In re Allen
| Decision Date | 10 May 2013 |
| Docket Number | CASE NO. 13-14348 (GMB) |
| Parties | In re: STACY M. ALLEN, Debtor. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
NOT FOR PUBLICATION
Ryan M. Ernst, Esquire
Thomas D. Bielli, Esquire
Daniel Patrick Murray, Esquire
O'Kelly Ernst & Bielli
Attorney for the Debtor
Edward L. Paul, Esquire
Michael A. Katz, Esquire
Paul & Katz, P.C.
Attorneys for Creditor, Advanced Telecommunication Network, Inc.
Jason H. Baruch, Esquire
Special Counsel for Advanced Telecommunication Network, Inc. Presently pending before the Court is the Motion of Advanced Telecommunication's Network, Inc. ("ATN") for Relief from the Automatic Stay or in the alternative to Dismiss the bankruptcy case of Debtor Stacy Allen (the "Debtor"). After extensive briefing and a lengthy evidentiary hearing conducted on April 4, 2013, and upon consideration of the evidence presented and admitted, this Court finds that the movant, ATN, has failed to show "cause" sufficient for granting it relief from the automatic stay afforded to Debtor under the Bankruptcy Code. Moreover, ATN has failed to establish "cause" for dismissal of the Debtor's bankruptcy case, filed under Chapter 11, at this stage in the proceedings. Denial of both of ATN's motions is without prejudice.
This court has jurisdiction over this matter pursuant to 28 U.S.C. §1334 and Standing Order of Reference from the United States District Court for the District of New Jersey dated September 18, 2012. This is a core proceeding pursuant to 28 U.S.C. §§157(b)(2)(A) and (G). Venue is proper pursuant to 28 U.S.C. §§1408 and 1409.
On March 1, 2013 Stacy M. Allen filed the within petition seeking to reorganize her financial affairs pursuant to chapter 11 of Title 11 of the United States Code (the "Code"). After moving to withdraw the reference to the District Court, which was summarily denied by the District Court, ATN filed the within Motion for Relief from Stay and requested that said motion be heard on shortened time. Finding that ATN had failed to allege sufficient cause for a hearing on shortened time, this Court scheduled ATN's motion in the normal course. ATN then filed a Motion to Dismiss the Debtor'sbankruptcy case, which closely resembled ATN's Motion for Relief from Stay, and both motions were scheduled to be heard on April 4, 2013.
On March 15, 2013, the Debtor filed her schedules and statements, listing total assets in the amount of $812,822.66, liabilities in the amount of $42,405.52, potential tax liabilities from the IRS and State of New Jersey Division of Taxation, and contingent, unliquidated and disputed claims of ATN with an amount listed as "unknown."
Thereafter, ATN filed a supplemental brief in support of its motions, and also filed a motion requesting that the Court take judicial notice of the entry and filing of certain orders and opinions entered by the United States Bankruptcy Court for the Middle District of Florida. Said motion was heard on April 2, 2013 and this Court entered an order taking judicial notice of the entry of, inter alia, several orders and opinions by the United States Bankruptcy Court for the Middle District of Florida, Orlando Division, in the adversary proceeding captioned Advanced Telecommunication Network, Inc. v. Daniel W. Allen, et al., No. 03-ap-122 (the "ATN Litigation").
On April 4, 2013 this Court held a hearing on ATN's Motion for Relief from Stay and Motion to Dismiss. During the course of the hearing, ATN attempted to submit several exhibits into evidence. Several exhibits were admitted at the hearing, while issues of admissibility of several others were taken under advisement by this Court. Stacy Allen was present during the hearing and was cross examined by counsel for ATN. At the conclusion of the hearing, this Court took all matters under advisement, including the evidentiary issues, and noted that a ruling would be forthcoming in the following weeks. On May 8, 2013 this Court ruled on the admissibility of each of the exhibits taken under advisement.
While this Memorandum Opinion will not recite at length the history of the litigation between ATN and Debtor's husband, Daniel Allen, which has been ongoing since at least 2003 and relates to actions which occurred in the 1990's, some brief background is necessary. Daniel Allen, Debtor's husband, received approximately $6 million in settlement proceeds from ATN in or around 1999 after several years of state court litigation involving a shareholder dispute. Daniel Allen relinquished his interest in ATN to the other managing member in exchange for the settlement proceeds. Several years later the then principal of ATN, a different individual who had received ATN stock as a result of a settlement in unrelated litigation, caused ATN to file for bankruptcy relief. Immediately thereafter, ATN filed an adversary complaint against Daniel and David Allen (the "Allen Brothers") alleging, inter alia, claims of actual fraud, constructive fraud and unjust enrichment as a result of the 1999 settlement payment.
