
I must first address the Bankruptcy Court’s determination that it lacked jurisdiction to lift the stay because the subsequent state court action might lead to a ruling inconsistent with that of the District Court considering the Summary Judgment appeal.
Bankruptcy judges lack the guaranteed salary and life-tenure of Article III judges,
State courts have concurrent jurisdiction with federal courts over matters of federal law unless federal or state law divests them of such jurisdiction.
Outside of bankruptcy, a federal court may enter an injunction to stay proceedings in a state court only when an exception to the Anti-Injunction Act is met,
The specific question here is whether the notice of appeal from the Summary Judgment order divested the Bankruptcy Court of jurisdiction to lift the stay, given that a state court might render a judgment on the issue of the ownership of the funds. From the foregoing discussion, it is apparent that the Bankruptcy Court had jurisdiction to lift the stay. Concurrent state and federal jurisdiction is the norm, and specifically contemplated in the context of bankruptcy by Section 1334(c). The notice of appeal stripped the bankruptcy court of jurisdiction to amend the Summary Judgment order, including the holding that a decision on the ownership of the funds was not necessary to fix and classify Appellants’ claims. It did not strip the bankruptcy court of jurisdiction to permit a state court to potentially rule on the issue of ownership of the funds.
This is perhaps easiest to see by imagining that the Summary Judgment order had been entered and appealed during the pen-dency of the state court action. In this posture, the order would be granted pre-clusive effect in New York courts.
In this case, the state court proceedings were enjoined by the stay. The notice of appeal deprived the bankruptcy court of jurisdiction to amend the order on appeal — the Summary Judgment order — , but that order related to issues collateral to the stay.
B. The Bankruptcy Court Correctly Held That Appellants’ Claims Are Property of the Estate
The central issue on appeal is whether the Bankruptcy Court erred in determining that the alter-ego claims were property of the estate. The Appellants make three of arguments that the Bankruptcy Court so erred. First, they argue that the Bankruptcy Court made an error of fact, because the State Court complaint did not allege general harm to the creditors, but rather direct harm to creditors.
The Appellants’ first two arguments demonstrate that they misapprehend the basis for the Bankruptcy Court’s holding, which rests on the following grounds: (1) as of the petition date, the Appellants’ bankruptcy claims were classified as general unsecured claims;
It is irrelevant that the State Court complaint did not specifically allege that harm accrued to the general creditors of Cabrini. What is relevant is that the kind of harm alleged by the State Court complaint was no different from the harm suffered by the unsecured creditors of Cabrini generally, i.e. that due to the diminution of Cabrini’s assets by Missionary Sisters, they would not fully recover their claims.
Likewise, the Appellants’ third argument does not provide a basis for reversing the Bankruptcy Court’s holding. First, their unsupported allegation that the Missionary Sisters’ domination and control of Cabrini increased the amount available to the general unsecured creditor class is easily disproved. Throughout the adversary proceedings that ripened into the Settlement and Plan Injunction, the Creditors’ Committee alleged that, through its control of Cabrini, Missionary Sisters diminished Cabrini’s estate.
C. The Bankruptcy Court Correctly Held that the Plan Injunction Presented an Independent Bar to Appellants’ Claims
Given that the Appellants’ claims were properly classified as property of the estate, it follows that they were settled, released, and barred by the Plan Injunction, which specifically bars estate claims. This is precisely what the Bankruptcy Court held.
D. The Bankruptcy Court Was Not Required to Make Explicit Reference to the Sonnax Factors
Finally, Appellants contend that the Bankruptcy Court’s failure to explicitly reference the Sonnax factors constitutes reversible error.
VI. CONCLUSION
For the foregoing reasons, the order of the Bankruptcy Court is affirmed. The Clerk of the Court is directed to close this case.
SO ORDERED:
. A refusal to lift the automatic stay by the bankruptcy court is a final, appealable order under the law of this Circuit. See In re Megan-Racine Assoc., Inc., 102 F.3d 671, 675 (2d Cir. 1996). As such, this Court has jurisdiction over this appeal of the bankruptcy court’s refusal to lift the stay pursuant to 28 U.S.C. § 158(a)(1) and Fed. R. Bankr.P. 8001(a).
