Case KJC Doc 4025 Filed 02/12/16 Page 1 of 9 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case KJC Doc 4025 Filed 02/12/16 Page 1 of 9 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) Chapter 11 In re: ) ) Case No (KJC) TROPICANA ENTERTAINMENT, LLC, et al., ) ) Jointly Administered ) Reorganized Debtors. ) Re: Docket Nos. 3948, 3949, 3955, and 3997 ) JOINT REPLY OF TROPICANA ENTERTAINMENT AND TROPICANA LAS VEGAS TO THE OBJECTION OF WIMAR TAHOE CORPORATION AND COLUMBIA SUSSEX CORPORATION TO JOINT MOTION TO ALTER OR AMEND JUDGMENT TO CLARIFY THAT ARGUMENTS ARE PRESERVED BY MEMORANDUM AND ORDER DATED OCTOBER 14, 2015 Tropicana Entertainment and Tropicana Las Vegas (together, the Movants ) hereby submit this reply (the Reply ) to the objection [Docket No. 3997] (the Objection ) filed by Wimar Tahoe Corporation ( Wimar ) and Columbia Sussex Corporation ( Columbia Sussex, together with Wimar, the Claimants ) and in further support of the Movants motion to clarify the Summary Judgment Memorandum and Order [Docket No. 3955] (the Motion to Clarify ), 1 and in support respectfully state as follows. REPLY 1. Wimar and Columbia Sussex devote much of their Objection to recasting the Motion to Clarify, claiming it seeks reconsideration or another bite at the apple. (Obj. 9, 12-16). To the contrary, as expressly stated in the Motion to Clarify, the Movants merely seek clarification that the Summary Judgment Memorandum and Order precludes payment of the CS Pre-Petition Claim (as the Arguments are not expressly addressed therein), and therefore cannot be said to be rearguing the merits of the disputes on the Motions for Summary Judgment. (See 1 Capitalized terms not defined herein shall have the meanings ascribed to them in the Motion to Clarify. RLF v.1

2 Case KJC Doc 4025 Filed 02/12/16 Page 2 of 9 Mot. to Clarify 1). 2 The Movants are complying with the Court s rulings, 3 however, after a thorough review of the Summary Judgment Memorandum and Order, the Movants believe that the Court did not intend to dispose of the Movants Equitable Subordination Arguments, Setoff Arguments, or Disputed Claim Argument (collectively, the Arguments ). 2. Notably, the Claimants agree that the Summary Judgment Memorandum and Order does not appear to address [the Movants ] equitable subordination and setoff arguments and request that the Court grant the Motion to Clarify to preserve those arguments. (Obj. 5, introductory paragraph, and conclusion). The only dispute is whether the Court should enter an order making clear (as requested in the Motion to Clarify) that payment on the CS Pre- Prepetition Claim is barred until all three Arguments are adjudicated or otherwise resolved. (Obj. 6, introductory paragraph, and conclusion). The clarification sought by Movants will provide needed certainty as to the Movants rights and defenses and will prevent confusion and the commencement of further (potentially unnecessary) proceedings. A. Each of the Arguments Precludes Payment. 3. The Claimants fail to address two simple facts: (i) that the Summary Judgment Motion and Order make no mention of the Arguments, and (ii) that each of the Arguments if successful would preclude payment on the CS Pre-Petition Claim. As Columbia Sussex s success on each Argument is necessary to permit payment, the Movants believe the Court would have addressed the Arguments expressly if it intended to order immediate payment of the CS Pre-Petition Claim, despite the Arguments, in the Summary Judgment Memorandum and Order. 2 3 The facts, circumstances and underlying arguments relevant to this Reply are fully set forth in the Motion to Clarify and the Movants Objections [Docket Nos. 3124, 3122, 3361, 3566, 3567, and 3578] to Columbia Sussex s Motion for Summary Judgment [Docket No. 3022] and Wimar s Motion for Summary Judgment [Docket No. 3019], and are incorporated by reference as if fully set forth herein. To wit, the Movants are cooperating with Columbia Sussex to calculate the CS Pre-Petition Claim cap, and have been producing documents in connection with same. RLF v.1 2

3 Case KJC Doc 4025 Filed 02/12/16 Page 3 of 9 4. The Court has the authority to clarify the Summary Judgment Memorandum and Order to confirm that the Arguments are not addressed therein. See, e.g., In re Tribune Co., 464 B.R. 208, 213 (Bankr. D. Del. 2011) (Carey, J.) (ordering clarification that prior opinion did not determine the value of notes); In re Smith Corona Corp., 212 B.R. 59, 60 (Bankr. D. Del. 1997) (clarifying contingent nature of right to dividend, not mentioned in prior opinion); Helios Software, LLC v. SpectorSoft Corp., No. CV LPS, 2015 WL , at *1 (D. Del. June 5, 2015) (clarifying that prior summary judgment decision precluded damages based on international sales, not addressed in the prior opinion). 5. Moreover, as fully set forth in the Objections to the Motions for Summary Judgment, each of the Arguments precludes the immediate payment of the CS Pre-Petition Claim. (See Tropicana Entertainment Objection 37-39, 43-47, 51-55, and 5, respectively; Tropicana Las Vegas Objection pp.16-19, 19-20, and 2 n.3, respectively). However, in its Objection, Columbia Sussex takes the position that the Court ruled that the CS Pre-Petition Claim must be paid immediately to the extent that the claim does not exceed the section 507(a)(5)(B) cap. (See Obj. 9). Absent clarification, the Movants may be forced to pay the CS Pre-Petition Claim prematurely and to their detriment, only to later commence litigation to recover the payment as it was not justified in the first place, for example because the Claimants claims will be equitably subordinated or setoff by a larger judgment obtained in the Trustee s pending litigation against the Claimants. 6. The Claimants agree that the Summary Judgment Memorandum and Order does not preclude either the Equitable Subordination or the Setoff Arguments, so later litigation is certain. (See Obj. conclusion paragraph: Columbia Sussex and Wimar respectfully request that this Court enter an Order [ ] granting the Motion to Clarify to the extent that it seeks clarification RLF v.1 3

4 Case KJC Doc 4025 Filed 02/12/16 Page 4 of 9 on the issue of whether this Court decided [the Equitable Subordination Argument and the Setoff Arguments] ). Given the certainty of future litigation, the Movants do not believe that the Court intended to require payment prior to adjudication or other resolution of the Arguments. 7. As the Objections to the Motions for Summary Judgment make clear, payment of the CS Pre-Petition Claim prior to adjudication of the Setoff Argument and Equitable Subordination Argument is inequitable and improper. (See generally, Objections to Motions for Summary Judgment; see, e.g., Tropicana Entertainment Objection, 36-55; Tropicana Las Vegas Objection, pp.7-8, 13-14, and 19-20). 8. Payment of the CS Pre-Petition Claim is also precluded by the express language of the Plans. Notwithstanding the clear prohibition against payment prior to the resolution of all of Columbia Sussex s Disputed Claims, Columbia Sussex asserts (in a footnote) that the Plans except it from the general bar against distributions to holders of Disputed Claims. In so arguing, Columbia Sussex misinterprets the Plans plain language. 9. The OpCo Plan provides that any Entity that holds both an Allowed Claim and a Disputed Claim shall not receive any distribution on any Allowed Claims unless and until all objections to the Disputed Claim have been resolved by settlement or Final Order and the Disputed Claim has been Allowed. (OpCo Plan VII.B.2 (emphasis added)). 4 This provision unambiguously precludes payment until all Disputed Claims have been Allowed (each as defined in the Plans), which promotes judicial economy and efficiency by withholding payment until all disputes are resolved, thus avoiding piecemeal litigation and any need for disgorgement of payments made to creditors. 10. Columbia Sussex seeks to override that prohibition with other language from the 4 The LandCo Plan contains an identical provision. See LandCo Plan VII.B.2. RLF v.1 4

5 Case KJC Doc 4025 Filed 02/12/16 Page 5 of 9 Plans that is consistent. Without any explanation, Columbia Sussex quotes the Plans provisions (OpCo Plan VII.B.2) 5 that no distribution shall be made on any Claim asserted by any Yung Entity until such Claim is Allowed by order of the Bankruptcy Court (Obj. 2 n. 1) as somehow overriding the bar to payment for creditors that hold Allowed and Disputed Claims. The language quoted by Columbia Sussex simply confirms what section VII.B.2 of the Plans already provide, that there can be no distribution until an Allowed claim exists. That provision, however, cannot be read to require a distribution once there is an Allowed claim. To provide that relief the Court would have to re-write the Plans to provide that distribution shall be made on any Claim asserted by any Yung Entity once such Claim is Allowed by order of the Bankruptcy Court Columbia Sussex (and Wimar) filed proofs of claim asserting a number of claims in addition to the CS Pre-Petition Claim. As seen in the proofs of claim (attached as Exhibits A and B), both Claimants assert at least three claims against the debtors: Administrative expense and priority claims payable under Casino Service Agreements (at issue in the Summary Judgment Memorandum and Order); Contribution, indemnification and reimbursement for losses, claims and damages regarding multiple litigations and/or guaranty or indemnity agreements; and Contribution, indemnification and reimbursement for losses, claims and damages regarding the Park Cattle litigation and a related $165 million settlement. 12. None of those claims has been Allowed, and given the other Disputed Claims asserted, allowance of the CS Pre-Petition Claim does not entitle Columbia Sussex to payment. Consequently, Columbia Sussex s assertion that payment is due upon demonstrat[ing] that its claim does not exceed the limitations set in 507(a)(5)(B) conflicts with the plain terms of the Plans. (See Plans VII.B.2). 5 The LandCo Plan contains an identical provision. See LandCo Plan VII.B.2. RLF v.1 5

