784 Cafe Inc. v. Chin (In re Stanley Lang Chin Fdba Law Office of Stanley L. Chin)
| Decision Date | 07 July 2020 |
| Docket Number | Adv. Pro. No. 18-01134-cec,Case No. 18-45157-cec |
| Citation | 617 B.R. 761 |
| Parties | IN RE: Stanley LANG CHIN fdba Law Office of Stanley L. Chin aka Stanley Chin, Esq., Debtor(s). 784 Cafe Inc. and John Foley, Plaintiffs, v. Stanley Lang Chin, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
Gene Wurzel Rosen, Esq., 147-10 77th Avenue, Kew Gardens, NY 11367, Counsel for Plaintiffs
Robert Kirby, Esq., Francisco Vazquez, Esq., Norton Rose Fulbright US LLP, 1301 Avenue of the Americas, New York, NY 11019, Counsel for Defendant
DECISION DENYING THE PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND GRANTING THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This matter comes before the Court on the motion of 784 Cafe Inc. (the "Corporation") and John Foley ("Foley," and together with the Corporation, the "Plaintiffs"), unsecured creditors of Stanley Lang Chin (the "Defendant"), for summary judgment denying the Defendant a discharge pursuant to 11 U.S.C. § 727(a)(4)(A) or excepting their debt from discharge pursuant to § 523(a)(2)(A) and (a)(4), and the Defendant's cross-motion for summary judgment dismissing this adversary proceeding.1 The Plaintiffs assert that the Defendant should be denied a discharge under § 727(a)(4)(A) because he knowingly and fraudulently testified at the meeting held pursuant to § 341(a) that he was not suspended from the practice of law. Alternatively, the Plaintiffs seek to except their debt from discharge pursuant to § 523(a)(2)(A) and (a)(4), asserting that the Defendant committed fraud and breached his fiduciary duty to the Plaintiffs by failing to inform them that he had never registered as an attorney and did not complete continuing legal education as required under New York law. The Defendant argues that the § 727(a)(4)(A) claim must be rejected because any misstatement was immaterial, and that the claims under § 523(a)(2)(A) and (a)(4) are barred by collateral estoppel. For the following reasons, the Plaintiffs' motion for summary judgment is denied, and the Defendant's motion is granted.
This Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334(b), and the Eastern District of New York standing order of reference dated August 28, 1996. This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(I) and (J). This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.
The facts set forth below are undisputed, except where otherwise noted.
The Defendant was admitted to practice law in the State of New York, Second Judicial Department, on June 19, 1958. ).2 As of 1981, all attorneys admitted to practice law in New York State were required to register with the Office of Court Administration, and as of 1988, were required to complete continuing legal education courses. .) The Defendant never registered as an attorney or completed continuing legal education courses. ).
In 2011, the Defendant represented Foley and the Corporation's former owner in connection Foley's purchase of the Corporation's stock from the former owner. .) Prior to being retained by Foley, the Defendant did not inform Foley of his failure to register as an attorney or to complete continuing legal education courses. .) Foley paid the Defendant a fee of $1,000 for his services. .)
Foley alleges that, after he purchased the stock, he learned that the Corporation's former owner failed to collect and withhold taxes for the Corporation. . Foley alleges that, as a result, he ultimately became personally liable for the back taxes owed. The Defendant asserts that Foley only became personally liable as part of a repayment plan Foley negotiated with respect to the outstanding taxes. .)
On October 10, 2013, the Plaintiffs filed a verified complaint in New York Supreme Court, Nassau County (the "State Court") against the Defendant.3 (Def.'s Stmt. of Material Facts ¶ 7, ECF No. 28-21 ; Kirby Decl. Ex. J, ECF No. 28-12.) The Plaintiffs alleged that the Defendant "defrauded Foley and the Corporation by holding himself out as being duly authorized to practice law even though [the Defendant] was not registered as an attorney," resulting in damages to the Plaintiffs. (Kirby Decl. Ex. J at ¶ 36, ECF No. 28-12.) The Plaintiffs also alleged that the Defendant's negligence and legal malpractice resulted in Foley's personal liability for the taxes owed by the Corporation. (Kirby Decl., Ex. J at ¶ 38, ECF No. 28-12.).
In November 2013, the Plaintiffs filed a complaint against the Defendant with the disciplinary committee. (Foley Decl. Ex. D, ECF No. 27-7 ; Def.'s Stmt. of Material Facts ¶ 6, ECF No. 28-21.) Based upon that complaint, on April 29, 2014, the Appellate Division, First Department suspended the Defendant from the practice of law in New York effective immediately until further order of the court. .)
On May 14, 2018, at the conclusion of the Plaintiffs' presentation of evidence and on the Defendant's motion for a directed verdict, the State Court dismissed the Plaintiffs' claim of fraud against the Defendant. (Kirby Decl., Ex. E at 472:24-25, ECF No. 28-7.) Three days later, on May 17, 2018, the jury determined that the Defendant was acting as an attorney in connection with Foley's purchase of the Corporation, and that the Defendant's negligence was a substantial factor in causing the Plaintiffs' damages in the total amount of $142,226.02.4 .) On June 1, 2018, the State Court entered a judgment against the Defendant in the amount of $143,566.02, which was comprised of the jury award and the Plaintiffs' costs and disbursements. (Foley Decl. Ex F, ECF No. 27-9 ; Kirby Decl. Ex. N, ECF No. 28-16.)
On September 7, 2018, the Defendant filed a pro se voluntary petition under chapter 7 of the Bankruptcy Code. .) The Defendant attended the meeting of creditors held pursuant to § 341(a) on October 10, 2018. (Def.'s Stmt. of Material Facts ¶ 26, ECF No. 28-21.) The Defendant testified that he is "a retired lawyer," and stopped practicing law 15 years prior, and that he had not been suspended. When further questioned on the issue, the Defendant testified that he did not remember if he was suspended. (Foley Decl. Ex. G at 12, ECF No. 27-10 ; Def.'s Stmt. of Material Facts ¶ 28, ECF No. 28-21 ; Kirby Decl. Ex. Q at 8, ECF No. 28-19 ).
On November 12, 2018, approximately one month after the § 341(a) meeting was held, the trustee filed a no asset report.
On December 10, 2018, the Plaintiffs commenced this action. On January 27, 2020, the parties filed these motions for summary judgment, which were heard on March 26, 2020.5
Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In ruling upon a summary judgment motion, the Court's job is not to resolve disputed issues of fact, but to determine whether a genuine issue of fact exists. See Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When viewing the evidence, the court must ‘assess the record in the light most favorable to the non-movant and ... draw all reasonable inferences in [the non-movant's] favor.’ " Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000) (quoting Delaware & Hudson Ry. Co. v. Consol. Rail Corp., 902 F.2d 174, 177 (2d Cir. 1990) ). "The nonmoving party must show that there is more than a metaphysical doubt regarding a material fact and may not rely solely on self-serving conclusory statements." Rosenman & Colin LLP v. Jarrell (In re Jarrell), 251 B.R. 448, 450–51 (Bankr. S.D.N.Y. 2000) (citations omitted).
The Plaintiffs seek to deny the Defendant a discharge under § 727(a)(4)(A), asserting that the Defendant knowingly and fraudulently testified at the § 341 meeting that he was not suspended from the practice of law. The Defendant asserts that he was confused and argues that he also testified that he did not remember if he was suspended. The Defendant further argues that, in any event, the misstatement is immaterial, and...
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