In re Henderson
| Decision Date | 27 January 2010 |
| Docket Number | Adversary No. 09-80035.,Bankruptcy No. 08-60255. |
| Citation | 423 B.R. 598 |
| Parties | In re Clinton B. HENDERSON d/b/a Bookstock U.S. d/b/a CB Henderson Construction Co. and Renata Henderson, Debtors. Ronald J. Scheidelman and Khalida Scheidelman, Plaintiffs, v. Clinton B. Henderson and Renata Henderson, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of New York |
Ronald J. Scheidelman, Oxford, NY, pro se.
Khalida Scheidelman, Oxford, NY, pro se.
Peter A. Orville, P.C., Peter A. Orville, Esq., Binghamton, NY, for Debtors-Defendants.
James C. Collins, Esq., Whitney Point, NY, Chapter 7 Trustee.
MEMORANDUM-DECISION AND ORDER ON DEBTORS' MOTION TO DISMISS PLAINTIFFS' SECOND AMENDED COMPLAINT
The Plaintiffs, Dr. Ronald J. Scheidelman and Khalida Scheidelman (collectively, "Plaintiffs" or "Scheidelmans"), acting pro se, commenced the instant adversary proceeding on May 21, 2009, by filing a 131 paragraph adversary complaint (Adv. No 1, the "Complaint")1 alleging what Plaintiffs classified as four separate causes of action pursuant to 11 U.S.C. §§ 523(a)(4), (6), 727(a)(3), (4)(A), (4)(B), and (6)(A).2 The Defendants are the Debtors, Clinton B. Henderson and Renata Henderson (collectively, "Debtors" or "Hendersons"), who filed a joint petition under Chapter 13 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1532 (effective Oct. 17, 2005) ("Code"),3 on February 8, 2008, and voluntarily converted from a case under Chapter 13 to one under Chapter 7 on July 24, 2008. Presently before the Court is Debtors' motion to dismiss Plaintiffs' 217 paragraph Second Amended Adversarial Complaint filed on October 1, 2009 (Adv. No. 19, "Second Amended Complaint"), wherein Plaintiffs allege sixty-one causes of action pursuant to §§ 523 and 727. Alternatively, Debtors ask the Court to require Plaintiffs to produce a more definite statement.
This Court has jurisdiction over the parties and subject matter of this adversary proceeding pursuant to 28 U.S.C. §§ 1334(a) and 157(a) and (b). This is a core proceeding which the Court may hear and determine pursuant to 28 U.S.C. §§ 157(b)(2)(I) and (J).
Given the contentiousness of the parties since the commencement of Debtors' case, the Court has decided several motions and thereby generated a voluminous record. The Court assumes familiarity with its prior rulings, orders, and decisions, including the Recusal Decision, which sets forth the relevant procedural history through May 27, 2009. The Court will therefore limit its background discussion to additional or subsequent facts relevant to the matter under consideration.
Plaintiffs have diligently pursued Debtors in order to effectively investigate and flesh out their claims since the filing of Debtors' petition on February 2, 2008. Plaintiffs were afforded an opportunity to question Debtors at the initial, pre-conversion § 341 meeting of creditors held on March 5, 2008, as well as at the initial, post-conversion § 341 meeting of creditors held on September 10, 2008, and at all continued meetings held on October 6, October 20, November 3, and December 8, 2008. Moreover, on March 9, 2009, Plaintiffs deposed Debtors pursuant to Federal Rule of Bankruptcy Procedure ("Bankruptcy Rule") 2004 ("Rule 2004 Exam"). After a complete investigation of Debtors' estate, the Chapter 7 Trustee classified Debtors' case as a no-asset case. The Trustee's report to this effect was docketed on May 15, 2009 ("No-Asset Report").
The original deadline for filing a complaint under § 523 in the Debtors' Chapter 13 case was set for March 5, 2008. Upon conversion, the new deadline for filing a complaint objecting to Debtors' Chapter 7 discharge or dischargeability of certain debts was set for November 7, 2008.4 In order to allow Plaintiffs sufficient time to fully investigate their claims, Plaintiffs requested and obtained three extensions of time to commence the instant adversary proceeding on May 21, 2009.5 Accordingly, Plaintiffs were allowed more than fourteen months from the original date set to object the dischargeability of certain debts in Debtors' Chapter 13 case, and more than six months from the original date set to object to issuance of Debtors' general discharge in Debtors' Chapter 7 case.6
On June 9, 2009, Debtors moved for a more definite statement or, in the alternative, to dismiss the adversary proceeding commenced on May 21, 2009. (Adv. No. 3, "First Dismissal Motion.") The Court heard the First Dismissal Motion at its regular motion term calendar in Binghamton New York, on August 6, 2009, and, after continuation, on September 3, 2009. In the interim, on July 31, 2009, Plaintiffs filed an Amended Complaint, without Debtors' consent or leave of court. (Adv. No. 8, "First Amended Complaint.") On August 26, 2009, Plaintiffs filed a motion to extend time to file a second amended pleading, which they subsequently amended on September 11, 2009. (Adv. Nos. 11 and 14, "Plaintiffs' Motion to Extend Time to Amend.") At the September 3, 2009 hearing, Debtors' counsel objected to the First Amended Complaint for the reason that it also failed to contain a more definite statement. After a series of hearings on the parties' respective motions, by Order dated September 14, 2009 (Adv. No. 17), the Court granted Debtors' request for a more definite statement and allowed Plaintiffs thirty days to file an amended pleading.7 Plaintiffs were required to and did file their second amended pleading on or before October 1, 2009. On October 20, 2009, Debtors filed the second dismissal motion presently under consideration. The Court heard the motion at its regular motion term in Binghamton, New York, on December 2, 2009, and the parties were advised after oral argument that the motion would be taken under submission for the Court's issuance of a written decision.8
Debtors raise three procedural objections to Plaintiffs' Second Amended Complaint. First, Debtors assert that the Second Amended Complaint does not comport with Federal Rule of Civil Procedure ("Rule") 8(a)(2),9 made applicable to this proceeding by Federal Rule of Bankruptcy Procedure ("Bankruptcy Rule") 7008(a), because the pleading is so unintelligible and ambiguous that it fails to put Debtors on notice of Plaintiffs' claims or the facts upon which they rest. As such, Debtors contend they cannot adequately respond or prepare a defense to the Second Amended Complaint. Second, Debtors claim that the Second Amended Complaint violates Rule 8(d) because it is not "simple, concise, and direct." Debtors further contend that Plaintiffs' failure to comply with the general rules of pleading is inexcusable given that Plaintiffs have been granted ample opportunity to present a legally sufficient pleading. Third, Debtors assert that Plaintiffs have improperly added new causes of action, including causes of action against Debtors' counsel, Attorney Orville. Should Plaintiffs be allowed to proceed with any cause of action against Attorney Orville, Debtors assert that they would be unduly prejudiced by having to proceed pro se following Attorney Orville's necessary disengagement due to a conflict of interest created by Plaintiffs.
