Geltzer v. Brizinova (In re Brizinova), Case No. 12–42935–ess

• Decision Date: 03 March 2017
• Docket Number: Adv. Pro. No. 15–01073–ess,Case No. 12–42935–ess
• Citation: 565 B.R. 488
• Parties: IN RE: Estella BRIZINOVA and Edward Soshkin, aka Eduard Soshkin, Debtors. Robert L. Geltzer, Chapter 7 Trustee of the Estate of Estella Brizinova and Edward Soshkin, Plaintiff, v. Estella Brizinova and Edward Soshkin, Defendants.
• Court: U.S. Bankruptcy Court — Eastern District of New York

565 B.R. 488

IN RE: Estella BRIZINOVA and Edward Soshkin, aka Eduard Soshkin, Debtors.Robert L. Geltzer, Chapter 7 Trustee of the Estate of Estella Brizinova and Edward Soshkin, Plaintiff,

v.Estella Brizinova and Edward Soshkin, Defendants.

Case No. 12–42935–ess

Adv. Pro. No. 15–01073–ess

United States Bankruptcy Court, E.D. New York.

Signed March 3, 2017

Robert L. Geltzer, Esq., Law Offices of Robert L. Geltzer, 1556 Third Avenue (Suite 505), New York, NY 10128, Karamvir Dahiya, Esq., Dahiya Law Offices, LLC, 75 Maiden Lane (Suite 506), New York, NY 10038, Attorneys for Estella Brizinova and Edward Soshkin

Robert A. Wolf, Esq., Tarter Krinsky & Drogin LLP, 1350 Broadway (11th Floor), New York, NY 10018, Attorneys for Robert L. Geltzer, as Chapter 7 Trustee of the

Estate of Estella Brizinova and Edward Soshkin

MEMORANDUM DECISION ON MOTION FOR CONTEMPT AND SANCTIONS AGAINST KARAMVIR DAHIYA, ESQ., AND/OR DAHIYA LAW OFFICES, LLC

HONORABLE ELIZABETH S. STONG, UNITED STATES BANKRUPTCY JUDGE

Introduction

Before the Court is the motion of the Chapter 7 Trustee Robert L. Geltzer for contempt and sanctions against Karamvir Dahiya, Esq., and Dahiya Law Offices, LLC (together, "Dahiya"), in an adversary proceeding brought in the bankruptcy case of Estella Brizinova and Edward Soshkin. The Trustee commenced this adversary proceeding against the Debtors to recover certain assets from them for the benefit of their bankruptcy estate.

As this Court has observed before, "the prospect of imposing sanctions against a professional is never pleasant for the parties or the court." Kramer v. Mahia (In re Khan) , 488 B.R. 515, 521 (Bankr. E.D.N.Y. 2013), aff'd sub nom. Dahiya v. Kramer , 2014 WL 1278131 (E.D.N.Y. Mar. 27, 2014), aff'd , 593 Fed.Appx. 83 (2d Cir. 2015). As this Court has also found:

Some of the most important precepts of the legal profession are in the background, and occasionally the foreground, of a request for this relief. As Chief Judge Irving Kaufman noted some thirty years ago, "advocacy is an art in which the unrelenting pursuit of truth and the most thorough self-control must be delicately balanced," and "zealous advocacy in behalf of a client can never excuse contumacious or disrespectful conduct." Van Iderstine Co. v. RGJ Contracting Co. , 480 F.2d 454, 459 (2d Cir. 1973).

Id. And as the Second Circuit has noted, "[c]ourts can adjudicate disputes only when the parties present reasoned arguments rather than invective-laden diatribes." Koehl v. Greene, 424 Fed.Appx. 61, 62 (2d Cir. 2011).

The Trustee seeks contempt and sanctions against Dahiya in response to five statements in the Defendants' Motion to Dismiss this adversary proceeding, on grounds that they are highly objectionable and offensive. These statements are:

Geltzer having realized that he has gotten money from the sons, he could extract more, he has begun his extortionist journey again.

[A]s stated earlier, trustee wants to threaten a family into further submission.

They had sued the sons and settled with them. Seeing the promptness of the settlement Geltzer has to devise ways to reach deeper to extort more settlement.

This Trustee Robert Geltzer, has been known to never file an estate closure reports on an expeditious basis but for keeping it open. Why? Unexpected accretion!

Geltzer brought a lawsuit against the sons of the debtors, Nick Soshkin and Igor Soshkin on grounds very frivolous .... This settlement, became a source of inspiration to Geltzer to dig more.

Mot. to Dismiss at 8, 9, 12, 16, 20. See Sanctions Mot. at 6–7 (the "Statements").

The Trustee also seeks contempt and sanctions against Dahiya in response to a statement in the Defendants' Reply Memorandum in further support of the Motion to Dismiss, on grounds that it is an impermissible disclosure of a statement made during a mediation in Geltzer v. Ng (In re Ng) , Case No. 12–01343–CEC, another bankruptcy case in which he served as the Chapter 7 trustee and Dahiya represented the debtor. That statement is that the settlement in In re Ng "was an Agreement, that was signed only on the basis of being urged with the words: ‘Sometimes, it takes a stronger person to walk away.’ I decided to walk away." Sanctions Mot. at 13.

