Official Committee of Unsecured Creditors et ano v. Haltman, et al.

Filing 239

MEMORANDUM & ORDER denying 196 Motion to Dismiss; terminating 201 Motion for Discovery; denying 218 Motion to Appoint Counsel; denying 219 Motion to Withdraw; For the foregoing reasons, Defendant Bruce Frank's motion to dismiss and for reconsideration (Docket Entry 196) is DENIED, Defendant Elise Frank's motion to dismiss (Docket Entry 219) is DENIED, and Defendant Bruce Frank's motion to appoint counsel for his minor children, J.F. and B.F (Docket Entry 218) is DENIE D WITHOUT PREJUDICE and with leave to renew. The Clerk of the Court is directed to docket Defendants' motion to dismiss and related briefing (Docket Entries 3-5, 3-6, 3-7, 3-8) as separate entries, designating Docket Entry 3-5 as a motion. Plai ntiff's request for a certificate of default (Docket Entry 221) is DENIED WITHOUT PREJUDICE and with leave to renew pending the Court's determination on the motion to dismiss. Additionally, the Clerk of the Court is directed to TERMINATE AS MOOT Plaintiff's motion for a discovery schedule (Docket Entry 201) in light of the passage of the requested deadlines. To prevent further delay, the Court directs that discovery proceed while the motion to dismiss is pending. After conferring, the parties are directed to file a proposed discovery schedule with Judge Tomlinson within twenty (20) days of the date of this Memorandum and Order. The Court finds that a status conference is unnecessary and DENIES Plaintiff's request (Docket Entry 238) at this time. Plaintiff is directed to serve a copy of this Order on the pro se defendants and file proof of service on ECF promptly. So Ordered by Judge Joanna Seybert on 3/21/2017. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------X
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF EXETER HOLDING, LTD.,
Plaintiff,

MEMORANDUM & ORDER
13-CV-5475 (JS)(AKT)

-against–
LINDA HALTMAN, et al.,
Defendants.
-------------------------------------X
SEYBERT, District Judge:
Currently pending before the Court are: (1) Defendant
Bruce Frank’s motion to dismiss and for reconsideration (Docket
Entry 196), (2) Defendant Elise Frank’s motion to dismiss (Docket
Entry 219), and (3) Defendant Bruce Frank’s motion to appoint
counsel for his minor children, J.F. and B.F (Docket Entry 218).
For the following reasons, Defendant Bruce Frank’s motion to
dismiss and for reconsideration is DENIED, Defendant Elise Frank’s
motion to dismiss is DENIED, and Defendant Bruce Frank’s motion to
appoint counsel is DENIED WITHOUT PREJUDICE and with leave to
renew.
Additionally,

the

Official

Committee

of

Unsecured

Creditors (“Plaintiff”) has requested that the Court: (1) enter a
discovery schedule (Docket Entry 201), (2) issue a certificate of
default against the unrepresented minors and unrepresented trusts
(Docket Entry 221), and (3) hold a status conference (Docket Entry
238).

The requests are DENIED.

The Court assumes familiarity with the facts of this
case, which are detailed in Judge A. Kathleen Tomlinson’s Report
and Recommendation dated August 25, 2015 (R&R, Docket Entry 151)
and this Court’s Orders dated January 12, 2016 and September 21,
2016 (Docket Entries 171, 225).

Briefly, Plaintiff brought this

adversary proceeding against officers, directors, and insiders of
Exeter Holdings, Ltd. (“Exeter” or “the Company”) following the
commencement of bankruptcy proceedings by Exeter.

(Compl., Docket

Entry 3-9, ¶¶ 1-2.) The Defendants include Arnold Frank and Sondra
Frank; their three children Linda Haltman, Bruce Frank, and Larry
Frank;

and

their

(collectively
alleges

that

grandchildren,

“Defendants”).
Defendants

trusts

(Compl.
defrauded

¶¶

and

other

16-70.)

Exeter’s

entities
Plaintiff

creditors

by

transferring funds to themselves, trusts, and other entities they
control and seeks to recover approximately $29 million.

(Compl.

¶¶ 3-7.)
I.

Bruce Frank’s Motion to Dismiss and For Reconsideration
On February 2, 2015, Plaintiff filed a motion for

sanctions for spoliation of evidence.
92.)

(Pl.’s Mot., Docket Entry

The undersigned referred the motion to Judge Tomlinson.

Her

R&R recommended that the Court grant the motion in part and issue
an adverse inference at trial that the jury “may infer that the
spoliated evidence was largely damaging to defendants.”
Docket Entry 151, at 43.)

(R&R,

Several Defendants filed objections to
2

Judge

Tomlinson’s

R&R,

including

Bruce

Frank

(“Mr.

