CATHY SEIBEL, U.S.D.J.
Before the Court is the appeal of Plaintiff-Appellant Benjamin Lawsky, Superintendent of Financial Services of the State of New York in his capacity as Liquidator (the Liquidator) of Frontier Insurance Company (FIC), from the bankruptcy courts February 15, 2018 Memorandum of Decision After Trial, (Bankr. Doc. 66 (Trial Dec.),) and March 12, 2018 Partial Judgment, (Bankr. Doc. 72), ruling that Defendant-Appellee Frontier Insurance Group, LLC (FIGL) holds title to, and all reversionary interests in, land and improvements thereon in Sullivan County, New York, that the parties have labeled in this litigation Parcels B and C. For the following reasons, the bankruptcy courts orders are AFFIRMED.
I. BACKGROUND
A. Facts
1. Parties
In 2001, the Supreme Court of the State of New York placed FIC in a temporary rehabilitation proceeding under the New York Insurance Law, and subsequently entered a final rehabilitation order. (Bankr. Doc. 74-23.) The rehabilitation order vested the Superintendent of Insurance (the Rehabilitator) with ownership and possession of FICs property. (Bankr. Doc. 55 ¶ 46.) The Superintendent of Insurance is the statutory predecessor of the Superintendent of Financial Services, meaning the Rehabilitator is Plaintiff-Appellants predecessor. (Id. ¶ 45.)
Frontier Insurance Group, Inc. (FIGI) was the corporate parent of FIC, and on July 5, 2005, FIGI filed a voluntary petition in the U.S. Bankruptcy Court for the Southern District of New York for relief under chapter 11 of title 11 of the United States Code. In re Frontier Ins. Grp., Inc. , No. 05-36877 (Bankr. S.D.N.Y.), Doc. 1. Under FIGIs chapter 11 plan, FIGL became FIGIs successor. (See Bankr. Doc. 52-4 (the Plan).)
2. Parcels A, B, and C
In 1991, FIC purchased a 15.23-acre site in Sullivan County, (Bankr. Doc. 74-1), which is now considered Parcel A. In 1993, FIGI purchased an adjacent 15.667-acre site, (See Bankr. Doc. 74-2), 2.7 acres of which are now considered Parcel B and 12.967 acres of which are now considered Parcel C. At the outset and through FIGIs bankruptcy proceedings, the properties were not referred to as Parcels A, B, and C, (together, the Rock Hill property); those designations were not used until the events giving rise to the instant dispute occurred. (See Bankr. Doc. 60 at 99:2-6, 137:4-19; see also Trial Dec. at 2.)
Prior to FIGIs bankruptcy proceedings, FIC and FIGI shared a building as their headquarters on Parcel A, with an address of 195 Lake Louise Marie Road, Rock Hill, New York (the Headquarters). (See Bankr. Doc. 52-1; Trial Dec. at 2.) There were two additional structures on the Rock Hill property: a daycare center referred to as Nanas House and a tool shed referred to as the pole barn, both on Parcel C. (See Bankr. Doc. 52-2.) Nanas Houses address was 16 Frontier Drive, Rock Hill, New York, and the pole barns address was 195 Lake Louise Marie Road, the same as the Headquarters. (Id. ) Other portions of Parcel C as well as Parcel B were used for parking. (See Doc. 7 (Mem.) at 7 (aerial photo of the Rock Hill property.)
In connection with development of the Rock Hill property, FIGI, FIC, and the County of Sullivan Industrial Development Authority (CSIDA) entered into a Payment in Lieu of Taxes (PILOT) agreement, which provided tax relief to FIGI and FIC subject to periodic payments for a twenty-year period commencing on February 28, 1994. (Bankr. Doc. 74-12 at 2.) As collateral under the PILOT agreement, FIC transferred Parcel A to CSIDA in 1993, FIGI transferred Parcel B to CSIDA in 1994, and, in 1997, FIGI deeded Parcel C to FIC, which that same day deeded Parcel C to CSIDA. (Bankr. Docs. 74-5, 74-7, 74-8, 74-9.) At the end of the twenty-year payment period, CSIDA would transfer the deeds back to the Company, which under the PILOT agreement was defined as FIC. (Bankr. Doc. 74-5 at 24.) In 1997 and 1999, the parties expanded the PILOT agreement to include improvements FIGI and FIC were making to the Rock Hill property, which ultimately included the additions of Nanas House and the pole barn. (See Bankr. Doc. 74-12 at 2-3.) The two supplemental PILOT agreements also provided that, upon completion of the payments, CSIDA would convey title to the Parcels back to the Company, which is defined in both agreements as FIC. (Bankr. Doc. 74-11 at 15; Bankr. Doc. 74-13 at 12-13.)
