Albrecht v. Mergenthaler et al

Filing 14

MEMORANDUM & ORDER granting Motion to Dismiss for Failure to State a Claim. SO ORDERED that the motion to dismiss is GRANTED, and this appeal is DISMISSED. Appellees are directed to mail a copy of this Order to the pro se parties and file proof of s ervice on ECF promptly. The Clerk of the Court is directed to mark the case CLOSED. Should Appellant seek in forma pauperis status on appeal, the Court certifies pursuant to 28 U.S.C. § 1915(a)(3) that any appeal from this Memorandum and Order would not be taken in good faith and therefore in forma pauperis status is DENIED for purposes of an appeal. Ordered by Judge Joanna Seybert on 2/14/2018. (US Bankruptcy Court EDNY, 8-15-72040-reg) (CM to pro appellant and appellee) (Florio, Lisa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
RUEDIGER ALBRECHT,
Appellant,

MEMORANDUM & ORDER
17-CV-0592(JS)

-against–

FILED 
CLERK 

2/14/2018 4:42 pm

U.S. DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
LONG ISLAND OFFICE 

ROSEMARY IDA MERGENTHALER, DEAN
OSEKAVAGE, R. KENNETH BARNARD, MARK
CUTHBERTSON, and UNITED STATES TRUSTEE,
Appellees.
---------------------------------------X
SEYBERT, District Judge:

Currently pending before the Court is an appeal filed by
Ruediger Albrecht (”Appellant”), a creditor, from three orders
issued

by

Judge

Mergenthaler’s

Robert

E.

(”Mergenthaler”

bankruptcy proceeding.

Grossman
or

”the

in

Appellee

Debtor”)

Rosemary

Chapter

7

(See In re Mergenthaler, BR No. 15-72040.)

On November 28, 2016, Appellant filed a Notice of Appeal in this
Court seeking review of: (1) an order granting a motion to sell
the property at 3 Wood Edge Court, Water Mill, New York pursuant
to 11 U.S.C. § 363 (the ”Sale Order”) (see Sale Order, Barnard
Reply Ex. A, Docket Entry 5-1; In re Mergenthaler, BR No. 1572040,

Docket

adversary

Entry

proceeding

241);

and

commenced

(2)
by

two

orders

Appellant

dismissing

(the

an

”Dismissal

Orders”)1 (see Dismissal Orders, Barnard Reply Exs. B-C, Docket

The Notice of Appeal was received by the Clerk of the
Bankruptcy Court on November 28, 2016 but was not docketed with
1

Entries 5-2 to 5-3; Albrecht v. Mergenthaler, BR No. 16-08015,
Docket Entries 16, 17).
As

background,

the

Debtor

and

Mergenthaler, are well known to this Court.

her

husband,

Peter

Over the last two

years, they filed ten bankruptcy appeals before this Court in an
effort to prevent their former residence, located at 3 Wood Edge
Court, Water Mill, New York (the “Property”) from being sold to
satisfy a lien held by Osekavage.2

The Court issued several

opinions addressing the appeals, each time finding the arguments
to be meritless.

See, e.g., Mergenthaler v. Osekavage, No. 16-

CV-2466, 2018 WL 451642 (E.D.N.Y. Jan. 17, 2018); Mergenthaler v.
Barnard, No. 15-CV-05078, 2016 WL 3080808 (E.D.N.Y. May 27, 2016);
Mergenthaler v. Thaler, No. 15-CV-2034 (E.D.N.Y Apr. 29, 2015).
On September 21, 2016, this Court barred Mergenthaler from “filing
any additional cases, motions, or appeals concerning the assets in
her bankruptcy estate before this Court without first obtaining
written permission from the Court.”

Mergenthaler v. Barnard, Nos.

16-CV-4390, 15-CV-5078, 2016 WL 5173261, at *2 (E.D.N.Y. Sept. 21,
2016).

Shortly thereafter, Appellant--a friend of Mergenthaler--

this Court until February 1, 2017.
Entry 1.)

(See Not. of Appeal, Docket

The actions filed by the Mergenthalers bear the following case
numbers: 15-CV-2031, 15-CV-2032, 15-CV-2033, 15-CV-2034, 15-CV5078, 15-CV-7301, 16-CV-1113, 16-CV-2466, 16-CV-4390, and 17-CV0615.
2

2

filed this appeal challenging several orders, including the Sale
Order.
At a hearing on March 6, 2017, Appellees Dean Osekavage
(”Osekavage”) and R. Kenneth Barnard (”Barnard”) made an oral
motion

to

dismiss

the

appeal.

