Mazer-Marino v. S.J.P.B., Inc. (In re Thakur)

Decision Date30 September 2013
Docket NumberNo. 12 Civ. 8490(ER).,12 Civ. 8490(ER).
Citation498 B.R. 410
PartiesIn re Pradeep THAKUR and Jennin C. Thakur, Debtors. Jil Mazer–Marino, as Chapter 7 Trustee of the Estate of Pradeep Thakur and Jennin C. Thakur, Plaintiff, v. S.J.P.B., Inc., HSBC Bank USA, National Association as Trustee for Nomura Asset Acceptance Corporation Mortgage Pass–Through Certificates, Series 2006–AF2, David A. Cantor, and Baron Associates, Defendants. David A. Cantor and Baron Associates, Appellants, v. Jil Mazer–Marino, as Chapter 7 Trustee of the Estate of Pradeep Thakur and Jennin C. Thakur, Appellee.
CourtU.S. District Court — Southern District of New York


Thomas A. Draghi, Westerman, Ball, Ederer, Miller & Sharfstein, L.L.P., Uniondale, NY, for HSBC Bank USA, National Association As Trustee For Nomura Asset Acceptance Corporation Mortgage Pass-Through Certificates, Series 2006-AF2.

Adam Michael Levy, Goldberg, Weprin, Finkel, Goldstein, LLP, New York City, Kevin J. Nash, Finkel, Goldstein, Rosenbloom

& Nash, LLP, New York City, Andrew Philip Tureaud, Hecker, Colasurdo & Segall, P.C., White Plains, NY, for Appellants.

Jil Mazer-Marino, Meyer, Suozzi, English & Klein, P.C., Garden City, NY, for Appellee.

Scott Barry Ugell, Ugell Law Firm, P.C., New York City, for Debtors.


RAMOS, District Judge.

Appellants David Cantor (Cantor) and Baron Associates (Baron) (collectively Appellants) appeal from the order granting the trustee's motion for summary judgment, entered on September 25, 2012 by United States Bankruptcy Judge Robert D. Drain, and the underlying decision rendered on the record on August 30, 2012, which avoided a mortgage lien conveyed by S.J.P.B., Inc. to Appellants and preserved such lien for the benefit of the debtors' estate pursuant to sections 544, 550 and 551 of the Bankruptcy Code, 11 U.S.C. §§ 544, 550–51. Bankr.Docs. 38, 40.1 On appeal, Appellants do not challenge the bankruptcy court's finding that the mortgage is avoidable and recoverable by the bankruptcy trustee as the result of a fraudulent conveyance by the debtors to S.J.P.B., Inc. The sole issue on appeal is whether the bankruptcy court erred in finding that Appellants were not good faith transferees of the mortgage pursuant to section 550(b) of the Bankruptcy Code, 11 U.S.C. § 550(b). For the reasons set forth below, the judgment of the bankruptcy court is AFFIRMED.

I. Background
a. Statement of Facts

Appellant Baron is a New York investment partnership which provides loans through Levites Realty. Trustee's Supplemental Appendix (“T.Appx.”), Ex. 1, Trustee Declaration (“Trustee Deck”) ¶¶ 11–12, Doc. 14. Barry Levites, who passed away in 2010, was a principal of Levites Realty. Id. ¶ 13. Starting in 1998, Levites Realty and its affiliates made “hard money” mortgage loans for amounts of up to $500,000.00. Id. ¶ 15. The mortgage loans were “value loans,” which means that a brokerage firm would approach Barry Levites with a loan request and he would perform due diligence on the “loan to value” ratio. Id. ¶ 16. Barry Levites and his affiliated companies generally made loans secured by first mortgages on real property, however, approximately 25% of their loans were secured by subordinate mortgages. Id. ¶ 17.

Appellant Cantor has been a private lender since 1983. Id. ¶ 18. In 2007, he was issuing private loans primarily on a “loan to value” basis. Id. ¶ 19. Cantor and Barry Levites were friends and had a partnership relationship through which they provided loans. Id. ¶ 20.

Since approximately 1996 to the present, Richard Roth (“Roth”) has been an independent legal advisor and contractor for Levites Realty. Id. ¶ 21. As independent legal counsel, Roth assisted Levites Realty in making “hard money” loans for real property, and his duties included “ordering title” and drafting loan documents. Id. ¶ 22. From 1998 to 2008, Roth worked on approximately sixty deals with Cantor and Barry Levites as lenders. Id. ¶ 23.

i. The Appellants' Acquisition of the Property

In 1998, Pradeep Thakur, together with his mother, Savitri Thakur, and his sister, Nillo Thakur, purchased property located at 3 Herald Court, Valley Cottage, New York (the “Property”). Id. ¶ 26. By indenture dated May 25, 2000, the Property was transferred from Pradeep, Savitri and Nillo Thakur to the eventual Debtors, Pradeep Thakur and Jennin C. Thakur (Debtors). Id. ¶ 27. The recording instrument identification number for this deed is 2000–00027731. Id.; see also id., Tab J (2000 Transfer Deed). The Debtors used the Property as their residence.

ii. Events Leading to the Appellants' Loan

On May 11, 2005, the Debtors formed S.J.P.B., Inc. (SJPB), with each Debtor owning a 50% interest in the entity. Trustee Decl. ¶¶ 31–32. Afterward, SJPB acquired a business operating under the name Jenny's Gourmet Deli (the “Deli”). Id. ¶ 33. However, the Deli was losing business and the Debtors decided to remodel the Deli in an effort to operate profitably. Id. ¶¶ 34–35.

