Gewirtzman v. Markowitz

646 B.R. 604

Aaron D. GEWIRTZMAN, et al., Appellants,

v.Samuel MARKOWITZ, et al., Respondents.

22-CV-02450 (PMH)

United States District Court, S.D. New York.

Signed October 13, 2022

Robert A. Spolzino, Abrams Fensterman LLP, White Plains, NY, for Appellants.

Tracy Lee Klestadt, Klestadt, Winters, Jureller, Southard & Stevens LLP, New York, NY, for Respondents Samuel Markowitz, Steven Green, Daniel Green, Yehuda Bluminfeld.

Michael Lee Levine, Law Firm of Michael Levine, P.C., Scarsdale, NY, for Respondent Yom T. Henig.

MEMORANDUM OPINION AND ORDER

PHILIP M. HALPERN, United States District Judge:

The instant appeal concerns the March 7, 2022 Order ("Order"), entered by Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), granting a motion for summary judgment dismissing the underlying adversary proceeding captioned Congregants of Mosdos Chofetz Chaim Inc. v. Mosdos Chofetz Chaim, Inc., et al. , No. 21-07030 (Bankr. S.D.N.Y. 2021). (Br. Doc. 104, "Order").¹ The adversary proceeding concerned the underlying plaintiffs’—Aaron D. Gewirtzman ("Gewirtzman"), Bent Philipson ("Philipson"), Daniel Rosenblum ("Rosenblum"), Joseph Grunwald ("Grunwald"), Mark Blisko ("Blisko"), Shimon Zaks ("Shimon"), and Rabbi Mayer Zaks ("Rabbi Mayer" and collectively, "Appellants")—assertion that they constituted and controlled Congregation Radin Development Inc. ("CRDI").

The Order granted a motion for summary judgment filed by defendants in the adversary proceeding—Yom T. Henig ("Henig"), Samuel Markowitz ("Markowitz"), Steven Green ("S. Green"), Daniel Green ("D. Green"), and Yehudah Blumenfeld ("Blumenfeld" and collectively, "Appellees"). (Id. ). The Order found that "none of the [Appellants] are officers, trustees, members, or otherwise in control of [CRDI] and ... the persons who allegedly elected them as such were not congregants or members of [CRDI] with authority to elect them as such." (Id. at 2).

Appellants appealed the Order to this Court on March 25, 2022. (Doc. 1). Following a status conference on May 3, 2022, Appellants filed their opening brief on May 27, 2022 (Doc. 12, "App. Br."), Respondents filed their opposition on June 14, 2022 (Doc. 13, "Opp. Br."), and Appellants filed their reply on June 30, 2022 (Doc. 14, "Reply").

For the reasons set forth below, the Order is AFFIRMED.

BACKGROUND

Appellants filed this case originally in New York State Supreme Court on June 8, 2021, captioned as Congregation Radin Dev. Inc., et al. v. Yom T. Henig, et al. , Index No. 33145/2021 (Rockland Cty. 2021), after multiple attempts to challenge the transfer of the property at 1-60 Kiryas-Radin Drive, Spring Valley, New York 10977 (the "Property") from Mosdos Chofetz Chaim ("Mosdos") to CRDI as set forth in the Bankruptcy Court's October 2, 2019 plan of reorganization for Mosdos (the "Plan"). Appellants now contend that they, rather than Appellees, constitute and control CRDI. Appellants’ initial claim for relief sought to declare that Appellants are the rightful trustees of CRDI while also declaring that Appellees are not the rightful trustees of CRDI. Appellees removed the action on June 11, 2021, and the matter was referred to the Bankruptcy Court on June 14, 2021. (Br. Doc. 1). Appellants thereafter sought to remand. The Bankruptcy Court denied the request on October 4, 2021 (Br. Doc. 31) and leave to appeal was denied by this Court on March 30, 2022 (CRDI v. Henig , No. 21-CV-08691 (S.D.N.Y. 2021) (Doc. 15)). Appellants thereafter filed, on November 4, 2021, an Amended Complaint with the same claims for relief except they removed CRDI as a plaintiff in the Amended Complaint. (Br. Doc. 41, "Am. Compl.").

The Amended Complaint seeks the same judgment declaring that Appellants are the legitimate trustees of CRDI and that Appellees are not. (Id. at 1-2). The basis for this assertion is that, whether by resignation or lack of proper election, Appellees were no longer proper trustees of CRDI. (Id. at 2-3). Appellants allege further that they were elected as trustees on May 25, 2021 at a special meeting of the "members" of CRDI, in accordance with New York Religious Corporations Law § 195 (" RCL § 195") and CRDI's by-laws. (Id. at 3). RCL § 195 establishes that the voters of a religious corporation, qualified to elect the trustees thereof are:

All persons who are then members in good and regular standing of such church by admission into full communion or membership therewith in accordance with the rules and regulations thereof ... or [those] who have been stated attendants of divine worship in such church and have regularly contributed to the financial support thereof.

