Omanoff v. Reifler (In re Reifler)
| Docket Number | 22-CV-10201 (CS) |
| Decision Date | 25 August 2023 |
| Parties | In re BRADLEY C. REIFLER, Debtor. v. BRADLEY C. REIFLER; FOREFRONT PARTNERS, LLC; TALKING CAPITAL WINDUP LLC; TALKING CAPITAL PARTNERS II, LLC; TALKING CAPITAL PARTNERS III, LLC; BOWLES & JOHNSON PLLC; DAVID K. BOWLES, ESQ.; MARGARETT A. JOHNSON, ESQ.; WILLIAM T. MCKETTRICK; JOHN OR JANE DOES (1-10); and ABC ENTITIES (1-10), Defendants-Appellees. RODNEY OMANOFF, Plaintiff-Appellant, |
| Court | U.S. District Court — Southern District of New York |
Ira N Glauber Yonit A Caplow Dilworth Paxson LLP New York, New York Douglas J. Pick Pick & Zabicki LLP New York, New York Counsel for Plaintiff-Appellant Rodney Omanoff
David K. Bowles Bowles & Johnson, PLLC New York, New York Counsel for Defendant-Appellees Forefront Partners, LLC Talking Capital Windup LLC, Talking Capital Partners II, LLC Talking Capital Partners III, LLC, Margarett A. Johnson, Esq and David K. Bowles, Esq. Anthony J. Proscia Kaufman Dolowich & Voluck, LLP New York, New York Counsel for Defendant-Appellee Bowles & Johnson PLLC
This appeal concerns the July 14, 2022 and August 19, 2022 Orders entered by Judge Cecilia G. Morris of the United States Bankruptcy Court for the Southern District of New York in the adversary proceeding[1] captioned Omanoff v. Reifler et al. (In re Reifler), Adv. Proc. No. 22-AP-9002 (CGM) (Bankr. S.D.N.Y.), that (1) granted the motion of Forefront Partners, LLC, Talking Capital Windup LLC, Talking Capital Partners II, LLC, Talking Capital Partners III LLC, Bowles & Johnson PLLC, David K. Bowles, Esq., Margarett A. Johnson, Esq., and William T. McKettrick[2] (together, the “Appellees”) to dismiss the adversary proceeding brought against them by Rodney Omanoff (“Appellant”), (see ECF No. 1 at 5-6); (2) denied as moot Appellant's motion to disqualify Bowles & Johnson PLLC, David K. Bowles, Esq., and Margarett A. Johnson, Esq. (together the “Attorney-Appellees”), (see id.); and (3) denied Appellant's motion for reconsideration, (see id. at 7-8). For the following reasons, the Bankruptcy Court's Orders are AFFIRMED.
I assume the parties' familiarity with the facts and prior proceedings, and I recite only those relevant to the disposition of this matter.
On January 20, 2017, Bradley Reifler filed a personal Chapter 7 bankruptcy petition. In re Reifler, No. 17-BK-35075 (SA. 1-17.)[3] At that time, he was the 100% owner and sole manager of Appellee Forefront Partners, LLC (“Forefront”). (A. 4, 30, 62, 78, 2086.) Forefront itself is the sole member of Appellee Talking Capital Windup LLC, formerly known as Talking Capital LLC, (A. 45, 59, 293, 843), and Reifler is also the sole manager of that entity, (A. 90, 2075). Talking Capital Windup LLC, in turn, is the sole member of Appellees Talking Capital Partners II, LLC and Talking Capital Partners III, LLC, (collectively with Talking Capital Windup LLC, the “TC Companies”). (A. 45, 59.) The TC Companies and Forefront are Delaware limited liability companies (“LLCs”) with principal places of business in New York. (A. 103-04.)
On February 24, 2017, Appellees TC Companies and Forefront brought a derivative action against Appellant in the Supreme Court of the State of New York, New York County (the “State Action”), originally styled Forefront Partners et al. v. Omanoff et al., Index No. 650973/2017. (A. 193-218.) That action alleged, among other things, claims against Appellant for breach of fiduciary duty, misappropriation of corporate opportunity, and unjust enrichment, contending that he secretly ran a competing company while managing the TC Companies and misappropriated the TC Companies' clients and primary lender. (A. 208-13, 1873.)
On September 27, 2019, Appellant filed an answer and counterclaims in the State Action, (A. 699-770), stating (among other things) that Reifler has always owned and operated Forefront and that Reifler “[was] not a named party because of his currently pending personal bankruptcy proceeding,” (A. 730-32). On October 25, 2021, with permission from the state court, (A. 84243)[4], the TC Companies filed a third amended complaint in the State Action (the currently active complaint), this time asserting the claims directly, (see A. 102-139). The third amended complaint stated that Reifler is the “sole non-member manager of Talking Capital Windup, LLC,” which is the sole member of Appellees Talking Capital Partners II, LLC and Talking Capital Partners III, LLC. (A. 139.)
