Third Circuit disposition — 083905np-pdf

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 08-3905
_____________
In re: VICTOR MONDELLI,
Appellant.
Appeal from the Order of the United States District Court
for the District of New Jersey
(D.C. No. 08-cv-01582)
District Judge: Hon. William J. Martini
Submitted Under Third Circuit L.A.R. 34.1(a)
on May 22, 2009
Before: FUENTES, JORDAN, and NYGAARD, Circuit Judges.
(Opinion Filed: October 20, 2009 )
OPINION OF THE COURT
FUENTES, Circuit Judge:
Debtor-Appellant Victor Mondelli appeals the decision of the District Court to
affirm two orders entered by the Bankruptcy Court: one that enforced a mortgage and
lease specifically agreed to by Mondelli; and another that denied a subsequent motion for

-- 1 of 6 --

2
reconsideration. For the reasons that follow, we will affirm the District Court’s order
dismissing Mondelli’s appeal from the Bankruptcy Court.
I.
Because we write exclusively for the parties, we only discuss the facts and
proceedings to the extent necessary for the resolution of this case.
In May 2007, the Bankruptcy Court approved a plan whereby Mondelli would
satisfy a significant portion of his outstanding debts by mortgaging property he owned in
Berkeley Heights, New Jersey. Mondelli obtained the loan from Jack Silverman Realty &
Mortgage Co. (“JSRM”) and used the loan proceeds to pay his creditors. Atypically, the
mortgage agreement with JSRM was accompanied by a ninety-nine year ground lease to
another company, Berkeley Realty Partners (“BRP”). The lease expressly states that the
lease’s existence was a condition precedent to JSRM’s grant of the mortgage – JSRM and
BRP share some overlapping ownership interests, and the mortgage from JSRM and the
lease to BRP were clearly part of a package deal.
The lease to BRP contains several provisions relevant to this appeal. First, the
lease gives BRP a right of first refusal if and when Mondelli decides to sell the property.
Second, the lease contains a “subordination” provision, which requires Mondelli to
subordinate his interest in the property to any subsequent mortgage entered into by BRP
for the purpose of “construction and permanent financing” of the lease. Third, pursuant

-- 2 of 6 --

3
to the lease, BRP is required to pay property taxes and purchase insurance for the
property.
The present dispute arose when BRP attempted to obtain a mortgage on the
property, invoking the provision of the lease requiring Mondelli to subordinate his
interest. Mondelli objected and refused to execute the necessary paperwork. BRP and
JSRM then filed a motion with the Bankruptcy Court to enforce the relevant lease
provisions consented to by Mondelli. During the hearing on the motion, Mondelli noted
that BRP had fallen behind on its property tax obligations, thus endangering Mondelli’s
interest in the land. Over Mondelli’s objections, the Bankruptcy Court granted the
motion, noting that Mondelli had agreed to the subordination and characterized
Mondelli’s resistance as something akin to buyer’s remorse.
Shortly thereafter, Mondelli filed a motion for reconsideration of the decision
enforcing the lease provisions. In this motion, Mondelli supplemented his claim about
the unpaid taxes by arguing that (1) BRP’s right of first refusal constituted a clog on
Mondelli’s equitable right of redemption; (2) BRP could not request subordination
without evidence that the mortgage was for development of the property; (3) BRP had
breached the lease by subleasing a portion of the property; and (4) the Bankruptcy Judge
should have recused himself for bias. The Bankruptcy Court rejected all of these

