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In re Olympic Property Partners, LLC

United States District Court, S.D. New York

March 22, 2017

In re OLYMPIC PROPERTY PARTNERS, LLC, Alleged Debtor.
v.
OLYMPIC PROPERTY PARTNERS, LLC, Appellee. CONCRETE CAPITAL, LLC, Appellant,

          Douglas J. Pick, Esq. Pick & Zabicki LLP New York, NY Counsel for Appellant.

          Daniel E. Silverman, Esq. Silverman & Sardar LLP New York, NY Counsel for Alleged Debtor-Appellee.

          OPINION & ORDER

          KENNETH M. KARAS, District Judge.

         Concrete Capital, LLC (“Concrete”) appeals from the “Order Pursuant to 11 U.S.C. §§ 303 and 305 (I) Granting Dismissal (II) Awarding Fees and Costs but Reserving Decision on Amount of Same and (III) Reserving Further Decision on Damages under 11 U.S.C. § 303(I)(2)” (“Bankruptcy Order”), entered in the United States Bankruptcy Court for the Southern District of New York by United States Bankruptcy Judge Robert D. Drain. (See Not. of Appeal (Dkt. No. 1).)[1] More specifically, Concrete challenges the part of the Bankruptcy Order holding that Olympic Property Partners, LLC (“Olympic”) is entitled to attorney's fees and costs pursuant to 11 U.S.C. § 303(i)(1), and permitting Olympic to seek damages under 11 U.S.C. § 303(i)(2). Concrete contends that the bankruptcy court erred in its interpretation of § 303(i). For the reasons given herein, Concrete's appeal is dismissed because the Court lacks jurisdiction to hear it.

         I. Factual and Procedural Background

         On November 19, 2015, Concrete filed an Involuntary Petition (the “Petition”) pursuant to 11 U.S.C. § 303 with the bankruptcy court, seeking the entry of an order against Olympic under chapter 11 of the Bankruptcy Code. (Bankr. Dkt. No. 1.)[2] Concrete sought relief in the bankruptcy court because Olympic allegedly failed to repay a series of loans it received from Concrete. The facts giving rise to the underlying dispute are not relevant for purposes of this appeal.

         On December 14, 2015, Olympic filed a motion to dismiss the Petition, (Bankr. Dkt. No. 8), arguing that the requirements of § 303 were not met, (see Olympic Mem. of Law in Supp. of Mot. To Dismiss Petition 13-31 (Bankr. Dkt. No. 12)). Olympic also sought an award of attorney's fees and costs that it expended litigating the allegedly improperly filed Petition, and damages. (Id. at 40-44.) In opposition to Olympic's motion to dismiss, Concrete filed a “Statement” consenting to the dismissal of the Petition. (Concrete Statement in Opp'n to Mot. To Dismiss Petition ¶¶ 1-2 (Bankr. Dkt. No. 22).) Concrete stood by the merits of the Petition, but “as a result of weighing . . . the potential costs, risks[, ] and rewards associated with continued litigation, ” decided to consent to Olympic's motion. (Id. ¶ 1.) Concrete explained that it attempted to negotiate a consensual dismissal with Olympic, but Olympic would not consent without the inclusion of certain conditions and limitations. (Id. at 2 n.1.) It did argue, however, that Olympic's request for attorney's fees, costs, and damages should be denied. (Id. ¶ 2.) Olympic filed a reply memorandum “consent[ing] to that portion of [Concrete's] Statement that consents to and seeks dismissal . . . of its Involuntary Petition; but . . . d[id] not waive the right to judgement [sic] under 11 U.S.C. § 303(i).” (Olympic Reply Mem. of Law in Supp. of Mot. To Dismiss Petition ¶ 1 (Bankr. Dkt. No. 26).)