(Oral

Mot.,

March

6,

2017.)

Appellant filed his response on April 4, 2017 (Appellant’s Br.,
Docket Entry 4), and Barnard and Osekavage filed reply briefs in
further support of their motion on April 12, 2017 and April 13,
2017, respectively.

(Barnard Reply, Docket Entry 5; Osekavage

Reply, Docket Entry 7.)

Without Court leave, Appellant filed a

reply brief on May 31, 2017.3

(Appellant’s Reply, Docket Entry

10.)
DISCUSSION
I.

Legal Standard
On appeal, this Court reviews the Bankruptcy Court’s

“legal conclusions de novo and its factual findings for clear
error.”

Townsend v. Ganci, 566 B.R. 129, 133 (E.D.N.Y. 2017).

Factual findings are clearly erroneous when, “after reviewing the
evidence as a whole, ‘the reviewing court is left with the definite
and firm conviction that a mistake has been committed.’”

In re

Thakur, 498 B.R. 410, 419 (S.D.N.Y. 2013) (quoting In re AMR Corp.,

Because the Court-Ordered briefing schedule did not provide for
a reply brief, the Court will disregard it. (See Minute Entry,
March 6, 2017, Docket Entry 3.)
3

3

490 B.R. 470, 475 (S.D.N.Y. 2013)).

The district court reviews

mixed questions of law and fact de novo.
II.

Id.

Appeal of the Sale Order
On September 15, 2016, Barnard filed a motion to sell

the

Property

pursuant

to

11

U.S.C.

§

363(b).

(See

In

re

Mergenthaler, BR No. 15-72040, Barnard Mot., Docket Entry 224.)
On November 13, 2016, Judge Grossman granted Barnard’s motion.
(See Sale Order.)

The sale closed on December 8, 2016, and

substantially all of the proceeds have been distributed.
Reply ¶ 23.)

(Barnard

Appellant had a lien on the Property, but because

the lien was determined to be junior to Osekavage’s lien, it does
not appear that Appellant received any proceeds from the sale.
(Barnard Reply ¶¶ 14-15; Appellant’s Br. at 4, ¶ 4.)
Barnard and Osekavage argue that the appeal of the Sale
Order must be dismissed because the appeal is statutorily moot
pursuant to 11 U.S.C. § 363(m) (“Section 363(m)”).
¶

29.)

Section

363(m)

provides

that

“[t]he

(Barnard Reply
reversal

or

modification on appeal of an authorization under subsection (b) or
(c) of this section of a sale or lease of property does not affect
the validity of a sale or lease under such authorization to an
entity that purchased or leased such property in good faith,
whether or not such entity knew of the pendency of the appeal,
unless such authorization and such sale or lease were stayed
pending appeal.”

11 U.S.C. § 363(m).
4

The Second Circuit has held

that Section 363 “‘bars appellate review of any sale authorized by
11 U.S.C. § 363(b) or (c) so long as the sale was made to a goodfaith purchaser and was not stayed pending appeal.’”

Lynch v.

Vaccaro, 566 B.R. 290, 300 (E.D.N.Y. 2017) (quoting In re WestPoint
Stevens, Inc., 600 F.3d 231, 247 (2d Cir. 2010)).

In other words,

Section 363(m) limits the reviewing court’s jurisdiction, and
“‘absent an entry of a stay of the Sale Order, [courts] only retain
authority to review challenges to the good faith aspect of the
sale.’”

Id.

(quoting WestPoint, 600 F.3d at 248) (internal

quotation marks omitted; alteration in original); see also 23
Jefferson St. LLC v. 636 Assets, Inc., Nos. 14-CV-7150, 14-CV7171, 2015 WL 5037343, at *3 (E.D.N.Y. Aug. 24, 2015) (“Section
363(m) . . . sharply curtails appellate review of an unstayed
bankruptcy court order approving a sale of property.”).

This rule

ensures that “the uniquely important interest in assuring the
finality of a sale” is protected.

Lynch, 566 B.R. at 300.

