Opposition Brief — Indu Craft, Inc. v. Bank of India, 124 S. Ct. 929 (2003) (No. 03-535)

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Al iv H i fi* a

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4

Nos. 03-535 & 03-541

IN THE

Supreme Court of the United States

INDU CRAFT, INC.,

Petitioner,

-and- ;

TRENDI SPORTSWEAR, INC.,

Petitioner,

v.

BANK OF BARODA,

Respondent.

On PETITIONS FOR Writs OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION

RosBert P. STEIN

Counsel of Record

JEFFREY R. MANN

THOMAS WEBER

Rajiv KHANNA

SARAH A. WADELTON

GREENBERG TRAURIG LLP

885 Third \venue

New York, NY 10022

(212) 801-2100

Counsel for Respondent

' er.

Lat OOS

a

i

STATEMENT PURSUANT TO RULE 29.6

Respondent Bank of Baroda is incorporated in the

Republic of India and 66.26% of its shares are owned by the

Government of India. No public company owns 10% or more

of its shares.

Ti

TABLE OF CONTENTS

Statement Pursuant to Rule 29.6 ...............

Table of Combes. oks oc x 6 eee eee

Table of Cited Authorities .....................

Table of ANGE: wk vnc eke dene

COUNTER-STATEMENT OF THE CASE .......

A.

B.

os

D.

Ee.

Thee 1907 AOE kn on kccta seems

The T9309 AOROR oe i ess oe

The Indu Craft Bankruptcy ..............

The First Amended Fourth-Party Complaint

Trendi’s “Second Third-Party Complaint” ...

THE DECISIONS OF THE COURTS BELOW ...

REASONS FOR DENYING THE PETITIONS ...

I.

SECTION 524(e) HAS NO APPLICATION

TO THE CASE AT BAR AND THE

DECISIONS BELOW DO NOT CONFLICT

WITH THE DECISIONS OF THIS COURT

OR OF ANY CIRCUIT COURT ..........

Page

10

itl

Contents

Page

II. SECTION 524(e) DOES NOT PREEMPT

STATE LAW AS TO THE REQUIREMENTS

FOR COMMON LAW _ INDEMNIFI-

ends Aves ous 0 eR ee eae kes 15

Ill. THE DECISIONS OF THE COURTS

BELOW DO NOT CONSTITUTE

A “COLLATERAL ATTACK” UPON

ANY ORDER OF THE BANKRUPTCY

ee ie cl ae nn ehh oes 17

IV. THE DECISIONS OF THE COURTS

BELOW DO NOT CONFLICT WITH ANY

DECISION OF THE NEW YORK COURT

WO i sk ois wn wa ees ccevesss 20

V. PETITIONERS’ REMAINING ARGU-

MENTS ARE WITHOUT MERIT ........ 22

rea sie k y's beeen 6 44 ¥o 0 25

iv

TABLE OF CITED AUTHORITIES

Page

Federal Cases

Bank of India v. Trendi Sportswear, Inc., 239 F.3d

ee et Se ieee es eee ess 2

Branti v. Finkel, 445 U.S. 507 (1980) ........... 21

Brown vy. Northeast Nuclear Engergy Co.,

48 F. Supp.2d 116 (D. Conn. 1999) ........... 17

California v. Taylor, 353 U.S. 553 (1957) ........ 15

Celotex Corporation v. Edwards, 514 U.S. 300

COPE oe eee cece cdN Se Ee ee pe tat te 18

Cheang-Kee v. United States, 70 U.S. 320 (1865) ... 22

Cipollone v. Ligget Group, Inc., 505 U.S. 504

Dy PRA rine nl emery ay eee gem ee (16

Green v. Welsh, 956 F.2d 30 (2d Cir. 1992) ....... 13

Indu Craft, Inc. v. Bank of Baroda, 1991 WL 107438,

(87 Civ. 7379, $.D.N.Y., June 11, 1991) ....... 1,3

In re Bergman, 585 F.2d 1171 (2d Cir. 1978) ..... 19

In re Chateaugay Corp., 115 B.R. 760 (Bankr.

ik ae er ore rr ry, eer 19

In re Clarkson, 767 F.2d 417 (8th Cir. 1985) ..... 19

Vv

Cited Authorities

: Page

In re Cole, 189 B.R. 40 (Bankr. S.D.N.Y. 1996) ... 19

In re Continental Airlines, 203 F.3d 203 (3rd Cir.

Pe, EEO IEE: PT LEE I pd A OS 13,14

In re Drexel Burnham Lambert Group, Inc., 138 B.R.

423 (Bankr. $.D.N.Y. 1992) .............0.5. 19

In re Friedberg, 192 B.R. 338 (Bankr. S.D.N-Y.

FOE. Wi pee i oa roe eee ee ee 19

In re Prudential Energy Co., 58 B.R. 857 (Bankr.

aE cc cwena cece eee 19

Lawn y. United States, 355 U.S. 339 (1958) ...... 15

Layne & Bowler Corp. v. Western Well Works, Inc.,

MU ALD. DRPESTEOD bce bioedeen beseaclie 10

Magnum Imports Co. v. Coty, 262 U.S. 159 (1923) .. 10

Malone v. White Motor Corp., 435 U.S. 497 (1978)

TERE ee Lee eee ee ee et 16

National Labor Relations Board y. Pittsburgh S.S.

Co., 340 U.S. 498 (1951) ..............0.00. 21

Project Hope v. M/V IBN SINA, 250 F.3d 67 (2d Cir.

ED exe sea tien Le ee 24

VI

Cited Authorities

Page

Retcal, Inc. v. Insular Lumber Co. (Phil.), Inc., 379

PY, Dee. GE CC. Ca Sela) ct vccassescesuss 23

Rice v. Santa Fe Elevator Corp., 331 U.S. 218

Ge f) eee Ey ey A re ee 16

Taylor v. Freeland & Kronz, 503 U.S. 638 1644

hi 2) ee re ee er re eee rr 15

Terwilliger v. Terwilliger, 206 F.3d 240 (2d Cir.

yy Bree ee Oe Te rere er ae 12

Tho Dinh Tran vy. The Alphonse Hotel Corp..,

GOL Eom oo Ge Ws MME 9x0 hace eee ences 22

Wasik v. Borg, 423 F.2d 44 (2d Cir. 1970) ........ 24

Wilson v. Fairchild Republic Co., 143 F.3d 733

Ca Ge SEED 4s ecev reso wea eens 22

State Cases

Duffy v. Horton Memorial Hospital, 66 N.Y.2d 473,

GFt ATS OOO CPOE) 5a sd lentes es 20, 21

Federal Statutes

Geer Se eS ere ne errr errr passim

USE CO ue eee 19, 20

vil

Cited Authorities

Page

Rules

Supreme Court Rules, Rule 10 Lae AP rin, ante 10

PO a Be Ne cece ccna cS cv ee eee ee 3, 9, 23

Om. We SW, FE OO ok ek vas ve cos cs ca bee nwas 9

Treatises

4 William M. Collier, et al., Collier on Bankruptcy

Pr Ce OLE non onic ec cvsunncvareres 12

3 James Wm. Moore, et al., Moore's Federal Practice

§ 14.03[2] (3d ed. 2003) ....... 2... 23

Vill

TABLE OF APPENDICES

Excerpts From Disclosure Statement For Second

Amended Plan Of Reorganization Of Indu Craft,

Inc. Dated November 9, 1998 ...............

