Kramer v. Mahia (In re Khan)
| Decision Date | 30 September 2014 |
| Docket Number | Adv. Pro. No. 11-01520-ess,Case No. 10-46901-ess |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
| Parties | In re: SHAHARA KHAN, Debtor. DEBRA KRAMER, as Trustee of the Estate of Shahara Khan, Plaintiff, v. TOZAMMEL H. MAHIA, Defendant. |
Appearances:
Avrum J. Rosen, Esq.
as Trustee of the Estate of Shahara Khan
Karamvir Dahiya, Esq.
Dahiya Law Offices, LLC
75 Maiden Lane, Suite 506
New York, NY 10038
Before the Court is the motion of Debra Kramer, as Trustee of the estate of Shahara Khan, the Plaintiff in this adversary proceeding, for summary judgment against the Defendant, Tozammel H. Mahia. The Trustee brings this adversary proceeding pursuant to New York's Debtor and Creditor Law ("NY DCL") Sections 273, 274, 275, 276, 276-a, and 278, and Bankruptcy Code Sections 542, 544, 550, and 551, to avoid and recover certain alleged fraudulent transfers made by the Debtor to the Defendant. She also seeks to recover the alleged fraudulent transfers based on common law principles of unjust enrichment. By this motion, the Trustee seeks summary judgment on the First through Sixteenth Causes of Action asserted in her amended complaint.
This adversary proceeding has a lengthy procedural history in this Court, the District Court, and the Second Circuit Court of Appeals. In order to provide some context, the Court summarizes certain of these proceedings, which include termination and reinstatement of Dahiya as counsel for the Defendant, motions to withdraw the reference, a motion for sanctions, a request for recusal, two appeals, and now, this motion for summary judgment.
The Debtor filed a Chapter 7 bankruptcy petition on July 22, 2010. On December 3, 2011, the Trustee commenced this adversary proceeding by filing a complaint against Mr. Mahia, the Debtor's son. In the Complaint, the Trustee seeks to avoid and recover an alleged fraudulent conveyance of funds by the Debtor to the Defendant arising from the sale of certain real property located at 87-27 110th Street, Richmond Hill, NY 11418 (the "Richmond Hill Property") that was owned jointly by the Debtor, the Defendant, and Shamsum N. Rimi, arelative of the Debtor and the Defendant. The Complaint asserts eight Causes of Action, and seeks to recover the Debtor's share of the sale proceeds, or $35,587, under various theories of statutory and common law.
At first, the Defendant was not represented by counsel and did not respond to the Complaint. At the initial pre-trial conference on January 24, 2012, attorney Karamvir Dahiya, Esq. and the Dahiya Law Offices, LLC (together, "Dahiya") appeared for the Defendant. The Court directed Dahiya to file a notice of appearance and extended the Defendant's time to respond to the Complaint to January 31, 2012. On February 7, 2012, the Defendant answered the Complaint, demanded a jury trial, and asserted counterclaims against the Trustee for "constitutional torts" and abuse of process.
The Trustee's time to respond to the Counterclaims was extended by stipulation to May 4, 2012. On March 24, 2012, the Trustee filed a motion for sanctions against Dahiya (the "Sanctions Motion"). One month after the Trustee made the Sanctions Motion, the Defendant terminated Dahiya and hired new counsel, Christine T. Castiglia-Rubinstein, Esq. On April 23, 2012, Dahiya filed an affirmation in opposition to the Sanctions Motion. That same day, Ms. Castiglia-Rubinstein, on behalf of the Defendant, filed a Letter Terminating Prior Counsel, and the next day, on April 24, 2012, Ms. Castiglia-Rubinstein withdrew the Counterclaims on behalf of the Defendant. On December 3, 2012, the Defendant discharged Ms. Castiglia-Rubinstein as his counsel, and two days after that, Dahiya filed a notice of appearance as counsel for the Defendant.
The Court held a series of conferences and hearings on the Sanctions Motion over a period of several months, and on September 10, 2012, Dahiya filed a second affirmation inopposition to the Sanctions Motion. On September 11, 2012, the Trustee filed a reply to Dahiya's opposition to the Sanctions Motion.
On November 19, 2012, Dahiya filed a motion to withdraw the reference to the bankruptcy court of the Sanctions Motion on grounds that the bankruptcy court lacked the constitutional authority to adjudicate the issued raised therein. On December 5, 2012, the Defendant filed a motion to withdraw the reference to the bankruptcy court of the Adversary Proceeding, again on grounds that the bankruptcy court lacked authority to adjudicate those claims. On January 4, 2013, the Trustee filed a response to the Motion to Withdraw the Reference of the Sanctions Motion. On March 11, 2013, Dahiya filed a letter seeking this Court's recusal in the Adversary Proceeding and in all cases in which Dahiya appears as counsel. Later that same day, the Court granted the Sanctions Motion and entered a memorandum decision and order (the "Sanctions Order"). On March 13, 2013, the Court entered an order denying the Letter Request for Recusal, without prejudice, to the extent the Letter could be construed as a motion. On March 20, 2013, Dahiya filed a notice of appeal of the Sanctions Order to the District Court.
