In re Taub

CourtUnited States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Eastern District of New York
Citation421 B.R. 93
Docket NumberBankruptcy No. 08-44210-ESS.,Adversary No. 09-1277-ESS.
PartiesIn re Chana TAUB, Debtor. Chana Taub, Plaintiff, v. Tommy Hershkowitz, ZVI Dressler, Chaim Fuchs, John Doe, and Jane Doe, Defendants.
Decision Date03 December 2009

Dennis Houdek, Esq., New York, NY, for Plaintiff, Chana Taub.

Jacob Silver, Esq., Brooklyn, NY, for Defendants, Zvi Dresler and Chaim Fuchs.

Tommy Hershkowitz, Brooklyn, NY, Defendant.

MEMORANDUM DECISION ON MOTIONS TO RECONSIDER ORDER GRANTING ABSTENTION MOTION AND CONSENT ORDER

ELIZABETH S. STONG, Bankruptcy Judge.

Chapter 11 debtor in possession and landlord Chana Taub commenced this adversary proceeding against three tenants in an apartment building in Brooklyn. She alleges that they have not paid the rent and seeks an accounting, payment of the rent, and if the rent is not paid, an order of eviction. The Defendants deny that they are liable for any back rent, and assert counterclaims for relief including compensatory and punitive damages.

By Memorandum Decision and Order dated September 21, 2009, this Court abstained from deciding these claims on grounds that they are fundamentally in the nature of claims arising under the New York Rent Stabilization Law of 1969 (the "Rent Stabilization Law"), and should be decided by New York City Civil Court's Housing Part (the "Housing Court"). Taub v. Hershkowitz (In re Taub), 417 B.R. 186 (Bankr.E.D.N.Y.2009) (the "Abstention Decision").

Chana Taub now asks this Court to reconsider the Abstention Decision as well as an Order entered on consent on August 26, 2009 (the "Consent Order"), under Federal Rules of Civil Procedure 59 and 60, on grounds that the Abstention Decision is wrongly decided and that she did not, in fact, consent to the relief in the Consent Order.

These motions call upon the Court to consider whether the matters decided in the Abstention Decision and Consent Order should be revisited and resolved differently. And the Debtor's motion to reconsider the Consent Order requires the Court additionally to consider whether an attorney's agreement on behalf of a client, made on the record of a court hearing, should be dislodged because the client wishes to disavow the agreement as unauthorized.

Motions to reconsider should be the exception, not the rule, and successful motions to reconsider are rarer still. The yardstick against which such relief is measured is an exacting one, the burden faced by a movant is high, and the grounds for such relief are narrow indeed, because reconsideration is at odds with the principle of finality and "the just, speedy, and inexpensive determination of every case and proceeding." FED. R. BANKR.P. 1001. Relief that depends on overturning an agreement made by counsel on the record of a court hearing is similarly disfavored because courts and parties must be able to rely on the representations of counsel in order to protect the integrity of the judicial process.

For the reasons set forth below, the Debtor's motions to reconsider are denied.

Jurisdiction

The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334(b) and 157(b)(1), and over these motions to reconsider pursuant to 28 U.S.C. § 157(b)(3).

Procedural History
The Debtor's Bankruptcy Case

The Debtor commenced this Chapter 11 bankruptcy case on July 1, 2008, by filing a voluntary petition for relief. She continues to operate and manage her business and property as a debtor in possession in accordance with 11 U.S.C. §§ 1107 and 1108.

The Adversary Proceeding

The Debtor, as landlord, filed this adversary proceeding on June 4, 2009, seeking an order directing Tommy Hershkowitz, Zvi Dresler, and Chaim Fuchs, tenants at 1259 52nd Street, Brooklyn, New York (the "52nd Street Property"), to turn over the unpaid pre-petition rent or alternatively, to be subject to eviction. She also seeks an order directing each of the Defendants to provide an accounting of the pre-petition rent, to turn over the unpaid pre-petition rent, or alternatively, to turn over possession of the apartment.

Mr. Dresler and Mr. Fuchs filed an Answer to the Complaint and a Counterclaim on July 27, 2009. They deny the material allegations of the Complaint and assert several affirmative defenses, and that the Debtor has not maintained the 52nd Street Property in accordance with the requirements of the New York City Housing Maintenance Code and the warranty of habitability by failing to provide hot water or heat or to make necessary repairs. They also claim that the Debtor has intentionally and fraudulently charged excessive rent. They seek injunctive relief, disgorgement of rent payments made, and treble damages.

The Debtor filed a Reply to the Counterclaim asserted by Mr. Dresler and Mr. Fuchs on August 24, 2009, in which she denies the material allegations of the Counterclaim and asserts several affirmative defenses.

