Moxey v. Pryor et al

Filing 7

MEMORANDUM AND ORDER - For the foregoing reasons, the Bankruptcy Court's denial of Moxey's Motion for a Protective Order is AFFIRMED and granting of the Trustee's Sanctions Motion is VACATED. The Clerk of Court is directed to mail a copy of this Memorandum & Order to the Pro Se Appellant and to mark this appeal CLOSED. So Ordered by Judge Joanna Seybert on 8/25/2015. US Bankruptcy Court Case No. 8-13-08108-ast. C/M; C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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KENNETH MOXEY,
Appellant,

MEMORANDUM & ORDER
14-CV-6972(JS)

-againstROBERT L. PRYOR, MAAAS ENTERPRISES, LP,
V-JAMA HOLDINGS, LLC, TUTHILL FINANCE,
And MPJM CRUSH HOLDINGS,
Appellees.
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APPEARANCES
For Appellant:
Kenneth Moxey, pro se
923 Custer Street
Valley Stream, NY 11580
For Appellees:

J. Logan Rappaport, Esq.
Pryor & Mandelup, LLP
675 Old Country Road
Westbury, NY 11590
Bruce L. Weiner, Esq.
Rosenberg Musso & Weiner, LLP
26 Court St., Ste. 2211
Brooklyn, NY 11242

SEYBERT, District Judge:
Pro Se appellant Kevin Moxey (“Moxey” or “Appellant”) is
the debtor in a Chapter 7 bankruptcy proceeding captioned In re
Kenneth

G.

Moxey,

No.

8-12-74340,

and

a

related

adversary

proceeding captioned Moxey v. Pryor, et al., No. 8-13-8108.

Those

actions are before Judge Alan Trust in the United States Bankruptcy
Court for the Eastern District of New York (the “Bankruptcy
Court”).

Moxey appeals from certain of the Bankruptcy Court’s

1

orders in those proceedings.

For the reasons discussed herein,

the orders appealed from are AFFIRMED in part and VACATED in part.
BACKGROUND
Though made complex by Moxey’s lack of discretion in
filing papers and heaving unfounded allegations on all involved,
Moxey’s bankruptcy proceeding is, at its core, an effort to secure
his alleged interest in real property located at 245 South First
Street, Brooklyn, New York 11211 (the “Property”).
Moxey purchased the Property sometime prior to May 25,
2007.

(Sanctions Mot., Docket Entry 1–1, at 26.1)

On that date

and in exchange for a loan of $480,000.00, Moxey signed a note for
the loan and gave Tuthill Finance LP (“Tuthill”) a mortgage on the
Property.

(Sanctions Mot. at 26.)

In 2009, after Moxey defaulted

under the terms of the note, Tuthill commenced a foreclosure action
in the New York State Supreme Court, Kings County, under index
number 932/2009 (the “Foreclosure Action”).
26-27.)

(Sanctions Mot. at

Moxey never answered Tuthill’s summons and complaint.

(Sanctions Mot. at 27.)

Thereafter, Tuthill transferred its

unanswered

Foreclosure

Action

to

(“Crush”).

MPJM

Crush

Holdings,

LLC

(Sanctions Mot. at 27.)
After it received Tuthill’s interest in the Foreclosure

Action,

Crush

obtained

a

default

judgment

against

Moxey.

Page Numbers are those generated by the Electronic Case Filing
System.
1

2

(Sanctions Mot. at 27.)

After Moxey’s unsuccessful challenge to

the default judgment, the State Court granted Crush a final
judgment of foreclosure and sale, determining that Moxey owed Crush
$757,811.78, plus interest.

(Sanctions Mot. at 27.)

for bankruptcy to prevent the foreclosure sale.

Moxey filed

(Sanctions Mot.

at 27.)
Moxey

filed

a

voluntary

bankruptcy

petition

Chapter 7 of the Bankruptcy Code on July 12, 2012.
Mot. at 28.)

under

(Sanctions

Moxey’s petition valued the Property at $600,000.00

and indicated that it was encumbered by two mortgages totaling
$757,000.00.