On March 25, 2013, the Trustee filed an amended complaint. In the Amended Complaint, the Trustee seeks to avoid and recover the Debtor's share of the proceeds of the sale (the "Sale Proceeds Transfer") of the Richmond Hill Property in the reduced amount of $26,690.75. The Trustee also seeks to recover another allegedly fraudulent transfer made on January 5, 2007, by the Debtor to the Defendant of funds secured by a mortgage (the "Mortgage Proceeds Transfer") on the Richmond Hill Property. The Trustee alleges that the Debtor's share of the Mortgage Proceeds was $37,500. The Amended Complaint asserts fifteen Causes ofAction pursuant to various sections of NY DCL and the Bankruptcy Code, and a Sixteenth Cause of Action based on a theory of unjust enrichment. All in, the Trustee seeks to recover from the Defendant the sum of $64,190.25.
On May 21, 2013, the Honorable Dora L. Irizarry of the U.S. District Court for the Eastern District of New York entered a Memorandum Decision and Order denying the Defendant's Motion to Withdraw the Reference of the Adversary Proceeding. That same day, the Defendant appealed Judge Irizarry's Order to the Second Circuit Court of Appeals. The Defendant did not seek a stay pending appeal, and the Second Circuit dismissed the appeal for lack of jurisdiction on May 27, 2014.
On May 31, 2013, the Defendant filed a motion to reopen discovery with respect to the Amended Complaint. On June 26, 2013, the Trustee filed an objection to the Motion to Reopen Discovery. On July 1, 2013, the Defendant filed a reply to the Trustee's Objection to the Motion to Reopen Discovery, and on July 9, 2013, the Court entered an order denying the Defendant's Motion to Reopen Discovery without prejudice to renewal to seek discovery with respect to matters that are disputed and alleged in the Amended Complaint but not in the original Complaint.
On July 8, 2013, the Court entered a pre-trial order directing the Trustee and the Defendant to prepare, execute, and file separate pre-hearing statements. On November 12, 2013, the Trustee filed her Pre-Trial Statement, and on December 5, 2014, the Defendant filed his Pre-Trial Statement. The Court held a pre-trial conference on December 10, 2013 and set a January 31, 2014 deadline for the filing of dispositive motions.
On January 31, 2014, the Trustee filed this Motion for Summary Judgment. TheDefendant filed several documents in opposition to the Motion over a period of several days from March 24 to March 28, 2014. These include affidavits of the Defendant and the Debtor, an unsigned affirmation of Dahiya on behalf of the Defendant, a response to the Trustee's Rule 56 Statement and exhibit in support of the opposition, and finally, further exhibits in support of the opposition.
On April 1, 2014, the Court held a hearing on the Motion for Summary Judgment and set an April 8, 2014 deadline for the Trustee to reply to the Opposition. On April 8, 2014, the Trustee filed a reply to the Opposition. On April 25, 2014, the Court held a continued hearing on the Motion for Summary Judgment, heard argument from the Trustee and the Defendant, by counsel, and reserved decision.
By this adversary proceeding, the Trustee seeks to recover two transfers made by the Debtor to her son in 2007, some three years before filing her Chapter 7 bankruptcy case. The first transfer at issue occurred in connection with a home equity loan in the amount of $150,000 (the "Mortgage Proceeds") secured by a mortgage on the Richmond Hill Property in favor of Countrywide Bank, N.A., and dated January 5, 2007. The Trustee alleges that the Debtor conveyed her share of the Mortgage Proceeds, or $37,500, for no consideration to the Defendant. The second transfer at issue occurred in connection with the sale of the Richmond Hill Property on April 5, 2007, which yielded $106,761 (the "Sale Proceeds"). The Trustee alleges that the Debtor again transferred her share of those proceeds, or $26,690.25, for no consideration to the Defendant.
The record shows that the Debtor, the Defendant, and Shamsum N. Rimi held title to the Richmond Hill Property as tenants in common by a deed recorded in the Office of the City Register of the City of New York, Queens County, on November 1, 2002. Since September 23, 2002, the Debtor held a twenty-five percent interest, the Defendant held a fifty percent interest, and Shamsum N. Rimi held a twenty-five percent interest in the...
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