Federal judge rejects proposed ARC settlement judgment over dispute involving same funds

ARC

NEW YORK — A federal judge in New York has rejected a request by Clear Cove Opportunities Fund to enter a partial final judgment in its lawsuit against Addiction Recovery Care, ARC founder Tim Robinson and Angelica Capital Trust, finding that the proposed judgment could conflict with another ongoing case involving the same funds.

Clear Cove and the ARC defendants had reached a proposed stipulated judgment and asked the court to formally enter it. However, Angelica Capital Trust opposed the request, and U.S. District Judge Mary Kay Vyskocil denied the motion in an order issued Tuesday.

The judge said the proposed judgment involved funds that are also at the center of an earlier lawsuit involving Angelica and ARC. Clear Cove had previously sought to intervene in that case but was denied.

“Clear Cove, having declined to appeal Judge Daniels’ denial of intervention in Angelica, may not use this action as an end-run around that one,” Vyskocil wrote.

Clear Cove and Angelica have both sued ARC over claims that the company sold the same tax credits to both companies and reneged on paying either one. Robinson was later indicted on wire fraud and money laundering charges for his role in the alleged scheme.

The court noted that Angelica has moved to confirm an arbitration award in its favor involving the same funds and that another judge had previously blocked the distribution of that money. Clear Cove has since renewed its request to intervene in that case.

Vyskocil said entering the proposed judgment between Clear Cove and ARC could result in inconsistent rulings and interfere with the efficient resolution of the related litigation.

“Entry of Clear Cove’s Proposed Stipulated Judgment in this case would have the clear potential to create inconsistent adjudications,” the judge wrote.

The ruling does not necessarily prevent Clear Cove and ARC from enforcing any settlement agreement they may have reached. The judge said Clear Cove remains free to pursue enforcement of its contractual rights against ARC and Robinson in a separate proceeding.

However, the court declined to formally approve the proposed judgment, finding that Clear Cove had not shown that the issues were sufficiently separate from the Angelica litigation or that there was sufficient reason to enter judgment before the related case is resolved.

A copy of the judge’s order follows: