Residential Capital, LLC

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
RESIDENTIAL CAPITAL, LLC, et al.
Debtors.
NOT FOR PUBLICATION
Case No. 12-12020 (MG)
Jointly Administered
MEMORANDUM OPINION AND ORDER DENYING TIMOTHY J. LAHRMAN’S
MOTION FOR RECONSIDERATION OF ORDER ENFORCING THE CHAPTER 11
PLAN INJUNCTION
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
Pending before the Court is the Motion to Reconsider or Otherwise Alter, Amend and
Modify Order or Judgment and Motion for Releif [sic] from Judgment or Order (the “Motion,”
ECF Doc. # 6772) filed by Timothy J. Lahrman (“Lahrman”). In support of the Motion,
Lahrman submits the Declaration of Timothy J. Lahrman (the “Lahrman Decl.,” ECF Doc.
# 6772-2) and attaches various documents, including emails sent to the Debtors’ counsel, court
pleadings, and guardianship proceedings (see ECF Doc. # 6772-3).1 Lahrman asks the Court to
reconsider its Order Granting Ally Financial Inc.’s Motion for an Order Enforcing the Chapter
11 Plan Injunction (the “Order,” ECF Doc. # 6702), which enforced the Third Party Release and
Injunction provisions (defined below) of the Second Amended Joint Chapter 11 Plan Proposed
by Residential Capital, LLC, et al. and the Official Committee of Unsecured Creditors (the
1 	In the Motion, Lahrman purports to incorporate by reference Exhibits A–C of a previous “Letter Motion”
dated March 7, 2014, which Lahrman also refers to as a “Complaint on Note and to Foreclose Mortgage.” Neither
Lahrman nor AFI filed anything on March 7, 2014 in these chapter 11 cases. Lahrman has filed only three
documents in these chapter 11 cases: (1) the Motion; (2) a “Special Appearance for the Limited Purposes of
Presenting Objections and Raising Jurisdictional Issues Warranting Dismissal with Prejudice of the AFI Motion”
(the “Response,” ECF Doc. # 6635); and (3) a “Declaration of Timothy Lahrman” (the “Original Declaration,” ECF
Doc. # 6715). The Response filed by AFI is dated March 8, 2014, but it only attaches one exhibit. Thus, it is
unclear what Lahrman seeks to incorporate by reference in the pending Motion. For the purposes of the Motion,
however, the exhibits Lahrman references are not necessary. Even assuming the documents referenced in the
Lahrman Declaration are what he claims they are, they do not alter the Court’s analysis or conclusion.
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“Plan,” ECF Doc. # 6065-1) as to claims Lahrman asserts in an Indiana state court proceeding
(the “State Court”) against Ally Financial Inc. (“AFI”).
The Court entered the Order enforcing the Plan Injunction following a court hearing on
AFI’s motion (the “AFI Motion,” ECF Doc. # 6527) on March 26, 2014. Lahrman did not
appear at the hearing in person or by telephone, despite having notice of the AFI Motion and of
the hearing. The Court ruled from the bench and the Order was entered following the hearing.
Because Lahrman has failed to satisfy the standards for a motion for reconsideration, the
Motion is DENIED.
I. 	BACKGROUND
A. 	ResCap Bankruptcy Plan Confirmation
On May 14, 2012 (the “Petition Date”), ResCap and various related entities (the
“Debtors”) filed chapter 11 bankruptcy petitions. On August 29, 2012, the Court entered an
order setting the bar date of November 9, 2012 for filing non-governmental proofs of claim in
the chapter 11 cases. (ECF Doc. # 1309.) The Court thereafter entered an Order Extending the
Bar Date for Filing Proofs of Claim to November 16, 2012 (the “Bar Date”). (ECF Doc.
# 2093.) Neither Lahrman nor Cynthia Damron, Lahrman’s “significant other,” filed a proof of
claim in these chapter 11 cases.