Frank”);

however, the Court overruled the objections and adopted the R&R in
its entirety.
of

the

(Jan. 12, 2016 Order, Docket Entry 171, at 1.)

individual

Defendants,

Linda

and

Michael

Two

Haltman,

subsequently filed a motion for reconsideration of the sanctions
decision.

(Haltman Mot., Docket Entry 175.)

reconsideration

was

denied.

(Sept.

21,

The motion for

2016

Order,

Docket

Entry 225.)
On April 25, 2016, Mr. Frank filed a “Request to be
dismissed in the motion of spoliation.”
Docket Entry 196.)

(Frank Spoliation Mot.,

He argues that he was listed as a defendant in

the spoliation motion, but has “never been an employee, manager,
or

officer

of

Exeter.”

(Frank

Spoliation

Mot.

at

1.)

Additionally, he maintains that he never accessed any of Exeter’s
computers or data, and that as far as he understands, no files
were deleted.

He also requests that the Court instruct Plaintiff

to discontinue the case against him.

(Frank Spoliation Mot. at

1.)
Motions for reconsideration are governed by Rules 59(e)
and 60(b) of the Federal Rules of Civil Procedure and Local Rule
6.3.

See Wilson v. Pessah, No. 05-CV-3143, 2007 WL 812999, at *2

(E.D.N.Y.

Mar.

appropriate

14,

when

2007).

the

moving

A

motion
party

for

reconsideration

believes

that

the

is

Court

overlooked important facts or controlling law in a prior decision.
3

Shamis v. Ambassador Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y.
1999).

However, a motion for reconsideration is not a proper tool

to relitigate arguments and issues already considered by the Court
in deciding the original motion.

See United States v. Gross, No.

98-CR-0159, 2002 WL 32096592, at *4 (E.D.N.Y. Dec. 5, 2002) (“A
party may not use a motion to reconsider as an opportunity to
reargue the same points raised previously.”).
raise new arguments and issues.

Nor is it proper to

See Lehmuller v. Inc. Vill. of

Sag Harbor, 982 F. Supp. 132, 135 (E.D.N.Y. 1997). Reconsideration
may only be granted when the Court failed to evaluate controlling
legal authority or facts “‘that might reasonably be expected to
alter the conclusion reached by the court.’”

Wechsler v. Hunt

Health Sys., 186 F. Supp. 2d 402, 410 (S.D.N.Y. 2002) (quoting
Davidson v. Scully, 172 F. Supp. 2d 458, 461 (S.D.N.Y. 2001)).
Mr.

Frank

appears

to

argue

that

reconsider its decision to impose sanctions.
declines to do so.

the

Court

should

However, the Court

Judge Tomlinson’s R&R and this Court’s prior

Orders carefully considered this issue, including the alternative
reasons offered by Defendants for the data loss.

Moreover, Mr.

Frank offers no new facts or controlling law that would cause this
Court to revisit that decision.

Finally, the Court declines to

instruct Plaintiff to dismiss Mr. Frank as a defendant in this
action.

Accordingly, Mr. Frank’s motion to dismiss and for

reconsideration (Docket Entry 196) is DENIED.
4

II.

Elise Frank’s Motion to Dismiss
On August 2, 2016, Defendant Elise Frank (“Ms. Frank”)

filed a request to be dismissed from this case.
Mot., Docket Entry 219.)

(Frank Dismissal

She argues that she “was a minor during

the time period that the events took place in this action” and has
“never received any money directly or indirectly for [her] benefit
from Exeter Holding, Ltd.”

(Frank Dismissal Mot. at 1.)

She

contends that she was an investor in Exeter but never received any
distribution of that investment.
On August 17, 2016, Plaintiff opposed the motion and
argued that Ms. Frank’s motion was duplicative of an earlier filed
motion to dismiss which remains sub judice.
Entry 222, at 1.)

The Court agrees.

(Pl.’s Opp., Docket

Upon review, it appears that

the prior motion to dismiss, which was originally filed in the
Bankruptcy Court, was improperly docketed.
directed

that

it

be

docketed,

the

motion

Although this Court
was

not

docketed

separately nor was it filed as a motion.
By way of background, Plaintiff commenced this matter in
the Bankruptcy Court in the Eastern District of New York on October
23, 2012.

(Adversary Proceeding 12-8401, Compl., Docket Entry 1.)

On January 11, 2013, numerous Defendants, including Ms. Frank,
filed a motion to dismiss.

(Adversary Proceeding 12-8401, Mot. to

Dismiss, Docket Entry 9.)

Before the motion could be determined,

Plaintiff

filed

a

motion

to

withdraw
5

the

reference

to

the

bankruptcy court.