6 Case KJC Doc 4025 Filed 02/12/16 Page 6 of The Motion to Clarify should therefore be granted, and the Objection overruled. B. The Motion to Clarify is Procedurally Proper and Satisfies FRCP 52(b). 14. The Claimants also complain the Motion to Clarify is procedurally inappropriate pursuant to FRCP 52(b) and that the Movants otherwise failed to supply any proper ground... for reconsideration and thus, cannot satisfy the standard under FRCP 59(e). (See Obj. 9-16). The Claimants have mischaracterized the Movants requested relief and the applicable law. The Movants have not requested that the Court reverse any portion of its decision. 15. The Claimants assert that FRCP 52(b) permits amendment of findings and conclusions by the Court that are promulgated during actions tried on the facts without a jury, (Obj. 10), and argue that such findings are not made on a motion for summary judgment and thus, the Movants motion is procedurally flawed and [ ] should be denied (id. 11). In support of their position, the Claimants cite inapposite cases concerning post-summary judgment requests for additional findings of fact or reversal of a court s prior findings of fact. (See id. at 10). Here, the Movants are not seeking additional findings of fact, or reversal of prior findings. 16. Furthermore, the Claimants acknowledge that the Motion to Clarify seeks clarification with respect to a conclusion of law, not a finding of fact. (See. Obj. 10 n. 2). That this admission appears only in a footnote is telling. The Claimants quote a Third Circuit Court of Appeals decision for the proposition that Rule 52(b) does not explicitly refer to reconsideration of conclusions of law.... (See Obj. 10 n.2) (quoting U.S. Gypsum Co. v. Schiavo Bros., 668 F.2d 172, 180 n.9 (3d Cir. 1981)). That quotation is selective, and obscures the Third Circuit s express holding, which instead provides that [a]lthough Rule 52(b) does not explicitly refer to reconsideration of conclusions of law, it is clear that the district court has the power under Rules 52(b) and 59(e), read together, to alter or add to its conclusions of law where appropriate. Id. (emphasis added). RLF v.1 6

7 Case KJC Doc 4025 Filed 02/12/16 Page 7 of The Court is clearly authorized to undertake the clarification sought under FRCP 52(b), and the Objection should be overruled. See, e.g., In re Kora & Williams Corp., No PM, 2007 Bankr. LEXIS 1283, at *3 (Bankr. D. Md. Feb. 2, 2007) (noting that amendment under FRCP 52(b) is warranted where a court fails to make express findings germane to an issue raised or to correct... oversight. ); In re Perotti, No. 1:07-bk-01889MDF, 2008 Bankr. LEXIS 4629, at *3 (Bankr. M.D. Pa. Oct. 22, 2008). C. The Movants Seek Clarification, and Therefore Have Satisfied FRCP 59(e). 18. The Claimants similarly misconstrue the Movants requested relief and the applicable standard under FRCP 59(e). 19. Columbia Sussex insists that the Movants seek reconsideration and therefore must demonstrate either (1) an intervening change in controlling law; (2) the availability of new evidence; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice. (Obj. 13). In support, they cite a handful of inapposite cases, none of which confront the question before the Court or offer guidance for resolving it. 6 To be clear, the Movants do not seek to upset or challenge the Court s prior judgment. Rather, they request that the Court clarify its prior ruling with respect to the Arguments, which were not expressly addressed in the Summary Judgment Memorandum and Order. As Claimants acknowledge, courts have recognized that FRCP 59(e) is a proper mechanism for obtaining such clarification. 7 (See Obj. 6 7 Many of these cases denied motions for reconsideration without addressing an issue of clarification. See In re New Century TRS Holdings, Inc., 502 B.R. 416, (Bankr. D. Del. 2013) (Carey, J.) (denying reconsideration, not clarification); Hardwick v. Senato, No SLR, 2015 WL , at *1 (D. Del. Dec. 8, 2015) (same); In re Joy Glob., Inc. f/k/a Harnischfeger Indus., Inc., No. CIV LPS, 2011 WL , at *2 (D. Del. Nov. 22, 2011) (denying reconsideration where the moving party sought to rewrite the prior opinion, not clarification). In another cited case, the court corrected a clerical error, which contrary to Claimants position, suggests that FRCP 59(e) is the proper mechanism for clarification. See In re Fisker Auto. Holdings, Inc. Shareholder Litig., No. CV SLR, 2015 WL , at *1 (D. Del. Oct. 15, 2015). Claimants cite to Commercial Union Ins. Co. v. Charleston Marine Leasing Co., 52 F.3d 320 (Table), 1995 WL , at *5 (4th Cir. 1995) and Gregoire v. Centennial Sch. Dist., No. CIV. A , 1989 WL 83598, at *1 (E.D. Pa. July 25, 1989) to suggest not all courts agree that clarification is permitted under FRCP 59(e). RLF v.1 7

