In re Rosenberg

• Decision Date: 21 August 2009
• Docket Number: No. 09-13196-BKC-AJC.,09-13196-BKC-AJC.
• Citation: 414 B.R. 826
• Parties: In re Maury ROSENBERG, Alleged Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Florida

414 B.R. 826

In re Maury ROSENBERG, Alleged Debtor.

No. 09-13196-BKC-AJC.

United States Bankruptcy Court, S.D. Florida, Miami Division.

August 21, 2009.

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Allison R. Day, Esq., Carlos E. Sardi, Esq., Miami, FL, Bonnie R. Golub, Philadelphia, PA, for Debtor.

ORDER AND MEMORANDUM OPINION GRANTING MOTION OF ALLEGED DEBTOR MAURY ROSENBERG TO DISMISS INVOLUNTARY CHAPTER 7 BANKRUPTCY CASE

A. JAY CRISTOL, Chief Judge Emeritus.

THIS MATTER came before the Court on April 20, 2009 at 11:00 a.m. on the Motion to Dismiss Involuntary Chapter 7 Bankruptcy Case ("Motion to Dismiss") filed by Alleged Debtor, Maury Rosenberg ("Alleged Debtor" or "Rosenberg"). The Court, having reviewed the pleadings filed in this case, together with the deposition transcripts and other exhibits submitted by the parties into evidence, having heard argument of counsel, and otherwise being fully advised in the premises,

FINDS AND DETERMINES as follows:

I. RELEVANT FACTS

A. Procedural Background

1. On November 7, 2008 ("Petition Date"), DVI Receivables, XIV, LLC ("DVI XIV"), DVI Receivables XVI, LLC ("DVI XVI"), DVI Receivables XVII, LLC ("DVI XVII"), DVI Receivables XVIII, LLC ("DVI XVIII"), DVI Receivables XIX, LLC ("DVI XIX"), and DVI Funding, LLC ("DVI Funding")¹ (collectively, the "Original Petitioning Creditors") filed an involuntary chapter 7 bankruptcy petition (the "Original Involuntary Petition") against Rosenberg in the United States Bankruptcy Court for the Eastern District of Pennsylvania, Case No. 08-17346(JKF) (the "Involuntary Case").

2. On November 10, 2008, the Original Petitioning Creditors amended their Original Involuntary Petition ("First Amended Involuntary Petition"). [Ex. 7]. According to the Original Petitioning Creditors, the First Amended Involuntary Petition was required by the Clerk of the Court to include information relating to the two corporate bankruptcy cases related to this case. [C.P. 77, ¶ 2].²

3. On the Petition Date, the Original Petitioning Creditors also filed involuntary bankruptcy petitions (the "NMI Subsequent Petitions") against National Medical Imaging, LLC ("NMI") and National Medical Imaging Holding Co., LLC ("NMI Holding") [Exs. 84-85], which are co-guarantors of Rosenberg under that certain Settlement Agreement, dated August 12, 2005, between Rosenberg, NMI, NMI Holding, the NMI LPs (defined below) and Lyon [Exs. 26 and 75] (the "Settlement Agreement").

4. Months before the transfer of the Involuntary Case to this Court, Rosenberg filed a motion to dismiss the Involuntary Petition pursuant to Rule 1011(b) of the Federal Rules of Bankruptcy Procedure and Rule 12 of the Federal Rules of Civil Procedure ("Motion to Dismiss"), or, alternatively, to transfer venue pursuant to Bankruptcy Rule 1014(a)(2) and Federal Rule 12(b)(3) ("Motion to Transfer Venue"). Subsequently, the Motion to Transfer Venue was granted by agreement of the parties. By Order dated January 30, 2009, the Involuntary Case was transferred to this Court. [Ex. 64].

5. Notwithstanding the transfer of venue, the Alleged Debtor's Motion to Dismiss remained pending for final adjudication by this Court. The issues raised in the Motion to Dismiss and the response filed in opposition by the Original Petitioning Creditors were fully briefed by the parties, with memoranda in support of their respective positions, prior to the Involuntary Case being transferred to this Court.

6. As a result, on March 2, 2009, the Court entered its Order Setting Hearing, [C.P. 6], specially setting a hearing on the Motion to Dismiss. The Court's Order also provided that "[t]o the extent the [M]otion to [D]ismiss answers the [I]nvoluntary [P]etition, the Court will, at that time, conduct an evidentiary hearing on the answer to the petition."

7. On March 13, 2009, the Alleged Debtor filed his Motion of the Alleged Debtor (A) for Clarification or, Alternatively, (B)(1) to Convert the Motion to Dismiss into a Motion for Summary Judgment, or (2) to Bifurcate Issues for Upcoming Evidentiary Hearing Set for April 13, 2009 at 2:00 p.m. ("Motion for Clarification") [C.P. 22], seeking clarification of the Court's March 2, 2009 Order.