3. FIGIs Bankruptcy
In 2003, the Insurance Management Group, Inc. (IMG) bought the debt secured by a first lien on substantially all of FIGIs assets. (Bankr. Doc. 48 ¶¶ 3-4.) FIGI then commenced its chapter 11 case with the goal of enabling IMG to obtain FIGIs interest in FIC, along with FIGIs other property. (Id. ¶ 4.) In connection with its chapter 11 petition, pursuant to 11 U.S.C. § 521, FIGI filed a Schedule A listing all of the real property in which it had any legal, equitable, or future interest. (Bankr. Doc. 52-1.) FIGI listed Nanas House, the Headquarters, and the pole barn - by name and address - as property in which it was a successor in interest to CSIDA, and listed that it was the 100% owner of a property at an address in Monticello, New York. (Id. ) On August 16, 2005, FIGI filed an Amended Schedule A, which omitted reference to the Headquarters but was otherwise the same as the first Schedule A. (Bankr. Doc. 52-2; In re Frontier Ins. Grp., Inc. , No. 05-36877, Doc. 56.) FIGI did not specify any interest in the land on which any of the structures sat. Suzanne Loughlin, FIGIs Executive Vice President in 2005, (Doc. 49 ¶ 1), testified that she did not distinguish between the structures and the land on which they sat because the reference to the structure implied a claim over the property underneath it, (see Bankr. Doc. 60 at 108:25-109:10). Loughlin further testified that she provided no description for the land on which the Monticello property sat, but that land was sold and the proceeds transferred into a litigation trust. (See id. at 109:3-6)
On August 29, 2005, Neal Conolly, the administrator of FIC designated by the Rehabilitator, filed a $ 43,230,580 proof of claim against FIGI, but it made no claim to Nanas House, the pole barn, the neighboring parking lots, any real estate, or any rights concerning real estate. (See Bankr. Doc. 52-12 at 92:22-93:4; Bankr. Doc. 52-7.) FIC and FIGI then entered into negotiations to resolve everything that was outstanding. (Bankr. Doc. 52-11 at 50:24-51:4.) During the negotiations, it was Conollys and FICs understanding that FIGI owned Nanas house, the pole barn, and the adjacent parking lots, which together make up Parcels B and C. (Id. at 50:9-20.) Even though the PILOT agreements indicated that the reversionary interest belonged to FIC, FIC believed those provisions of the PILOT agreements were drafted in error. (Bankr. Doc. 52-12 at 87:6-9, 89:14-19, 90:5-24.) FIGI too believed that it owned the reversionary interest in Parcels B and C. (Doc. 49 ¶ 5.)
FIC and FIGI reached an agreement, which was later incorporated into the Plan. (Bankr. Doc. 52-6 ¶ 1; see Bankr. Doc. 52-8.)
Pursuant to the settlement agreement and the Plan, FIC was to receive, among other things, a $ 12 million allowed unsecured claim and certain personalty. (Bankr. Doc. 52-8 ¶¶ 3, 5.) At no point during the bankruptcy proceedings did FIC make a claim to or assert an interest in Parcels B and C. (Bankr. Doc. 52-12 at 92:22-93:4; see Bankr. Doc. 52-11 at 37:22-39, 42:14-17, 44:2-20.) After reaching an agreement with FIGI, FIC voted affirmatively to accept FIGIs Plan. (Bankr. Doc. 52-9 ¶ 10.)
On October 17, 2005, FIGI filed the Plan with the bankruptcy court. The Plan defined FIGIs Assets as including all ... real property interests. (Plan at 3.) FIGIs First Amended Disclosure Statement noted that the Assets of the Debtor [FIGI], except for the Trust Assets [not relevant here], shall revest in the Reorganized Debtor [FIGL] free and clear of all Liens, Claims and Equity Interests pursuant to Section 11.01 of the Plan. (Bankr. Doc. 52-5 (Disclosure Statement) at 33.) The Disclosure Statement also made specific reference to the Schedule A and Amended Schedule A that FIGI had filed with the court. (See id. at 20.) The only assets that the Disclosure Statement actually identified, however, were FIGIs significant assets, which did not include the Rock Hill property. (Id. at 13-17.)
As a condition precedent to confirmation of the Plan, FIGI required the bankruptcy court to enter a final order approving its Disclosure Statement. (Plan § 10.01). On December 1, 2005, the bankruptcy court confirmed the Plan and Disclosure Statement. (Bankr. Doc. 52-10 at 14 ¶ 2.)
4. FICs Liquidation Proceedings
In 2012, the Albany County Supreme Court converted FICs rehabilitation proceeding to a liquidation proceeding, vesting the Liquidator with title to all of [FICs] property, contracts and rights of action and directing the Liquidator to liquidate all of FICs business and affairs in accordance with New York insurance law. (Trial Dec. 3-4 (quoting In re Liquidation of Frontier Ins. Co. , No. 97-06 (Sup. Ct. Nov. 9, 2012) ). FIGL did not make any claim in the FIC receivership proceeding asserting an interest in Parcels B or C. (Bankr. Doc. 60 at 126:22-127:9.)
