Dubrowsky v. Estate of Perlbinder (In Re Dubrowsky)

268 B.R. 6, 2001 U.S. Dist. LEXIS 17067, 2001 WL 1217468
CourtDistrict Court, E.D. New York
DecidedOctober 6, 2001
Docket96 CV 5121(ADS), 97 CV 4918(ADS)
StatusPublished
Cited by1 cases

This text of 268 B.R. 6 (Dubrowsky v. Estate of Perlbinder (In Re Dubrowsky)) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dubrowsky v. Estate of Perlbinder (In Re Dubrowsky), 268 B.R. 6, 2001 U.S. Dist. LEXIS 17067, 2001 WL 1217468 (E.D.N.Y. 2001).

Opinion

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

In a decision and order dated February 8, 2000, this Court affirmed the following decisions and orders of the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”) *7 (Eisenberg, J.): (1) the August 22, 1996 decision and the September 20, 1996 order denying Debtor-Appellant Paul Dubrow-sky (“Dubrowsky”) a discharge in bankruptcy; (2) the March 5, 1997 decision and July 29, 1997 order that imposed (a) a $5000 sanction on Dubrowsky for filing a false bankruptcy petition, (b) a $19,825 sanction on Dubrowsky and Kenneth E. Warner, Esq. (“Warner”) — Dubrowsky’s attorney in the adversary bankruptcy proceeding — -jointly and severally for legal fees incurred by the Estate of Arnold Perl-binder (the “plaintiff’) during discovery disputes, and (c) an $11,659.36 award for costs, for which Dubrowsky and Warner are jointly and severally liable; and (3) the July 31, 1997 hearing and August 11, 1997 order awarding the plaintiff the sum of $9,000, which sum represents the attorney’s fees incurred in bringing the successful sanctions motion, for which Dubrowsky and Warner are jointly and severally liable. See In re Dubrowsky, 244 B.R. 560 (E.D.N.Y.2000).

The Court assumes familiarity with the facts of the case and the substance of In re Dubrowsky, 244 B.R. 560 (E.D.N.Y.2000), but will briefly summarize the facts pertinent to this motion. In affirming the award of sanctions, costs, and fees against Dubrowsky and Warner jointly and severally, the Court confirmed Judge Eisen-berg’s findings that Warner (1) failed to turn over various financial documents including credit card accounts, bank statements and cancelled checks despite the Bankruptcy Court’s order directing that he turn over those documents; (2) made numerous arguments before Judge Eisen-berg that lacked any legal merit; (3) had no standing to move to quash a subpoena seeking documents from a non-party witness whom he did not represent; and (4) made relevancy arguments during discovery that could only be interpreted as an effort to delay the discovery proceedings and hide the truth.

On March 9, 2000, Warner and Dubrow-sky each filed separate notices of appeal. During the months of June and July 2000, all of the parties to this action engaged in extensive settlement negotiations and reached an agreement. Pursuant to that agreement, Dubrowsky and Warner withdrew their appeals, and all of the parties jointly submitted the present Rule 60(b) motion, seeking vacatur of the portions of this Court’s February 8, 2000 decision and the Bankruptcy Court’s orders and judgments that make findings of fact or conclusions of law and affirm or grant relief against or pertaining to Warner. The parties assert that the Court should grant their request because a vacatur will effectuate settlement of this case thereby averting the cost of further litigation.

A motion seeking relief pursuant to Rule 60(b) is addressed to the sound discretion of the district court. See Nemaizer v. Baker, 793 F.2d 58, 61-62 (2d Cir.1986). When determining whether to grant such a motion, the Court must balance the interests of honoring a settlement reached by the parties against the public interest in the finality of judgments and the development of decisional law. See Nestle Co. v. Chester’s Market, Inc., 756 F.2d 280, 282 (2d Cir.1985); Austin v. Ford, 181 F.R.D. 283, 285 (S.D.N.Y.1998); Jewelers Vigilance Comm., Inc. v. Vitale, Inc., 177 F.R.D. 184, 186 (S.D.N.Y.1998).

Recent Second Circuit decisions indicate that the Court of Appeals has stepped away from its previous position of encouraging district courts to vacate judgments in favor of settlement. Nestle, 756 F.2d at 282-83 (noting “the importance of honoring settlements over the finality of trial court judgments”). For instance, in Manufacturers Hanover Trust Co. v. Yanakas, 11 F.3d 381 (2d Cir.1993), the parties had *8 reached a settlement agreement conditioned upon the Second Circuit’s vacatur of the district court judgment. The Second Circuit refused to vacate the district court judgment because the Circuit court had already filed its opinion. In arriving at this conclusion, the Court stated:

When a clash between genuine adversaries produces a precedent ... the judicial system ought not allow the social value of that precedent, created at cost to the public and other litigants, to be a bargaining chip in the process of settlement. The precedent, a public act of a public official, is not the parties’ property-

id at 385 (quoting In re Mem’l Hosp. of Iowa County, Inc., 862 F.2d 1299, 1301-02 (7th Cir.1988)).

One year later, the Supreme Court decided U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994), in which it refused to vacate an appellate court decision because the case had settled. The Court held that the vacatur is permissible only upon a showing of “exceptional circumstances” which “do not include the mere fact that the settlement agreement provides for vacatur.” Bancorp, 513 U.S. at 29, 115 S.Ct. at 393. The Court emphasized the significance of judicial precedents to the legal community as a whole and noted that they are “not merely the property of private litigants and should stand unless the court concludes that the public interest would be served by a vacatur.” Id. at 26-27, 115 S.Ct. 386 (quoting Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips Corp., 510 U.S. 27, 40, 114 S.Ct. 425, 126 L.Ed.2d 396 (1993) (Stevens, J., dissenting)).

In light of these decisions, several courts in this Circuit have declined to grant a request for vacatur merely because a settlement agreement is conditioned upon it. In Agee v. Paramount Communications, Inc., 932 F.Supp. 85 (S.D.N.Y.1996), the Court refused to grant the plaintiffs motion for vacatur of the Court’s order awarding the defendants attorneys’ fees, which had been predicated on a finding that the plaintiff and his lawyer engaged in “highly improper conduct.” Id. The Court noted that “[i]f parties could simply erase such judgments by including a clause in their settlement agreements, the district courts’ power to deter frivolous litigation would be gutted.” Id. The Court also found that the public interest in ending wasteful and deceptive litigation is better served by preserving the judgment than by vacating it. Id. The Court concluded that the public interest was not outweighed by the plaintiffs interest in eliminating any record of his litigation tactics. Id.

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Bluebook (online)
268 B.R. 6, 2001 U.S. Dist. LEXIS 17067, 2001 WL 1217468, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dubrowsky-v-estate-of-perlbinder-in-re-dubrowsky-nyed-2001.