Filed: Mar. 07, 2014
Latest Update: Mar. 02, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 13-2171 _ In re: VICTOR MONDELLI, Appellant _ On Appeal from the United States District Court for the District of New Jersey (D.C. No. 12-cv-04659) District Judge: Honorable William J. Martini _ Submitted Under Third Circuit LAR 34.1(a) March 6, 2014 Before: RENDELL, SMITH and HARDIMAN, Circuit Judges. (Filed: March 7, 2014) _ OPINION _ HARDIMAN, Circuit Judge. Victor Mondelli appeals the District Court’s order affirming
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 13-2171 _ In re: VICTOR MONDELLI, Appellant _ On Appeal from the United States District Court for the District of New Jersey (D.C. No. 12-cv-04659) District Judge: Honorable William J. Martini _ Submitted Under Third Circuit LAR 34.1(a) March 6, 2014 Before: RENDELL, SMITH and HARDIMAN, Circuit Judges. (Filed: March 7, 2014) _ OPINION _ HARDIMAN, Circuit Judge. Victor Mondelli appeals the District Court’s order affirming ..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 13-2171
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In re: VICTOR MONDELLI,
Appellant
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On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 12-cv-04659)
District Judge: Honorable William J. Martini
____________
Submitted Under Third Circuit LAR 34.1(a)
March 6, 2014
Before: RENDELL, SMITH and HARDIMAN, Circuit Judges.
(Filed: March 7, 2014)
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OPINION
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HARDIMAN, Circuit Judge.
Victor Mondelli appeals the District Court’s order affirming the Bankruptcy
Court’s dismissal of his Chapter 13 petition and its imposition of sanctions. We will
affirm.
I
Mondelli first filed for bankruptcy on February 18, 2004. At the time, he and his
mother Anna owned commercial property located in Berkeley Heights, New Jersey. As
part of the subsequent reorganization, the Bankruptcy Court approved a plan in which
Mondelli obtained a $650,000 loan in May 2007 from Jack Silverman Realty & Mortgage
Co. (Silverman) secured by mortgages on the commercial property.Mondelli also granted
Silverman’s affiliate, Berkeley Realty Partners 244, LLC (Berkeley), a 99-year lease to
redevelop the property.
Mondelli used the funds obtained from Silverman to pay his creditors in full, but
then sought to void Silverman’s mortgages by filing numerous motions with the New
Jersey Superior Court, the Bankruptcy Court, the District Court, the Third Circuit, and the
Supreme Court. While Mondelli’s efforts proved unsuccessful, they prevented Berkeley
from obtaining financing for and moving forward with its development project. In March
2011, vexed by Mondelli’s litigation to void the bankruptcy plan, the District Court
imposed monetary sanctions on Mondelli’s counsel. See In re Mondelli, Civ. No. 10-
3393, 2011 WL 1211433, *8 (D.N.J. Mar. 19, 2011), aff’d at No. 11-3029,
2012 WL
6685476 (3d Cir. Dec. 26, 2012).
While Mondelli maneuvered through the federal courts, he defaulted on his
payments to Silverman. Silverman obtained judgments of foreclosure in the New Jersey
Superior Court in September 2011, and a sheriff’s sale of the commercial property was
scheduled for February 1, 2012. At Mondelli’s request, the sale was adjourned until
2
February 29, 2012.1
Mondelli filed multiple motions to stay the sheriff’s sale, which were denied. He
then applied to the New Jersey Superior Court for permission to file an emergency
application for a stay, which was denied on the afternoon of February 28, 2012, the day
before the scheduled sheriff’s sale.
That same evening, Anna Mondelli filed a voluntary petition for bankruptcy under
Chapter 13, which again stayed the sale. The Bankruptcy Court dismissed this petition as
a bad-faith filing and lifted the stay, and the sheriff’s sale was rescheduled for March 14,
2012.
On the morning of March 14, 2012, Mondelli filed yet another Chapter 13 petition,
which is the subject of this appeal. Silverman moved to dismiss the petition the same day,
requesting the Bankruptcy Court to sanction Mondelli for making “another in a long chain
of bad faith [filings].” Silverman Mot. to Dismiss 13, B.R. No. 12-16514, ECF No. 3-2.
Silverman also claimed that “the games and the outrageous conduct of Mr. Mondelli and
his attorneys” had cost Silverman $300 a day. On March 20, 2012, the Bankruptcy Court
entered an order dismissing Mondelli’s petition as a bad-faith filing and sanctioning him
$6,000. Mondelli appealed to the District Court, which affirmed the Bankruptcy Court’s
1
Mondelli also sought to evict Berkeley from the property in a suit filed February
2012 in landlord-tenant court. This action was transferred to the New Jersey Chancery
Division and consolidated with another pending state-court action involving Mondelli,
Silverman, and Berkeley.
3
decision on March 21, 2013.
Mondelli timely filed this appeal. While this appeal was pending, Silverman
purchased the property for $100 at a rescheduled foreclosure sale.
II2
Mondelli’s principal argument on appeal is that the Bankruptcy Court erred in
dismissing his petition as a bad-faith filing.3
A bankruptcy court may dismiss a Chapter 13 petition that is filed in bad faith “for
2
The District Court had jurisdiction under 28 U.S.C. § 158(a)(1) and we have
jurisdiction under 28 U.S.C. §§ 158(d) and 1291. Because the District Court sat as an
appellate court reviewing the Bankruptcy Court’s order, we review its decision de novo.
