STEPHEN RASLAVICH, Bankruptcy Judge.
Before the Court are two Motions wherein the Movants seek dismissal of those counts in the above adversary proceeding which are directed at them. One dismissal motion has been filed by 10 of the 15 defendants who refer to themselves collectively as the "Capital Family Defendants." The other is brought by the remaining 5 defendants, who refer to themselves collectively as the "Segal Defendants."
A rather detailed review of the history of this case is required in order to place the matters before the Court in their proper light.
The Debtor, Stanley Segal, commenced this Chapter 7 Bankruptcy case on August 13, 2010. The case was filed on his behalf by attorney Robert Chernicoff, of the firm Cunningham & Chernicoff, P.C. Robert Holber was appointed Chapter 7 Trustee. The precipitating event for the bankruptcy filing was a $1,829,369 judgment entered against Segal in the Philadelphia Court of Common Pleas on July 27, 2010. The judgment arose from litigation wherein the Plaintiff, Reliant Healthcare Management, Inc. ("Reliant") claimed that Segal and others had conspired to tortiously interfere with Reliant's contract to manage a pair of nursing home facilities owned by an entity controlled by Segal. Reliant was represented in State Court by Attorney Mark L. Rhoades of the law firm Mitts Milavec, LLC. Segal was represented by attorney Christopher J. Fox, of the law firm Richman Berenbaum & Associates, P.C.
The State Court litigation was commenced in January 2008. At about that time Segal was negotiating a sale of the two nursing home facilities to two of the Capital Family Defendants (i.e., Capital Family Partners, LLC and Green Lion Group, LLC). The sale was consummated on April 27, 2008. Among the consequences of the sale was what was later determined in State Court to be the improper termination of Reliant's contract to manage the nursing homes. Reliant's judgment makes it the Debtor's largest unsecured creditor.
Two days prior to closing on the sale of the nursing homes the Buyers had entered into a consulting agreement with Segal, (the "Consulting Agreement") Pursuant to it, Segal was to be paid $1.9 million over a period of 10 years to provide various and sundry consulting services to the Buyers, all as described in the Consulting Agreement. (See Exhibit D to the Complaint.)
Two $250,000 payments were made to Segal in 2008. There is apparently a dispute as to whether one additional $250,000 payment was made, but it appears agreed that no other installment payments under the Consulting Agreement were made. Segal disclosed and described his "rights" under the Consulting Agreement on Bankruptcy Schedule B (Personal Property) at ¶ 21. (Contingent and Unliquidated Claims), as follows:
He estimated the value of this asset as "unknown." Payments under the Consulting Agreement were guaranteed by two of the Capital Family Defendants, Eliezer Friedman and Naftali Weinberger. (See: Complaint Exhibit D).
Meanwhile, Segal's Schedule "C" — Property Claimed as Exempt, contained the following relevant entry at ¶ 22:
Segal had claimed the Federal as opposed to the State exemptions, and in that regard had claimed "any remaining equity" in the "monies owed" as exempt under 11 U.S.C. § 522(d)(5). Segal again, however, reported the value of the asset as "unknown."
A Section 341 first meeting of creditors was originally scheduled in Segal's case for September 10, 2010. The meeting of creditors was eventually held on September 28, 2010. Shortly thereafter, on October 10, 2010, Attorney Rhoades entered his appearance in the Bankruptcy case on behalf of Reliant (Docket Entry # 20). At that time Rhoades was still associated with the firm, Mitts Milavec, LLC. On October 28, 2010, attorney Fox entered his appearance in the case as "an interested party." By that time attorney Fox had become associated with the firm Lamm Rubenstone, LLC.
On October 29, 2010 Trustee Holber filed a notice changing the status of the Segal Bankruptcy case from "no-asset" to
A separate Notice to this effect was sent to scheduled creditors and it advised them to file any claims against the Bankruptcy estate no later than January 31, 2011. Concurrently with his "change" notice, Trustee Holber filed an application to employ attorney Dexter Case as his counsel under 11 U.S.C. § 327(a). An Order approving that request was entered on November 12, 2010.
