Schneorson v. Franklyn (In re Schneorson)

645 B.R. 146

IN RE: Menachem Mendel SCHNEORSON, Debtor.

Menachem Mendel Schneorson, Plaintiff,

v.Barry S. Franklyn Esq., Barry S. Franklin & Associates P.A., and Margalit Schneorson, Defendants.

Menachem Mendel Schneorson, Plaintiff,

v.Margalit Schneorson, Barry S. Franklin Esq., and Barry S. Franklin & Associates P.A., Defendants.

Case No. 1-22-40433-jmm

Adv. Pro. No. 1-22-01031-jmm

Adv. Pro. No. 1-22-01049-jmm

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

Signed September 29, 2022

Menachem Mendel Schneorson, 1553 Union St. Apt# 2, Brooklyn, NY 11213, Pro Se Debtor-Plaintiff.

Alan R Crane, Esq., Furr & Cohen, P.A., 2255 Glades Road, Suite 419a, Boca Raton, FL 33431, Attorney for the Defendants.

MEMORANDUM DECISION ON DEFENDANTS’ MOTIONS TO DISMISS ADVERSARY PROCEEDINGS

JIL MAZER-MARINO, UNITED STATES BANKRUPTCY JUDGE

INTRODUCTION

Plaintiff Menachem Mendel Schneorson, appearing pro se , commenced two adversary proceedings against his spouse Margalit Schneorson and her matrimonial attorneys alleging Defendants violated the automatic stay by filing a motion to bifurcate claims in the Schneorsons’ divorce action. Plaintiff requests the Court to hold Defendants in civil contempt and award him actual and punitive damages and attorneys’ fees under 11 U.S.C. § 362(k). Defendants have moved to dismiss both complaints with prejudice for failure to state a claim, arguing that the motion to bifurcate did not violate the automatic stay. Alternatively, Defendants request the two adversary proceedings be consolidated. For the following reasons, Plaintiff's claims in both adversary proceedings are dismissed.

JURISDICTION

This Court has subject matter jurisdiction over this adversary proceeding under 28 U.S.C. § 1334(b), 28 U.S.C. § 157(a), and the Standing Order of Reference entered by the United States District Court for the Eastern District of New York, dated August 28, 1986, as amended by Order dated December 5, 2012. This adversary proceeding is a core proceeding under 28 U.S.C. § 157(b)(2)(A).

BACKGROUND

The Matrimonial Action And The Marital Residence

In 2017, Margalit Schneorson commenced an action captioned In re: the Marriage of Margalit Schneorson, Petitioner/Counter-Respondent/Wife, and Menachem Schneorson, Respondent/Counter-Petitioner/Husband, and Barry A. Kaye, Third Party Defendant , Case No. FMCE-17-011569 (the "Matrimonial Action") in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida (the "Family Court") seeking dissolution of her marriage to Plaintiff, domestic support, and equitable distribution of marital assets. Mot. for Relief From Automatic Stay (the "Stay Relief Motion") Ex. C, ECF No. 10-3, Case No. 22-40494; see also Stay Relief Mot. ¶ 5, ECF No. 10.¹ Margalit Schneorson asserted a third-party claim in the Matrimonial Action against Barry A. Kaye alleging that Plaintiff conveyed to Barry A. Kaye a "bogus" mortgage on the marital residence located at 1125 NE 6th Street, Hallandale Beach, Florida, which mortgage was removed by the Family Court. Stay Relief Mot. ¶¶ 12, 15; see also Stay Relief Mot. Ex. A ¶ 8, ECF No. 10-1.

Prior to the Matrimonial Action, the Hallandale property deed identified Plaintiff as the sole owner. Stay Relief Mot. Ex. A ¶¶ 4-5. By order dated November 19, 2019, the Family Court determined that title to the Hallandale property should be held jointly and directed Plaintiff to execute and deliver a quitclaim deed conveying a one-half interest in the Hallandale property to Margalit Schneorson. Id. ¶ 10. The Family Court reserved jurisdiction on Margalit Schneorson's request that attorneys’ fees and costs be taxed against Plaintiff for failing or refusing to correct the deed voluntarily. Id. ¶ 9.

By order dated July 19, 2019, the Family Court, among other things, directed Plaintiff to deposit the net proceeds from the sale of real property located at 1257 Ocean Parkway, Brooklyn, New York, into the Broward Clerk's Office Court Registry or with the trust account maintained by Margalit Schneorson's attorneys. Am. Obj., at 2, ECF No. 18, Adv. Pro. No. 22-1025; see also Am. Obj. Ex. A, at 34, ECF No. 18, Adv. Pro. No. 22-1025. Barry A. Kaye reports that Margalit Schneorson used that order (and a February 5, 2020 Family Court order) to restrain bank accounts held by him, his business, and his family members that allegedly contain proceeds from the 1257 Ocean Parkway property sale. See Kaye's Obj. to Mot. to Remand ¶ 4, ECF No. 18, Adv. Pro. No. 22-1030.

By order dated July 30, 2019 (the "Temporary Support Order"), the Family Court awarded Margalit Schneorson temporary alimony, exclusive use of the Hallandale property, and temporary partial payment of legal fees. Stay Relief Mot. Ex. C, at 7.

