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EXHIBIT “C”
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SUPREMECOURTOFTHESTATEOFNEWYORK
COUNTYOFALBANY
JOHNDOE, AMENDED
ANSWER
WITHCOUNTERCLAIM
Plaintiff/Petitioner,
Index No. 901925-24
-against-
TOBINANDDEMPF, LLP and MICHAELL.
COSTELLO,
Defendant/Respondent.
Defendants as and for an Amended Answer to the complaint, respectfully allege upon
information and belief as follows:
"2," "3," "4," "5," "8,"
1. Admit the allegations set forth at paragraphs designated
"9," "10," "16," "19," "20."
and
"12"
2. With respect to paragraph admit that The RomanCatholic Diocese of
Albany filed a petition for reorganization with the Northern District of NewYork Bankruptcy
Court on March 15, 2023, and deny the balance of the allegations contained therein.
3. Deny any knowledge or information sufficient to form a belief regarding the
"1," "18."
allegation set forth at paragraph and
"6," "7," "11," "13," "14,"
4. Deny the allegations set forth at paragraphs designated
"15," "17," "21," "22," "23," "24," "25," "26," "27," "28," "29," "30," "31," "32," "33," "34,"
"35," "36," "37," "38," "39," "40," "41," "42," "43," "44," "45," "46," "47," "48," "49," "50,"
"51," "52," "53," "54," "55," "56," "57," "58," "59," "60," "61," "62," "63," "64," "65," "66,"
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"67," "68," "69," "70," "71," "72," "73," "74," "75," "76," "77," "78," "79," "80," "81," "82,"
"83," "84," "85," "86," "87," "88," "89," "90," "91," "92," "93," "94," "95," "96," "97," "98,"
"99," "100," "101," "102," "103," "104," "105," "106," "107," "108," "109," "110," "111,"
"112," "113," "114," "115," "116," "117," "118," "119," "120," "121," "122," "123," "124,"
"125," "126," "127," "128," "129," "130," "131," "132," "133," "134," "135," "136," "137,"
"138," "139," "140," "141," "142," "143," "144," "145," "146," "147," "148," "149," "150,"
"151," "152," "153," "154," "155," "156," "157," "158," "159."
and
AFFIRMATIVE DEFENSES
In further response to the complaint, the Defendants hereby assert the following
affirmative and other defenses, without conceding that they bear the burden of persuasion as to
any of them except those deemed affirmative defenses by law, regardless of how such defenses
are denominated herein. Nor do the Defendants admit the Plaintiff is relieved of its burden to
prove each and every element of its claims and the damages, if any, to which it claims to be
entitled. As for its defenses, the Defendants reassert and reincorporate as if fully set forth herein
their responses, above, to the complaint.
FIRST DEFENSE
5. The mediation sessions which resulted in the settlement of Plaintiff's claim, Index
No. 905378-19, were conducted under the direct supervision and participation of the Supreme
Court, Albany County, with active participation of Plaintiff's counsel, Jordan K. Merson, Esq.,
and Jesse R. Mautner, Esq., counsel and representatives of the insurance carriers of the Diocese
of Albany, representative of the Diocese of Albany and Michael L. Costello of Tobin and
Dempf, LLP. The mediation was conducted with full disclosure and good faith on behalf of all
participants under the direction and supervision of the Supreme Court.
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SECONDDEFENSE
6. The Complaint fails to state a claim or cause of action cognizable in law or equity
upon which relief can be granted.
THIRD DEFENSE
7. Plaintiff's claims against the Defendants are barred in whole or in part by the
applicable statute of limitations.
FOURTH
DEFENSE
8. Plaintiff's claims are barred by the doctrine of waiver, laches and equitable
estoppel.
FIFTH DEFENSE
9. Plaintiff's claims are barred by the order of the United States Bankruptcy Court
Northern District of NewYork dated February 14, 2024 (Case No. 23-10244-1).
SIXTH DEFENSE
10. Plaintiff's claims against the Defendants are barred by release.
SEVENTHDEFENSE
1 1. Plaintiff's claims against the Defendants are barred by novation.
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AS ANDFORA COUNTERCLAIM
DEFENDANTS
RESPECTFULLY
ALLEGE
12. Following the Supreme Court mediated settlement, Plaintiff, by its attorneys,
Jordan K. Merson, Esq., and Jesse R. Mautner, Esq., filed an affirmative proof of claim with the
United States Bankruptcy Court on or before the Court designated bar date of November 1, 2023.
