Salim v. Nisselson (In re Big Apple Volkswagen, LLC)
| Decision Date | 19 May 2016 |
| Docket Number | Case No. 11-11388 (JLG),Adv. Proc. No. 15-01408 (JLG) |
| Parties | In re: Big Apple Volkswagen, LLC, Debtor Julian Salim, Plaintiff v. Alan Nisselson as Trustee, Defendants |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York |
NOT FOR PUBLICATION
APEARANCES:
WINDELS MARX LAND & MITTENDORF, LLP
Attorneys for Plaintiff Alan Nisselson, Trustee
156 West 56th Street
New York, New York 10019
By: Howard L. Simon, Esq.
Leslie S. Barr, Esq.
Dean M. Solomon, Esq.
GILL & KADOCHNIKOV, P.C.
125-10 Queens Blvd., Suite 223
Kew Gardens, New York 11415
By: Navpreet K. Gill, Esq.
Alex Kadochnikov, Esq.
Alan Nisselson is the court-appointed chapter 7 trustee (the "Trustee") of the estate of Big Apple Volkswagen LLC ("Big Apple Volkswagen" or the "Debtor") and has served in that capacity since his appointment on December 23, 2011 [ECF Doc. No. 148].1 For the period of May 12, 2011 through December 22, 2011, Mr. Nisselson served as the Debtor's chapter 11 trustee. In that capacity, and as relevant to this adversary proceeding, Mr. Nisselson sold substantially all of the Debtor's assets and businesses (collectively, the "Dealership Assets") to Ted Bessen or his designee, Teddy Volkswagen of the Bronx, LLP pursuant to a court-ordered sale under §363 of the Bankruptcy Code (the "Asset Sale Transaction")2, and sued Ratiba Salim ("Ratiba") and Wahid Saleem ("Wahid," and collectively with Ratiba, the "Parents") to avoid and recover prepetition transfers to them from the Debtor totaling approximately $705,000, under state and federal laws.3 That action is pending before this Court.4
Julian Salim ("Julian"), the plaintiff herein, is the Debtor's former managing member and the son of Ratiba and Wahid. On or about November 24, 2015, acting pro se,5 hecommenced this adversary proceeding against the Trustee by filing a three count complaint [AP ECF No. 1] (the "Complaint") seeking both damages occasioned by the Trustee's alleged breach of his fiduciary duties (the First Cause of Action) and breach of his Agreement (defined below) with Julian (the Second Cause of Action), and an injunction against the continued prosecution of the Recovery Action (the Third Cause of Action). The matter before the Court is the Trustee's motion to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6)6 [AP ECF Doc. No. 5] (the "Motion").7 Julian opposes the Motion and seeks leave to replead to the extent the Court finds grounds to dismiss the Complaint.
At the April 21, 2016 hearing on the Motion (the "April 21 Hearing"), the Plaintiff modified the relief he is seeking in the Complaint. He waived all claims in the Complaint for money damages, dismissed the First Cause of Action, and limited the relief he is seeking under the Second Cause of Action to an injunction barring the Trustee's continued prosecution of the Recovery Action. He did not specifically address the Third Cause of Action. For the reasons discussed herein, the Court finds that the Trustee has established grounds under Rule 12(b)(6) to dismiss the Second Cause of Action, as amended, and the Third Cause of Action, as pled in the Complaint. Accordingly, the Motion is GRANTED. Because the defects in those claims cannot be cured by repleading the underlying allegations, Julian's request for leave to replead is DENIED.
The Court has subject matter jurisdiction of this proceeding pursuant to 28 U.S.C. §§ 1334, 157(a) and 157(b)(1) and the Amended Standing Order of Reference M-431 (Preska, C.J.). This is a core proceeding. See 28 U.S.C. § 157(b)(2)(A).
On or about March 30, 2011 (the "Petition Date"), the Debtor filed a voluntary petition under chapter 11 of the Bankruptcy Code. [ECF Doc. No. 1]. As of the Petition Date, the Debtor was in the business of operating a Volkswagen dealership, including service and parts departments (collectively, the "Business"). Compl. ¶¶ 1, 8. The Debtor retained possession and control of its assets and Business as debtor in possession until May, 2011, when the Court appointed Mr. Nisselson as chapter 11 trustee. Id. ¶ 3.
