3586 Boston Road Realty Corp.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: 	:
:
3586 BOSTON ROAD REALTY CORP., 	: 	Chapter 11
: 	Case No. 14-12080 (SMB)
Debtor. 	:
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MEMORANDUM DECISION AND ORDER
DENYING DEBTOR’S MOTION FOR REARGUMENT
A P P E A R A N C E S:
BLEICHMAN & KLEIN
Attorney for Debtor
117 South Main Street, Route 45 South
Spring Valley, NY 10977
Joshua N. Bleichman, Esq.
Of Counsel
HARRIS BEACH PLLC
Attorney for Creditor 54, LLC
100 Wall Street
New York, NY 10005
Eric H. Lindenman, Esq.
Of Counsel
KOSSOFF, PLLC
Attorney for the Receiver
217 Broadway, Suite 401
New York, NY 10007
Steven Y. Steinhart, Esq.
Of Counsel
STUART M. BERNSTEIN
United States Bankruptcy Judge:
The debtor, 3586 Boston Road Realty Corp. (“Boston Road”), filed this single asset real
estate case on July 16, 2014 to stay a foreclosure sale scheduled to take place five days later. By
Order dated September 11, 2014 (the “September Order”), the Court granted the motion by 54,
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LLC (the “Lender”) to lift the automatic stay under Bankruptcy Code § 362(d)(1) and (2) to
allow the sale to proceed. Boston Road has now moved to reargue the September Order pursuant
to Local Rule 9023-1(a) (the “Motion”). For the reasons that follow, the Motion is denied.
BACKGROUND
Boston Road owns commercial real property, its sole asset, located at 3586 Boston Road
in the Bronx (the “Premises”). On March 21, 2007, it executed a Building Mortgage Note in the
sum of $1,900,000 secured by a mortgage on the Premises in favor of the Lender. (Motion of 54,
LLC for an Order (i) Granting Relief from the Automatic Stay Pursuant to 11 U.S.C. Sections
362(d)(1) and 362(d)(2) and (ii) for an Award of Attorneys’ Fees and Costs, filed Aug. 15, 2014
(“Lift Stay Motion”), Ex. A, B (ECF Doc. # 17).) 	Following Boston Road’s default, the Lender
commenced a foreclosure action in New York State Court and obtained a Judgment of
Foreclosure and Sale (the “Judgment”) on May 8, 2014. (Lift Stay Motion at ¶¶ 11, 17 & Ex. F.)
The Judgment included a monetary award in the sum of $3,554,631.40 plus fees, costs, interest
and maintenance. As of the petition date, the Judgment plus post-judgment interest totaled
approximately $3.9 million. (Id. at ¶ 18.)
The foreclosure sale, scheduled for July 21, 2014, was stayed by the commencement of
this case on July 16, 2014. Boston Road’s schedules ascribed a value of $3,550,000 to the
Premises, less than the amount owed to the Lender. (Schedule A, at 3 of 24.) 1 The Motion
followed one month later. The Lender argued, relying on Bankruptcy Code § 362(d)(2), that it
lacked adequate protection. Boston had not made any payment to the Lender in more than four
1 	Boston Road’s Schedules and its Statement of Financial Affairs (“SOFA”), all dated Aug. 1, 2014, were
docketed on the Court’s ECF system as document number 11. Boston Road filed an amended SOFA on October 20,
2014 (ECF Doc. # 38) which states that it collected $70,000 from tenants since 2012, but does not otherwise modify
the original SOFA.
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years, and had failed to offer any post-petition adequate protection. (Lift Stay Motion at ¶ 39.)
In fact, Boston Road could not provide adequate protection because it had no other assets aside
from minimal office furniture (Schedule B, at 4-6 of 24), and, according to its SOFA, no income,
cash flow or financial records. (SOFA, at 14, 19 of 24.) The Lender also argued, citing
§ 362(d)(2), that Boston Road lacked equity in the Premises and the Premises were not necessary
for an effective reorganization, i.e., there was no “reasonable possibility of successful
reorganization within a reasonable period of time.” (Lift Stay Motion at ¶ 42) (quoting United
Sav. Ass’n v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 376 (1988)).