. The facts below are drawn from: (1) the parties’ briefs (Appellant Brief ("Appellant Br.”); Joint Brief in Opposition to Appeals from Decision of the Bankruptcy Court Denying Renewed Motion for Relief from the Automatic Stay ("Appellee Br.”); and Appellants’ Reply Brief in Fúrther Support of the Appeal ("Reply Br.”)); and (2) the record on appeal as designated pursuant to Federal Rule of Bankruptcy Procedure 8006 (including Appellants’ Designation of Record and Statement of Issues on Appeal ("Record”), and the Joint Designation of Additional Items for Inclusion in the Record on Appeal by Appellees ("Supp. Record”)). Citations to items that appear only on the docket of the Bankruptcy Court are abbreviated with the notation "Bankr.Dkt. No.” followed by the relevant number. The facts necessary for this appeal are not in dispute.
. See 09/07/09 Affidavit of Diane Kniejski (Chief Operating Officer of Cabrini Medical Center) Pursuant to Local Bankruptcy Rule 1007-2 and in Support of Chapter 11 Petition, Record No. 2, ¶¶ 4, 13, 78.
. See State Court Complaint, Record Ex. A., ¶¶ 8-11.
. See Joint Stipulated Statement of Undisputed Material Facts (“Sum. J. Statement”), Record No. 34, ¶ 5.
. See id. II 33.
. See id. ¶ 34.
. See id. ¶ 37.
. Id. ¶ 57.
. See id. ¶¶ 54; 62.
. See id. ¶ 56.
. See State Court Complaint, Record Ex. A.
. See id. ¶ 1.
. See, e.g., id. ¶ 15 ("On information and belief, the Missionary Sisters have lent millions of dollars to Cabrini, have purchased Cabrini assets at below-market rates and have exerted de facto control over Cabrini's financial affairs.”).
. See Appellants’ Amended Complaint and Exhibits, filed in Supreme Court of the State of New York, New York County, on March 1, 2010 (Case No. 602284/2008), Record Ex. B.
. See Supreme Court of the State of New York, New York County, Amended Decision and Order of the Honorable Eileen Bransten on Motion to Dismiss, dated January 4, 2011, with Notice of Entry. (Case No. 602284/2008), Record Ex. N; Order of the Supreme Court of the State of New York, Appellate Division-First Department, affirming the January 4, 2011, Supreme Court of the State of New York, New York County, Amended Decision and Order, dated April 5, 2012, with Notice of Entry. (Case No. 602284/2008), Record Ex. 51.
. See Sum J. Statement, Record No. 34, ¶ 67.
. See id. ¶¶ 67-68.
. See Interim Order (I) Authorizing Debtor to Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 364(c) and 364(d); (II) Authorizing the Use of Cash Collateral Pursuant to 11 U.S.C. § 363; (III) Granting Liens and Super-Priority Claims; (IV) Granting Adequate Protection to the Secured Parties Pursuant to 11 U.S.C. §§ 361, 362, 363 and 364; and (V) Scheduling a Final Hearing, Bankr.Dkt. No. 66, at 17.
. See id.
. See Complaint by Official Committee of Unsecured Creditors against MSSH-NY and Missionary Sisters of the Sacred Heart, a not-for-profit corporation organized under the laws of Illinois ("MSSH-IL”) dated October 28, 2009 ("Cred. Compl.”), Supp. Record No. 1.
. See, e.g., id. ¶¶ 169 (alleging that "At all relevant times, MSSH-NY was an insider of CMC, its officers were CMC’s ex-officio members and it effectively appointed the board of trustees or were ex-officio trustees.”); 176 ("Upon information and belief, at all relevant times the Defendant effectively controlled [Cabrini] and used this control to its advantage.”).
. See Sum J. Statement, Record No. 34, ¶ 70.
. See id. ¶ 72.
. See id. ¶ 74. The sale was to a party not involved in these proceedings. See id.