In 2005 or 2006, Pradeep Thakur sought to refinance the existing mortgage on the Property to obtain funds for the Deli. Id. ¶ 36. On April 26, 2006, the Debtors borrowed over $547,000 from Union Federal Savings Bank. This loan was evidenced by two promissory notes (the “HSBC Notes”) and secured by mortgages (the “HSBC Mortgages”) on the Property. Id. ¶ 37. HSBC is the successor in interest to the Union Federal Savings Bank's interest in the notes. HSBC waited three years to record the HSBC Mortgages with the County Clerk for Rockland County. Id. ¶¶ 38–39.

In 2007, Pradeep Thakur asked an attorney, Alan McGeorge (“McGeorge”), for assistance in obtaining financing because the Debtors were deeply in debt, had been unable to pay the HSBC Notes for almost six months and had started to receive letters from the mortgage lender. Id. ¶ 40. On October 19, 2007, McGeorge contacted Roth via telephone and informed him that the Debtors needed a loan (the October 19 Call”). Id. ¶ 45. McGeorge further advised Roth that the Debtors had undertaken a high-end restaurant renovation, had gone over budget, “maxed out” their credit cards and needed relief. Id. ¶ 47. In response, Roth told McGeorge that a loan could not be made unless the home collateralizing the loan was owned by a corporation. McGeorge then said that he had just arranged for title to be conveyed to a corporation. McGeorge also told Roth that he was aware that “hard money” lenders did not like to make loans for primary residences. Id. ¶ 48.

By deed dated that same day, October 19, the Debtors transferred the Property to SJPB. Id. ¶ 28. The recording instrument identification number for this deed is 2007–00056376. Id.; see also id., Tab K (2007 Transfer Deed). The Real Property Transfer Report recorded with the deed states that the Property was conveyed in consideration of $450,000.00. Trustee Decl. ¶ 29. However, the Debtors admit that they transferred the Property to SJPB without consideration and they continued to reside at the Property after the transfer to SJPB. Id. ¶¶ 29–30.

One week later, on October 26, at Roth's request, McGeorge sent him an email discussing the proposed mortgage loan for the Property (the October 26 Email”). Id. ¶ 50. The October 26 Email states:

S.J.P.B., Inc. d/b/a Jenny's Gourmet Deli (“SJPB”) operates a deli from leased premises located at 120 West Ramapo Road (a/k/a Route 202) in Garnerville, NY. It is owned by Pradeep Thakur, who resides with his wife Jennin at 3 Herald Court, Valley Cottage, NY. Essentially, Pradeep overspent on leasehold improvements w hen he purchased the assets of a former deli at that location,and financed the improvements with credit cards, and now he is falling behind.

Would your lender be interested in making a loan to SJPB in an a[ ]mount sufficient to yield $150,000.00 net proceeds, to be secured by a UCC against the deli assets and mortgage against [the Debtor]'s residence? The house is a one-family, 4 bedroom 2 1/2 bath colonial with a two-car attached garage on a 1/2 acre lot. According to the Town of Clarkstown receiver of taxes website information, the total assessed value is $123,900, which, when divided by the residential assessment ratio of 23.86 and then multiplied by 100, indicates an assessed fair market value of $519,279.10. According to the Rockland County Clerk's website information, SJPB has approximately $27,000.00 of state tax warrants against it, and [Debtors] have one credit card judgment and two pending credit card actions against them. Otherwise the only recorded lien against the house is an old CEMA [, Consolidation, Extension and Modification Agreement,] dated 6/22/2000 that apparently was refinanced but the satisfaction was never recorded. Accordingly, assuming payoff of the credit card judgment, your lender would have a first position mortgage against the residence.

Id., Tab U (emphasis supplied). The Court notes that the October 26 Email does not discuss the HSBC Mortgages. Trustee Decl. ¶ 55.

After receipt of the October 26 Email, Roth wrote a memorandum, dated November 12, to Barry Levites inquiring whether he was interested in making the loan (the “Loan Memorandum”). Id. ¶ 56. There are at least two versions of the Loan Memorandum. Id. ¶ 57. The subject line for both versions is “Subordinate Mortgage Request, 3 Herald Ct., Valley Cottage, NY” and both indicate that the Property is owned by a corporation and occupied by the Debtors, who are the principals of the corporation. Furthermore, both versions indicate that the loan will be a [f]irst [m]ortgage on the house” and that “Mr. Thakur overspent on his credit cards on his leasehold improvements when he bought the deli.” Id., Tab V.2

The Appellants ultimately agreed to loan SJPB $160,000.00. Trustee Decl. ¶ 80. The Appellants' loan is evidenced by a loan agreement between SJPB as the borrower and Appellants as the lenders. Id. ¶ 81. As security for the loan, SJPB executed a Collateral Security Mortgage Note on the Property, dated December 7, 2007 (the “Mortgage...

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