On December 11, 2013, the Court confirmed the Plan by entering the Confirmation
Order. (ECF Doc. # 6065.) The Plan includes the release of the Debtors’ parent company AFI
(the “Third Party Release”) in exchange for a contribution from AFI of $2.1 billion to the
Debtors’ estate (the “AFI Contribution”). (See Plan Art. IV.A.) The Third Party Release
extends to
any 	and 	all 	Causes 	of 	Action 	whatsoever, 	whether 	known 	or
unknown, asserted or unasserted, derivative or direct, foreseen or
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unforeseen, 	existing 	or 	hereinafter 	arising, 	in 	law, 	equity, 	or
otherwise, whether for tort, fraud, contract, violations of federal or
state securities laws, veil piercing or alter-ego theories of liability,
contribution, indemnification, joint liability, or otherwise, arising
from or related in any way to the Debtors.
(Plan Art. IX.D.) 2 The Third Party Release further provides:
On and as of the Effective Date of the Plan . . ., the holders of Claims
and Equity Interests shall be deemed to provide a full and complete
discharge and release to the Ally Released Parties and their respective
property from any and all Causes of Action . . . arising from or
related in any way to the Debtors, including those in any way related
to RMBS issued and/or sold by the Debtors or their affiliates and/or
the Chapter 11 Cases or the Plan, the Consent Order, and the Order
of Assessment.
(Id.) To define the term “Claim,” the Plan adopts the definition contained in Bankruptcy Code
section 101(5). (Plan Art. I.A.53.) Section 101(5), in turn, defines a “claim” as the “right to
payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”
11 U.S.C. § 101(5). Thus, Claims asserted against AFI “arising from or related in any way to the
Debtors” are “Released Claims” under the Plan. (See id. Art. I.A.242; see also id. IX.D.) The
Plan “permanently enjoin[s] and preclude[s]” all parties
who have held, hold or may hold Claims, . . . [or] Causes of Action . . .
that constitute Released Claims . . . from and after the effective date of
the Plan, from: 	(a) commencing or continuing in any manner or
action or other proceeding of any kind against any Released Party
whether directly, derivatively or otherwise, on account of or in
connection with or with respect to any Released Claims; . . . [and] (e)
commencing 	or 	continuing 	in 	any 	manner 	or 	action 	or 	other
proceeding of any kind against any Released Party on account of or in
connection with or respect to any Released Claims . . . .
(Id. Art. IX.I.)
2 	Capitalized terms used but not defined herein have the meanings given to such terms in the Plan.
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The Plan became effective on December 17, 2013 (the “Effective Date”). (See ECF Doc.
# 6137.)
B. 	Lahrman’s State Court Action
On January 3, 2014, nearly one month after the Court confirmed the Plan, Lahrman filed
a pro se complaint (the “Compl.,” ECF Doc. # 6621, Ex. A) in Indiana state court (the “State
Court Action”) against a number of defendants (the “Defendants”),3 including AFI, related to a
mortgage foreclosure. (See id., Exs. A, B.) On January 21, 2014, Lahrman filed a supplemental
complaint in the State Court Action adding additional foreclosure-related claims against the
Supplemental Defendants (the “Supp. Compl.,” and together with the “Compl.,” the
“Complaints”).4 (Id. Ex. B.) In the Complaints, Lahrman alleges that AFI does business as
GMAC Mortgage, LLC (“GMACM”), GMACM’s predecessor-in-interest GMAC Mortgage
Corp. (“GMACM Corp.”), and Residential Funding Company, LLC (“RFC”).5 (Compl. at 1;
Supp. Compl. at 1.) GMAC Mortgage Corp. merged with GMACM in 2006, but for the
purposes of this Opinion, the Court will refer to both entities as GMACM.
1. 	The Complaint
In the Complaint, Lahrman alleges that he is associated with Cynthia Damron, whom he
identifies as his “‘significant other[]’/‘life partner[].’” (Compl. ¶ 2 n.1.) According to Lahrman,
3 	The Defendants named in the Complaint are: “Green Tree Servicing, LLC as assignee of and/or successor
to GMAC Mortgage, LLC; Ally Financial, Inc., d/b/a GMAC Mortgage, LLC/GMAC Mortgage Corp/Residential
Funding Company, LLC; Federal National Mortgage Association (Fannie Mae); Mortgage Electronic Registration
Systems, Inc. (MERS, Inc.); and, unnamed, unknown and yet to be identified persons, entities and/or membership
associated common agents of MERS, Inc.” (Complaint at 1.)