Excerpts From Transcript Of Hearing Held On

RUT DA SPOO ovina k cn eeneeebcwwcewc wreak

Transcript Of Bankruptcy Court Hearing Held On

ge | rrr rrr ere re

Joint Statement Of Facts Concerning The Clair.s Of

Trendi Sports-Wear, Inc. And Indu Craft, lac.

Se SE Ce RARE ie ewe n i ev as caeney eee

Decision And Order Resolving Claims Objection Of

The United States Bankruptcy Court For The

Southern District Of New York Dated July 12,

ig fee ee ree eee ere ee ere

Final Decree Of The United States Bankruptcy Court

For The Southern District Of New York Dated May

ae Re ra ay a err

Page

la

28a

33a

l

Respondent Bank of Baroda (the “Bank”’) submits this brief

in Opposition to the petitions of Indu Craft, Inc. (“Indu Craft”)

and Trendi Sportswear, Inc. (““Trendi’’) for writs of certiorari to

review a Summary Order of the United States Court of Appeals

for the Second Circuit which unanimously affirmed the dismissal

of Indu Craft’s fourth party action for indemnification, and

Trendi’s “Second Third Party Complaint.” Pet. App. at la-6a.

Contrary to the assertions of Indu Craft and Trendi, the

decisions of the Court of Appeals and the United States District

Court for the Southern District of New York are not in conflict

with the decisions of this Court, or of any other circuit, raise no

novel or important federal question, and provide no compelling

reason for review by this Court. Rather, the determinations of

the courts below are based upon garden variety common law

principles which preclude a claim for indemnification in the

absence ofa loss, and the settled and salutary rule that precludes

the amendment of a pleading long after the expiration of the

statute of limitations and the entry of judgment on the underlying

claims. Pet. App. at 7a-17a, 18a-36a. Such decisions are

undoubtedly correct and should not be disturbed.

COUNTER-STATEMENT OF THE CASE

A. The 1987 Action

The tortured history of this fifteen year-old litigation is

detailed in the Summary Order of the Court of Appeals and the

Opinions of the District Court dated August 7, 2002 and

January 17, 2002 (Hon. John S. Martin), and need not be

repeated here. Pet. App. at la-6a, 7a-10a, 19a-23a. Suffice it to

say that this action is an outgrowth of a 1987 action entitled

Indu Craft, Inc. v. Bank of Baroda, (87 Civ. 7379 (KTD))

(the “1987 Action’’) in which Indu Craft asserted various contract

2

and tort-based claims against the Bank. The case was tried in

1992, and resulted in a verdict in favor of Indu Craft that was

ultimately paid in full by the Bank’s deposit of the amount of

the judgment in an interpleader action.' Pet. App. at 20a-21a;

Resp. App. at 13a-14a.

B. The 1989 Action

In September 1989, Bank of India (“BOT’) commenced an

action against Trendi entitled Bank of India v. Trendi Sportswear,

Inc. (89 Civ. 5996 (JSM)) (the “1989 Action”) seeking payment

on a promissory note.’ In May 1990, Trendi filed a third-party

action for common law indemnification against Indu Craft, its

sister company, claiming that the breach by Indu Craft of a

contract to supply goods caused Trendi to default in its

obligations to BOI. Rather than move to dismiss Trendi’s third-

party action as not dependent upon the main claim filed by BOI,

' Like many of the argumentative and unsupported statements

contained in the petitions, Indu Craft’s assertion that the Bank’s

interpleader action was “contrived” and somehow “caused Indu Craft

to file a Chapter 11 petition for bankruptcy relief” is flatly contradicted

by the record. (Indu Craft Br. at 4) As stated by Indu Craft in its Disclosure

Statement in support of its proposed Second Amended Plan of

Reorganization, “The proximate cause of the decision to seek chapter

11 relief was the Debtor’s inability to consummate a settlement with

the IRS.” (Emphasis added) Resp. App. at 14a.

2 On January 29, 1991, the District Court granted BOI’s motion

for summary judgment, and on April 24, 1991 a judgment was entered

in faver of BOI and against Trendi in the sum of $2,224,895.19.

See Bank of India v. Trendi Sportswear, Inc., 239 F.3d 428, 433 (2d Cir.

2000). By the time that Indu Craft consented to judgment in favor of

Trendi in accordance with the terms of its Plan for Reorganization, the

amount of Trendi’s third-party claims against Indu Craft had mushroomed

to $21,101,348.47. Pet. App. at 21a-22a.

3

and thus in violation of Fed. R. Civ. P. 14 (Pet. App. at 23a-

24a), Indu Craft filed a fourth-party action against the Bank,

seeking common law indemnification in the event that it was

found liable to Trendi.’ Pet. App. at 21a.

C. The Indu Craft Bankruptcy

On July 25, 1997, Indu Craft filed for bankruptcy in the

United States Bankruptcy Court for the Southern District of

New York in a proceeding entitled Jn re Indu Craft, Inc.

(Bk. No. 97-44958 (JHG)) (the “Bankruptcy Actiori”). In its

Plan of Reorganization (the “Plan”), Indu Craft proposed

“payment in full” of all administrative, tax, priority and secured

claims from the proceeds of the interpleader action commenced

by the Bank, by which the Bank satisfied the judgment entered

in the 1987 Action. Resp. App. at 3a. The Plan also contemplated

* In a prior opinion in the 1989 Action, Judge Martin observed

that the third-party claims previously asserted by Trendi against Indu

Craft appeared to be “manufactured” and were nothing more than the

“right pocket” suing the “left pocket.” Resp. App. at 23a. That observation

that was joined in by Judge Duffy in a prior opinion in the 1987 Action.

