Statek Corp. v. Development Specialists, Inc. (In re Coudert Brothers LLP)

If the Circuit Court of Appeals elects to consider a new argument on appeal, then on remand, the lower court may not ignore the Court of Appeal's ruling on the basis that it relied on a non-cognizable "new argument."
Procedural context:
Plan administrator-appellee originally moved to disallow appellant's proof of claim. Claim disallowed, appellee moved for reconsideration by bankruptcy court, which was denied. District Court affirmed bankruptcy court decision. Second Circuit reversed and remanded to District Court "with instructions to REMAND IN PART to the bankruptcy court with instructions to apply Connecticut's choice of law rules in deciding [Appellant]'s motion to reconsider." Bankruptcy Court issued its decision, Appellant again moved for reconsideration, which bankruptcy court denied, and district court affirmed bankruptcy court. Appeal taken for second time to Second Circuit.
In the first appeal, on remand, the bankruptcy court was instructed "to apply Connecticut's choice of law rules in deciding [Appellant]' motion to reconsider." The bankruptcy court did not follow that instruction. Instead, the bankruptcy court ordered further briefing on whether it could adhere to its prior alternative holding that Appellant's argument was a new argument not available on reconsideration. However, even though the Second Circuit did not expressly address the merits of the Appellant's "new argument", its decision impliedly foreclosed the issue from being further considered on remand. The Second Circuit noted that if it thought an alternative, dispositive holding would altogether preclude application of Connecticut's choice of law rules (which was the overwhelming focus of the appeal, then the Second Circuit would have affirmed and there would not have been a need to remand. Accordingly, the Second Circuit was fully aware of the bankruptcy court's alternative holding, but chose to not adopt it. Therefore, it was improper for the bankruptcy court to further consider the alternative argument on remand, the bankruptcy court erred, and its decision must be reversed, thereby allowing the appellant to continue its litigation of the allowance of its claim.
Cabranes, Pooler, and Chin

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