Opinion
CASE NO. 00-71661
January 15, 2003
ORDER DENYING AMENDED MOTION FOR RELIEF FROM JUDGMENT
On September 15, 2003, Steven L. Dye, the former sole equity holder of the Debtor, filed a "Motion for Relief from Judgment" (document no, 554) seeking relief from this Court's order of April 18, 2003 that denied Mr. Dye's motion for (1) reconsideration of the confirmation of The GMS Group, LLC's ("GMS") second amended plan of reorganization, (2) an amendment of this Court's findings of fact and conclusions of law concerning the confirmed plan, and (3) a new confirmation hearing. Approximately two months later on November 3, 2002, Mr. Dye filed an amended and restated motion for relief from the same order (document no. 570). Mr. Dye's motion on its face seeks to set aside the order denying his motion to reconsider the confirmation order, but it really is directed to setting aside the confirmation order itself.
In Adversary Proceeding No. 03-9119, the Court dismissed in July 2003, Dye's complaint seeking to set aside the confirmation order. On January 14, 2003, the Court denied his motion for reconsideration of that order. Because the issues raised in the adversary proceeding are the same issues raised by the present motion, consideration of the present motion is barred by the doctrine of res judicata.
Even if Dye had not already tried and failed to set aside the confirmation order on two other occasions, he would not succeed with the present motion. Mr. Dye bases his motion on Fed.R.Civ.P. 60(b), which is made applicable in this proceeding through F.R.Bankr.P. 9024. The portion of Fed.R.Civ.P. 60(b) cited by Mr. Dye states, "On motion and upon such terms as are just, the court my relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: . . . (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party. . . ."
Rule 60's reach is limited by F.R.Bankr.P. 9024, which states in relevant part:
Rule 60 F.R.Civ.P. applies in cases under the Code except . . . (3) a complaint to revoke an order confirming a plan may be filed only within the time allowed by § 1144, § 1230, or § 1330 [of the Bankruptcy Code].
Section 1144 of the Bankruptcy Code, entitled "Revocation of an Order of Confirmation," states:
On request of a party in interest at any time before 180 days after the date of the entry of the order of confirmation, and after notice and a hearing, the court may revoke such order if and only if such order was procured by fraud. An order under this section revoking an order of confirmation shall —
(1) contain such provisions as are necessary to protect any entity acquiring rights in good faith reliance on the order of confirmation; and
(2) revoke the discharge of the debtor.
His motion contains four general arguments for relief under Rule 60(b). None is compelling in the slightest, and all fail to qualify as grounds for relief under Rule 60(b). First, he asserts that the election of Jim Clayton, a stated officer of GMS to the managing member position of the reorganized debtor contradicted the plan and disclosure statement presented to the bondholders. It is unclear how this allegation, if true, can be viewed as either "newly discovered evidence" or a fraud upon the Court or the bondholders. The Modified Third Amended Disclosure Statement stated that GMS "anticipates that the members of the Reorganized Debtor will hold a meeting within one (1) week of confirmation to elect a managing member." Modified Third Amended Disclosure Statement (document no. 468, pg. 23). The election of an officer of GMS to the managing member position of the reorganized debtor, without more, is neither fraudulent on its face, nor newly discovered evidence that would permit this Court to contemplate voiding a previously entered order.
Second, Mr. Dye contends that present actual operations of the reorganized Debtor prove that the projections of increased occupancy and income in the Debtor in Possession's plan were reasonable. The Debtor's plan was abandoned when Mr. Dye fired its counsel in the fall of 2002, and it is irrelevant whether that plan was based on accurate projections. Even if the allegation is true, that fact would not show that the confirmation order was procured by fraud.
Third, Mr. Dye alleges that U.S. Bank has breached its fiduciary duty to the bondholders in this case by not representing the bondholders and by giving their "stamp of approval to the filings by Mr. Walsh" (the attorney for GMS). (Amended and Restated Motion (document no. 570, pg. 5). This contention, raised by Dye on several other occasions, involves no newly discovered evidence and does not show in any manner that the confirmation order, which itself rejected this contention, was procured by fraud.
Finally, Mr. Dye makes a variety of allegations about improprieties in the plan confirmation process. Mr. Dye asserts that the only way to uncover these improprieties is to compare the balloting reports to the list of membership interests in the reorganized debtor. This is no doubt an attempt to make these allegations seem like newly discovered evidence because the list of membership interests was filed after confirmation. However, these allegations of improprieties are actually a hodge podge of previously aired and sometimes misleading allegations that all could have been raised or were raised at the confirmation hearing. The appropriate time to raise issues concerning bond ownership and voting was at plan confirmation. The confirmation order dealt with these issues and with the failure of Dye to produce any evidence to support his contentions. The order entered in adversary proceeding no. 03-9119 also dealt with similar contentions and showed that Dye's factual contentions are false as shown by the record in this case. Merely noting changes in membership interests or in the list of bondholders over the duration of the case does not show fraud because a person could have purchased a bond after a list of bondholders was compiled in the fall. of 2002 and prior to entry of the confirmation order in April 2003.
For these reasons, it is
ORDERED that Steven L. Dye's Motion, as amended, For Relief From Judgment (document nos. 554 and 570) is DENIED.