On December 21, 2010 attorney Rhoades filed Motions on behalf of Reliant to take Bankruptcy Rule 2004 examinations of the Nursing Home Buyers: Capital Family Partners, LLC, and Green Lion Group, LLC. (Docket Entry # 62 and # 63)
The two motions each read the same. Of significance, they each recite in pertinent part, as follows:
The Motions at Exhibit "B" elaborate on the "topics for the examination," as follows:
On December 23, 2010 attorney Rhoades filed a third Rule 2004 Motion, this seeking an examination of Segal. It was unopposed and the Motion was granted on January 25, 2011. Answers in opposition to the 2004 Examination requests as to Capital Family Partners, LLC and Green Lion Group, LLC, had been filed and a hearing on these was held January 25, 2011. The parties thereafter reported that dispute as having been resolved consensually. The examinations were thereupon scheduled and took place. The Motions, Settlement Stipulation and Approval Orders were all served on the Trustee and his counsel, Dexter Case, Esquire.
On April 1, 2011 the Trustee filed an Objection to the exemptions claimed by the Debtor on Bankruptcy Schedule "C," (Docket Entry # 105). The Trustee noted therein that 1) the Debtor had claimed the exemption of "monies owed" under 11 U.S.C. § 522(d)(5); 2) that Section 522(d)(5) places a dollar limit on the maximum allowable exemption thereunder; 3) that the Debtor had all but exhausted the available exemption under Section 522(d)(5) on other property; and 4) that the Debtor had listed the value of the monies owed as unknown. As a consequence, the Trustee asserted that he could not determine if the Debtor's claim of exemption in the monies allegedly owed under the Consulting Agreement exceeded the Debtor's remaining entitlement under 11 U.S.C. § 522(d)(5). The Trustee calculated the Debtor's remaining entitlement, after deducting all other property claimed as exempt under that section, to be $410. Accordingly the Trustee requested that the Debtor's entitlement to "any remaining equity" in the "monies owed" be capped at $410.
A hearing on the Trustee's Exemption Objection was held on April 28, 2011. At that time the parties reported the matter settled. On May 3, 2011 a Stipulation and Consent Order was approved by the Court. The parties' agreement is central to matters before the Court. The brief stipulation reads as follows:
Wherefore, Stanley J. Segal, the above named Debtor and Robert H. Holber, Trustee, respectfully request that this Honorable Court enter an Order approving the terms of this Stipulation.
The Stipulation was approved by the Court on May 3, 2011.
The next event of significance occurred on September 30, 2011, with the filing by attorney Rhoades of an adversary proceeding on behalf of Reliant requesting a determination that Segal's judgment debt to Reliant was non-dischargeable under 11 U.S.C. § 523(a)(6) because it was based on a wilful and malicious injury. (Docket Entry # 124). In support Reliant attached its Complaint from the Philadelphia Common Pleas Court lawsuit and the Jury's completed verdict form.
By January 9, 2012, Segal and Reliant had ostensibly settled their differences over the dischargeability action pursuant to a written stipulation fully executed by counsel on behalf of each. The Stipulation is attached as Exhibit "A" to a Motion seeking approval of the Stipulation as a "compromise" under F.R.B.P. 9019 (Docket Entry # 125). The Rule 9019 Motion was filed on January 9, 2012. It was served on Trustee Holber's counsel, Dexter Case, but recites at ¶ 22 that the Trustee "does not concur in the relief herein requested." Two days later, on January 11, 2012, attorney Chernicoff filed a Praecipe on Segal's behalf withdrawing the Rule 9019 Motion, without explanation.
