Opinion
Case No. 3:20-bk-01690-RCT
03-19-2021
In re Kristen Adams, Debtor.
Chapter 11 ORDER DENYING DEBTOR'S MOTION FOR RECONSIDERATION
This case is considered, without a hearing, on the Debtor's Motion for Reconsideration (the "Motion") (Doc. 245). The Motion is directed at the Court's Order Granting Debtor's Motion for Additional Time to File the 3rd Amended Plan of Reorganization and Continuing the April 15, 2021 Hearings (the "Order") (Doc. 242), which granted the Debtor's request to allow her additional time to file an amended plan of reorganization. The Order also stated that the Court will not grant any additional requests for extensions of time, and that if the Debtor's third amended plan is not confirmed at the next scheduled confirmation hearing, the Court will consider dismissal or conversion of the case. By the Motion, the Debtor requests that the Court reconsider its decision to not grant any further requests for extensions of time.
Motions for reconsideration are governed by Federal Rule of Bankruptcy Procedure 9023, which incorporates Rule 59 of the Federal Rule of Civil Procedure ("Rule(s)"). Relief under Rule 59 is limited to the following circumstances: "(1) an intervening change in controlling law; (2) newly discovered evidence; or (3) clear error or manifest injustice." Woide v. Fed. Nat'l Mortg. Ass'n (In re Woide), No. 6:16-cv-1484-Orl-37, 2017 WL 549160, at *1 (M.D. Fla. Feb. 9, 2017). "[R]econsideration of a previous order is an extraordinary remedy to be employed sparingly."
Burger King Corp. v. Ashland Equities, Inc., 181 F. Supp. 2d 1366, 1370 (S.D. Fla. 2002).
Debtor does not expressly cite Rule 59, instead relying on its corollary, Rule 60(b). Nevertheless, reviewing the Motion under Rule 59, Debtor makes no mention of a change in controlling law nor asserts any new evidence. Rather, she makes arguments that suggest she would claim "clear error or manifest injustice." But for the reasons discussed below, her arguments fail.
As stated, Debtor references Rule 59's corollary, Rule 60(b); however, the Motion does not identify any specific ground for relief under Rule 60(b). The Debtor does, however, state as a basis for reconsideration that she "made a grave error in her original motion when she was under the belief that she could put together her Plan of Reorganization in 30 days" because she has since been advised by an appellate attorney "that it may take months" for her appeal to be resolved. (Doc. 245 ¶ 6). Therefore, it appears that the Debtor may seek relief under Rule 60(b)(1) which provides relief based on "mistake, inadvertence, surprise, or excusable neglect."
Rule 60 is incorporated herein by Fed. R. Bankr. P. 9024.
Courts have held, however, that Rule 60(b)(1) may not be used to relieve a party from a tactical litigation decision which, in hindsight, was determined to be a mistake. The Debtor is an intelligent and savvy litigant who made the tactical decision to appeal this Court's ruling that granted stay relief to Fidus Roofing and Construction, LLC ("Fidus"). The Court modified the automatic stay, in part, to give the Debtor an opportunity to deal with the actual claim of Fidus, as finally determined by the state court, or otherwise resolved between the Debtor and Fidus.
McCarthy v. Consulate Health Care, No. 4:13CV132-WS/CAS, 2016 WL 1729604, at *3 (N.D. Fla. Mar. 29, 2016); see also Waddell v. Hendry Cty. Sheriff's Office, 329 F.3d 1300, 1310 (11th Cir.2003) (concluding that it was plaintiffs' "tactical decisions" that prevented plaintiffs from fully presenting their case).
Fidus' Second Amended Proof of Claim (9-3) is filed as a secured claim in the amount of $85,085.53.
The Debtor appealed the Order on the Amended Motion for Relief from Automatic Stay (Doc. 210) on December 16, 2020. (Doc. 212).
By asserting that she cannot propose a plan of reorganization until the appeals process has concluded, the Debtor is essentially asking the Court to abate her Subchapter V case for an indefinite time. A plan of reorganization is the "framework for the debtor's reorganization and successful exit from bankruptcy," and therefore, "a debtor cannot wallow" indefinitely in a Subchapter V case. Although it is certainly the Debtor's right to appeal this Court's ruling, it is not an appropriate use of bankruptcy to effectively hold the other creditors in this case hostage to the Subchapter V proceeding while her appeal is pending.
In re Babayoff, 445 B.R. 64, 78 (Bankr. E.D.N.Y. 2011).
In re Tornheim, 181 B.R. 161, 164 (Bankr. S.D.N.Y. 1995).
"[A] debtor's inability to accomplish substantive progress toward confirmation inherently carries the risk of unreasonable and undue delay, which is nearly always prejudicial toward creditors." Matter of Oakley Grading &, Pipeline, LLC, No. 18-10743-WHD, 2019 WL 1270805, at *5 (Bankr. N.D. Ga. Mar. 15, 2019).
Alternatively, perhaps Debtor intended to seek relief under Rule 60(b)(6), the so-called "catchall provision." Rule 60(b)(6) permits relief "for any other reason justifying relief from the operation of the judgment." "This remedy, however, is intended 'only for extraordinary circumstances.'" To obtain relief under Rule 60(b)(6), a party "must demonstrate a justification so compelling that the [bankruptcy] court was required to vacate its order." The Debtor has made no such showing.
Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1316 (11th Cir.2000) (cited in Olmstead v. Humana, Inc., 154 Fed.Appx. 800, 805 (11th Cir.2005)).
Aldana v. Del Monte Fresh Produce N.A., Inc., 741 F.3d 1349, 1355 (11th Cir.2014) (quoting Cano v. Baker, 435 F.3d 1337, 1342 (11th Cir.2006) (per curiam) (quotation omitted)).
The Debtor has not established a proper basis for reconsideration under either Rule 59 or Rule 60. Accordingly, her Motion must be denied.
Further, a Subchapter V case is intended to be an expedited process which allows "small business debtors to reorganize quickly, inexpensively, and efficiently." The Debtor can file a plan of reorganization that deals with the claim as filed by Fidus or treat the claim outside of the plan. Either way, the case needs to be moved forward. The Debtor's request to effectively abate the case indefinitely, pending the outcome of the appeal, is not within the spirit of what a Subchapter V case is intended to be.
In re Seven Stars on the Hudson Corp., 618 B.R. 333, 336 (Bankr. S.D. Fla. 2020).
The Debtor's case will have been pending for almost a year by the time of the continued confirmation hearing on May 13, 2021.
For these reasons, it is ORDERED that the Motion (Doc. 245) is DENIED.
ORDERED.
Dated: March 19, 2021
/s/_________
Roberta A. Colton
United States Bankruptcy Judge Service of this Order other than by CM/ECF is not required.