Saturday, December 7, 2013

Vacating an Order as Void Ab Initio Pursuant to NRCP 60(b)

Excerpted from a Brief in Support of a Motion
to Vacate Partial Summary Judgment
Three and half years ago, Plaintiff filed a Motion for Partial Summary Judgment seeking findings of fact, conclusions of law and judgment against Defendant Vandelay Industries and Jerry Seinfeld.  This Court and the sitting Judge at the time (Judge Dredd) granted Plaintiff’s motion in its entirety.[1]  Before the proposed order was presented to the judge for review and execution, before it was filed and entered, Vandelay filed for bankruptcy and removed this matter to bankruptcy court.  Plaintiff sought remand and secured from the bankruptcy court an order remanding the case back to this Court on the express condition that any and all claims against Vandelay (now a bankruptcy debtor) be relinquished and dismissed (the “Bankruptcy Order”).  Indeed, the Bankruptcy Order modified the automatic stay for the express and singular purpose of allowing Plaintiff to amend her complaint accordingly.
After a two-year hiatus[2] subsequent to securing remand, Plaintiff revisited this case and in an effort to salvage partial summary judgment as to Seinfeld as rendered by this Court against Vandelay and Seinfeld, fashioned an order that: (1) fails to reflect the motion for judgment that she actually filed and the relief requested therein; (2) mischaracterizes the nature and subject of the proceedings at the hearing on the motion; and (3) fails to reflect the actual decision of the Court resulting from the motion, opposition, affidavits, evidence, exhibits, oral argument, and deliberation on the matter.
Instead, Plaintiff endeavored to whitewash the Order in a futile effort to avoid running afoul of the provisions of §362 and the automatic stay.  Plaintiff did not succeed.  Indeed, the Order as filed and entered, directly violates the mandate of the Bankruptcy Court’s Order for Remand and is void ab initio pursuant to NRCP 60(b)(4).  It is an impermissible continuance of a proceeding against Debtor.
If the Belated order stands in its present form, despite Plaintiff’s superficial efforts to avoid affecting the Debtor and its estate, the net result would be that the Deed of Trust on the Pueblo Property must be revised and rerecorded rescinding Plaintiff’s pro rata interest in same.  As a result the Debtor’s Note in favor of Plaintiff must be reinstated and reflected by the Debtor obliging it to amend Debtor’s bankruptcy schedules to the detriment of Debtor’s estate and Plaintiff would be obliged to return to the Debtor’s estate the $61,033.01 she received as part of the transaction she now claims she rescinded.  Such a result is not consistent with the Bankruptcy Order on Remand which presumed that any and all claims against Debtor were to be dismissed prior to Plaintiff proceeding on remand in state court.[3]
Moreover, Plaintiff’s efforts to re-characterize the nature of her motion for partial summary judgment, the proceedings at the hearing and the Judge’s decision, result in plain misstatements of facts not otherwise in dispute, and as a consequence, must be vacated pursuant to NRCP 60(b)(1).  Plaintiff’s contortion of findings in an effort to superficially comply with the Bankruptcy Court Order does not comport with the facts and constitutes fraud, misrepresentation or other misconduct as contemplated by NRCP 60(b)(3).

11 USC § 541 in the Context of Alter Ego Claims

Excerpted from a Brief in Support of Defendant’s
Opposition to a Motion for Leave to File a Second Amended Complaint
Section 541(a) sets forth what constitutes property of a bankruptcy estate.  Any claims which the debtor could make that might inure to the benefit of the estate and therefore its creditors are claims belonging to the trustee.  In the present case, Plaintiff claims that the Debtor and the Non/Debtor co-defendants engaged in certain contractual breaches and tortious conduct including but not limited to fraud, resulting in financial loss and injury to her.  She filed her claims pre-petition.  Ordinarily, the provisions of §362 might apply so as prevent or preclude her from pursuing her claims at least against the debtor absent a lifting of the stay.  But in this case, one or more of the Non/Debtor co-defendants removed this action to the bankruptcy court affording plaintiff free reign to pursue her claims there, without hindrance.  The nature of the claims is not such that a trustee would or could bring on behalf of the estate or on behalf of its creditors as they are claims against the Debtor.  A Debtor does not sue itself.  Alter-ego lawsuits may be pursued against the debtor in bankruptcy court, without lifting the automatic stay. Despite the apparent silence of the Code on this point, the Code implicitly permits the filing of suit in the bankruptcy court against a debtor without violating the automatic stay.  The action as removed to bankruptcy court was nothing more or less than any other adversary claim.  Instead of hanging their hats on what, if any, protection the provisions of the automatic stay might have afforded them, the Defendants in this case removed the action.  They opened the door and laid out the red carpet for the Plaintiff to pursue her claims.  Instead of doing so, she waited five months, and filed for remand and in so doing looked the proverbial gift horse in the mouth and kicked it.  Then, after waiting around for two years, she now seeks the benefit of a tolling period so as to avoid the mandate of NRCP 41(e).  No such tolling period is warranted.