See Indu Craft, Inc. v. Bank of Baroda, 87 Civ. 7379, 1991 WL 107438,

at *5,n.2 (S.D.N.Y. June 11, 1991). A similar concern was raised by the

Bankruptcy Judge in Indu Craft’s subsequent bankruptcy proceeding,

in which the Court stated,

There are lots of things on this plan that are beginning to

make me very, very nervous, the way the claims are, the

insider problems. This may be a case that would well be

served by either a Chapter 11 or Chapter 7 Trustee. If it

goes through or not, I think the moment may come to have

someone else take a look at this arrangement as it unravels

before my eyes.

Resp. App. at 27a.

4

that the Class 5 subordinated creditors, including Trendi,

would also share “pro rata” in the “distribution of the net

proceeds of any recovery” in the fourth-party indemnity action

[““Baroda II] commenced by Indu Craft against the Bank.‘

Resp. App. at 8a-9a, 17a.

As detailed in the Plan, the possibility of any recovery by

Trendi and the other holders of Class 5 Subordinated Claims

was both speculative and remote. Thus, and as stated by Indu

Craft in its description of the “Risk Factors” applicable to the

Plan, “[t}here can be no assurance that the Debtor will

recommence the litigation in Baroda II, or that such litigation,

if commenced would be resolved in the Debtor’s favor.”

(Emphasis added) Resp. App. at 17a-18a. Nevertheless, Indu

Craft concluded that the Plan was “feasible” and in the best

interests of all of its creditors, and recommended its approval.°

Resp. App. at 2a, 18a, 22a.

As explained by Indu Craft in its disclosure statement, as

of the “Effective Date” of the Plan, Indu Craft would be

“discharged ... from all Claims against and Interests in the

Debtor” arising prior thereto. Resp. App. at 19a. Both the Plan

and the disclosure statements further provided that all persons

* Indu Craft had “ceased operations in November 1987,” and the

interpleader proceeds constituted its only asset. Resp. App. at lia.

* In explaining why the Plan was “feasible,” Indu Craft stated that

“it must be demonstrated that consummation of the Plan in not likely to

be followed by the liquidation or the need for further financial

reorganization of the Debtor.” Resp. App. at 18a. Indu Craft concluded

that the Plan was “feasible” because it provided for distribution to holders

of all “allowed” and “priority” claims from the “Interpleader Proceeds,”

and because Indu Craft “believes it will be able to make all payments

required to be made pursuant to the Plan.” Resp. App. at 18a.

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5

or entities having such claims would be “precluded and

enjoined” from asserting any such claims “against the Debtor

and its successors, assets or properties.” Resp. App. at 19a.

Finally, all creditors were on notice that the Plan would constitute

a “settlement and release” between and among Indu Craft and

each of its creditors. Resp. App. at 21a.

On March 24, 1999, Indu Craft filed its Second Amended

Plan of Reorganization, As Modified, which was ultimately

adopted by Indu Craft’s creditors and approved by the Court.

Pet. App. at 85a-89a. The treatment of Trendi’s unsecured claim

was set forth in Article 5, Section 5.2 of the Plan which provided,

in the preamble, that “Allowed Claims in Classes 4 and 5 are

impaired and shall receive the following treatment under the

Plan in full settlement, release and discharge thereof.”

(Emphasis added) Pet. App. at 64a. Under the Plan, Trendi and

ANZ Sales, Inc. (“ANZ”) were to share in the sum of $200,000,

to be paid upon confirmation of the Plan, and Trendi, ANZ and

Hemant Mehta, as the holders of claims in Class 5, were to

share pro rata in the “net proceeds of any recovery” in the fourth-

party indemnity action, after deduction of certain funding costs.

Pet. App. at 87a-88a.

Article 9 of the Plan, entitled “DISCHARGE AND

RELEASES,” provided that on the “Effective Date,” Indu Craft

“shall be discharged . . . from all Claims against and Interests

in Debtor” arising prior to the Effective Date, whether or not

the holder of such a claim or interest had filed a proof of claim

or had accepted the Plan. (Emphasis added) Pet. App. at 76a-

77a. Section 9.1 (b) of the Plan further provided that “all Persons

shall be precluded and enjoined” from asserting any claim

against the Debtor. (Emphasis added) Pet. App. at 77a.

In conformity with Section 524 of the Bankruptcy Code, the

Plan also provided that “any judgment at any time obtained, to

6

the extent that such judgment is a determination of the liability

of the Debtor with respect to any debt discharged pursuant to

the Plan and section 1141(d)(1) of the Bankruptcy Code, shall

be null and void... .” (Emphasis added) (Pet. App. at 77a.

The Plan was confirmed by Order of the Bankruptcy Court dated

March 29, 1999. Pet. App. at 90a-101a.

Because Trendi had filed a proof of claim in an “unknown

amount,” the Plan also set forth Indu Craft’s agreement to

“consent to judgment being entered against it in the third party

action ... for the amount of Trendi’s claim as determined by

the Bankruptcy Court.” Pet. App. at 88a. This was consistent

with the terms of a Stipulation and Order Governing Treatment

of [Trendi’s] Claim In Plan of Reorganization dated March 24,

1999, pursuant to which Trendi and Indu Craft agreed to certain

modifications of the Plan, and Trendi agreed to vote in favor of

the Plan. Pet. App. at 102a-104a. Pursuant to Section 11.1 of

the Plan, the Bankruptcy Court retained jurisdiction to “[a]llow,

disallow, determine, liquidate, classify or establish the priority”

of any claim, including the determination of the amount of

Trendi’s claim so that in the event of “any recovery” by

Indu Craft in this fourth-party indemnity action, the amount of

Trendi’s pro rata share of distribution could be ascertained.

Pet. App. at 82a.

On June 10, 1999, Indu Craft and Trendi entered into a

Joint Statement of Facts regarding Trendi’s claim against Indu

Craft (the “Joint Statement’). Resp. App. at 28a-32a. Pursuant

to the Joint Statement, Indu Craft acknowledged that it had

breached its contract with Trendi regarding the purchase and

sale of certain garments. Resp. App. at 28a-32a. Indu Craft also

consented to $20,480,275.04 of Trendi’s proposed damage claim

of $21,101,348.47. Resp. App. at 34a.

a ee eee

7

By Decision and Order dated July 12, 1999, the Bankruptcy

Court fixed the amount of Trendi’s claim as $21,101,348.47,

the full amount sought by Trendi. Resp. App. at 33a-35a.