Four days later, on January 16, 2012, the Trustee filed a Notice changing the Segal Bankruptcy case back from an "asset" case to a "no-asset" case. Concurrently therewith the Trustee filed a "Report of No Distribution" and asked to be discharged from any further duties. (Docket Entry # 128)
Despite withdrawal of the Rule 9019 Motion, Reliant's non-dischargeability case was still reported as settled. It was accordingly closed on March 8, 2012. On
Three days later, on June 29, 2012, Segal filed a Complaint in the United States District Court for the Eastern District of Pennsylvania against Eliezer Friedman and Naftali Weinberger, the two Capital Family Defendants who had guaranteed payment under the Consulting Agreement. (Civil Action 12-3663)
Segal's Complaint was filed by attorney Fox. It contains three counts: 1) Breach of Contract; 2) Fraud; and 3) Civil Conspiracy. Although the demand for relief is unliquidated, it appears, at a minimum, that Segal is pressing claim to amounts unpaid under the Consulting Agreement.
The Defendants moved to dismiss Segal's complaint, however, the District Court did not do so. Instead, on October 4, 2012, the Court issued an Order transferring Segal's Civil Action to the Bankruptcy Court, as follows:
On January 18, 2013 Attorney Fox filed a Motion to Transfer the Civil Action back to the District Court (Docket No. 136), arguing that the Consulting Agreement had been fully considered by the Trustee and had been abandoned to Segal who now held "all rights and title to the Consulting Agreement." (Motion at ¶ 10).
Segal's Transfer Motion was opposed by Friedman and Weinberger, and also by Reliant. A hearing on the matter was held on February 6, 2013. Attorney Fox appeared on behalf of Segal, Attorney Rhoades appeared on behalf of Reliant, and Attorney William J. Levant of the firm Kaplin, Stewart, Meloff, Reiter & Stein, P.C. appeared on behalf of Friedman and Weinberger. Former Trustee Holber filed no papers and was not present at the hearing, in person or through counsel.
At the hearing attorney Fox represented to the Court that he had spoken to Holber's former counsel a few months earlier and was told that Holber took no position and planned to take no action. (N.T. 2/6/13, at 3). Fox also argued that the funds being claimed under the Consulting Agreement by Segal were "wages" and would not be part of the Bankruptcy Estate in any event. (Id.)
Friedman and Weinberger argued that it would be premature to simply transfer the Civil Action back to the District Court without conducting a hearing on the matters described in the District Court's October 4, 2012 Order. Further to this point,
As noted, a hearing on the transfer Motion was held on February 6, 2013. At the hearing, Reliant's attorney, Rhoades, appeared and identified himself as the one who "presented this case" to the Trustee (N.T. 2/6/13, at 8) It would appear that Rhoades' association with the Mitts Milavec Law Firm had by this time ended. Rhoades was now associated with the Haviland Hughes Law Firm.
Asked whether he had ever offered to be special counsel to the Trustee, Rhoades stated that he had had several discussions with the Trustee about that. (N.T. 2/6/13, at 8) He stated that the Trustee "would not advance the case" but had asked if Rhoades' client "would advance the cause of the case." The client apparently said no, and there were then discussions over whether Rhoades would take the case on a contingency basis. Rhoades informed the Court on February 6, 2013 that he was unable to do so at that earlier time, but that he was ready to do so now. (Id.)
Friedman and Weinberger's counsel, Levant, acknowledged that his clients were going to be sued over the Consulting Agreement in any event, but that "candidly" he would much rather deal with a Chapter 7 Trustee and counsel that Mr. Segal. (N.T. 2/6/13, at 9) The Court concluded that overall the situation did not pass what it called "the smell test" and indicated it would reopen the case. Attorney Levant suggested the appointment of a Chapter 7 Trustee other than Mr. Holber, while attorney Fox argued for appointment of Mr. Holber, but against his retaining attorney Rhoades as special counsel. Those, however, were questions for another day.