When no stay was sought and the reviewing court’s inquiry
is limited to whether the purchase was made in good faith, “‘good
faith is lost only by fraud, collusion between the purchaser and
other bidders or the trustee, or an attempt to take grossly unfair
advantage of other bidders.’”

23 Jefferson St., 2015 WL 5037343,

at *4 (quoting In re Gucci, 126 F.3d 380, 390 (2d Cir. 1997)).
Further, if the bankruptcy court found that the sale was made to

5

a good-faith purchaser, “the appeal is moot unless appellants can
establish that such a finding is clearly erroneous.”

Id.

As the sale was authorized pursuant to Section 363(b),
(See Sale Order at 7), and Appellant did not seek a stay of the
Sale Order, the only issue is whether the buyer purchased the
Property in good faith.

Moreover, because Judge Grossman found

that the purchase was made in good faith, (see Sale Order at 56), Appellant must show that Judge Grossman’s finding was clearly
erroneous to prevail.4

The Court finds that Appellant has failed

to show any bad faith on the part of the purchaser.

On the

contrary, Appellant does not attack the sale, but instead focuses
on the distribution of the proceeds--an issue not before this
Court.

(See Appellant’s Br. at 3 (“[T]his appeal contests the

court order being appealed regarding its manner of distributing
the

assets

of

the

Property . . . .”).)

estate,

not

regarding

the

sale

of

the

As Barnard points out, Appellant appears to

challenge the allocation of the funds, which was approved in a
separate Order on July 25, 2016.

(See Approval Order, Barnard

Reply Ex. H, Docket Entry 5-8; In re Mergenthaler, BR No. 1572040, Docket Entry 201.)
Because Appellant has not shown that the bankruptcy
court’s good faith finding was clearly erroneous, the appeal of

In the Sale Order, Judge Grossman noted that Appellant did not
object to the sale at that time. (See Sale Order at 5.)
4

6

the Sale Order is statutorily moot.
order is DISMISSED.

Therefore, the appeal of that

See Lynch, 566 B.R. at 301; 23 Jefferson St.,

2015 WL 5037343, at *5; Sabatini Frozen Foods, LLC v. Jones, No.
11-CV-1294, 2013 WL 1345104, at *6 (E.D.N.Y. Mar. 29, 2013).
III. Appeal of the Dismissal Orders
Barnard argues that the appeal from the Dismissal Orders
should be dismissed as untimely.

(Barnard Reply ¶¶ 24-28.)

On

October 17, 2016, Judge Grossman issued two orders dismissing an
adversary
Orders.)
28, 2016.

proceeding

commenced

by

Appellant.

(See

Dismissal

As discussed, the Notice of Appeal was filed on November
Federal Rule of Bankruptcy Procedure 8002(a) provides

that “a notice of appeal must be filed with the bankruptcy clerk
within 14 days after the entry of the judgment, order, or decree
being appealed.”

FED. R. BANKR. P. 8002(a)(1).

Therefore, because

Appellant failed to file the Notice of Appeal by October 31, 2016,
the appeal of the Dismissal Orders is DISMISSED.5
CONCLUSION
For the foregoing reasons, the motion to dismiss is
GRANTED, and this appeal is DISMISSED.

Appellees are directed to

mail a copy of this Order to the pro se parties and file proof of

Additionally, Appellant appears to have abandoned these
appeals. In his brief responding to the motion to dismiss, he
does not address the Dismissal Orders and identifies only the
Sale Order as the subject of the appeal. (See Appellant’s Br.
at 2-3.)
5

7

service on ECF promptly.
mark the case CLOSED.

The Clerk of the Court is directed to

Should Appellant seek in forma pauperis

status on appeal, the Court certifies pursuant to 28 U.S.C.
§ 1915(a)(3) that any appeal from this Memorandum and Order would
not be taken in good faith and therefore in forma pauperis status
is DENIED for purposes of an appeal.

Coppedge v. United States,

369 U.S. 438, 444–45, 82 S. Ct. 917, 8 L. Ed. 2d 21 (1962).

SO ORDERED.

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

February
14 , 2018
Central Islip, New York

Cc:

Ruediger Albrecht, pro se
3 Cordsstr 22609
Hamburg, Germany
Rosemary Ida Mergenthaler, pro se
32 Eastville Avenue
Sag Harbor, New York 11963

8