Adar 980 Realty LLC v. Sofer (In re Sofer), Case No. 1–13–46127 (CEC)

519 B.R. 28

In re Avraham Sofer, Debtor.Adar 980 Realty LLC, Plaintiff,

v.Avraham Sofer, Defendant.

Case No. 1–13–46127 (CEC)

Adv. Pro. No. 1–14–01005 (CEC)

United States Bankruptcy Court, E.D. New York.

Signed October 31, 2014

Abraham Neuhaus, Esq., Neuhaus & Yacoob LLC, 1222 Avenue M, Suite 207, Brooklyn, NY 11230, Counsel for Plaintiff

Avraham Sofer, 1025 East 13 Street, Brooklyn, NY 11230, Defendant, Pro Se

Chapter 7

DECISION

CARLA E. CRAIG, Chief United States Bankruptcy Judge

This matter comes before the court on the motion of a creditor, Adar 980 Realty LLC (the “Plaintiff” or “Adar 980 Realty”), seeking summary judgment pursuant to Federal Rule of Civil Procedure 56(a), made applicable here by Federal Rule of Bankruptcy Procedure 7056, against Avraham Sofer (the “Debtor”), denying the Debtor a discharge under 11 U.S.C. §§ 727(a)(2)(A), 727(a)(2)(B), 727(a)(4)(A), 727(a)(6)(A), and 727(a)(7).

The uncontested facts show that the Debtor refused to obey a court order by operating a business owned by the Debtor after this Court issued a preliminary injunction prohibiting the Debtor from doing so. Moreover, the facts show that the Debtor—as an insider of the debtor in a related bankruptcy case, In re 1040 Management, LLC, Case No. 13–45283–CEC transferred and concealed property of the estate in that case after the filing of the petition with the intent to hinder, delay, or defraud both the creditors and the trustee in that case. Accordingly, for the reasons set forth below, Plaintiff's motion for summary judgment is granted.

JURISDICTION

This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b), and the Eastern District of New York standing order of reference dated August 28, 1996, as amended by order dated December 5, 2012. This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(J). This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

BACKGROUND

The facts set forth below are not in dispute, except as otherwise noted.

On August 28, 2013 (the “Corporate Filing Date”), the Debtor's wholly owned limited liability company, 1040 Management, LLC (“ 1040 Management”), filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code (the “Corporate Case”). (Petition, Case No. 13–45283–CEC, ECF No. 1.) Lori Lapin Jones was appointed as Chapter 7 Trustee of the Estate of 1040 Management (the “Corporate Trustee”) on August 28, 2013.

The Debtor and 1040 Management were co-tenants with respect to the parking lot known and located at 980 East 13th Street, Brooklyn, New York (the “Parking Facility”) pursuant to a lease dated September 1, 2010 between Management 1040, LLC, Avraham Sofer, and Adar 980 Realty LLC. (Complaint, Adv. Pro. No. 14–01005–CEC, ECF No. 1 ¶ 14.) ¹ During the course of operating the Parking Facility, 1040 Management and the Debtor entered into agreements with certain store owners and vendors in the surrounding area (the “Vendors”), under which the Debtor collected money in exchange for providing parking spots to customers of the Vendors. (Complaint, Adv. Pro. No. 14–01005–CEC, ECF No. 1 ¶¶ 18–19; Answer, Adv. Pro. No. 14–01005–CEC, ECF No. 5 ¶¶ 66,106.) In addition, 1040 Management and the Debtor also provided overnight parking to patrons of the Parking Facility on both a nightly and monthly basis. (Complaint, Adv. Pro. No. 14–01005–CEC, ECF No. 1 ¶¶ 20–21.) Further, the Debtor collected money from individuals and other entities in exchange for placing various billboards and advertisements around the Parking Facility (the “Advertisement Customers”). (Complaint, Adv. Pro. No. 14–01005–CEC, ECF No. 1 ¶ 22; Answer, Adv. Pro. No. 14–01005–CEC, ECF No. 5 ¶¶ 70–73.)

On August 29, 2013, Adar 980 Realty filed a motion for relief from the automatic stay in the Corporate Case pursuant to § 362 of the Bankruptcy Code (the “Corporate Lift Stay Motion”), to continue an eviction action pending in state court against the Debtor and 1040 Management. (Mot. for Relief from Stay, Case No. 13–45283–CEC, ECF No. 5.) On September 11, 2014, the Court issued an order scheduling a hearing on the Corporate Lift Stay Motion for October 9, 2013. (Order Scheduling Hearing, Case No. 13–45283–CEC, ECF No. 11.) Following the hearing on the Corporate Lift Stay Motion, the Court issued an order lifting the automatic stay in the Corporate Case with respect to the Parking Facility on October 9, 2013 (the “Corporate Lift Stay Order”) to allow Adar 980 Realty to continue the eviction action pending in state court. (Order Lifting Automatic Stay, Case No. 13–45283–CEC, ECF No. 15.)

The Debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code (the “Individual Case”) on October 10, 2013 (the “Individual Filing Date”). (Petition, Case No. 13–46127–CEC, ECF No. 1.) Richard McCord was appointed as Chapter 7 Trustee for the Estate of Avraham Sofer (the “Individual Trustee”) on October 10, 2013.