. See Sum J. Statement, Record No. 34, ¶¶ 75-78.
. See Motion Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure for an Order Approving Settlement of Claims by and Between the Official Committee of Unsecured
. See id. ¶ 17(g).
. See Disclosure Statement, Bankr.Dkt. No. 502; Ex Parte Motion of the Debtors for Entry of an Order Pursuant to Federal Rules of Bankruptcy Procedure 2002(b) and (m), 3017(a) and 9007(A) Scheduling a Disclosure Statement Hearing, (B) Approving Form and Manner of Notice and (C) Establishing a Deadline for Objections and Modifications to the Proposed Disclosure Statement, Bankr. Dkt. No. 503.
. See Objection of Mannucio Mannuci, Angelo Taranta, Guido Padula and Dilva Salvioni to the Debtor's Proposed Disclosure Statement, Bankr.Dkt. No. 541, ¶¶ 34-52.
. See Appellant Br. at 5.
. See Appellants’ Motion for Relief for Automatic Stay, Record No. 18.
. See Appellant Br. at 5-6.
. See Appellants' Objection to Confirmation of Debtor’s First Amended Chapter 11 Plan of Liquidation of Cabrini Medical Center, Record No. 26.
. See Order Confirming First Amended Chapter 11 Plan of Liquidation of Cabrini Medical Center, Record No. 28.
. Id. ¶ 19.
. Id.
. See In re Cabrini Med. Ctr., No. 09-14398, 2012 WL 527711, at *1 (Bankr.S.D.N.Y. Feb. 16, 2012).
. See id. at *8 ("Therefore, because the funds were commingled and the tracing requirement is not met, summary judgment is granted to Cabrini and each of the doctors’ claims is allowed as an unsecured claim.”).
. See Appellant Br. at 7.
. See id. at 14.
. See 10/09/12 Argument on Appeal, Mannucci v. Cabrini Med. Ctr., No. 12 Civ. 3211(LAK) (S.D.N.Y.) (Docket No. 14).
. See, e.g. id. at 15:1-7 ("THE COURT: I thought you agreed with me a few minutes ago that the property in the Merrill Lynch accounts was owned beneficially and of record by the hospital, that the doctors had no rights in that property in and of itself, and what they had was a contractual right to have the hospital pay them either a lump sum or on an installment basis out of whatever property the hospital chose to pay it out of.”).
. See id. at 13:15-14:23.
. 10/9/12 Judgment, Mannucci v. Cabrini Med. Ctr., No. 12 Civ. 3211(LAK) (S.D.N.Y.) (Docket No. 13).
. See 11/08/12 Notice of Appeal, Mannucci v. Cabrini Med. Ctr., No. 12 Civ. 3211(LAK) (S.D.N.Y.) (Docket No. 17).
. See Appellants' Renewed Motion for Relief from Stay, Record No. 50.
. See id. ¶ 29.
. See Debtors' Limited Objection to the Man-nucci Parties’ Renewed Motion for Relief from the Automatic Stay dated April 4, 2012, Supp. Record No. 34, at 5-6.
. See In re Cabrini Medical Center, No. 09-14398, 2012 WL 2254386, at *6 (Bankr.S.D.N.Y. June 15, 2012).
. See id. at *9-10.
. See Order, denying Appellants' Renewed motion for Relief from Automatic Stay, Record No. 58.
. See Amended Notice of Appeal filed by Katherine B. Harrison on behalf of Mannucio Mannucci, Supp. Record No. 40.
. Designation of Record and Statement of Issues on Appeal, Record No. 61, at 2.
. See In re Sanshoe Worldwide Corp., 993 F.2d 300, 305 (2d Cir. 1993) ("[Appellant] relies on several cases for the reasonable proposition that the district court acts as an appellate court in reviewing a bankruptcy court's judgments.”).
. See Fed. R. Bankr.P. 8013 ("Findings of fact ... shall not be set aside unless clearly erroneous, and due regard shall be given to
. In re Manville Forest Prods. Corp., 896 F.2d 1384, 1388 (2d Cir. 1990) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)).