B. The Proceedings Below
On February 24, 2014, the Liquidator filed a verified petition in Albany County Supreme Court, requesting an order declaring that FIC is the sole beneficial owner of the Rock Hill property and directing CSIDA to execute a deed conveying the Rock Hill property to FIC. See Lawski v. Frontier Ins. Grp., LLC (In re Frontier Ins. Grp., LLC. ), 517 B.R. 496, 502-03 (Bankr. S.D.N.Y. 2014). FIGL subsequently removed the case to the United States District Court for the Northern District of New York and filed counterclaims claiming the reversionary interest in Parcels B and C. Id. at 503. On April 28, 2014, the Liquidator moved to remand the case to state court, but the Northern District judge transferred the case and pending motion to the Southern District of New York, where the chapter 11 case had been filed. Id.
Chief Judge Cecelia G. Morris of the bankruptcy court denied the Liquidators motion to remand, and added:
The Court need not step on the toes of the state court by making a determination on whether the various contracts between and among the parties grant a right of reversion to the Reorganized Debtor. The Court need only look to the plan and confirmation order to determine whether [Parcels B and C were] included in the plan, whether the Liquidators claim was dealt with in the plan, whether the Liquidator is enjoined from proceeding against the Debtor, whether the Reorganized Debtor is released from any liability and whether a violation of the discharge has occurred, as was alleged by the Reorganized Debtor. The Court believes that it is in a better position than the state court to make such determinations and that doing so would assist, rather than hinder, the state court. If the Court determines that this issue was not covered by the plan, it will send the matter back to state court so that the issue can be decided under state law.
Id. at 504. Thus, the bankruptcy court needed to decide whether [Parcels B and C] w[ere] part of the plan, and as such, whether res judicata attaches or whether the FIC is enjoined from bringing its claims against [FIGL]. Id. at 507.
On January 6, 2015, the case was transferred from Judge Morris to Judge Robert D. Drain, (Bankr. Doc. 25). Judge Drain recognized the principle that a creditor with an interest in an asset may lose it if, knowing the debtor claims a contrary interest, the creditor allows a plan to be confirmed without contesting the issue. (Trial Dec. at 12.) Under 11 U.S.C. § 1141(c), property dealt with in a confirmed plan is free and clear of the claims and interests of creditors, provided the holder of the claim or interest participated in the bankruptcy case. City of Concord v. N. New England Tel. Operations (In re N. New England Tel. Operations ), 795 F.3d 343, 348 (2d Cir. 2015). To address those issues, Judge Drain needed to decide the issue of whether Parcels B and C were covered by, included in, or dealt with by the Plan and confirmation order, and, more specifically, the context in which those documents should be read, which in turn required the court to engage in fact-finding regarding the nature of FIGIs disclosure of its asserted property interests during its bankruptcy case, the extent of the involvement of the Liquidators predecessor, the Rehabilitator, in that case, and the parties mutual understanding of their respective claims to the property at issue when the Plan was confirmed. (Trial Dec. at 5.) Accordingly, the bankruptcy court held a trial on those issues. (Id. )
After trial, Judge Drain found (and the Liquidator does not dispute) that the Rehabilitator (and thus his successor, the Liquidator), participated in FIGIs case for purposes of section 1141(c) of the Bankruptcy Code under In re Northern New England Telephone Operations , 795 F.3d at 350. (Trial Dec. at 14.) Judge Drain further held that because the Plan provided that all of the property of FIGIs estate with the exception of the Trust Assets would vest post-confirmation in FIGL, and because Parcels B and C were not listed as Trust Assets, they vested in FIGL in a way that satisfies the identification or dealt with requirement of In re Northern New England Telephone Operations , 795 F.3d at 349, and thus the Liquidator could not contest FIGLs free and clear ownership of them, so long as the Plan actually identified those assets as property of the estate for purposes of the Plan. (Trial Dec. at 16.)
