In re Zinke
| Citation | 149 BR 310 |
| Decision Date | 22 December 1992 |
| Docket Number | Adv. No. 887-0193-20.,Bankruptcy No. 887-71461-20 |
| Parties | In re Judith A. ZINKE, a/k/a Judith Zinke, Judith Zorn, Debtor. Judith A. ZINKE, Plaintiff, v. UNITED STATES DEPARTMENT OF the TREASURY; New York State Tax Commission; City of New York Department of Finance; Sherman, Citron & Karasik; Dejet Systems; Denwell Contractors, Inc.; Goodman Plumbing & Heating Corp.; Robert Abruzzo; Strazzen & Son; Environmental Control Board; V.A. Paradise, as Trustee for Schiavone Construction Company Profit Sharing Plan and Schiavone Construction Company Pension Trust; Philip Zinke, John Does and Jane Does, being individuals, partnerships, corporations or other entities whose real names are unknown, who may have an interest in property to be sold, Defendants. |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Eastern District of New York |
Tim Truman, Truman & Spicer, P.C., Fort Worth, TX, for Stonehenge Insured Notes-I Ltd. Partnership.
Patricia C. Henry, U.S. Dept. of Justice, E.D.N.Y., Sp. Asst. U.S. Atty., Brooklyn, NY.
Abe Backenroth, Backenroth & Grossman, New York City, for debtor and debtor in possession.
Michael B. Hunter, Bishop, Payne, Lamsens, Williams & Werley, Fort Worth, TX, Andrew S. O'Connor, Liddle, O'Connor, Finkelstein & Robinson, New York City, for Stonehenge Insured Notes-I Ltd. Partnership and Harbison-Fischer Mfg. Co.
DECISION AND ORDER ON MOTION FOR NEW TRIAL, CLARIFICATION OF RULING, AND/OR ALTERATION OR AMENDMENT OF JUDGMENT
This matter comes before the Court upon a motion ("Motion") by STONEHENGE INSURED NOTES-I LIMITED PARTNERSHIP and HARBISON-FISCHER MANUFACTURING COMPANY ("Movants") for an order of the Court granting a new trial to the Movants, or clarifying or altering or amending a prior ruling of the Court.
The Court has jurisdiction over the Motion pursuant to section 157(a), (b)(1) of title 28, United States Code ("title 28") and the order of referral of matters to the bankruptcy judges by the District Court for the Eastern District of New York (Weinstein, C.J., 1986). This is a core proceeding pursuant to section 157(b)(2)(A), (B), (N), and (O) of title 28.
For the reasons set forth below, the Court holds that the Motion for a new trial, or for alteration or amendment or the Court's prior ruling is DENIED; a limited amount of clarification of our prior ruling is GRANTED and is provided by this opinion and order.
From the Court's files, all papers submitted in support of and in opposition to the Motion and the hearing held thereon ("Hearing") the Court makes the following findings of fact.
On September 29, 1987, Judith A. Zinke, the above-referenced Debtor (the "Debtor") filed a voluntary petition for bankruptcy relief under chapter 11 of title 11, United States Code ("Bankruptcy Code"). On November 3, 1987, the Debtor commenced the above-referenced adversary proceeding ("Adversary Proceeding") through which the Debtor sought, among other things, Court approval of a sale pursuant to Bankruptcy Code section 363, of 100% of the shares and proprietary leasehold interest in a certain cooperative apartment located at 1010 Fifth Avenue, New York, New York ("Shares"). Under section 363(h) and (f), a debtor may sell property of the estate free and clear of any interest in such property, including the joint interest of a co-owner. 11 U.S.C. § 363(h), (f). By order dated December 2, 1987, the Court (i) authorized and approved a sale of the Shares free and clear of all liens and encumbrances; (ii) authorized the payment, at closing and out of the proceeds of the sale of the Shares ("Proceeds"), of all expenses and taxes owed or incurred in connection with the sale; (iii) ordered the payment of such taxes to be made without prejudice to the rights of competing claimants to make claims for the recovery of such funds against the taxing authorities; (iv) held that the taxing authorities would remain subject to the jurisdiction of the Court to determine any and all claims raised in the Adversary Proceeding or with regard to any claim for recovery of the funds paid to the taxing authorities pursuant to the order; (v) ordered that the respective interests of the Debtor and her husband, Philip W. Zinke ("Mr. Zinke"), as well as other claimants who filed claims against the Shares or the Proceeds on or before November 13, 1987, shall attach to the balance of the Proceeds; and (vi) ordered that any and all John Does and/or Jane Does or any other defendants therein who had not submitted an answer to the complaint in the Adversary Proceeding prior to November 17, 1987, would be declared to be in default and shall have no further claims to the Proceeds.
