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BRADLEES STORES, INC. v. ST. PAUL FIRE AND MARINE INSURANCE

United States District Court, Southern District of New York


July 30, 2003

BRADLEES STORES, INC., ET AL., PLAINTIFFS-APPELLEES, AGAINST ST. PAUL FIRE AND MARINE INSURANCE COMPANY, ET ANO., DEFENDANTS-APPELLANTS.

The opinion of the court was delivered by: Lewis Kaplan, District Judge.

Chapter 11

ORDER

This matter is before the Court on motions to dismiss aspects of the appeal of defendants-appellants and for sanctions.

In May 2002, the debtors — plaintiffs-appellees in this Court — commenced an adversary proceeding against defendants. On January 27, 2003, the parties entered into a settlement stipulation. A motion to approve the settlement was made in the Bankruptcy Court. On February 6, 2003, the Bankruptcy Court entered an order approving the settlement stipulation and also "so ordered" the settlement stipulation itself. No appeal was taken from the February 6, 2003 orders.

On February 18, 2003, defendants moved in the Bankruptcy Court to vacate the order approving the settlement on the ground of mutual mistake. On April 9, 2003, the Bankruptcy Court issued a memorandum decision and order denying the motion.

Defendants then filed a notice of appeal on April 14, 2003. It purported to appeal from:

"(i) the Memorandum Decision Denying Motion to Vacate Order Approving Settlement of Adversary Proceeding, entered in the Adversary Proceeding . . . on April 9, 200 3 . . .; (ii) the Order . . . entered in the Adversary Proceeding on February 6, 2003, titled Order Approving Stipulation Resolving Claims Between Bradlees Stores, Inc., Bradlees, Inc. and New Horizons of Yonkers, Inc. as Plaintiffs and St. Paul Fire and Marine Insurance Company and St. Paul Surety as Defendants . . .; and (iii) that certain Stipulation Resolving Claim's Between Bradlees Stores, Inc., Bradlees, Inc. and New Horizons of Yonkers, Inc. as Plaintiffs and St. Paul Fire and Marine Insurance Company and St. Paul Surety as Defendants . . . approved by the Honorable Burton R. Lifland, United States Bankruptcy Judge, on February 6, 2003."
Defendants subsequently filed a Designation of Record and Statement of Issues on Appeal. The only issue set forth therein was "[w]hether the Bankruptcy Court erred by denying St. Paul's motion, made pursuant to Rules 59 and 60 of the Federal Rules of Civil Procedure and Bankruptcy Rules 9023 and 9024, to vacate the Settlement Order and Settlement Agreement on the grounds of mistake, misrepresentation, newly discovered evidence, and/or the existence of extraordinary circumstances . . ."

Plaintiffs-appellees now move to dismiss so much of the appeal as seeks to bring up the propriety of the order approving the settlement stipulation and the "so ordering" thereof — that is, so much of the appeal as is set forth in clauses (ii) and (iii) of the notice of appeal quoted above — on the grounds that they are consent orders from which no appeal lies, that defendants lack standing to appeal from them, that any appeal therefrom is precluded by defendants' failure to object to their entry in the Bankruptcy Court, and that defendants are bound by their statement of issues on appeal, which does not challenge either of the February 6, 2003 actions of the Bankruptcy Court.

Plaintiffs plainly are correct at least where, as here, there is no express reservation of a right to appeal. E.g., Kelly's Trust v. Commissioner of Internal Revenue, 168 F.2d 198, 199 (2d Cir. 1948) ("a consent judgment by its nature precludes an appeal"). Defendants' contention that their consent to the settlement was the product of mistake, misrepresentation or fraud does not alter this principle. While proof of such claims in appropriate circumstances may justify relief from a judgment or order — which indeed was the object of the motion to vacate that defendants made in the Bankruptcy Court — there is no basis for supposing that it affords an aggrieved party a right to appeal from the consent judgment or order itself.

Accordingly, the motion to dismiss so much of the appeal as seeks review of the orders dated February 6, 2003 [docket item 5] is granted. This of course leaves for determination so much of the appeal as seeks reversal of the April 9, 2003 order denying defendants' motion to vacate the prior February 6, 2003 orders. Defendants' motion for sanctions [docket item 7] is denied as frivolous.

SO ORDERED.

20030730

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