4 	The Supplemental Complaint names five additional defendants (the “Supplemental Defendants”): “James
M. Boyers, both individually and professionally as Attorney at Law; Joel F. Bornkamp, both individually and
professionally as Attorney at Law; Leah Bell Silverthorn, both individually and professionally as Attorney at Law;
Wooden & McLaughlin, LLP; and Reisenfeld & Assoc., LPA LLC.” (Supplemental Complaint at 1.)
5 	Throughout the Complaint, Lahrman refers to GMACM as “Ally.01,” to RFC as “Ally.02,” and to
GMACM Corp. as “Ally.03.” Lahrman alleges that AFI was “doing business as” each of these entities when he
refers to them. Lahrman does not name any of the Debtors as defendants in the State Court Action.
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Damron granted him “legal and equitable rights and interests” in a home located in Elkhart
County, Indiana (the “Property”), pursuant to a “long-standing agreement.” (Id. ¶ 1–2.) As
evidence that Damron, the “deed holder,” granted Lahrman these rights, Lahrman attached to the
Complaint a Limited (Special) Warranty Deed. (Id. ¶ 2, Ex. A6 .) Lahrman claims that he and
Damron have “resided together and maintained their lives’ [sic] mutually in the subject real
estate as their homestead and common household” for 22 years. (Id. ¶ 2 n.1.) Lahrman claims
that
Defendant Ally Financial, Inc. d/b/a GMAC Mortgage, LLC is likewise
known by as many as fifty-two other recognized trade names and business
entities serving the home mortgage business of defendant Ally Financial,
Inc. 	By reference and unless otherwise specified, references to ‘Ally’
includes [sic] any and all Ally related mortgage entities known, or which
come to be known, to have associated with the subject real estate and its
title.
(Id. ¶ 3 n.2.)
Lahrman’s Complaint alleges that (1) “Ally.01” “claimed interest” in the Property as
holder of a promissory note and mortgagee is false and fraudulent (id. ¶ 8); (2) “Ally.03” filed a
false and fraudulent mortgage lien with the Elkhart County Recorder’s Office on September 14,
2005, at which time GMACM did not own the promissory note or debt obligation (id. ¶ 10);
(3) “Ally.03” attempted to fraudulently assign its false and fraudulent mortgage to “Ally.01” on
6 	The “Limited (Special) Warranty Deed” provides:
KNOW TO ALL MEN BY THESE PRESENTS, that Grantor, in and for valuable consideration
sufficient and received by Grantor from Grantee and acknowledged by Grantor, has granted, bargained,
sold and released, and by these presents does grant, bargain, sell and release unto Grantee, subject to any
valid and legally enforceable encumbrances, a one-half undivided share of, and life estate expectancy in the
entirety to subject solely to the right of Grantee surviving the Grantor, the real estate (“the Premises”)
described as follows and as evidence [sic] by the attached Exhibit A.
(Compl. Ex. A.) The Limited (Special) Warranty Deed was signed by Damron and a notary public on May 13,
2013. It is unclear if it was recorded. If Lahrman acquired an interest in the Property from Damron on May 13,
2013, he did so after the Bar Date (November 16, 2012); Damron did not file a proof of claim. By acquiring an
interest in the Property after the Bar Date, Lahrman could not revive a claim that was already barred.
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November 23, 2009, at which time “Ally.03” was no longer a legal entity (id. ¶ 11); and
(4) “Ally.02” has no legal or equitable rights to the Property (id. ¶ 15).7 Lahrman seeks to quiet
title on the Property against the Defendants and “in particular as against defendants Ally.03 for
its false lien filed on or about September 14, 2005, and Ally.01 for the false, fraudulent and
defective assignment(s) dated November 23, 2009 and any mortgage lien recorded and
associated therewith.” (Id. at 5–6.) Lahrman also seeks damages for: (1) common law and
actual fraud; (2) breach of contract; (3) violation of the Deceptive Consumer Sales Act
(I.C. § 24-5-0.5 et seq.); (4) unfair and deceptive mortgage practices; (5) unfair and deceptive
mortgage servicing practices; (6) unfair and deceptive debt collection practices; (7) unfair and
deceptive mortgage foreclosure practices; (8) tortious interference; (9) nuisance ad in factum;
and (10) intentional infliction of emotional distress.
