ANNUNZIATA et al v. ISAACSON

Filing 22

OPINION filed. Signed by Judge Michael A. Shipp on 2/28/2018. (mmh)

,
I

RECEIVED
NOT FOR PUBLICATION

FEB 2 8 2018
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

AT 8:30

M

WILLIAM T. WALSH
CLEAi<

In re RICHARD ANNUNZIATA,
Bankruptcy Action No. 15-28996 (CMG)
Debtor.

RICHARD ANNUNZIATA,
Plaintiff,

v.

Adversary Proceeding No. 15-2272 (CMG)

PUTNAM AT TI~TON FALLS, LLC et al.,
Defendants.
RICHARD ANNUNZIATA,
Appellant,
v.

NANCY ISAACSON, CHAPTER 11
TRUSTEE, UNITED STATES TRUSTEE,
et al.,

Civil Action No. 17-1864 (MAS)
ON APPEAL FROM THE
BANKRUPTCY COURT OF THE
DISTRICT OF NEW JERSEY
MEMORANDUM OPINION

Appellees.
SHIPP, District Judge
This matter 1 comes before the Court on Appellant Richard Annunziata' s ("Debtor") appeal
from: (i) the Bankruptcy Court's Amended Order approving the bankruptcy settlement, dated

1

This is a consolidated matter, originally proceeding under Civil Action Nos. 17-1864 and
17-1866. Plaintiff filed identical appeals in the main bankruptcy case In Re: Richard Annunziata,
Case No. 15-28996 ("Main Case") and the adversary proceeding Annunziata v. Putnam at Tinton
Falls, Adv. No. 15-02272 ("Adversary Proceeding"). The Court consolidated the appeals on
September 1, 2017. (ECF No. 21.)

December 28, 2016 ("Settlement Order," Bankr. ECF No. 324); 2 and (ii) the Bankruptcy Court's
denial of Debtor's Motion for Reconsideration, dated March 9, 2017 (the "Reconsideration Order,"
Bankr. ECF No. 361) (collectively, "Bankruptcy Orders"). (Notice of Appeal, ECF No. 1.) The
United States Trustee, the Chapter 11 Trustee, and Putnam at Tinton Falls, LLC ("Putnam") each
filed opposition. (ECF Nos. 16, 17, 18.) After careful consideration and for the reasons set forth
below, the Court denies Debtor's appeal and affirms the Bankruptcy Orders.

I.

Background
On February 6, 2015, Debtor filed for Chapter 13 bankruptcy in the Southern District of

New Yotk.

(Ch. 11 Trustee's Br. 20 n.5, ECF No. 17.) The proceeding was converted to a

Chapter 11 bankruptcy and transferred to the District of New Jersey. (Bankr. ECF Nos. 48, 125,
128.) Debtor then filed an adversary proceeding against Putnam under docket number 15-2272.
The adversary proceeding sought judgment relating to two underlying escrow accounts, discussed
in detail below.

A.

Escrow I

By way of background, Debtor was a part owner of Putnam. (U.S. Trustee's Br. 5, ECF
No. 16.) Putnam, through Debtor, cast a winning bid at a bankruptcy auction for ninety-eight lots
of land in Tinton Falls. The purchase price of $8,000,000 was paid by Gino and Family LLC, an
entity controlled by Gino Palazzolo. (Ch. 11 Trustee's Br. 11.) Debtor and Palazzolo thereafter
had a falling out and Debtor was removed from Putnam's tnartagetnent. (Id at 12.) Debtor then
instituted an action in the Superior Court of New Jersey, captioned Richard Annunziata v. Gino
Palazzolo, et al., docket no. C-125-10 ("Palazzolo Case"). The parties were sent to arbitration,

2

Citations to. the Bankruptcy Court record refer to the Main Case docket unless otherwise
indicated. Where identical documents were filed in both the Main Case and the Adversary
Proceeding, the Court omits duplicative citations to the Adversary Proceeding.

