In Re: Saint Vincent Catholic Medical Center of New York
Filing
14
OPINION AND ORDER: For the reasons set forth above, the order and judgment of the Bankruptcy Court, dated September 20, 2011, is AFFIRMED. The Clerk of the Court is respectfully directed to docket this decision and close the case. (Signed by Judge Edgardo Ramos on 9/27/2012) The Clerks Office Has Mailed Copies. (fk)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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In re:
:
:
SAINT VINCENTS CATHOLIC MEDICAL
:
CENTERS OF NEW YORK, et al.,
:
:
Debtors.
:
:
:
BHARAT KUMAR NARUMANCHI,
:
:
Appellant,
:
:
-against:
:
SAINT VINCENTS CATHOLIC MEDICAL
:
CENTERS OF NEW YORK, et al.,
:
:
Appellees.
:
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OPINION AND ORDER
11 Civ. 9431 (ER)
Appearances:
Bharat Kumar Narumanchi
Honolulu, Hawaii
Appellant, Pro Se
Frank A. Oswald, Esq.
Brian F. Moore, Esq.
David M. Smith, Esq.
Togut Segal & Segal LLP
New York, New York
Attorneys for Appellees Saint Vincents Catholic
Medical Centers of New York, et al.
Ramos, D.J.:
Bharat Kumar Narumanchi (“Narumanchi” or “Appellant”) appeals the Order of the
Bankruptcy Court denying his Lift Stay Motion as against Saint Vincents Catholic Medical
Centers of New York, et al. (“Saint Vincents” or “Appellees”). For the reasons set forth below,
the order of the Bankruptcy Court is AFFIRMED.
I.
Background 1
The following facts are not disputed unless otherwise noted.
Narumanchi is a medical doctor and a former employee of Saint Vincents. (Appellant’s
Br. at 3.) He worked at Saint Vincents from July 1, 2008 to December 31, 2009. (Id.) While
employed there, he was a member of the Committee of Interns and Residents (“CIR”), a
collective bargaining unit that was a party to a collective bargaining agreement (“CBA”) with
Saint Vincents. (Appellees’ Br. at 3.) Narumanchi was terminated effective December 31, 2009.
(Appellant’s Br. at 3.) The circumstances of his termination are disputed. Appellant asserts that
he was terminated “arbitrarily and illegally,” (id. at 3), while Appellees reply that he was
terminated due to “inappropriate and unprofessional behavior.” (Appellees’ Br. at 3.)
At Narumanchi’s request, CIR filed a grievance against Saint Vincents relating to his
termination and requested that it be heard in front of an external—or neutral—arbitrator. (Bankr.
Doc. 1887 at 6.) 2 CIR and Saint Vincents thereafter agreed to adjourn the arbitration pending
confidential negotiations to resolve the grievance. (Appellees’ Br. At 3.) Those negotiations
resulted in a proposed settlement that was rejected by Narumanchi. (Bankr. Doc. 1968 at 3;
1
In contravention of Rule 8006 of the Federal Rules of Bankruptcy Procedure, Narumanchi failed to submit a
statement of issues on appeal. Fed. R. Bankr. P. 8006. While Narumanchi’s pro se status does not absolve him of
responsibility to abide by the rules of the Court, in this Circuit the submissions of pro se litigants are treated with
“special solicitude.” Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir.2006) (per curiam). In the
instant case, the Court finds that the materials submitted by Narumanchi, including the briefs and transcript of the
hearing below, together with the parties’ briefs on appeal, provide a sufficient basis to render a decision on this
appeal. The Court also notes, and duly appreciates, that Appellees have characterized Appellants arguments—which
are inartfully drafted—in a responsible and professional manner.
2
“Bankr. Doc.” refers to documents filed in the Bankruptcy Court for the Southern District of New York under
docket number 10-11963 (CGM).