On January 18, 2000, a final judgment in that amount was

entered in favor of Trendi (the “Trendi Judgment”).° Pet. App.

at 45a. On May 17, 2000, a Final Decree was entered in the

Bankruptcy Action, pursuant to which Indu Craft was

“discharged and released from any and all claims of creditors,”

and the Chapter 11 Case was closed. Pet. App. at 3a, 9a; Resp.

App. at 36a-37a.

D. The First Amended Fourth-Party Complaint

On March 29, 2001 — more than 10 years after the

commencement of the 1989 Action — Indu Craft served an

amended fourth-party complaint, purportedly as of right, to

recover in indemnity for the amount of the Trendi Judgment. In

addition to its prior claims for common law indemnity, Indu

Craft also asserted new claims under the Racketeer Influenced

and Corrupt Organizations Act (“RICO”). Pet. App. at 5a, 31a.

The Fourth-Party Complaint was dismissed by Final Judgment

entered April 11, 2002. Pet. App. at 8a.

E. Trendi’s “Second Third-Party Complaint”

On July 30, 2001 — more than one-and-half years after the

entry of the Trendi Judgment and some 14 years after the events

giving rise to the 1987 Action — Trendi filed what purported to

be a “Second Third Party Complaint,” seeking for the first time

° By any standard, the Trendi Judgment was collusive in nature.

As found by the District Court, the Trendi Judgment “was entered

pursuant to a stipulation in a context in which Indu Craft .. . had no

incentive to litigate the amount of damages.” Pet. App. at 28a.

8

to assert direct claims against the Bank. Pet. App. at 10a. Trendi

did so without leave of court, and despite the fact that it lacked

standing because it was no longer a party to the pending 1989

Action. Following the grantin, “*he Bank’s motion to dismiss

the fourth party action, Trendi 1iade an application to vacate

the Final Judgment, which was denied. Pet. App. at 8a-17a.

THE DECISIONS OF THE COURTS BELOW

In dismissing Indu Craft’s fourth party claims for

indemnification, the courts below held that because Indu Craft

sought indemnity with respect to a consent judgment rendered

in favor of Trendi, its affiliate, but had received a complete

discharge and release in bankruptcy from all claims of all of its

creditors, including Trendi, Indu Craft had not suffered, and

could not suffer, any cognizable loss and its claims for indemnity

were legally insufficient. Pet. App. at 24a-27a. In reaching this

conclusion, the District Court stated that it was “black letter

law” that “an indemnification claim does not arise until the party

seeking indemnification has an out-of-pocket loss to be

reimbursed,” and that the law “does not permit recovery on an

indemnity claim where the party seeking indemnification has

not suffered an out of pocket loss.” Pet. App. at 24a, 27a. Because

Indu Craft had been discharged from any obligation to pay

Trendi, and Trendi was barred by the Plan from seeking to

enforce the Trendi Judgment, except to the extent of any recovery

in this action, the lower courts held that Indu Craft’s indemnity

claims could not succeed as a matter of law. Pet. App. at 25a.

The courts below further held that Indu Craft’s claims under

RICO were also barred by both res judicata and the four-year

RICO statute of limitations. Pet. App. at 31a-34a. Because Indu

Craft’s First Amended Fourth Party Complaint alleges that all

of the acts complained of occurred between 1984 and 1990,

9

Indu Craft was on inquiry notice of such claims “at the

time that the 1987 Action was tried in 1992... .” Pet. App. at

31a-32a. The lower courts also rejected Indu Craft’s contention

that its RICO claims did not arise until the time of the

Trendi Judgment, holding that the “injury, if any, took place

when Indu Craft was originally ‘exposed to civil liability”

as a result of the filing of Trendi’s third-party complaint in 190.

Pet. App. at 33a.

With respect to the claims asserted by Trendi, the courts

below held that Trendi’s self-styled “Second Third Party

Complaint” was not an amended pleading within tue meaning

of Fed. R. Civ. P. 15(a), but was an independent third party

complaint pursuant to Fed. R. Civ. P. 14. Pet. App. at 12a-13a.

Accordingly, Trendi had no right to amend its third party

complaint with respect to claims previously asserted, and which

had resulted in the entry of a final judgment in favor of Trendi

and against Indu Craft on January 18, 2000. In a word, it was

simply too late, in 2002, for Trendi to attempt to assert direct

claims against the Bank which arose in 1987, and which Trendi

elected not to assert for 14 years. Pet. App. at 12a-15a.

Finally, the District Court explicitly rejected Trendi’s

contention that the court, in its prior opinion dismissing the

fourth-party action, had held that the Trendi Judgment was “null

and void,” stating that “the Court never questioned the validity

of the Bankruptcy Court’s judgment.” Pet. App. at 14a. Rather,

the Court explained that it “merely held that Indu Craft’s

indemnification claim . . . failed to state a cause of action as a

matter of New York law,” and that Trendi’s agreement to limit

recovery on the Trendi Judgment to the proceeds, if any, of.

Indu Craft’s fourth-party indemnity claims against the

Bank “would preclude Trendi from collecting on its judgment.”

Pet. App. at 14a. The Court concluded by stating that

10

“(while Trendi may well have made an ill-advised agreement,

which did not take adequate account of New York law regarding

indemnification, that agreement was, nevertheless, the basis

upon which the judgment of the Bankruptcy Court was entered,”

and which “has not been set aside.’ Pet. App. at 14a.

REASONS FOR DENYING THE PETITIONS

Petitioners have not met, and cannot meet, their heavy

burden of demonstrating the existence of “compelling reasons”

warranting review on a writ of certiorari. Sup. Ct. R. 10.

As held by this Court in Layne & Bowler Corp. v. Western Well

Works, Inc., 261 U.S. 387, 393 (1923), petitions for certiorari

will only be granted “in cases involving principles the settlement

of which is of importance to the public, as distinguished from

that of the parties, and in cases where there is a real and

embarrassing conflict of opinion and authority between the

Circuit Courts of Appeal.” In the words of Chief Justice Taft in

Magnum Import Co. v. Coty, 262 U.S. 159, 163 (1923), certioran

jurisdiction is “not conferred upon this court merely to give the

defeated party in the Circuit Court of Appeals another hearing.”

In support of their petitions, neither Indu Craft nor Trendi

addresses, let alone challenges, the black-letter law upon which

Indu Craft’s common law indemnity claims were held to be

legally insufficient, its RICO claims were held to be barred by

res judicata and the four-year RICO statute of limitations, and

Trendi’s “Second Third Party Complaint” was held to be time-

” Substantially all of the arguments raised by Indu Craft and Trendi

in its Petitions to this Court were made to and rejected by the Courts

below. In unanimously affirming the orders of the District Court, the

Court of Appeals did so by Summary Order, rather than by opinion.