Then, turning to the issue most critical to this appeal, Judge Drain found that FIGIs reversionary interest in Parcels B and C was sufficiently identified during FIGIs chapter 11 case. Under the pre-bankruptcy documents, i.e. , the PILOT agreements, FIC, not FIGI had the reversionary interest in all three parcels. (Id. at 18.) But Judge Drain found that the trial record was equally clear that during FIGIs bankruptcy case, both FIGI and the Rehabilitator treated the reversionary interests in the land on which Nanas house and the pole barn sit and the adjacent parking lot, or Parcels B and C, as FIGIs property and that the Plan was confirmed with that understanding. (Id. ) For example, FIGIs Amended Schedule A listed FIGI as the [s]uccessor in [i]nterest to the CSIDA in Nanas House and the pole barn, which clearly indicates a reversionary interest, and one can reasonably assume that by listing Nanas House and the pole barn in its schedule of assets, FIGI was including the land on which those structures sit among its assets, as well. (Id. at 19-20.) Further, Judge Drain found that because Nanas House and the pole barn did not have an address separate from the general Rock Hill Property address, (id. at 20) - which is true for the pole barn but not for Nanas House, (Doc. 52-2) - [i]t would have been misleading to have identified Parcel C by the Rock Hill Property address because that address also applied to Parcel A, which FIGI did not claim as its property in its amended schedule of assets, (Trial Dec. at 20). Thus, [b]y listing the buildings on Parcel C in its schedule of assets FIGI sufficiently put the Rehabilitator and other parties in interest on notice of its claim to the land on which they sit. (Id. at 21.) The court added that in its experience, parties in bankruptcy cases routinely identify real property by its address, not by a metes and bounds description, or by [identifying] a building on the site. (Id. )
Next, the bankruptcy court took up whether FIGL was judicially estopped from claiming Parcel B as an asset due to FIGIs failure to specifically disclose Parcel B in its Disclosure Statement or Schedule A. First, the court found that FIGIs failure to disclose Parcel B was harmless and not malicious. (Id. at 26-27.) Parcel B would not revert to FIGI for several years even if FIGI had the wherewithal to make the PILOT payments - which it lacked without the assistance of FIGLs parent, IMG - [and thus] the assets disclosure on FIGIs schedules would not have been material to the general creditors or any party other than IMG and the Rehabilitator. (Id. at 26.) Further, the non-disclosure was by FIGI, not FIGL or IMG which were now claiming an interest in Parcel B. (Id. at 26.) Moreover, the terms Parcel B and Parcel C were not used at the time of the bankruptcy proceedings, but rather, the property was referred to as Nanas House, the pole barn, and their neighboring parking lots. (Id. at 27.) Accordingly, the bankruptcy court found that by scheduling Nanas House and the pole barn, FIGI came almost as close to identifying what the parties now refer to as Parcel B, the parking lot next to them, as they did to identifying Parcel C. (Id. )
The bankruptcy court concluded that most importantly, ... FIGI, IMG and - critically - the Rehabilitator understood when the Plan was confirmed that FIGI, not FIC, had the reversionary interest not only in Parcel C but also Parcel B. (Id. ) The court primarily relied on Mr. Conolly who stated that as administrator of FIC, he entered into the settlement with FIGI with the understanding that FIGI had the reversionary interest in Nanas House, the pole barn, and the adjacent parking lots, otherwise known as Parcels B and C. (Id. at 28-29.) Among the evidence corroborating Mr. Conollys testimony was the testimony of Al Escobar - the Chief Executive Officer of FIC during Rehabilitation - that Nanas House, the pole barn, and some of the parking lots heading towards [the Headquarters] were to revert back to FIGI under the PILOT agreements, (Bankr. Doc. 60 at 79:1-3), and the testimony of FIGIs representative that the reversionary interest in Parcels B and C
would belong to FIGL as FIGIs successor, (Trial Dec. at 30; see Bankr. Doc. 49 ¶ 5). Because the Plan was confirmed with the understanding that FIGL had the reversionary interest in Parcels B and C, as between FIGL and the Liquidator judicial estoppel should not overcome the effect of 11 U.S.C. § 1141(a) - (c) and res judicata to unwind it. (Trial Dec. at 27.) To rule otherwise based on judicial estoppel or any other equitable doctrine would provide the Liquidator, as the Rehabilitators successor, with an improper windfall contrary to 11 U.S.C. § 1141(a) - (c) and undo the Plan and Confirmation Order." (Id. at 31.)
The bankruptcy court held that under the Plan the reversionary interests in Parcels B and C are property of FIGL, and the Liquidator is precluded by the Plan and the Confirmation Order from interfering with those interests, and thus the CSIDA was ordered to promptly transfer title to Parcels B and C to FIGL. (Id. ; Bankr. Doc. 72 at 3.)
Judge Drain entered partial judgment on March 13, 2018, (Bankr. Doc. 72), and on April 12, 2018, Plaintiff-Appellant filed his notice of appeal, (Doc. 1).
II. LEGAL STANDARD
This Court has jurisdiction pursuant to 28 U.S.C. § 158(a)(1) to hear appeals from final judgments, orders, and decrees of a bankruptcy court. A district court reviews a bankruptcy courts findings of fact for clear error and its legal conclusions de novo. Overbaugh v. Household Bank, N.A. (In re Overbaugh ), 559 F.3d 125, 129 (2d Cir. 2009) (per curiam ). When reviewing for clear error, [I] may reverse only if [I am] left with the definite and firm conviction that a mistake has been committed. United States v. Bershchansky , 788 F.3d 102, 110 (2d Cir. 2015) (internal quotation marks omitted). Thus, if the factual findings of the bankruptcy court are plausible in light of the record viewed in its entirety, this Court may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Savage & Assocs., P.C. v. Williams Commcns (In re Teligent Servs., Inc. ), 372 B.R. 594, 599 (S.D.N.Y. 2007) (internal quotation marks omitted). And where there are two permissible views of the evidence, the factfinders choice between them cannot be clearly erroneous. Id. (internal quotation marks omitted).
