Cohen v. CDR Creances S.A.S.
Docket: No. 13-1308-bk
Court: Court of Appeals for the Second Circuit; January 9, 2014; Federal Appellate Court
Leon Cohen appeals a judgment from the United States District Court for the Southern District of New York, which upheld the Bankruptcy Court’s denial of his application to reopen a Chapter 11 proceeding for Euro-American Lodging Corporation (EALC). The appeal is reviewed independently, affirming factual findings unless clearly erroneous and legal conclusions de novo. Under 11 U.S.C. § 350(b), a case may be reopened to administer assets or provide debtor relief, but a bankruptcy judge's decision to deny such a motion is only overturned for abuse of discretion. Cohen’s application seeks to enjoin claims from CDR Creances, S.A.S. (CDR) against him, asserting that his debts were discharged by EALC's plan of reorganization. He also requests various forms of relief, including an anti-litigation injunction against CDR. However, Cohen is not a debtor in the closed bankruptcy and must demonstrate 'cause' to reopen the case. The Bankruptcy Court found no abuse of discretion in denying his application, noting that nondebtor releases require "truly unusual circumstances," which Cohen failed to establish. The court highlighted that the reorganization plan did not grant Cohen a discharge, rendering his requests for relief meaningless. Cohen did not provide the plan for review, which further undermined his position. The Bankruptcy Court correctly determined it lacked jurisdiction to grant the additional relief requested by Cohen's Application, as it did not have a close nexus to the confirmed bankruptcy plan. Post-confirmation jurisdiction is reserved for matters essential to effectuating the reorganization plan, which in this case does not include CDR’s state court actions, as they involve disputes between non-debtors and do not affect EALC’s estate or the completed administration of its plan. The reorganization plan did not suggest that CDR's future claims against Cohen would be restricted as a result of confirmation, and the Bankruptcy Court explicitly rejected this idea. Cohen's arguments that the plan somehow discharged CDR’s fraud claims under non-bankruptcy law are inappropriate for the bankruptcy context and should be presented in state court. The judgment of the District Court is affirmed, and it was noted that under the out-of-pocket rule for fraud claims, damages are calculated based on the actual financial losses incurred, not potential profits that could have been gained absent the fraud.