Radnor Holdings Corp. v. Skadden Arps Slate Meagher & Flom LLP , 706 F. App'x 94 ( 2017 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________
No. 17-1415
______________
In re: RADNOR HOLDINGS CORPORATION, et al.,
Debtors
RADNOR HOLDINGS CORPORATION, et al.; MICHAEL T. KENNEDY; MTK
TRUST FBO RYAN M. KENNEDY; MTK TRUST FBO SEAN M. KENNEDY; MTK
TRUST FBO MICHAEL C. KENNEDY; and MTK TRUST FBO CONOR R.
KENNEDY
v.
SKADDEN ARPS SLATE MEAGHER & FLOM LLP; SKADDEN ARPS SK
PRIVATE INVESTMENT FUND 1998 c/o SKADDEN ARPS; RICHARD T. PRINS;
GREGORY M. GALARDI; TENNENBAUM CAPITAL PARTNERS, LLC;
MICHAEL E. TENNENBAUM; SUSAN S. TENNENBAUM; DAVID HOLLANDER;
ALVAREZ & MARSEL LLC; TENNENBAUM SVEF LLC; TENNENBAUM SVOF
LLC; MARK HOLDSWORTH; HOWARD LEFKOWITZ; BABSON & CO.;
RICHARD E. SPENCER; JOSE E. FELICIANO; STANLEY SPRINGEL; SK
PRIVATE INVESTMENT FUND 1998 LLC
MICHAEL T. KENNEDY,
Appellant
______________
On Appeal from the United States District Court
for the District of Delaware
(D.C. No. 1-16-cv-00332)
District Judge: Honorable Richard G. Andrews
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Submitted under Third Circuit LAR 34.1(a)
September 27, 2017
Before: SMITH, Chief Judge, McKEE, and RESTREPO, Circuit Judges
(Opinion Filed: November 30, 2017)
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OPINION*
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RESTREPO, Circuit Judge
Appellant Michael T. Kennedy, former majority shareholder and former Chairman
of the Board of Directors of Radnor Holdings Corporation (“Radnor” and, together with
Radnor’s affiliated Chapter 11 debtors, “Debtors”), appeals pro se the District Court’s
Order affirming the Bankruptcy Court’s grant of appellees’ respective motions to dismiss
Kennedy’s Complaint. Kennedy’s Complaint challenges the bankruptcy sale of the assets
of the Debtors to an affiliate of Tennenbaum Capital Partners LLC (“Tennenbaum”). The
Bankruptcy Court found that Kennedy’s claims were time-barred, were precluded as
already adjudicated, and that Kennedy lacked standing to bring the claims. For the
reasons explained below, we affirm.
I.1
In 2006 the Debtors filed for Chapter 11 bankruptcy protection. The Debtors then
applied for an Order authorizing them to retain Skadden, Arps, Slate, Meagher & Flom
LLP (“Skadden”) as their bankruptcy counsel. The U.S. Trustee objected because
*
This disposition is not an Opinion of the full Court and, pursuant to I.O.P. 5.7, does not
constitute binding precedent.
1
We write exclusively for the parties and therefore set forth only those facts that are
necessary to our disposition.
2
Skadden had disclosed that it represented Tennenbaum, Radnor’s secured lender, in
unrelated matters. Following a hearing, upon concluding that Tennenbaum was not a
significant client and that Skadden’s relationship with it was not a disabling conflict of
interest, the Bankruptcy Court entered an Order authorizing the Debtors to employ
Skadden. Tennenbaum then purchased Radnor’s assets through a bankruptcy sale after
Radnor’s attempts at restructuring proved unsuccessful.
