Moxey v. Pryor (In re Moxey)

522 B.R. 428

In re: Kenneth G. Moxey, Debtor.

Kenneth Moxey, Plaintiff

v.Robert L. Pryor, et al. Defendants.

Case No.: 12-74340-AST

Adv. Pro. No.: 13-8108-AST consolidated

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

Signed November 25, 2014

November 26, 2014

Anthony F. Giuliano, J. Logan Rappaport, Pryor & Mandelup, Westbury, NY, for Defendant Robert L. Pryor.

Bruce Minkoff, Robinowitz Cohlan Dubow & Doherty LLP, White Plains, NY, for Defendant Tuthill Finance LP.

Andrew L Oliveras, Oceanside, NY, for Defendant David A. Betron.

Bruce Weiner, Rosenberg Musso & Weiner LLP, Brooklyn, NY, for Defendants MPJM Crush Holdings, LLC, Maaas Enterprises, LP, V–Jama Holdings, LLC.

Chapter 7

DECISION AND ORDER GRANTING MOTIONS TO DISMISS AND DENYING DEBTOR'S MOTIONS TO AMEND

Alan S. Trust, United States Bankruptcy Judge

As previously noted in this Court's Decision and Order Granting David A. Betron's Motion to Dismiss (the “Betron Decision”), this consolidated litigation is a very broad ranging, confusing and poorly framed lawsuit by debtor, Kenneth G. Moxey (“Debtor” or “Moxey”), regarding his loss of real property located at 245 South First Street, Brooklyn, New York, 11211 (the “Property”). In re Moxey, Case No. 12–74340, Adv. Pro. No. 13–810(AST), 2014 WL 1820607 (Bankr.E.D.N.Y. May 7, 2014). See also Order Denying Motion for Remand entered June 11, 2014 [13–8108 dkt item 109; 12–74340 dkt item 37; 13–08132 dkt item 38] Debtor has filed a number of pleadings with this Court which include scandalous and spurious allegations, for which no good faith basis appears to exist, and which include repetitive and overlapping claims for relief which are simply not available at law or in equity. Debtor has peppered the Defendants with numerous pleadings. These pleadings allege, inter alia, violations of the Fair Debt Collection Practices Act, fraud, conspiracy, civil rights violations, civil RICO claims, and various criminal violations. Debtor has also alleged the involvement of Hon. Judge Joanna Seybert, U.S.D.J., in a criminal conspiracy, and stated an intention to sue or seek criminal charges against the undersigned if any of the relief Debtor seeks is denied.

This Order addresses the following motions now pending before this Court:

Joint Motion to Dismiss Adversary Proceeding filed on December 6, 2013 and Corrected Joint Motion to Dismiss Adversary Proceeding filed on December 22, 2013, by Robert L. Pryor (the “Trustee”), MPJM Crush Holdings, LLC, Maaas Enterprises, LP, and V–Jama Holdings, LLC (collectively, “Crush” and the “Trustee–Crush Motions to Dismiss”) [adv. 13–8108, dkt items 36, 37];

Motion to Dismiss Adversary Proceeding filed on December 9, 2013 by Tuthill Finance LP. (the “Tuthill Motion to Dismiss”) [adv. 13–8108, dkt item 38]; and the various responses and oppositions to the Motions to Dismiss filed by Debtor [adv. 13–8108, dkt items 41, 56, and 146]; and

Debtor's Motion to Amend, seeking leave to file an amended complaint, along with the proposed amended complaint (the “Amended Complaint”) [adv. 13–8108, dkt items 32, 33], by which Debtor seeks to add additional defendants: Alan Drezin, Jeffrey Wain, Pliny Syndications, LLC and Mario Prestigiacomo, along with Debtor's second Motion to Authorize Plaintiff to Amend Complaint and Order the Clerk of Court to Issue Summons for Jeffrey Wain, Pliny Syndications and Mario Prestigiacomo [dkt item 60], along with a Second Proposed Amended Complaint (the “Second Proposed Amended Complaint”) [dkt item 62], as well as the more recent Motion to Leave to Amend filed on September 8, 2014, to which is attached an unnumbered Proposed Amended Complaint (the “Third Proposed Amended Complaint”) [dkt item 138] (collectively, the “Motions to Amend”).

Numerous objections to the Motions to Amend have been filed by the Trustee, Crush and other proposed additional defendants. [dkt items 36, 37, 38, 42 43, 44, 59, 67, 68, 69, 70, 72, 76 and 142].

For the reasons to follow, the Trustee–Crush Motions to Dismiss are granted, the Tuthill Motion to Dismiss is granted, and the balance of Debtor's Motions to Amend are denied.

Background

Pre-bankruptcy Events

The basic pre-bankruptcy chronology is as follows. Debtor purchased the Property sometime prior to May 25, 2007.¹ On May 25, 2007, Tuthill Finance LP² (“Tuthill”) loaned Debtor $480,000.00. Debtor signed a note for the $480,000.00 and gave Tuthill a mortgage on the Property to secure payment of the note (the “Note” and the “Mortgage”).