III. DISCUSSION
A. Judge Drain Properly Considered FIGIs Amended Schedule A
Plaintiff-Appellant argues that Judge Drain erred because neither the Amended Plan nor the Amended Disclosure Statement indicated that FIGI claimed any interest in Parcels B or C, and the courts confirmation order made no reference to them. (Mem. at 20; see id. at 22 (citing Baeshen v. Arcapita Bank B.S.C.(c) (In re Arcapita Bank B.S.C.(c) ), 520 B.R. 15, 21 (Bankr. S.D.N.Y. 2014) (The preclusive effect of a confirmation order is limited by the content of the reorganization plan and the confirmation order.) ).) Accordingly, Plaintiff-Appellant argues even though FIGIs Amended Schedule A may have claimed an interest in those Parcels, because FIGI did not explicitly incorporate its Amended Schedule A into its Disclosure Statement or Plan, Judge Drain erred by considering it. (Id. at 21-22.)
Plaintiff-Appellant offers no support for the notion that a Schedule A must be explicitly incorporated into a Disclosure Statement or Plan to be considered by the bankruptcy court. The case on which Plaintiff-Appellant relies, In re Arcapita , involved a plan in which the debtor defined its Assets, in part, as all property disclosed in the Debtors respective Schedules and the Disclosure Statement , 520 B.R. at 23 n.6 (emphasis in original), but that case did not hold that the language emphasized above is required to give effect to a debtors schedules. To the contrary, cases often discuss whether a debtor sufficiently disclosed or identified assets in its Schedules , Disclosure Statement or confirmed Plan. MF Glob. Holdings USA Inc. v. Heartland Co-Op (In re MF Glob. Holdings Ltd. ), No. 11-CV-15059, 2017 WL 1373267, at *1 (Bankr. S.D.N.Y. Apr. 13, 2017) (emphasis added); see Heritage Hotel Ltd. Pship v. Valley Bank of Nev. (In re Heritage Hotel Pship I ), 160 B.R. 374, 378 (9th Cir. BAP 1993) (a party is equitably estopped from asserting a cause of action not raised in a reorganization plan or otherwise mentioned in the debtors schedules or disclosure statement), affd , 59 F.3d 175 (9th Cir. 1995) ; cf. Kunica v. St. Jean Fin., Inc. , 233 B.R. 46, 57 (Bankr. S.D.N.Y. 1999) (finding disclosure insufficient only because the debtors schedule was never submitted to bankruptcy court or seen by creditors). Here, FIGI filed with the bankruptcy court its Schedule A and Amended Schedule A, (see Bankr. Docs. 52-1, 52-2), and referenced those schedules repeatedly in its Disclosure Statement as the source from which FIGI listed, among other things, its assets and creditors claims, (see Disclosure Statement at 15, 20, 22, 26, 28-29). Thus, I see no reason why it would be error to consider FIGIs Amended Schedule A.
Additionally, where a reorganization plan is ambiguous, bankruptcy courts are permitted to examine the case context to determine what creditors are bound by the plan and what property was within the debtors estate. See Harper v. Oversight Comm. (In re Conco, Inc. ), 855 F.3d 703, 711-14 (6th Cir. 2017). Here, the Plan defined Assets broadly as any ... real property interests, (Plan at 3), but the Disclosure Statement only identified FIGIs significant assets, (see Disclosure Statement at 13-17). There is thus an ambiguity as to what other assets FIGI had, if any, making reference to other documents appropriate. The Amended Schedule A would be the obvious place to look to determine FIGIs real property interests, and it identified Nanas House and the pole barn. As the parties would have during the bankruptcy proceedings, Judge Drain was permitted to consider FIGIs Amended Schedule A to determine its assets and estate under the Plan.
B. Judge Drain Did Not Clearly Err in Finding Parcels B and C Sufficiently Identified
Following trial, Judge Drain found that Parcels B and C were included among FIGIs assets under the Plan because of the Amended Schedule As reference to Nanas House and the pole barn, as well as the parties understanding that FIGI possessed the reversionary interest in Nanas House, the pole barn, and their adjacent parking lots. (Trial Dec. at 20.) Where ... a contract is ambiguous, its interpretation in the presence of extrinsic evidence of meaning is a question of fact. Therefore, a district court may reverse a bankruptcy courts interpretation of an ambiguous contract only if it is clearly erroneous. Castillo v. Gen. Motors, LLC (In re Motors Liquidation Co. ), 500 B.R. 333, 339 (S.D.N.Y. 2013) (internal quotation marks and citations omitted), affd , 578 F. Appx 43 (2d Cir. 2014) (summary order). Further, [t]here is simply no denying that [the lower court] is much more familiar with this Plan - and with the parties expectations regarding it - than [I am]. Dow Corning Corp. v. Claimants Advisory Comm. (In re Settlement Facility Dow Corning Tr. ), 628 F.3d 769, 772 (6th Cir. 2010). Accordingly, Judge Drains factual findings regarding the interpretation of the Plan are due considerable deference. Id.