That day arrived shortly. On February 7, 2013 Holber was reappointed Chapter 7 Trustee and on February 27, 2013 attorney Dexter Case was reappointed as his counsel. Trustee Holber withdrew his Report of No Distribution on February 18, 2013 and once again changed the status of the case from a "no-asset" case to an "asset" case. On March 13, 2013 Attorney Case filed an Application on behalf of Holber for authority to retain Rhoades and his new firm Haviland Hughes as special counsel to the Trustee for the following purpose:
Friedman and Weinberger objected to the request to retain Rhoades, as did Segal. Friedman and Weinberger asserted that Segal had released any claims under the Consulting Agreement and that they had written proof thereof. Segal claims his signature on the purported release documents is forged. Friedman and Weinberger argued that this was a threshold issue and that the Trustee should retain a handwriting expert to verify the authenticity of the release documents before any more litigation was undertaken. They stated further that, irrespective of the authenticity issue, they stood ready to discuss amicable resolution of the Estate's claims against them. Segal, as noted, argued that the monies owed under the Consulting Agreement "constitute the equivalent of wages," and as such were not subject to the jurisdiction of the Trustee. Segal also argued that any claims having to do with the sale of the nursing homes in 2008 were time barred, such that the issue of the Consulting Agreement was the only matter capable of being pursued in the Civil Action transferred to this Court by the District Court.
A hearing on Holber's Application to Retain Rhoades was held on April 3, 2013. At that time Attorney Levant reiterated his position, both on the existence of a release, and on his client's willingness to settle with the Trustee irrespective of the release. Attorney Tracey Updike from Cunningham & Chernicoff appeared for Segal and reiterated Segal's position that the claims made in the District Court did not constitute an asset of the Bankruptcy Estate.
Also present at the April 3rd hearing was Attorney Fox, now apparently a sole practitioner. Attorneys Updike and Fox argued that, if there was going to be a retention of anyone, it should be Fox, 1) because he knew the case from having represented Segal in connection with it for so many years, 2) because Segal and Rhoades would need to cooperate in prosecuting the Civil Action, but they did not like each another, and 3) because Fox had agreed to a 40% contingency fee, whereas Rhoades wanted 50%.
The Court concluded that, inasmuch as Segal's argument was that any monies owed under the Consulting Agreement were wages not available to the Estate, the retention of Fox to represent Holber was out of the question. On the other hand, no one contradicted the Court's "working assumption" that there was no one other than Rhoades eager to take on this representation in an otherwise no-asset case. (N.T. 4/3/2013, at 19) Rhoades' retention was therefore approved. In doing so, however, the Court specifically noted the Objectors' argument that there was a potentially dispositive legal issue over whether any monies owed under the Consulting Agreement were or were not wages. The Court advised the parties that it seemed to make sense to address that threshold issue early on. Attorney Case assured the Court that they would be "cognizant of that" and "take a look at it." (Id. at 20-21)
Segal appealed the retention of Rhoades to the District Court. While the Appeal was pending Rhoades filed the instant adversary proceeding. (Docket # 172, November 6, 2013) On January 23, 2014 the present Dismissal Motions were filed. As noted above an omnibus response in opposition to the Motions was filed and a hearing was held on March 19, 2014. On March 20, 2014 the District Court concluded
At the outset it is important to recall that the limited reason this bankruptcy case was reopened was to address the mandate contained in the District Court's Order of October 4, 2012, which was to determine if the subject of the Contract at issue before the District Court, (i.e., the Consulting Agreement) had been properly reported to the Bankruptcy Court and considered by the Trustee during the pendency of the Plaintiff's Chapter 7 petition. The Court answers this ultimate question first; answers it in the affirmative; and will so advise the District Court via a copy of this Opinion.
