Barry v. Perkins

1

PHILLIP G. BARRY, Appellant, v. THOMAS PERKINS and SALLY PERKINS, Appellees.

No. 20-CV-05050 (LDH)

United States District Court, E.D. New York

March 31, 2022

MEMORANDUM AND ORDER

LASHANN DEARCY HALL, UNITED STATES DISTRICT JUDGE.

Phillip G. Barry (“Appellant”), proceeding pro se appeals the bankruptcy court's order, dated October 1 2020, in adversary proceeding No. 16-01135, which granted the motion to dismiss filed by Thomas Perkins and Sally Perkins (“Appellees”).^[1]

BACKGROUND^[2]

Appellant the debtor in bankruptcy action In re Philip G. Barry, No. 08-bk-47352 (Bankr. E.D.N.Y.) (the “Bankruptcy Proceeding”), is currently incarcerated at Fort Dix Federal Correctional Institute. (Adv. Proc. Compl. (“Compl.”) at ¶ 16, R41.^[3]) Appellant has been incarcerated since November 17, 2010, when he was remanded to custody following a guilty verdict at trial. See Minute Entry for Jury Trial, USA v. Barry, No. 9-cr-833 (Nov. 17, 2010) (E.D.N.Y.), ECF No. 124. Appellees, secured creditors in the Bankruptcy Proceeding, were mortgagees to a mortgage signed by Appellant on May 19, 2006, securing the premises located at 8126 Fifth Avenue, Brooklyn, New York^[4] (the “Premises”), of which Appellant was the owner of record. (Id. at R17.) Appellant previously operated various businesses, including Barry Publications, out of a portion of the Premises. (Id.) According to the complaint, the Premises contained inventory, equipment, furniture, customer lists, and other personal property related to Appellant's businesses. (Id. at R19.)

On October 31, 2008, prior to his incarceration, Appellant filed an individual voluntary petition for bankruptcy protection under Chapter 11 of the United States Code. (Id. at R17.) On January 28, 2009, Alan Nisselson (the “Trustee”) was appointed as the Chapter 11 trustee of the debtor's estate pursuant to U.S.C. § 1104. (Id.) Upon motion of the Trustee, the Court entered an order on December 15, 2009, converting the bankruptcy to a Chapter 7 proceeding. (Id.) Nisselson was re-appointed as the Chapter 7 trustee. (Id.) On April 22, 2010, the Trustee filed a notice of proposed abandonment of the Premises. (Id. at R18; Notice of Abandonment, R162- 63.) No. objections were filed in response to that notice and, pursuant to Bankruptcy Code § 554, Bankruptcy Rule 6007(a), and Local Bankruptcy Rule 6007-1, the Trustee's abandonment of the Premises became effective on May 19, 2010. (Compl. at ¶ 18.) On November 9, 2010, the bankruptcy court so ordered Appellant's voluntary waiver of discharge. (Stip. and Order Waiving Debtor's Discharge and Dismissing Adv. Proc. with Prejudice, R160-61.)

On January 19, 2012, Appellees moved the bankruptcy court for relief from the automatic stay, which, if granted, would have permitted Appellees to commence foreclosure proceedings in connection with the Premises. (Compl. at ¶ 18 (incorrectly identifying date as January 29, 2012); Appellees' Mot. for Relief from Stay, BK^[5] ECF No. 368.) On January 20, 2012, the Trustee filed a response to that motion, stating that he had thoroughly investigated the value of the Premises, determined that it was encumbered by a mortgage and tax liens in an amount in excess of the value of the property, and found it was therefore burdensome to the estate. (Resp. of Ch. 7 Tr. to Appellees' Mot. for Relief from Stay (“Tr.'s Resp.”) at ¶ 5, BK ECF No. 371; see also Compl. at ¶ 18.) The Trustee also referred the bankruptcy court to the notice of abandonment of the Premises filed on April 22, 2010. (See Tr.'s Resp. ¶¶ 6-10.) On January 31, 2012, the bankruptcy court issued an order stating, “[t]he property listed in the [m]otion [for relief from the automatic stay] has been abandoned by the Trustee. Therefore the [m]otion is moot and no relief is necessary.” (Bankruptcy Order, R165; BK ECF No. 373; see also Compl. at ¶ 18.)

On August 9, 2012, Appellees initiated foreclosure proceedings in New York state court, seeking foreclosure of the Premises and monetary damages from Appellant for any debt that would remain unsatisfied after the foreclosure sale (the “Foreclosure Action”). (Compl. at ¶ 23.) Appellant filed an answer to the state court complaint, alleging, as affirmative defenses or counterclaims, inter alia, that Appellees (i) trespassed upon the Premises, (ii) caused or permitted the change or destruction of locks at the Premises, (iii) prevented access to the Premises by Appellant, his agents, and his employees, (iv) caused the termination of Appellant's business, (v) illegally denied Appellant access to the inventory, equipment, supplies, and records necessary for the functioning of the business, and (vi) illegally converted, disposed of, or sold personal property, including:

[b]usiness inventory, equipment, furniture, safes with contents, fixtures, computers, supplies, records, clothing, shoes, keys, collectibles, sound and video recordings, numismatic and philatelic items, cash, postage stamps, family mememtos [sic] and heirlooms, photographs and other irreplaceable items of sentimental value, as well as incoming United States [m]ail addressed to [Appellant] and his business entities.