Boston Road’s opposition consisted of a two-page, unsworn statement signed by its
attorney, (Opposition to Motion to Relief from Stay, dated Sept. 2, 2014 (“Opposition”) (ECF
Doc. # 21), and a two-page Memorandum of Law. (Memorandum of Law, dated Sept. 2, 2014
(“Memorandum”) (ECF Doc. # 21).) Boston Road’s principal Samuel Miller, who had personal
knowledge of the facts, did not author his own opposition, and what Boston Road did submit was
rife with conclusory statements contradicted by the evidence. The Opposition stated that Boston
Road had procured insurance, (id. at 4), and, in support, referred to Exhibit A, but Exhibit A
consisted of an application for insurance and a premium quote. The Opposition also stated that
the Lender had a “several hundred thousand dollar equity cushion,” (Opposition at ¶ 7), but
Boston Road’s own schedules valued the Premises for less than the Judgment and less than the
$4.6 million in undisputed, secured debt. (See Schedule D, 7-8 of 24.) The Memorandum made
the astounding declarations that Boston Road had complied with 11 U.S.C. § 362(d)(3) by
“making monthly payments” to the Lender, (id. at 1), and that “current mortgage payments have
been made,” (id. at 2), overlooking Boston Road’s failure to make any payments for more than
four years.
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The Court heard the Motion on September 4, 2014. Boston Road’s counsel represented
that some payments had been made to the Receiver, but was unable to state the nature of the
payments ‒ whether they were mortgage payments or rental payments made by Miller who
occupied space at the Premises. (Transcript for Sept. 4, 2014 Hearing, filed Sept. 18, 2014
(“Tr.”), 6:2-10, 8:7-10 (ECF Doc. # 29).) 	Counsel also said that Boston Road had lined up
tenants, but was unable to produce any supporting evidence and the Receiver’s counsel explained
that all of the previous tenants had been evicted, except for Miller who was essentially squatting.
(Tr. 10:11-11:10.) When asked to produce the actual insurance policy instead of the quote that
was attached as Exhibit A to the Debtor’s Opposition, counsel replied, “I’m sorry, sir, I do not
have it with me,” and the Receiver’s counsel stated that the Receiver had procured an insurance
policy. (Tr. 15:2-11.)
As noted, the Court granted the Motion from the bench. It was “undisputed that the
debtor hasn’t made a mortgage payment in four or five years, since 2009.” (Tr. 17:5-7.) Boston
Road failed to prove it had procured insurance on the Premises. (Tr. 17:8-14.) It “ha[d] no
equity in this property and ha[d] failed to show that there is . . . a reasonable prospect of
confirming a plan within a reasonable period of time.” (Tr. 17:15-19.) In addition, Boston Road
had no cash flow or tenants except for Miller who had agreed to pay $6,000 per month but had
reneged. (Tr. 7:20-8:3.) Boston Road also admitted that it did not have any books and records.
(Tr. 18:4-6.) The Court expressed surprise that Miller had not submitted an affidavit based on
personal knowledge to back up counsel’s statements, and could not overlook the “total lack of
any offer of evidence on the side of the debtor.” (Tr. 18:21-19:1.) Finally, the Court stated, in
dicta, that the case had all the earmarks of a bad faith filing. It involved a two-party dispute,
Boston Road had no assets, cash flow or employees, and after losing in state court, it filed the
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chapter 11 on the eve of the foreclosure sale which frustrated the legitimate rights of the Lender.
(Tr. 18:7-20.)
DISCUSSION
Local Bankruptcy Rule 9023-1(a) provides:
A motion for reargument of a court order determining a motion shall be served
within fourteen (14) days after the entry of the Court’s order determining the
original motion, or in the case of a court order resulting in a judgment, within
fourteen (14) days after the entry of the judgment, and, unless the Court orders
otherwise, shall be made returnable within the same amount of time as required
for the original motion. The motion shall set forth concisely the matters or
controlling decisions which counsel believes the Court has not considered. No
oral argument shall be heard unless the Court grants the motion and specifically
orders that the matter be re-argued orally.
Local Bankruptcy Rule 9023-1(a) is adapted from Civil Rule 6.3 of the United States
District Court for the Southern District of New York. Local Bankruptcy Rule 9023-1 cmt. The
standards governing motions for reargument and motions to alter or amend a judgment under
Federal Rule of Civil Procedure 59(e) are identical. Samuel’s Temple Church of God in Christ v.
