JOANNA SEYBERT, District Judge.
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. (Bankr. Ct.'s March 10, 2014 Order, Docket Entry 1-28, at 2.) 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. (Mortgage Agreement, Docket Entry 1-3, at 80.) 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, New York, under index number 932/2009 (the "Foreclosure Action"). (Bankr. Ct.'s March 10, 2014 Order at 2-3.) Moxey never answered Tuthill's summons and complaint. (Bankr. Ct.'s March 10, 2014 Order at 3.) Thereafter, Tuthill transferred its unanswered Foreclosure Action to MPJM Crush Holdings, LLC ("Crush"). (Assignment of Mortgage, Docket Entry 1-3, at 118.)
After it received Tuthill's interest in the Foreclosure Action, Crush obtained a default judgment against Moxey. 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. (Bankr. Ct.'s March 10, 2014 Order at 3.) Moxey filed for bankruptcy to prevent the foreclosure sale.
Moxey filed a voluntary bankruptcy petition under Chapter 7 of the Bankruptcy Code on July 12, 2012. (Bankr. Pet., Docket Entry 1-53.) Moxey's petition valued the Property at $600,000.00 and indicated that it was encumbered by two mortgages totaling $757,000.00. (Bankr. Pet. at 14.)
Robert L. Pryor (the "Trustee") was appointed as the Chapter 7 trustee of the bankruptcy estate.
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. (
On January 9, 2013, Crush assigned its stalking-horse bid to Maaas Enterprises, LP ("Maaas") and V-Jama Holdings, LLC ("Jama"). (Bankr. Ct.'s March 10, 2014 Order at 5.) The sale was later closed, and the Trustee executed a deed conveying the Property to Maaas and Jama. (Quitclaim Deed, Docket Entry 1-3 at 129.)
After the transfer of the Property, Moxey began a flurry of legal activity. Moxey sued the Trustee, Crush, Tuthill, Maaas, Jama, and others in New York State Supreme Court, Kings County (the "State Court Action"), and commenced adversary proceeding 13-8108 against the Trustee (the "Adversary Proceeding"). The State Court Action was removed to this Court, then transferred to the Bankruptcy Court and consolidated with the Adversary Proceeding. (Bankr. Ct.'s Oct. 29, 2013 Order, Docket Entry 1-10.) Moxey was ordered to file an amended complaint. (Bankr. Ct.'s Oct. 29, 2013 Order.)
Moxey has since flooded the Bankruptcy Court with various motions, including a Motion for Referral of the Matter to the United States Trustee for Fraud (the "Motion for Criminal Referral") and a Motion to Remove the Trustee. On February 25, 2014, the Bankruptcy Court held a hearing on these (and other of Moxey's) motions. At that hearing, Moxey was unable to articulate any factual basis for his allegations. (Bankr. Ct.'s March 10, 2014 Order at 9.) As a result, the Bankruptcy Court denied Moxey's Motion to Remove the Trustee and Motion for Criminal Referral. (Bankr. Ct.'s March 4, 2014 Order, Docket Entry 1-26.)
Later, on March 10, 2014, the Bankruptcy Court issued an order that found that Moxey was abusing the litigation process, and enjoined Moxey from filing any non-responsive pleadings without authorization for ninety (90) days from February 25, 2014. (Bankr. Ct.'s March 10, 2014 Order.)
Moxey now challenges (1) the Bankruptcy Court's denial of his motion to Remove the Trustee, (2) the Bankruptcy Court's denial of his Motion for Criminal Referral, and (3) the Bankruptcy Court's enjoining him from filing unapproved pleadings for ninety days. Moxey goes far beyond alleging that the Bankruptcy Court erred in these rulings, alleging—without any factual basis that the Court can discern—that Judge Trust has criminally conspired against him.
The Court will first discus the applicable standard of review, before considering each of Moxey's challenges in turn.
A district court acts as an appellate court in reviewing judgments rendered by the Bankruptcy Courts. FED. R. BANKR. P. 8013;
Moxey first alleges that the Bankruptcy Court erred when it refused to remove Robert L. Pryor as the Trustee. Moxey asserts that the sale of the Property was the result of some illegal collusion between the Trustee and buyers, and the Bankruptcy Court should have removed the Trustee as a result of his double-dealing.
A bankruptcy court may remove a trustee for cause. 11 U.S.C. § 324(a). In defining "cause" for removal, the Second Circuit has encouraged courts to look to the elements of fraud and actual injury to debtor interests.
The Bankruptcy Court's denial of Moxey's motion to remove is AFFIRMED for substantially the same reasons articulated by the Bankruptcy Court. The Court cannot find any evidence even suggesting that cause exists to remove the Trustee, much less sufficient evidence to establish a firm conviction that the Bankruptcy Court erred. Moreover, even if Moxey's allegations that the Trustee colluded with others to sell the Property were true, the Court can find no "fraud and actual injury to the debtor interests" compelling the Trustee's removal.
Accordingly, the Bankruptcy Court's denial of Moxey's motion to remove the Trustee is AFFIRMED.
Next, Moxey challenges the Bankruptcy Court's denial of his Motion for Criminal Referral. He offers no basis, in fact or in law, for overturning the Bankruptcy Court's decision.
As best as the Court can tell, Moxey argues that the Bankruptcy Court disregarded some duty to report the crimes he alleges to the appropriate authorities. Though he does not cite it, 18 U.S.C. § 3057 requires any judge that has reasonable grounds for believing a violation of the Bankruptcy Code has been committed to "report to the appropriate United States attorney all the facts and circumstances of the case." Moxey never alleged, however that the Bankruptcy Code had been violated, so the reporting requirements of section 3057 were not triggered. More importantly, the Bankruptcy Court held a hearing on the motion where Moxey was unable to assert any facts in support of his allegations of criminal activity. The Bankruptcy Court's finding that no factual basis exists for believing a crime has been committed is unsurprising.
Accordingly, the Bankruptcy Court's denial of Moxey's Motion for Criminal Referral is AFFIRMED.
Finally, Moxey challenges the Bankruptcy Court's prohibiting him from filing any pleadings with the Bankruptcy Court for a period of ninety days, beginning on February 25, 2014. Because the ninety-day period has ended, this Court is unable to grant any effective relief, and Moxey's appeal is therefore moot.
Accordingly, Moxey's appeal of the Bankruptcy Court's order enjoining him from filing pleadings without permission is DISMISSED AS MOOT.
For the foregoing reasons, the Bankruptcy Court's denial of Appellant's Motion to Remove the Trustee and Motion for Criminal Referral are AFFIRMED. Appellant's appeal of the Bankruptcy Court's imposition of a filing injunction is DISMISSED AS MOOT. The Clerk of the Court is directed to mail of a copy of this Memorandum and Order to the
SO ORDERED.