In re Marathe
| Decision Date | 10 November 2011 |
| Docket Number | No. 3:10–bk–10758–PMG.,3:10–bk–10758–PMG. |
| Citation | 23 Fla. L. Weekly Fed. B 201,66 Collier Bankr.Cas.2d 1343,459 B.R. 850 |
| Parties | In re Shriram S. MARATHE and Karen Rav–Marathe, Debtors. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
OPINION TEXT STARTS HERE
Robert Altman, Robert Altman Att. at Law, Palatka, FL, for Debtors.
ORDER ON MOTION FOR RECONSIDERATION OF COURT'S ORDER GRANTING TRUSTEE'S MOTION FOR A RULE 2004 EXAMINATION AND MOTION FOR A PROTECTIVE ORDER FOR KAVERI MARATHE
THIS CASE came before the Court for hearing to consider Kaveri Marathe's Motion for Reconsideration of Court's Order Granting Trustee's Motion for a Rule 2004 Examination and Motion for a Protective Order.
On July 8, 2011, the Court entered an Order authorizing the Chapter 7 Trustee to conduct a 2004 examination of Kaveri Marathe (Kaveri) pursuant to the Federal Rules of Bankruptcy Procedure. In her Motion for Reconsideration of the Order, Kaveri primarily asserts that the proposed examination is impermissible because it violates her rights under the due process clause of the United States Constitution.
The Court finds that the Order authorizing the Trustee to conduct the examination was appropriate, and that the Trustee should be permitted to examine Kaveri in accordance with Rule 2004 and Rule 9016 of the Federal Rules of Bankruptcy Procedure.
The Debtors, Shriram S. Marathe and Karen Rav–Marathe, filed a petition under Chapter 7 of the Bankruptcy Code on December 15, 2010. The petition was filed in the Bankruptcy Court for the Middle District of Florida.
On their schedule of assets filed with the petition, the Debtors listed the following interest in real property:
H & W hold a 1/2 interest with daughter in cooperative apartment located at 26 Cornelia St., New York, N.Y. (JTWRS)
(the Apartment). The Debtors indicated in the schedules that the Apartment was not encumbered by any liens, and that the current value of their interest in the Apartment was unknown. The Debtors did not claim the Apartment as exempt on their schedule of exemptions.
On June 30, 2011, the Chapter 7 Trustee filed a Motion to conduct the examination of Kaveri Marathe, the Debtor's daughter, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. (Doc. 76). In the Motion, the Trustee alleged that the Debtors had disclosed their interest in the Apartment on their schedules, that the Trustee's investigation had revealed that the Apartment “was purchased by the Debtors and purportedly their daughter Kaveri Marathe,” and that New York City's public records reflect that the Apartment is owned jointly by the Debtors and Kaveri. (Doc. 76, ¶ 7). The Trustee also alleged that she needed additional information regarding the consideration paid by Kaveri for her interest in the Apartment, the relative interests of the Debtors and Kaveri in the Apartment, the existence of any unrecorded transfers related to the Apartment, and the current usage of the Apartment. (Doc. 76, ¶ 13).
On July 8, 2011, the Court entered an Order granting the Trustee's Motion for Rule 2004 Examination, and directed Kaveri to appear for examination at a time and place to be scheduled by the Trustee. (Doc. 78).
On July 26, 2011, Kaveri filed the Motion for Reconsideration and for a Protective Order that is currently under consideration. (Doc. 86). In the Motion, Kaveri acknowledges that she has an ownership interest in the Apartment, and asserts that she “lives, resides and works in New York, is a nondebtor in the instant bankruptcy proceeding, and does not have the ‘minimum contacts' with either the Federal Judicial District for the Middle District of Florida or with the State of Florida necessary, pursuant to the requirements of the Due Process Clause, for this Court to subject her to a Rule 2004 Examination.” (Doc. 86, ¶¶ 1, 10).
In response to Kaveri's Motion for Reconsideration, the Trustee contends that the Debtors' interest in the Apartment is an asset of the bankruptcy estate, and that the Trustee is entitled to examine Kaveri in Kaveri's capacity as a co-owner of the Apartment. According to the Trustee, the examination had been scheduled for August 17, 2011, in New York City. The subpoena for the examination had been issued by an attorney in New York City who was employed as special counsel for the Trustee. (Doc. 88).
