Pereira v. Brown (In re Brown)
| Decision Date | 22 September 2022 |
| Docket Number | 18-10617 (JLG),Adv. 20-01058 (JLG) |
| Parties | In re: Michael Rodger Brown, Debtor. v. Jennifer Brown, et al., Defendants. John S. Pereira, as Chapter 7 Trustee for the estate of Michael Rodger Brown, Plaintiff, |
| Court | U.S. Bankruptcy Court — Southern District of New York |
NOT FOR PUBLICATION
AKERMAN LLP Counsel for Plaintiff John P. Campo, Esq. Darryl R. Graham, Esq.
KAKAR P.C. Counsel for Jennifer Brown Sumeer Kakar, Esq. Kalpana Nagampalli, Esq.
LAW OFFICE OF CURTIS A. HEHN Counsel for Jennifer Brown Curtis A Hehn, Esq.
Introduction[1]
In this adversary proceeding, John S. Pereira, as plaintiff and the chapter 7 trustee (the "Trustee" or "Plaintiff") for the estate of Michael Rodger Brown (the "Debtor"), contends that he is entitled to receive, on behalf of the Debtor's estate, Marital Assets, including Sale Proceeds, which he says rightfully belong to the Debtor's estate pursuant to the Judgment of Divorce entered by the State Court in the Matrimonial Action between the Debtor and Defendant Jennifer Brown ("Jennifer"). He filed the seven-count Complaint commencing this adversary proceeding against Jennifer and certain other defendants to recover those alleged assets and to preserve the estate's alleged rights and claims against them.[2] The matter before the Court is the Trustee's motion for partial summary judgment (the "Summary Judgment Motion")[3] against Jennifer pursuant to Rule 56 of the Federal Rules of Civil Procedure ("Rule 56")[4] on Count VI (Conversion) and Count VII (Turnover) of the Complaint, and for entry of a judgment against Jennifer totaling $210,637.32 (plus costs and prejudgment interest). Jennifer opposes the motion. [5]
For the reasons set forth herein, the Court grants the Summary Judgment Motion and awards the Trustee partial summary judgment on Count VI and Count VII of the Complaint, and directs that a judgment be entered against Jennifer totaling $210,637.32 (plus costs and prejudgment interest).
The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference dated January 31, 2012 (Preska, C.J.). This is a core proceeding pursuant to 28 U.S.C. § 157(b).
In support of the Summary Judgment Motion, the Trustee filed the Plaintiff's Rule 56 Statement.[6] In support of her Opposition, and in response to the Plaintiff's Rule 56 Statement, Jennifer filed the Defendant's Rule 56 Statement.[7] The Trustee then filed the Plaintiff's Response to Defendant's Rule 56 Statement.[8] The Plaintiff's Rule 56 Statement consists of 41 Statements of Fact. [9] The Trustee supplements his statement with exhibits annexed to the Campo Declaration. Jennifer essentially does not contest the facts set forth in the Plaintiff's Rule 56 Statement. See Defendant's Rule 56 Statement ¶¶ 1-41. She does not challenge the Trustee's reliance on the documents annexed to the Campo Declaration and relies on certain of those documents in her Opposition to the motion.
In the Defendant's Rule 56 Statement, Jennifer purports to assert "Additional Undisputed Material Facts" to the record of the motion. See Defendant's Rule 56 Statement ¶¶ 42-67.[10] The Trustee contends that the inclusion/consideration of those alleged facts in Defendant's Rule 56 Statement runs afoul of Local Rule 7056-1(c). That rule states:
Papers opposing a motion for summary judgment shall include a correspondingly numbered paragraph responding to each numbered paragraph in the statement of the moving party, and if necessary, additional paragraphs containing a separate, short, and concise statement of additional material facts as to which it is contended that there is a genuine issue to be tried.
LBR 7056-1(c). He asks the Court to strike those alleged facts. See Plaintiff's Response to
Defendant's Rule 56 Statement ¶ 1. Alternatively, he asserts that those alleged facts are irrelevant to the Summary Judgment Motion. See id. ¶ 2. In any event, the Trustee does not take a position with respect to the facts themselves for the purpose of the Summary Judgment Motion. Id. However, he disputes the legal conclusions drawn by Jennifer from the Additional Undisputed Material Facts. Id.