Nevertheless, Indu Craft and Trendi moved for rehearing and rehearing

en banc, which was denied by Order dated July 7, 2003.

. 1]

barred. Instead, Indu Craft urges that (a) the decisions below

somehow violate Section 524(e) of the Bankruptcy Act, 11 U.S.C

§ 524(e); (b) Section 524(e) “abrogates” the common law rule

requiring payment as a condition to recovery in indemnity;

and (c) a “conflict” supposedly exists in the circuit courts

regarding the interpretation of Section 524(e). Both Indu Craft

and Trendi also claim that the decisions below constituted an

impermissible “collateral attack” upon Indu Craft’s

reorganization plan. Finally, Trendi urges that to the extent that

the courts below held that Trendi’s belated “Second Third Party

Complaint” did not relate back to the filing of its original third-

party action, such decisions are somehow in conflict with a

decision of the New York Court of Appeals.

The arguments advanced by Indu Craft and Trendi are

without merit for at least the following reasons. First, (a) Section

524(e) of the Bankruptcy Code is irrelevant to any of the issues

raised in the courts below; (b) there is no conflict regarding

Section 524(e) and the decisions of any of the circuit courts;

and (c) Section 524(e) does not abrogate or preempt the common

law rules which require a loss as a condition to recovery in

indemnity. Second, the determination of the courts below that

Indu Craft suffered no loss, and that its claims for

indemnification were legally insufficient, was not a “collateral

attack” upon the Plan or any order of the Bankruptcy Court.

Third, the decisions below are not in conflict with any decision

of the New York Court of Appeals. Finally, and in any event,

none of the arguments advanced by Indu Craft and Trendi

warrants review by this Court.

12

I. SECTION 524(e) HAS NO APPLICATION TO THE

CASE AT BAR AND THE DECISIONS BELOW DO

NOT CONFLICT WITH THE DECISIONS OF THIS

COURT OR OF ANY CIRCUIT COURT

Section 524(e) of the Bankruptcy Code provides that the

“discharge of a debt of the debtor does not affect the liability of

any other entity ... for... such debt.” Pet. App. at 13 1a.

The Bank has never relied upon or otherwise claimed the benefit

of Section 524(e), and has never asserted that Indu Craft’s

discharge in bankruptcy resulted in a discharge of Indu Craft’s

indemnity claims against the Bank. Rather, the Bank contends,

and the courts below held, that the legal effect of Indu Craft’s

discharge in bankruptcy was to prevent Indu Craft from suffering

any loss arising from the Trendi Judgment and that, as a result,

“Indu Craft’s action for indemnification cannot succeed, as a

matter of law, and must be dismissed.” Pet. App. at 25a.

As is clear from the legislative history of Section 524(e),

the purpose of that statute was to prevent a debtor’s discharge

in bankruptcy from affecting the liability of a co-debtor or

guarantor on the underlying debt. 4 William M. Collier er a/.,

Collier on Bankruptcy 4 524.05, n.2 (2002 ed.) See also

Terwilliger v. Terwilliger, 206 F.3d 240, 247-48 (2d Cir. 2000).

Here, the Bank is neither a “co-debtor” nor a “guarantor” of

any obligation that Indu Craft may have had to Trendi, and Indu

Craft’s discharge in bankruptcy had no effect upon Indu Craft’s

burden to demonstrate the existence of a loss as a condition to

asserting a valid claim for indemnity against the Bank. It is not

the Bank which seeks to obtain any benefit from Section 524(e),

but Indu Craft, which impermissibly seeks to use that statute in

order to breathe life into a claim for indemnification that is bereft

of menit.

13

Indu Craft’s reliance upon Green v. Welsh, 956 F.2d 30

(2d Cir. 1992), is misplaced. Green and its progeny involve a

narrow exception to the “fresh start” objective of the Bankruptcy

Code and the discharge provisions of Section 524, which permit

a creditor to proceed against a discharged debtor “solely to

establish liability, as a prerequisite to recovery, permitted by

state law, from an insurer or other surety.” Pet. App. at 27a.

This exception has nothing to do with the salient principle that

‘New York State law does not permit recovery on an indemnity

claim where the party seeking indemnification has not suffered

an out of pocket loss.” Pet. App. at 27a.

For the rule in Green to apply, Trendi would have to sue

Indu Craft in a post-discharge proceeding in order to establish

Indu Craft’s liability as a prerequisite to pursuing a claim against

the Bank. However, the Bank in not an insurer or surety of

Trendi’s claims against Indu Craft, Trendi already obtained a

judgment against Indu Craft and it was not Trendi, but

Indu Craft, that sought to rely upon the narrow exception to

Section 524(e), an exception that is intended to benefit creditors

and not debtors such as Indu Craft. Simply put, Indu Craft is

seeking to turn Section 524(e) on its head in order to circumvent

the black letter law which prohibits any recovery in indemnity

in the absence of an out-of-pocket loss.

Nor is there any “conflict” in the circuits regarding any

interpretation of Section 524(e) that is applicable to the facts of

this case. Indu Craft’s claim of “conflict” is based upon the

Third Circuit’s decision in /n re Continental Airlines, 203 F.3d

203 (3d Cir. 2000), a case in which the Court considered the

validity of a clause in a plan of reorganization that provided for

the release of third party claims, and a permanent injunction

14

against third party actions, against the officers and directors of

the debtor. The Court held that the release and injunction

provisions before it were legally unsupportable. /d. at 214.

In reaching this conclusion, the Court reviewed the

decisions of various circuit courts which had previously

considered the issue of the effect of Section 524(e) upon the

validity of release and injunctive provisions regarding

non-debtors in a plan of reorganization. /d. at 212-13. However,

in none of those cases did any of the courts state that any

“conflict” existed among the various decisions. Rather, and as

noted by the Court in Continental, these decisions were fact

intensive, were based upon the specific language of the particular

plans under review, and did not establish a “blanket rule”

regarding the validity of such release and injunctive provisions.

Regardless of the decisions reached by the courts in

Continental and related cases, such cases have no possible

bearing on the petitions for certiorari before this Court.

Indu Craft’s plan of reorganization contained no provision for

the release of any non-debtors, the Bank has never made any

claim in reliance upon Section 524(e), and the courts below did

not base their decision to dismiss Indu Craft’s indemnity claims

upon Section 524(e). Indu Craft’s attempt to use Section 524(e)

to cast doubt upon the validity of the decisions below is a classic

bootstrap argument that seeks to create an issue where none

exists, and certainly does not demonstrate the existence of any

“conflict” or compelling issue sufficient to warrant review by

this Court.