The Court finds that the Order authorizing the Trustee to conduct Kaveri's examination was properly entered, and that the Trustee is entitled to examine Kaveri pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. Trustees and parties in interest in bankruptcy cases may examine any person, including nondebtors, regarding matters that affect the administration of the bankruptcy estate. Additionally, Kaveri's attendance at an examination in New York City will not violate her due process rights, because she has knowledge of property of the bankruptcy estate, and because the examination will be conducted in the district in which she resides.
The filing of a voluntary bankruptcy petition creates a bankruptcy estate consisting of all of the debtor's property as of the commencement of the case. Section 541(a) of the Bankruptcy Code provides in part:
11 U.S.C. § 541. Property of the estate
(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:
(1) Except as provided in subsections (b) and (c)(2) of this section, all legal and equitable interests of the debtor in property as of the commencement of the case.
11 U.S.C. § 541(a)(Emphasis supplied). In re Chambers, 451 B.R. 621, 622 (Bankr.N.D.Ga.2011)(Emphasis in original). Pursuant to § 541, property of the estate includes all property “wherever located” in which the debtor had an interest, regardless of territorial borders. In re Lykes Bros. Steamship Co., Inc., 207 B.R. 282, 287 (Bankr.M.D.Fla.1997).
In this case, the Debtors listed an interest in the Apartment on their bankruptcy schedules, and did not claim the interest as exempt. The Debtors' interest in the Apartment is property of the estate, even though the bankruptcy petition was filed in Florida, and the Apartment is located in New York.
The jurisdiction of Bankruptcy Courts is set forth at 28 U.S.C. § 1334. Section 1334(e) of title 28 provides in part:
28 USC § 1334. Bankruptcy cases and proceedings
...
(e) The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction—
(1) Of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate; ...
28 U.S.C. § 1334(e) (Emphasis supplied). Under this provision, the Bankruptcy Court has exclusive jurisdiction over property of the bankruptcy estate, and over disputes regarding whether specific property is property of the estate. In re Cox, 433 B.R. 911, 920 (Bankr.N.D.Ga.2010). “Congress intended to grant comprehensive jurisdiction to the bankruptcy courts so that they might deal efficiently and expeditiously with all matters connected with the bankruptcy estate.” Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984) (quoted in In re Ryan, 2008 WL 1969593, at 2 (11th Cir.)).
By providing for bankruptcy court jurisdiction over all property of the estate “wherever located,” the statute is intended to have “global reach.” In re Globo Comunicacoes e Participacoes S.A., 317 B.R. 235, 250 (S.D.N.Y.2004). “Section 1334(e) ... embodies a Congressional determination that bankruptcy courts should determine rights in property of bankrupt estates regardless of where that property may be found.” In re Gucci, 309 B.R. 679, 683(S.D.N.Y.2004).
As shown above, the Debtors' interest in the Apartment is property of their bankruptcy estate. Consequently, the Bankruptcy Court has jurisdiction over their interest in the Apartment pursuant to 28 U.S.C. § 1334(e), even though the bankruptcy petition was filed in Florida and the Apartment is located in New York.
Adversary proceedings in bankruptcy cases are governed by Part VII of the Federal Rules of Bankruptcy Procedure. Rule 7004 of the Rules relates to service of the summons and complaint in an adversary proceeding. Rule 7004 provides in part:
Rule 7004. Process; Service of Summons, Complaint
...
(d) NATIONWIDE SERVICE OF PROCESS. The summons and complaint and all other process except a subpoena may be served anywhere in the United States.
...
(f) PERSONAL JURISDICTION. If the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service in accordance with this rule or the subdivisions of Rule 4 F.R.Civ.P. made applicable by these rules is effective to establish personal jurisdiction over the person of any defendant with respect to a case under the Code or a civil proceeding arising under the Code, or arising in or related to a case under the Code.
Fed.R.Bankr.P. 7004(d), (f) (Emphasis supplied). Under these provisions, personal jurisdiction may be established over a defendant in an adversary proceeding if (1) service of process is made in accordance with the Rules, (2) the proceeding arises under or relates to a bankruptcy case, and (3) the Court's exercise of jurisdiction is consistent with the Constitution and laws of the United States. In re Texas Reds, Inc., 2010 WL 1711112, at 2 (Bankr.D.N.M.).
In this case, for example, Kaveri could be served with a summons and complaint “anywhere...
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