8. On March 26, 2009, the Court entered an Order on the Motion for Clarification [C.P. 34], procedurally aligning the evidentiary hearing on two critical legal threshold issues—(i) whether as of November 7, 2008, the Alleged Debtor was indebted to, or owed any monetary obligation to, any of the Original Petitioning Creditors; and (ii) if so, whether (A) each Original Petitioning Creditor holds and owns a separate non-contingent claim against the Alleged Debtor which is not subject to a bona fide dispute as to liability or amount pursuant to the eligibility requirements set forth in Section 303(b) of the Bankruptcy Code, or (B) the Original Petitioning Creditors should be considered one consolidated creditor that holds and owns one non-contingent claim against the Alleged Debtor which is not subject to a bona fide dispute as to liability or amount pursuant to the eligibility requirements set forth in Section 303(b) of the Bankruptcy Code. [Id.]

9. After the parties engaged in extensive written discovery and oral examination of various witnesses, the Original Petitioning Creditors amended, for a second time, their Original Involuntary Petition on April 7, 2009 (the "Second Amended Involuntary Petition"). [Ex. 82]. This second amendment changed the amounts originally claimed to be owed to each of the Original Petitioning Creditors, and added Ashland Funding as a new petitioning creditor. The Second Amended Involuntary Petition was not signed by one of the Original Petitioning Creditors, namely DVI Funding. [Id.] The Second Amended Involuntary Petition included a copy of a certain Portfolio Sale Agreement whereby Ashland Funding asserts that it acquired the assets of DVI Funding. [C.P. 46, Ex. B].³

10. The trial on the Motion to Dismiss was held on April 20, 2009 at 11:00 a.m., at which time the parties agreed to the authenticity and admissibility of all of the documents to be submitted into evidence. The parties also agreed to forego live testimony in lieu of using depositions transcripts already designated. In addition, the parties further agreed to preserve objections on any grounds in connection with sworn statements provided by way of affidavits submitted in support or opposition to the Motion to Dismiss.

11. After the trial on the Motion to Dismiss, the remaining Original Petitioning Creditors and Ashland Funding moved the Court to amend the Involuntary Petition for a third time (the "Third Amended Involuntary Petition"). [C.P. 77] According to the Original Petitioning Creditors and Ashland Funding, the third amendment was required to correct and rectify an error in the calculation of the amounts allegedly due and owing by Rosenberg to the Original Petitioning Creditors and Ashland Funding. [Id., ¶ 6].

B. Factual Background

(i) The Master Leases, the Securitization Transactions and the DVI Financial Bankruptcy.

12. Starting in November, 2000, certain limited partnerships ("NMI LPs") entered into various equipment leases (the "Master Leases") with DVI Financial Services, Inc. ("DVI Financial") for the purpose of financing the acquisition of medical imagining and PET scan machines used at diagnostic imaging centers operated by the NMI LPs. [Ex. 75] [Ex. 104, ¶ 5]. As security for the payment of the obligations of the NMI LPs under the Master Leases, Rosenberg was required to execute and deliver an individual limited guaranty to DVI Financial. [Id.] Two other entities related to the NMI LPs, namely National Medical Imaging, LLC ("NMI") and National Medical Imaging Holding, LLC ("NMI Holding"), were also required to execute and deliver guaranty agreements to DVI Financial in varying amounts for the Master Leases. [Id.] The Master Leases were part of complex securitization transactions among DVI, Inc., U.S. Bank, N.A., as Trustee, and DVI Financial, as the original servicer. [Exs. 69-75].

13. At various times from 2000 to 2003 and pursuant to the terms of certain Contribution and Servicing Agreements, DVI Financial transferred and assigned the Master Leases and related assets to certain corporations known as DVI Receivables Corp. XIV, DVI Receivables Corp. XVI, DVI Receivables Corp. XVII, DVI Receivables Corp. XVIII, DVI Receivables Corp. XIX, and DVI Funding Corporation (collectively, the "Transferees"). In connection therewith, DVI Financial agreed to service the Master Leases for such parties. [Id.]

14. Simultaneously therewith and as part of the securitization transactions, each of the Transferees further transferred the Master Leases and related assets to the respective Original Petitioning Creditor with similar names (for example, DVI Receivables Corp. XVI simultaneously transferred the Master Leases and related assets it received from DVI Financial to DVI Receivables XVI, LLC, which is one of the Original Petitioning Creditors). Such transfers were consummated pursuant to the terms of certain Subsequent Contract Transfer Agreements. [Exs. 69-74]

15. Each of the Subsequent Contract Transfer Agreements contains a legend on the cover page in all capital letters that states as follows:

ALL RIGHTS IN AND TO THIS AGREEMENT ON THE PART OF THE DVI RECEIVABLES [roman numeral], LLC HAVE BEEN ASSIGNED AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF U.S. BANK NATIONAL ASSOCIATION (AS SUCCESSOR TO U.S. BANK TRUST NATIONAL ASSOCIATION), AS TRUSTEE, UNDER THE INDENTURE DATED AS OF [date ] FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.

(Emphasis added).

16. Still further, with the exception of DVI Funding,⁴ each of the Original Petitioning Creditors, simultaneously with the execution and delivery of the Subsequent Contract Transfer Agreements referred to above, completed the securitization transactions by entering into certain...