OPINION1

CHRISTOPHER S. SONTCHI, Bankruptcy Judge.

INTRODUCTION

The Catholic Diocese of Wilmington, Inc. (the "Debtor") is the debtor in this Chapter 11 case. Among its many activities, it operates a pooled investment program on behalf of the Diocese.2 The Debtor operates the program through an account (the "PIA") in the Debtor's name. Numerous entities affiliated with the Diocese have deposited, in aggregate, approximately $75 million in the pooled investment program. The Debtor and the investors have taken the position that the investors' deposits in that account are held by the Debtor in trust for the benefit of the investors and, thus, the money is not property of the Debtor's estate.

The Official Committee of Unsecured Creditors filed an adversary proceeding seeking, among other things, a declaration that (i) a valid trust does not exist with respect to the PIA; and (ii) the alleged trust funds cannot be traced. The Court held a four-day trial with respect to these issues.

On June 28, 2010, the Court issued an opinion finding that the Non-Debtor Defendants'3 money in the PIA is held by the Debtor in a resulting trust on their behalf.4 Nonetheless, applying the lowest intermediate balance test, the Court found that the defendants failed to meet their burden of tracing those funds. Thus, with one exception, the Court found that the entirety of the PIA is property of the estate.5

On June 29, 2010, the Non-Debtor Defendants filed a motion for reconsideration.6 Briefing is complete. This is the Court's ruling on the motion.

JURISDICTION

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b).

GOVERNING STANDARD

Federal Rule of Civil Procedure 59(e), made applicable to this adversary proceeding pursuant to Rule 9023 of the Federal Rules of Bankruptcy Procedure, governs motions for reconsideration. A motion for reconsideration may be granted where (i) there has been an intervening change in controlling law; (ii) new evidence has become available; or (iii) there is a need to prevent manifest injustice or to correct a clear error of law or fact.7 The Court should reconsider a prior decision where it appears it has overlooked or misapprehended some factual matter that might reasonably have altered the result reached by the Court.8 While it is true that a motion for reconsideration should not be used to reargue the facts or applicable law, it is appropriate when the facts were presented but overlooked by the Court.9 The defendants assert that this is the case here.

THE MOTION FOR RECONSIDERATION MUST BE DENIED10

In attempting to meet their burden of identifying and tracing the funds deposited in trust with the Debtor, the defendants argued that the Court should look solely to the Debtor's accounting records, which meticulously recorded the investors' share of the funds in the PIA. The Court declined to do so, noting that the defendants' argument ignored the fact that the trust funds were deposited and withdrawn from the operating account and not the PIA. The Court held that the "defendants must identify and trace the trust funds (i) to and from the operating account; and (ii) between the operating account and the PIA," which they did not and could not do because no such evidence exists.11 Nonetheless, the Court did find that St. Ann's met its burden of tracing its funds because it established at trial that its funds were deposited directly into the PIA and the PIA balance never fell below the amount of its deposit after it was made.12

In the motion for reconsideration, the defendants assert that the Court ignored the fact that the bulk of the funds in the PIA (not just those of St. Ann's) had been deposited by the investors years if not decades ago. They further assert that "a significant portion of the Non-Debtors' funds within the PIA, just like those held by St. Ann's, never even arguably passed through the Debtor's operating account." More specifically, the Defendants assert that several of the investors had significant sums of money in their own endowment accounts prior to their election to participate in the PIA and any contributions made to their accounts since their initial deposits have been de minimis, at best.13

The defendants have the burden of establishing the manner in which all deposits and withdrawals were made.14 Their attempt to meet that burden by arguing what "must have happened" over the last 30 or so years is not persuasive. The testimony upon which the defendants rely was qualified with phrases such as "unlikely," "my guess," "don't know for certainty," and "don't know whether." Such testimony is of no probative value. Moreover, the "hard" evidence in the record refutes the defendants' argument.

In short, the defendants did not present any evidence establishing the existence of any mechanism by which funds were deposited and withdrawn from the PIA and/or its predecessors other than through the operating account.18

The defendants failed at trial to address the questions that must be answered in order for them to prevail. When did the deposits and withdrawals occur? How large were the deposits and withdrawals? Did they flow directly into the PIA or through one or more other commingled accounts? Did the balance of the PIA ever drop below the amount of the deposits or even to zero? How were any transfers between custodial accounts accomplished? The absence of evidence in the record on these points means that the party with the burden of proof, i.e., the defendants, cannot make their case and must lose.19

The Court considered the entirety of the evidence presented in the case. Nonetheless, it ruled that the defendants had failed to meet their burden of tracing the funds. The defendants have not identified any evidence presented but overlooked by the Court that might reasonably have altered the result. Thus, the motion for reconsideration must be denied.20

The Court will issue an order.