13. On October 5, 2023, Jordan K. Merson, Esq., filed a motion with the United
States Bankruptcy Court Northern District of NewYork for the entry of an order pursuant to 11
U.S.C. § 365(d)(2) compelling the debtor [Diocese of Albany] to assume or reject its executory
contract with John Doe within a specified period of time. Copy of motion is annexed as Exhibit
"A."
14. Plaintiff's motion by Jordan K. Merson, Esq., before the Bankruptcy Court
centered and relied on the settlement and the allegations set forth in the instant action at
"2," "4," "5," "9," "10," "11."
paragraphs and
15. Plaintiff's motion by Jordan K. Merson, Esq., before the Bankruptcy Court
included as an exhibit the Settlement Agreement and Full and Final Release of Claims. Redacted
"B."
copy annexed as Exhibit
16. The hearing on Plaintiff's motion by Jordan K. Merson, Esq., was conducted on
February 14, 2024, by the Bankruptcy Court.
17. The Bankruptcy Court denied the motion filed by Jordan K. Merson, Esq. Copy
"C."
of order dated February 14, 2024, annexed as Exhibit
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18. On February 22, 2024, Plaintiff's attorneys Jordan K. Merson, Esq., and Jesse R.
Mautner, Esq., commenced the instant action by filing the Summonsand Complaint with
NYSCEFunder Index No. 901925-24.
19. The instant action filed by attorneys Jordan K. Merson, Esq., and Jesse R.
Mautner, Esq., eight days after the Bankruptcy Court decision, is a direct, intentional and
aggressive attempt to circumvent the decision of the Bankruptcy Court denying the relief
requested on the settlement in the underlying CVAaction, Index No. 905378-19, reached before
the Supreme Court Albany County.
20. The instant action filed by attorneys Jordan K. Merson, Esq., and Jesse R.
Mautner, Esq., constitutes abuse of process and the "use of the process in a perverted manner to
objective"
obtain a collateral Curiano v. Suozzi, 63 N.Y.2d 113, 116 [1984].
WHEREFORE,
Defendants, respectfully request that this Court deny the relief
requested in Plaintiff's Complaint, dismiss the complaint with prejudice, grant judgment to
Defendants on the Counterclaim and grant such other and further relief as the Court deemsjust,
fair and proper.
DATED: March 13, 2024 TOBIN ANDDEMPF, LLP
Albany, NewYork
By: /s/ Michael L. Costello
Attorneys for Defendants
515 Broadway, 4"' Floor
Albany, NY 12207
(518) 463-1 177
mcostelketdlaws.com
TO: Jordan K. Merson, Esq.
Jesse R. Mautner, Esq.
Attorneysfor Plaintiff
18th
950 Third Avenue, FlOOr
NewYork, NY 10022
(212) 603-9100
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VERIFICATION
STATEOFNEWYORK )
COUNTYOFALBANY ) ss.:
Michael L. Costello, being duly sworn, deposes and says he is a partner at the law firm of
Tobin and Dempf, LLP; has read the foregoing Amended Answer and knows the contents
thereof to be true of his knowledge, except as to the matters therein stated to be alleged on
information and belief and as to those matters believes them to be true based on records,
investigation, data and consultations with counsel.
/s/Michael L. Costello
Michael L. Costello
Sworn to before methis 13th
day of March, 2024
/s/ Sheri Camprone
Notary Public
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Exhibit "A"
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Hearing Date: November 8, 2023
Hearing Time: 10:30 a.m.
Location: Albany, New York (and via the
Court's Teleconference System)
DIAL-IN #: 877-402-9753
ACCESSCODE: 4954900#
Objection Deadline: November 1, 2023
UNITEDSTATESBANKRUPTCY COURT
NORTHERN DISTRICT OFNEWYORK
In re
THE ROMAN CATHOLICDIOCESEOF Chapter 11
ALBANY, NEWYORK, Case No. 23-10244
Debtor.