Judge Drain found that it would have been misleading to identify Parcel C by the Rock Hill property address on the Amended Schedule A because that address also applied to Parcel A. (Trial Dec. at 20). Judge Drain also relied on the fact that the designations Parcels A, B, and C were not used by the parties while the bankruptcy proceedings were taking place, so identifying Parcel C by listing buildings on that property was a reasonable means to put creditors and others on notice of FIGIs claim to those buildings and the land on which they sat, and would also have flagged FIGIs interest in the neighboring area on Parcel B. (Id. at 2, 21, 27.) Finally, and most importantly, Judge Drain relied on testimony from representatives of FIC, the Rehabilitator, and FIGI to conclude that all of the parties understood when the Plan was confirmed that FIGI, not FIC, had the reversionary interest not only in Parcel C but also Parcel B. (Id. at 27.)
Except for Judge Drains erroneous finding that Nanas House, the pole barn, and the Headquarters shared an address, (id. at 20), all of the bankruptcy courts factual findings above are supported by evidence in the record. And that error was only a partial one, as Judge Drain was correct that the pole barn and the Headquarters shared an address, and thus it would have been at least confusing to attempt to identify Parcel C by that address or to refer to it by the address of Nanas House, which might suggest FIGI was claiming an interest in less than the full Parcel. Further, as noted, the designations Parcel A, Parcel B, and Parcel C were not used until the events giving rise to this dispute occurred. (See Bankr. Doc. 60 at 99:2-6, 137:4-19.) Thus, as a practical matter, at the time the settlement and Plan were negotiated and consented to by all parties, including the Liquidators predecessor, the Rock Hill property consisted of 1) the Headquarters, 2) Nanas House and the pole barn, and 3) the parking lots between them. Nobody thought of the land as three parcels. By disclaiming any interest in the Headquarters and the parking lot on its Parcel but claiming an interest in Nanas House, the pole barn and their neighboring parking lots, FIGI indicated - clearly enough for the Liquidator to understand, as he plainly did - that it was claiming an interest in what is now regarded as Parcels B and C but not A.
Finally, testimony from FIC, the Rehabilitator, and FIGI support the finding that they understood, at the time of FIGIs bankruptcy proceeding, that FIGI owned the reversionary interests in Parcels B and C. (See Bankr. Doc. 49 ¶ 5; Bankr. Doc. 52-11 at 50:2-20; Bankr. Doc. 60 at 78:22-79:3.) Even assuming that sitting as the trier of fact I might have weighed the evidence differently, that is insufficient to find that Judge Drain clearly erred, as there is ample evidence in the record (even discounting, as I am, Judge Drains erroneous finding that Nanas House did not have an address of its own) that FIGIs interests in Parcels B and C were among its assets under the Plan. See In re Teligent Servs., Inc. , 372 B.R. at 599. Accordingly, I find that Judge Drain did not clearly err by so finding.
C. Development History of Parcels B and C
Plaintiff-Appellant further argues that even assuming it was understood that FIGI had a reversionary interest in the parking lots during the bankruptcy proceeding, the parking lots cannot be considered part of Parcels B and C because they were developed to provide parking for the Headquarters on Parcel A before Nanas House and the pole barn were built. (Mem. at 18.) Thus, Plaintiff-Appellant asserts that Judge Drain erred by treating Parcel B as appurtenant to the two small structures built five years later on the corner of Parcel C, (id. at 18), and by considering FIGIs reference to two ancillary structures ... to extend to the 12.967 acre parcel on which they sit, (id. at 24). But Judge Drain never determined that the parking lots on Parcels B and C were appurtenant to Nanas House and the pole barn rather than to the Headquarters. Rather, he found that the reversionary interest that FIGI claimed - and that FIGI was understood to possess by all relevant parties involved during the bankruptcy proceeding - included Nanas House, the pole barn, and their adjacent parking lots , which together make up Parcels B and C. (Trial Dec. at 27.) Whether the cars parked in Parcels B and C were driven by people who worked in a building on Parcel A, C, or anywhere else does not seem relevant to the issues presented here. All parties understood that FIC had the reversionary interest only in the first parcel deeded to CSIDA, and that FIGI claimed the reversionary interest in the remaining deeded land. Accordingly, the development history of Parcels B and C does not change my analysis above.
D. CSIDA Contracts
Plaintiff-Appellant also argues that Judge Drain erred by operating on the mistaken premise that the reversionary interest in Parcel B was an undisclosed asset of FIGI, when it was in fact an FIC asset pursuant to the CSIDA contracts. (Mem. at 15.) But, to the contrary, Judge Drain acknowledged that under the pre-bankruptcy documents, i.e. , the CSIDA contracts, FIC, not FIGI had the reversionary interest in all three parcels. (Trial Dec. at 18.) Judge Drain noted, however, that the record was equally clear that during the bankruptcy proceedings and post-confirmation, FIGI and the Rehabilitator treated the reversionary interest in Parcel B (and Parcel C) as FIGIs property. (Id. ) Thus, Judge Drain did not rely on any mistaken premises. In fact, Judge Drain avoided step[ping] on the toes of the state court by making a determination on whether the various contracts between and among the parties grant a right of reversion. In re Frontier Ins. Grp., LLC. , 517 B.R. at 504. Instead, he looked to the Plan, the parties understanding at the time the Plan was made, and FIGIs Amended Schedule A to determine that Parcel B was properly treated as an asset of FIGI, all of which was permissible.
