Opinion
CASE NO.: 18-22070
08-29-2019
IN RE: 3232 CENTRAL AVENUE, LLC, Debtor.
CHAPTER 11 ORDER DENYING MOTION TO RECONSIDER
This Chapter 11 proceeding was dismissed on February 19, 2019 due to Debtor's failure to file its monthly operating reports and remit the required quarterly fees to the United States Trustee (Docket Entry #140). Subsequently, on March 4, 2019, Zafar Sheikh ("Sheikh"), a purported creditor in this case, filed a document entitled, "Motion to Reconsider Court's Order for Contempt & Sanctions against Countryside Bank & Attorney Townsend", hereafter referred to as the "Motion" (Docket Entry #144). In the Motion, Sheikh requests that the Court reconsider an order it entered on February 13, 2019, which was docketed by the Clerk of the Court on that same day (Docket Entry #132). The foregoing order denied two separate motions Sheikh filed in October of 2018: a motion to hold Countryside Bank, a creditor in this case, in contempt for allegedly making certain misrepresentations and filing false pleadings (Docket Entry #49) and a motion requesting sanctions against Countryside Bank and its attorney Nancy Townsend (Docket Entry #51). Both motions hereafter shall be referred to collectively as the "Contempt/Sanction Motions." The Contempt/Sanction Motions alleged, among other things, that Countryside Bank and attorney Nancy Townsend filed and/or executed a number of "false and misleading" documents meant to defraud the Court. These documents purportedly included an assignment of an interest in real estate between BSLB, LLC and Countryside Bank along with a proof of claim that Attorney Nancy Townsend filed on behalf of Countryside Bank.
In light of the dismissal of this case, the Court believes that the issue of sanctions between the two creditors may now be moot. Nevertheless, for the sake of completeness, the Court will consider the Motion on its merits and, for the reasons stated herein, finds that it should be denied. In the Seventh Circuit, requests for reconsideration are governed either by Rule 59(e) or Rule 60(b) of the Federal Rules of Civil Procedure. Notwithstanding the fact that Rules 59(e) and 60(b) provide for different motions, they are directed to a similar goal. "Rule 59(e) governs motions to 'alter or amend' a judgment; Rule 60(b) governs relief from a judgment or order for various listed reasons." Helm v. Resolution Trust Corp., 43 F.3d 1163, 1166 (7th Cir. 1995). Further, although Rule 59(e) generally requires a lower threshold of proof than does 60(b), each motion seeks to erase the finality of a judgment and to allow further proceedings. Id. Yet, the distinction between them is critical. Rule 59(e) contains a strict 28 day deadline to file a motion, while Rule 60(b) allows one year, sometimes more, to file a motion. Fed. R. Civ. P. 59; Helm, 43 F.3d at 1166. More importantly, Rule 59(e) tolls the time for an appeal while Rule 60(b) does not. Id. at 1167.
As this is a bankruptcy proceeding, the Federal Rules of Bankruptcy Procedure apply. In his Motion, Sheikh does not specify whether he is seeking relief pursuant to Federal Rule of Bankruptcy Procedure 9023, under which Federal Rule of Civil Procedure 59(e) is applicable to this proceeding, or whether he is seeking relief pursuant to Federal Rule of Bankruptcy Procedure 9024/Federal Rule of Civil Procedure 60(b). In a circumstance such as this, the Seventh Circuit Court of Appeals has established a bright line test for determining under which rule a motion for reconsideration should be reviewed. Helm, 43 F.3d at 1166. Specifically, a court should treat a motion requesting reconsideration, filed before the 28-day deadline established in Rule 59, as a motion arising under that rule. Kiswani v. Phoenix Sec. Agency, Inc., 584 F.3d 741, 742 (7th Cir. 2009). Conversely, a motion filed more than 28 days after the final judgment is entered is treated as motion brought under Rule 60(b). Id.
F.R.C.P. 59(e) previously provided for a ten day deadline for filing a motion.
However, Bankruptcy Rule 9023 specifically modifies the Rule 59 deadline and provides that a motion to, "alter or amend a judgment shall be filed...no later than 14 days after the entry of the judgment." In this case, Sheikh filed the Motion on March 4, 2019, which is 19 days after the court entered the underlying order denying the Contempt/Sanction Motions. Therefore, the Court must consider Sheikh's Motion as one brought under Federal Rule of Bankruptcy Procedure 9024/Federal Rule of Civil Procedure 60(b).
Emphasis added. --------
Rule 60(b) is "an extraordinary remedy and is granted only in exceptional circumstances." Eskridge v. Cook County, 577 F.3d 806, 809. The court may grant Rule 60(b) relief only "under the particular circumstances listed in the text of the rule." Russell v. Delco Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir.1995). Rule 60(b) provides:
On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:Notably, Rule 60(b) motions are not meant to correct legal errors made by the district court. See Marques v. Federal Reserve Bank of Chicago, 286 F.3d 1014, 1017-18 (7th Cir. 2002). ("A legal error by the district court is not one of the specified grounds for [a Rule 60(b) ] motion. In fact it is a forbidden ground").
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
In his Motion, Sheikh does not allege any of the special circumstances necessary for Rule 60(b) relief. Instead, he essentially requests that the Court revisit its previous decision and declare the assignment to Countryside Bank "invalid[] and against the laws of the State of Indiana" and "take a second look" at the order "absolving Nancy Townsend and Countryside bank [sic] of the charges of Contempt of Court for deceptions and misrepresentations." In sum, Sheikh's request is not one of the specified grounds for a Rule 60(b) motion. Therefore, the Motion (Docket Entry #144), filed by Zafar Sheikh, is hereby denied.
All of the foregoing is hereby ordered, adjudged, and decreed in Hammond, Indiana on August 29, 2019.
/s/ James R. Ahler
James R. Ahler, Judge
United States Bankruptcy Court Distribution:
Debtor, Attorney for Debtor, Attorney Townsend,
Creditor Sheikh, US Trustee