Novello et al v. Zacher et al

Filing 13

ORDER granting stay pending appeal. Signed by Hon. Richard J. Arcara on 9/20/2010. (JMB)

Novello et al v. Zacher et al

Doc. 13

UNITED STATES DISTRICT COURT W ESTERN DISTRICT OF NEW YORK

In re LEGACY HEALTHCARE, LLC, Debtor,

LEGACY HEALTHCARE, LLC., et al., Plaintiff-Appellees, v. ORDER 09-CV-1102A 09-CV-1103A

THE STATE OF NEW YORK, et. al., Defendants-Appellants.

Legacy Healthcare , LLC ("Legacy") moves for a stay pending its appeal to th e Second Circuit of this Court's June 22, 2010 Decision and Order vacating an in ju n c tio n that had been granted in its favor by Bankruptcy Judge Michael J. K a p la n . Judge Kaplan had enjoined defendant New York State Department of H e a lth ("DOH") from effecting the closure of W illia m s v ille Suburban Nursing H o m e ("W illia m s ville Suburban"), a nursing home facility owned by Legacy. W illia m s ville Suburban had been targeted for closure by the Berger Commission w h ile Legacy's Chapter 11 bankruptcy proceeding was pending in bankruptcy c o u rt.

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After W illia m s v ille Suburban was recommended for closure, Legacy c o m m e n c e d an adversary proceeding in bankruptcy court seeking to prohibit D O H from implementing the closure. The bankruptcy court ruled in favor of L e g a c y and enjoined DOH from effectuating the closure. DOH appealed the b a n k ru p tc y court's injunction to this Court. On June 22, 2010, this Court vacated th e injunction and granted summary judgment in favor of DOH as to Legacy's s o le claim of estoppel. Legacy then appealed this Court's ruling to the Second Circuit and moved fo r an order staying the closure pending appeal. The standard for granting a stay pending appeal is well-settled. Before g ra n tin g a stay, the Court considers: (1) whether the stay applicant is likely to s u c c e e d on the merits of the appeal; (2) whether the applicant will be irreparably in ju re d absent a stay; (3) whether issuance of the stay will substantially injure the o th e r parties interested in the proceeding; and (4) where the public interest lies. See In re World Trade Center Disaster Site Litigation, 503 F.3d 167, 170 (2d Cir. 2 0 0 7 ). The Circuit has stated that " the degree to which a factor must be present va rie s with the strength of the other factors, meaning that `more of one [factor] e xc u s e s less of the other.' " Id. (quoting Thapa v. Gonzales, 460 F.3d 323, 334 (2 d Cir. 2006)). Upon consideration of four factors, the Court finds that a stay pending a p p e a l should be granted. Although Legacy has not made a strong showing that 2

it is likely to succeed on appeal, other factors support a stay. In particular, L e g a c y has demonstrated that it will suffer irreparable harm if a stay is not g ra n te d . Legacy seeks to prevent the closure of W illia m s v ille Suburban while the a p p e a l is pending. The merits of the appeal relate to whether DOH should be p e rm itte d to close the facility at all. If DOH is permitted to close the facility p e n d in g appeal, that action will essentially moot the appeal. "[W ]h e re the denial o f a stay pending appeal risks mooting [the] appeal," irreparable harm is e s ta b lis h e d . See In re DBSD North America, Inc., 2010 W L 1838630 (S.D.N.Y. M a y 7, 2010). Even if that were not the case, the threat of closure of the nursing h o m e is, by itself, sufficient to establish irreparable harm. See Roso-Lino B e v e ra g e Distribs. Inc. v. Coca-Cola Bottling Co. of New York, Inc., 749 F.2d 1 2 4 , 125-26 (2d Cir. 1984) (noting that threatened loss of an ongoing, established b u s in e s s constitutes irreparable harm). As to the third factor, the Court does not believe that DOH will suffer s u b s ta n tia l injury if the stay is granted. Although DOH certainly has an interest in fu lfillin g the mandate of the Berger Commission as soon as possible, there has a lre a d y been significant delay. The nursing home was recommended for closure in January 2007 and closure was mandated to occur on June 2008. W illia m s v ille S u b u rb a n has been continuing to operate for two years after it was supposed to h a ve closed. The Court does not believe that delaying the closure for a few more m o n th s so that the appeal can be heard would have a significant adverse impact 3

upon the DOH, particularly compared to the irreparable harm that Legacy will s u ffe r if the stay is denied. As to the fourth factor, the public interest, the Court finds that the public in te re s t weighs in favor of granting the stay. Although the public has an interest in fulfilling the mandate of the Berger Commission by closing W illia m s v ille S u b u rb a n , the closure of the facility will undoubtedly disrupt the lives of its e xis tin g residents. If a stay is denied, the elderly and disabled patients that c u rre n tly reside at the facility will be forced out of their rooms and their familiar s u rro u n d in g s . Of course, if this Court's June 22, 2010 Decision and Order is a ffirm e d on appeal, the residents will need to be moved anyway. However, if L e g a c y is successful on its appeal, the relocation of those residents will have b e e n unnecessary. The Court believes that it is in the best interest of those e ld e rly and disabled patients, their loved ones, and the public to permit the re s id e n ts to remain at W illia m s v ille Suburban until such time as closure is d e te rm in e d to be certain. In sum, the Court finds it prudent to preserve the status q u o pending appeal. A c c o rd in g ly, for the reasons stated herein, the motion for a stay pending a p p e a l is granted.

SO ORDERED.

s/ Richard J. Arcara
HONORABLE RICHARD J. ARCARA UNITED STATES DISTRICT JUDGE DATED: September 20, 2010 4

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