In Re: Abraham Klein

Filing 19

ORDER granting (9) Motion to Substitute Attorney; denying (1) Motion to Withdraw Reference Bankruptcy Court AP case number 10-44815-ESS, in case 1:11-mc-00860-DLI; finding as moot (9) Motion to Dismiss; granting (15) Motion to Substitute Attorney in case 1:11-cv-06391-DLI; granting (8) Motion to Substitute Attorney in case 1:11-cv-06393-DLI; granting (8) Motion to Substitute Attorney in case 1:11-cv-06395-DLI; granting (8) Motion to Substitute Attorney in case 1:11-cv-06392-DLI; granting (8) Motion to Substitute Attorney in case 1:11-cv-06394-DLI; ORDER re (11 in 1:11-cv-06394-DLI) Letter filed by Abraham Klein in case 1:11-mc-00860-DLI; ORDER re (11 in 1:11-cv-06394-DLI) Letter filed by Abraham Klein in case 1:11-cv-06391-DLI ; ORDER re (11 in 1:11-cv-06394-DLI) Letter filed by Abraham Klein in case 1:11-cv-06392-DLI; ORDER re (11 in 1:11-cv-06394-DLI) Letter filed by Abraham Klein in case 1:11-cv-06393-DLI; ORDER re (11 in 1:11-cv-06394-DLI) Letter filed by Abrah am Klein in case 1:11-cv-06394-DLI; ORDER re (11 in 1:11-cv-06394-DLI) Letter filed by Abraham Klein in case 1:11-cv-06395-DLI in case 1:11-cv-06394-DLI - For the reasons set forth in the ATTACHED WRITTEN MEMORANDUM AND ORDER, Trustee's mo tion to dismiss the appeals is denied as moot. Also denied is Trustee's motion to withdraw reference of the bankruptcy case to the Bankruptcy Court. Appellants' request to withdraw their appeals and the Trustee's motion to substitute counsel are granted. SO ORDERED by Judge Dora Lizette Irizarry on 8/16/2012. (Irizarry, Dora)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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In Re:
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CHRISTINE PERSAUD,
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Debtor.
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In Re:
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ABRAHAM KLEIN,
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Appellant.
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In Re:
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CARING HOME CARE
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AGENCY,
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Appellant.
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In Re:
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JOEL KLEIN,
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Appellant.
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In Re:
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MELQUISIDEC ESCOBAR,
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Appellant.
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In Re:
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PHILIP GOTTEHRER,
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Appellant.
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MEMORANDUM AND ORDER
11-mc-00860 (DLI)

11-cv-6391 (DLI)

11-cv-6392 (DLI)

11-cv-6393 (DLI)

11-cv-6394 (DLI)

11-cv-6395 (DLI)

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DORA L. IRIZARRY, United States District Judge:
On November 10, 2011, the United States Bankruptcy Court for the Eastern District of
New York (“Bankruptcy Court”) granted in part five motions brought by John S. Pereira
(“Trustee”), in his role as trustee of the bankruptcy estate of Christine Persaud (“Debtor”), to
take discovery under Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule”) 2004 from
Abraham Klein (“Klein”), Caring Home Care Agency (“Caring”), Joel Klein, Melquisidec
Escobar and Phillip Gottehrer (collectively with Klein, Caring, Joel Klein and Escobar,
“Appellants”). Appellants appealed from these orders and the Trustee moved to dismiss the
appeals. (See Notice of Appeal, Dkt. Entry 1; Aff. of Trustee in Supp. of Mot. to Dismiss
Appeals, 11-cv-6391 Dkt. Entry 9-1 (“Trustee Aff.”), at ¶¶ 11-13.) On August 14, 2012,
Appellants voluntarily withdrew their appeals. (See Appellants’ Letter, 11-cv-6391 Dkt. Entry
18.) Appellants’ request to withdraw the appeals is granted and the Trustee’s motion to dismiss
the appeals is denied as moot.
During the pendency of the appeals, the Trustee moved to withdraw reference of this
bankruptcy case from the Bankruptcy Court. (See Mot. of Trustee to Withdraw the Reference of
this Chapter 7 Case, 11-mc-00860 Dkt. Entry 1.) For the reasons set forth below, the Trustee’s
motion to withdraw reference of this bankruptcy case is denied.
The Trustee also had moved to substitute the law firm of Troutman Sanders LLP for
Pereira & Sinisi, P.C. as counsel of record for Trustee. (See Stip. and Order Substituting Att’ys,
11-cv-6391 Dkt. Entry 15.) This motion is granted.
DISCUSSION
The Trustee moved to withdraw the reference of Debtor’s bankruptcy case to the
Bankruptcy Court, so that this court can adjudicate the matter instead. (See generally Trustee’s
Mem. of Law in Supp. of Mot. to Withdraw Reference of the Debtor’s Bankruptcy Case, 11-mc2