. See In re Cody, 338 F.3d at 94; In re 139-141 Owners Corp., 313 B.R. 364, 367 (S.D.N.Y. 2004) (same).
. In re Dairy Mart Convenience Stores, Inc., 351 F.3d 86, 91 (2d Cir. 2003) (citation omitted).
. In re Mazzeo, 167 F.3d 139, 142 (2d Cir. 1999).
. See In re WorldCom, Inc., No. 05 Civ. 5704, 2006 WL 2270379, at *2 (S.D.N.Y. Aug. 4, 2006) ("The decision to grant or deny relief from the automatic stay or, by analogy, the Plan Injunction, is reviewed for abuse of discretion.”) (citation omitted).
. In re Dairy Mart Convenience Stores, Inc., 351 F.3d at 91 (quoting 11 U.S.C. § 362(d)).
. 11 U.S.C. § 362(d)(1).
. In re Mazzeo, 167 F.3d at 143 (quoting In re Sonnax Indus., Inc., 907 F.2d 1280, 1286 (2d Cir. 1990)).
. 11 U.S.C. § 541(a)(1).
. See In re Jaclcson, 593 F.3d 171, 176 (2d Cir. 2010) (citing Seward v. Devine, 888 F.2d 957, 963 (2d Cir. 1989)).
. Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 118 (2d Cir. 1991).
. See Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979).
. See St. Paul Fire and Marine Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 700 (2d Cir. 1989).
. In re Optimal U.S. Litig., No. 10 Civ. 4095, 2011 WL 4908745, at *3 (S.D.N.Y. Oct. 14, 2011) (quotation marks and citations omitted).
. First Keystone Consultants, Inc. v. Schlesinger Elec. Contractors, Inc., No. 10-CV-696, 2012 WL 1711218, at *16 (E.D.N.Y. May 15, 2012) (quotation marks and citations omitted). Subsequent references to "veil piercing claims” and "alter ego claims” are shorthand for independent claims that seek to use the equitable device of veil-piercing.
. Finance One, Inc. v. Timeless Apparel, Inc., No. 09 Civ. 9397, 2011 WL 1345030, at *4 (S.D.N.Y. Mar. 29, 2011) (quoting MAG Portfolio Consult, GMBH v. Merlin Biomed Group LLC, 268 F.3d 58, 63 (2d Cir. 2001)).
. Gruber v. Victor, No. 95 Civ. 2285, 1996 WL 492991, at *10 (S.D.N.Y. Aug. 28, 1996) (quoting Corcoran v. Hall, 149 A.D.2d 165, 545 N.Y.S.2d 278 (1st Dep’t 1989)).
. See Ferrara v. Oakfield Leasing Inc., 904 F.Supp.2d 249, 269-70, 2012 WL 5467519, at *17 (E.D.N.Y. 2012) (collecting cases). See also Leddy v. Standard Drywall, Inc., 875 F.2d 383, 388 (2d Cir. 1989) (“We therefore hold that at least to the extent that a controlling corporate official defrauds or conspires to defraud a benefit fund of required contributions, the official is individually liable under Section 502 of ERISA, 29 U.S.C. § 1132 ... even if the traditional conditions for piercing the corporate veil are not met.”).
. Peacock v. Thomas, 516 U.S. 349, 354, 116 S.Ct. 862, 133 L.Ed.2d 817 (1996).
. Hanley v. Giordano's Restaurant, Inc., No. 94 Civ. 4696, 1995 WL 442143, at *3 (S.D.N.Y. July 26, 1995) (quoting Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 53 (2d Cir. 1984)).
. See Labarbera v. United Crane and Rigging Svcs., Inc., Nos. 08-CV-3274, 08-CV-3983, 2011 WL 1303146, at *5-6 (E.D.N.Y. Mar. 2, 2011).