2

where the arbitrator found that Debtor had no interest in Putnam. (Id) The parties, however,
subsequently agreed to settle the dispute by payment from Putnam to Debtor of $900,000 in
exchange for Debtor's release of any purported ownership interest in Putnam. (Id; U.S. Trustee's
Br. 5.) After a subsequent dispute over the settlement--in which Debtor claimed his lawyer was
not authorized to enter into the settlement-the arbitrator held a hearing, deterinined that Debtor
was bound to the settlement and had no further interest in Putnam, and ordered Putnam to deposit
the settlement amount with Putnam's attorney, Edward McKenna. (Ch. 11 Trustee's Br. 12-13.)
This deposit is the subject of the first escrow account at issue ("Escrow I"). The arbitrator also
ordered $100,000 to be paid from Escrow I to Debtor's professionals and permitted "all attorneys
and other professionals" to place additional liens on the escrow prior to its release. (Id at 14.)
Debtor then appealed from the arbitrator's order. On April 27, 2012, Judge Cavanaugh,
sitting in the Superior Court of New Jersey, confirmed the arbitrator's decision. (Id at 13.) Judge
Cavanaugh also ordered that Mr. McKenna release additional specified disbursements from
Escrow I to Debtor's attorneys. (Id. at 14-15.) Debtor then filed a certification to the New Jersey
Supreme Court, which was denied. (Id at 13.)
A few months later in a companion case between Putnam and Debtor, captioned Putnam
at Tinton Falls, LLC v. Richard Annunziata, docket number MON-L-1900-12 ("Putnam Case"),

discussed in more detail below, Judge Quinn, sitting in the Superior Court of New Jersey, ordered
Mr. McKennato deposit the remaining escrow funds with the Superior Court. (Id at 15.) Despite
the court's order, Escrow I was never actually deposited with the Superior Court and instead
remained with Mr. McKenna. (Id.; Debtor's Appeal Br. 12, ECF No. 12.) McKenna then
apparently mistakenly disbursed the funds from Escrow I, but this was later corrected and the
Chapter 11 Trustee asserts that all of the funds are accounted for, as the $625,900 turned over to

3

the Chapter 11 Trustee "squares with the monies remaining in [Escrow I]." (Ch. 11 Trustee's Br.
16.)

B.

Escrow II

Also relevant to this appeal is money in a second escrow ("Escrow II"). This escrow is the
result of an agreement between the parties in a separate litigation, Robert Ross v. Richard

Annunziata, Putnam at Tinton Falls, pending in the Superior Court of New Jersey, Monmouth
County, under docket number L-1359-09 ("Ross Litigation"). (Id.at 17.) In the Ross Litigation,
plaintiff Ross claimed that he had an ownership interest in Putnam pursuant to an agreement
plaintiff made with Debtor. (Id.) The underlying claims involved a /is pendens claim against the
property at issue. (Id.) Around May 2011, the Superior Court of New Jersey granted summary
judgment in favor of defendants. (Respondent's Appendix ("Ra") 225, ECF No. 17-1.) Plaintiff
appealed. In an effort to allow property sales to close while the plaintiff appealed the Superior
Court's decision, the parties agreed that a portion from the closing proceeds of each sale would be
deposited into Escrow II, which would be held by one of Debtor's former attorneys, Mr. Kalebic,
and that any judgment in favor of Ross would be satisfied through the escrow account. (Ch. 11
Trustee's Br 17-18.) The parties stipulated that the funds would "not be disbursed until a final
decision is rendered by the Appellate Court or any remand after the Appeal." (Ra226.) The parties
did not file the stipulation with the court. (Ra225.)
On February 29, 2012, the Appellate Division affirmed the Superior Court's ruling.
(Ra226.) Before any funds were disbursed, Debtor wrote to Mr. Kalebic and objected to the release
of funds. (Id.) Putnam filed a motion to enforce litigant's rights, Debtor opposed, and Mr. Kalebic
filed a

cross-~otion

to deposit the funds with the court. (Id.) The Court denied both motions,

finding that "a final judgment has already been entered .... There are no litigant's rights to enforce.