The evidence in support of this conclusion is extensive. Initially, the Consulting Agreement was scheduled as an asset, albeit with unknown value and questionable collectability. However, the Trustee's special counsel on more than one occasion has conceded that he personally reviewed the legitimacy of the Consulting Agreement with the Trustee. In particular, when Segal moved to transfer the Civil Action back to the District Court soon after it arrived here, Segal asserted inter alia the following:
In response, Rhoades on behalf of Reliant replied, as follows:
The foregoing recital is compelling evidence of "what the Trustee knew and when he knew it." Further to the point, the Trustee had obviously considered the Consulting Agreement, inasmuch as he had objected to the Debtor's claim that it was exempt in its entirety. The May 3, 2011 Stipulation between the Segal and the Trustee reflects an understanding and analysis of the relevant issues surrounding the Consulting Agreement. Pursuant to the May 3, 2011 Stipulation, unless Segal
In reaching this conclusion the Court has taken into consideration the anomaly of Friedman and Weinberger having initially signed onto the proposition that the Trustee lacked adequate information to properly assess the value of the Consulting Agreement. This argument was advanced on their behalf by Attorney Levant. The pair switched lawyers when the instant adversary proceeding was filed and are represented now, along with all of the other Capital Family Defendants, by the firm Flaster/Greenberg, P.C.
In their Motion to Dismiss this adversary proceeding the Capital Family Defendants now argue that the Trustee should be judicially estopped from arguing that he lacked sufficient information about the Consulting Agreement, based inter alia on the matters of record referred to by the Court above. (See N.T. 3/19/2014, at 9) In a roundabout way the Segal Family Defendants also adopt this argument.
Attorney Levant argued that Friedman and Weinberger wanted to see the case kept here because they would rather deal with the Trustee and his counsel rather than Segal. Segal was present at that hearing on February 6, 2013 and behaved a bit intemperately in open Court. Perhaps Friedman and Weinbergers' misgivings over having to deal with Segal are well founded. This, of course, does not justify an improper change of position, but possibly it provides some context. In the final analysis, however, regardless of the position of Friedman and Weinberger, past or present, the evidence is very clear that sufficient information about the Consulting Agreement had been reported to the Court and the Trustee during the pendency of the bankruptcy case. Moreover, it appears to have appropriately dealt with by the Trustee under the circumstances. This is to say that, with no funds in the estate and no one willing to represent the Estate on a contingency basis, the Trustee lacked the means to initiate what this case has already shown would be complex, expensive and time consuming litigation.
The Stipulation entered into between the Trustee and Segal appears to have struck the correct balance. If Segal prevails in his lawsuit, but cannot prove that any monies owed are post-petition wages, any funds recovered would presumably belong to the Estate. If Segal proves that there are monies owed, and that the monies at issue constitute post-petition wages, then the Estate is no worse off as a result.
The Court likewise acknowledges that the short 3 day interval between the date on which Segal's bankruptcy case was closed and the District Court Civil Action was commenced certainly gives one pause. Even under heightened scrutiny, however, the same picture emerges. Rhoades argued that Segal had planned this precise tactic. (See Consulting Agreement at ¶ 11 supra) Rhoades predicted this exact course of conduct in his Motions seeking Rule 2004 Examinations. Paradoxically, the fact that events transpired just as Rhoades anticipated adds weight to the argument that the information was known to all during the pendency of Segal's bankruptcy case. Once again, by his own admission, Rhoades reviewed all of this extensively with the Trustee.
There seem to be more than enough grounds for judicial estoppel to go around in this case. That said, the key change to the landscape appears to be that Rhoades, having changed his professional affiliation, has also apparently changed his mind about representing the Trustee on a contingency basis. Regrettably, it would also appear that the Trustee and his attorneys disregarded the Court's encouragement to consider the viability of Segal's
The events on which the Trustee's Complaint are based occurred in 2008. Bankruptcy Code § 108(a) provides the time limitations for a bankruptcy trustee to initiate a lawsuit, as follows:
11 U.S.C. § 108(a).
Thus, the Code permits the Trustee to commence an action, for which the applicable statute of limitations had not expired before the date when the bankruptcy case was filed, before the later of the time period provided under the applicable non-bankruptcy law statute of limitations or two years after the Order for Relief commencing the bankruptcy case.
