FORMAN v. YOUNGMAN
Filing
19
OPINION. Signed by Judge Anne E. Thompson on 6/17/2014. (gxh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Aaron D. FORMAN,
Appellant,
Civ. No. 13-5877
v.
OPINION
Catherine E. YOUNGMAN and AMBOY
BANK,
Appellees.
THOMPSON, U.S.D.J.
I. INTRODUCTION
This matter is before the Court upon the appeal of Aaron D. Forman (“Appellant”) of an
order entered by the United States Bankruptcy Court for the District Of New Jersey on June 12,
2013 captioned “Order Denying Aaron Forman’s Motion to Remove Catherine Youngman as
Chapter 7 Trustee.” (Docket No. 1).1 Catherine E. Youngman (“Appellee”) opposes this appeal.
(Docket No. 14). The Court has decided this matter upon the parties’ written submission without
oral argument. For the reasons set forth below, Appellant’s appeal will be dismissed for lack of
jurisdiction.
II. BACKGROUND
On November 29, 2007 (the “Petition Date”), Hovie Forman (“the Debtor”) filed a
voluntary petition for relief under chapter 13 of the United States Bankruptcy Code.
This is Aaron Forman’s fourth appeal to this Court in this matter. (Docket No. 14,
Appellee’s Br. at 2).
1
(Bankruptcy Docket No. 1). On the Petition Date, the Debtor had an interest of fifty-percent or
more in 116 Bloomfield Street, Hoboken, New Jersey (“the Property”). The remaining interest
was owned by an entity known as J Maar Development, LLC (“J Maar”). Until June of 2011, J
Maar’s managing member was Joshua Maarleveld. Maarveld was replaced by Appellant as J
Maar’s managing member on June 9, 2011. (Bankruptcy Docket No. 385). Appellant does not
have a proprietary interest in the Property and he is not a creditor of the Debtor’s estate. (Docket
No. 14, Appellee’s Br. at 4).
On October 22, 2008, the bankruptcy court entered an order converting the Debtor’s case
to a chapter 7 case, (Bankruptcy Docket No. 30), and thereafter Appellee was appointed as the
chapter 7 trustee for the Debtor’s estate, (Bankruptcy Docket No. 32). Appellee retained a real
estate broker to market the Property for sale. (Bankruptcy Docket No. 60).
On January 24, 2008, the Debtor commenced an Adversary Proceeding against Appellant
and a number of other defendants seeking complete title to the Property. (Adversary Docket No.
1). Upon her appointment as Trustee, Appellee assumed the Debtor’s role as plaintiff in the
Adversary Proceeding and filed an amended complaint on March 2, 2009. (Adversary Docket
No. 25).
Appellant filed a motion to remove Appellee as trustee in the Main Case on September
15, 2011. (Bankruptcy Docket No. 436). The bankruptcy court dismissed Appellant’s motion.
(Bankruptcy Docket No. 480). During the hearing on Appellant’s motion, the court noted
Appellant’s excessive filings in this matter and placed restraints on Appellant to prevent the relitigation of previously decided issues. (Id.).
On April 8, 2013, Appellant filed another motion to remove Appellee as trustee. The
“Motion to Remove Catherine Youngman as Chapter 7 Trustee” in the Adversary Proceeding
sought the following relief:
(1) The removal of Catherine Youngman as Chapter 7 Trustee; (2) For a hearing
on the appropriateness, legality and truthfulness of the actions of Catherine
Youngman in connection with the § 363 sale of the property located at 116
Bloomfield St.; (3) an order voiding the § 363 sale of the 116 Bloomfield
property; (4) A grant of discovery pursuant to D.N.J. 7026-1-31.1 and inspection
of all of the estate’s documents and correspondence, including emails of
Catherine Youngman; (5) an order directing the Trustee to produce all materials it
relied on in its investigation of both Adversary Complaint and Sale Motions under
Discovery D.N.J. 7026-1-31; (6) a thorough review of the Trustee’s
communications between David Penque, First Jersey Title, LT Title Company,
ECH Development Group LLC, Joseph Scanlon, Esq., 1st Constitution Bank,
New Jersey Title/Heritage Abstract, Steven Wallace, New Jersey Title, Weichert
Realtors/Aurelio Romero, Thomas, Halm, Esq./Amboy Bank include all
correspondence, print form or email pursuant to Discovery D.N.J. 7026-1-31.1;
(8) a claw back of 116 Bloomfield Street; and (9) referring this matter to the
United States Attorney General’s Office.
(Adversary Docket No. 52).