E. Judicial Estoppel
Plaintiff-Appellant further argues that because FIGI failed to list Parcel B as an asset in its bankruptcy proceedings, it should be judicially estopped from claiming it now. (Mem. at 15-17.) Judicial estoppel will, generally, prevent a party who failed to disclose a claim in bankruptcy proceedings from asserting that claim after emerging from bankruptcy. BPP Illinois, LLC v. Royal Bank of Scotland Grp. PLC , 859 F.3d 188, 192 (2d Cir. 2017). But the exact criteria for invoking judicial estoppel will vary based on specific factual contexts. Adelphia Recovery Tr. v. Goldman, Sachs & Co. , 748 F.3d 110, 116 (2d Cir. 2014) (quoting New Hampshire v. Maine , 532 U.S. 742, 751, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) ).
Judicial estoppel will generally apply where (1) a partys later position is clearly inconsistent with its earlier position; (2) the partys former position has been adopted in some way by the court in the earlier proceeding; and (3) the party asserting the two positions would derive an unfair advantage or impose an unfair detriment on the party seeking estoppel.
Edwards v. CGI Grp. Inc. , No. 11-CV-8611, 2018 WL 4043142, at *4 (S.D.N.Y. Aug. 10, 2018) (internal quotation marks omitted). Because the purpose of judicial estoppel is to protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment, the Second Circuit limits judicial estoppel to situations where the risk of inconsistent results with its impact on judicial integrity is certain. Azuike v. BNY Mellon , 962 F.Supp.2d 591, 598 (S.D.N.Y. 2013) (alteration omitted) (quoting Derosa v. Natl Envelope Corp. , 595 F.3d 99, 103 (2d Cir. 2010) ).
There is no dispute that FIGI failed to specifically identify Parcel B on its Amended Schedule A, Disclosure Statement, or elsewhere during the bankruptcy proceedings. Judge Drain, however, found that FIGIs non-disclosure was harmless and not malicious, and thus presents a unique fact pattern under which judicial estoppel does not prevent FIGL from now claiming Parcel B. I agree.
FIGLs current position is not clearly inconsistent with its own or its predecessors positions during FIGIs bankruptcy proceeding. Evidence in the record shows that during the bankruptcy proceedings, it was FIGIs understanding that it possessed the reversionary interest in Parcel B, (Bankr. Doc. 49 ¶ 5), and that is the same position FIGL takes now. Its failure to list Parcel B at a time when nobody thought of the area as Parcel B is - given FIGIs identification of the area by reference to nearby structures - not clearly contrary to the position it takes now. Thus, there is no prior inconsistency that would necessitate application of judicial estoppel. And because there was no former inconsistent position taken by FIGI, there was no inconsistent position adopted by the bankruptcy court.
Finally, refraining from applying judicial estoppel will not result in FIGL deriving an unfair advantage, nor would it impose an unfair detriment on the Liquidator. Despite the Liquidators claims to the contrary now, the evidence is that the Rehabilitator understood during the bankruptcy proceedings that FIGI, not FIC, had the reversionary interest in Parcel B, despite the mistakes made in paper in the PILOT agreements with CSIDA. (Bankr. Doc. 52-12 at 89:12-90:12; see Bankr. Doc. 52-11 at 50:16-20 (describing the realty owned by FIGI as the Pole Barn and adjacent parking lot, and Nanas House and adjacent parking lot). The Rehabilitator acknowledged as much at the time, stating that what is now known as Parcel B was not material to FIC. (Bankr. Doc. 52-12 at 111:2-5.) The Rehabilitator knew that FIGI was claiming the reversionary interest in Parcel B, (Bankr. Doc. 52-11 at 34:2-8, 37:22-38:21, 50:2-20; Bankr. Doc 52-12 at 89:14-93:4), but made no claim to Parcel B and raised no objection to confirmation of the Plan relative to Parcel B, (Bankr. Doc. 52-11 at 42:14-17), likely because the complex settlement it reached with FIGI was beneficial to it. Because the Rehabilitator essentially disclaimed any interest of FIC in Parcel B, the Liquidator cannot now claim surprise or prejudice as a result of FIGIs failure to specifically identify Parcel B in its Disclosure Statement or Schedule A. Indeed, for the reasons explained by Judge Drain, (Trial Dec. at 22), nobody with a conceivable interest in Parcels B or C was deceived.