(Sanctions Mot. at 28.)

Robert L. Pryor (the “Trustee”) was appointed as the
Chapter 7 trustee of the bankruptcy estate.

(Sanctions Mot. at

28.)
In October 2012 the Trustee and Crush negotiated a
settlement that provided for the disposition of the Property Crush
would make a stalking-horse offer of $600,000.00, plus a $25,000.00
payment to the appointed Receiver of Rents for a quitclaim deed to
the property.

(Sanctions Mot. § 13 at 9.)

Crush’s offer was a

credit-offer, with a $44,000.00 cash carve-out for Trustee and
related fees.

(Sanctions Mot. § 14 at 9-10.)

subject to higher and better offers.
The

parties

agreement

on

moved

the

November

(Sanctions Mot. § 28 at 13.)

Bankruptcy

Court

16,

and

2012,
3

Crush’s offer was

for

Moxey

approval

of

did

object.

not

the

(Sanctions Mot. §§ 15-16 at 10.)

The Bankruptcy Court approved

the agreement on December 11, 2012.
Moxey did not appeal.

(Sanctions Mot. § 16 at 10.)

(Sanctions Mot. § 17 at 10.)

On January 9, 2013, Crush executed an Assignment of Bid
assigned its stalking-horse bid to Maaas Enterprises, LP (“Maaas”)
and V–Jama Holdings, LLC (“Jama”).

(Sanctions Mot. at 29.)

The

sale was later closed, and the Trustee executed a deed conveying
the Property to Maaas and Jama.

(Sanctions Mot. at 29.)

In May of 2013, after the transfer of the Property, Moxey
began a flurry of legal activity.

(Sactions Mot. at 29.)

Moxey

sued the Trustee, Crush, Tuthill, Maaas, Jama, and others in New
York State Supreme Court, Kings County (the “State Court Action”),
and in July 2013 commenced adversary proceeding 138108 against the
Trustee (the “Adversary Proceeding”).

(Sanctions Mot. at 29.)

The State Court Action was removed to this Court, then transferred
to

the

Bankruptcy

Proceeding.

Court

and

consolidated

(Sanctions Mot. at 30-31.)

an amended complaint.
Moxey

has

motions,

the

Adversary

Moxey was ordered to file

(Sanctions Mot. at 31.)
since

flooded

various motions and other papers.
pleadings,

with

and

other

the

Bankruptcy

Court

with

After examining the numerous

papers

that

Moxey

had

filed,

Appellees expressed concern that “[Moxey’s] papers have been and
are being drafted by a legal practitioner.”
Docket Entry 4, at 11.)

(Appellees’ Br.,

Consequently, the Trustee requested the
4

deposition

of

Moxey

for

the

limited

purpose

of

determining

(1) whether Appellant has received any aid in connection with the
preparation of his pleadings, motions, and other papers; (2) what
aid,

if

any,

he

has

received;

and

(3)

the

identity

of

the

individual(s) providing him with such assistance or ghostwriting
such papers.

(Appellees’ Br. at 11.)

The Bankruptcy Court granted the Trustee’s request to
depose Moxey at a hearing held in the Adversary Proceeding on
February 25, 2014.

The Bankruptcy Court memorialized this oral

order in a March 10 written order prohibiting plaintiff from filing
further pleadings with this court for ninety (90) days. (See March
10, 2014 Order, Docket Entry 1-1, at 33 n. 12 and at 34.) Following
the two orders, on April 14, 2014, the Trustee, by his attorney,
served

Moxey

with

a

Notice

of

Deposition

stating

that

his

deposition date was set for April 29, 2014. (Notice of Dep, Docket
Entry 1-7.)

Moxey failed to appear.

As a result of Moxey’s refusal to appear at the courtordered

and

properly

noticed

deposition,

sanctions (the “Sanctions Motion”).