2
Appellant’s Br. at 4.) 3 As a result of Narumanchi’s rejection of the offer, CIR withdrew its
request for arbitration and informed Narumanchi of its action on March 18, 2011. (Appellant’s
Br. at 4.) CIR confirmed its decision by letter to Appellees dated May 27, 2011. (Bankr. Doc.
1968 at 4.)
On April 14, 2010, Saint Vincents filed for Chapter 11 bankruptcy protection. (Bankr.
Doc. 1887 at 6.) Narumanchi first filed a proof claim with the Bankruptcy Court on September
24, 2010 in the amount of $24,700. (Bankr. Doc. 1968 at 4.) This claim was filed prior to the
October 12, 2010 bar date set by the Bankruptcy Court. (Id. at 4 n.3.) On April 1, 2011,
Narumanchi filed a revised claim in the amount of $1,524,700. (Id.)
On August 1, 2011, Narumanchi filed a motion with the Bankruptcy Court for relief from
the automatic stay imposed by §362(a) of the Bankruptcy Code, to compel CIR and Saint
Vincent to arbitration, and to allow him to pursue his claims against Saint Vincent in state or
federal court. (Bankr. Doc. 1887.) Saint Vincents objected and responded to Narumanchi’s
request by a brief filed on September 2, 2011. (Bankr. Doc. 1968.) In its response, Saint
Vincents argued that a lift of the automatic stay was not appropriate because: (1) Narumanchi
waived his right to arbitration when CIR withdrew from arbitration; (2) Narumanchi could file an
unfair labor practices action directly with the National Labor Relations Board (“NLRB”)—which
proceedings are exempt from the automatic stay provisions; and (3) pursuant to the Second
Circuit’s decision in Sonnax Indus., Inc. v. Tri-Component Prods. Corp., 907 F.2d 1280 (2d Cir.
1990), Narumanchi was unable to establish the requisite cause to merit lifting of the automatic
stay. (Bankr. Doc. 1968 at 5-9.) Specifically, Saint Vincents argued the requested relief should
not be granted on the basis of Sonnax Factors 4, 7 and 12. (Id. at 9.)
3
According to Narumanchi, CIR and Saint Vincents “cooked up some cockamamie agreement . . . which is
detrimental and harmful to the short-term and long-term interests of [A]ppellant’s career as a medical doctor.”
(Appellant’s Br. at 4.)
3
The Bankruptcy Court held a hearing on Narumanchi’s motion on September 15, 2011, at
which he was allowed to participate by telephone because he lives in Hawaii. (See Tr. of Hr’g,
Appellant’s Br., Ex. E.)
At the hearing, the Bankruptcy Court denied Narumanchi’s motion to
lift the stay, holding, in relevant part, that a lift of the stay was not appropriate to allow
Narumanchi to compel arbitration or initiate a law suit against Saint Vincents on the basis of
Sonnax Factors 7 (whether litigation in another forum would prejudice the interest of other
creditors) and 12 (the impact of the stay on the parties and balance of harms). (Appellant’s Br.,
Ex. E at 51-53.)
The Bankruptcy Court made no ruling as to whether or not Narumanchi could proceed
against Saint Vincents before the NLRB, as Saint Vincents conceded that such an action was
excepted from the automatic stay provisions. (Id. at 46, 53.) The Bankruptcy Court entered its
order denying the lift stay motion on September 20, 2011. (Id., Ex. A.) Appellant timely filed
his notice of appeal on September 26, 2011. (Bankr. Doc. 2037.)
II.
Discussion
A. Standard of Review
This Court has jurisdiction to hear appeals from decisions of a bankruptcy court pursuant
to 28 U.S.C. § 158(a), which provides in relevant part that “[t]he district courts of the United
States shall have jurisdiction to hear appeals . . . from final judgments, orders, and decrees; . . .
[and,] with leave of court, from other interlocutory orders and decrees . . . of bankruptcy judges.”