The bankruptcy court held a hearing on Appellant’s motion on May 30, 2013, which
resulted in the order denying Appellant’s motion which is the subject of this appeal. (Adversary
Docket No. 163). At the hearing, Judge Gambardella of the bankruptcy court observed the
following about Appellant’s motion:
Here having reviewed all of the pleadings before the Court, having reviewed the
arguments of the parties, the Court finds here that there has been no showing of
intentional misconduct or negligence during the time that the Trustee has been
administering the Debtor estate. Further, the Court finds that the Trustee has not
breached any of her fiduciary duties, nor committed any fraud on the Court. In
large part, Mr. Forman’s motion, with some exception, appear to include
repetitions of prior allegations, many of which have already been addressed by the
Court in connection with motions previously denied. Without showing of any
intentional misconduct – or other fraud, or other breach of fiduciary duty, the
Court finds no cause to remove the Trustee. Nor has the movant state any
grounds for a hearing on the appropriateness, legality and truthfulness of the
actions of Catherine Youngman in connection with the Section 363 sale of the
property located in Hoboken, New Jersey. Nor has there been any grounds set
forth for an order avoiding the sale of the property. Nor has there been any
grounds for the grant of discovery requested by Mr. Forman in the context of this
motion. Nor is there any grounds to direct the Trustee to produce materials as set
forth in this motion. Nor is there grounds to direct the Trustee to provide
communications between various third parties . . . pursuant to the discovery rules,
or any other further relief, nor are there grounds for a clawback of 116 Bloomfield
Street, Hoboken, New Jersey. Nor are there grounds for this Court to refer this
matter to the United States Attorney’s office.
(Transcript of May 30, 2013 hearing at 52:9-53:16).
III. ANALYSIS
Appellate standing in bankruptcy matters is more restrictive than Article III standing. See
In re Combustion Eng’g, Inc., 391 F.3d 190, 215 (3d Cir. 2004). With respect to bankruptcy
appeals, courts have adopted the “person aggrieved” doctrine in which “marginal parties
involved in bankruptcy proceedings, who, even though they may be exposed to some potential
harm incident to the bankruptcy court’s order[,] are not ‘directly affected’ by that order,” lack
standing to appeal. Travelers Ins. Co. v. H.K. Porter Co., 45 F.3d 737, 741-42 (3d Cir. 1995).
The Third Circuit has explained that the “person aggrieved” doctrine
exists to fill the need for an explicit limitation on standing to appeal in bankruptcy
proceedings. This need springs from the nature of bankruptcy litigation which
almost always involves the interests of persons who are not formally parties to the
litigation. In the course of administration of the bankruptcy estate disputes arise
in which numerous persons are to some degree interested. Efficient judicial
administration requires that appellate review be limited to those persons whose
interests are directly affected.
Id. at 741 (quoting In re Fondiller, 707 F.2d 441, 443 (9th Cir. 1983)). Under the
doctrine, appeals are limited to persons whose interests are “directly and adversely
affected pecuniarily” by an order of the bankruptcy court, and must show that the order
“diminishes their property, increases their burden, or impairs their rights.” In re
Combustion Eng’g, Inc., at 214 (quoting In re Dykes, 10 F.3d 184, 187 (3d Cir. 1993)).
Here, Appellant cannot meet the “person aggrieved” standard which would allow him to
appeal the bankruptcy court’s order. The only interest that Appellant has in the Debtor’s
bankruptcy proceedings is that of a defendant in the Adversary Proceeding. Courts have held
that a defendant in an adversary proceeding that is without a proof of claim does not have
standing to participate in a bankruptcy to file motions to convert or motions to dismiss. See In re
FBN Food Servs., 1995 WL 230958 (N.D. Ill. 1995) (holding that a defendant in an adversary
proceeding does not have standing to object to a creditor’s claim in the main case); In re
MarketXT Holdings Corp., 336 B.R. 67 (Bankr. S.D.N.Y. 2006) (“An entity's status as a
defendant in an adversary proceeding does not make it a ‘party in interest’ entitled to intervene in
other adversary proceedings . . . .”); In re E.S. Bankest, L.C., 321 B.R. 590 (Bankr. S.D. Fla.
2005) (holding that defendant in an adversary proceeding does not have standing to prosecute a
motion to convert.). See also In re O’Brien Environmental Energy, Inc., 181 F.3d 527, 531 (3d
Cir. 1991) (finding that even prospective purchasers of property lack standing to object to a sale).
Similarly, Appellant, as a defendant in the adversary proceeding without status as a creditor or
any pecuniary interest in the bankruptcy proceeding, lacks standing to seek relief pertaining to
the administration of the estate.
Furthermore, Appellant’s motion does not pertain to claims in the Adversary Proceeding.
The Amended Complaint in the Adversary Proceeding seeks to determine the estate’s interest in
the Property. Any question of the Appellee’s efficacy in carrying out her duties as trustee is the
appropriate subject matter of the Debtor’s Main Case and not the Adversary Proceeding. Thus,
Appellant cannot seek the removal of the Trustee in the Adversary Proceeding and Appellant’s
appeal will be dismissed for lack of standing.
The Court additionally notes that if it had standing to consider the appeal, it would
dismiss the appeal as frivolous. Neitzke v. Williams, 490 U.S. 319, 325 (1989) (finding an action
is frivolous if it “lacks an arguable basis either in law or in fact”).
IV. CONCLUSION
For the reasons set forth above, Appellant’s appeal will be dismissed for lack of standing.
_/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
Date: 6/17/14
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?