In re Continental Airlines, 125 F.3d 120, 128 (3d Cir. 1997). Exercising the same
standard of review as the District Court, we review the Bankruptcy Court’s legal
determinations de novo, its factual findings for clear error, and its final determinations for
abuse of discretion.
Id. We review the Bankruptcy Court’s imposition of sanctions for
abuse of discretion. Fellheimer, Eichen & Braverman, P.C. v. Charter Tech., Inc.,
57
F.3d 1215, 1223 (3d Cir. 1995).
3
Mondelli raises six additional arguments on appeal. Specifically, he challenges
the conversion of his 2004 bankruptcy case from a Chapter 13 to a Chapter 7 petition, the
denial of his right to dismiss that case, and the Court permitting him to enter into the
mortgages and loan agreement with Silverman in 2007, over the Trustee’s objection. He
also claims that the loss of his property to Silverman through foreclosure was
unconscionable, that the Bankruptcy Court and the District Court failed to consider
Silverman’s wrongdoing in providing the mortgages, and that he was mentally incapable
of representing himself in these bankruptcy proceedings. Because these claims do not
stem from the present petition, they are not properly before us on appeal. Moreover,
Mondelli’s arguments on these issues are collaterally estopped because they have been
fully litigated in prior decisions. See Raytech Corp. v. White, 54 F.3d 187, 190 (3d Cir.
1995).
4
cause” under 11 U.S.C. § 1307(c). In determining whether a bankruptcy was filed in bad
faith, courts look to the factors articulated in In re Lilley, 91 F.3d 491 (3d Cir. 1996),
which include:
[T]he nature of the debt; the timing of the petition; how the debt arose; the debtor’s
motive in filing the petition; how the debtor’s actions affected creditors; the
debtor’s treatment of creditors both before and after the petition was filed; and
whether the debtor has been forthcoming with the bankruptcy court and the
creditors.
Id. at 496 (quoting In re Love,
957 F.2d 1350, 1357 (7th Cir. 1992)) (alteration omitted).
As the Bankruptcy Court noted in this case, the suspicious timing of Mondelli’s
petition indicated that his sole purpose in filing for bankruptcy was to delay the sheriff’s
sale of the property. Indeed, his filing occurred only after numerous attempts to stay the
sale were denied in the New Jersey Superior Court, and after his mother’s petition, which
also operated to reschedule the sale, was dismissed by the Bankruptcy Court as filed in
bad faith. The record also shows that Mondelli received credit counseling on February 29,
2012, the day after his mother’s unsuccessful petition. Thus, while he had enough
information then to file his own petition, he waited two weeks for a more strategic
moment—on the eve of the rescheduled March 14 sheriff’s sale—to do so. Having failed
to void Silverman’s mortgages on the property, and having defaulted on his obligations,
Mondelli sought to avoid the consequences of his actions by abusing the bankruptcy
process through his dilatory conduct.
Mondelli claims that his petition was filed in good faith, insisting that he had a
5
“viable plan to extract himself from the bankruptcy case once it was filed.” This
argument is based on Mondelli’s unsupported statement that his cousin would purchase
the commercial property. The Bankruptcy Court found as a matter of fact that this
familial bailout was illusory, as the proposed contract was contingent on a $1.2 million
mortgage that could take months to resolve, and required “confirmation there [was] no
pending or threatened litigation or appeals.” The purchase agreement also required the
sellers to deliver clear and marketable title at closing, a near impossibility given
Berkeley’s 99-year lease on the property. Mondelli never approached Silverman with a
proposal for a buyout, nor did he bring his cousin to the sheriff’s sale where the property
was ultimately sold.
Mondelli also contends that the Bankruptcy Court erred in considering prior
bankruptcy proceedings, including his mother’s failed petition, in determining whether
the petition at issue was filed in bad faith. Again, we disagree. The Bankruptcy Court
rightly found Mondelli’s pattern of filings probative of his motives in this petition. While
the Bankruptcy Court did err in finding that Mondelli exercised power of attorney over
his mother’s petition, it had a reasonable basis to determine that Mondelli was aware of
and orchestrated her filing.
Accordingly, we find no error in the Bankruptcy Court’s ruling that Mondelli had
no reasonable prospect of reorganization under Chapter 13, and that there was no
6
legitimate purpose for his bankruptcy filing.4
III
Mondelli also challenges the Bankruptcy Court’s imposition of sanctions, claiming
it was inappropriate because his petition was made in good faith. Because the Bankruptcy
Court properly determined that Mondelli acted in bad faith, it similarly acted within its
discretion in sanctioning him for the costs Silverman and the Chapter 13 Standing Trustee
have incurred in responding to this petition. See Chambers v. NASCO, Inc., 501 U.S. 32,
50 (1991) (a federal court may use its “inherent power to impose attorney’s fees as a
sanction for bad-faith conduct”). And the amount of sanctions is, as Mondelli tacitly
concedes, well within reason on the facts of this case.
IV
For the foregoing reasons, we will affirm the District Court’s order upholding the
Bankruptcy Court’s dismissal of Mondelli’s Chapter 13 petition as a bad-faith filing and
its decision to impose $6,000 in sanctions.
4
Silverman also contends that the Bankruptcy Court did not have jurisdiction over
this petition because the amount Mondelli owed exceeded the statutory limit set forth in
11 U.S.C. § 109(e). Because the Bankruptcy Court’s finding of bad faith is an
independent ground for dismissal, we do not reach this argument.
7