(Mot. to Withdraw Reference, Docket Entry 1.)

On September 18, 2013, this Court granted the motion and held that
the matter would proceed in this Court.
Docket Entry 2.)

(Sept. 18, 2013 Order,

In that Order, the Court directed the parties to

file a joint letter attaching as exhibits the relevant filings
from the Bankruptcy Court docket and directed the Clerk of the
Court to docket the filings.
separately docketed.

(Order at 3-4.)

They were never

Further, the parties did not indicate in

their correspondence to the Court that the motion was pending and
inexplicably failed to bring the motion to the Court’s attention
until Ms. Frank filed the instant motion.
Accordingly, the Court finds that Ms. Frank’s motion to
dismiss is duplicative and her motion (Docket Entry 219) is DENIED.
The Clerk of the Court is directed to docket Defendants’ motion to
dismiss and related briefing (Docket Entries 3-5, 3-6, 3-7, 3-8)
as separate entries, designating Docket Entry 3-5 as a motion.
The Court will determine the motion in due course.
III. Bruce Frank’s Motion to Appoint Counsel
On August 2, 2016, Mr. Frank filed a motion to appoint
counsel for his minor sons, J.F. and B.F.
Docket Entry 218.)

(Mot. for Counsel,

Mr. Frank alleges that he has incurred over

$275,000 in legal bills during the course of this litigation and
that he cannot afford to hire counsel to represent J.F. and B.F.
(Mot. for Counsel at 1.)
6

Initially, Mr. Frank, his wife Kathleen, their children
and the children’s trusts were represented by Marc A. Pergament,
Esq.

(Mot. to Withdraw, Docket Entry 45.)

However, the Court

granted Mr. Pergament’s motion to withdraw on June 25, 2014 due to
a conflict resulting from his representation of both the Franks
and the Haltmans.1
Franks

subsequently

(See, Minute Order, Docket Entry 47.)
retained

Cullen

&

Dykman

represent them, their children and the trusts.

LLP

(“C&D”)

The
to

In March 2015, the

Court granted C&D’s motion to withdraw as counsel for Bruce and
Kathleen Frank in all capacities, and in July 2016, the Court
granted C&D’s motion to withdraw as counsel for the children and
the trusts.

(See, Minute Order, Docket Entry 107; Minute Order,

Docket Entry 216.)

As a result, Bruce Frank, Kathleen Frank, and

their two older children are proceeding pro se, while the trusts
and the two minor children, J.F. and B.F., remain unrepresented.
Despite the Court’s direction, Mr. and Mrs. Frank have failed to
retain counsel for their minor children or the trusts.
In light of the pending motion to dismiss, the Court
DENIES WITHOUT PREJUDICE Mr. Frank’s motion to appoint counsel
with leave to renew, if necessary, after the motion has been
resolved.

Should the Court rule in Plaintiff’s favor, the motion

to appoint counsel may be renewed at that time.

As previously noted, Bruce Frank’s sister, Linda Haltman, and
her husband, Michael Haltman are also defendants in this action.
1

7

CONCLUSION
For

the

foregoing

reasons,

Defendant

Bruce

Frank’s

motion to dismiss and for reconsideration (Docket Entry 196) is
DENIED, Defendant Elise Frank’s motion to dismiss (Docket Entry
219) is DENIED, and Defendant Bruce Frank’s motion to appoint
counsel for his minor children, J.F. and B.F (Docket Entry 218) is
DENIED WITHOUT PREJUDICE and with leave to renew.

The Clerk of

the Court is directed to docket Defendants’ motion to dismiss and
related briefing (Docket Entries 3-5, 3-6, 3-7, 3-8) as separate
entries, designating Docket Entry 3-5 as a motion.

[BOTTOM OF PAGE INTENTIONALLY LEFT BLANK]

8

Plaintiff’s request for a certificate of default (Docket
Entry 221) is DENIED WITHOUT PREJUDICE and with leave to renew
pending

the

Court’s

determination

on

the

motion

to

dismiss.

Additionally, the Clerk of the Court is directed to TERMINATE AS
MOOT Plaintiff’s motion for a discovery schedule (Docket Entry
201) in light of the passage of the requested deadlines.

To

prevent further delay, the Court directs that discovery proceed
while the motion to dismiss is pending.

After conferring, the

parties are directed to file a proposed discovery schedule with
Judge Tomlinson within twenty (20) days of the date of this
Memorandum and Order.

The Court finds that a status conference is

unnecessary and DENIES Plaintiff’s request (Docket Entry 238) at
this time.

Plaintiff is directed to serve a copy of this Order on

the pro se defendants and file proof of service on ECF promptly.

SO ORDERED.

/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.

Dated:

March
21 , 2017
Central Islip, New York

9