JOAN N. FEENEY, Bankruptcy Judge.
The matter before the Court is the "Motion of Cathleen Kavanagh, Trustee of April Realty Trust, for Stay Pending Appeal" (the "Stay Motion"). Through her Motion, Cathleen Kavanagh ("Kavanagh"), Trustee of the April Realty Trust ("April Realty"), seeks a stay of this Court's Order dated February 12, 2018, denying "April Realty's Motion to Re-Open Bidding for Debtor's Interest in 218 Andover Street Peabody Realty Trust (the "Realty Trust"), assented to by Chapter 7 Trustee" and granting, in part, Goodwill Enterprises, Inc.'s "Cross-Motion for An Order Allowing Goodwill to Exercise Specific Performance of Its Right of First Refusal against April Realty Trust pending the outcome of April Realty's appeal of the October 20, 2017 Order and Judgment entered by the Massachusetts Land Court, Department of the Massachusetts Trial Court. See
Kavanagh's Stay Motion involves the following decisions and orders: 1) this Court's August 31, 2012 Order Authorizing and Approving Private Sale of Interest in 218 Andover Street Peabody LLC and Interest in 218 Andover Street Realty Trust (the "2012 Sale Order") and its concomitant finding, based upon the joint affidavit submitted by Brian D. Kelly ("Kelly") and Kavanagh that April Realty was purchasing interests of Daniel P. Corbett (the "Debtor") in good faith;
In its February 12, 2018 Memorandum, this Court analyzed the relief requested by Kavanagh to Re-Open Bidding, which in essence was a request to modify the 2012 Sale Order, under Federal Rule of Civil Procedure 60(b)(4) and 60 (b)(6), made applicable to the contested matter by Federal Rule of Bankruptcy Procedure 9024. See
The standard for determining whether to grant a motion for stay pending appeal is similar to that for obtaining an injunction.
Kavanagh seeks a stay pending appeal to the United States District Court for the District of Massachusetts of this Court's February 12, 2018 order. She seeks to stay this Court's order because she is hoping to succeed with respect to her pending appeal of the October 20, 2017 Order and Judgment entered by the Massachusetts Land Court. She contends that she has satisfied the standard for obtaining a stay pending an appeal from this Court's decision denying her Motion to Re-Open Bidding and granting, in part, Goodwill's Cross-Motion, through which it sought an order permitting it to exercise its right of first refusal by paying Kavanagh the amount of her winning bid at the 2012 sale. Kavanagh's Stay Motion lacks merit and highlights the inconsistent positions taken by April Realty since 2015, when Kavanagh as April Realty's Trustee, opposed Goodwill's Motion to Modify the Sale Order.
This Court concludes that Kavanagh has failed to establish a likelihood of success on the merits. Kavanagh argues at length that she has established a likelihood of succeeding on the merits of her appeal of the Land Court's decision, concluding that because this Court's February 12, 2018 decision was premised entirely upon the Land Court's holdings, "if the Land Court's decision were to be overturned on appeal, the Court's February 12, 2018 Order would necessarily have to be overturned as well." This Court disagrees. Having abstained from determining the dispute between Kavanagh and Goodwill as to whether the 2012 sale was free and clear of Goodwill's lease and ROFR, Goodwill was permitted to litigate the dispute in the Land Court. In her Stay Motion, Kavanagh did not address the basis for this Court's decision that the 2012 Sale Order was a final order that cannot be vacated either in whole or in part, absent a determination that the order was void owing to a due process violation, see Fed. R. Civ. P. 60(b)(4), or, alternatively, absent a showing under the sliding scale approach that estate enhancement from a proposed increased bid for the Debtor's interests outweighs the reasonable expectations of the parties and "the gravity of finality." See Fed. R. Civ. P. 60(b)(6), and
In seeking to reopen the bidding with respect to the Sale Order, Kavanagh invited Goodwill's Cross-Motion. The alleged errors of law made by the Land Court do not establish a likelihood of success on the merits of this Court's February 12, 2018 Order because, as noted above, Kavanagh did not demonstrate that the 2012 Sale Order was void for lack of due process or that any potential benefit to the bankruptcy estate, which is ready to close, outweighed the policy of the finality of sale orders and judgments emphasized by courts in the First Circuit. See
Kavanagh also contends that she will suffer irreparable harm. She argues the following:
In response, Goodwill, in addition to challenging Kavanagh's assertion that she has a likelihood of success on the merits of her appeal, argues: 1) that it will suffer irreparable harm because April Realty's offer to put future distributions from the Realty Trust into escrow does not eliminate future harm to it because it is entitled to the benefits of ownership of the fifty percent beneficial interest in the Realty Trust, adding that further deprivation of its rights to control the property would constitute a due process violation; 2) that it will be irreparably harmed because it "will lose the right to control the real property during the remaining term of its Lease, and the length of the stay will likely exceed the time remaining on Goodwill's Lease to occupy the Property in dispute (thereby depriving Goodwill of its right to use the Property);" and 3) permitting Kavanagh to control the property whiling pursuing two separate appeals "is both unjust and unfair." It also states, however, that it "is willing to agree not to transfer the Property to any third party pending April Realty's appeals," adding that "[t]his will provide April Realty the security it seeks without depriving Goodwill of its use of the Property and the income therefrom."
The Court concludes that Goodwill's objection to the Stay Motion is meritorious and the Kavanagh is not entitled to a stay pending appeal. The 2012 Sale Order is a final order and Kavanagh failed to establish grounds for revisiting that order. Kavanagh has not established that Goodwill is endeavoring to sell its interest in the real estate. In view of Goodwill's offer not to transfer the real property while the appeals are pending, Kavanagh's irreparable harm argument fails. Moreover, Kavanagh makes no representation that she is precluded from seeking a stay pending her appeal from the decision of the Land Court.
Were this Court to issue a stay pending appeal, Goodwill would be irreparably injured. As this Court observed in its February 12, 2018 Memorandum, Goodwill was not afforded notice of the original sale in 2012. Kavanagh opposed the relief Goodwill sought in 2015, namely the modification of the Sale Order "to reflect that pursuant to Section 363(f), the sale of the Debtor's Interest in the RE Entities to the Buyer was and is subject to Goodwill's right of first refusal, which Goodwill may seek to enforce against the Buyer under applicable state law." After losing in the Land Court in October of 2017, however, Kavanagh, moved this Court, in essence, to modify (or vacate) the 2012 Sale Order so that "a new `open cry' auction be conducted between April Realty and Goodwill for the Corbett Interest on terms and conditions to be proposed by the Trustee." This Court denied Goodwill's Motion to Modify, noting that Goodwill failed to surmount the "formidable hurdle" applicable to its Motion to Modify the Sale Order" under Fed. R. Civ. P. 60(b), made applicable by Fed. R. Bankr. P. 9024. Consistent with its October 26, 2015 Order, this Court denied Kavanagh's Motion to Re-Open Bidding explicating in more detail the same grounds for denying the relief requested with reference to Rule 60(b).
Finally, the Court concludes that public policy does not favor entry of a stay pending appeal. The finality of the 2012 Sale Order overrides any attempt to undo that order at this late date in the absence of compelling reasons under Fed. R. Civ. P. 60(b)(4) and (6), which Kavanagh failed to advance in her Motion to Re-Open Bidding.
In accordance with the foregoing, the Court shall enter an order denying the Motion for Stay Pending Appeal