It is alleged by the parties that Daniel Allen, upon receipt of the settlement funds in 1999, consulted with an estate planning professional who suggested the creation of a trust vehicle for retirement planning purposes. These trust vehicles, hereinafter referred to as the "Offshore Trusts," were concededly funded, at least in part, by the settlement funds. During the pendency of the ATN Litigation, ATN requested that the Florida Bankruptcy Court enter repatriation orders requiring Daniel Allen to repatriate funds to the United States from the Offshore Trusts and to provide ATN with a complete written accounting of the "Assets." In making rulings on ATN's repatriation requests, the Florida Bankruptcy Court defined the term "Assets" as those "assets transferred to [the Allen Brothers] pursuant to the Settlement, Stock, Purchase and Escrow Agreement dated January 12, 1999 (collectively, the "Assets")." ATN v. Daniel Allen, et al., Case No.6:03-ap-00122KSJ, Doc. 70, 1/23/2004. Significantly, there was no requirement in the repatriation orders that the funds be turned over to ATN, as there had been no final determination on the merits in the ATN Litigation. It is also significant to note that in defining the term "Assets," the order simply refers to all of the funds transferred as part of the 1999 settlement; there is no indication that in defining the term "Assets," the orders were intended to create ownership rights in or over any property.
On February 18, 2005, after a three day bench trial, the Florida Bankruptcy Court ruled in favor of the Allen Brothers in the ATN Litigation, dismissing the complaint against them. All prior repatriation orders were vacated, consistent with the ruling at that time in favor of the Allen Brothers. ATN appealed the final judgment and on September 25, 2007, the Eleventh Circuit Court of Appeals reversed and remanded the ATN Litigation for further proceedings consistent with the appellate ruling. On July 10, 2009, the Florida Bankruptcy Court entered judgment in favor of ATN, with the judgment being later reduced to $6 million. Specifically, the Florida Bankruptcy Court found that the 1999 settlement was a constructively fraudulent transfer. More motions and appeals followed, with the Eleventh Circuit affirming on June 8, 2011 that the Allens had waived their right to further appeals and reaffirming the final judgment in favor of ATN.
ATN began its collection efforts pursuant to proceedings supplementary allowed by Bankruptcy Rule 7069(a)(1) in early 2011. As the Florida Bankruptcy Court noted in a July 28, 2011 Order, "[a]s a judgment creditor, ATN want[ed] to proceed with discovery in aid of execution on its final judgment...." ATN v. Allen, 2011 Bankr. LEXIS 3069, *9. To that end, ATN made a motion to have the 2004 repatriation ordersreinstated and to vacate the 2005 order vacating the 2004 repatriation orders. Rather than granting the specific relief requested by ATN, the Florida Bankruptcy Court entered an order and attendant opinion which incorporated certain findings of fact and conclusions of law from the 2004 repatriation orders, but which specifically denied a blanket reinstatement of said orders (the "July 2011 Order"). As Judge Jennemann pointed out in the July 2011 Order, "the [2004] [r]epatriation [o]rders were properly vacated because, at that time, the Allens had won their case...I lack the ability to reinstitute an order whose effectiveness has lapsed." Id. *12.
In 2010, ATN commenced another adversary proceeding against, inter alia, the following individuals: Daniel Allen, David Allen, Stacy Allen, and John Does 1-10 (the "2010 Recovery Action"). The 2010 Recovery Action contained the following counts: avoidance, disgorgement, repatriation, imposition of constructive trust, restitution, recovery under 11 U.S.C. §§544 and 550, accounting, equitable lien, equitable subordination, declaratory relief, and costs and interest. The 2010 Recovery Action also named several corporations and limited liability companies as defendants. The 2010 Recovery Action was filed by ATN on July 9, 2010 and on that same date ATN also filed a Motion for Abatement of the action. Case No. 6:10-ap00177, Doc. No. 3 (Bankr.M.D.Fla, 7/9/2010). ATN indicated in its Motion for Abatement that it did not intend to proceed with the 2010 Recovery Action during the pendency of certain appeals in the ATN Litigation and that it also did not intend to serve the complaint on the named defendants at that time. Id. The Motion for Abatement was granted by court order on July 20, 2010 and the case sat dormant until February 8, 2013 when ATN filed an emergency motion to reopen the case, for an ex parte restraining order, and to seal theaforementioned filings. Case No. 6:10-ap00177, Doc. No. 7-9 (Bankr.M.D.Fla, 7/9/2010). An order was entered on February 21, 2013 reopening the adversary and granting ATN's emergency ex parte motion...
To continue reading
Request your trial