8 Case KJC Doc 4025 Filed 02/12/16 Page 8 of 9 15 (noting that the Movants cited authorities that allow a clarification of a prior judgment under Rule 59(e) )). 20. The Claimants also incorrectly state the standard for granting clarification. They assert that even though FRCP 59(e) permits clarification the Movants must satisfy one of the above-mentioned grounds for relief, citing Brown v. Hovatter, 525 F. Supp. 2d 754, 759 (D. Md. 2007). 8 Brown, however, found that the moving party must satisfy one of the three grounds to justify amending a judgment, but explicitly stated that FRCP 59 provides grounds for clarifying an opinion, and (although the moving party did not demonstrate grounds for amendment) the court then proceeded to clarify its prior opinion. See id. Thus, authorities cited by both the Claimants and the Movants make plain that the Court is authorized to clarify its Summary Judgment Memorandum and Order under FRCP 52(b) and 59(e). See, e.g., U.S. Gypsum, 688 F.2d at 180 n.9 ( it is clear that the district court has the power under Rules 52(b) and 59(e), read together, to alter or add to its conclusions of law where appropriate ). CONCLUSION WHEREFORE, the Movants respectfully request that the Court enter the proposed order granting the Motion to Clarify, (i) clarifying that the Summary Judgment Memorandum and Order does not preclude the Arguments, and conditioning payment of any portion of the CS Pre- Petition Claim that does not exceed the limitations set forth in 507(a)(5)(B) on the resolution of those Arguments; and (ii) granting such other and further relief to the Movants as the Court deems just and proper. 8 These cases are distinguishable and inapposite. In both Commercial Union and Gregoire, the moving party tried to raise new issues post-judgment that it failed to raise pre-judgment. Here, the Movants raised the Arguments before the Court s Summary Judgment Memorandum and Order. Columbia Sussex also cites O'Brien v. Green, No. 3:14-CV-178, 2014 WL , at *6 (E.D. Va. July 31, 2014) in support of this proposition. In O Brien, the motion was simply denied as untimely. RLF v.1 8

9 Case KJC Doc 4025 Filed 02/12/16 Page 9 of 9 Dated: February 12, 2016 Respectfully submitted, YOUNG CONAWAY STARGATT & TAYLOR, LLP /s/ M. Blake Cleary Robert S. Brady (No. 2847) M. Blake Cleary (No. 3614) Rodney Square 1000 North King Street Wilmington, Delaware Telephone: (302) Telecopier: (302) and - JONES DAY Bruce Bennett (admitted pro hac vice) James O. Johnston (admitted pro hac vice) Joshua D. Morse (admitted pro hac vice) 555 South Flower Street, 50th Floor Los Angeles, California Telephone: (213) Telecopier: (213) Co-Counsel to Tropicana Las Vegas RICHARDS, LAYTON & FINGER, P.A. /s/ Joseph C. Barsalona II Daniel J. DeFranceschi (No. 2732) Zachary I. Shapiro (No. 5103) Joseph C. Barsalona II (No. 6102) One Rodney Square 920 N. King Street Wilmington DE Telephone: (302) Facsimile: (302) and - DENTONS US LLP Peter D. Wolfson (admitted pro hac vice) Arthur H. Ruegger (admitted pro hac vice) Oscar N. Pinkas (admitted pro hac vice) 1221 Avenue of the Americas New York, New York Telephone: (212) Facsimile: (212) Co-Counsel to Tropicana Entertainment RLF v.1 9

10 Case KJC Doc Filed 02/12/16 Page 1 of 19 EXHIBIT A RLF v.1

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29 Case KJC Doc Filed 02/12/16 Page 1 of 16 EXHIBIT B RLF v.1

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