00860 Dkt. Entry 1-4, (“Trustee’s Mem.”) at 1-2.) The Trustee argues, in essence, that Klein
consistently has been opposing the Trustee’s routine and uncontroversial motions and appealing
the resulting Bankruptcy Court orders to the district court. (Id. at 1.) According to the Trustee,
withdrawing reference of the case will promote efficiency because the district court will
ultimately have to adjudicate every issue in the bankruptcy case anyway as a result of Klein’s
repeated appeals. (Id. at 2.) Klein responds by arguing, among other things, that withdrawing
the reference to the Bankruptcy Court will not promote judicial efficiency because the
Bankruptcy Court is most familiar with the case. (See Mem. of Law in Resp. to the Trustee’s
Mot. to Withdraw the Reference of the Bankruptcy Case, 11-mc-00860 Dkt. Entry 2-1, at 6.)
While district courts have original jurisdiction over bankruptcy cases, see 28 U.S.C. §
1334(a), each district court may refer “any or all” bankruptcy proceedings “to the bankruptcy
judges for the district.” 28 U.S.C. § 157(a). The United States District Court for the Eastern
District of New York, pursuant to 28 U.S.C. § 157(a), has referred all bankruptcy cases to the
bankruptcy courts in the district. See Eastern District Administrative Order 264.
However, district courts can withdraw the referral in individual cases:
[t]he district court may withdraw, in whole or in part, any case or proceeding
referred under this section, on its own motion or on timely motion of any party,
for cause shown. The district court shall, on timely motion of a party, so
withdraw a proceeding if the court determines that resolution of the proceeding
requires consideration of both title 11 and other laws of the United States
regulating organizations or activities affecting interstate commerce.
28 U.S.C. § 157(d). The Trustee does not argue that withdrawal here is mandatory, but seeks
discretionary removal for cause. (See Trustee’s Reply Mem. in Resp. to Opp. to Trustee’s Mot.
to Withdraw, 11-mc-00860 Dkt. Entry 7 (“Trustee’s Reply”), at 1.) In determining whether
cause exists, the Second Circuit has held that a district court should weigh: “(1) whether the
claim is core or non-core, (2) what is the most efficient use of judicial resources, (3) what is the
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delay and what are the costs to the parties, (4) what will promote uniformity of bankruptcy
administration, (5) what will prevent forum shopping, and (6) other related factors.” In re
Burger Boys, Inc., 94 F. 3d 755, 762 (2d Cir. 1996).
After weighing the above factors, the court finds that the Trustee has not established
cause. As the Trustee concedes, he requests that this court entertain core bankruptcy matters
because he seeks withdrawal of the entire bankruptcy case. (Trustee’s Reply at 1.) This weighs
heavily against withdrawing the reference. See In re Iridium Operating LLC, 285 B.R. 822, 834
(S.D.N.Y. 2002) (determination that proceeding is core “is the most important factor” against
withdrawal). By asking the court to withdraw the reference for entire bankruptcy case, the
Trustee invites this court to take the drastic step of overseeing the disposition of Debtor’s entire
estate. However, adjudicating bankruptcy cases is the bankruptcy courts’ fundamental function.
In these matters they are able to bring to bear their “greater and familiarity and expertise” with
core bankruptcy matters. See In re Chateaugay Corp., 193 B.R. 669, 675 (S.D.N.Y. 1996).
Indeed, the Second Circuit has cautioned that “hearing core matters in a district court could be an
inefficient allocation of judicial resources given that the bankruptcy court generally will be more
familiar with the facts and issues.” In re Orion Pictures Corp., 4 F. 3d 1095, 1101 (2d Cir.
1993). This warning is particularly apt here, where the Bankruptcy Court has been administering
the core bankruptcy proceedings for approximately two years. Thus, it is beyond peradventure
that the Bankruptcy Court is more intimately familiar with the facts and issues of Debtor’s
bankruptcy case. It would hardly promote judicial efficiency for this court to parachute in now
and take over the entire case.
The Trustee’s assertion that withdrawal of the reference actually promotes judicial
economy because Klein has been filing frivolous appeals that will have to be decided by the

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district court eventually anyway is unconvincing. (Trustee’s Mem. 2; Trustee’s Reply, 2.) Even
assuming Klein actually is able to appeal, and does appeal, every decision the Bankruptcy Court
makes, the Bankruptcy Court has a different role than the district court does acting as an
appellate court. For example, a district court can only review factual findings by the Bankruptcy
Court for “clear error” on appeal, see, e.g., In re Bayshore Wire Prods. Corp., 209 F. 3d 100, 103
(2d Cir. 2000), but withdrawing the reference would force this court to find facts de novo.
Moreover, the Trustee has not pointed to any authority (and the court is not aware of any) for the
proposition that a party’s frivolous conduct provides grounds for withdrawal of reference to a
bankruptcy court. If a party is taking meritless appeals and filing other spurious papers, there are
more appropriate remedies, such as the imposition of sanctions, that a court can take to
discourage such conduct.
Therefore, because the Trustee seeks to withdraw the reference of core proceedings, such
a withdrawal would hinder judicial efficiency, and no factor weighs in favor of withdrawal, the
Trustee’s motion is denied.
CONCLUSION
For the reasons set forth above, Trustee’s motion to dismiss the appeals is denied as
moot. Also denied is Trustee’s motion to withdraw reference of the bankruptcy case to the
Bankruptcy Court. Appellants’ request to withdraw their appeals and the Trustee’s motion to
substitute counsel are granted.
SO ORDERED.
Dated: Brooklyn, New York
August 16, 2012
/s/
DORA L. IRIZARRY
United States District Judge
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