MOTIONFORENTRYOFANORDERPURSUANT TO 11 U.S.C. § 365(d)(2)
COMPELLINGTHEDEBTORTOASSUMEORREJECT ITS EXECUTORY
CONTRACT WITHJOHNDOEWITHIN A SPECIFIED PERIODOFTIME
John Doe ("Mr. Doe"), by and through his attorneys at Merson Law, PLLC, hereby moves
this Court for entry of an order in the form attached hereto as Exhibit "A" pursuant
substantially
to 11 U.S.C. § 365(d)(2) granting Mr. Doe's Motion (the "Motion") compelling The Roman
Catholic Diocese of Albany, New York (the "Debtor") to assume or reject its executory contract
(the "Agreement") with Mr. Doe within a specified period of time. In support of the Motion, Mr.
Doe respectfully states as follows:
JURISDICTION ANDVENUE
1. This Court has jurisdiction over the Motion pursuant to 28 U.S.C. §§ 157 and 1334.
This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(A). Venue is proper
before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
2. The statutory predicates for the relief requested herein are Sections 105 and
365(d)(2) of Title 1 1 of the United States Code (1 1 U.S.C. § 101, et seq., the "Bankruptcy Code").
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FACTS
3. On August 16, 2019, Mr. Doe filed a lawsuit against the Debtor and St. Mary's
Church pursuant to CPLR § 214-g (the "Lawsuit"). A copy of the Summonsand Verified
Complaint (the "Complaint") is attached hereto and made a part hereof as Exhibit "B".
4. After more than three years of intense litigation (and with the Lawsuit approaching
trial), a settlement conference was held before the presiding judge, Hon. L. Michael Mackey,
J.S.C., on February 24, 2023. That conference was attended by counsel for Mr. Doe, counsel for
the Debtor (along with one of its corporate representatives), and counsel for two of the Debtor's
insurers.
5. While no settlement was reached during the conference on February 24, 2023, after
subsequent settlement conferences before Judge Mackey on February 27, 2023, February 28, 2023
and March 1, 2023, the Lawsuit was settled for $375,000.00
6. Then, in order to effectuate the settlement, the parties drafted and agreed upon the
Claims"
terms of a document entitled "Settlement Agreement and Full and Final Release of (the
"Agreement"). A copy of the Agreement is attached hereto and made a part hereof as Exhibit
"C".1
7. Of note for the purposes of the Motion is that the Agreement required: (i) the Debtor
sum"
to issue the "full and final settlement to counsel for Mr. Doe "within twenty-one (21) days
of the execution and receipt of four originals of th[e] Agreement"; and, (ii) Mr. Doe to release his
claims against Debtor. See Exhibit "C".
'
For the purposes of the Motion, the Agreement has been redacted only as to Mr. Doe's nameand other personal,
identifying information in accord with the Stipulation entered into by counsel for Mr. Doe and counsel for the
Debtor at the outset of the Lawsuit. A copy of the Stipulation is attached hereto and madea part hereof as Exhibit
"D".
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8. Pursuant to its terms, Mr. Doe executed four originals of the Agreement which were
then delivered via Federal Express and received by counsel for the Debtor on March 8, 2023. A
copy of the Proof of Delivery from Federal Express is attached hereto and made a part hereof as
Exhibit "E".
9. On March 9, 2023, counsel for Mr. Doe also received verbal confirmation from
counsel for the Debtor that his office had received the Agreement such that payment was to be
issued no later than Wednesday, March 29, 2023. A copy of the Email Correspondence is attached
hereto and made a part hereof as Exhibit "F".
10. Then, on March 15, 2023, while its time to issue payment was running, the Debtor
filed a petition for relief under Chapter 11 of the United States Bankruptcy Code.
11. To date, the Debtor has not issued payment, and Mr. Doe has not released his claims
against the Debtor via the discontinuance of the Lawsuit.
ARGUMENT
1. The Agreement is an Executory Contract
12. When read together, 11 U.S.C. §§ 365(a) and 1107(a) provide that a Chapter 11
debtor-in-possession may assume or reject any executory contract of the debtor, subject to court
approval. See CORRoute 5 Co., LLC v. Penn Traffic Co. (In re Penn Traffic Co.), 524 F.3d 373,
384 n.2 (2d Cir. 2008) (citing to 11 U.S.C. §§ 365(a) and 1107(a)).
13. While the Bankruptcy Code does not define the term "executory contract", it has
long been held that a contract is executory if "the obligation of both the bankrupt and the other
party to the contract are so far unperformed that the failure of either to complete performance
other."
would constitute a material breach excusing performance of the See In re Penn Traf]ìc
Co., 524 F.3d at 379 (internal citations omitted).