4

This Court did not order or know anything about an escrow.... This determination is an entirely
new question of law ... [and] this Court will not adjudicate this issue as a motion under this docket
number." (Ra227-28.) Mr. Kalebic then filed a separate action in which Judge Kilgallen granted
leave to deposit Escrow II, in the amount of $1,013,350.17, with the court. (Ra234-35.) The order
stated that the money would remain deposited with the Court until issuance of a final unappealable
order in two pending matters: the Palazzolo Case and the Putnam Case. (Ch. 11 Trustee's Br.
18-19; Ra234-35.)
The Palazzolo Case was later resolved with an unappealable order after Judge Cavanaugh's
confirmation of the arbitrator's order and the New Jersey Supreme Court's refusal to hear the case,
as previously discussed. The Putnam Case is a lawsuit by Putnam against Debtor alleging that
Debtor misrepresented that he owned Putnam in order to obtain a loan, and used Putnam's property
as collateral; after the arbitrator already determined that Debtor had no interest in Putnam. On
January 23, 2013, a judgment was entered against Debtor for $1.5 million dollars in the Putnam
Case. (Ch. 11 Trustee's Br. 19.) On December 16, 2014, Debtor's counterclaims and defenses
were stricken in the Putnam Case, resolving the action. On January 21, 2015, however, Debtor
appealed the d~cisions in the Putnam Case. A few weeks later, on February 6, 2015, Debtor filed
his Chapter 11 bankruptcy, which stayed the appeal. (Id at 20.) The Bankruptcy Court later
granted relief from the stay to allow Debtor to pursue the appeal. (Dec. 13, 2016 Tr. 52:24-53:8,
Bankr. No. 15-2272, ECF No. 223 ("Dec. 13, 2016 Tr.").)
C.

Bankruptcy Proceedings

In the adversary proceeding, Debtor sought an adjudication that Escrow I was property of
the bankruptcy estate and to enjoin disbursement of the funds in Escrow II. (U.S. Trustee's Br. 7.)
On March 31, 2016, Putnam moved to replace Debtor as a debtor in possession with a Chapter 11

5

trustee. (Id. at7-8.) Putnam's request was granted and the Acting United States Trustee appointed
Nancy Isaacson as the Chapter 11 Trustee. (Id. at 8.)
On August 1, 2015, the Chapter 11 Trustee filed a motion to approve compromise between
Trustee and Putnam with respect to the two escrows. (Ch. 11 Trustee's Br. 9.) The same motion
was filed in both the main case and the adversary case. (Dec. 13, 2017 Tr. 47:8-11.) Under the
terms of the settlement, all funds remaining in Escrow I and $25,000 of the funds in Escrow II
~ould

become property of the bankruptcy estate. (U.S. Trustee's Br. 8.)
On August 23, 2016, Debtor filed a pro se certification objecting to the settlement.

(Ra12-13.) Debtor claimed a full accounting was needed on money in Escrow I and that, as to
Escrow II, Debtor's "crossclaims are on appeal" and "if [he] win[s] the appeal the million dollars
would come to [him]." (Ra13.) On December 8, 2016, Debtor, through his counsel, filed another
objection to the settlement motion. (Ra30.) In the three-page submission, unsupported by any
record citation.s or reasoned legal analysis, Debtor accused the Chapter 11 Trustee of committing
"rank bankruptcy fraud," "lying to the Court to deceive creditors," and asked the Bankruptcy Court
to "deny the settlement as falling below the lowest range of reasonableness" and "being rife with
fraud." (Ra3 2.)
On December 13, 2016, the Bankruptcy Court held a hearing on the Chapter 11 Trustee's

motion to approve a settlement with Putnam. (Bankr. ECF No. 315.) Debtor argued that the
settlement should not be approved because the Debtor, not Putnam, was entitled to the money in
Escrow II.

(Dec. 13, 2016 Tr. 31:12-32:18.)