Coincident with the sale process in the Chapter 11 proceedings, Radnor’s
Unsecured Creditors Committee (“Committee”) commenced litigation against
Tennenbaum and its affiliates alleging claims of, inter alia, breach of fiduciary duty and
fraudulent transfers. Following extensive discovery and eight days of trial, on November
17, 2006 the Bankruptcy Court entered Judgment in favor of the defendants. See In re
Radnor Holdings Corp., 353 B.R. 820, 26-827 (Bankr. D. Del. 2006). In support thereof,
the Court found that Tennenbaum did not engage in wrongful conduct and that
Tennenbaum at all times acted in good faith with a view to maximizing Radnor’s value to
all constituents. Id. at 841. The Committee did not pursue an appeal of the Bankruptcy
Court’s Judgment, and the Bankruptcy Court entered an Order approving the sale of the
Debtors’ assets to a Tennenbaum affiliate (“Sale Order”).
On September 10, 2012, the Bankruptcy Court entered an Order confirming
Radnor’s plan of liquidation (“Plan”), and thereafter, in accordance with the terms of the
Plan, Skadden filed its Final Fee Application. In December 2012, Kennedy filed in the
Bankruptcy Court his original Complaint, along with his Objection to the Final Fee
3
Application, and he filed his Amended Complaint in February 2013 (“Complaint”). The
Bankruptcy Court stayed the deadline for filing a response to the Complaint pending the
outcome of Kennedy’s Objection and the Final Fee Application proceedings.
After an evidentiary hearing, the Bankruptcy Court entered its Order overruling
Kennedy’s Objection in its entirety and granting Skadden’s Final Fee Application (“Final
Fee Order”), finding that Kennedy’s assertions were without merit and that Skadden and
Tennenbaum did not fail to disclose conflicts or act improperly. See In re Radnor
Holdings Corp., 2013 WL 3228116 (Bankr. D. Del. June 20, 2013). Kennedy appealed
the Final Fee Order to the District Court, which affirmed on August 13, 2014. In re
Radnor Holdings Corp., 528 B.R. 245, 251 (D. Del. 2014). Kennedy then appealed to
our Court, and on December 10, 2015, this Court affirmed the District Court’s decision.2
In re Radnor Holdings Corp., 629 F. App’x 277, 280 (3d Cir. 2015). The Supreme Court
denied certiorari on October 11, 2016. See Kennedy v. Skadden, Arps, Slate, Meagher &
Flom LLP, 137 S. Ct. 294 (2016).
After this Court’s affirmance of the Final Fee Order, appellees filed their
respective Motions to Dismiss the Complaint, and the Bankruptcy Court granted those
motions, finding that Kennedy’s claims were time-barred, that the doctrines of law of the
case, res judicata, and collateral estoppel prevented Kennedy from re-litigating the
2
In that Kennedy’s Objection to the Final Fee Application incorporated the allegations of
his Complaint by reference, Kennedy’s appeal of the Final Fee Order raised very similar,
if not identical, claims as those raised in this appeal, including that Skadden attorneys
concealed their investments in the Tennenbaum-affiliated Special Value Expansion Fund
LLC.
4
issues, and that Kennedy lacked standing to bring his claims. See In re Radnor Holdings
Corp., 2016 WL 1644499 (Bankr. D. Del. Apr. 22, 2016). On appeal, the District Court
affirmed, see In re Radnor Holdings Corp., 564 B.R. 467 (D. Del. 2017), and Kennedy
appeals from the District Court’s affirmance.
II.3
Appellees argue that the Bankruptcy Court properly concluded that Kennedy’s
claims were time-barred, and that we may affirm on this basis alone. We agree.
The Bankruptcy Court determined there are multiple statutes of limitations which
potentially apply to Kennedy’s claims and that his claims are time-barred no matter
which of those statutes of limitations apply. See Radnor Holdings Corp., 2016 WL
1644499, at *3 (identifying all potentially applicable statutes of limitations).
Specifically, none of the even potentially applicable statutes of limitations is more than
six years, and because all of the wrongful acts alleged in Kennedy’s Complaint predate or
relate to Radnor’s sale to Tennenbaum on November 21, 2006, and Kennedy did not file
his original Complaint until December 26, 2012, more than six years later, each of the
causes of action asserted in Kennedy’s Complaint is time-barred.