A ame

15

II. SECTION 524(e) DOES NOT PREEMPT STATE LAW

AS TO THE REQUIREMENTS FOR COMMON LAW

INDEMNIFICATION

In support of its petition for a writ of certiorari, Indu Craft

urges for the first time that the common law requirements for a

claim of indemnification have been preempted by Section 524(e)

of the Bankruptcy Code. (Indu Craft Br. at 17-18) However,

Indu Craft never raised this argument in any of the courts below,

and neither the District Court nor the Court of Appeals ever

passed on this issue. Indu Craft is precluded from raising this

issue before this Court.

It is axiomatic that the Supreme Court does not ordinarily

decide questions that have not been raised or resolved by the

lower courts. Lawn v. United States, 355 U.S. 339, 362-263,

n.16 (1958); California v. Taylor, 353 U.S. 553, 557 n.2 (1957).

As stated by the Court in Zaylor v. Freeland & Kronz, 503 U.S.

638, 646 (1992), this is one of the principles that “help to

maintain the integrity of the process of certiorari.” Accordingly,

Indu Craft’s claim of preemption should not be considered as

part of its petition for a writ of certiorari.*

Separate and apart from the foregoing, the contention that

Section 524(e) has abrogated or preempted the common law

rule that requires payment as a condition to a claim for

indemnification is meritless. As acknowledged by Indu Craft,

Section 524(e) contains no language of preemption, and there

is nothing in Section 524(e) that would remotely indicate any

* Indu Craft’s contention that the Bank lacks “standing” to raise

any argument based upon the legal effect of Indu Craft’s discharge in

bankruptcy is another argument that was never raised below and should

not be considered by the Court. (Indu Craft Br. at 24)

16

intent on the part of Congress to preempt any aspect of the state

law of indemnification. Simply stated, neither the fresh start

objective of the Bankruptcy Code, nor the provisions of Section

524(e), have any possible bearing on the settled principal that a

party seeking indemnity cannot recover in the absence of proof

that it has suffered a loss. Pet. App. at 24a-27a.

Consideration of whether a federal law pre-empts state law,

“start[s] with the assumption that the historic police powers of

the States [are] not to be superseded by . . . Federal Act unless

that [is] the clear and manifest purpose of Congress.” Rice v.

Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).

Accordingly, “‘[t]he purpose of Congress is the ultimate

touchstone’” of pre-emption analysis. Malone v. White Motor

Corp., 435 U.S. 497, 504 (1978) (quoting Retail Clerks v. .

Schermerhorn, 375 U.S. 96, 103 (1963)). “Congress’ intent may

be ‘explicitly stated in the statute’s language or implicitly

contained in its structure and purpose.’” Cipollone v. Ligget

Group, Inc., 505 U.S. 504, 516 (1992) (quoting Jones v. Rath

Packing Co., 430 U.S. 519, 525 (1977)). In the absence of

express preemption, there can by no preemption of state law

unless “that [state] law actually conflicts with federal law, or if

federal law so thoroughly occupies a legislative field ‘as to make

reasonable the inference that Congress left no room for the States

to supplement it.’”” [citations omitted] Jd.

Any contention that Section 524(e) preempts the payment

rule of state indemnity law is not supported by the language,

structure, or purpose of the Bankruptcy Code. The common

law payment rule as applied to indemnity claims has nothing to

do with the limited objective of Section 524(e) of preserving

the liability of non-debtors who are jointly liable for the

obligation of a debtor that is discharged in bankruptcy.

Conversely, there is nothing in either the statutory language of

17

Section 524(e), or its legislative history, that would evidence

any possible legislative concern regarding any common

law claims of indemnity. See, e.g., Brown v. Northeast Nuclear

Energy Co., 48 F. Supp.2d 116, 120 (D. Conn. 1999)

(no preemption of common law claims for breach of contract

and tort, by field of federal nuclear safety legislation, where

state law claims were “not motivated by an objective of

regulating nuclear safety.”’)

Finally, the requirement of payment as a condition to a claim

for indemnification does not create any conflict with the purpose

of Section 524(e). It is not the fact of Indu Craft’s discharge in

bankruptcy, but the legal consequences of that discharge on Indu

Craft’s claims for indemnification that rendered such claims

legally insufficient. That result has nothing whatsoever to do

with Section 524(e).

Il. THE DECISIONS OF THE COURTS BELOW DO

NOT CONSTITUTE A “COLLATERAL ATTACK”

UPON ANY ORDER OF THE BANKRUPTCY

COURT

Contrary to the assertions of Indu Craft and Trendi, the

determination of the courts below that Indu Craft’s discharge

and release in bankruptcy constituted a legal bar to Indu Craft’s

claims for indemnification is not a “collateral attack” upon any

order of the bankruptcy court, let alone a “nullification” of

Indu Craft’s reorganization Plan. (Indu Craft Br. at 22-23,

Trendi Br. at ii-14) At no time did the Bank ever challenge or

seek to set aside the validity of any aspect of the Plan, and the

decisions below contain no finding that any aspect of the Plan

was invalid. Indeed, the same argument was rejected by the

courts below, with the District Court explaining that in

dismissing Indu Craft’s fourth-party action, the Court “never

18

questioned the validity of the Bankruptcy Court’s judgment,”

but “merely held that Indu Craft’s indemnification claim .. .

failed to state a cause of action as a matter of New York law.”

Pet. App. at 14a.

This Court’s decision in Celotex Corporation v. Edwards,

514 U.S. 300 (1995), underscores the fact that the Bank’s defense

to the indemnification claims asserted by Indu Craft did not

constitute a “collateral attack” upon any order of the Bankruptcy

Court. In Celotex, this Court reversed a decision of the United

States Court of Appeals for the Fifth Circuit, which held that

respondents were entitled to execute upon a supersedeas bond

posted to secure a final judgment, despite the fact that the

bankruptcy court had issued an injunction prohibiting any

execution on the bond without further court order. Granting

certiorari to resolve a conflict between the circuit courts, this

Court held that by obtaining an injunction in the Texas district

court, respondents had engaged in an impermissible collateral

attack upon the injunction issued by the bankruptcy court, from

which no appeal had been taken. 514 U.S. at 313.