Also on October 10, 2013, Adar 980 Realty filed a motion for relief from the automatic stay in the Individual Case pursuant to § 362 of the Bankruptcy Code (the “Individual Lift Stay Motion”), to continue the eviction action pending in state court against the Debtor and 1040 Management. (Mot. for Relief from Stay, Case No. 13–46127–CEC, ECF No. 5.) On October 11, 2014, the Court issued an order scheduling a hearing on the Individual Lift Stay Motion for November 5, 2013. (Order Scheduling Hearing, Case No. 13–46127–CEC, ECF No. 8.)

On October 18, 2013, the Individual Trustee filed, in both the Individual Case and Corporate Case, an application seekingthe entry of an order permitting the Individual Trustee and the Corporate Trustee (collectively, the “Trustees”) to jointly operate the Parking Facility for a period of ninety days pursuant to §§ 105 and 721 of the Bankruptcy Code. (App. for Entry of an Order, Case No. 13–46127–CEC, ECF No. 13; App. for Entry of an Order, Case No. 13–45283–CEC, ECF No. 17.) The Individual Trustee requested permission to hire Adar 980 Realty, as managing agent of the Trustees, to operate the Parking Facility. (App. for Entry of an Order, Case No. 13–46127–CEC, ECF No. 13 ¶ 19.) On October 23, 2013, the Court entered an Order authorizing the Trustees to jointly operate the Parking Facility for a period of ninety days, retroactive to October 10, 2013 (the “721 Orders”). (Order Authorizing the Chapter 7 Trustees to Operate Debtor's Business, Case No. 13–46127–CEC, ECF No. 20; Order Authorizing the Chapter 7 Trustees to Operate Debtor's Business, Case No. 13–45283–CEC, ECF No. 17.) On October 23, 2013, the Debtor refused to turn over control of the Parking Facility to Adar 980 Realty, and, on October 24, 2013 the Court issued an amended order that expressly authorized Adar 980 Realty to operate the Parking Facility as an agent of the Trustees. (Complaint, Adv. Pro. No. 14–01005–CEC, ECF No. 1 ¶¶ 30–32; Amended Order, Case No. 13–46127–CEC, ECF No. 21 at p. 6.; Amended Order, Case No. 13–45283–CEC, ECF No. 19 at p. 3.)

On October 25, 2013, the Individual Trustee filed an adversary proceeding in the Individual Case, and the Corporate Trustee filed an adversary proceeding in the Corporate Case, seeking a preliminary injunction restraining the Debtor from contacting Vendors and Advertisement Customers on behalf of 1040 Management and from entering the premises of the Parking Facility. (Complaint, Adv. Pro. No. 13–01498–CEC, ECF No. 1; Complaint, Adv. Pro. No. 13–01497–CEC, ECF No. 1.) On October 25, 2013, the Court issued an order in each adversary proceeding, temporarily restraining the Debtor from entering upon or conducting business associated with the Parking Facility, and, on November 1, 2013, the Court issued an order enjoining the Debtor from entering the premises for a period of 45 days and closing the Parking Facility, effective October 31, 2013 (the “Preliminary Injunction Orders”). (Order, Adv. Pro. 13–01498–CEC, ECF No. 5; Order Granting Preliminary Injunction, Adv. Pro. 13–01498–CEC, ECF No. 10; Order, Adv. Pro. 13–01497–CEC, ECF No. 4; Order Granting Preliminary Injunction, Adv. Pro. 13–01497–CEC, ECF No. 9.)

On November 8, 2013, the Court issued an order lifting the automatic stay in the Individual Case with respect to the Parking Facility (the “Individual Lift Stay Order”) to allow Adar 980 Realty to continue eviction proceedings in state court. (Order Lifting Automatic Stay, Case No. 13–46127–CEC, ECF No. 35.) The Debtor has admitted that he operated the Parking Facility on November 10, 2014, notwithstanding the Preliminary Injunction Order in effect. (Answer, Adv. Pro. No 14–01005–CEC, ECF No. 5 ¶¶ 43–45; Decl. in Opp. to Motion for Contempt, Case No. 13–46127–CEC, ECF No. 48 ¶¶ 5, 8.) The Debtor admitted that he collected fifty dollars while operating the Parking Facility on November 10th. (Decl. in Opp. to Mot. for Contempt, Case No. 13–46127–CEC, ECF No. 48 ¶ 7.) The Debtor also admitted that, on November 12, 2013, at the Debtor's direction, the cones that blocked the entry to the Parking Facility were removed so that customers could park there. (Decl. in Opp. to Mot. for Contempt, Case No. 13–46127–CEC, ECF No. 48 ¶ 10.) Moreover, the Debtor also admitted that he returned to the Parking Facility on November 13, 2013, to attempt to remove the chains that were blocking the entrance to the Parking Facility. (Decl. in Opp. to Mot. for Contempt, Case No. 13–46127–CEC, ECF No. 48 ¶ 11.)

On November 14, 2013, Adar 980 Realty filed a motion in each case to find the Debtor in contempt for violating the Preliminary Injunction Order issued in that case (the “Contempt Motions”). (Mot. for Contempt, Case No. 13–46127–CEC, ECF No. 37.) On November 22, 2013, the Court held an evidentiary hearing on the Contempt Motions, at which the Court found that the Debtor had entered the Parking Facility on November 10, 2014, violating the Preliminary Injunction Orders. (Tr. of...