Plaintiffs advance several arguments in opposition to Debtors' motion.10 Plaintiffs assert that the Second Amended Complaint is pleaded with particularity so as to allow Debtors to respond to each and every allegation asserted against them. Moreover, Plaintiffs contend that they have not added any new causes of action in the Second Amended Complaint. In support of this argument, however, Plaintiffs refer back to their claims made in the First Amended Complaint. Notably, Plaintiffs advance their own procedural argument in support of survival of their Second Amended Complaint. Citing Cintron-Luna v. Roman-Bultron, 668 F.Supp.2d 315, 317-18 (D.P.R.2009) () (internal quotation marks and citations omitted), Plaintiffs maintain that the Court should deny Debtors' motion because their Second Amended Complaint does not fall within the category of complaints typically warranting dismissal for failure to comply with the general rules of pleading.
This adversary proceeding has its origin in a home improvement contract entered into by the parties on or about January 16, 2006, whereby Mr. Henderson agreed to perform certain construction services to improve the Scheidelmans' residence in exchange for payment in the amount of $80,000.00 ("Contract"). Mr. Henderson commenced work on the Scheidelmans' home but he did not complete the scheduled renovations. These facts are agreed upon. All other facts, however, regarding the circumstances of the parties' abbreviated relationship are in dispute.11
At the outset, the Court notes that the Second Amended Complaint is rife with erroneous statutory references and it contains a multitude of incomplete, repetitive, and/or conclusory statements. Plaintiffs oftentimes confuse or mix the elements of §§ 523 and 727, and they fail to differentiate between separate and distinct legal theories such as fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny. See 11 U.S.C. § 523(a)(4) (emphasis added). The Complaint is similarly drafted. Plaintiffs' causes of action are difficult to decipher as a result of such draftsmanship. Since all of the facts alleged in the Second Amended Complaint arose out of the same conduct alleged in the Complaint, however, they do relate back to the original pleading rather than add entirely new claims for relief. After carefully examining the Second...
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O'Hearn v. Gormally (In re Gormally)
...); see also Carlucci & Legum v. Murray (In re Murray), 249 B.R. 223, 228 (E.D.N.Y.2000) ; Scheidelman v. Henderson (In re Henderson), 423 B.R. 598, 618 (Bankr.N.D.N.Y.2010). To establish the fraudulent intent element, a plaintiff must show “ ‘actual, not constructive fraud.’ ” In re Bressle......
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In re Bernard L. Madoff Inv. Sec. Llc
...defendant receives "fair notice of what the ... claim is and the grounds upon which it rests." Scheidelman v. Henderson (In re Clinton B. Henderson), 423 B.R. 598, 612 (Bankr.N.D.N.Y.2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)) (inter......
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Labbadia v. Martin (In re Martin), Case No.: 18-31636 (AMN)
...or 'statement' but 'right to payment.'" In re Gorchev, 275 B.R. 154, 164 (Bankr. D. Mass. 2002); see also In re Henderson, 423 B.R. 598, 619 (Bankr. N.D.N.Y. 2010). No proofs of claim were filed in the Debtor's bankruptcy case, which is typical in no-asset Chapter 7 cases, like the Main Cas......
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In re Bernard L. Madoff Inv. Sec. Llc
...that the defendant receives “fair notice of what the ... claim is and the grounds upon which it rests.” Scheidelman v. Henderson (In re Henderson), 423 B.R. 598, 612 (Bankr.N.D.N.Y.2010) (quoting Twombly, 550 U.S. at 545, 127 S.Ct. 1955) (internal quotations omitted). Indeed, “the sole cons......
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DEBTOR EMBEZZLEMENT OF COLLATERAL.
...Circuit has not addressed it, but several bankruptcy courts in the Second Circuit have, see Scheidelman v. Henderson (In re Henderson), 423 B.R. 598, 624 (Bankr. N.D. N.Y. 2010) (defining embezzlement as "the fraudulent appropriation of property by a person to whom such property has been in......