Shamus Holdings, LLC

The assignments include causes of action against the officers, directors,1
managers, members, trustees, beneficiaries, agents, employees, successors, and assigns
of LBM and Wolfpen, specifically, Marcello Mallegni and Michael J. Norris.
Additionally, the Debtor, through the Acquisition Motion, disclosed that it had
executed an ancillary agreement with Barry Queen, agreeing not to assert any claim or
cause of action against him in consideration for his execution of the Agreement as a
1
UNITED STATES BANKRUPTCY COURT
FOR THE
DISTRICT OF MASSACHUSETTS
~~~~~~~~~~~~~~~~~~~~~~~~~~~
In re
SHAMUS HOLDINGS, LLC, 	Chapter 11
Debtor 	Case No. 07-14572-JNF
~~~~~~~~~~~~~~~~~~~~~~~~~~~
MEMORANDUM
I. INTRODUCTION
The matter before the Court is the “Motion to Approve Acquisition of Claims by
Debtor” (the “Acquisition Motion”), pursuant to which the Debtor seeks Court approval
of the conditional release of certain claims and causes of action it holds against 14 Beach
Street Realty Trust, Pine Banks Nominee Trust, and Foundry Realty LLC (collectively, the
“Assigning Co-Parties”), in exchange for assignments of certain claims and causes of action
held by the Assigning Co-Parties against LBM Financial, LLC (“LBM”) and Wolfpen
Financial LLC (“Wolfpen”), all as set forth in a “Settlement Agreement” attached to the
Acquisition Motion. 	The Debtor’s purpose in filing the Acquisition Motion is to confer1
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member of Foundry Realty LLC.
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upon itself standing to renew counterclaims it previously asserted in an adversary
proceeding commenced by the filing of an “Objection to Claim and Counterclaim” (the
“Litigation”).
II. BACKGROUND
By way of background, this Court, on August 6, 2008, dismissed the Debtor’s
Counterclaims and circumscribed the grounds upon which the Debtor could object to
LBM’s proof of claim. 	The Court based its decision, in part, on the Debtor’s lack of
standing to assert a number of its Counterclaims, a decision which the Debtor appealed.
See Shamus Holdings, LLC v. LBM Financial, LLC, No. 08-1030, 2008 WL 3191315 (Bankr.
D. Mass. Aug. 6, 2008). The Debtor, in its pleadings, has admitted that the purposes of the
Acquisition Motion are to enable it “to pursue the Assigning Co-parties’ claims and causes
of action against LBM, which are rights the Debtor may be unable to assert based on the
Court’s recent decision, as well as to “eliminate the need for a time consuming and
expensive appeal . . . .” In short, the Debtor’s Acquisition Motion represents an attempt
to circumvent the August 6, 2008 decision in lieu of pursuing its appeal.
LBM objected 	to 	the 	Acquisition Motion, and the incorporated Settlement
Agreement, on a variety of grounds, including that the Debtor failed to satisfy the
standards for approval of settlement agreements, see Jeffrey v. Desmond, 70 F.3d 183, 185
(1st Cir. 1995); Fed. R. Bankr. P. 9019, that the Debtor failed to establish that the acquisition
and release of the claims described in the its pleadings are in the best interests of the
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bankruptcy estate, that the Debtor failed to disclose the multiple and competing roles that
its principal has undertaken with different parties whose claims are part of the Acquisition
Motion, and that the Debtor is seeking to improperly validate the assignment of claims
based upon allegations of fraud and misrepresentation.
III. DISCUSSION
Upon consideration of the Acquisition Motion, LBM’s Objection and the Debtor’s
Response to LBM’s Objection, the Court denies the Acquisition Motion. 	While LBM’s
Objection has merit, the Court finds that allowance of the Acquisition Motion would be
futile. 	Were 	the 	Debtor 	to 	seek 	to 	renew 	its 	Counterclaims, 	either 	through 	the
commencement of a new adversary proceeding or through a motion for reconsideration
of the Court’s August 6, 2008 decision, it would need to satisfy the requirement of Fed. R.
Civ. P. 60(b), made applicable to this proceeding by Fed. R. Bankr. P. 9024. 	Rule 60(b)
provides in pertinent part the following:
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On
motion 	and 	just 	terms, 	the 	court 	may 	relieve 	a 	party 	or 	its 	legal
representative from a final judgment, order, or proceeding for the following
reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence,
could not have been discovered in time to move for a new trial
under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
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LBM supported its allegation with a copy of GMCR Capital LLC’s Certificate of2
Organization, which reveals that Ross is its manager.
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(5) the judgment has been satisfied, released or discharged; it
is based on an earlier judgment that has been reversed or
vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b).
As is evident from even a cursory review of the grounds for relief in Rule 60(b), only
the last, “any other reason that justifies relief,” is applicable. “A second bite of the apple,”
however, is not a reason justifying relief.
The Debtor, whose manager is Steven A. Ross, filed its Chapter 11 petition on July
25, 2007. Approximately six months later, after considerable use of Fed. R. Bankr. P. 2004
to obtain discovery from principals and agents of LBM and others, it commenced the
Litigation referenced above against LBM in which it objected to LBM’s proof of claim and
asserted ten counterclaims. The Debtor, which was formed less than one week before it
filed its Chapter 11 petition, not burdened with substantial unsecured debt. 	Indeed, it
listed just one secured creditor, LBM, with a mortgage secured by Unit C-1 of the Foundry
Condominium located at 314-330 West Second Street, South Boston, Massachusetts (the
“Foundry property”) and one unsecured creditor, GMCR Capital LLC, whose claim was
incurred on July 3, 2007 before the Debtor was formed. 	LBM has alleged that GMCR
Capital LLC is an insider of the Debtor because the Debtor and GMCR Capital LLC have
the same manager, namely Steven A. Ross. In view of these circumstances, the Court finds2
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that the Debtor cannot advance a legitimate reason for relieving itself of the adverse
consequences of this Court’s August 6, 2008 judgment. The only reason that this Court can
fathom is to belatedly correct the deficiencies that precipitated the dismissal of its
counterclaims - - deficiencies which were patent in view of the Debtor’s acquisition of the
Foundry property on the same day it was formed and within days of the commencement
of the Debtor’s bankruptcy case. See 2008 WL 3191315 at *1. This reason is outside the
purview of Rule 60(b).
IV. CONCLUSION
In view of the foregoing, the Court shall enter an order denying the Acquisition
Motion
By the Court,
Joan N. Feeney
United States Bankruptcy Judge
Dated: November 12, 2008
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