DEBORAH K. CHASANOW, District Judge.
Presently pending and ready for resolution in this bankruptcy appeal is a motion to alter or amend judgment filed by Appellant Gary A. Rosen (ECF No. 13); a motion to strike filed by Appellees David Dahan, Sarit Dahan, Karin Dahan, Maia, LLC, Rokama, LLC, and Raymonde, LLC (ECF No. 16); and Appellant's motion for retroactive extension of time in which to file a motion for rehearing (ECF No. 19). The relevant issues have been briefed, and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, Appellees' motion to strike will be denied; Appellant's motion for extension will be granted; and Appellant's motion for rehearing will be denied.
On March 10, 2011, Appellant Gary A. Rosen, the chapter 7 trustee for the jointly administered bankruptcy estates of Minh Vu Hoang and Thanh Hoang, commenced the adversary proceeding from which this appeal arises against Appellees David Dahan, Sarit Dahan, Karin Dahan, Maia, LLC, Rokama, LLC, and Raymonde, LLC.
Appellees filed a motion to dismiss all claims with respect to the six properties, arguing that "Section 542 is only available [to] obtain turnover of assets that were in the hands of a defendant pre-petition ... [and] does not apply to assets that came into the hands of [Appellees] post-petition." (ECF No. 6-2, at 2 (emphasis removed)).
In opposing the motion, Appellant conceded that his § 549 claims were time-barred, but urged that the plain language and legislative history of § 542 supported that "any entity, other than a custodian, is required to deliver property of the estate to the trustee or debtor in possession whenever such property is acquired by the entity during the case." (ECF No. 6-5, at 13). Arguing that Appellees were in possession of estate property during the case, Appellant maintained that he had a right to turnover of the proceeds in question and that, to the extent it held otherwise, Deckelbaum was wrongly decided. Notably, for present purposes, Appellant asserted an alternative theory in a footnote within his opposition papers: "the Dahan Defendants obtained possession of estate property as conduits.... By definition, therefore, they are not transferees ... [and] there are no postpetition transfers that would need to be avoided under § 549 as a prerequisite of imposing liability under § 542(a)." (Id. at 14, n. 25).
A hearing was held before United States Bankruptcy Judge Thomas J. Catliota on June 15, 2011. In response to a question by the court regarding the interplay between § 542 and the statute of limitations of § 549(d), Appellant's counsel stated:
(ECF No. 6-13, at 33-34).
At the conclusion of the hearing, Judge Catliota granted Appellees' motion to dismiss, indicating that he would separately issue a memorandum and order. In his subsequent opinion, he expressed reservations with regard to the outcome:
In re Minh Vu Hoang, 452 B.R. 902, 906-07 (Bankr.D.Md.2011) (internal footnote omitted; emphasis in original). In the factual recitation of the decision, the bankruptcy court appeared to accept that Appellees were Debtor's "conduits or intermediaries" with respect to the proceeds from the sale or refinancing of the properties at issue, id. at 905, but it did not specifically address the implications of this finding with respect to whether the money could be subject to turnover pursuant to § 542(a).
Appellant filed a timely motion for leave to appeal and concomitantly moved to stay the proceedings in the adversary case pending resolution of the prospective appeal. Appellees did not oppose those motions, and both were subsequently granted.
In his appellate brief, Appellant argued (1) that "Deckelbaum was wrongly decided because § 542(a) is not limited to estate property in the defendants' possession, custody, or control when the petition was filed," and (2) that "[e]ven if Deckelbaum's holding were correct, it would not apply here because the counts at issue allege that the Dahan defendants acquired property of the estate as conduits, not transferees." (ECF No. 4, at 7, 17). With respect to the second argument, Appellant asserted:
(Id. at 22).
In response, Appellees argued that the conduit/intermediary argument was "never raised ... in the Bankruptcy Court," and that, even if it had been, Appellant's turnover claims "properly should have been brought against the Debtors, rather than [Appellees] [.]" (ECF No. 9, at 13, 14). In reply, Appellant cited numerous instances in which the issue was raised in his amended complaint, opposition to the motion to dismiss, and at the motions hearing, but did not address Appellees' contention that they were not a proper party. (ECF No. 10, at 11-15).
On March 9, 2012, this court issued a memorandum opinion and order affirming the decision of the bankruptcy court. See In re Minh Vu Hoang, 469 B.R. 606 (D.Md.2012). The court determined (1) that the turnover provision, § 542(a), entitles the trustee to possession of "property of the estate," as that term is defined in § 541(a); (2) that property transferred postpetition may lose its status as property of the estate unless or until such transfer is avoided by the trustee pursuant to § 549, in which case the property is drawn back into the estate pursuant to §§ 541(a)(3) and 550; and (3) that because the property at issue in this case was transferred, and the transfers were not avoided, it was not property of the estate and, therefore, could not be recovered pursuant to the turnover provision.