The third Defendant, Mr. Hershkowitz, filed a Pro Se Answer and Counterclaims on August 26, 2009. Like the other defendants, he denies the material allegations of the Complaint and asserts several affirmative defenses, including that the Debtor has not maintained the 52nd Street Property in accordance with the requirements of the New York City Housing Maintenance Code and the warranty of habitability by failing adequately to maintain the apartment's shower and bath, toilet, walls, and ceiling. And Mr. Hershkowitz alleges that he has made rental payments to Simon Taub, the Debtor's estranged husband. Mr. Hershkowitz also asserts counterclaims against the Debtor, including that the Debtor has willfully withheld services, resulting in an actual partial eviction and breach of the warranty of habitability, and that the Debtor's failure to maintain services amounts to gross negligence and wanton misconduct entitling him to a rent abatement, damages, and punitive damages.

The Debtor filed a Reply to the Counterclaims asserted by Mr. Hershkowitz on September 17, 2009, in which she denies the material allegations of the Counterclaims, asserts several affirmative defenses, and seeks judgment dismissing the Counterclaims with prejudice.

The Abstention Motion

Mr. Dresler and Mr. Fuchs filed the Motion for Abstention on July 27, 2009 (the "Abstention Motion"), asking this Court to abstain from hearing the claims in this action on permissive or mandatory grounds pursuant to 28 U.S.C. §§ 1334(c)(1) and (c)(2), because "the Adversary Proceeding [is] a Non-Core proceeding wholly seeking relief under New York State Law and pursuant to the [Rent Stabilization Law], for the payment of rents by the Defendants, or in the alternative for their eviction, as well as other related relief." Abstention Motion ¶ 3.1

The Debtor opposed the Abstention Motion, arguing that it was marked by numerous procedural defects and based on factual misstatements. She noted that the Defendants' unpaid rent is property of the estate under Bankruptcy Code Section 541, and that this Court has jurisdiction to adjudicate disputes that concern estate property. The Debtor also observed that Bankruptcy Code Section 542 allows her to seek the turnover of estate property. And the Debtor argued that the claims asserted here are in the nature of a core proceeding, or at a minimum, within the Court's non-core, "related-to" jurisdiction. The Debtor also stated that common law principles require courts with jurisdiction to exercise that jurisdiction, and that mandatory abstention is not available with respect to a core proceeding.

The Court held a preliminary conference on the Abstention Motion on August 6, 2009, at which counsel for the Defendants, counsel for the Debtor, and the creditor Esther Newhouse appeared and were heard. The Court set a schedule for discovery and further briefing, but the parties did not file any further submissions.

The Court held a hearing on the Abstention Motion on September 8, 2009, at which counsel for the defendants Mr. Dresler and Mr. Fuchs, counsel for the Debtor, and the defendant Tommy Hershkowitz appeared and were heard. As noted above, by Memorandum Decision and Order entered on September 21, 2009, the Abstention Motion was granted.

The Order to Show Cause

After the Abstention Motion was filed but before it was heard, on August 18, 2009, Mr. Dresler, by counsel, brought an application for an order to show cause seeking emergency relief in response to his alleged illegal eviction from Apartment #2 at the 52nd Street Property (the "OSC"). Mr. Dresler asserted that on August 15, 2009, the Debtor changed the locks to that apartment and rented it to a new tenant, without removing his possessions from the unit. The Order to Show Cause requested an immediate hearing to determine why an order should not be issued:

A. Ordering the Debtor to allow the defendant Zvi Dresler and his family occupancy to his apartment.

B. Ordering "John Doe & Jane Doe", the current occupants of 1259 52nd Street Apartment. # 2 Brooklyn, N.Y. 11219 to Vacate said premises.

C. Ordering the United States Marshals Service, or another Federal, State, or City Officer to break, remove and change the locks on Apartment # 2 of the premises and to physically evict and remove "John Doe & Jane Doe" being the current occupants of 1259 52nd Street Apt. #2 Brooklyn, N.Y. 11219, from the premises.

D. Ordering the debtor to turn over the belongings of the defendant and his family, and provide an accounting as to the location and condition of said belongings.

E. Ordering the debtor to pay damages to the defendant, as well as Treble damages as authorized by state law.

F. Ordering that the request for Abstention, and for Relief from the Automatic Stay be Granted.

OSC at 1-2.

The Debtor opposed Mr. Dresler's application for an order to show cause by affirmations of the Debtor and Dennis Houdek, Esq., the Debtor's counsel, filed on August 24, 2009. As...

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