As can be plainly seen, under either of the above alternatives the Trustee's Complaint is out of time. As noted, Segal's case was commenced with the entry of an Order for relief on August 3, 2010. If the operative limitation period is 2 years after the Order for Relief, than the bar date for all but three of the counts in the Complaint was August 3, 2012.
Alternatively, if the operative limitation period is the applicable non-bankruptcy statutory period, then all of the counts are still stale given the date of the relevant events (2008) and the applicable statutory periods which pertain to the various counts the Trustee has asserted.
In this regard the counts in the Trustee's Complaint consist of the following:
The applicable Bankruptcy and non-bankruptcy limitations periods for the above counts are, as follows:
COUNT I Violation of RICO, 18 U.S.C. §1962(c) 4 years7 COUNT II Conspiracy To Violate RICO, 18 U.S.C. § 1962(d) 4 years COUNT III Turnover Pursuant to 11 U.S.C. § 542(a) Timely, but otherwise fails as discussed below COUNT IV Turnover Pursuant to 11 U.S.C. § 542(a) Timely, but otherwise fails as discussed below COUNT V Fraudulent Transfer, 12 Pa. C.S.A. § 5104, 11 2 years, 11 U.S.C. § 546(a); U.S.C. §548 4 years, state analog — 12 Pa. C.S. § 5109 COUNT VI Aiding and Abetting Fraudulent Transfer 2 years, 42 P.S. § 5524(7) COUNT VII Fraud 2 years, 42 P.S. § 5524(7) COUNT VIII Fraudulent Misrepresentation 2 years, 42 P.S. § 5524(7) COUNT IX Negligent Misrepresentation 2 years, 42 P.S. § 5524(7) COUNT X Conversion 2 years, 42 P.S. § 5524(3) COUNT XI Civil Conspiracy 2 years, 42 P.S. § 5524(7) COUNT XII Aiding and Abetting Civil Conspiracy 2 years, 42 P.S. § 5524(7) COUNT XIII Aiding and Abetting Fraud 2 years, 42 P.S. § 5524(7) COUNT XIV Aiding and Abetting Conversion 2 years, 42 P.S. § 5524(3)
COUNT XV Concert of Actions 2 years, 42 P.S. § 5524(7) COUNT XVI Imposition of a Constructive Trust 2 years, 42 P.S. § 5524(7) COUNT XVII Unjust Enrichment 4 years, 42 P.S. § 5525(4) COUNT XVIII Breach of Contract 4 years, 42 P.S. § 5525(8) COUNT XIX Breach of the Implied Covenant of Good 4 years, 42 P.S. § 5525(4) Faith and Fair Dealing COUNT XX Action To Declare Eliezer Friedman, Naftali 2 years, 42 P.S. § 5524(7) Weinberger, Naomi Weinberger, Yehoshua Friedman, SF Family Credit Shelter Trust, 50 Jersey, LLC, Oakhurst Properties, LLC and Oakwood Healthcare, LLC Responsible For the Corporate Debts Of Capital Family Partners, LLC and Green Lion Group, LLC COUNT XXI Action to Declare Ardsley Group, Inc., 2 years, 42 P.S. § 5524(7) Ashton Hall, Inc. and Ashton Terrace, Inc. the Alter Egos of the Debtor. COUNT XXII Revocation of the Debtor's Discharge Under 1 year after discharge or Section 727(d)(2) of the Bankruptcy Code date on which bankruptcy case is closed. 11 U.S.C. § 727(e)(2)
In sum, on the face of the Complaint itself, and using any date during the year 2008 as the relevant time frame, all of the counts, insofar as they are subject to non-bankruptcy statutes of limitations, are out of time.
In reaching this conclusion, the Court has given the Trustee the benefit of the doubt as to whether certain of the Counts in his Complaint are even viable as independent causes of action. This would apply to Count XIII — Aiding and Abetting Fraud, which is duplicative of a claim for concert of action; Count XVI — Constructive Trust, which is an equitable remedy rather than an independent cause of action; Count XIX — Breach of Covenant of Good Faith and Fair Dealing, which is at best superfluous where a breach of contract claim is pled; and Count XX — personal liability for corporate debts, which is also a remedy rather than independent cause of action.
