In Re: Soundview Elite Ltd.
- Lorna Schofield
- 1:19-cv-03739
- U.S. District Court · Southern District of New York
- 5
In Ladner v. Ball, Judge Schofield dismissed Ladner’s appeal and affirmed an order directing entry of a bankruptcy attorneys’ fees judgment.
George Ladner and the other persons held jointly and severally liable for the Plan Administrator’s attorneys’ fees; Corrine Ball as Plan Administrator.
What happened
In In re: Soundview Elite Ltd. et al., George Ladner appealed an order directing the bankruptcy clerk to enter judgment for attorneys’ fees awarded after Ladner was held in civil contempt for violating a court order. The earlier contempt order had made Ladner and others jointly responsible for those fees.
Ladner argued that the later order was invalid because the request was filed in a different bankruptcy case, the related case had already been closed, the Plan Administrator waited too long, and the delay harmed him. The court rejected each argument, finding that Ladner knew about the request, the clerk’s failure to enter judgment was a clerical mistake, the delay was not the Plan Administrator’s responsibility, and Ladner did not provide enough evidence of harm.
Judge Schofield dismissed the appeal and affirmed the bankruptcy court’s order. The ruling left in place the direction to enter judgment for the Plan Administrator’s attorneys’ fees.
The detailed version
- In Re: Soundview Elite Ltd. · No. 1:19-cv-03739
- Lorna Schofield
- Mar. 17, 2020
Background
Soundview Elite Ltd., Soundview Star Ltd., Elite Designated, Premium Designated, and Star Designated filed Chapter 11 bankruptcy petitions in September 2013. Corrine Ball served as the Chapter 11 trustee and Plan Administrator. In a related adversary proceeding, the Bankruptcy Court entered an order requiring funds to be retained for legal representation.
The Bankruptcy Court later found that operators of Soundview Composite, including George Ladner, violated that order by diverting some of the retained funds. It issued a civil-contempt order holding Ladner and others jointly and severally liable for the Plan Administrator’s attorneys’ fees incurred in bringing the contempt motion. Ladner appealed that contempt order before the bankruptcy clerk entered final judgment, and the District Court affirmed the contempt order on March 23, 2016.
The clerk did not enter final judgment on the attorneys’ fees award. After the related adversary proceeding was formally closed on January 31, 2018, the Plan Administrator filed a letter in the main bankruptcy case requesting that the Bankruptcy Court direct the clerk to enter judgment on the award. The Bankruptcy Court granted that request in its April 11, 2019, order, which Ladner then appealed.
Arguments on Appeal
Ladner offered three reasons to overturn the April 2019 order. First, he argued that the request was filed in the main bankruptcy case rather than the related adversary proceeding. Second, he argued that the Plan Administrator’s delay in seeking entry of judgment was unjustified. Third, he argued that the delay caused him harm.
The District Court rejected the first argument because Ladner was served with the request and acknowledged knowing about it. The communication therefore was not an undisclosed communication with the Bankruptcy Court. The court also held that filing the April order on the main-case docket did not invalidate it.
The court further held that reopening the closed adversary proceeding was not required. The clerk’s failure to enter judgment was a clerical mistake, and Federal Rule of Civil Procedure 60(a), applied through the bankruptcy rules, permits a court to correct a clerical mistake or an omission.
The court rejected the delay argument because the clerk, rather than the parties, was responsible for entering the judgment. It also held that the delay did not amount to abandonment of the award under 11 U.S.C. § 554(c), because the Plan Administrator sought entry of judgment while the main bankruptcy case was still ongoing.
Finally, the court held that Ladner had not supplied enough evidence that the delay injured him. His claims that the contempt order had affected him and other operators, had a chilling effect, and had caused reputational harm did not explain how the delay caused those injuries or establish that they occurred.
Disposition
Judge Lorna G. Schofield dismissed the appeal and affirmed the Bankruptcy Court’s April 11, 2019, order. The opinion therefore left in place the direction that the bankruptcy clerk enter judgment concerning the attorneys’ fees award from the contempt order.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.