2. 	The Supplemental Complaint
On January 21, 2014, Lahrman filed the Supplemental Complaint to add a fourth count
against the Supplemental Defendants. Count 4 essentially charges the Supplemental Defendants
with engaging in fraudulent actions associated with the Property.
C. 	The AFI Motion
After Lahrman filed the State Court Action, AFI’s counsel sent him two letters. First,
AFI’s local counsel sent a letter dated January 29, 2014, informing Lahrman that the Court
7 	The Court omits additional causes of action that Lahrman alleges against Green Tree Servicing, LLC
(“Green Tree”), Fannie Mae, and MERS because they are unrelated to Lahrman’s claim against entities he identifies
as “Ally Financial, Inc.”
Green Tree is involved in the state court foreclosure proceedings because it acquired GMACM’s servicing
rights on January 31, 2013 and filed a Motion to intervene and substitute party plaintiff in the foreclosure
proceedings instituted by GMACM against Damron. (Compl. Ex. B ¶ 2.) In connection with the sale of those
rights, GMACM transferred the Note to the Property to Green Tree (endorsed in blank). (Id. ¶ 4.) Green Tree’s
motion to intervene and substitute party plaintiff was granted on April 23, 2013, despite objection from Damron.
(See State of Indiana Elkhart County Superior Court Docket, Case No. 20D02-1008-MF-00312.)
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entered the Confirmation Order confirming the Plan and that AFI “is not a proper defendant in
this matter” (the “First Letter,” ECF Doc. # 6621 Ex. C, at 1). Copies of the Confirmation Order
and Plan were attached to the First Letter. Lahrman did not respond to the First Letter. Instead,
he filed a motion for sanctions against AFI and its counsel in the State Court Action.
On February 21, 2014, Kirkland & Ellis LLP (“Kirkland”), AFI’s counsel in these
bankruptcy proceedings, sent Lahrman a second letter (the “Second Letter,” ECF Doc. # 6621
Ex. D) reiterating its position that the Third Party Release “releases all claims against AFI that
are ‘arising from or related in any way to the Debtors,’ including ResCap, GMAC Mortgage,
LLC and Residential Funding Company, LLC.” (Second Letter at 1 (quoting Plan Art. IX.D).)
Kirkland warned that if Lahrman failed to dismiss his claims and withdraw his motion for
sanctions against AFI by February 25, 2014, AFI would seek relief from the Court. (Id.)
Lahrman did not dismiss the State Court Action claims against AFI or withdraw his motion for
sanctions, nor did he contact AFI’s counsel to discuss the matter, so AFI filed the AFI Motion in
this Court. Lahrman filed a response (the “Response,” ECF Doc. # 6635) and AFI filed a reply
(the “Reply,” ECF Doc. # 6661). By its motion, AFI sought an order from the Court (1) finding
that Lahrman’s claim against AFI in the State Court Action is covered by the Plan’s Injunction;
(2) enforcing the Plan Injunction; and (3) permanently enjoining Lahrman from continuing his
lawsuit against AFI. (AFI Motion at 2.)
A hearing was held on the AFI Motion on March 26, 2014 at 10:00 a.m. Lahrman did
not appear in person or by phone, despite being personally served with the AFI Motion and
notice of the hearing by special process server, and the Court entered the Order and so ordered
the transcript. (See ECF Doc. # 6702, 6725.) The Court further noted that
[i]f Lahrman fails to comply with the order, [AFI] can bring on another
motion to enforce this order, with contempt. 	The contempt sanctions . . .
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should include any additional attorney’s fees from today on, in bringing on
an additional motion. 	Civil contempt is intended to compel compliance
with a lawful order of a court and can include a compensatory award
including attorney’s fees. . . . [I]f [AFI has] to go through further action in
this court, [AFI] can make an appropriate motion to include [attorney’s
fees].