These facts thus present the unusual case in which a debtors nondisclosure had at most a de minimis effect on a prior bankruptcy proceeding and judicial estoppel is inappropriate. Clark v. AII Acquisition, LLC , 886 F.3d 261, 267 (2d Cir. 2018) (quoting Adelphia , 748 F.3d at 120 ); see Maines v. Last Chance Funding, Inc. , No. 17-CV-5453, 2018 WL 4558408, at *6 (E.D.N.Y. Sept. 21, 2018) (not applying judicial estoppel where no risk of debtor deriving unfair advantage or risk of unfair detriment on opposing party), amended on other grounds by 2018 WL 4610898 (E.D.N.Y. Sept. 25, 2018). Accordingly, I find that Judge Drain was correct in not applying judicial estoppel to FIGLs claim to Parcel B.
F. The Extent to Which New York Law Applies
Plaintiff-Appellant argues that because New York law requires that any transfer of property be made via a document containing words of conveyance and a sufficient description of the property to be conveyed, the previous bankruptcy proceedings could not vest the reversionary interest in Parcels B and C in FIGI. (Mem. at 16-17.) But Judge Drain correctly held that Bankruptcy Code § 1141(a)-(c) provides for the vesting of real property upon confirmation of the Plan, even without a deed, and the Plan provides that New York law controls [e]xcept to the extent that the Bankruptcy Code or Bankruptcy Rules or other federal laws are applicable. (Plan § 14.05.) Here, the Bankruptcy Code is applicable, and thus under the terms of the Plan, the Bankruptcy Code controls in this situation. Therefore, no written conveyance is needed pursuant to New York law.
G. Limiting Effect of FICs Rehabilitation Status
Plaintiff-Appellant also argues that the bankruptcy court failed to consider that FICs rehabilitation status granted the state court exclusive jurisdiction over the Parcels and prohibited FIC from transferring any property interests to FIGI without permission from the state court. (Mem. at 24-26.) But Judge Drain did not order that the Liquidator transfer anything to FIGL or find that it had. He only found that under the Plan, the reversionary interests in Parcels B and C rested with FIGL, regardless of who might have owned them pre-bankruptcy. He did not purport to strip the Liquidator of FICs interests, but rather only found that even assuming FIC had a right to those interests, the Liquidators predecessor had lost it when, knowing that FIGI claimed the same interests, it consented to the Plan that would vest them in FIGL.
Further, the Bankruptcy Codes concept of property of the estate is not concerned with title or possession; it expressly embraces all legal or equitable interests of the debtor in property where located, as of the commencement of the case. In re Hudson Valley Ambulance Serv., Inc. , 11 B.R. 860, 863 (Bankr. S.D.N.Y. 1981) ; see Troutman v. Compton (In re Greyling Realty Corp. ), 74 F.2d 734, 736 (2d Cir. 1935) (The court thus acquiring jurisdiction over the property of the debtor does so throughout the United States as against any state or federal receiver theretofore appointed in any other proceeding.). Once it is determined that the property in question is property of the estate, it [would] not matter, for instance, if a state court receiver had actual possession of it. In re Hudson Valley , 11 B.R. at 863-64 ; see Troy Indus. Catering Serv. v. Michigan (In re Troy Indus. Catering Serv. ), 2 B.R. 521, 523 (Bankr. E.D. Mich. 1980) (rejecting contention that debtor was divested of property interest because state seized the property). FIC and the Rehabilitator would have been well within their rights to contest FIGIs claims to Parcels B and C (or Nanas House or the pole barn) during the bankruptcy proceedings, but they may not now claim that the bankruptcy court did not have jurisdiction over the property during those proceedings. See In re Hudson Valley , 11 B.R. at 864 (the question of turnover and parties entitlement to the protection of their interests are [to be] resolved in the light of principles under the Bankruptcy Code, not in disputes over jurisdiction). Accordingly, I reject Plaintiff-Appellants argument that Judge Drain erred by failing to consider the limiting effect of FICs rehabilitation status.
IV. CONCLUSION
For the foregoing reasons, the bankruptcy courts order is AFFIRMED in all respects. The Clerk of Court is respectfully directed to close the case.
SO ORDERED.
The current Superintendent of Financial Services is Maria T. Vullo.
Bankr. Doc. refers to documents filed in the U.S. Bankruptcy Court for the Southern District of New York under docket number 14-9022.
The transcript of Loughlins testimony reads that she was asked if she separated[d] in her mind the structures from the [indiscernible], (Doc. 60 at 109:7-8 (alteration in original) ), but based on the context, it is clear that the question was whether Loughlin separated the structure from the land on which it sat.
The settlement agreement never became effective because it was not approved by the state court supervising FICs rehabilitation. (Trial Dec. at 29.)
Plaintiff-Appellant makes a judicial estoppel argument only as to Parcel B.
That this settlement never became effective is immaterial to the issue of whether both parties operated with the understanding that FIGI had the reversionary interest in Parcel B.