In addressing Appellant's second issue on appeal, the court explained:
In re Minh Vu Hoang, 469 B.R. at 622-23.
On April 6, 2012, Appellant filed the pending motion to alter or amend judgment pursuant to Fed.R.Civ.P. 59(e). (ECF No. 13). Appellant asks the court to reconsider its ruling with respect to five of the six properties at issue based on "two points that the decision turned on, neither of which was ever raised by [Appellees in the bankruptcy court]":
(ECF No. 13-1, at 1 (emphasis in original)).
In response, Appellees moved to strike, arguing that the motion to alter or amend is only cognizable as a motion for rehearing pursuant to Federal Rule of Bankruptcy Procedure 8015, which must be "filed within 14 days after entry of the judgment of the district court or the bankruptcy appellate panel." (ECF No. 16 ¶ 7 (quoting Fed.R.Bankr.P. 8015)). Observing that Appellant filed his motion twenty-eight days after the appeal was decided, Appellees contend that it "may not be considered by the [c]ourt." (Id. at ¶ 16). On the same date, Appellees separately filed a "limited response to motion to alter or amend judgment," asserting that Appellant's claim that the property was never transferred "ignores the fact and reality that Maryland is a title state"; thus, "unlike the cases cited by Appellant which involve personal property and not real estate, there were actually transfers as evidenced in the land records — and those transfers were arguably subject to the
On April 30, Appellant filed a "cross-motion to retroactively extend the deadline for rehearing motions and to accept his motion to alter or amend judgment as a late-filed motion for rehearing" and supporting memorandum. (ECF No. 19).
Appellees do not indicate the legal basis of their motion to strike, but the only candidate is Federal Rule of Civil Procedure 12(f), which applies to adversary proceedings pursuant to Federal Rule of Bankruptcy Procedure 7012(b). Rule 12(f) allows the court to strike certain matters "from a pleading." Appellees' motion does not seek to strike any portion of a pleading; rather, it aims to strike Appellant's motion to alter or amend judgment in its entirety. Because there is "no basis in the Federal Rules" for doing so, Tepeyac v. Montgomery Cnty., 779 F.Supp.2d 456, 460 (D.Md.2011), Appellees' motion to strike will be denied.
As noted, the parties now agree that Federal Rule of Bankruptcy Procedure 8015, rather than Federal Rule of Civil Procedure 59(e), governs reconsideration in this context. That rule provides:
Fed.R.Bankr.P. 8015; see also In re Zegeye, Civ. No. DKC 04-1387, 2005 WL 544763, at *1 (D.Md. Mar. 4, 2005) ("When the district court is acting as an appellate court in a bankruptcy case, Rule 8015 provides the sole mechanism for filing a motion for rehearing" (citing English-Speaking Union v. Johnson, 353 F.3d 1013, 1019 (D.C.Cir.2004))).
Appellant concedes that he failed to file his motion within fourteen days, but argues that "the [c]ourt has the power to extend the deadline for rehearing motions under rule 8015 and to accept the Trustee's motion to alter or amend as a late-filed motion for rehearing." (ECF No. 19-1, at 1). Appellant points to the fact that Rule 8015 itself states that the fourteen-day time limit applies unless a "local rule or [] court order otherwise provides," and that Fed.R.Bankr.P. 8019 permits the
Extensions of time in this context are governed by Fed.R.Bankr.P. 9006(b)(1). See Matter of Eichelberger, 943 F.2d 536, 538-39 (5th Cir.1991); In re Solis, No. 95 Civ. 0356(JSM), 1995 WL 311781, at *1 (S.D.N.Y. May 19, 1995). That rule provides, absent exceptions not relevant here, that "when an act is required or allowed to be done at or within a specified period by these rules ... the court may at any time in its discretion ... on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect." Fed.R.Bankr.P. 9006(b)(1). As the Supreme Court explained in Pioneer Inv. Servs. Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993), the excusable neglect determination is "an equitable one, taking account of all relevant circumstances surrounding the party's omission," including "the danger of prejudice to the debtor, the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith."
