In Re Nortel Networks, Inc. , 664 F. App'x 157 ( 2016 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 15-3363
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In re: NORTEL NETWORKS, INC.; et al., Debtors
Ernest Demel,
Appellant
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On Appeal from the United States District Court
for the District of Delaware
(D. Del. No. 1-14-cv-01215)
District Judge: Honorable Leonard P. Stark
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Submitted Pursuant to Third Circuit LAR 34.1(a)
November 4, 2016
Before: SHWARTZ, COWEN and FUENTES, Circuit Judges
(Filed: November 4, 2016)
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OPINION*
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PER CURIAM
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Pro se appellant Ernest Demel appeals the District Court’s order affirming an
adverse order issued by the Bankruptcy Court. For the reasons detailed below, we will
affirm the District Court’s judgment.
In 2007, Demel, a former employee of a subsidiary of Nortel Networks, Inc.
(NNI), filed an action in the United States District Court for the Southern District of New
York. See S.D.N.Y. Civ. A. No. 07-cv-0189. Demel sought to recover disability benefits
from the subsidiary’s benefit and retirement plans.
In 2009, NNI and certain of its U.S.-based subsidiaries (collectively, “NNI”) filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware. Demel filed a proof of claim
against NNI in the amount of $1,924,557.70 relating to the benefits at issue in the
Southern District of New York action. Ultimately, Demel (through counsel) and NNI
stipulated that Demel’s claim would be allowed as a general unsecured claim of
$125,000, and that Demel would release any further claims against NNI. On October 14,
2010, the Bankruptcy Court approved the stipulation. See Fed. R. Bankr. P. 9019. In
2013, NNI entered into a settlement with an Official Committee of Long Term Disability
Participants to discontinue the benefit programs that it traditionally administered in return
for an allowed general unsecured claim of nearly $26 million.
In June 2014, Demel, relying on Federal Rules of Bankruptcy Procedure 9023 and
9024, filed a motion in the Bankruptcy Court to amend the stipulation. He sought to (1)
alter language in one section to clarify that he was permitted to transfer his claim; (2)
increase the value of his claim to $1,674,365; and (3) treat his claim as part of the larger
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long-term disability settlement. After holding a hearing, the Bankruptcy Court denied
amendments (2) and (3); as for amendment (1), the court emphasized in its order that
nothing in the initial stipulation prohibited Demel from transferring his claim. Demel
appealed to the District Court, which affirmed the Bankruptcy Court’s judgment. Demel
then filed a timely notice of appeal to this Court. He has also filed multiple motions to
expand the record and a motion to seal certain medical records that he has filed in this
Court.
The District Court exercised jurisdiction over the appeal of the Bankruptcy Court's
order under 28 U.S.C. § 158(a). We have jurisdiction under § 158(d)(1). We review the
Bankruptcy Court’s denial of a motion under Rule 9024 for abuse of discretion. See In re
Glob. Energies, LLC, 763 F.3d 1341, 1347 (11th Cir. 2014) (per curiam); see also
Reform Party of Allegheny Cty. v. Allegheny Cty. Dep’t of Elections, 174 F.3d 305, 311
(3d Cir. 1999) (en banc) (so ruling with respect to Rule 60(b)).
We will affirm the District Court’s order. Demel’s motion sought relief under
Fed. R. Bankr. P. 9024, which provides that Fed. R. Civ. P. 60 applies in bankruptcy
proceedings. The only subsection of Rule 60 that is arguably relevant here is Rule
60(b)(6).1 See Coltec Indus., Inc. v. Hobgood, 280 F.3d 262, 273-75 (3d Cir. 2002)
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A motion under Rule 60(b)(1)–(3) must be filed within one year of the judgment that is
challenged, see Rule 60(c)(1), and Demel filed his motion nearly four years after the
stipulation was approved. Demel is entitled to no relief under Rule 60(b)(4) because he
argues only that the stipulation is unfair, not that the Bankruptcy Court “lacked
jurisdiction of the subject matter or the parties or entered ‘a decree which is not within
the powers granted to it by the law.’” Marshall v. Bd. of Educ., 575 F.2d 417, 422 (3d
Cir. 1978) (quoting United States v. Walker, 109 U.S. 258, 266 (1883)). Nor does
subsection (b)(5) apply here, since the Bankruptcy Court’s judgment has not been
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(analyzing challenge to court-approved settlement agreement under Rule 60(b)). To be
entitled to relief under Rule 60(b)(6), Demel must show “extraordinary circumstances
where, without such relief, an extreme and unexpected hardship would occur.” Cox v.
