Miller et al v. Office of U.S. Trustee, EDNY

Filing 17

MEMORANDUM AND ORDER granting 11 Motion to Consolidate Cases; denying as moot 12 Motion to Compel. For the reasons set forth herein, the Bankruptcy Court's April 13, 2010 and June 15, 2010 Orders are AFFIRMED IN THEIR ENTIRETY. Mr. Miller must disgorge $146,000. All other pending motions are DENIED AS MOOT. The Clerk of the Court is directed to mark this matter as closed. SO ORDERED by Judge Joanna Seybert on 3/21/11. Bankruptcy Case No. 09-10393(DTE). C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------X In Re: ENGLISH SHEPPARD REALTY CORP., MEMORANDUM AND ORDER Bankr. Case No. 09-10393 (DTE) Debtor, ------------------------------X PHILLIP D. MILLER, ESQ. 10-CV-2864 (JS) 10-CV-3340 (JS) Appellant, -againstTRACY HOPE DAVIS, United States Trustee for Region 2, Appellee. ------------------------------X APPEARANCES: For Appellant: Phillip D. Miller, pro se1 33 Old Estate Road Manhasset, NY 11030 For Appellee: William E. Curtin, Jr., Esq. United States Department of Justice Office of the United States Trustee 271 Cadman Plaza East, Suite 4529 Brooklyn, NY 11201 Charles E. Simpson, Esq. Windels Marx Lane & Mittendorf LLP 156 West 56th Street New York, NY 10019

For Debtor:

Mr. Miller, although representing himself, is an attorney. On July 6, 2010, the Supreme Court of New York Appellate Division, Second Department, suspended him from the practice of law for six months, largely for the same conduct that led to the Bankruptcy Court's disgorgement order. See Matter of Miller, 907 N.Y.S. 2d 218 (2d Dep't 2010). It is unclear if he has been readmitted yet.

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SEYBERT, District Judge: On April 13, 2010, the United States Bankruptcy Court for the Eastern District of New York ordered Appellant Phillip Miller to disgorge $146,000 in attorneys' fees he received. In re English Sheppard Realty Corp., No. 99-10393, 2010 See WL

1492272, at *4 (E.D.N.Y. Bankr. Apr. 13, 2010).

On June 15,

2010, the Bankruptcy Court denied Mr. Miller's motion to alter or amend its disgorgement order. the Bankruptcy Court's Orders. Mr. Miller now appeals both of The Government has moved to

consolidate these two appeals (10-CV-2684 and 10-CV-3340). The Government's motion to consolidate is GRANTED.

Having been consolidated, the Court hereby DENIES Mr. Miller's appeals. DISCUSSION I. Standard of Review "On an appeal the district court . . . may affirm, modify, decree or or reverse remand a bankruptcy judge's for judgment, further order, or

with

instructions

proceedings."

FED. R. BANK. P. 8013.

The Bankruptcy Court's "finding[s] of

fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous . . . ." Id.; see also In

re Momentum Mfg. Co., 25 F.3d 1132, 1136 (2d Cir. 1994); In re PCH Assoc., 949 F.2d 585, 597 (2d Cir. 1992). "A finding of

fact is clearly erroneous when, although there is evidence to 2

support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. . . . Factual findings must be upheld if plausible Robbins Int'l,

in light of the record viewed in its entirety."

Inc. v. Robbins MBW Corp., 275 B.R. 456, 464-65 (S.D.N.Y. 2002) (internal Court's quotations, citations are omitted). de The novo. Bankruptcy See In re

legal

conclusions

reviewed

Momentum Mfg. Co., 25 F.3d at 1136. II. Prior Proceedings This is not the first time this Court has dealt with Mr. Miller, or the underlying bankruptcy case. On September 19,

2007, this Court affirmed a prior Bankruptcy Court Order that required Mr. Miller to disgorge $298,000 in fees. then appealed that affirmance to the Second Circuit. On April 28, 2009, the Second Circuit affirmed in Mr. Miller

part, and vacated in part. Appx. 25 (2d Cir. 2009).