28 U.S.C. § 158(a). A district court reviews a bankruptcy court’s findings of fact for clear error
and its conclusions of law de novo. Overbaugh v. Household Bank, N.A. (In re Overbaugh), 559
F.3d 125, 129 (2d Cir. 2009); see Fed. R. Bankr. P. 8013 (a district court may “affirm, modify, or
reverse a bankruptcy judge’s judgment, order, or decree,” and “[f]indings of fact, whether based
4
on oral or documentary evidence, shall not be set aside unless clearly erroneous”). The authority
to lift the automatic stay is within the discretion of the bankruptcy court, and appellate courts
will only review the bankruptcy court’s ruling for an abuse of that discretion. New England
Dairies, Inc. v. Dairy Mart Convenience Stores, Inc. (In re Dairy Mart Convenience Stores,
Inc.), 351 F.3d 86, 91 (2d Cir. 2003); Sonnax, 907 F.2d at 1286.
B. The Bankruptcy Court Properly Denied the Lift Stay Motion 4
Section 362(a)(1) of the Bankruptcy Code provides, in pertinent part, that:
[A] petition filed under section 301, 302, or 303 of this title … operates as a stay,
applicable to all entities, of . . . the commencement of continuation, including the
issuance of employment of process, of a judicial, administrative, or other action or
proceeding against the debtor that was or could have been commenced before the
commencement of the case under this title, or to recover a claim against the
debtor that arose before the commencement of the case under this title.
11 U.S.C. § 362(a)(1).
The automatic stay provision affords a debtor fundamental protection under the
Bankruptcy Code. See Midlantic Nat’l Bank v. New Jersey Dep’t of Envtl. Prot., 474 U.S. 494,
503 (1986) (stating that the Automatic Stay is “one of the fundamental debtor protections
provided by the bankruptcy laws”). One salutary purpose of the automatic stay provision is to
allow the bankruptcy court to centralize all disputes concerning the debtor property so that
reorganization can proceed efficiently. See MBNA Am. Bank, N.A. v. Hill, 436 F.3d 104, 109 (2d
Cir. 2006); S.E.C. v. Brennan, 230 F.3d 65, 70 (2d Cir. 2000) (internal citation and quotation
marks omitted); see also In re Ionosphere Clubs, Inc., 133 B.R. 5 (S.D.N.Y. 1991).
4
As Appellees correctly note, Narumanchi asserts three issues on appeal: (1) all of Narumanchi’s claims against the
Debtors must be consolidated; (2) Narumanchi must be given an opportunity to exhaust various administrative
remedies; and (3) this Court should compel the Debtors to arbitrate his grievances. (Appellees’ Br. At 1-2;
Appellant’s Br. at 1). However, the only proper question before this Court is whether the Bankruptcy Court abused
its discretion in denying Narumanchi’s Lift Stay Motion.
5
Relief from the automatic stay provision is available through § 362(d) of the Bankruptcy
Code, which states that a party may be entitled to relief from the automatic stay under certain
circumstances. As relevant to this appeal, § 362(d) provides:
On request of a party in interest and after notice and a hearing, the court shall
grant relief from the stay provided under subsection (a) of this section, such as by
terminating, annulling, modifying, or conditioning such stay . . . for cause,
including the lack of adequate protection of an interest in property of such party in
interest . . . .
11 U.S.C. § 362(d) (emphasis added). Neither Section 362(d)(1) nor the legislative history defines
“for cause.” Sonnax, 907 F.2d at 1285. In Sonnax, however, the Second Circuit adopted twelve
factors, 5 first enunciated in In re Curtis, 40 B.R. 795, 799–800 (Bankr. D. Utah 1984), which are
weighed to determine whether to allow a creditor to continue litigation in another forum. Only
those factors relevant to a particular case need be considered, Sonnax, 907 F.2d at 1286, and the
Court need not assign them equal weight. In re Touloumis, 170 B.R. 825, 828 (Bankr. S.D.N.Y.