(Mar. 26, 2014 Tr. 64:15–25.)
D. 	The Motion
The Court received the Motion on April 11, 2014—seventeen days after the Order was
entered. The Motion reiterates Lahrman’s arguments in the Complaints and the Response,
namely that AFI did not comply with the “Consent Order(s)” and “Consent Judgment” to which
it is a party, along with various government entities.
Lahrman further argues that the Court’s Order misunderstands the nature of Lahrman’s
State Court Action for five reasons. First, Lahrman asserts, without explaining, that “[t]he Court
has misapprehended and misunderstood the nature and character of Lahrman’s ‘Action’ against
Ally to the extent that Lahrman does not alleges [sic] that Ally is directly engaged in any wrongs
other than failing to ensure that Ally’s mortgage industry related subsidiaries are conducting
themselves in compliance with all relevant and applicable state and federal law and, in
compliance with the express terms of the ‘Consent Order(s)’ and ‘Consent Judgment’ to which
Ally et al. are parties.” (Motion ¶ 1.) Second, Lahrman asserts, again without explanation, that
“[t]he Court has misapprehended and misunderstood the nature and character of Lahrman’s
‘Action’ against Ally to the extent that Lahrman does not complain that he is damaged by Ally in
any manner other than by those damages flowing from Ally’s failure to ensure that its mortgage
industry related subsidiaries cease and desist in those specific business practices and conducts
which are expressly prohibited by and enjoined under the ‘Consent Order(s)’ and ‘Consent
Judgment’ to which Ally et al. are parties.” (Id. ¶ 2.) Third, Lahrman argues that the Court
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“abused its discretion, made error of both fact and law, and applied an improper standard of legal
analysis when concluding that the Third-Party Release is a complete and absolute bar to
Lahrman’s ‘Action’ against Ally” because the Court was not the proper venue to determine the
ultimate issues involved in the State Court Action, and the Plan does not bar post-confirmation
conduct by “Ally et al.” (Id. ¶ 3.) Fourth, Lahrman alleges that AFI “engaged in misconduct and
in conduct prejudicial to the administration of justice in and during these proceedings.” (Id. ¶ 4.)
Additionally, Lahrman disputes AFI’s contention that he was not known to AFI before filing the
State Court Action because he was referenced by Damron in an affidavit in the foreclosure
proceedings between GMACM (and later Green Tree) and Damron. (Lahrman Decl. ¶ 5.)
Finally, Lahrman argues that the Court abused its discretion “by reaching the merits of the
dispute while Lahrman is not properly before the court and properly represented in the cause
[sic].” (Motion ¶ 5.)8
II. 	DISCUSSION
A. 	Lahrman Fails to Satisfy the Standards for a Motion for Reconsideration
Bankruptcy Rule 9023 incorporates Federal Rule of Civil Procedure 59, which governs
motions for amendment of a judgment. Rule 9023 states: “[a] motion . . . to alter or amend a
judgment shall be filed . . . no later than 14 days after entry of judgment.” FED. R. BANKR. P.
9023 (emphasis added). Lahrman filed the Motion seventeen days after the Court entered the
Order, which prevents him from obtaining relief under Bankruptcy Rule 9023. Therefore, the
Court will apply Rule 9024, which incorporates Federal Rule of Civil Procedure 60.
8 	Lahrman also claims that AFI failed to comply with “L.R. 7.2,” which, according to Lahrman, required AFI
to provide him with copies of “numerous documents and select case law which are only available on digital
databases to which Lahrman has no access, subscription, or membership.” (Lahrman Decl. ¶ 8.) Lahrman appears
to be referencing Local Rule 7.2 of the United States District Court for the Southern District of New York
(“Authorities to be Provided to Pro Se Litigants”), which is not applicable to proceedings in this Court.