Parade Place, LLC (In re Parade Place, LLC), 508 B.R. 863, 868 (Bankr. S.D.N.Y. 2014); see
also In re Bressler, No. 06-11897(AJG), 2007 WL 98493, at *1 (Bankr. S.D.N.Y. Jan. 12, 2007);
In re Houbigant, Inc., 190 B.R. 185, 187 (Bankr. S.D.N.Y 1996). “The movant must show that
the court overlooked controlling decisions or factual matters ‘that might materially have
influenced its earlier decision.’” In re Best Payphones, Inc., No. 01-15472 (SMB), 2008 WL
2705472, at *3 (Bankr. S.D.N.Y. July 3, 2008) (quoting Anglo American Ins. Group, P.L.C. v.
CalFed Inc., 940 F. Supp. 554, 557 (S.D.N.Y. 1996)). “Alternatively, the movant must
demonstrate the need to correct a clear error or prevent manifest injustice.” Griffin Indus., Inc. v.
Petrojam, Ltd., 72 F. Supp. 2d 365, 368 (S.D.N.Y. 1999) (internal quotation marks and citations
omitted).
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The rule permitting reargument is strictly construed to avoid repetitive arguments on
issues that the court has already fully considered. Griffin Indus., 72 F.Supp.2d at 368; Monaghan
v.. SZS 33 Assocs., L.P., 153 F.R.D. 60, 65 (S.D.N.Y. 1994); Farkas v. Ellis, 783 F.Supp. 830,
832 (S.D.N.Y. 1992). In addition, the parties cannot advance new facts or arguments; a motion
for reargument is not a vehicle for “presenting the case under new theories, securing a rehearing
on the merits, or otherwise taking a ‘second bite at the apple.’” Sequa Corp. v. GBJ Corp., 156
F.3d 136, 144 (2d Cir.1998)(discussing Rule 59); accord Griffin Indus., 72 F.Supp.2d at 368
(discussing motions for reargument).
Boston Road argues that the Court overlooked the following three facts:
1) that this case is only one month old and the debtor has had no time to negotiate
any adequate protection payment to 54[,] LLC; 2) that there is no mortgage
payment due to 54[,] LLC; it has a judgment against the debtor which may be
paid through a plan of reorganization; and 3) there are now leases for the premises
which increases the value of the property and provides a means to pay the
adequate protection payment while providing an equity cushion to 54[,] LLC.
(Memorandum of Law in Support of Motion to Reargue, dated Sept. 12, 2014 (Reargument
Memorandum”), at 2 (ECF Doc. # 28).)
In granting relief from the stay, the Court concluded, and Boston Road apparently now
concedes, that the Lender lacked adequate protection. Boston Road never argued that it needed
more time to negotiate an adequate protection payment schedule. To the contrary, it argued that
the Lender was already adequately protected because there was equity in the Premises,
(Opposition at ¶ 7), and the Boston Road had made current mortgage payments that the Lender
had accepted. (Memorandum at 2.) Since I could not overlook an argument that was never
made, Boston Road’s first point fails.
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Boston Road’s second point urges that no mortgage payments were due because of the
Judgment, and it could pay the Judgment through a plan. Yet Boston Road was the one who
insisted in its opposition to the lift stay motion that “current mortgage payments have been
made,” (Memorandum at 2), and this assertion was belied by contrary evidence that no payments
had been received by the Lender in over four years. In addition, although a debt can be paid
through a plan, the Court concluded that Boston Road could not confirm a plan. Accordingly, its
second point does not provide a basis for reargument.
In its third point, Boston Road contends that the Court overlooked the fact that it had
tenants for the Premises. It has submitted a one page summary of these tenancies which
indicated that they were all in place by the time of the September hearing and generated monthly
rental income of $18,000.2 (See Reargument Memorandum, Ex. C.) Although Boston Road’s
counsel alluded to tenants at the hearing on the lift stay motion, he could not identify any and
lacked personal knowledge. Boston Road had not supplied the list attached to its Reargument
Memorandum which in any event, like its other submissions, is unsworn and unsupported by
anyone with personal knowledge of the tenancies. Consequently, Boston Road’s third point does
not supply a reason to reargue the lift stay motion, and the Motion is denied.
So ordered.
Dated: New York, New York
October 28, 2014
/s/ Stuart M. Bernstein
STUART M. BERNSTEIN
United States Bankruptcy Judge
2 	According to the exhibit, Boston Road “lined up” the tenants between June 1, 2014 and September 1, 2014.
These are the same tenants identified in the amended SOFA who paid $70,000 in rent prior to the petition date.
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