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14. In determining whether a party's failure to perform their contractual obligations
would constitute a material breach, courts are instructed to look to state contract law. See In re
Worldcom, Inc., 343 B.R. 486, 493 (Bankr. S.D.N.Y. 2006) (internal citations omitted); see also
Shoppers World Cmty. Ctr., L.P. v. Bradlees Stores (In re Bradlees Stores, Inc.), 2001 U.S. Dist.
LEXIS 14755, *24-25 (S.D.N.Y. 2001) (internal citations omitted).
15. Here, the Agreement states that it "shall in all respects be interpreted, enforced and
governed by and under the laws of the State of NewYork." See Exhibit "C" at ¶ 3.
16. As such, in accord with New York State contract law, a material breach is one
transaction."
"which is so substantial as to defeat the purpose of the entire See In re Bradlees
Stores, Inc., 2001 U.S. Dist. LEXIS 14755 at *25. Furthermore, "[t]he question of whether there
fact."
has been substantial compliance or material breach is a question of See id. (internal citations
omitted).
17. Given that the Agreement is, at its core, an exchange of money for a release and
discontinuance, and to date, there has been neither an exchange of money or a release and
discontinuance, there can be no dispute that both sides have committed breaches so material that
they defeat the purpose of the Agreement.
18. Finally, while the executory nature of a contract is typically examined as of the
petition date, there are times when "postpetition events alter the executoriness of a contract". See
In re Worldcom, Inc., 343 B.R. at 493. Under those circumstances, courts are instructed to "look
date."
to the date the motion to assume or reject is made or heard rather than the petition See Penn
Traffic Co. v. CORRoute 5 Co., LLC (In re Penn Traffic Co.), 2005 U.S. Dist. LEXIS 20407, *8
(8.D.N.Y. 2005) (internal citations omitted).
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19. While it is true that the Debtor had not breached the Agreement as of the petition
date as its time to issue payment was still running, Plaintiff respectfully submits that here, like in
In re Penn T'raffic Co., postpetition events (i.e., the Debtor's continued non-payment and Mr.
Doe's failure to release and discontinue) have rendered the Agreement executory such that this
Court should consider the same. See id.
20. Based on the foregoing, it is respectfully submitted that the Agreement is an
executory contract.
2. This Court Should Fix a Specified Period of Time Within Which the Debtor Must
Assume or Reject the Agreement
21. Pursuant to 11 U.S.C. § 365(d)(2), a Chapter 11 debtor-in-possession "may assume
plan."
or reject an executory contract . . . of the debtor at any time before the confirmation of a
See In re Hawker Beechcraft, Inc., 483 B.R. 424, 433 n.6 (Bankr. S.D.N.Y. 2012) (citing to 11
U.S.C. §§ 365(d)(2)).
22. Notwithstanding the above, the Bankruptcy Code also provides that "[o]n request
of the non-debtor party to the contract, the court may order the [debtor-in-possession] to assume
time."
or reject the contract within a specified See In re Hawker Beechcraft, Inc., 483 B.R. at 428;
see also 11 U.S.C. § 105(a)(2)(A) (courts have the authority to issue various kinds of orders,
including one that "sets the date by which the [debtor-in-possession] must assume or reject an
executory contract").
