Marshall v. Abdoun (In re Marshall)

• Decision Date: 21 December 2021
• Docket Number: Adv. Proc. No. 17-00088-AMC,Bankruptcy No. 15-18921-AMC
• Parties: IN RE Kathylene A. MARSHALL, Debtor Kathylene A. Marshall, Plaintiff v. Yasir A. Abdoun, Defendant
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania

636 B.R. 396

IN RE Kathylene A. MARSHALL, Debtor

Kathylene A. Marshall, Plaintiff

v.Yasir A. Abdoun, Defendant

Bankruptcy No. 15-18921-AMC

Adv. Proc. No. 17-00088-AMC

United States Bankruptcy Court, E.D. Pennsylvania.

Signed December 21, 2021

Irwin Lee Trauss, Philadelphia Legal Services, Philadelphia, PA, for Plaintiff.

James J. O'Connell, Law Office, Philadelphia, PA, for Defendant.

Ashely M. Chan, United States Bankruptcy Judge

I. INTRODUCTION

In March 2017, the plaintiff-debtor, Kathylene Marshall ("Debtor"), initiated this adversary proceeding seeking, inter alia, to avoid a pre-petition tax sale of her home located at 715 S. Cobbs Creek Parkway, Philadelphia, PA ("Property") pursuant to 11 U.S.C. § 548, and to recover damages under Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 P.S. § 201-9.2, for actual costs and emotional distress caused by the purchaser of the Property—and defendant in this adversary proceeding—Yasir Abdoun ("Abdoun") wrongfully attempting to obtain possession of the Property ("Adversary Proceeding"). On February 11, 2020, after a trial, the Court entered an order finding that the pre-petition tax sale could not be avoided under 11 U.S.C. § 548, and awarding Debtor actual damages under the UTPCPL on account of Abdoun's unlawful actions attempting to dispossess her from the Property ("Marshall Adversary Judgment"). Now, the Debtor moves to have the Court reconsider and vacate a portion of the Marshall Adversary Judgment pursuant to Fed. R. Bankr. P. 9023. ("Reconsideration Motion"). Ultimately, for the reasons described below, the Court denies the Reconsideration Motion.

II. FACTUAL & PROCEDURAL BACKGROUND

Because the facts and circumstances underlying this matter are fully set forth in the opinion accompanying the Marshall Adversary Judgment, Marshall v. Abdoun (In re Marshall) , 613 B.R. 194 (Bankr. E.D. Pa. 2020) ("Opinion"), which is hereinafter incorporated by reference, only certain abbreviated facts relevant to the Reconsideration Motion will be restated. In February 2015, the City of Philadelphia ("City") sold the Debtor's Property, which was owned by the Debtor and her estranged husband, at a sheriff's sale to Abdoun on account of delinquent real estate taxes. Marshall , 613 B.R. at 202-03. Prior to the February 2015 sheriff's sale, the Philadelphia County Court of Common Pleas ("State Court") failed to hold a hearing ("Hearing") in compliance with Pennsylvania's Municipal Claims and Tax Lien Act ("MCTLA"), 53 P.S. § 7283(a). Id.

Prior to the expiration of the statutory redemption period,¹ Abdoun impermissibly attempted to collect rent and effectuate an eviction of the Debtor from the Property on numerous occasions. Id. at 204-05. His actions caused the Debtor to experience severe emotional distress, triggered in large part by a history of police contact at the Property due to past incidents of domestic abuse by her husband. Id. at 204.

On December 14, 2015, the Debtor, through counsel, filed a voluntary petition under chapter 13 of the Bankruptcy Code. Case No. 15-18921 ECF No. ("ECF") 1. On March 27, 2017, the Debtor initiated the instant Adversary Proceeding by filing a complaint against Abdoun seeking to avoid the transfer of the Property in its entirety as a constructively fraudulent transfer pursuant to 11 U.S.C. § 548(a)(1)(B) based upon the State Court's failure to hold a Hearing in advance of the sale; to recover the Property pursuant to 11 U.S.C. § 550(a)(1) ; and determine the extent and validity of Abdoun's lien on the Property pursuant to 11 U.S.C. § 550(e). Case No. 17-88 ECF 1; Compl. ¶¶ 1, 33-42, 54-57. Additionally, the Debtor sought to recover damages for alleged violations of Pennsylvania's Fair Credit Extension and Uniformity Act ("FCEUA"), 73 P.S. § 2270.1 et seq., as enforced through the UTPCPL. Compl. ¶¶ 43-45, 47-53. Alternatively, the Debtor sought to have the Court disallow pursuant to Fed. R. Bankr. P. 3001(c)(2)(D)(i) the secured claim Abdoun had filed in the bankruptcy proceeding on the basis that his proof of claim, which was based upon his purchase of the Property at the sheriff's sale, contained "no support for an allowed secured claim in any amount."² Compl. ¶¶ 62, 63; Marshall , at 613 B.R. at 205. In the event Abdoun's claim was not disallowed in its entirety, the Debtor sought to have the Court set the redemption amount at $19,000, the alleged value of the Property, according to the Debtor, as of the petition date, and reclassify any excess amount of Abdoun's claim as a general unsecured claim pursuant to 11 U.S.C. § 506(a). Compl. at ¶ 64.

