13‐1632‐cv(L) Ace Investors, LLC v. Robert Rubin, et al.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 9th day of April, two thousand fourteen.
PRESENT: RALPH K. WINTER, RICHARD C. WESLEY, SUSAN L. CARNEY, Circuit Judges, ______________________
ACE INVESTORS, LLC,
Petitioner‐Appellee,
‐v.‐ Nos. 13‐1632‐cv(L), 13‐2264‐cv(con)
ROBERT RUBIN, individually, MARGERY RUBIN, as trustee of the Rubin Family Irrevocable Stock Trust, the Rubin Family Irrevocable Marital Trust, and the Rubin Family Irrevocable Realty Trust,
1 Respondents‐Appellants.* ______________________
FOR APPELLEE: Gary E. Doctorman, Parsons Behle & Latimer, Salt Lake City, UT (J. Michael Bailey, J. Thomas Beckett, Matthew D. Cook, Alan S. Mouritsen, Parsons Behle & Latimer, Salt Lake City, UT; David Graff, Shveta Kakar, Anderson, Kill & Olick, New York, NY, on the brief).
FOR APPELLANTS: Ahmed A. Massoud (Lisa Pashkoff, on the brief), Massoud & Pashkoff, New York, NY.
Appeal from the United States District Court for the Southern District of New York (Marrero, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED AND DECREED that the judgment is AFFIRMED in Part, and
VACATED and REMANDED in part.
Respondents‐Appellants appeal from three decisions of the United States
District Court for the Southern District of New York (Marrero, J.) entered on
April 23, 2013, May 8, 2013, and August 20, 2013 respectively. On April 23, 2013,
the district court entered an Order and Judgment that granted ACE Investors,
LLC’s (“Ace”) Verified Petition for Special Proceeding and Turnover. The Order
and Judgment, inter alia, (a) augmented a May 17, 2010 stipulated judgment Ace
had obtained against the Rubin Family Irrevocable Stock Trust (the “Stock
* The Clerk of the Court is directed to amend the official caption as noted above.
2 Trust”) in the District of Utah (the “Utah Judgment”), (b) imposed joint and
several liability against Margery Rubin as Trustee of the Stock Trust, Marital
Trust, and Realty Trust (collectively, the “Trusts”), Margery Rubin (“Margery”),
individually, and Robert M. Rubin (“Robert”), individually, and (c) attached
several of appellants’ assets.
On May 8, 2013 the district court entered an Order and Judgment, and
corresponding Augmented Judgment (“Augmented Judgment”), which granted
Ace’s motion to augment the April 23, 2013 judgment to include interest and
attorney fees incurred in relation to collecting that judgment. Due to the fact that
Margery, the Stock Trust, and the Realty Trust had filed bankruptcy petitions in
the time between the April 23, 2013 judgment and the Augmented Judgment, the
district court entered the Augmented Judgment against Robert only.1
On August 20, 2013, the district court entered an Order denying
appellants’ Federal Rule of Civil Procedure 60(b)(3) motion to vacate the
Judgment and Augmented Judgment. With one minor exception as explained
below, we affirm the district court’s decisions in full.
In the Augmented Judgment, the district court does not indicate whether the Marital 1
Trust had also filed a bankruptcy petition, yet the district court excluded the Marital Trust from its order of judgment.
3 First, contrary to appellants’ claim, the May 8, 2013 Order and Judgment
satisfies Federal Rule of Civil Procedure 52, which requires district courts, in
actions tried on the facts without a jury, to “make sufficiently detailed findings to
inform the appellate court of the basis of the decision and to permit intelligent
appellate review.” Krieger v. Gold Bond Bldg. Prods., 863 F.2d 1091, 1097 (2d Cir.
1988). Although conclusory in part, the district court’s citations to the record –
including direct reference to the April 5, 2013 hearing concerning Ace’s petition –
and to relevant law permit intelligent appellate review.
The undisputed evidence also supports the district court’s conclusion that
the December 20, 2007 transfer of over $7.4 million from the Stock Trust’s UBS
Account to the Marital Trust’s Merrill Lynch account constituted actual fraud
under N.Y. D.C.L. § 276.2 See Wall St. Associates v. Brodsky, 257 A.D.2d 526, 529
(1st Dep’t 1999). First, the Rubins’ own deposition testimony reveals that Robert
was an insider who improperly managed the trusts, and that Margery abdicated
her role as Trustee of the Stock Trust, Marital Trust, and Realty Trust, and
permitted Robert to make every decision regarding the Trusts’ assets. See
Lending Textile, Inc. v. All Purpose Accessories Ltd., 664 N.Y.S.2d 979, 981 (1st Dep’t
2 Although a total of four transfers were at issue, we need only address the 2007 transfer because it is sufficient to support the district court’s imposition of liability.
4 1997). Moreover, the 2007 transfer’s timing – occurring roughly three weeks after
the Stock Trust received a Notice of Default from Ace – is a signature “badge[] of
fraud.” See In re Kaiser, 722 F.2d 1574, 1582‐83 (2d Cir. 1983).