. See St. Paul Fire and Marine Ins. Co., 884 F.2d at 704 ("If, however, the cause of action is a general one, and does not accrue to [the creditor] individually, [then the creditor] cannot seek individual relief outside of the bankruptcy court.”). Accord Picard v. JPMorgan Chase & Co., 460 B.R. 84, 96 (S.D.N.Y. 2011) (quoting Koch Refining v. Farmers Union Cent. Exchange, Inc., 831 F.2d 1339, 1349 (7th Cir. 1987) (" 'To determine whether an action accrues individually to a claimant or generally to the corporation, a court must look to the injury for which relief is sought and consider whether it is peculiar and personal to the claimant or general and common to the corporation and creditors.’ ”)).
. St. Paul Fire and Marine Ins. Co., 884 F.2d at 701. Accord Kalb, Voorhis & Co. v. American Financial Corp., 8 F.3d 130, 132 (2d Cir. 1993) ("Property of the estate does not belong to any individual creditor. If under governing state law the debtor could have asserted an alter ego claim to pierce its own corporate veil, that claim constitutes property of the bankrupt estate and can only be asserted by the trustee or the debtor-in-possession.”).
. Picard, 460 B.R. at 89 (quoting Steinberg v. Buczynski, 40 F.3d 890, 892-93 (7th Cir. 1994)).
. See In re Cabrini Med. Ctr., 2012 WL 2254386, at *10 ("If the state-court action were to proceed against the debtor, it could lead to inconsistent rulings on [the] issue [of the ownership of the funds], and the Court is without jurisdiction to allow such a result.”).
. See, e.g., Young-Gibson v. Patel, 476 Fed.Appx. 482, 483 (2d Cir. 2012) ("subject matter jurisdiction is a threshold question that must be resolved ... before proceeding to the merits”).
. See U.S. Const, art. III, § 1 ("The judicial Power of the United States shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.”). See also Exxon Mobil Corp. v. Allapattah Servs., Inc. 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) ("The district courts of the United States, as we have said many times, are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute.” (quotation marks and citation omitted)).
. See U.S. Const. art. III, § 2.
. 28 U.S.C. § 1334(a).
. Id. § 1334(e). Accord Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440, 447, 124 S.Ct. 1905, 158 L.Ed.2d 764 (2004) ("Bankruptcy courts have exclusive jurisdiction over a debtor's property, wherever located, and over the estate.”).
. Id. § 1334(b).
. See In re Standing Order of Reference Re: Title 11, No. 12-M-32 (S.D.N.Y. Jan. 31, 2012).
. See U.S. Const. art. III, § 1.
. See Celotex Corp. v. Edwards, 514 U.S. 300, 320, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995) (Stevens, J., dissenting) ("The [1978 Bankruptcy Reform Act] did not, however, make the newly empowered bankruptcy judges Article III judges. In particular, it denied bankruptcy judges the life tenure and salary protection that the Constitution requires for Article III judges.”). See also Thomas v. Union Carbide Agr. Prods. Co., 473 U.S. 568, 583, 105 S.Ct. 3325, 87 L.Ed.2d 409 (1985) ("the Court has long recognized that Congress is not barred from acting pursuant to its powers under Article I to vest decisionmaking authority in tribunals that lack the attributes of Article III courts.”).
. See Stern v. Marshall, — U.S. -, 131 S.Ct. 2594, 2620, 180 L.Ed.2d 475 (2011) ("Article III of the Constitution provides that the judicial power of the United States may be vested only in courts whose judges enjoy the protections set forth in that Article.... The Bankruptcy Court below lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor's proof of claim.”). Cf. In re Quigley Co., Inc., 676 F.3d 45, 52 (2d Cir. 2012) (noting that the holding of Stern was narrow, and that "[ejnjoining litigation to protect bankruptcy estates during the pendency of bankruptcy proceedings, unlike the entry of the final tort judgment at issue in Stern, has historically been the province of the bankruptcy courts.”) (citation omitted).
. See In re Prudential Lines, Inc., 170 B.R. 222, 243 (S.D.N.Y. 1994). Cf. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982) ("The filing of a notice of appeal is an event of jurisdictional significance — it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.”).