3
The Bankruptcy Court and the District Court had jurisdiction pursuant to 28
U.S.C. §§ 157 and 158(d), respectively. We have appellate jurisdiction under 28 U.S.C §
158(d). “Because the District Court sat as an appellate court to review the Bankruptcy
Court, we review the Bankruptcy Court’s legal determinations de novo, its factual
findings for clear error, and its exercises of discretion for abuse thereof.” In re Goody’s
Family Clothing Inc., 610 F.3d 812, 816 (3d Cir. 2010); see also In re Telegroup, Inc.,
281 F.3d 133, 136 (3d Cir. 2002) (“[T]his Court conducts the same review of the
Bankruptcy Court’s order as did the District Court.”).
5
On appeal, Kennedy does not dispute that, absent tolling, all potentially applicable
statutes of limitations had expired by the time he filed his Complaint.4 However, he
argues that any applicable limitations periods should be equitably tolled in this case
because, according to Kennedy, appellees concealed, until March 15, 2013, that certain
Skadden attorneys had ownership interests in a Tennenbaum-affiliated Fund. Kennedy
acknowledges that ownership in the Tennenbaum affiliate by Skadden attorneys forms
the basis for relief he is requesting under each of the counts set forth in his Complaint.
As the Bankruptcy Court and the District Court pointed out, the Bankruptcy Court
conducted the hearing on the sale to Tennenbaum on November 21, 2006, more than six
years before Kennedy filed his Complaint, and Kennedy knew of Skadden’s relationship
with Tennenbaum, at the latest, by the time of the 2006 sale hearing. Following an
evidentiary hearing, the Bankruptcy Court overruled Kennedy’s Objection to Skadden’s
Final Fee Application and found that prior to and at the September 20, 2006 hearing on
Skadden’s retention as bankruptcy counsel, Skadden disclosed, among other things, that
Skadden partners had invested in the Tennenbaum-affiliated Funds. Radnor Holdings
Corp., 2013 WL 3228116, at *3. Further, the Court pointed out that these disclosures
were made openly and publicly prior to the Court’s approval and authorization of
Skadden’s retention. Id. at *3. Similarly to Kennedy’s claims on appeal here, on appeal
to the District Court from the Bankruptcy Court’s Final Fee Order and then on appeal to
4
Therefore, this appeal does not call upon us to determine which specific statute of
limitations applies to each of the causes of action alleged in Kennedy’s Complaint.
6
this Court, Kennedy argued that Skadden’s pre-retention disclosures failed to include
investments by Skadden partners in Tennenbaum-affiliated Funds, but we affirmed the
finding that Skadden had disclosed prior to its retention that its partners had invested in
Tennenbaum-affiliated Funds. See Radnor Holdings Corp., 2013 WL 3228116, at *3
(finding Skadden disclosed that “[c]ertain Skadden partners invested in Tennenbaum
affiliated funds . . . openly, publicly and to [the] Court prior to [the] Court’s approval and
authorization of Skadden’s retention”), aff’d, 528 B.R. at 249-51, aff’d, In re Radnor
Holdings Corp., 629 F. App’x 277, 279 (3d Cir. 2015), cert. denied, 137 S. Ct. 294
(2016). Kennedy is unable to show that equitable tolling applies here. Since
Tennenbaum’s relationship with Skadden, including that certain Skadden partners had
invested in Tennenbaum-affiliated Funds, was revealed at the latest by the sale hearing,
and thus more than six years before Kennedy filed his Complaint, his claims are time-
barred.5
For the foregoing reasons, we affirm.
5
Having found that appellees’ respective motions to dismiss were properly granted
because Kennedy’s claims were time-barred, it is unnecessary to address the Bankruptcy
Court’s other grounds for granting appellees’ motions, including that Kennedy lacks
standing to bring his claims and that Kennedy’s claims are precluded as already
adjudicated. We also need not address the additional grounds raised by appellees for
affirming dismissal of the Complaint, including that the Sale Order approved a release of
appellees from Kennedy’s claims and that the Confirmation Order foreclosed Kennedy’s
right to object.
7