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UNITED STATES BANKRUPTCY COURT

DISTRICT OF MASSACHUSETTS

In re
NEW SEABURY COMPANY
LIMITED PARTNERSHIP,
Debtor

Chapter 11
Case No. 97-12964-JNF

JEROME HOFFMAN, JAMES EGAN,

CHARLES REIDY and DONALD H.
SIEGAL,
Plaintiffs

Adv. P. No. 16-01082

v.
NEW SEABURY PROPERTIES, LLC,
Defendant
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
ORDER GRANTING IN PART PLAINTIFFS! MOTION FOR PRELIMINARY
INJUNCTION AND DEFENDANT!S CROSS-MOTION FOR LIMITED
RELIEF FROM MAY 11, 2016 ORDER

Upon consideration of 1) the Plaintiffs! Motion for Preliminary Injunction

(the "Motion#); 2) the Defendant, New Seabury Properties LLC!s1 (I) Objection to



The Defendant!s counsel represented at the May 27, 2016 hearing that although
the Defendant does not own the Club at New Seabury, such Club is owned by an
affiliate of the Defendant. The Defendant agrees to be bound by any injunction.




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Motion for Preliminary Injunction and (II) Request for Emergency Determination
on Cross-Motion for Limited Relief from May 11 Order (the Cross-Motion); 3)
the Plaintiffs Verified Adversary Complaint; 4) the Declaration of Paul M. Kruzel
in support of Objection to the Motion to Reopen Case (filed in the case) and
exhibits; 5) the Declarations of Oscar N. Pinkas and Sachin Latawa and exhibits;
6) the Reply Declaration of Patrick P. Dinardo and exhibits; 7) THE Further
Supplemental Reply Declaration of Patrick P. Dinardo; 8) the arguments of counsel
to the parties at the hearing on the Motion and Cross-Motion held at 1:00 PM on
May 27, 2016; 9) the record of proceedings in the above-referenced Chapter 11
case, in particular the Courts Order (Hillman, J.) Confirming Fourth Amended
Plan of Reorganization of New Seabury Company Limited Partnership dated June
15, 1998 (the Confirmation Order); 10) the well-settled standards in the First
Circuit for the issuance of a preliminary injunction, see Ross-Simons of Warwick,
Inc. v. Baccarat, Inc., 102 F. 3d 12, 15 (1st Cir. 1996); and 11) no party having
requested an evidentiary hearing on the Motion or Cross-Motion,
Now, therefore the Court finds and rules as follows:
a) The Plaintiffs have demonstrated a likelihood of success on the merits
of their claim that certain of the actions of the Defendant and/or its
affiliates, which own, manage, operate, or control The Club at New
Seabury (the Club) have violated the provisions and terms of the
Confirmation Order. In particular, the evidence proffered by both the
Plaintiffs and the Defendant shows that the Club has violated or intends
to violate the Confirmation Order by: (i) failing to consult with the
Plaintiffs and/or other Category I members to obtain their input prior
to changing the Clubs rules and regulations, in particular in failing to
meet and directly communicate with Category I members in late 2015
and early 2016, prior to the customary time for sending bills for dues;




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(ii) sending confusing, ambiguous, and misleading communications to

Category I members; and (iii) creating a class of membership superior
to the Plaintiffs category of membership, namely the Diamond
category, as the benefits of that category appear to be the same as that
of the Plaintiffs at a lower cost. The Court rejects the Defendants
argument that the Clubs business decisions on membership are entitled
to complete deference, particularly where one important aspect of the
initial proposal to change membership structure, namely an increase in
the number of members to 900, was a blatant and clear violation of the
Confirmation Order.
b) The Plaintiffs have met the requirements of showing irreparable harm
absent an injunction, that the balance of harms weighs in their favor,
and that the preliminary injunction is in the public interest. The
confusion which the Club has engendered has created uncertainty
among the Plaintiffs concerning their ability to retain their Category I
membership status. Moreover, the advantages and disadvantages of
remaining in the Category I membership class, as opposed to electing a
new membership category are unclear. The confusing communications
have caused the Plaintiffs legitimate consternation and uncertainty
about their rights and future at the Club. As set forth below, the tailored
injunction will protect the ability of the Club to collect dues from nonPlaintiff members, and the Club will be able to collect 2016 dues from
other members and not sustain financial harm from the injunction as
originally requested by the Plaintiffs. An injunction is in the public
interest as there is a strong public policy in favor of the finality and
enforceability of Bankruptcy Courts Orders.

The Court finds that the Preliminary Injunction requested by the Plaintiffs
restraining implementation of planned changes with respect to membership
structure is unwarranted for several reasons. First, the only parties before the
Court are the Plaintiffs and Defendant, and its affiliates, by agreement of its
counsel. The Plaintiffs and their counsel do not have standing or authority to
represent other members of the Club who are not before the court. This action is
not a class action, and the Plaintiffs have not requested class certification. See Fed.



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R. Civ. P. 23, made applicable hereto by Fed. R. Bankr. P. 7023. Moreover, this
Court has no jurisdiction over persons not parties to this adversary proceeding.
The relief requested by the Plaintiffs is overly broad to the extent the Plaintiffs seek
to restrain the Club in favor of members who joined after entry of the Confirmation
Order, those who have elected new membership categories, and future members.
The provisions of the Confirmation Order which are in dispute apply only to those
members with Membership Agreements as defined in the Chapter 11 Plan. This
Courts jurisdiction and authority extends only to the Plaintiffs. The Court may
not grant relief in favor of members over whom it has no jurisdiction or authority
and may grant relief only in favor of the Plaintiffs.

The Court does have

jurisdiction to enforce the Confirmation Order notwithstanding the postconfirmation status of this case, as the dispute between the parties is related to the
bankruptcy case insofar as the parties seek an interpretation of the Confirmation
Order. Moreover, abstention by this Court over the disputes between the parties
is unwarranted as the issue presented by the Plaintiffs involves the interpretation
of an Order of the Bankruptcy Court which the Court likely can decide more
expeditiously than a state court.
Accordingly, the Court restrains and enjoins the Defendant and its affiliates
from implementing its proposed changes to the membership structure and annual
dues insofar as those changes affect the Plaintiffs, pending resolution of this
adversary proceeding and the request of the Plaintiffs to hold the Defendant in



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contempt of the Confirmation Order, as set forth in the Motion to Reopen filed in
the case.
With respect to the Cross-Motion, the Defendant has shown that it is
entitled to relief from the May 11, 2016 Order such that it may collect dues from
members of the Club for 2016, other than from the Plaintiffs. The assessment of
the amount of membership dues is within the business judgment of the Club
pursuant its Rules and Regulations, as set forth in the attachments to the Kruzel
Declaration. Pursuant to the Confirmation Order, the Plaintiffs have no ability to
veto or approve such business decisions.

Moreover, the Club has shown

legitimate reasons for the increase in dues for 2016, as set forth in the various
Declarations, including planned capital improvements and increased labor costs.
With respect to the 2016 dues of the Plaintiffs, the Court orders them to pay the
amount of their 2015 dues to the Club within 14 days of the date of this Order,
which amount may be adjusted pending further order of the Court. The Court
modifies its Order dated May 11, 2016, consistent with the provisions of this Order.
Finally, the Court denies the Defendants request for a bond given the
Courts narrowing of the Plaintiffs request. Moreover, the Defendant has failed



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to demonstrate that it will sustain quantifiable financial harm as a result of this

preliminary injunction.

By the Court,

Joan N. Feeney
United States Bankruptcy Judge
Dated: May 27, 2016