. See Mims v. Arrow Fin. Svcs., LLC, - U.S. -, 132 S.Ct. 740, 748, 181 L.Ed.2d 881 (2012) ("In cases arising under federal law, we note, there is a deeply rooted presumption in favor of concurrent state court jurisdiction, rebuttable if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim.”).
. See 28 U.S.C. § 1257. See also District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983) ("[A] United States District Court has no authority to review final judgments of a state court injudicial proceedings.”).
. See 28 U.S.C. § 1783. Cf. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 380, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985) (holding that the state law of preclusion must be followed even when federal jurisdiction over the subject matter of a claim is exclusive); Matsushita Elec. Indus. Co., Ltd. v. Epstein, 516 U.S. 367, 385, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996) (holding that a state court settlement may be given full faith and credit in federal courts, even if it concerns an exclusively federal area of law); Migra v. Warren City School Dist. Bd. of Education, 465 U.S. 75, 80, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984) ("It is now settled that a federal court must give to a state-court judgment the same pre-clusive effect as would be given that judgment under the law of the State in which the judgment was rendered.").
. See Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 507-09, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001).
. See, e.g., Colorado River Water Conservation District v. United States, 424 U.S. 800, 814-17, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).
. See 28 U.S.C. § 2283 (“A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or
. See Younger v. Harris, 401 U.S. 37, 54, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971).
. See In re Chateaugay Corp., 880 F.2d 1509, 1511 (2d Cir. 1989) (stating that "denial [of motion to lift the stay] is the functional equivalent of a permanent injunction”); In re Sonnax Indus., Inc., 907 F.2d at 1285 ("The stay seems to us to be the equivalent of [a permanent] injunction [which] the district court retains the power to modify as circumstances dictate.”).
. 28 U.S.C. § 1334(c)(1).
. Id. § 1334(c)(2). See also Certain Underwriters at Lloyd’s, London v. ABB Lummus Global, Inc., No. 03 Civ. 7248, 2004 WL 224505, at *8 (S.D.N.Y. Feb. 5, 2004) ("[Section] 1334(c)(2) requires the court to abstain from hearing a non-core proceeding under certain circumstances. Section 1334(c)(1) permits abstention if the case is a core proceeding or a non-core proceeding that does not otherwise meet the criteria for mandatory abstention.”) (emphasis in original).
. Id. § 1334(d). See also id. § 1334(e)(1).
. See Semtek Int'l Inc., 531 U.S. at 507-09, 121 S.Ct. 1021. See also New York Civil Practice Law and Rules ("N.Y. CPLR”) § 5018 ("A transcript of the judgment of a court of the United States rendered or filed within the state may be filed in the office of the clerk of any county and upon such filing the clerk shall docket the judgment in the same manner and with the same effect as a judgment entered in the supreme court within the county.”); N.Y. CPLR § 5402 ("The clerk shall treat the foreign judgment in the same manner as a judgment of the supreme court of this state. A judgment so filed has the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of the
. Cf. Bradford-Scott Data Corp., Inc. v. Physician Computer Network, Inc., 128 F.3d 504, 506 (7th Cir. 1997) (holding that notice of appeal of District Court opinion denying arbitration stay divested District Court of jurisdiction to continue proceedings until the appeal was complete).
. See Appellant Br. at 16 (“In this, the Bankruptcy Court got it backward: in fact, the Amended Complaint alleges a particularized, personal, direct harm to the Doctors and does not make any allegation of general harm to Cabrini or any of Cabrini’s other creditors.”) (emphasis removed).
. See id. at 18 ("The Bankruptcy Court’s serious factual error then led the Bankruptcy Court to make a reversible error of law. The Bankruptcy Court held that the ... allegations of MSSH’s 'domination and control'— are allegations of general injury to Cabrini and its creditors, even though the Amended Complaint does not allege any injury to Cabrini or to Cabrini’s other creditors.”).
. See id. at 20-21.