1994); In re Anton, 145 B.R. 767, 770 (Bankr. E.D.N.Y.1992). When applying these factors and
considering whether to modify the automatic stay, the Court should take into account the
particular circumstances of the case, and ascertain what is just to the claimants, the debtor and
the estate. In re M.J. & K. Co., Inc., 161 B.R. 586, 590 (Bankr. S.D.N.Y.1993) (citing City Ins.
Co. v. Mego Int’l, Inc. (In re Mego Int’l, Inc.), 28 B.R. 324, 326 (Bankr. S.D.N.Y. 1983)).
5
The factors are:
(1) whether relief would result in a partial or complete resolution of the issues; (2) lack of any
connection with or interference with the bankruptcy case; (3) whether the other proceeding
involves the debtor as a fiduciary; (4) whether a specialized tribunal with the necessary expertise
has been established to hear the cause of action; (5) whether the debtor's insurer has assumed full
responsibility for defending it; (6) whether the action primarily involves third parties; (7) whether
litigation in another forum would prejudice the interests of other creditors; (8) whether the
judgment claim arising from the other action is subject to equitable subordination; (9) whether
movant's success in the other proceeding would result in a judicial lien avoidable by the debtor;
(10) the interests of judicial economy and the expeditious and economical resolution of litigation;
(11) whether the parties are ready for trial in the other proceeding; and (12) impact of the stay on
the parties and the balance of harms.
907 F.2d at 1286.
6
In the instant case, the Bankruptcy Court based its determination to deny Appellant’s
motion on the basis of Factors 7 and 12. 6 The Bankruptcy Court held:
The debtors are faced with thousands of claims that . . . have been stayed by this
bankruptcy filing, many of which are similar to that of Dr. Narumanchi.
Permitting creditors to litigate claims outside of the bankruptcy court is adverse to
the purpose of the automatic stay, which is to prevent a chaotic and uncontrolled
scramble for the debtors’ assets in a variety of uncoordinated proceedings in
different courts; to prevent conflicting judgments from different courts; and in
order to harmonize all the . . . creditors’ interests with one another.
The debtors . . . have agreed to allow Dr. Narumanchi to file an unfair practices
proceeding against the National Labor Relations Board [sic]. In light of this,
granting . . . relief from the stay so that Dr. Narumanchi can proceed in state court
is unjustified and would be harmful to the estate, the debtor and other creditors.
...
Without the protection of the stay, the debtors would be subject to unnecessary
duplicative litigation that has the potential of depleting what little funds there may
be for the distribution to unsecured creditors under a liquidation plans [sic].
(Appellant’s Br., Ex. E at 52-53.)
As the Bankruptcy Court noted, Appellees here are faced with “thousands of claims” and
limited funds. Allowing Narumanchi to litigate his claims could prejudice other, similarly
situated creditors. Moreover, as Appellees note, all pre-petition lawsuits which were pending
against them at the commencement of the Chapter 11 case have been stayed. (Appellees’ Br. at
14.) The Appellant proffered no compelling reason why he should have been treated any
differently from every other creditor whose assertion of injury was at least as compelling as his.
See Morgan Guar. Trust Co. of New York v. Hellenic Lines, Ltd., 38 B.R. 987, 998 (S.D.N.Y.
1984) (“Those who seek to avoid the proscription of § 362 must apply to the court for an order to
lift, vacate or modify the automatic stay for good cause shown.”) (citing Johns-Manville Sales
6
Contrary to Appellees’ assertion, the bankruptcy court did not explicitly rely on Factor 4, which requires
consideration of whether a specialized tribunal with the necessary expertise has been established to hear the cause of
action. (See Appellees’ Br. at 9 n.4); Sonnax, 907 F.2d at 1286. In fact, the bankruptcy court specifically declined
to rule on the issue of whether the stay needed to be modified as to Appellant’s right to seek an NLRB proceeding.
(Appellant’s Br., Ex. A at 2, Ex. E at 46.)
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