23. While a debtor-in-possession
Preview
FILED: ALBANY COUNTY CLERK 05/15/2024 11:34 AM INDEX NO. 901925-24 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/15/2024 EXHIBIT “C” FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/202 4 11:34 10 : 30 AM AN INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 12 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/15/2024 03/13/2024 SUPREMECOURTOFTHESTATEOFNEWYORK COUNTYOFALBANY JOHNDOE, AMENDED ANSWER WITHCOUNTERCLAIM Plaintiff/Petitioner, Index No. 901925-24 -against- TOBINANDDEMPF, LLP and MICHAELL. COSTELLO, Defendant/Respondent. Defendants as and for an Amended Answer to the complaint, respectfully allege upon information and belief as follows: "2," "3," "4," "5," "8," 1. Admit the allegations set forth at paragraphs designated "9," "10," "16," "19," "20." and "12" 2. With respect to paragraph admit that The RomanCatholic Diocese of Albany filed a petition for reorganization with the Northern District of NewYork Bankruptcy Court on March 15, 2023, and deny the balance of the allegations contained therein. 3. Deny any knowledge or information sufficient to form a belief regarding the "1," "18." allegation set forth at paragraph and "6," "7," "11," "13," "14," 4. Deny the allegations set forth at paragraphs designated "15," "17," "21," "22," "23," "24," "25," "26," "27," "28," "29," "30," "31," "32," "33," "34," "35," "36," "37," "38," "39," "40," "41," "42," "43," "44," "45," "46," "47," "48," "49," "50," "51," "52," "53," "54," "55," "56," "57," "58," "59," "60," "61," "62," "63," "64," "65," "66," 1 of 6 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/2024 11:34 10 :30 AM Ali INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 12 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/15/2024 03/13/2024 "67," "68," "69," "70," "71," "72," "73," "74," "75," "76," "77," "78," "79," "80," "81," "82," "83," "84," "85," "86," "87," "88," "89," "90," "91," "92," "93," "94," "95," "96," "97," "98," "99," "100," "101," "102," "103," "104," "105," "106," "107," "108," "109," "110," "111," "112," "113," "114," "115," "116," "117," "118," "119," "120," "121," "122," "123," "124," "125," "126," "127," "128," "129," "130," "131," "132," "133," "134," "135," "136," "137," "138," "139," "140," "141," "142," "143," "144," "145," "146," "147," "148," "149," "150," "151," "152," "153," "154," "155," "156," "157," "158," "159." and AFFIRMATIVE DEFENSES In further response to the complaint, the Defendants hereby assert the following affirmative and other defenses, without conceding that they bear the burden of persuasion as to any of them except those deemed affirmative defenses by law, regardless of how such defenses are denominated herein. Nor do the Defendants admit the Plaintiff is relieved of its burden to prove each and every element of its claims and the damages, if any, to which it claims to be entitled. As for its defenses, the Defendants reassert and reincorporate as if fully set forth herein their responses, above, to the complaint. FIRST DEFENSE 5. The mediation sessions which resulted in the settlement of Plaintiff's claim, Index No. 905378-19, were conducted under the direct supervision and participation of the Supreme Court, Albany County, with active participation of Plaintiff's counsel, Jordan K. Merson, Esq., and Jesse R. Mautner, Esq., counsel and representatives of the insurance carriers of the Diocese of Albany, representative of the Diocese of Albany and Michael L. Costello of Tobin and Dempf, LLP. The mediation was conducted with full disclosure and good faith on behalf of all participants under the direction and supervision of the Supreme Court. 2 2 of 6 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/202 4 11:34 AH 10 : 30 AM INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 12 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/15/2024 03/13/2024 SECONDDEFENSE 6. The Complaint fails to state a claim or cause of action cognizable in law or equity upon which relief can be granted. THIRD DEFENSE 7. Plaintiff's claims against the Defendants are barred in whole or in part by the applicable statute of limitations. FOURTH DEFENSE 8. Plaintiff's claims are barred by the doctrine of waiver, laches and equitable estoppel. FIFTH DEFENSE 9. Plaintiff's claims are barred by the order of the United States Bankruptcy Court Northern District of NewYork dated February 14, 2024 (Case No. 23-10244-1). SIXTH DEFENSE 10. Plaintiff's claims against the Defendants are barred by release. SEVENTHDEFENSE 1 1. Plaintiff's claims against the Defendants are barred by novation. 