Here, it is Indu Craft and Trendi which seek to “collaterally

attack” their own plan of reorganization by engaging in inventive

interpretations which fly in the face of the plain language of the

Plan. Thus, Indu Craft continues to argue that Trendi’s claim

against Indu Craft was never discharged, despite the express

language of the Section 9.1 of the Plan that upon the effective

date thereof, “the Debtor shall be discharged ... from all

Claims against and Interests in the Debtor that arose prior to

the Effective Date ...,” and Section 5.2 of the Plan, which

provides that “Allowed Claims in Classes 4 and 5 are impaired

and shall receive the following treatment under the Plan in full

settlement, release and discharge thereof.” (Emphasis added)

Pet. App. at 77a, 64a. Similarly, Indu Craft’s assertion that the

19

holdings of the courts below somehow impair the “‘feasibility”

of the Plan is contrary to law, and is equally belied by its

admission in its Disclosure Statement that the Plan was

“feasible” and in the best interests of all of its creditors.°

Resp. App. at 18a.

Indu Craft’s contention also rests upon a fundamental

misconception regarding the treatment of a claim in bankruptcy.

Pursuant to § 1141(d)(1)(A) of the Bankruptcy Code, the

confirmation of a debtor’s Chapter 11 plan of reorganization

“discharges the debtor from any debt that arose before the date

of such confirmation. .. .” Jn re Chateaugay Corp., 115 B.R.

760, 773 (Bankr. S.D.N.Y. 1990). Consistent with the foregoing,

the effect of confirmation of a plan of reorganization is to

extinguish all allowed or allowable claims, which are exchanged

for the right to participate in and receive any benefits of that

plan. Jn re Friedberg, 192 B.R. 338, 341 (Bankr. S.D.N.Y. 1996).

As explained by the court in Jn re Cole, 189 B.R. 40, 45 (Bankr.

S.D.N.Y. 1996), “the creditor’s underlying claim is extinguished

by confirmation of the plan with the debtor’s obligation to

comply with the terms of the confirmed plan being substituted

for the underlying claim.”

By voting in favor of the Plan, Trendi agreed to limit any

recovery on the Trendi Judgment to its pro rata share of the

° A finding that a plan of reorganization is feasible is not a guarantee

of success. Jn re Prudential Energy Co., 58 B.R. 857, 862 (Bankr.

S.D.N.Y. 1986). Rather, the “key element of feasibility is whether there

exists the reasonable probability that the provisions of the Plan can be

performed.” Jn re Drexel Burnham Lambert Group, Inc., 138 B.R. 723,

762 (Bankr. S.D.N.Y. 1992); see also In re Clarkson, 767 F.2d 417, 420

(8th Cir. 1985) (quoting Jn re Bergman, 585 F.2d 1171, 1179 (2d Cir.

1978)). As explained by the Court in Jn re Drexel Burnham Lambert

Group, “speculative prospects of failure cannot defeat feasibility . . .

since a guarantee of the future is not required.” 138 B.R. at 762.

a rca mc ay aa Ti

20

proceeds, if any, of any judgment obtained by Indu Craft on its

fourth-party claims for indemnification against the Bank.

Pet. App. at 14a, 102a-104a. However, because Trendi’s claim

against Indu Craft was settled, released and discharged,

Indu Craft has not suffered, and cannot possibly suffer, any loss

for which a claim for indemnity would lie. Having drafted the

Plan and the discharge and relzase provisions contained therein,

it is simply too late for Indu Craft, with the aide of Trendi, its

sister company, now to attempt to rewrite those provisions in a

manner more to its liking.!°

IV. THE DECISIONS OF THE COURTS BELOW DO

NOT CONFLICT WITH ANY DECISION OF THE

NEW YORK COURT OF APPEALS

Seeking to create a conflict where none exists, Trendi urges

that the decisions below dismissing its “Second Third Party |

Complaint” somehow conflict with the decision of the New

York Court of Appeals in Duffy v. Horton Memorial Hospital,

66 N.Y.2d 473, 497 N.Y.S.2d 890 (1985). In Duffy, the

New York Court of Appeals held that an amended complaint

against a third-party defendant, with actual notice of plaintiff’s

potential claims, would relate back to the time of the filing of

the original complaint. As stated by the Court, where “a potential

defendant is fully aware that a claim is being made against him

with respect to the transaction or occurrence involved in the

suit, ... permitting an amendment to relate back would not

necessarily be at odds with the policies underlying the Statute

of Limitations.” 66 N.Y.2d at 477, 497 N.Y.S.2d at 893.

'° Pursuant to Section 1144 of the Bankruptcy Code, a party seeking

to revoke an order of confirmation must do so within “180 days after

the date of the entry of the order of confirmation.” Here, the Plan was

confirmed by Order of the Bankruptcy Court dated March 29, 1999.

Pet. App. at 90a-101a.

——

21

The facts in Duffy are not remotely similar to facts of this

case and serve only to underscore the correctness of the decisions

below dismissing Trendi’s belated pleading in its entirety.

Unlike the plaintiff in Duffy, Trendi never sought to amend its

pleading, but simply asserted direct claims against the Bank,

purportedly as a matter of right, long after its third-party claims

had been fully adjudicated and merged into a final judgment,

and long after the expiration of all applicable statutes of

limitation. Unlike the third-party defendant in Duffy, the Bank

had no notice that it would be subjected to claims by Trendi

that arose some 15 years earlier, and which Trendi deliberately

failed to assert despite having had every opportunit:, to do so.

The decision in Duffy is not only fact-intensive, but involves

facts that are far different from those presented in the instant

case. To the extent that petitioners seek to alter or challenge

factual determinations reached by the courts below, such matters

are not properly within the scope of review by this Court."

In the absence of extraordinary circumstances, it is the “settled

practice” of this Court to accept “factual determinations in which

the district court and the court of appeals have concurred.” Branti

v. Finkel, 445 U.S. 507, 512 (1980); National Labor Relations

Board v. Pittsburgh S.S. Co., 340 U.S. 498, 501 (1951).

'! Without the benefit of citation to the record, Trendi asserts that

the Bank “had ‘actual notice’ of Trendi’s claims when [the Bank] was

impleaded in 1990.” (Trendi Br. at 24) The record facts are otherwise.

Until July 30, 2001, when Trendi filed its “Second Third Party

Complaint” seeking for the first time to assert direct claims against the

Bank, the only claims ever asserted by Trendi were the third-party claims

that it asserted against its sister company, Indu Craft. Pet. App. at 2a-5a,

10a. Trendi made the same argument in the courts below, and although

such courts did not specifically rule on Trendi’s false claim of “notice,”

such claim was implicitly rejected by the refusal to allow Trendi’s

self-styled pleading to relate back to May, 1990, the time of its original

third-party claims against Indu Craft.