On February 24, 2022, the TC Companies moved for summary judgment against Appellant in the State Action. (A. 1873.) On August 26, 2022, the state court granted that motion against Appellant and the other defendants on liability, holding that Appellant and his co-defendants misappropriated corporate opportunities and breached their fiduciary duties to the TC Companies. (SA. 308-09, 294-96.) The court then set a date for a bench trial on damages. (SA. 309.)
On February 25, 2022 (the day after the motion for summary judgment was filed in the State Action), Appellant filed an adversary proceeding - originally naming only Forefront, the TC Companies, and Reifler - and petitioned the Bankruptcy Court for a temporary restraining order (“TRO”). (A. 637, 1873; Adv. Proc. ECF No. 1, 2.)[5] In his complaint, Appellant asserted three claims: (1) that Reifler's membership interest in Forefront constituted property of the bankruptcy estate under 11 U.S.C. § 541(a), and thus that the State Action should be stayed and enjoined under 11 U.S.C. § 362(a); (2) that the named Defendant-Appellees should be permanently enjoined from “exercising control over the Debtor's assets in the [State] Action” and from continuing the State Action under 11 U.S.C. § 105(a); and (3) that under 11 U.S.C. § 542(a) the named Defendant-Appellees should “immediately turn over” to the Chapter 7 Trustee any withheld funds recovered by Reifler in the State Action. (Adv. Proc. ECF No. 1 ¶¶ 32-48.)
On March 1, 2022, the Bankruptcy Court granted Appellant's request for a TRO enjoining the prosecution of the State Action and setting a preliminary injunction hearing for March 15, 2022. (Adv. Proc. ECF No. 7; see A. 1874-75.) At that hearing, the Bankruptcy Court concluded that Appellant failed to meet the elements required for a preliminary injunction. (A. 40-41; see id. 1875-76.) On March 23, 2022, the Bankruptcy Court entered an order dissolving the TRO and denying Appellant's request for a preliminary injunction. (Adv. Proc. ECF No. 29; see A. 1876.) On April 5, 2022, Appellant filed a motion to reconsider the March 23 order, and the Bankruptcy Court held a hearing on that motion on April 19, 2022. (A. 1040-63; Adv. Proc. ECF No. 33; see A. 1876.)
On April 25, 2022, it granted a preliminary injunction to temporarily halt Forefront and the TC Companies from pursuing the State Action until June 30, 2022. (Adv. Proc. ECF No. 58; see A. 1876.)
On April 12, 2022, Appellant filed in the adversary proceeding an Amended Complaint adding additional defendants Bowles & Johnson PLLC, David K. Bowles, Esq., Margarett Johnson, Esq., (collectively, the “Appellee-Attorneys”), William T. McKettrick, and “John and Jane Does 1 through 10” and “ABC entities 1 through 10.” (Adv. Proc. ECF No. 44; A. 43-74, 1063.) Bowles & Johnson PLLC had represented Forefront and the TC Companies in the State Action since May 2019,[6] and David K. Bowles represented the non-debtor Defendant-Appellees in the adversary proceeding.[7] (A. 636-37.) The Amended Complaint brought four claims: (1) that Reifler's membership and managerial interest in Forefront, including Forefront's right to appoint the managers of the TC Companies, were property of Reifler's bankruptcy estate under 11 U.S.C. § 541(a), and that Appellees' continued pursuit of the State Action violated the automatic stay provision of 11 U.S.C. § 362(a)(3); (2) that Appellant was entitled to a declaration from the Bankruptcy Court that the State Action was void ab initio under 11 U.S.C. § 362(a)(3); (3) that Appellant was entitled to a permanent injunction against the State Action under 11 U.S.C. §§ 105(a) and 362(a); and (4) that Appellant was entitled to costs and damages under 11 U.S.C. §§ 105(a) and 362(k) for Appellees' alleged willful violation of the automatic stay. (A. 44-45, 66-70, 1874.)
That same day, Appellant filed a proof of claim alleging that he is a creditor of Reifler's bankruptcy estate. (A. 848-850.)
On May 5, 2022, Appellees moved to dismiss the amended complaint for failing to state a claim upon which relief may be granted under Federal Rule of Civil Procedure 12(b)(6), (see A. 595-634), asserting five arguments: (1) that Appellant sought to impose the automatic stay of Section 362(a)(3) on property that was outside of Reifler's bankruptcy estate (see A. 611-17); (2) that Appellant lacked prudential standing because his injuries “f[e]ll outside the relevant zone of interest,” (see A. 623); (3) that collateral estoppel applied because the state court determined that the State Action was not property of Reifler's bankruptcy estate, (see A. 630-31); (4) that the adversary proceeding should be dismissed on the ground of laches, (see A. 628-630); and (5) that naming Appellees' counsel as additional defendants was frivolous, (see A. 631-34). On May 10, 2022, Appellant filed a motion to disqualify the Appellee-Attorneys from representing Forefront and the TC Companies in the State Action, the Adversary Proceeding, the underlying Reifler bankruptcy case, and “all other legal matters.” (Adv. Proc. ECF No. 91; see SA. 247.) In that motion, Appellant argued that the Appellee-Attorneys should be disqualified because: (1) they were neither hired by the Chapter 7 Tr...
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