See Miller v. Sampson, 325 Fed. The Second Circuit "affirm[ed] that

portion of the order requiring Miller to disgorge attorney fees he paid to himself from the Net Sale Proceeds" of a property that Debtor English Sheppard Realty had sold. Id. at 27. The

Second Circuit affirmed because Mr. Miller: (1) "violated that portion of the Escrow Order requiring him to retain the [Net Sale] proceeds in an 11 escrow Plan of account pending confirmation and of

Debtor's

Chapter

Reorganization 3

distribution

pursuant to Court Order"; and (2) "did not obtain a fee award as required by 11 U.S.C. § 330(a)." citations omitted). portion of the Id. (internal quotations and

The Second Circuit, however, vacated the fixing disgorgement at $298,000, and

order

remanded with instructions for the Bankruptcy Court to conduct an evidentiary hearing as to the amount of fees that Mr. Miller "paid to himself from the Net Sale Id. Proceeds, without prior

bankruptcy court authorization." III. Mr. Miller's Present Appeals

In his present appeals, Mr. Miller does not contest that the $146,000, which the Bankruptcy Court ordered disgorged, originated property. "from the Net Sale Proceeds" of the Debtor's

Instead, Mr. Miller argues that, although originating

from that sale, the money no longer belonged to the Debtor when he used it to pay his fees. This is because, in Mr. Miller's

view, the Debtor had first used the money to purchase the stock of another company, ABSR Realty Corp., in a transaction the Bankruptcy Court ratified. Thus, Mr. Miller contends, ABSR, and

not the Debtor, paid his fees. The Court does not reach these arguments, because it is bound by the mandate rule. the law-of-the-case doctrine. have been explicitly or "The mandate rule is a branch of This rule holds that where issues decided on appeal, the

implicitly

district court is obliged, on remand, to follow the decision of 4

the appellate court."

Burrell v. United States, 467 F.3d 160,

165 (2d Cir. 2006) (internal citations and quotations omitted). "In other words, the trial court is barred from reconsidering or modifying any of its prior decisions that have been ruled on by the court of appeals." omitted). Id. (internal citations and quotations

Thus, "[w]hen an appellate court has once decided an

issue, the trial court, at a later stage in the litigation, is under a duty to follow the appellate court's ruling on that issue." Id. (internal citations and quotations omitted). the Second Circuit held that, by using the

Here,

Debtor's escrowed funds to facilitate the Debtor's purchase of ABSR, Mr. Miller "violated that portion of the Escrow Order requiring him to retain the [Net Sale] proceeds in an escrow account." Court Miller, 325 Fed. Appx. at 27. consider Mr. Miller's Consequently, the that he acted

cannot

argument

legitimately when he used the Debtor's funds to purchase ASBR. Similarly, the Second Circuit also held he must disgorge any fees originating "from the Net Sale Proceeds." the Second Circuit's order in limits the this Id. to Nothing in Net Sale or

holding legal

Proceeds

that

remained

Debtor's

possession,

exempts Net Sale Proceeds that Mr. Miller improperly removed from the Debtor's ledger account. Rather, on its face, it

applies to all Net Sale Proceeds.

Accordingly, the Court cannot

consider Mr. Miller's argument that, by essentially laundering 5

the Net Sale Proceeds through ABSR (using the mechanism of a stock sale), he removed these funds from the Bankruptcy Court's jurisdiction, himself. CONCLUSION If Mr. Miller wants to keep raising the arguments he presents in his appeals, he is free to do so. But the proper For now, enabling him to then use this money to pay

place for them is the Second Circuit, not this Court. the Court must apply the Second Circuit's mandate. done so, the Court or sees no error in the

And, having Court's the

Bankruptcy

factual

findings

legal

conclusions.

Consequently,

Bankruptcy Court's April 13, 2010 and June 15, 2010 Orders are AFFIRMED IN THEIR ENTIRETY. Mr. Miller must disgorge $146,000. The Clerk of the

All other pending motions are DENIED AS MOOT. Court is directed to mark this matter as closed. SO ORDERED.

/s/ JOANNA SEYBERT______ Joanna Seybert, U.S.D.J. Dated: March 21 , 2011 Central Islip, New York

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