On November 19, 2019, the Family Court entered an order directing Plaintiff to execute, in open court, a quitclaim deed conveying all Plaintiff's right, title, and interest in and to the Hallandale property to Margalit Schneorson based on that court's findings that Plaintiff had failed to comply with its prior orders. Stay Relief Mot. Ex. D, at 8, ECF No. 10-4. The deed conveying the Hallandale property to Margalit Schneorson was recorded on December 19, 2019. Stay Relief Mot. Ex. E, ECF No. 10-5.

On January 6, 2020, the Family Court entered an order and judgment awarding Margalit Schneorson $111,199.60 in attorneys’ fees and costs. Stay Relief Mot. Ex. F, at 6-7, ECF No. 10-6.

On December 21, 2021, the Family Court entered an order that, among other things, found that Plaintiff violated its orders by failing to pay temporary alimony, attorneys’ fees, or mortgage or insurance payments or real estate taxes for the Hallandale property. Stay Relief Mot. Ex. G, ECF No. 10-7. The December 21, 2021 order granted Margalit Schneorson's motion for early equitable distribution of the Hallandale property and authorized her to sell it. Id. at 3. The order required the net sale proceeds be held in Margalit Schneorson's matrimonial attorney's trust account, albeit certain distributions could be made without further court order, subject to a final accounting. Id. at 4.

Plaintiff's Bankruptcy Cases

Less than two weeks later, on December 29, 2021, Plaintiff filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code pro se.² In re Schneorson , Case No. 21-43159 (Bankr. E.D.N.Y.) (the "First Case"). The First Case was automatically dismissed pursuant to Bankruptcy Code section 521(i) on February 14, 2022, due to Plaintiff's failure to file required schedules and statements. Notice of Automatic Dismissal, ECF No. 42, Case No. 21-43159.

On March 6, 2022 (the "Petition Date"), Barry A. Kaye, Aaron Berlin, and Mark Alnatan filed against Plaintiff an involuntary petition for relief under chapter 7 of the Bankruptcy Code. In re Schneorson , Case No. 22-40433 (Bankr. E.D.N.Y.) (the "Bankruptcy Case"). Shortly thereafter, on March 14, 2022, Plaintiff filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code pro se. In re Schneorson , Case No. 22-40494 (Bankr. E.D.N.Y.). By order dated April 13, 2022, the Court found that Plaintiff's voluntary petition constituted consent to the entry of an order for relief in the Bankruptcy Case and directed the two cases be consolidated. Order Consolidating Cases, ECF No. 18, Case No. 22-40433. On April 19, 2022, the Court entered an order for relief under chapter 7 of the Bankruptcy Code in the Bankruptcy Case. Order for Relief, ECF No. 23, Case No. 22-40433.

On April 20, 2022, the United States Trustee appointed Richard J. McCord as chapter 7 trustee (the "Chapter 7 Trustee") for Plaintiff's bankruptcy estate. Notice of Appointment of Trustee, ECF No. 24, Case No. 22-40433.

On June 30, 2022, Margalit Schneorson filed a proof of claim, identified on the Claims Register of the Bankruptcy Case as Claim Number 9-1, asserting a $750,271.43 priority claim for domestic support. See Claims Reg., Case No. 22-40433. The claim amount is based on the amounts awarded in the Temporary Support Order plus additional amounts for temporary alimony and attorneys’ fees. Id.

The Stay Relief Motion

Margalit Schneorson filed the Stay Relief Motion on March 18, 2022 and a supplement and amendment to the Stay Relief Motion on April 11, 2022. See ECF Nos. 10, 35, Case No. 22-40494; see also ECF Nos. 7, 13, Case No. 22-40433.³

The Stay Relief Motion requests an order granting relief from the automatic stay (or a determination that the stay is inapplicable) to allow (i) the Family Court to enter and enforce all orders necessary or appropriate respecting the dissolution of the marriage, and (ii) Margalit Schneorson to sell the Hallandale property. Stay Relief Mot. ¶ 2, ECF No. 10.

On April 5, 2022, Barry A. Kaye, one of the petitioning creditors and a third-party defendant in the Matrimonial Action, filed an objection to the Stay Relief Motion. Kaye's Obj. to Stay Relief Mot., ECF No. 24, Case No. 22-40494. Barry A. Kaye alleges that Margalit Schneorson's characterization of Plaintiff and Barry A. Kaye and statements respecting the Matrimonial Action are false and misleading. Id. at 1-3. Next, Barry A. Kaye raises procedural objections to the Stay Relief Motion, including that Margalit Schneorson's attorney filed the motion prior to entry of the order granting him admission pro hac vice , the Stay Relief Motion was filed without an affidavit and not properly served, and the Stay Relief Motion is defective as it requests declaratory relief, which must be sought by adversary proceeding. Id. at 4-5, 7. Lastly, Barry A. Kaye objects to the sale of the Hallandale property on the basis that the Chapter 7 Trustee has not had time to investigate the sale and a premature sale may negatively impact creditors. Id. at 6.

On April 6, 2022, Plaintiff filed an objection to the Stay Relief Motion. Pl.’s Obj. to Stay Relief Mot., ECF No. 25, Case No. 22-40494. Like Barry A. Kaye, Plaintiff claims Margalit Schneorson and her attorney acted fraudulently in the Family Court and in this...