The Chapter 11 Trustee clarified the issues

surrounding the escrows and argued that the settlement was reasonable because Debtor had no
interest in the money from Escrow IL (Id. at 32:6-37:1.) After considering arguments for and
against the settlement, Judge Gravelle approved the settlement, finding that "[s]ettlement would

6

essentially resolve lengthy and contentious litigation between Putnam and [D]ebtor." (Id at
47:14-15.) Judge Gravelle's oral decision on the record recited the relevant facts and procedural
history. (Id at 47:23-56:21.) In discussing Escrow II, Judge Gravelle found that the final
unappealable order in the Palazzolo Case that determined Debtor has no interest in Putnam
undermines

D~btor's

arguments that he has an interest in Escrow II. (Id at 59:19-60:8.) Further,

even if Debtor is successful on appeal in the Putnam Case, that does not mean he has an interest
in Escrow II.

Even if the Superior Court decision is vacated on appeal, Debtor would not

automatically prevail-the case would require further litigation through trial or dispositive
motions. (Id at 59: 11-18.) In exploring the possibilities related to the Putnam Case and the
Trustee's decision not to oppose Debtor's request to pursue the Putnam Case appeal, Judge
Gravelle found the Trustee's position "eminently reasonable." (Id at 60:9-61 :9.)
As to the legal basis for approving the settlement, in a well-reasoned legal analysis, Judge
Gravelle set forth the factors established by the Third Circuit in Myers v. Martin (In Re Martin),
91 F.3d 389, 393 (3d Cir. 1996) and applied the facts of this case. Judge Gravelle noted that the
most significant Martin factor is the paramount interest of the creditors (Dec. 13. 2016 Tr.
61: 16-18) and found that the proposed settlement "unquestionably benefits creditors" (id. at 62:6).
Judge Gravelle found that the settlement would provide a return to the creditors and continue to

protect them, as Debtor's potential counterclaim against Putnam in the Putnam Case remains an
asset of the estate. (Id. at 62: 12-15.) Judge Gravelle also found that "since the debtor has no
ownership interest and no claim to the $1 million escrow ... the payment of$25,000 to release no
claim is a pretty good settlement." (Id. at 62:17-19.) For all of these reasons, Judge Gravelle
approved the compromise between Putnam and the Trustee. (Id. at 62:20-21.) The Court entered

7

an order, which it amended on December 28, 2016, and entered the amended order in both the
Main Case and the Adversary Proceeding. (Bankr. ECF No. 324.)
On January 18, 2017, Debtor filed a motion for reconsideration, which was amended on
February 7, 2017. (Bankr. ECF Nos. 330, 340, 341.) Debtor's submission argues that the Trustee
''made no showing with respect to Escrow II," "the [Superior Court] settlement orders are not clear
with respect to Escrow I," "the settlement for Escrow II should not be granted because of the
egregious misappropriation and mishandling of Escrow I," and that the Bankruptcy Court "ignored
the precendent [sic] standard set for determination [of] whether to approve a settlement." (See
Amended Motion for Reconsideration, Banlcr. ECF No. 340.) On March 7, 2017, the Bankruptcy
Court held a

~earing

on Debtor's motion. After hearing the parties' arguments, Judge Gravelle

denied the motion for reconsideration and set forth the reasoning on the record. (Mar. 7, 2017 Tr.
25:16-26:6, ECF No. 369.) The Bankruptcy Court analyzed Debtor's arguments in light of the
standard for reconsideration and found that Debtor failed to set forth a valid legal basis for the
motion to be granted. Judge Gravelle found that none of the information provided by Debtor
constituted new evidence, Debtor failed to cite any change in controlling law or clear error of law,
and the

motio~

was "an attempt to reargue the underlying motion, after failing to file competent

opposition originally." (Id. at 26: 18-24.)

Nevertheless, Judge Gravelle analyzed the additional information Debtor provided in
support of the motion and found that the settlement should still be approved. (Id. at 26:25-27:6.)
Judge Gravelle specifically addressed Debtor's argument that certain funds were inappropriately
missing from Escrow I.