The Local Rule plainly contemplates that the party opposing a summary judgment motion can include, in its Rule 56 Statement, "additional paragraphs containing a separate, short, and concise statement of additional material facts as to which it is contended that there is a genuine issue to be tried." That is what Jennifer purports to do in her Defendant's Rule 56 Statement. The Court overrules the Trustee's objection to the inclusion of those facts in the record of this matter. However, in reaching this conclusion, the Court finds that portions of the statement contain facts that are not material or relevant to the resolution of the Summary Judgment Motion. For example, and without limitation, the additional facts relating to "J. Brown, and Her Children's, Financial Extremis as a Result of the Debtor's Repeated Violations of the Pendente Lite Order" and to the "Disposition of Marital Assets" have no bearing on the resolution of the Summary Judgment Motion.
The following relevant and material facts are not in dispute.
On March 24, 2001, Jennifer and the Debtor were married. See Plaintiff's Rule 56 Statement ¶ 1. On March 26, 2013, following a year-long separation, Jennifer began a divorce proceeding against the Debtor (the "Matrimonial Action")[11] in the Supreme Court for the State of New York (the "State Court"). See id. ¶ 2.
On March 5, 2018 (the "Petition Date"), before the equitable distribution of marital assets was resolved by the State Court, the Debtor commenced his bankruptcy case in this Court (the “Chapter 7 Case”) by filing a voluntary petition for relief under chapter 7 of the Bankruptcy Code. See id. ¶ 3. See id. ¶ 3.[12] The same day, John S. Pereira was appointed as chapter 7 trustee. See id. ¶ 4.
On July 27, 2018, Jennifer filed a contingent unsecured proof of claim in the sum of $6,375,000 ("Claim No. 6")[14] on the claims register in the Chapter 7 Case. See Plaintiff's Rule 56 Statement ¶ 9. The claim is on account of "$12.75 million in marital funds subject to equitable distribution" that "[e]xperts in action for divorce were unable to trace" (the "Unaccounted For Marital Assets"). See Claim No. 6 at 2.
On February 7, 2019, the State Court referred the remaining financial and custody issues in the Matrimonial Action, including the issue of equitable distribution of marital property, to Special Referee Marilyn T. Sugarman (the "Special Referee"). See Plaintiff's Rule 56 Statement ¶ 10.
On July 30, 2019, Jennifer and the Debtor entered into a term sheet (the "Term Sheet")[15]in the Matrimonial Action. As relevant, in the Term Sheet, Jennifer and the Debtor resolved all matters relating to the equitable distribution between them of the assets that she and/or the Debtor acquired during their marriage (the "Marital Assets").[16] In substance, under the Term Sheet, Jennifer abandoned to the Debtor any right or claim that she may have to the Marital Assets, in consideration for a payment to be made by the Debtor out of his post-bankruptcy funds (the "Equitable Distribution Payment") equal to "$2,500,000 as [Jennifer's] share of equitable distribution." Term Sheet ¶ 2.[17] The Term Sheet calls for Jennifer to identify (i) the Marital Assets that she sold during the Matrimonial Action, (the "Transferred Marital Assets"), see id. ¶ 4(a)-(d), and (ii) the Marital Assets that Jennifer possessed as of the execution of the Term Sheet or donated or gifted during the Matrimonial Action (the "Other Marital Assets", with the Transferred Marital Assets, the "Jennifer Marital Assets"), see id. ¶ 4(e)-(i). The Term Sheet requires Jennifer to provide the Trustee with a list of the Jennifer Marital Assets within ten days after execution of the Term Sheet (the "Accounting Obligation"). See Term Sheet ¶ 4.[18] It also calls for Jennifer to deliver to the Trustee the Other Marital Assets, within thirty days of execution of the Term Sheet (the "Turnover Obligation"). See id. ¶ 5. The Term Sheet does not explicitly require the Debtor to turn over or deliver the Transferred Marital Assets or the proceeds thereof (the "Sale Proceeds") to the Trustee.
On July 30, 2019, the Special Referee took allocutions from both Jennifer and the Debtor, establishing their respective approval of the Term Sheet and the authenticity of their signatures on the Term Sheet.[19] See Plaintiff's Rule 56 Statement ¶ 14. At that time, Jennifer confirmed that she had read the Term...
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