Application of these factors here militates in favor of finding excusable neglect. Believing that Rule 59(e) governed the motion, Appellant timely filed it under that provision. After Appellees observed that Bankruptcy Rule 8015 was the proper vehicle, Appellant's counsel promptly acknowledged his error and requested appropriate relief. He unquestionably acted in good faith. Moreover, there is no discernible prejudice to Appellees attributable to the two-week delay in filing. Appellees' argument that the late filing resulted in undue delay in the adversary proceeding is undermined by the fact that they consented to a stay in the bankruptcy court pending resolution of the case on appeal. Accordingly, the court finds excusable neglect for the late filing and will consider Appellant's motion
The United States District Court for the District of South Carolina identified the proper standard in considering a motion for rehearing in Baumhaft v. McGuffin, C/A No. 4:06-CV-3617-RBH, 2007 WL 3119611, at *1 (D.S.C. Oct. 22, 2007):
At base, motions for rehearing are "designed to ensure that the appellate court properly considered all relevant information in rendering its decision." In re Zegeye, 2005 WL 544763, at *1 (citing In re Hessco Industries, Inc., 295 B.R. 372, 375 (9th Cir. BAP 2003)).
As noted previously, Appellant argues that the court took wrong turns at two points. He initially complains that the determination that the property in question was transferred failed to account for the fact that, under common law property principles, Debtor had no authority to effect the transfers in the first place. Thus, according to Appellant, the purported transfers were void, the property never left the estate, and it was subject to turnover. Appellant further contends that the court's finding that Appellees received the property as transferees, rather than conduits, was "mistaken" due to a misapplication of "the dominion-and-control test." (ECF No. 13-1, at 9).
The first argument was not raised in the bankruptcy court or on appeal. While Appellant did assert that the conveyances at issue were not transfers, he reasoned that this was because Appellees took possession as "conduits" or "intermediaries" of Debtor, not that the purported transfers were nullities. Moreover, his argument in the instant motion relies on the common law principle that "one cannot transfer more than one actually has" (Id. at 6), but the bankruptcy cases he cites in support are based on application of the automatic stay provision of § 362(a). See In re Kemp, 52 F.3d 546, 553 & n. 22 (5th Cir.1995) (citing § 362(a)(3) and (6) as the basis of its finding that the debtor "had no legal power to transfer the funds" at issue); In re DonPedro, No. 03-46671 TK, 04-4120 AT, 2004 WL 3187072, at *1 (Bankr.N.D.Cal. Nov. 30, 2004) ("the execution of the Deeds of Trust violated 11 U.S.C. § 362(a)(3) and thus were void").
With regard to Appellant's second claim — i.e., that the court erred in rejecting his argument that no transfers occurred because Appellees were "conduits," rather than "transferees" — it is unclear what it is the court is alleged to have overlooked. Regarding the "dominion and control" test for determining whether a transfer has occurred, the court explained that "the minimum requirement of status as a `transferee' is ... the right to put the [property] to one's own purposes." In re Minh Vu Hoang, 469 B.R. at 622 (quoting Bonded Financial, 838 F.2d at 893). It then found that it "strain[ed] credulity to suggest that an entity holding title to property does not exercise `dominion and control' over it[.]" In re Minh Vu Hoang, 469 B.R. at 622. Appellant now argues that "merely having title to the property is not dispositive" because "one may hold title to property as an agent, trustee, or nominee for someone else." (ECF No. 13-1, at 10). While this appears to be indistinguishable from the argument that was considered and rejected on appeal, it also misses the point. The relevant question was whether the transactions at issue were "transfers," as that term is defined in the bankruptcy context. As explained in the prior opinion, "[t]he term `transfer'" is defined by § 101(54) as "mean[ing] ... each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with ... property[] or ... an interest in property." The transactions at issue in this case clearly fell within that definition, just as they satisfy the "dominion and control" test because the holder of title to real property has the ability to put the property to his own use. Appellant does not address these points in his motion. Rather, he essentially restates the same argument that was considered and rejected previously. A motion for rehearing, however, "is not a means by which to reargue a party's case." In re Zegeye, 2005 WL 544763, at *2. To the extent that Appellant's argument is distinguishable, the court is not persuaded that it "overlooked or misapprehended" any significant point in the prior opinion. Accordingly, Appellant's motion for rehearing will be denied.
For the foregoing reasons, Appellees' motion to strike will be denied, Appellant's motion for extension will be granted, and Appellant's motion for rehearing will be denied. A separate order will follow.
(ECF No. 6-13, at 26).
Equally unmoving is his argument that the court "departed from appropriate bankruptcy procedure" by declining to hold oral argument. Pursuant to Bankruptcy Rule 8012, "[o]ral argument will not be allowed if ... the facts and legal arguments are adequately presented in the briefs and record and the decisional process would not be significantly aided by oral argument." The court expressly found that was the case here. See In re Minh Vu Hoang, 469 B.R. at 608.