14‐4236‐bk
In re: Richard H. Friedberg
Giannina Pradella et al. v. Melissa Zelen Neier, Chapter 7 Trustee
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL
EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER
JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE
OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE
32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED
WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL
APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER
MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second
2 Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley
3 Square, in the City of New York, on the 9th day of October, two thousand fifteen.
4
5 PRESENT: ROBERT D. SACK,
6 RAYMOND J. LOHIER, JR.,
7 SUSAN L. CARNEY,
8 Circuit Judges.
9 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
10 IN RE: RICHARD H. FRIEDBERG
11 GIANNINA PRADELLA and MILAN OLICH,
12
13 Plaintiffs‐Appellants,
14
15 v. No. 14‐4236‐bk
16
17 MELISSA ZELEN NEIER, CHAPTER 7 TRUSTEE,
18
19 Defendant‐Appellee.
20 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
21
1
1 FOR PLAINTIFFS‐APPELLANTS: Thomas R. Langan and William J.
2 Florence, Jr., Dempsey & Langan,
3 Peekskill, NY
4
5 FOR DEFENDANT‐APPELLEE: Melissa Zelen Neier, Ivey, Barnum &
6 O’Mara, LLC, Greenwich, CT
7
8 Appeal from a judgment of the United States District Court for the District
9 of Connecticut (Alfred V. Covello, Judge).
10 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
11 AND DECREED that the judgment of the District Court is AFFIRMED.
12 Plaintiffs‐Appellants Giannina Pradella and Milan Olich challenge a
13 judgment of the District Court (Covello, J.) affirming the approval by the
14 Bankruptcy Court (Alan H. W. Shiff, U.S.B.J.) of a settlement of all claims against
15 debtor Richard H. Friedberg’s bankruptcy estate. We review the Bankruptcy
16 Court’s legal conclusions de novo and its factual findings for clear error. In re N.
17 New England Tel. Operations LLC, 795 F.3d 343, 346 (2d Cir. 2015). We assume
18 the parties’ familiarity with the facts and record of the prior proceedings, to which
19 we refer only as necessary to explain our decision to affirm.
20 On appeal, the plaintiffs first argue that the South Carolina court that
21 issued a deficiency judgment against Monteverde LLC and North‐South
22 Development Corporation – two entities wholly owned by the debtor – had
2
1 exclusive jurisdiction to determine the plaintiffs’ right to recover against
2 Monteverde and North‐South under the terms of the secured note and mortgage
3 between the parties. This argument, however, is foreclosed by the plaintiffs’
4 conduct. When the plaintiffs filed a proof of claim with the Bankruptcy Court in
5 2009, they “invoke[d] the special rules of bankruptcy concerning objections to the
6 claim, estimation of the claim for allowance purposes, and the rights of the
7 claimant to vote on the proposed distribution.” In re S.G. Phillips Constructors,
8 Inc., 45 F.3d 702, 706 (2d Cir. 1995) (quotation marks omitted). Because “a
9 creditor who files such a claim subjects itself to the bankruptcy court’s equitable
10 jurisdiction in proceedings affecting that claim,” In re CBI Holding Co., 529 F.3d
11 432, 466 (2d Cir. 2008), the plaintiffs “subjected [themselves] to all the
12 consequences that attach to an appearance,” In re Porges, 44 F.3d 159, 165 (2d Cir.
13 1995) (quotation marks omitted), including the eventual extinguishment of their
14 claims by the Bankruptcy Court.
15 We also reject the plaintiffs’ second argument that the deficiency judgment
16 issued by the South Carolina court was entitled to full faith and credit in the
17 Bankruptcy Court. The Bankruptcy Court determined that exceptions to South
18 Carolina’s application of the issue preclusion doctrine barred the judgment from
3
1 having preclusive effect in the action before the Bankruptcy Court. This
2 determination was correct for two reasons.
3 First, the Bankruptcy Court found that the plaintiffs had deceived the South
4 Carolina court by failing to disclose the restriction in the Bankruptcy Court’s
5 lift‐stay order on their rights to enforce any deficiency judgment. Under South
6 Carolina law, “even if all the elements for collateral estoppel are met, when
7 unfairness or injustice results or public policy requires it, courts may refuse to
8 apply it.” Crosby v. Prysmian Commc’ns Cables & Sys. USA, LLC, 397 S.C. 101,
9 109 n.5 (Ct. App. 2012) (quotation marks omitted); see also Widenhouse v.
10 Colson, 405 S.C. 55, 59 n.2 (2013) (noting that “a judgment . . . produced through
11 fraud or collusion” should not be afforded full faith and credit). The Bankruptcy
12 Court’s finding was not clear error. Second, the record supports the conclusion
13 that Appellee Melissa Zelen Neier, the trustee, did not have an incentive to fully
14 and fairly litigate the plaintiffs’ entitlement to a deficiency judgment against
15 Monteverde under the terms of the mortgage and note, given the terms of the
16 lift‐stay order and the Bankruptcy Court’s apparent understanding of the same.
17 See State v. Bacote, 331 S.C. 328, 332 (1998) (noting that issue preclusion may not
18 bar relitigation of an issue if “as a result of the conduct of the adversary or other
4
1 special circumstances,” the party opposing preclusion “did not have an adequate
2 opportunity or incentive to obtain a full and fair adjudication in the initial action”
3 (quotation marks omitted)).
4 We have considered all of the plaintiffs’ remaining arguments and
5 conclude that they are without merit. For the foregoing reasons, the judgment of
6 the District Court is AFFIRMED.
7 FOR THE COURT:
8 Catherine O=Hagan Wolfe, Clerk of Court
5