Horn, 757 F.3d 113, 115 (3d Cir. 2014) (quoting Sawka v. Healtheast, Inc., 989 F.2d 138,
140 (3d Cir. 1993)). Demel has not made that showing.
Demel first asked the Bankruptcy Court to edit the stipulation to clarify that his
claim was transferrable. The relevant provision states as follows: “8. No Transfer.
Claimant represents that he has not sold, assigned or otherwise transferred the claim to a
third party.” J.A. at 127. Demel sought to amend the stipulation to eliminate the word
“no” in the heading to ensure that a potential purchaser of his claim would not believe
that Demel could not transfer it. The Bankruptcy Court stated that it did not believe that
any purchaser would be confused, and, in denying Demel’s motion to amend, specifically
stated in the order that “The Court recognizes that there is no prohibition whatsoever as
to the transfer of the Claim.” J.A. at 10. While Demel believes that he should have been
awarded the precise relief he sought, his unfounded concerns about marketability do not
amount to “extraordinary circumstances.”
satisfied or vacated and is not “prospective” under the relevant standards. See Coltec
Indus., Inc. v. Hobgood, 280 F.3d 262, 272-73 (3d Cir. 2002). The District Court treated
Demel’s motion as arising under Fed. R. Bankr. P. 9023, which provides that Fed. R. Civ.
P. 59 applies in bankruptcy proceedings, but a motion under this rule must be filed “no
later than 14 days after entry of judgment,” so any such motion was grossly untimely.
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Demel’s two additional arguments — requests (2) and (3) before the Bankruptcy
Court — are that he settled for too little2 and that he would have been better off joining
the larger long-term benefit settlement. However, “even if [his] decision to settle was
improvident in hindsight, the decision has been made and cannot be revisited.” Coltec
Indus., Inc., 280 F.3d at 275 (affirming denial of Rule 60(b)(6) motion seeking to
invalidate a settlement agreement, explaining that the appellant “must bear the
consequences of its informed, counseled and voluntary decision” to settle).
Before this Court, Demel argues at some length that his attorney did not have
authority to enter into the settlement agreement on his behalf. At the hearing before the
Bankruptcy Court, Demel made a number of statements that are inconsistent with this
theory. See, e.g., JA at 16 (“we settled for a very low amount because it was at the very
preliminary stage of bankruptcy”). In any event, as the District Court explained, Demel
did not raise that argument before the Bankruptcy Court and consequently waived it. See
In re Kaiser Grp. Int’l Inc., 399 F.3d 558, 565 (3d Cir. 2005). The same conclusion
applies to Demel’s undeveloped assertions that NNI somehow committed fraud.
Accordingly, we will affirm the District Court’s judgment. Demel’s motions to
expand the record are denied. See, e.g., Burton v. Teleflex Inc., 707 F.3d 417, 435 (3d
2
Demel seems to assume that the amount he identified in his proof of claim —
$1,924,557.70 — represents the amount that he should have received, but he has offered
no evidence to support that valuation, and indeed, the Bankruptcy Court observed that
there was “substantial uncertainty as to the validity of [his] claim.” JA 28. Demel also
suggests that he believed that money would be distributed to him more quickly than it has
been, but there is nothing in the stipulation that would displace the standard rule that
distributions are made once a plan is confirmed. See Fed. R. Bankr. P. 3021.
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Cir. 2013) (a party may supplement the record on appeal in only “exceptional
circumstances”). Demel’s motion to seal his medical records is granted.
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