Appellees

moved

(See Sanctions Mot.)

for

Judge

Trust gave Moxey a second chance; rather than sanction Moxey, he
ordered

that

he

appear

for

a

deposition,

warning

that

the

Bankruptcy Court may “treat any unexcused failure of [Moxey] to
comply with this Order as a contempt of court . . . .”
Directing Dep., Docket Entry 1-11, at 3.)
5

(Order

On June 4, 2014, the

Trustee, by counsel, once again served Moxey with an Amended Notice
of Deposition notifying Moxey that his deposition was scheduled
for June 24, 2014.

(Am. Dep. Notice, Docket Entry 1-12.)

In

response to the second notice of deposition, Moxey moved for a
protective order.

(See Protective Order Mot., Docket Entry 1-4.)

Additionally, Moxey filed an objection to Appellees’ Sanctions
Motion.

(See Objection to Sanctions Mot., Docket Entry 1-5.)
On July 1, 2014, the Bankruptcy Court held a hearing on

the Motion for a Protective Order and the Sanctions Motion.
July 16 Order, Docket Entry 1-19, at 2.)

(See

On July 16, 2014, the

Bankruptcy Court issued an order denying Moxey’s Motion for a
Protective

Order

and

(“Sanctions Order”).

granting

the

Trustee’s

Sanctions

(See July 16 Order at 1-4.)

Motion

The Bankruptcy

Court found that sanctions were appropriate because Moxey failed
to comply with several notices of deposition, its February 25,
2014 ruling, and its June 3, 2014 Order, all of which required
Moxey to appear for a deposition.

(See July 16 Order at 2.)

Judge

Trust ordered Moxey to pay reasonable attorneys’ fees associated
with the preparation of a portion of the Sanctions Motion, the
Reply Affirmation in Further Support of the Sanctions Motion, and
the Trustee’s Objection to the Protective Order Motion.
16 Order at 2.)

6

(See July

Moxey now challenges (1) the Bankruptcy Court’s granting
of the Trustee’s Sanctions Motion and (2) the Bankruptcy Court’s
denial of Moxey’s Motion for a Protective Order.
DISCUSSION
The Court will first discuss the applicable standard
of review, before considering each of Moxey’s challenges in
turn.
I.

Standard of Review
A district court acts as an appellate court in reviewing

judgments rendered by the Bankruptcy Courts. FED. R. BANKR. P. 8013;
In re Cody, Inc., 338 F.3d 89, 94 (2d Cir. 2003).

The Bankruptcy

Court’s findings of fact are reviewed for clear error.
Kalikow, 602 F.3d 82, 91 (2d Cir. 2010).

In re

“A factual finding is

clearly erroneous only if . . . the reviewing court on the entire
evidence is left with the definite and firm conviction that a
mistake has been committed.”

Ortega v. Duncan, 333 F.3d 102, 106-

07 (2d Cir. 2003) (internal quotation marks and citation omitted).
Conclusions of law are reviewed de novo.
II.

Kalikow, 602 F.3d at 91.

Sanctions Order
Moxey first challenges the Bankruptcy Court’s granting

of the Sanctions Motion.

A bankruptcy court derives its power to

sanction through several sources, including the court’s inherent
authority, the Federal Rules of Bankruptcy Procedure, and 11 U.S.C.

7

§ 105.2

See Law v. Siegel, 134 S. Ct. 1188, 1198, 188 L. Ed. 2d

146 (2014).

In light of the various sources of authority pursuant

to which a bankruptcy court may sanction a party--and particularly
in light of the fact that each source utilizes a different legal
analysis--a bankruptcy court must specify the authority pursuant
to which sanctions are issued.

