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Posted: October 26, 2015

Arguments Not Raised in District Court Could Not be Raised on Appeal

On October 19, 2015, the Second Circuit issued a decision in In re: Fiorano Tile Imports, Inc., 14-3915, holding that arguments not raised in the EDNY could not be raised on appeal even though controlling circuit precedent would have precluded the court from accepting them, explaining:

It is a well-established general rule that an appellate court will not consider an issue raised for the first time on appeal. This court has discretion to consider arguments waived below, and will exercise that discretion where necessary to avoid a manifest injustice. However, the circumstances normally do not militate in favor of an exercise of discretion to address new arguments on appeal where those arguments were available to the parties below and they proffer no reason for their failure to raise the arguments below.

In the district court, [the appellant] argued only that the case was not equitably moot because the Plan had not been substantially consummated. In this Court, [the appellant] . . . primarily argues that equitable mootness should not apply because of the debtor’s lack of good faith or unclean hands. Because those arguments were not raised below, they have been forfeited.

Nor do we find it necessary to consider those arguments to prevent manifest injustice. [The appellant] argues that it could not have raised the arguments below because In re Chateaugay Corp., 10 F.3d 944 (2d Cir. 1993) made these arguments unavailable, as a matter of law, in the district court. [The appellant], however, could have argued to the district court that Chateaugay should be distinguished, or that equitable mootness should not apply for the reasons it presses on its appeal. To the extent that [the appellant] contends that the arguments would have failed in the district court because Chateaugay controls this case, the same precedent is equally binding on a panel of this Court. . . . To the extent [the appellant] seeks to preserve any argument that Chateaugay should be overruled, it could and should have presented that argument below, as it does here, in order to preserve it for review before this Court sitting en banc or before the Supreme Court.

(Internal quotations and citations omitted).

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