Membership in CRDI is thus determined by CRDI's by-laws, which provide that:

Membership in this organization is open to all persons of the Jewish faith, who shall be sabbath observing and who accept upon themselves to follow in the tenets of the Jewish faith and wish to advance the principles of the Jewish faith according to the teachings and directions of the saintly and revered Rabbi Israel Mayer Kagan 1834-1933 as taught by the ecclesiasticle leadership of the Corporation who shall be a descendant of the Holy Rabbi. Members shall pay annual dues, if so fixed by the Board of Trustees.

(Br. Doc. 64-29 at 5). Appellants also allege that the annual meeting of CRDI was held on September 1, 2021, whereby the actions taken at the May 25, 2021 special meeting were affirmed. (Am. Compl. at 3).

Each of Appellants’ allegations must be considered against the backdrop of the drawn-out litigation between these parties over this Property. CRDI was incorporated as a not-for-profit religious corporation on May 23, 2019 and purchased the Property from Mosdos on October 25, 2019 pursuant to the Plan. (Id. at 2). Thereafter, congregants of Mosdos and their leader, Rabbi Mayer, initiated multiple adversary proceedings against CRDI and Rabbi Mayer's brother, Rabbi Aryeh Zaks ("Rabbi Aryeh"). After years of litigation, the Bankruptcy Court, on May 25, 2021, issued an injunctive order which prohibited Rabbi Mayer and those acting in concert with him from entering the Property or engaging in stated conduct thereon without the express approval of CRDI which was, at that time, controlled by Appellees. Congregants of Mosdos Chofetz Chaim Inc. v. Mosdos Chofetz Chaim, Inc., et al. , No. 21-07023 (Bankr. S.D.N.Y. 2021 (Doc. 24) (the "Injunction")). That Injunction has been the subject of litigation of its own spawning from Rabbi Mayer's continued refusal to comply with the Injunction, ultimately in contempt thereof, including two recently-decided appeals by this Court. See Zaks v. Congregation Radin Dev., Inc. , No. 22-CV-03807, 2022 WL 4387450 (S.D.N.Y. Sept. 22, 2022) ; Zaks v. Mosdos Chofetz Chaim, Inc. , No. 21-CV-10441, 2022 WL 4783215 (S.D.N.Y. Oct. 03, 2022).

Prior to issuance of the Injunction, the congregants of Mosdos, including Appellants, were permitted to continue worshipping on the Property pursuant to a status quo order issued by the Bankruptcy Court. Appellants were permitted to stay on the Property despite CRDI's clear ownership of the Property and CRDI's lease of the Yeshiva building on the Property to Chofetz Chaim, Inc. ("CCI"), of which Rabbi Aryeh was the head Rabbi. (See Br. Doc. 334, In re. Mosdos Chofetz Chaim Inc. , No. 12-23616). However, on May 25, 2021—the very same day that Rabbi Mayer and his followers were no longer permitted to remain on the Property under the terms of the Injunction—Appellants purported to hold a special meeting of "CRDI" and elect themselves the entity's trustees, before initiating the instant lawsuit as CRDI. (See generally, Am. Compl.).

Appellees moved for summary judgment on January 18, 2022 (Br. Doc. 64) and, after the motion was fully briefed, the Bankruptcy Court held a hearing on March 4, 2022 (Br. Doc. 103, "Tr."). At that hearing, the Bankruptcy Court heard argument from the parties on the motion for summary judgment and announced its findings of law and fact on the record. (See generally id. ). The Bankruptcy Court determined, in relevant part, that:

[t]he underlying key to [Appellants’] proposition asserted in the complaint is that these people participating in [the May 25, 2021 and September 8, 2021] meetings were members of CRDI. I have determined that there is no material factual issue in dispute as to that assertion. There is nothing to support as a factual matter their being CRDI. To the contrary, there's a substantial factual record ... that they had no connection with CRDI, and that they were instead members of the debtor, Mosdos Chofetz Chaim.

(Id. at 49:13-23). As such, because Appellants’ argument as to their alleged membership in CRDI did not raise any issue of fact and was based on the "legal proposition [that] if you worship there, you're automatically a member," the Bankruptcy Court granted summary judgment to Appellees and dismissed the adversary proceeding. (Id. at 32:17-19). The Bankruptcy Court firmed up its bench ruling on March 7, 2022 with a written Order. (Br. Doc. 104). Appellants filed this appeal on March 25, 2022, raising two arguments for this Court to consider: (i) whether the Bankruptcy Court had subject matter jurisdiction over the adversary proceeding; and (ii) whether genuine issues of material fact precluded the Bankruptcy Court from granting summary judgment and relatedly, whether the Bankruptcy Court erred in refusing to permit Appellants to take discovery to oppose the motion. (App. Br. at i-ii).

STANDARD OF REVIEW

Where—as here—the Court exercises its appellate jurisdiction over proceedings in the United States Bankruptcy Court, see 28 U.S.C. § 158(a), it:

may affirm, modify, vacate, set aside or reverse any judgment, decree, or order of a court lawfully brought before it for review, and may remand the cause and direct the entry of such appropriate judgment, decree, or order, or require such further proceedings to be had as may be just under the

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