The Second Circuit has explained:

The Bankruptcy Court’s discretion to award
sanctions may be exercised only on the basis
of the specific authority invoked by that
court.
Because an award might be based on
“any of a number of rules or statutory
provisions,” each “governed by differing
standards,” we have found it “imperative that
the court explain its sanctions order with
care, specificity, and attention to the
sources of its power.”
Kalikow, 602 F.3d at 96 (quoting Sakon v. Andreo, 119 F.3d 109,
113 (2d Cir. 1997)); see also MA Salazar, Inc. v. Inc. Vill. of
Atl. Beach, 499 B.R. 268, 275 (E.D.N.Y. 2013); In re Obasi, No.
10-CV-10494, 2011 WL 6336153, at *8 (Bankr. S.D.N.Y. Dec. 19,

“‘[I]nherent-power sanctions are appropriate only if there is
clear evidence that the conduct at issue is (1) entirely without
color and (2) motivated by improper purposes.’” In re Plumeri,
434 B.R. 315, 328 (S.D.N.Y. 2010) (quoting Wolters Kluwer Fin.
Servs., Inc. v. Scivantage, 564 F.3d 110, 114 (2d Cir. 2009)).
Rule 37, applicable to bankruptcy proceedings pursuant to
Federal Rule of Bankruptcy Procedure 7037, allows a bankruptcy
court to sanction a party for failing to comply with the
bankruptcy court’s deposition order. See FED. R. CIV. P.
37(d)(1)(A)(i). Section 105 of the Bankruptcy Code provides the
authority for a bankruptcy court “to issue ‘any order, process,
or judgment that is necessary or appropriate to carry out the
provisions of [the Bankruptcy Code].’” Kalikow, 602 F.3d at 96
(alteration in original) (quoting 11 U.S.C. § 105(a)).
2

8

2011); Plumeri, 434 B.R. at 327.
court’s

award

of

sanctions

“Thus, although the [bankruptcy]

is

reviewed

under

an

abuse-of-

discretion standard, . . . such an award either without reference
to any statute, rule, decision, or other authority, or with
reference only to a source that is inapplicable will rarely be
upheld.”

Sakon, 119 F.3d at 113 (citations omitted).
The purpose of the requirement that the bankruptcy court

specify the authority pursuant to which it issues sanctions is to
give notice and an opportunity to be heard to the party being
sanctioned.

Plumeri, 434 B.R. at 327 (“Whatever the type of

sanctions to be imposed, ‘[b]efore imposing sanctions, the court
must afford the person it proposes to sanction due process, i.e.,
notice and opportunity to be heard.’” (quoting Mickle v. Morin,
297 F.3d 114, 126 (2d Cir. 2002) (alteration in original))).

That

party “‘must be forewarned of the authority under which sanctions
are being considered, and given a chance to defend himself against
specific charges.’”

Sakon, 119 F.3d at 114 (quoting Ted Lapidus,

S.A. v. Vann, 112 F.3d 91, 97 (2d Cir. 1997)).

“This requirement

is

relevant

fulfilled

by

the

identification

of

the

Federal

Rule . . . or statute that warrants imposition of a sanction.”
Viola v. U.S., 481 F. App’x 30, 31 (2d Cir. 2012) (citing Schlaifer
Nance & Co. v. Estate of Warhol, 194 F.3d 323, 334 (2d Cir. 1999)).
The Bankruptcy Court’s July 16, 2014 Order failed to set
forth the specific legal authority on which the sanctions were
9

based.

The order suggests that Appellees moved under both the

Bankruptcy Court’s inherent powers and 11 U.S.C. § 105(a) (July 16
Order at 1,) but it is silent as to which provision the Bankruptcy
Court applied.

Absent any further detail, the Sanctions Order

cannot be affirmed.

See Kalikow, 602 F.3d at 97.

Arguably, the reference in the Order to the Bankruptcy
Court’s inherent powers and 11 U.S.C § 105(a) was sufficient to
put Moxey on notice that the Bankruptcy Court was considering
sanctions under both provisions.