         On January 25, 2016, the bankruptcy court held oral argument on Olympic's motion to dismiss the Petition. Both Parties agreed that the Petition should be dismissed. (See Hr'g Tr. (“Tr.”) 11 (Bankr. Dkt. No. 33).) The question then became whether Olympic was entitled to attorney's fees and/or damages. Under 11 U.S.C. § 303(i), “if the court dismisses a petition under this section other than on consent of all petitioners and the debtor, and if the debtor does not waive the right to judgment under this subsection, the court may grant judgment . . . against the petitioners and in favor of the debtor for” costs, attorney's fees, and, under certain circumstances, damages. The bankruptcy court held that the type of consent envisioned by § 303(i) did not occur in this case. (Tr. 31.) Citing In re City Center Complex, LLC, No. 10-20820, 2012 Bankr. LEXIS 6205 (Bankr. N.D. Ind. Feb. 28, 2012), In re Express Car & Truck Rental, Inc., 440 B.R. 422 (Bankr. E.D. Pa. 2010), and In re Kelton Motors, Inc., 121 B.R. 166 (Bankr. D. Vt. 1990), the bankruptcy court explained that because Olympic moved to dismiss the Petition before Concrete agreed to withdraw it, Olympic did not “consent” to the dismissal, (Tr. 31 (“[I]t doesn't really sound like this is consent by the debtor since the debtor had to move to dismiss before [Concrete] was persuaded to agree with that. It doesn't seem to me to be the type of consent that [§] 303(i) is referring to.”); see also Id. at 32 (“Right, and [Olympic] moved first, so I don't see that as being consent. They moved to dismiss.”)). The bankruptcy court acknowledged that other courts have interpreted the meaning of “consent” differently, but pointed out that the majority of courts agreed with its interpretation of § 303(i). (See Id. at 31 (“I understand that [there] are cases that go the other way, but there certainly wasn't consent when [Olympic] moved to dismiss.”); id. at 41 (noting that the majority of courts would hold that Olympic did not consent to the dismissal).) Therefore, the bankruptcy court held that Olympic was entitled to the attorney's fees and costs it incurred in opposing the Petition. (Id. at 44.) It also granted Olympic leave to file a motion for damages under § 303(i)(2). (Id. at 44-45.)

         On January 26, 2016, the bankruptcy court entered the Bankruptcy Order, which granted Olympic's motion to dismiss, dismissed the Petition, awarded Olympic its reasonable fees and costs, and granted Olympic leave to seek damages under § 303(i)(2). (“Order Pursuant to 11 U.S.C. §§ 303 and 305 (I) Granting Dismissal (II) Awarding Fees and Costs but Reserving Decision on Amount of Same and (III) Reserving Further Decision on Damages under 11 U.S.C. § 303(I)(2)” (“Bankr. Order”) (Bankr. Dkt. No. 28).) Concrete filed a notice of appeal on February 4, 2016. (Bankr. Dkt. No. 29.) The following day, Olympic filed a notice of its intent to seek damages under § 303(i)(2). (Bankr. Dkt. No. 32.) On February 19, 2016, Olympic filed a “Statement, ” arguing that this Court could not hear Concrete's appeal because the Bankruptcy Order is not a final order. (Bankr. Dkt. No. 34.)

         Concrete filed its appellate brief on April 4, 2016. (Dkt. No. 8.) Olympic filed responsive papers on May 4, 2016. (Dkt. No. 11.)

         II. Discussion

         A. Standard of Review

         A district court reviews a bankruptcy court's findings of fact for clear error and reviews conclusions of law de novo. See In re Bayshore Wire Prods. Corp., 209 F.3d 100, 103 (2d Cir. 2000) (“Like the [d]istrict [c]ourt, we review the [b]ankruptcy [c]ourt's findings of fact for clear error, [and] its conclusions of law de novo . . . .” (citation and italics omitted)); In re Enron Corp., 307 B.R. 372, 378 (S.D.N.Y. 2004) (“A bankruptcy court's conclusions of law are reviewed de novo and its findings of fact for clear error.” (italics omitted)).

         B.Jurisdic ...


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