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Rule 60 permits a court to grant relief from a final judgment or order for the following
reasons: (1) “mistake, inadvertence, surprise, excusable neglect”; (2) newly discovered
evidence; (3) fraud, misrepresentation, or misconduct. (4) the judgment is void; (5) the judgment
has been satisfied, released, discharged, or it is “no longer equitable”; or (6) “any other reason
that justifies relief.” FED. R. CIV. P. 60(b). A motion for reconsideration “is generally not
favored and is properly granted only upon a showing of exceptional circumstances.” Marrero
Pichardo v. Ashcroft, 374 F.3d 46, 55 (2d Cir. 2004) (citation omitted); see also United States v.
Int’l Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001) (same). “A motion for reconsideration
should be granted only when the [moving party] identifies ‘an intervening change of controlling
law, the availability of new evidence, or the need to correct a clear error or prevent manifest
injustice.’” Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729 F.3d 99,
104 (2d Cir. 2013) (emphasis added) (quoting Virgin Atl. Airways, Ltd. v. Nat’l Mediation Bd.,
956 F.2d 1245, 1255 (2d Cir. 1992)). The party seeking Rule 60 relief bears the burden of proof.
See Int’l Bhd. of Teamsters, 247 F.3d at 391. Whether to grant a motion for relief under Rule 60
is within the discretion of the court. Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012).
Because Lahrman is pro se, the Motion is held “to less stringent standards than formal
pleadings drafted by lawyers,” Haines v. Kerner, 404 U.S. 519, 520 (1972). Even so, the Motion
fails to identify adequate grounds for relief. Lahrman has neither identified any intervening
change of controlling law nor introduced new evidence. Thus, to prevail, Lahrman must show
the need to correct clear error of law or to prevent manifest injustice. He has not done so.
Instead, Lahrman focuses on what he alleges is “post-plan confirmation” conduct by
GMACM, which he claims justifies his State Court Action against AFI. Lahrman claims that the
Court misunderstood the nature of the State Court Action because it did not realize that Lahrman
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is pursuing claims for post-confirmation acts. But Lahrman’s assertion that the State Court
Action is based on post-confirmation conduct is simply not true. He claims to base his theory for
recovery in the State Court Action on a January 31, 20149 Cross Motion for Summary Judgment
filed by Green Tree in the foreclosure proceedings initiated by GMACM against Damron in July
2010. As noted above, Green Tree acquired GMACM’s servicing rights to Damron’s mortgage
after the Debtors filed these chapter 11 cases, and Green Tree filed a motion to intervene and
substitute as plaintiff for GMACM in that foreclosure action. Green Tree has been the plaintiff
in that action since April 23, 2013. Even so, its attorneys indicated that the January 31, 2014
summary judgment motion was submitted on behalf of both Green Tree and GMACM. But
given that GMACM is no longer a plaintiff, this was merely a clarification that Green Tree was
submitting the filing as the substituted plaintiff for GMACM. GMACM is not a plaintiff and is
not engaged in affirmative conduct in that foreclosure action. Moreover, Lahrman’s Complaints
do not allege causes of action based upon this alleged post-confirmation “misconduct” of “filing”
a motion for summary judgment. Lahrman’s State Court Action instead alleges a claim against
AFI based upon pre-confirmation, pre-petition conduct by Debtor GMACM.
Lahrman asserts that he filed claims against AFI
because GMAC Mortgage, LLC continues, post-plan confirmation, to
engage in those same business practices and conducts previously enjoined
by the foregoing “Consent Order(s)” and “Consent Judgment” . . . and
because Ally has failed to provide that ‘source of strength’ which Ally
agreed to provide in correcting the business practices and conducts of its
mortgage industry related subsidiaries, Ally is both a proper party to and
liable under “the action”.
9 	Lahrman’s State Court Action was filed on January 2, 2014, nearly a month before the alleged “post-plan
confirmation” conduct. Additionally, Lahrman filed the State Court Action the same day his second Motion to
Intervene in the state court foreclosure proceedings against Damron was denied. See State of Indiana Elkhart
County Superior Court Docket, Case No. 20D02-1008-MF-00312.
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(Lahrman Decl. ¶ 7.) But, as noted above, GMACM did not act post-Plan confirmation, nor is it
a party to either the foreclosure proceeding or the State Court Action. Consequently, this is not a
basis upon which Lahrman can assert a cause of action against AFI.