See Sakon, 119 F.3d at 114

(explaining that a litigant “‘must be forewarned of the authority
under which sanctions are being considered, and given a chance to
defend himself against specific charges’” (quoting Ted Lapidus,
S.A., 112 F.3d at 97)).

However, in a subsequent order denying

Moxey’s motion to vacate the Sanctions Order, the Bankruptcy Court
explained that Moxey was in fact sanctioned pursuant to Federal
Rule 37(d)(3), incorporated by Bankruptcy Rule 7037.
Denying Debtor’s Mots., Docket Entry 1-27, at 8.)

(See Order

Thus, even if

Moxey had an opportunity to dispute the imposition of sanctions
under the Bankruptcy Court’s inherent authority and 11 U.S.C.
§ 105(a), he did not have an opportunity to dispute the sanctions
under Federal Rule 37.3

Accordingly, the Bankruptcy Court’s July

16 Sanctions Order is VACATED.

The fact that Moxey later learned the source of the authority
under which he was sanctioned is of no consequence. By then,
3

10

Although

the

Court

vacates

the

Bankruptcy

Court’s

imposition of sanctions against Moxey, its conclusion today should
not be read to condone Moxey’s behavior.
Court’s

independent

review

of

the

Indeed, based upon the

Bankruptcy

docket,

Moxey’s

behavior has progressed far beyond that required for sanctions
under any of the various authorities given to the Bankruptcy Court.
Thus, the Court’s Memorandum and Order today is in no way intended
to embolden Moxey or otherwise license him to continue his pattern
of frivolous, vexatious filings.
III. Protective Order
Next, Moxey alleges that the Bankruptcy Court erred when
it refused to grant his Motion for a Protective Order.
disagrees.

The Court

Moxey argues that his Motion for a Protective Order

should have been granted because “[t]he information which the
Trustee sought has no relevance to the case . . . .”
Br. on Appeal, Docket Entry 3, at 10.)

(Appellant’s

The Bankruptcy Court

concluded that if there is a ghostwriter, the identity of the
ghostwriter is relevant because Moxey’s countless pleadings and
motions “include scandalous and spurious allegations, for which no
good faith basis appears to exist, and which include repetitive
and overlapping claims for relief which are simply not available

Moxey had already been deprived of a meaningful opportunity to
be heard.
11

at law or in equity.”

(Order Directing Dep. at 1.)

The Bankruptcy

Court reasoned that if Moxey’s claims prove to be frivolous, the
Trustee would have the opportunity to move for sanctions against
the ghostwriting lawyer.

See FED. R. BANKR. P. 9011(c).

The Court

finds the Bankruptcy Court’s reasoning persuasive.
Moreover, to obtain a protective order, a party must
have a good faith basis for the protective order.

FED. R. CIV. P.

26(c)(1)4 (“The court may, for good cause, issue an order to protect
a party or person from annoyance, embarrassment, oppression, or
undue burden or expense . . . .”).

The Bankruptcy Court concluded

that because Moxey failed to allege a good faith basis in his
Motion for a Protective Order, he was not entitled to one pursuant
to Federal Rule of Civil Procedure 26(c)(1).

(See July 16 Order

at 2 (“[T]he Protective Order Motion [was] denied in its entirety
as [Moxey] has failed to establish any good faith basis for the
relief sought therein . . . .”).)

This Court finds no error in

the Bankruptcy Court’s ruling.
CONCLUSION
For the foregoing reasons, the Bankruptcy Court’s denial
of Moxey’s Motion for a Protective Order is AFFIRMED and granting
of the Trustee’s Sanctions Motion is VACATED.

The Clerk of the

Rule 26(c) is applicable to bankruptcy proceedings.
Varela, 530 B.R. 573, 587-88 (Bankr. E.D.N.Y. 2015).
4

12

See In re

Court is directed to mail a copy of this Memorandum and Order to
the pro se Appellant and to mark this appeal CLOSED.

SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

August
25 , 2015
Central Islip, New York

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