Judge Gravelle found that the "theory borders on frivolous," was

"troubling," and "was eviscerated by the Trustee's reply ... outlining the authority for all the
remaining payments." (Id. at 43: 19-25.) In a thorough decision, Judge Gravelle again recited the

8

factual and procedural history (id. at 27:7-32:16), reviewed the applicable legal standard (id. at
32: 14-34:5), analyzed Debtor's submissions (id. at 34:6-37:3), and set forth the reasons supporting
the Bankruptcy Court's approval of the settlement (id. at 37:4-47:5).
Debtor. now appeals from both the order approving settlement and the order denying the
motion for reconsideration. In support of his motion, Debtor sets forth essentially the same
arguments presented to the Bankruptcy Court initially and on reconsideration. Debtor's Statement
oflssues for this appeal includes four questions. (ECF No. 3.) Debtor's brief, however, raises six
issues for review, none of which exactly match the iss·ues previously raised. 3 The crux of Debtor's

3

Debtor's "Statement of Issues to Be Presented on Appeal" contains the following issues:
1. Did the Bankruptcy Court err when it granted the motion of the Chapter 11 Trustee pursuant
to Fed. R. Bankr. Pro. 9019 approving the settlement of the issues between the parties herein
when the Trustee accepted $25,000, at the lowest range of reasonableness, in exchange for the
payment of over $1 million to Putnam at Tinton Falls, LLC ("Putnam").
2. Did the Bankruptcy Court err when it granted the motion approving the settlement between the
Trustee and Putnam when the parties provided no basis, evidence or merits of such settlement,
the parties provided no legal analysis in support thereof, and indeed; no factual or legal basis
for such settlement has been provided.
3. Did the Bankruptcy Court err when it approved a settlement of a motion for reconsideration
filed by Putnam with respect to a motion for summary judgment as part and parcel of the
purported settlement between the Trustee and Putnam when the motion for summary judgment
was frivolous on its face.
4. Did the Bankruptcy Court err when it approved the settlement between the Trustee and Putnam
when the Court failed to consider that the amounts certified by the Trustee in the account
holding such funds by Putnam were in error.
r

(ECF No. 3 (verbatim).)
Debtor's brief includes the following "Statement oflssues Presented for Review":
1. Whether the Bankruptcy Judge abused her discretion, when she granted the settlement between
Putnam at Tinton Falls and the Trustee; even though there were substantial questions of fact
presented to why no settlement should be approved?
2. Whether in fact The Debtor is correct in the fact that there is money still due to the state for
Escrow I?
3. Whether it was correct to approve the settlement, despite Debtor proving with evidence that
there were double payments, and monies owed to Escrow I?

9

argument is that "Escrow I was improperly accounted for, and Escrow II should not have been
given away." (Debtor's Appeal Br. 7.)

II.

Jurisdiction and Standard of Review
The parties dispute the appropriate standard of review. In a confusing claim, Debtot argues

that the Court should apply a de novo review to "a district court's ruling on a motion to dismiss
for failure to state a claim." (Debtor's Appeal Br. 8-9.) The U.S. Trustee and the Chapter 11
Trustee argue that this is incorrect and the appropriate standard of review of an order approving
settlement is abuse of discretion. (Ch. 11 Trustee's Br. 4 ("This statement is both puzzling and
wrong. This appeal involves the review of a bankruptcy Court order approving settlement ....
The District Court reviews such approvals for abuse of discretion."); U.S. Trustee's Br. 3.)

A district court has appellate jurisdiction over a bankruptcy court's final judgments, orders,
and decrees. See 28 U.S.C. § 158(a) (2010).

The standard of review for bankruptcy court

decisions "is determined by the nature of the issues presented on appeal." Baron & Budd, P. C. v.