Jurisdiction

This Court has jurisdiction over these proceedings pursuant to 28 U.S.C. §§ 1334(b) and 157(b)(1). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). And this Court has constitutional authority to enter a final order, because the Trustee's requests for relief stem from these proceedings and "from the bankruptcy itself." Stern v. Marshall , 564 U.S. 462, 499, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). For these reasons, this Court has jurisdiction and the authority to consider and enter a final order on the relief sought here under 28 U.S.C. § 1334(b) and the Standing Order of Reference dated August 28, 1986, as amended by Order dated December 5, 2012, of the United States District Court for the Eastern District of New York.

Background

This Adversary Proceeding

By this action, the Chapter 7 Trustee seeks to recover certain assets from the Defendants, who are also the Debtors in this bankruptcy case, for the benefit of this Chapter 7 estate. This is not the Trustee's first action to recover assets in this bankruptcy case—the Trustee brought a prior case, Geltzer v. Soshkin , Adv. Pro. No. 14–01040, against the Defendants' sons in March 2014, and this Court approved the settlement of that action later that year.

In this action, the Defendants moved to dismiss the Complaint, and that motion prompted both opposition from the Trustee and this Motion for Contempt and Sanctions (the "Sanctions Motion"). The Defendants' Motion to Dismiss was granted in part and denied in part by Memorandum Decision and Order dated July 20, 2016. The Trustee declined to replead the claim that was dismissed, and the Defendants have answered the Complaint. But this motion remains to be decided by the Court.

This Motion for Contempt and Sanctions

By this motion, the Trustee argues that Dahiya should be held in contempt pursuant to Bankruptcy Code Section 105(a) and Bankruptcy Rules 9014 and 9020 for two reasons. First, he seeks an order of civil contempt or coercive sanctions on grounds that by making the Statements in the Motion to Dismiss, Dahiya violated a stipulated order entered by Chief Judge Craig in In re Ng (the "Ng Stipulated Order"). And second, he seeks an order of contempt on grounds that by disclosing a confidential mediation statement in the Reply Memorandum, Dahiya violated a mediation order entered by Chief Judge Craig in that action (the "Ng Mediation Order").

In addition, the Trustee argues that Dahiya should be sanctioned under Bankruptcy Code Section 105 and this Court's inherent authority, on grounds that the Statements and the disclosure of a confidential mediation statement violate the Ng Stipulated Order, the Ng Mediation Order, the Bankruptcy Code and Rules, this Court's Local Bankruptcy Rules, and the New York Rules of Professional Conduct.

The Trustee seeks an order (i) declaring that Dahiya has violated the Ng Stipulated Order, the Ng Mediation Order, the Local Bankruptcy Rules, and New York's Rules of Professional Conduct; (ii) sanctioning Dahiya for those violations; (iii) holding Dahiya in contempt of the Ng Stipulated Order and the Ng Mediation Order; (iv) imposing coercive civil per diem sanctions against Dahiya to compel compliance with those orders; and (v) imposing such other means to compel compliance as the Court deems necessary and appropriate.

The Trustee's Arguments

The Trustee advances several arguments in support of his requests for contempt and sanctions. Some are based on the Statements made by Dahiya in the context of the Motion to Dismiss, and others are based on matters separate from this adversary proceeding and the Debtors' bankruptcy case.

At the outset, the Trustee notes that in the Ng Stipulated Order, "Dahiya reaffirms his commitment to practice in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of this District ... [and] the New York Rules of Professional Conduct," so that any violation of these authorities amounts to contempt of that order. Sanctions Mot. at 5.

The Trustee argues, in forceful terms, that by making the Statements, Dahiya violated the Ng Stipulated Order and several of New York's Rules of Professional Conduct. He characterizes those statements as "unjustified and scandalous personal attacks against me" and "unprofessional, ill-conceived, poorly written and baseless invective." Sanctions Mot. at 6. And he describes those statements and the Motion to Dismiss as "part of [Dahiya's] use and abuse of this Court and its otherwise lawful processes to wage a crusade against me, and not for the otherwise legitimate (though incorrect) position to try to dismiss this Adversary Proceeding." Sanctions Mot. at 7. "Then and now," the Trustee states, Dahiya has "multiplied proceedings ," "behaved unreasonably and vexatiously ," "increased the costs of the proceedings," and "acted with bad faith and with intentional misconduct ." Sanctions Mot. at 7 (emphasis in original).

The Trustee also argues that Dahiya violated the Ng Mediation Order and the Local Bankruptcy Rules by disclosing a confidential mediation communication from the court-ordered mediation in Geltzer v. Ng . In particular, referring to the settlement stipulation in that case, the Trustee states that in the Reply Memorandum, "Dahiya improperly discloses that it ‘was signed only on the basis of being urged with the words [of Judge/Mediator Stong]: Sometimes, it takes a stronger person to walk away. I decided to walk away.’ " Sanctions Mot. at 13 (alterations in original).

In addition, the Trustee argues that Dahiya has engaged in a continuing and sanctionable course of conduct against him and other Chapter 7 trustees, and states that rather than conduct himself professionally, Dahiya "seeks to abuse them and show sheer and unmitigated disrespect for the legal system...