At the outset of the April 2019 trial ("Trial"), Debtor notified the Court and Abdoun that he intended to amend the pleadings to conform to the evidence at Trial to include a claim for willful violation of the automatic stay pursuant to 11 U.S.C. § 362(k). Trial Tr. 6:19-7:10, April 17, 2019 ("Trial Tr."). After the Trial, and after the parties filed proposed findings of fact and conclusions of law, which included discussion of, inter alia, the § 362(k) claim, the Court entered the Marshall Adversary Judgment, awarding the Debtor $300 pursuant to the UTPCPL, 73 P.S. § 201-9.2, representing one-and-a-half times the amount of her actual damages of $200 sustained as a result of Abdoun's FCEUA violations of seeking rent and attempting to evict the Debtor from the Property prior to the expiration of the statutory redemption period. Marshall , 613 B.R. at 220 ; Case No. 17-88 ECF 24 Pl. Proposed Concl. of Law ¶¶ 40-42, ECF 27 Def. Proposed Concl. of Law ¶ 12. However, the Court ultimately concluded, as reflected in the Marshall Adversary Judgment and supporting Opinion, that the sale of the Property was not a constructively fraudulent transfer subject to avoidance under 11 U.S.C. § 548(a)(1)(B) because the Debtor "failed to produce any evidence that would support a finding that the tax sale price would have been higher if the State Court had held the Hearing before it issued the Decree permitting the Property to be sold." Marshall, 613 B.R. at 212 (citing Ankrah v. HSBC Bank USA, N.A. (In re Ankrah) , 602 B.R. 286, 291 (Bankr. D. N.J. 2019) ; Thorian v. Baro Enters., LLC (In re Thorian) , 387 B.R. 50, 65 (Bankr. D. Idaho 2008) ). Subsequently, on February 24, 2020, the Debtor filed the Reconsideration Motion. Case No. 17-88 ECF 40. At the Court's request, Debtor filed a supplemental brief in support of the Reconsideration Motion on December 28, 2020, and Abdoun filed a supplemental response brief on January 25, 2021. Id. at ECF 58, 59. Also at the Court's request, Debtor filed an additional supplemental brief on May 7, 2020. Id. at ECF 72.

III. DISCUSSION

The Debtor argues in the Reconsideration Motion that the Court erred by: (1) overlooking evidence supporting the "inference" that no sheriff's sale would have occurred had the Hearing required by 53 P.S. § 7283(a) been held prior to the issuance of the decree authorizing the sale of the Property ("Decree"); (2) failing to consider the invalidity of the Decree, which deprived the State Court of jurisdiction to conduct the sheriff's sale, thus rendering Abdoun's deed a legal nullity; (3) measuring the "reasonably equivalent value" of the Property for purposes of 11 U.S.C. § 548 against the price that would have been received had the sale of the Property complied with applicable state law governing forced sales of property for delinquent real estate taxes instead of against its fair market value; (4) failing to award emotional distress damages under 73 P.S. § 201-9.2, which permits the Court to provide such "additional relief as it deems necessary or proper"; and (5) failing to award damages for emotional distress based on an unpled claim for intentional infliction of emotional distress in tort. Mot. for Recons. ¶¶ 3-24; Case No. 17-88 ECF 58 Suppl. Br. in Supp. of Pl's. Mot. to Recon. at 16-22. For the reasons described below, the Court concludes that the Debtor has not satisfied the high burden required to justify vacating and reconsidering the Marshall Adversary Judgment.

A. Applicable Legal Principles

Federal Rule of Bankruptcy Procedure 9023 (" Rule 9023") provides that "Rule 59 F.R.Civ.P. applies in cases under the [Bankruptcy] Code." Motions for reconsideration timely filed fourteen days after entry of judgment, as the instant Reconsideration Motion was, are treated as motions to alter or amend judgment under Fed. R. Civ. P. 59(e) (" Rule 59"). In re Stuart, 402 B.R. 111, 119 (Bankr. E.D. Pa. 2009). A motion for reconsideration under Rule 59(e) may only be granted if the moving party demonstrates at least one of the following grounds: (1) an intervening change in controlling law; (2) new evidence not previously available; or (3) the need to correct a clear error of law or fact or prevent manifest injustice. Id. at 120. The movant bears a high burden to demonstrate that grounds exist justifying reconsidering final judgment. In re Sellers , 555 B.R. 479, 481-82 (Bankr. E.D. Pa. 2016) (citing ABS Brokerage Servs., LLC v. Penson Fin. Servs., Inc. , Civ. No. 09-4590 (DRD), 2010 WL 3257992, at *5 (D. N.J. Aug. 16, 2010) ).

A motion for reconsideration is an extraordinary remedy that should be granted sparingly. In re Stuart , 402 B.R. at 120. "It is not to be used as a means to reargue matters already argued and disposed of or as an attempt to relitigate a point of disagreement between the Court and the litigant." Id . Additionally, "[a] party cannot invoke Rule 59(e) to raise arguments or evidence that could have been raised prior to judgment...That is, Rule 59(e) is ‘aimed at reconsideration, not initial consideration,’ and thus a party may not rely on Rule 59(e) to raise an argument that could and should have been made before judgment issued." Est. of Scotty Ray Sisk v. Manzanares, 270 F. Supp. 2d 1265, 1279-80 (D. Kan. 2003) (citing Steele v. Young , 11 F.3d 1518, 1520 n.1 (10th Cir. 1993) ; 11 Charles Alan Wright et al., Federal...