The Movants became the only persons or entities to assert claims to the Proceeds. Pleadings were served and filed with the Court and on August 5 and 6, 1991, a trial on Movants' claims was held before the Court ("Trial").
In an order dated September 25, 1991, the Court adjudicated the Movants' claims to the Proceeds and set forth its findings of fact and conclusions of law ("Decision"). The Decision set forth the Court's holding that the Movants did not establish a constructive trust claim to the Proceeds.
The Movants' Motion is for (i) a new trial; (ii) for clarification of the Decision; and/or (iii) for alteration or amendment of the Decision. On January 8, 1992, the Hearing on the Motion was held before the Court at which time the Court reserved decision. The Court will address each prong of the Motion separately.
The Movants' request for a new trial is based upon contentions made in various sections of their written Motion and during the Hearing.
Movants first argue that counsel for the United States refused to disclose the location of the Debtor's husband, Mr. Zinke, which resulted in Mr. Zinke's testimony at the Trial being an unfair surprise. To support their allegations that counsel for the United States knew the location of Mr. Zinke, Movants refer to facts learned about Mr. Zinke subsequent to the Trial. The Movants' state that they learned of Mr. Zinke's conviction in the District Court for the Southern District of New York, for certain violations of the Federal Income Tax law. They state they also learned that Mr. Zinke cooperated with the United States in 1990 in connection with certain criminal matters, and for such cooperation received a reduction in his sentence in 1991.
Movants rely upon these facts as bases for their allegations that United States' counsel knew where Mr. Zinke was.
Movants also state that their inquiry of counsel for the United States and others as to the location of Mr. Zinke was to no avail since they were told that his location was unknown. In fact, on the Friday before the Trial, Movants asked Patricia C. Henry ("Ms. Henry"), who represented the United States, whether she intended to produce any other witnesses at trial other than one Mr. Bernard Karoff. Ms. Henry's response was that she was still attempting to reach Mr. Zinke.
The following quotation adequately summarizes the Movants' contentions/arguments:
The misconduct of counsel for the United States in refusing to disclose the whereabouts of Mr. Zinke resulted in a miscarriage of justice that calls for the granting of a new trial in this case, or in the alternative, to allow the reopening of the record for additional testimony concerning the conviction of Mr. Zinke and the sentence reduction agreement with the United States. The testimony of Philip W. Zinke at the trial was a surprise to Movants.
Movants Application and Motion at 2-3.
In response to the Motion, a declaration in opposition by Ms. Henry and an objection by the Debtor were filed with the Court.
Ms. Henry writes:
The Movants\' contention that Zinke was convicted and sentenced to six months for violations of federal income tax laws, and that he "cooperated" with the United States in connection "with certain unrelated criminal matters" and thereafter, in 1991 "received a reduction in his sentence" is irrelevant to the case at bar. Zinke is not a party to this action and he did not "cooperate with the United States" in the adversary proceeding. He testified freely; the United States did not coerce, persuade, and/or influence Zinke nor did it suggest in any manner the content of his testimony. The United States did not represent Zinke in the adversary proceeding and had no control over his actions. Contrary to the Movants\' contention that there was a miscarriage of justice because counsel for the United States "refused" to disclose the whereabouts of Zinke prior to the trial, the United States could not "disclose" the whereabouts of Zinke because the United States did not know the whereabouts of Zinke.... The Movants complain that they were unable to depose Zinke prior to trial although they were entitled to do so. Yet, the Movants had the same ability to locate and depose Zinke based on past legal dealings with Zinke and could have used the same sources to locate him as did the United States. As of August 2, 1991, at the Karoff deposition, on the Friday before the trial, the undersigned did not know the whereabouts of Zinke nor whether Zinke would be at the trial. But, since the United States was still actively seeking to ascertain his whereabouts, the undersigned advised the Movants that she was still trying to locate him.... Although the Movants contend that Zinke\'s testimony at trial in this case was contrary to the information gathered by Movants in preparation for trial and that as a result they were not prepared to examine Zinke, the Movants fail to provide an explanation of what testimony was contradictory or why this is grounds for a new trial.
Declaration of Patricia C. Henry dated Nov. 4, 1991 at 1-4 (paragraph numbers omitted).
The Court agrees with Ms. Henry's statements. Mr. Zinke's cooperation in 1990 with the United States, in exchange...
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