Lahrman also asserts that he is an “adjudicated incapacitated person” (Motion ¶ 4 n.1),
but this does not alter the Court’s analysis. The Court already applies the standard enunciated in
Haines v. Kerner to pro se filings; the fact that Lahrman may have been adjudicated as
incapacitated in the past does not alter the Haines v. Kerner analysis.
B. 	The Court Properly Enforced the Third Party Release and Plan Injunction
Lahrman argues that the Court abused its discretion by issuing the Order “while Lahrman
is not properly before the court and properly represented in the cause [sic].” (Id. ¶ 5.) This
argument is without merit. Lahrman was served with copies of the AFI Motion and notice of the
hearing by special process server (see Reply Ex. A) and did not appear at the hearing, either in
person or telephonically. The AFI Motion was properly before the Court and the Court rendered
its decision on the record and in the Order under its authority to enforce previous orders (in this
case, the Confirmation Order). The Third Party Release and Injunction provisions included in
the Plan are enforceable against Lahrman.
1. 	The Third Party Release and Plan Injunction are Appropriate in these
Cases
In the Second Circuit, non-debtor releases are permissible under certain circumstances.
“[A] bankruptcy court only has jurisdiction to enjoin third party non-debtor claims that directly
affect the res of the bankruptcy estate.” In re Johns-Manville Corp., 600 F.3d 135, 152 (2d Cir.
2010) (citation omitted). Because AFI filed proofs of claim for indemnification against the
Debtors, and because AFI and the Debtors shared insurance policies, third-party claims such as
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the ones asserted by Lahrman would affect the res of the estate, satisfying the jurisdictional
underpinnings for the third-party release approved by the Court.
In In re Drexel Burnham Lambert Grp., Inc., 960 F.2d 285, 293 (2d Cir. 1992), the
Second Circuit noted that “[i]n bankruptcy cases, a court may enjoin a creditor from suing a third
party, provided the injunction plays an important part in the debtor’s reorganization plan.” In its
decision in In re Metromedia Fiber Network Inc., 416 F.3d 136 (2d Cir. 2005), the Second
Circuit further clarified the standard under which it is appropriate to grant non-debtor releases.
The court identified two factors that are necessary for court approval of a non-debtor release:
(1) the release must itself be important to the plan; and (2) the scope of the release must be
necessary to the plan. Id. at 143. Thus, a non-debtor release is not justifiable simply on the
ground that it was offered in exchange for a monetary contribution. Id.
During the Plan confirmation hearing, the Court considered all of the factors under
Metromedia and Johns-Manville and their progeny and determined that the Court had the
jurisdiction to enter the third party non-debtor release in favor of AFI. (See ECF Doc. # 6065,
Order Confirming Second Amended Joint Chapter 11 Plan Proposed by Residential Capital,
LLC, et al. and the Official Committee of Unsecured Creditors (the “Confirmation Order”),
¶ UU.) The Court found that the Metromedia factors, which establish a high burden before a
court will grant non-debtor releases, were satisfied in this case. The AFI Contribution was the
“lynchpin of the Plan, without which the cases would devolve into endless litigation, the Plan
would not be confirmable or feasible, and the recoveries currently contemplated by the Plan
would not exist.” (Id. ¶ RR.) As stated in the Plan, the Third Party Release was “an essential
component and critical to the success of the Plan.” (Plan Art. IX.D.) The Court found that
“[t]hese facts are unprecedented and justify the approval of the Third Party Releases.”
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(Confirmation Order ¶ RR.) No appeal was taken from the Confirmation Order. It is a final
order and may not be collaterally attacked. Celotex Corp. v. Edward, 514 U.S. 300, 313 (1995).
2. 	The Court Has Authority to Enforce the Third Party Release and Plan
Injunction Against Lahrman
“All courts retain the jurisdiction to interpret and enforce their own orders.” In re
Charter Commc’ns, No. 09-11435, 2010 WL 502764, at *4 (Bankr. S.D.N.Y. Feb. 8, 2010); see
also Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009) (“[A]s the Second Circuit
recognized . . . the Bankruptcy Court plainly had jurisdiction to interpret and enforce its own
prior orders.”). While a bankruptcy court’s jurisdiction diminishes in importance following plan
confirmation, In re Gen. Media, Inc., 335 B.R. 66 (S.D.N.Y. 2005), the action in this case is
“sufficiently close in time to confirmation of the Plan and sufficiently critical to the integrity of
the Plan’s structure that it is proper for this Court to take firm control and decide” the Motion.