22

Finally, the standard of review of a determination not to

permit a new or amended pleading to relate back to the date of

the original pleading is an abuse of discretion. Wilson v. Fairchild

Republic Co., 143 F.3d 733, 738 (2d Cir. 1998); See also

Tho Dinh Tran v. The Alphonse Hotel Corp., 281 F.3d 23,

26-27 (2d Cir. 2002). Whether or not the decisions below

- regarding the relation back of Trendi’s “Second Third Party

Complaint” constituted an abuse of discretion is not a matter

that is subject to review by this Court. Cheang-Kee v. U.S.,

70 U.S. 320, 326 (1865). Accordingly, no further review of the

determinations of the courts below dismissing Trendi’s belated

and untimely pleading is warranted.

V. PETITIONERS’ REMAINING ARGUMENTS ARE

WITHOUT MERIT

Virtually every argument advanced by petitioners rests upon

a false or misleading premise, or is otherwise based upon a

misinterpretation of facts that is beyond the proper scope of

review by this Court. For example, petitioners’ entire

argument regarding Section 524(e) of the Bankruptcy Code is

based upon the erroneous notion that the decisions below

“effectively granted a non-debtor discharge” to the Bank in

violation of Section 524(e). (Indu Craft Br. at 8) Petitioners’

mischaracterization of the decisions of the courts below falls

far short of the heavy burden they are required to meet in order

to demonstrate the existence of a compelling reason sufficient

to warrant review by this Court.

Similarly, Trendi’s contention that the decisions below

create a compelling issue regarding the statute of limitations

applicable to its “Second Third Party Complaint” is plainly

erroneous. Far from creating “three different statutes of

limitation for the same claim,” the decisions below applied

23

settled and incontrovertible legal principles to dismiss a pleading

which Trendi had no standing to file, and which was plainly

time-barred under the most generous of limitation periods.

(Trendi Br. at 25) Trendi’s misunderstanding of these principles

provides no basis for review by this Court."

As stated by the District Court, pursuant to Fed. R. Civ. P.

14(a), Trendi was “fully advised” of Indu Craft’s claims against

the Bank and, as a defendant and third-party plaintiff in the

1989 Action, could have filed a direct claim against the Bank at

any time between the filing by Indu Craft of its fourth party

action on June 21, 1990 and the entry of Final Judgment by the

Bankruptcy Court on January 18, 2000. Pet. App. at 14a-15a.

However, Trendi was required to do so “before the statute of

limitations has run.” Pet. App. at 12a. For reasons that “remain[]

unexplained,” Trendi, simply failed to do so. Pet. App. at 15a.

Trendi’s reliance upon the cases cited at page 26 of its brief

is equally misplaced. Unlike the facts found by the courts below,

these cases involved situations in which third-party defendants

'2 By its terms, Rule 14 only applies to parties to a pending action,

and “only defending parties may implead.” 3 James Wm. Moore, et al.,

Moore's Federal Practice § 14.03[2] (3d ed. 2003) Thus, only a

“defending party” may commence a third-party action, only a “third-

party defendant” may assert claims against the plaintiff or any person

who is not a party “who is or may be liable to the third-party defendant”

for the claims asserted against him, and only a “plaintiff” may assert

claims directly against the third-party defendant. Fed R. Civ. P. 14(a).

Once the third-party action was terminated by the entry of judgment in

favor of Trendi, Trendi was no longer a “party,” let alone a “defending

party,” to the third-party action, and lacked standing to assert any third-

party claims against the Bank. Retcal, Inc. v. Insular Lumber Co. (Phil.),

Inc., 379 F. Supp. 62, 64 (C.D. Cal. 1973) (persons who were neither

defendants, defending parties, nor claimants were not authorized to file

third-party action under Rule 14).

24

had actual notice that the plaintiffs were proceeding directly

against them, and actually defended against plaintiffs’ claims

without objection, despite the fact that no formal claim had ever

been asserted by plaintiffs directly against such third-party

defendants.'? Again, Trendi’s reliance upon these cases rests

upon its unilateral and unsupported assertion that the Bank was.

“effectively on notice” of Trendi’s claims, an assertion that was

made and implicitly rejected by the courts below.

Finally, and without the benefit of any authority, Indu Craft

urges that this Court should exercise its “supervisory powers”

in order to give effect to the Trendi Judgment, despite the plain

language of the Plan which discharges Indu Craft from any

liability on Trendi’s underlying claim except to the limited extent

provided for in the Modified Plan. (Indu Craft Br. at 25-27)

In making this argument, Indu Craft erroneously asserts that

the decisions below were fundamentally inconsistent in that they

purportedly held that the Trendi Judgment, although not void,

was not required to be paid by Indu Craft. (Indu Craft Br. at 25)

Once again, Indu Craft’s baseless attack upon the decisions of

the courts below provides no conceivable basis for review by

this Court.

Contrary to petitioners’ rhetorical assertions, the decisions

below are neither inconsistent, contradictory, conflicting,

illogical, unfair or, in the words of Trendi, “schizophrenic.” (Indu

Craft Br. at 25-26, Trendi Br. at 22) Rather, such decisions rest

upon the fundamental and irrefutable rule that a party may not

recover in indemnity in the -bsence of a loss. As held by the

courts below, and as a result of Indu Craft’s discharge in

bankruptcy, Indu Craft had not suffered, and could not suffer,

any loss for which a claim for indemnity would lie.

'3 See Project Hope v. M/V IBN SINA, 250 F.3d 67 (2d Cir. 2001),

and Wasik v. Borg, 423 F.2d 44 (2d Cir. 1970).

25

Simply put, the indemnity claims asserted by Indu Craft in

its fourth-party action, and the direct claims belatedly asserted

by Trendi in its “Second Third Party Complaint,” are a sham. If

Trendi and Indu Craft were truly at arms-length, it is

inconceivable that Indu Craft, having received a full discharge

and release in bankruptcy, would invest the time, effort and

expense to pursue a claim for indemnity with respect to a

collusive judgment which it cannot pay, has no obligation to

pay, and as to which it has not suffered, and will never suffer,

any loss. The decisions of the courts below were correct,

petitioners have failed to demonstrate any basis for review by

this Court, and the time has come to bring this Dickensian

litigation to an end.

CONCLUSION

For each of the foregoing reasons, the Petitions for Writs

of Certiorari should be denied.

Respectfully submitted,

RosEert P. STEIN

Counsel of Record

JEFFREY R. MANN

THOMAS WEBER

Rasrv KHANNA

SARAH A. WADELTON

GREENBERG TRAURIG LLP

885 Third Avenue

New York, NY 10022

(212) 801-2100

Counsel for Respondent