(Compl. at ¶ 26-27.) Appellant also alleged that Appellees exercised and maintained unlawful dominion over Appellant's records and documents, including those necessary to defend against the Foreclosure Action. (Id. at R27.)

On November 8, 2013, a final decree was entered in the Bankruptcy Proceeding and it was closed accordingly. (Final Decree, R166.) On September 23, 2014, a Judgment of Foreclosure and Sale of the Premises was entered in the Foreclosure Action Thomas Perkins et al v. Philip Barry et al, Index No. 16411/2012 (N.Y. Sup. Ct.). (Compl. at ¶ 24; Decl. of Thomas Perkins Supp. Mot. Dismiss Adv. Proc. (“Perkins Decl.”), Ex. K at ¶ 199-206.) Appellees acquired the Premises through a foreclosure sale on December 10, 2015. (Compl. At ¶ 24.) Several months later, on February 18, 2016, Appellees moved for a deficiency judgment in the Foreclosure Action against Appellant in the amount of $1, 176, 871.60. (Id. at R24.) By order dated May 5, 2016, Appellees' request was granted and the deficiency judgment was entered. (Id. at R25; Perkins Decl., Ex. M, R219-21.)

Over two years after the Bankruptcy Proceeding was closed, on July 27, 2016, Appellant filed an adversary proceeding in bankruptcy court against Appellees (the “Adversary Proceeding”). (Compl. at ¶ 15.) The allegations in the Adversary Proceeding mirror Appellant's counterclaims or affirmative defenses in the Foreclosure Action in many respects. (See generally id.) In the Adversary Proceeding, Appellant alleged that sometime between June 2011 and January 2013, Appellee Thomas Perkins changed the locks to the Premises and did not provide the Trustee, Appellant, or any of Appellant's agents with a copy of the keys, thus preventing Appellant's employees from accessing the Premises. (Id. at R19.) This conduct caused the termination of Barry Publications' business operations. (Id. at R20.) During this period, Appellee Thomas Perkins also sold, destroyed, or otherwise disposed of personal property of the bankruptcy estate located in the Premises, including over forty thousand sound and video recordings, books, collectibles, numismatic and philatelic items, precious metals, semi-precious stones, business records, legal records relating to the bankruptcy and other proceedings, financial records, as well as various business equipment, electronics, fixtures, appliances, furniture, attire, kitchenware, and items of sentimental value (the “Personal Property”). (Id. at R21-22.) Thomas Perkins disposed of this Personal Property, at least in part, during the pendency of the Bankruptcy Proceeding. (See Id. at R30-31.) As relief, Appellant sought to vacate the state court judgments, monetary damages relating to the improper disposal of Personal Property, recovery of money and property of the bankruptcy estate, monetary damages under 11 U.S.C. § 362(k), and injunctive relief with respect to property of the bankruptcy estate. (See Id. at R15.)

Appellees answered the complaint on September 9, 2016. (Answer, R76-78.) Subsequently, on March 10, 2017, Appellees moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the complaint. (Mot. Dismiss Adv. Proc., R81-93.) On April 14, 2017, the bankruptcy court granted the motion in part, dismissing the claims insofar as Appellant sought to vacate the deficiency judgment and judgment of foreclosure and sale and adjourning argument on claims related to the Personal Property. (Order Granting Mot. Dismiss in Part and Adjourning in Part, R245-46.) That decision was affirmed on appeal by the district court.^[6] See Barry v. Perkins, No. 17-CV-3078, 2019 WL 1232086, at *5 (E.D.N.Y. Mar. 15, 2019). Appellant appealed. The Second Circuit dismissed his appeal and certiorari was denied. See In re Barry, No. 19-950, 2019 WL 8403144 (2d Cir. Sept. 11, 2019) (appeal dismissed), cert. denied sub nom. Barry v. Perkins, 140 S.Ct. 2680 (2020). On May 11, 2017, the bankruptcy court heard argument on the motion to dismiss the claims concerning the Personal Property (see May 11, 2017 Tr., R249-88) and, on October 1, 2020, issued a ruling granting the balance of Appellees' motion (see Oct. 1, 2020 Tr., R370-81.). Thereafter, on October 7, 2020, the bankruptcy court entered an order dismissing the Adversary Proceeding in its entirety. (See Order Granting Balance of Mot. Dismiss, R384-85.)

On October 19, 2020, Appellant appealed the decision to this Court. (See Not. of Appeal, R387.)

STANDARD OF REVIEW

District courts have “jurisdiction to hear appeals . . . from final judgments, orders, and decrees . . . of bankruptcy judges.” 28 U.S.C. § 158(a)(1). “An order...