In the same vein, the Court has assumed, arguendo, that the Trustee can maintain turnover actions under 11 U.S.C. § 542(a), given that to prevail the Trustee's right to turnover must be uncontested, whereas here there is clearly a bona-fide dispute as to the Trustee's entitlement to the relief being sought. See In re Asousa Partnership, 264 B.R. 376, 384-385 (Bkrtcy.E.D.Pa.2001)
Most significantly, however, in reaching its conclusion the Court has considered but rejects the Trustee's arguments that, for purposes of a timeliness bar to his complaint, the Court should consider the various limitation periods to have been tolled so as to overcome any lateness. This really is the crux of the Trustee's position as to the entirety of his complaint. In this regard the Trustee makes reference to what he describes as two "complimentary" tolling doctrines. He describes them in this way:
(Trustee's Omnibus Response to Dismissal Motions at PPS. 22-23)
The Trustee accurately recites the law, but misapplies it to the facts. The District Court Civil Action deals with the Consulting Agreement alone. As hereinbefore discussed, the Trustee's rights with respect to the Consulting Agreement are by design preserved. The effort to connect the Consulting Agreement dispute with the Trustee's wide-ranging conspiracy theory appears to be a not so subtle attempt to circumvent the statutory periods which allow the former but bar the latter.
The November 7, 2012 docketing of the District Court's Order which transferred Segal's Civil Action to the Bankruptcy Court is a proverbial "red herring." It in no way supports the argument that until that point the Trustee had no knowledge of the matters raised in his complaint. The November 7, 2012 docket entry has marginal relevance at best, given the history of this case as detailed supra. In this regard, the Court stresses, once again, that the Trustee was timely acquainted with the entire alleged conspiracy, from multiple sources, including most importantly his own present special counsel, attorney Rhoades.
As an alternative to November 7, 2012, the Trustee argues that the various statutes of limitations should be considered to have been "equitably tolled," due to the Defendants' fraudulent conduct. This argument also lacks merit. Indeed, the authority on which the Trustee relies is unhelpful to him.
(Trustee's Omnibus Response to Dismissal Motions at P. 24)
The District Court Civil Action involves the Consulting Agreement. None of the above 3 instructive scenarios apply. As discussed, the Trustee knew of the details of the Consulting Agreement; he knew of the possible course of action Segal might pursue after his discharge; he protected the Estate's interests in the event that scenario obtained, and his rights in that regard are intact. The Court perceives no grounds for equitable tolling on these facts. The conundrum, if there is one, lies once again in the Trustee's attempt to conflate the 2012 Consulting Agreement litigation with his many other causes of action having to do with the nursing homes sale. This is perhaps understandable given the position in which the Trustee finds himself, which is that the latter causes of
The Defendants may have conspired as the Trustee alleges. Indeed, for purposes of these dismissal motions, the Court views all well pled allegations in the light most favorable to the Plaintiff/Trustee, and therefore assumes the Defendants acted as he alleges. See McTernan v. City of York, 577 F.3d 521, 526 (3d Cir.2009) There is no getting around the fact, however, that the claims in question were not concealed from the Trustee, let alone fraudulently concealed from him. The evidence, in fact, suggests just the opposite. The trustee had ample information and ample time in which to act before the various limitation periods expired. He was unable or unwilling to do so and cannot alter matters now via this belated adversary proceeding.
For all of these reasons, the Trustee's Complaint will be dismissed in its entirety and the Civil Action will be returned to the District Court. This Bankruptcy case, however, will remain open for the time being so that the Trustee may consider the position he wishes to take, if any, here or in the District Court with respect to Segal's Consulting Agreement Claims.
An appropriate Order follows.