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Adelphia Recovery Trust v. Bank of America

June 16, 2009

ADELPHIA RECOVERY TRUST, PLAINTIFF,
v.
BANK OF AMERICA, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: McKENNA, D.J.

MEMORANDUM AND ORDER

This memorandum and order addresses Goldman, Sachs & Co. ("Goldman") and Cooperatieve Centrale RaiffeisenBoerenleenbank B.A., "Rabobank Nederland", New York Branch ("Rabobank") motions for reconsideration. Both parties move for reconsideration of this Court's May 6, 2009 memorandum and order pursuant to Federal Rule of Civil Procedure 59(e) and Local Civil Rule 6.3 of the United States District Court for the Southern District of New York. Adelphia Recovery Trust v. Bank of America, N.A., No. 05-CV-9050, 2009 WL 1249360 (S.D.N.Y. May 06, 2009). Rabobank seeks dismissal of Claims 37, 38, and 55 of Adelphia Recovery Trust's ("ART") Amended Complaint. Goldman seeks dismissal of Claim 31 of the Amended Complaint. This Court requests ART to submit a revised version of paragraph 1359 of the Amended Complaint within thirty days. Rabobank's motion for reconsideration is DENIED.

I.

Defendants seek reconsideration of this Court's May 6, 2009 memorandum and order pursuant to Fed. R. Civ. P. 59(e) ("Rule 59(e)"). "The standard for granting [a motion for reconsideration] is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked-matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995) (citations omitted). Courts should not grant a motion for reconsideration in order to allow a party "[to] advance new facts, issues or arguments not previously presented to the Court." Shamis v. Ambassador Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y. 1999) (internal quotations and citations omitted). Courts shall not grant a motion for reconsideration when the moving party seeks solely to relitigate an already decided issue. Id. Goldman and Rabobank raise discreet issues in their motions for reconsideration. The motions are addressed separately.

II.

Goldman requests this court to reconsider its May 6, 2009 memorandum and order upholding Claim 31. Adelphia Recovery Trust v. Bank of America, N.A., No. 05-CV-9050, 2009 WL 1249360 (S.D.N.Y. May 06, 2009). Claim 31 alleges Salomon Smith Barney, Bank of America, Goldman Sachs and Deutsche Bank (collectively, the "Margin Lenders") received payments in the months preceding the Adelphia Bankruptcy. ART seeks to have the monies paid to these banks avoided, recovered, or preserved for ART under 11 U.S.C. §§ 548 and 550. (Am. Cmpl. ¶¶ 1357-362.) Goldman puts forward two arguments in its motion for reconsideration.

First, Goldman alleges ART lacks standing to bring Claim 31 because ART is seeking to recover on behalf of the creditors of Adelphia subsidiaries ("Obligor Debtors").

This court in its June 17, 2008 memorandum and order held ART lacked Article III standing to bring claims on behalf of the creditors of the Obligor Debtors. The creditors of the Obligor Debtors were deemed paid in full by the First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of Adelphia Communications Corporation and Certain Affiliated Debtors ("Joint Plan"). Adelphia Recovery Trust v. Bank of America, N.A., 390 B.R. 80 (S.D.N.Y. 2008).

Goldman alleges Claim 31 is factually analogous to the Claims dismissed by this Court in its June 17, 2008 memorandum and order. Goldman contends the payments it received were from the Obligor Debtors and not from Adelphia Communication Corporation ("ACC") and ART has no standing to bring claims on behalf of the Obligor Debtors' creditors.

The Amended Complaint does not identify which fraudulent conveyances came from ACC and which came from the Obligor Debtors. This omission is significant because ART lacks standing to pursue claims to recover for fraudulent conveyance on behalf of the Obligor Debtors.

The Amended Complaint lists the alleged fraudulent conveyances as coming from 'Adelphia'. The term Adelphia encompasses both the Obligor Debtors and ACC. "'Adelphia' as defined in the Amended Complaint includes the parent company, Adelphia Communications Corp." ART Reply Mem. of Law at 2.

This court requires ART to submit a revised version of paragraph 1359 of the Amended Complaint. The revised paragraph should identify which payments to the Margin Lenders came from ACC.

Second, Goldman contends the Amended Complaint fails to meet the pleading requirements of intentional fraudulent conveyance. Goldman contends that the Amended Complaint by failing to identify if the source of the payments was ACC or the Obligor Debtors does not provide the particularized detail required by Fed. R. Civ. P. 9(b). This Court's requirement for revision of paragraph 1359 of the Amended Complaint will provide the ...


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