-- 3 of 6 --

As noted by the District Court, the Bankruptcy Court did not clearly address1
Mondelli’s second argument – that subordination was dependent on evidence of
development – perhaps because it did not understand Mondelli to be actually arguing that
point. Regardless, the District Court did address the issue in its Opinion, and we will
review that determination for abuse of discretion.
4
arguments and dismissed the motion for reconsideration. Mondelli then appealed to the1
District Court, presenting the same arguments he raised in his earlier submissions. The
District Court affirmed, agreeing with the Bankruptcy Court on the merits of Mondelli’s
appeal, but also noting that Mondelli had defaulted on his obligation under the Federal
Rules of Bankruptcy Procedure to provide the District Court with a complete appellate
record.
II.
Pursuant to Federal Rule of Bankruptcy Procedure 8006, “[w]ithin 10 days after
filing [a] notice of appeal . . . , [an] appellant shall file with the clerk and serve on the
appellee a designation of the items to be included in the record on appeal and a statement
of the issues to be presented.” Fed. R. Bank. Proc. 8006. As noted by the District Court,
Mondelli filed his notice of appeal on February 4, 2008, but did not file his designation of
the items to be included in the record until April 2, 2008, well past the ten-day filing
limit. Such a violation may constitute a basis for dismissal of the appeal. See Fed. R.
Bank. Proc. 8001(a) (“An appellant’s failure to take any step other than timely filing a
notice of appeal does not affect the validity of the appeal, but is ground only for such
action as the district court or bankruptcy appellate panel deems appropriate, which may

-- 4 of 6 --

5
include dismissal of the appeal.). Before dismissing Mondelli’s appeal for this procedural
violation, however, the District Court appropriately analyzed Mondelli’s violation in
reference to the factors laid out in Poulis v. State Farm Fire and Casualty Co., 747 F.2d
863 (3d Cir. 1984).
(1) the extent of the party’s personal responsibility; (2) the
prejudice to the adversary caused by the failure to meet
scheduling orders and respond to discovery; (3) a history of
dilatoriness; (4) whether the conduct of the party or the
attorney was willful or in bad faith; (5) the effectiveness of
sanctions other than dismissal, which entails an analysis of
alternative sanctions; and (6) the meritoriousness of the claim
or defense.
Id. at 868. The District Court addressed each factor and found, in the aggregate, that
dismissal for failure to meet the requirements of Rule 8006 was warranted.
We have reviewed the District Court’s application of the Poulis factors, and we see
no abuse of discretion. See Emerson v. Thiel College, 296 F.3d 184, 191 (3d Cir. 2002)
(noting standard of review). In terms of the merits of Mondelli’s arguments, we affirm
for the thorough and persuasive reasons noted in the District Court’s opinion. In
particular, we echo the District Court’s analysis of the alleged clogs to Mondelli’s
equitable right of redemption – a contention that Mondelli prioritizes in his briefing. We
do not see how BRP’s right of first refusal in the event that Mondelli chooses to sell the
property in any way compares to the sort of unconditional right to purchase held by the
mortgagee in Humble Oil & Refining Co. v. Doerr, 303 A.2d 898 (N. J. Super. Ct. Ch.
Div. 1973). Quite simply, BRP’s right to repurchase would not affect Mondelli’s ability

-- 5 of 6 --

6
to redeem his mortgage – it would only affect his efforts to sell the property to a third
party. And, as noted by the District Court, even if the right of first refusal did clog the
equitable right of redemption, the remedy would be to render the provision unenforceable,
not to invalidate the entire lease. Id. at 565. We also reject the argument that the mere
presence of the subordination clause somehow clogs the equitable right of redemption.
While the subordination clause might affect Mondelli’s ability to obtain other financing at
a favorable rate, the clause does not in any way prevent him from actually redeeming his
mortgage, and thus cannot be considered a clog to that essential right.
In regard to the non-merits factors, we see no clear error in the District Court’s
factual determination that Mondelli was not personally responsible for the procedural
violation; that BRP was somewhat prejudiced by the delay; that Mondelli has a history of
dilatoriness; and that alternate sanctions, such as financial penalties, would be ineffective
given Mondelli’s bankruptcy. Accordingly, we agree with the District Court’s analysis
and balancing of the Poulis factors, and will affirm its dismissal of Mondelli’s appeal.

-- 6 of 6 --