In 2009, after Debtor defaulted under the terms of the note and mortgage, Tuthill commenced a foreclosure action against Debtor in the Supreme Court of Kings County, New York (the “State Court”), under index number 932/2009 (the “Foreclosure Action”). Debtor failed to answer Tuthill's summons and complaint. On or about April 1, 2010, Tuthill assigned the note, the mortgage, and the foreclosure action to MPJM Crush Holdings, LLC (“Crush”). Crush then moved to substitute itself as the plaintiff in the Foreclosure Action. Crush presented proof of the assignment before the State Court as required under New York law. Accordingly, the State Court granted Crush's motion for substitution. After validly being substituted as the plaintiff, Crush then continued the Foreclosure Action against Debtor and moved for a final judgment of foreclosure.

The State Court entered a default judgment in favor of Crush. Debtor then moved to vacate this default, claiming that he was never served with the summons and complaint. The State Court scheduled a traverse hearing on the issue of service and heard testimony from Debtor and from the process server, Betron. After the hearing, the State Court issued a decision finding that service of process on Debtor was proper under New York law and denied Debtor's motion to vacate his default. Debtor did not appeal from the decision denying his motion to vacate his default or move for reconsideration.

In June 18, 2012, the State Court granted Crush a final judgment of foreclosure and sale, and determined that Debtor owed Crush $757,811.78, plus interest of $320.82 a day from October 31, 2010, plus fees and costs (the “Foreclosure Judgment”). Debtor did not appeal from the Foreclosure Judgment or move for reconsideration. After the State Court entered the Foreclosure Judgment, the foreclosure referee scheduled a sale of the Property. Debtor then sought Chapter 7 bankruptcy protection in order to stay the foreclosure sale.

The Bankruptcy Proceedings

On July 12, 2012 (the “Petition Date”), Debtor filed his voluntary petition for relief under Chapter 7 of the Bankruptcy Code (the “Petition”). [main case no. 12–74340, dkt item 1] In his Petition, Debtor scheduled a fee simple interest in the Property, but did not schedule it as his residence.³ Debtor valued the Property at $600,000. [main case no. 12–74340, dkt item 1, Sch. “A”] Debtor's Petition indicates that the Property was encumbered by two liens totaling $757,000.00: a first mortgage held by Crush for $378,500.00; and a second mortgage held by Tuthill for $378,500.00. [main case no. 12–74340, dkt item 1, Sch. “D”] While the amounts Debtor scheduled are substantially less than the amounts set out in the Foreclosure Judgment, and while he listed two mortgage holders rather than one, Debtor's schedules demonstrate that there was no equity in the Property for the benefit of his bankruptcy estate.

On August 16, 2012, Robert L. Pryor was qualified as the permanent Chapter 7 Trustee of Debtor's bankruptcy case (the “Trustee”).

On November 16, 2012, the Trustee filed a motion seeking this Court's approval of a stipulation authorizing the Trustee and Crush to enter into a sale agreement for the Property whereby Crush agreed to make an initial stalking horse offer of $600,000.00, subject to higher or better offers that might be received by the Trustee for the purchase of the Property (the “Settlement Motion”). [main case no. 12–74340, dkt item 19] This agreement provided that, inter alia, if Crush was the successful purchaser, it would pay $18,000.00 to the Trustee for the benefit of unsecured creditors of this bankruptcy estate, as part of a carve-out from the first mortgage.

Debtor was properly served with the Settlement Motion and did not file an objection.

On December 11, 2012, this Court entered a Stipulation and Order granting the Settlement Motion (the “Approval Order”). [main case no. 12–74340, dkt item 22] Debtor did not appeal the Approval Order.

The Trustee alleges that, on January 9, 2013, Crush executed an Assignment of Bid (the “Assignment of Bid”), whereby it assigned all of its rights, title, and interest in and to the Approval Order to Maaas Enterprises, LP and V–Jama Holdings, LLC (collectively, “Maaas and Jama”).⁴ Thereafter, the Trustee closed the sale to Maaas and Jama, received all of the funds to be paid under the Approval Order, and executed a deed conveying the Property to Maaas and Jama.

Debtor's Lawsuits

On May 7 and May 8 of 2013, Debtor filed a summons and complaint, respectively, against, the Trustee, Crush, Tuthill, Maaas, Jama, Betron and Alan Drezin,⁵ before the State Court, commencing an action bearing Index No. 8698/13 (the “Kings County Action”) (the Trustee, Crush, Tuthill, Maaas, Jama and Betron are hereafter referred to as “Defendants”). [adv. 13–8108, dkt item 8, Exhibit “J”]

On July 10, 2013, Debtor filed a complaint (the “Trustee Action Complaint”) with this Court commencing adversary proceeding 13–8108, entitled Kenneth Moxey v. Robert L. Pryor (the “Trustee Action”). The Trustee Action Complaint seeks “an order for the bankruptcy trustee to comply with the court's stipulation and order, and further seeking authorization from the court to sue the trustee, Robert L. Pryor.” [adv. 13–8108, dkt item 1] Although the Trustee Action Complaint is at times rambling and difficult to dissect, it essentially seeks this Court's authority for Debtor to sue the Trustee for actions taken in his capacity as a trustee,⁶ to hold the Trustee liable for his...