. Notably, this classification of the Appellants' claims could not be modified by the Bankruptcy Court in its lift-stay opinion, because it formed part of the basis for the order on appeal to Judge Kaplan. As noted above, Judge Kaplan has since affirmed the Bank
. See In re Cabrini Med. Ctr., 2012 WL 2254386, at *9.
. See id. at *8 ("[Appellants] do not contend that the [Missionary Sisters] directly converted the funds in the Merrill Lynch accounts; the allegations of the amended complaint make it clear that the funds were removed by Cabrini and used for Cabrini’s own corporate purposes, not diverted to the treasury of [Missionary Sisters].”).
. See, e.g. id. at *8-9 (“It is alleged ‘on information and belief' that 'the Missionary Sisters knew when Plaintiffs' funds were taken that Cabrini was in financial distress,’ and it is claimed that at the same time the Missionary Sisters entered into 'financial transactions ... to secure most of their own alleged loans to Cabrini.' But, again, the wrongdoing asserted against the Missionary Sisters is general direction and control and action to the detriment of all of Cabrini's creditors.”) (quoting State Court Complaint ¶ 55).
. See Shearson Lehman Hutton, Inc., 944 F.2d at 119 ("To resolve whether the trustee has asserted claims that belong solely to HMK, we must determine what claims HMK possessed against Shearson before HMK went bankrupt.”) (citing 15 Collier on Bankruptcy, ¶ 541.04 at 541-22 (15th ed. 1989)).
. See id.
. See Cred. Compl., Supp. Record No. 1, ¶¶ 26-92. Indeed, it appears that some of the
. Vesta Fire Ins. Corp. v. New Cap Reinsurance Corp., Ltd., 244 B.R. 209, 220 (S.D.N.Y. 2000) (quoting In re Bird, 229 B.R. 90, 94 (Bankr.S.D.N.Y. 1999)).
. Vasile v. Dean Witter Reynolds Inc., 20 F.Supp.2d 465, 499 (E.D.N.Y. 1998) (citing Ostano Commerzanstalt v. Telewide Sys., Inc., 790 F.2d 206, 207 (2d Cir. 1986)).
. See In re Cabrini Med. Ctr., 2012 WL 2254386, at *9 ("However, the causes of action were not abandoned but were settled and released.... Pursuit of estate claims was specifically barred by the Plan Injunction.”).
. See Adelphia Recovery Trust v. Bank of America, N.A., 390 B.R. 80, 88 (S.D.N.Y. 2008) ("Under the Bankruptcy Code, a confirmed plan of reorganization acts like a contract that is binding on all of the parties, debtor and creditors alike.”) (quotation marks and citations omitted).
.See 11 U.S.C. § 1127(b) ("The proponent of a plan or the reorganized debtor may modify such plan at any time after confirmation of such plan and before substantial consummation of such plan, but may not modify such plan so that such plan as modified fails to meet the requirements of sections 1122 and 1123 of this title. Such plan as modified under this subsection becomes the plan only if circumstances warrant such modification and the court, after notice and a hearing, confirms such plan as modified, under section 1129 of this title."). Accord In re Indu Craft Inc., Nos. 11 Civ. 5996, 11 Civ. 6303, 11 Civ. 6304, 2012 WL 3070387, at *9 (S.D.N.Y. Jul. 27, 2012) ("By its terms, therefore, the statute does not
.See Reply Br. at 8 ("The Bankruptcy Court failed to even analyze the Sonnax factors for lifting the automatic stay, and did not give any reason for its failure to do so. That is a serious and reversible error by the Bankruptcy Court.”).
. See In re Burger Boys, Inc., 183 B.R. 682, 688 (S.D.N.Y. 1994) ("Sonnax did not expressly require specific consideration of the Curtis factors nor did it consider each one.”).
. See In re Cabrini Med. Ctr., 2012 WL 2254386, at *9.
. See id. at *5.
. See id. at *10.
Reference
- Full Case Name
- In re CABRINI MEDICAL CENTER, Debtor. Mannuccio Mannucci, Guido Padula, Dilva Salvioni, and Angelo Taranta v. Cabrini Medical Center
- Cited By
- 9 cases
- Status
- Published