3 3 of 6 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/202 4 11:34 10 : 30 AM AN INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 12 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/15/2024 03/13/2024 AS ANDFORA COUNTERCLAIM DEFENDANTS RESPECTFULLY ALLEGE 12. Following the Supreme Court mediated settlement, Plaintiff, by its attorneys, Jordan K. Merson, Esq., and Jesse R. Mautner, Esq., filed an affirmative proof of claim with the United States Bankruptcy Court on or before the Court designated bar date of November 1, 2023. 13. On October 5, 2023, Jordan K. Merson, Esq., filed a motion with the United States Bankruptcy Court Northern District of NewYork for the entry of an order pursuant to 11 U.S.C. § 365(d)(2) compelling the debtor [Diocese of Albany] to assume or reject its executory contract with John Doe within a specified period of time. Copy of motion is annexed as Exhibit "A." 14. Plaintiff's motion by Jordan K. Merson, Esq., before the Bankruptcy Court centered and relied on the settlement and the allegations set forth in the instant action at "2," "4," "5," "9," "10," "11." paragraphs and 15. Plaintiff's motion by Jordan K. Merson, Esq., before the Bankruptcy Court included as an exhibit the Settlement Agreement and Full and Final Release of Claims. Redacted "B." copy annexed as Exhibit 16. The hearing on Plaintiff's motion by Jordan K. Merson, Esq., was conducted on February 14, 2024, by the Bankruptcy Court. 17. The Bankruptcy Court denied the motion filed by Jordan K. Merson, Esq. Copy "C." of order dated February 14, 2024, annexed as Exhibit 4 4 of 6 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/202 4 11:34 10 : 30 AM AN INDEX NO. INDEX 90192 5 -2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 12 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/15/2024 03/13/2024 18. On February 22, 2024, Plaintiff's attorneys Jordan K. Merson, Esq., and Jesse R. Mautner, Esq., commenced the instant action by filing the Summonsand Complaint with NYSCEFunder Index No. 901925-24. 19. The instant action filed by attorneys Jordan K. Merson, Esq., and Jesse R. Mautner, Esq., eight days after the Bankruptcy Court decision, is a direct, intentional and aggressive attempt to circumvent the decision of the Bankruptcy Court denying the relief requested on the settlement in the underlying CVAaction, Index No. 905378-19, reached before the Supreme Court Albany County. 20. The instant action filed by attorneys Jordan K. Merson, Esq., and Jesse R. Mautner, Esq., constitutes abuse of process and the "use of the process in a perverted manner to objective" obtain a collateral Curiano v. Suozzi, 63 N.Y.2d 113, 116 [1984]. WHEREFORE, Defendants, respectfully request that this Court deny the relief requested in Plaintiff's Complaint, dismiss the complaint with prejudice, grant judgment to Defendants on the Counterclaim and grant such other and further relief as the Court deemsjust, fair and proper. DATED: March 13, 2024 TOBIN ANDDEMPF, LLP Albany, NewYork By: /s/ Michael L. Costello Attorneys for Defendants 515 Broadway, 4"' Floor Albany, NY 12207 (518) 463-1 177 mcostelketdlaws.com TO: Jordan K. Merson, Esq. Jesse R. Mautner, Esq. Attorneysfor Plaintiff 18th 950 Third Avenue, FlOOr NewYork, NY 10022 (212) 603-9100 5 of 6 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/202 4 11:34 AH 10 : 30 AM INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 12 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/15/2024 03/13/2024 VERIFICATION STATEOFNEWYORK ) COUNTYOFALBANY ) ss.: Michael L. Costello, being duly sworn, deposes and says he is a partner at the law firm of Tobin and Dempf, LLP; has read the foregoing Amended Answer and knows the contents thereof to be true of his knowledge, except as to the matters therein stated to be alleged on information and belief and as to those matters believes them to be true based on records, investigation, data and consultations with counsel. /s/Michael L. Costello Michael L. Costello Sworn to before methis 13th day of March, 2024 /s/ Sheri Camprone Notary Public 6 6 of 6 FILED: ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/2024 11:34 10:30 AM AH INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 13 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/15/2024 03/13/202 4 Exhibit "A" FILED: ALBANY COUNTY CLERK 05/15/2024 11:34 AM INDEX NO. 901925-24 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/15/2024 Main Document Page 1 of 9 Hearing Date: November 8, 2023 Hearing Time: 10:30 a.m. Location: Albany, New York (and via the Court's Teleconference System) DIAL-IN #: 877-402-9753 ACCESSCODE: 4954900# Objection Deadline: November 1, 2023 UNITEDSTATESBANKRUPTCY COURT NORTHERN DISTRICT OFNEWYORK In re THE ROMAN CATHOLICDIOCESEOF Chapter 11 ALBANY, NEWYORK, Case No. 23-10244 Debtor. MOTIONFORENTRYOFANORDERPURSUANT TO 11 U.S.C. § 365(d)(2) COMPELLINGTHEDEBTORTOASSUMEORREJECT ITS EXECUTORY CONTRACT WITHJOHNDOEWITHIN A SPECIFIED PERIODOFTIME John Doe ("Mr. Doe"), by and through his attorneys at Merson Law, PLLC, hereby moves this Court for entry of an order in the form attached hereto as Exhibit "A" pursuant substantially to 11 U.S.C. § 365(d)(2) granting Mr. Doe's Motion (the "Motion") compelling The Roman Catholic Diocese of Albany, New York (the "Debtor") to assume or reject its executory contract (the "Agreement") with Mr. Doe within a specified period of time. In support of the Motion, Mr. Doe respectfully states as follows: JURISDICTION ANDVENUE 1. This Court has jurisdiction over the Motion pursuant to 28 U.S.C. §§ 157 and 1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(A). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. 2. The statutory predicates for the relief requested herein are Sections 105 and 365(d)(2) of Title 1 1 of the United States Code (1 1 U.S.C. § 101, et seq., the "Bankruptcy Code"). FILED: ALBANY COUNTY CLERK 05/15/2024 11:34 AM INDEX NO. 901925-24 NYSCEF DOC. NYSCEF DOC. NO. NO. 58 13 N RECEIVED NYSCEF: 03/13/202 4 : 05/15/2024 Main Document Page 2 of 9 FACTS 3. On August 16, 2019, Mr. Doe filed a lawsuit against the Debtor and St. Mary's Church pursuant to CPLR § 214-g (the "Lawsuit"). A copy of the Summonsand Verified Complaint (the "Complaint") is attached hereto and made a part hereof as Exhibit "B". 4. After more than three years of intense litigation (and with the Lawsuit approaching trial), a settlement conference was held before the presiding judge, Hon. L. Michael Mackey, J.S.C., on February 24, 2023. That conference was attended by counsel for Mr. Doe, counsel for the Debtor (along with one of its corporate representatives), and counsel for two of the Debtor's insurers. 5. While no settlement was reached during the conference on February 24, 2023, after subsequent settlement conferences before Judge Mackey on February 27, 2023, February 28, 2023 and March 1, 2023, the Lawsuit was settled for $375,000.00 6. Then, in order to effectuate the settlement, the parties drafted and agreed upon the Claims" terms of a document entitled "Settlement Agreement and Full and Final Release of (the "Agreement"). A copy of the Agreement is attached hereto and made a part hereof as Exhibit "C".1 7. Of note for the purposes of the Motion is that the Agreement required: (i) the Debtor sum" to issue the "full and final settlement to counsel for Mr. Doe "within twenty-one (21) days of the execution and receipt of four originals of th[e] Agreement"; and, (ii) Mr. Doe to release his claims against Debtor. See Exhibit "C". ' For the purposes of the Motion, the Agreement has been redacted only as to Mr. Doe's nameand other personal, identifying information in accord with the Stipulation entered into by counsel for Mr. Doe and counsel for the Debtor at the outset of the Lawsuit. A copy of the Stipulation is attached hereto and madea part hereof as Exhibit "D". 2 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/2024 11:34 10 QÇ AM INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC NO. NŒ. 58 3 MaiI Do ument E RECEIVED N S NYSCEF: 03/13/2024 05/15/2024 Page 3 of 9 8. Pursuant to its terms, Mr. Doe executed four originals of the Agreement which were then delivered via Federal Express and received by counsel for the Debtor on March 8, 2023. A copy of the Proof of Delivery from Federal Express is attached hereto and made a part hereof as Exhibit "E". 9. On March 9, 2023, counsel for Mr. Doe also received verbal confirmation from counsel for the Debtor that his office had received the Agreement such that payment was to be issued no later than Wednesday, March 29, 2023. A copy of the Email Correspondence is attached hereto and made a part hereof as Exhibit "F". 