Charter Commc’ns, 2010 WL 502764, at *4.
As the court explained in Charter Communications, where a motion seeks to “prevent the
prosecution of causes of action expressly prohibited by the confirmation order,” it would be
“difficult to identify judicial acts that are any more critical to the orderly functioning of the
bankruptcy process or more closely tethered to core bankruptcy jurisdiction.” Id. (citing In re
Petrie Retail, Inc., 304 F.3d 223, 230 (2d Cir. 2002) (finding that bankruptcy court retained core
jurisdiction post-confirmation “to interpret and enforce its own orders, particularly when disputes
arise over a bankruptcy plan of reorganization”)).10
10 	While both this Court and the Indiana state court are competent to rule on the Plan Injunction and Third
Party Release, the “bankruptcy court is more closely connected to the current dispute and is the proper forum to rule
with respect to” enforcement of third party releases pursuant to the Plan. Charter Commc’ns, 2010 WL 502764, at
*3 (explaining that the bankruptcy court was the appropriate court to interpret the plan releases in that case, for
reasons that apply equally here: (1) the bankruptcy court had natural familiarity with the full record of the
confirmation hearing and process; and (2) if the bankruptcy court interprets the plan confirmation order, there is a
much smaller risk of erosion of its provisions and the injunction due to inconsistent interpretations across courts).
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The $2.1 billion AFI Contribution to the successful Plan in this case was a significant
factor to achieving Plan confirmation and a global resolution of the Debtors’ bankruptcies. A
key component of Ally’s willingness to provide the Contribution was the Plan Injunction and
Third Party Release. The Court carefully considered the record and weighed the relevant factors.
Initially, the U.S. Trustee, which rigorously enforces the law with respect to third party non-
debtor releases, had objected to the Third Party Release. That objection was withdrawn. By the
time of confirmation, there were no objections to the non-debtor release included in the Plan.
After considering the applicable case law and the U.S. Trustee’s withdrawal of its objection, the
Court approved the Plan, which included the Third Party Release and Injunction.
As explained above, Lahrman’s claims against AFI relate to alleged prepetition conduct
by GMACM or AFI—despite his assertions now that he is challenging postpetition conduct. As
already mentioned, Lahrman alleges that AFI does business as GMAC Mortgage, LLC and
Residential Funding, LLC, two of the Debtors in the chapter 11 case. (Compl. at 1; Supp.
Compl. at 1.) Lahrman’s claims fall squarely within the language of the release and injunction,
“arising from or related in any way to the Debtors.” (See Plan Art. IX.D.) Lahrman is bound by
the Third Party Release and is therefore “permanently enjoin[ed] and preclude[ed]” from
continuing his lawsuit against AFI. (See Plan Art. IX.I (enjoining all entities who hold
“Claims . . . from: (a) commencing or continuing in any manner or action or other proceeding of
any kind against any Released Party whether directly, derivatively or otherwise, on account of or
in connection with or with respect to any Released Claims; . . . [and] (e) commencing or
continuing in any manner or action or other proceeding of any kind against any Released Party
on account of or in connection with or with respect to any Released Claims”).)
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III. 	CONCLUSION
As the Court determined at the March 26, 2014 hearing and by Order, Lahrman asserts a
Claim as that term is defined in the Plan against AFI; he cannot do so. None of the arguments
Lahrman makes in the Motion support reconsideration under Federal Rule of Civil Procedure 60,
so his Motion is DENIED. The Order previously entered by the Court requires Lahrman to
dismiss State Court complaint against AFI with prejudice. Failure to comply with the Order may
be punishable by contempt pursuant to Bankruptcy Rule 9020.
IT IS SO ORDERED.
Dated: 	April 23, 2014
New York, New York
_____/s/Martin Glenn_______
MARTIN GLENN
United States Bankruptcy Judge
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