Id. See also id. ¶ 18 () Julian contends that during that meeting he identified Ted Bessen as a ready buyer of the Business for $1.1 million (id. ¶ 6), and advised the Trustee that Mr. Bessen had been in contact with Volkswagen about acquiring the Business and that Julian only needed to confirm the deal with him. Id. He says that after advising the Trustee about Ted Bessen's interest in acquiring the Business, he and Mr. Nisselson shook hands on a deal (the "Agreement") that "if [Julian got] him a buyer [the Trustee] would not sue anyone and would allow [Julian and Greg Samborski, his partner] to continue operating [the] dealership till [sic] it was sold and the debt was paid." Id.
Julian contends that two days after the meeting, he advised the Trustee by telephone that he had confirmed that Ted Bessen was ready to buy the Business (id. ¶ 7), and that although the Trustee promised that he would get back to him after he spoke with Mr. Bessen, the Trustee never called him back and, going forward, refused to speak with him about the sale process. Id. Julian also complains that the Agreement notwithstanding, the Trustee refused to allow Julian and Greg Samborski to operate the Business while it was in chapter 11. He alleges that three days after the meeting, the Trustee "sent one of his attorneys to throw [Julian and Greg] out of the dealership" and "shut the entire operation down by firing all employees only keeping [the Debtor's] accountant, Judy Kalis." Id. Julian further contends that he asked the Trustee to reconsider his decision to close down the Business since, at that time, the dealership was generating well over $100,000 per month from its parts and service department. Id. ¶ 8. He says that "[i]t made no sense to shut the operation down and keep the place open for another 9 monthsonly to sell it to the same person I got for them nine months earlier, Ted Bessin [sic]." Id. ¶ 9. He asserts that had they continued to operate the Business, they could have continued to generate money, kept the Debtor's employees employed and sold the dealership for more money than Ted Bessen paid for it. Id. ¶¶ 12, 17. He contends that the "[Trustee] and VW Credit purposely ruined the dealership and its value." Id. ¶ 17.9 Julian complains that the Trustee breached his promises (i) that he would not sue the Parents (id. ¶ 10), and (ii) that he would permit Julian and Greg Samborski to continue to operate the Business pending its sale. Id. ¶ 16. As succinctly put by Julian, "not only did the trustee not keep his promise [not to sue his Parents]; he ruined the dealership and put it in more debts for no apparent reason." Id. ¶ 15.
The Complaint consists of three causes of action. The First Cause of Action seeks money damages based on the Trustee's alleged breach of his fiduciary duty to operate the Debtor pending the sale of the Business. Julian alleges that "Alan Nisselson as a trustee had a fiduciary duty to keep Big Apple Volkswagen open for business and continue operating it to pay off any debt," and that he "ruined the dealership by shutting it down, stopping all sales, service and parts . . . [and] showed no good faith or ethics." Compl. ¶¶ 23, 24.
The Second Cause of Action seeks damages based on the Trustee's breach of his agreement not to sue Ratiba and/or Wahid and to keep the dealership open pending the sale of the Business. Julian alleges that "Alan Nisselson promised not to sue Ratiba Salim and WahidSaleem" and that "[h]e breached on his agreement as promised not to sue anyone." Id. ¶ 25. In addition, he contends that "Alan Nisselson breached his contract by not keeping his word to keep the dealership operating as promised." Id. ¶ 26. In support of those claims, Julian contends that Mr. Nisselson "repeatedly misled the court throughout the entire case" and "[b]ased on the facts, circumstances, and series of bad transactions as set forth [in the Complaint,] Alan Nisselson's act[s] or omissions were done willfully and maliciously to injure Big Apple Volkswagen and its property." Id. ¶¶ 28, 29.
The Third Cause of Action seeks equitable relief - an injunction barring continued prosecution of the Recovery Action. In support of that claim, Julian simply asks the Court "to compel trustee Alan Nisselson from suing Ratiba Salim and Wahid Saleem." Id. ¶ 27.
The Trustee did not file an answer to the Complaint. Instead, on December...
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