10. Then, on March 15, 2023, while its time to issue payment was running, the Debtor filed a petition for relief under Chapter 11 of the United States Bankruptcy Code. 11. To date, the Debtor has not issued payment, and Mr. Doe has not released his claims against the Debtor via the discontinuance of the Lawsuit. ARGUMENT 1. The Agreement is an Executory Contract 12. When read together, 11 U.S.C. §§ 365(a) and 1107(a) provide that a Chapter 11 debtor-in-possession may assume or reject any executory contract of the debtor, subject to court approval. See CORRoute 5 Co., LLC v. Penn Traffic Co. (In re Penn Traffic Co.), 524 F.3d 373, 384 n.2 (2d Cir. 2008) (citing to 11 U.S.C. §§ 365(a) and 1107(a)). 13. While the Bankruptcy Code does not define the term "executory contract", it has long been held that a contract is executory if "the obligation of both the bankrupt and the other party to the contract are so far unperformed that the failure of either to complete performance other." would constitute a material breach excusing performance of the See In re Penn Traf]ìc Co., 524 F.3d at 379 (internal citations omitted). 3 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03/13/202 4 11:34 10 : 30 AM INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOCH NYSCEF DOC. NO.. 58 3 Main Document Page 4 of 9 RECEIVED 1 N S NYSCEF: 03/13/2024 : 05/15/2024 14. In determining whether a party's failure to perform their contractual obligations would constitute a material breach, courts are instructed to look to state contract law. See In re Worldcom, Inc., 343 B.R. 486, 493 (Bankr. S.D.N.Y. 2006) (internal citations omitted); see also Shoppers World Cmty. Ctr., L.P. v. Bradlees Stores (In re Bradlees Stores, Inc.), 2001 U.S. Dist. LEXIS 14755, *24-25 (S.D.N.Y. 2001) (internal citations omitted). 15. Here, the Agreement states that it "shall in all respects be interpreted, enforced and governed by and under the laws of the State of NewYork." See Exhibit "C" at ¶ 3. 16. As such, in accord with New York State contract law, a material breach is one transaction." "which is so substantial as to defeat the purpose of the entire See In re Bradlees Stores, Inc., 2001 U.S. Dist. LEXIS 14755 at *25. Furthermore, "[t]he question of whether there fact." has been substantial compliance or material breach is a question of See id. (internal citations omitted). 17. Given that the Agreement is, at its core, an exchange of money for a release and discontinuance, and to date, there has been neither an exchange of money or a release and discontinuance, there can be no dispute that both sides have committed breaches so material that they defeat the purpose of the Agreement. 18. Finally, while the executory nature of a contract is typically examined as of the petition date, there are times when "postpetition events alter the executoriness of a contract". See In re Worldcom, Inc., 343 B.R. at 493. Under those circumstances, courts are instructed to "look date." to the date the motion to assume or reject is made or heard rather than the petition See Penn Traffic Co. v. CORRoute 5 Co., LLC (In re Penn Traffic Co.), 2005 U.S. Dist. LEXIS 20407, *8 (8.D.N.Y. 2005) (internal citations omitted). 4 FILED : ALBANY FILED: ALBANY COUNTY CLERK05/15/2024 COUNTYCLERK 03 13/202 4 11:34 10 : 30 AM INDEX NO. INDEX 901925-2 4 NO. 901925-24 NYSCEF DOC. NYSCEF DOC NO. 58 13 P Ó NYSCEF: RECEIVED NY 03/13/202 4 : 05/15/2024 Main Document Page 5 of 9 19. While it is true that the Debtor had not breached the Agreement as of the petition date as its time to issue payment was still running, Plaintiff respectfully submits that here, like in In re Penn T'raffic Co., postpetition events (i.e., the Debtor's continued non-payment and Mr. Doe's failure to release and discontinue) have rendered the Agreement executory such that this Court should consider the same. See id. 20. Based on the foregoing, it is respectfully submitted that the Agreement is an executory contract. 2. This Court Should Fix a Specified Period of Time Within Which the Debtor Must Assume or Reject the Agreement 21. Pursuant to 11 U.S.C. § 365(d)(2), a Chapter 11 debtor-in-possession "may assume plan." or reject an executory contract . . . of the debtor at any time before the confirmation of a See In re Hawker Beechcraft, Inc., 483 B.R. 424, 433 n.6 (Bankr. S.D.N.Y. 2012) (citing to 11 U.S.C. §§ 365(d)(2)). 22. Notwithstanding the above, the Bankruptcy Code also provides that "[o]n request of the non-debtor party to the contract, the court may order the [debtor-in-possession] to assume time." or reject the contract within a specified See In re Hawker Beechcraft, Inc., 483 B.R. at 428; see also 11 U.S.C. § 105(a)(2)(A) (courts have the authority to issue various kinds of orders, including one that "sets the date by which the [debtor-in-possession] must assume or reject an executory contract"). 23. While a debtor-in-possession