Opinion
Case No. 03 C 2328
November 13, 2003
MEMORANDUM OPINION AND ORDER
This matter comes before the Court on the appeal of an order of the bankruptcy court on February 21, 2003, by State Street Bank and Trust Company ("State Street"). Now before the Court is State Street's Motion for Rehearing. For the reasons that follow, this motion is granted.
BACKGROUND
On December 9, 2002, United Airlines and certain of its affiliates (collectively "United") filed voluntary petitions under Chapter 11 of Title 11 of the United States Code which were consolidated by the bankruptcy court,
State Street is the trustee of United's Employee Stock Ownership Plan ("ESOP"). State Street had announced its intent to sell all shares held by the ESOP, On December 9, 2002, United moved, pursuant to 11 U.S.C. § 105(a), 362(a)(3), and 541, to enjoin State Street from selling any shares held by the ESOP, arguing that the sale of those shares by State Street would cause United's bankruptcy estate to lose a multi-billion dollar "net operating loss" ("NOL") tax benefit asset under then-applicable Internal Revenue Service ("IRS") regulations. Because, at times, the ESOP trust held more than 50% of United's stock, United feared that further sales by State Street would trigger an "ownership change."
On December 11, 2002, after an initial hearing on the Trading Suspension Motion, the bankruptcy court entered an interim order restricting sales of certain equity positions and claims pending resolution of the Trading Suspension Motion, reasoning that there was a significant risk of loss of the NOLs while the bankruptcy court considered the Trading Suspension Motion, and set the matter for further hearing on December 30, 2002.
On February 24, 2003, the bankruptcy court enjoined State Street from transferring shares of United stock held by the ESOP. United was not required to post an injunction bond for the trading suspension order. On February 28, 2003, State Street appealed the bankruptcy court's ruling to this Court.
United filed a motion to dismiss State Street's appeal as moot because the issuance of a favorable IRS regulation preserved the NOLs which caused State Street to notify United of its intent to distribute all 15,948,257 shares held by the ESOP in connection with the ESOP termination. On August 18, 2003, the Court then granted United's motion and dismissed State Street's Appeal of the injunction as moot. Because of a docketing error, State Street's response to United's motion to dismiss was not considered. Accordingly, State Street filed this Motion to Reconsider,
This order contains a complete statement of the facts leading up to the appeal and the dismissal.
LEGAL STANDARD
Motions for reconsideration serve a limited function of correcting manifest errors of law or fact or presenting newly discovered evidence or an intervening change in the law. Cosgrove v. Bartolotta, 150 F.3d 729, 732 (7th Cir. 1998) ( Cosgrove), Reconsideration is appropriate when "the Court has patently misunderstood a party or has made a decision outside the adversarial issues presented to the Court by the parties or has made an error not of reasoning but of apprehension." Spearman Indus., Inc. v. St. Paul Fife Marine Ins, Co., 139 F. Supp.2d 943, 945 (N.D. Ill. 2001) (quoting Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990)). A motion for reconsideration cannot be used to introduce new legal theories for the first time, to raise legal arguments that could have been heard during the pendency of the previous motion, or to present evidence that could have been adduced during the pendency of the original motion. Publishers Res., Inc. v. Walker-Davis Publ'ns, Inc., 762 F.2d 557, 561 (7th Cir. 1985).ANALYSIS
In its response to United's Motion to Dismiss the Appeal as moot, State Street argued that it could still receive restitution, in the absence of an injunction bond, if the trading suspension injunction was erroneously entered. Failure to consider State Street's response at this time would amount to a patent error. Therefore, State Street's Motion for Rehearing is granted.
Cases are moot when there is no live case or controversy. Tobin for Governor v. Tit. State Bd. of Elections, 268 F.3d 517, 528 (7th Cir. 2001), There must be a live case or controversy from beginning of the suit to the end. Walters v. Edgar, 163 F.3d 430, 432 (7th Cir. 1999). "If a case becomes moot while on appeal, this [C]ourt loses its jurisdiction to decide the merits of the action." Bd, of Educ. of Oak Park River Forest High Sch. Dist. 200 v. Nathan R., 199 F.3d 377, 380-81 (7th Cir. 2000).
State Street has received the specific relief prayed for, namely, the capacity to dispose of the balance of the stock held in the ESOP trust. However, State Street argues that it is still entitled to restitution if the trading suspension injunction was erroneously entered; and, therefore, that ruling must be reviewed by this Court. State Street could not obtain damages from an injunction bond because, under Bankruptcy Rule 7065, United was not required to post an injunction bond.
Generally, an injunction "bond is the limit of damages the defendant can obtain for a wrongful injunction, even from the plaintiff, provided the plaintiff was acting in good faith." Coyne-Delaney Co. v. Capital Dev. Bd., 717 F.2d 385, 393 (7th Cir. 1983) (citation omitted). However, parties injured by an erroneously entered injunction may receive restitution, Temco Puerto Rico, Inc., v. Dep't of Consumer Affairs, 60 F.3d 867, 873-74 (1st Cir. 1995); Mitchell v. Riegel Textile, Inc., 259 F.2d 954, 955 (D.C. Cir. 1958). In addition, "[a] person who has been unjustly deprived of his property or its value may be entitled to maintain an action for restitution against another although the other has not in fact been enriched thereby." Citronelle-Mobile Gathering, Inc. v. Herrington, 826 F.2d 16, 27 (Temp.Emer.Ct.App. 1987) (quoting Restatement of Restitution § 1, cmt. e).
The Seventh Circuit had not yet determined whether restitution is available to parties in the absence of an injunction bond, but it has indicated restitution may be available. "Another exception [to the rule limiting damages to an injunction bond] might be where the plaintiff was seeking restitution rather than damages . . ." Coyne, 717 F.2d at 393 (emphasis added). Under these circumstances, it would be improper to either grant or deny United's Motion to Dismiss without further briefing on this issue and reconsideration of the merits of the appeal, if necessary.
CONCLUSION
For the foregoing reasons, State Street's Motion for Rehearing is granted. The parties are granted leave to file supplemental briefs pursuant to a schedule to be set by the Court,