Unsecured Asbestos Claimants Comm., 321 B.R. 147, 157 (D.N.J. 2005). Findings of fact are
reviewed under a clearly erroneous standard, where factual findings may only be overturned "when
'the reviewing court on the entire evidence is left with the definite and firm conviction that a

mistake has been committed."' In re Celine! Data Sys., Inc., 327 F.3d 242, 244 (3d Cir.
2003) (quoting United States v. US. Gypsum Co., 333 U.S. 364, 395 (1948)). Legal conclusions,

4. Whether in fact Putnam is entitled to Escrow II, even though they and the trustee have not
presented substantial evidence to prove ownership, despite numerous previous rulings that
denied them ownership?
5. Whether the Bankruptcy Judge was allowed to granter Escrow II, even though Judge Kilgallen
ruled that once there is a final unappealable decision then either party can make an application
to the court for the proceeds?
6. Whether the bankruptcy Judge abused her discretion, when she granted the proceeds of Escrow
II without a full hearing to determine whether in fact Putnam is the true owner?
(Debtor's Appeal Br. 4 (verbatim).)
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on the other hand, are subject to de novo, or plenary, review by the district court. See Donaldson
v. Bernstein, 104 F.3d 547, 551 (3d Cir. 1997). Ifit is alleged that the bankruptcy court abused its

discretionary authority, the district court may only inquire whether the bankruptcy court's decision
"rests upon a clearly erroneous finding of fact, an errant conclusion of law, or an improper
application oqaw to fact." Int 'l Union, UAW v. Mack Trucks, Inc., 820 F.2d 91, 95 (3d Cir. 1987).
Here, Debtor appeals from the District Court's approval of the settlement, which is
reviewed for abuse of discretion. See In Re Martin, 91 F. 3d at 393. A motion for reconsideration
is also reviewed for abuse of discretion. See Ahmed Amr v. Greenberg Traurig LLP (In re SyntaxBrillian Corp.), No. 13-337, 2016 WL 7177615, at *28-29 (D. Del. Dec. 9, 2016)(citing Lazaridis
v. Wehmer, 591F.3d666, 669 (3d Cir. 2010)). The Court, therefore, reviews the Bankruptcy Court

Orders for an abuse of discretion.

III.

Discussion

As an initial matter, Debtor's submissions to the Court are procedurally deficient and
violate several rules governing appellate practice. Debtor's brief does not contain proper citations
to the record cµid makes arguments about documents outside of the record entirely. In addition,
Debtor failed to include the transcripts of the Bankruptcy Court's decisions he is appealing, and
argues issues that were not raised in the initial statement of issues presented for appeal. Debtor

also failed to comply with the rules governing the table of contents, table of authorities, appendix,
statement of case, and certificate of compliance. See e.g., Fed. R. Bankr. P. 8014(a)(2)-(3), (6),
(8), (10), 8015 (a)(7)(C), 8015(b). Debtor's violations of the rules alone constitute a basis to deny
the appeal. See Kus her v. Winterthur Swiss Ins. Co., 620 F .2d 404, 406-407 (3d Cir. 1980). The
Court, however, will nevertheless address the merits of the appeal and finds that the appeal should
be denied.

11

The issues on appeal are whether the Bankruptcy Court abused its discretion in:
(1) approving the settlement between Putnam and the Chapter 11 Trustee; or (2) denying the
motion for rec.onsideration. Settlement compromises are generally favored in bankruptcy. In re
Wash. Mut., Inc., 442 B.R. 314, 327-28 (Del. Banla. 2011).

The approval or rejection of a

settlement is committed to the sound discretion of the bankruptcy court. Id. (citing Key3Media
Grp., Inc. v. Pulver.com Inc. (Jn re Key3Media Grp. Inc.), 336 B.R. 87, 92 (Banla. D. Del. 2005)).

In evaluating a proposed settlement, the Bankruptcy Court must consider whether the settlement
is "fair, reasonable, and in the best interest of the estate." In re Wash. Mut., Inc., 442 B.R. at 328
(citing In re Louise's Inc., 211 B.R. 798, 801 (D. Del. 1997). A settlement does not need to be the
"best possible compromise" available, it only needs to be above "the lowest point in the range
ofreasonableness." In re Wash. Mut., Inc., 442 B.R. at 328 (citing In re Coram Healthcare Corp.,
315 B.R. 321, 330 (Bankr. D. Del. 2004). "An abuse of discretion exists where the district court's
decision rests upon a clearly erroneous finding of fact, an errant conclusion of law, or an improper
application of law to fact." NMSBPCSLDHB, L.P. v. Integrated Telecom Express, Inc. (Jn re
Integrated Telecom Express, Inc.), 384 F.3d 108, 118 (3d Cir. 2004) (quoting In re SGL Carbon
Corp., 200 F.3d 154, 159 (3d Cir. 1999)).
Debtor.' s argument on appeal does not explain how the Bankruptcy Court abused its

discretion. Instead, Debtor recites the same arguments about the reasons he believes the settlement
should not have been approved in the first instance. Essentially, Debtor argues that he believes
there may be money missing from Escrow I even though the "accounting [] on the surface level
looks like it accounts for all [of] the money" (Debtor's Appeal Br. 12), Escrow II should not be
"given away" (id. at 19-24), and the Bankruptcy Court cannot issue an order relating to Escrow II
because it would violate the Rooker-Feldman doctrine (id. at 15-19).

12

The Court is not persuaded that the Bankruptcy Court abused its discretion. To the contrary,
the Bankruptcy Court acted reasonably, carefully analyzed the issues, and reached an appropriate
decision, which certainly falls above the lowest point in the range of reasonableness. Further, this
Court agrees with the Bankruptcy Court that the Rooker-Feldman doctrine is not applicable. The
doctrine is only implicated to bar federal jurisdiction when: ( 1) the federal plaintiff lost in state
court; (2) the plaintiff complains of injuries caused by the state court judgment; (3) the state court
judgment was rendered before the federal suit was filed; and (4) the plaintiff is inviting the court
to review and reject the state court judgment. B.S. v. Somerset Cty., 704 F.3d 250, 259-60 (3d Cir.
2013). Judge Kilgallen's order permitting the holder of the escrow to deposit the money with the
court does not prevent the Bankruptcy Court from approving a settlement between the Trustee and
Putnam that involves these funds. The Bankruptcy Court's Orders do not reject any state court
order. In fact, none of the Judge Kilgallen's orders actually determine ownership of Escrow II.
The fact that the order allows parties to apply for release of the funds after final resolution of the
litigations does not prevent the Bankruptcy Court from approving a settlement related to these
funds-especially where the issue of Debtor's purported interest in Putnam is completely resolved.
The conclusion of the Palazzolo Case resulted in a finding that Debtor does not have any ownership
interest in Putnam. By extension, therefore, Debtor does not have an ownership interest in Escrow

II. The Putnam Case appeal will not re-litigate this ownership issue. Even if Debtor is successful
on appeal and ultimately his crossclaims, it will not result in an ownership interest in Putnam or
Escrow II, just a judgment against Putnam. 4

4

The Court also notes that Debtor's claim that the Bankruptcy Court cannot issue an order
pertaining to Escrow II is disingenuous given Debtor's conduct in the bankruptcy. In fact, Debtor
instituted the adversary proceeding for the purpose of asking the Bankruptcy Court to enjoin
distributions from Escrow IL Now that Debtor disagrees with the Bankruptcy Court's decision,
he argues that the Bankruptcy Court's order violates the Rooker-Feldman doctrine because it
13

The Court, therefore, finds that the Bankruptcy Court did not abuse its discretion in
approving the settlement or denying the motion for reconsideration.

IV.

Conclusion
For the reasons set forth above, Debtor's appeal is denied, and the Bankruptcy Orders are

affirmed. An order consistent with this Memorandum Opinion will be entered.

s/Michael A. Shipp
MICHAEL A. SHIPP
UNITED ST ATES DISTRICT JUDGE

Dated: February 28, 2018

contradicts the state court order regarding Escrow IL Debtor apparently believes the
Rooker-Feldman doctrine only applies to bar orders affecting Escrow II with which he does not
agree.

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