Having determined that appellants were liable for actual fraud, the district
court had authority to impose judgment on all appellants even though the Utah
Judgment was against the Stock Trust only. When fraudulently transferred
assets no longer exist or are no longer in the transferee’s possession, “a money
judgment may be entered against the transferee in an amount up to the value of
the fraudulently transferred assets.” In re Adelphia Recovery Trust, 634 F.3d 678,
693 (2d Cir. 2011) (quoting 30 N.Y. Jur. 2d Creditors’ Rights & Remedies § 446).
Given the magnitude of the 2007 transfer and the fact that the Rubins
participated in and benefited from the 2007 transfer, liability against the Rubins
and the Marital and Realty trusts was proper. See FDIC v. Porco, 75 N.Y.2d 840,
842 (1990) (per curiam).
The district court’s award of attorneys’ fees was also proper. The Utah
Judgment entitled Ace to “attorneys fees to collect the judgment.” Ace Investors,
LLC v. Margery Rubin, as Trustee of the Rubin Family Irrevocable Stock Trust, Order,
No. 2:08‐cv‐289 TS (D. Utah May 17, 2010). We have no reason to believe that
5 any of the subject fees were incurred for purposes other than to collect the Utah
Judgment.
Finally, the record supports the district court’s decision to deny appellants’
Rule 60(b)(3) motion, which we review for abuse of discretion. See Malik v.
McGinnis, 293 F.3d 559, 561 (2d Cir. 2002).
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13‐1632‐cv(L) Ace Investors, LLC v. Robert Rubin, et al.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 9th day of April, two thousand fourteen.
PRESENT: RALPH K. WINTER, RICHARD C. WESLEY, SUSAN L. CARNEY, Circuit Judges, ______________________
ACE INVESTORS, LLC,
Petitioner‐Appellee,
‐v.‐ Nos. 13‐1632‐cv(L), 13‐2264‐cv(con)
ROBERT RUBIN, individually, MARGERY RUBIN, as trustee of the Rubin Family Irrevocable Stock Trust, the Rubin Family Irrevocable Marital Trust, and the Rubin Family Irrevocable Realty Trust,
1 Respondents‐Appellants.* ______________________
FOR APPELLEE: Gary E. Doctorman, Parsons Behle & Latimer, Salt Lake City, UT (J. Michael Bailey, J. Thomas Beckett, Matthew D. Cook, Alan S. Mouritsen, Parsons Behle & Latimer, Salt Lake City, UT; David Graff, Shveta Kakar, Anderson, Kill & Olick, New York, NY, on the brief).
FOR APPELLANTS: Ahmed A. Massoud (Lisa Pashkoff, on the brief), Massoud & Pashkoff, New York, NY.
Appeal from the United States District Court for the Southern District of New York (Marrero, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED AND DECREED that the judgment is AFFIRMED in Part, and
VACATED and REMANDED in part.
Respondents‐Appellants appeal from three decisions of the United States
District Court for the Southern District of New York (Marrero, J.) entered on
April 23, 2013, May 8, 2013, and August 20, 2013 respectively. On April 23, 2013,
the district court entered an Order and Judgment that granted ACE Investors,
LLC’s (“Ace”) Verified Petition for Special Proceeding and Turnover. The Order
and Judgment, inter alia, (a) augmented a May 17, 2010 stipulated judgment Ace
had obtained against the Rubin Family Irrevocable Stock Trust (the “Stock
* The Clerk of the Court is directed to amend the official caption as noted above.
2 Trust”) in the District of Utah (the “Utah Judgment”), (b) imposed joint and
several liability against Margery Rubin as Trustee of the Stock Trust, Marital
Trust, and Realty Trust (collectively, the “Trusts”), Margery Rubin (“Margery”),
individually, and Robert M. Rubin (“Robert”), individually, and (c) attached
several of appellants’ assets.
On May 8, 2013 the district court entered an Order and Judgment, and
corresponding Augmented Judgment (“Augmented Judgment”), which granted
Ace’s motion to augment the April 23, 2013 judgment to include interest and
attorney fees incurred in relation to collecting that judgment. Due to the fact that
Margery, the Stock Trust, and the Realty Trust had filed bankruptcy petitions in
the time between the April 23, 2013 judgment and the Augmented Judgment, the
district court entered the Augmented Judgment against Robert only.1
On August 20, 2013, the district court entered an Order denying
appellants’ Federal Rule of Civil Procedure 60(b)(3) motion to vacate the
Judgment and Augmented Judgment. With one minor exception as explained
below, we affirm the district court’s decisions in full.
In the Augmented Judgment, the district court does not indicate whether the Marital 1
Trust had also filed a bankruptcy petition, yet the district court excluded the Marital Trust from its order of judgment.
3 First, contrary to appellants’ claim, the May 8, 2013 Order and Judgment
satisfies Federal Rule of Civil Procedure 52, which requires district courts, in
actions tried on the facts without a jury, to “make sufficiently detailed findings to
inform the appellate court of the basis of the decision and to permit intelligent
appellate review.” Krieger v. Gold Bond Bldg. Prods., 863 F.2d 1091, 1097 (2d Cir.
1988). Although conclusory in part, the district court’s citations to the record –
including direct reference to the April 5, 2013 hearing concerning Ace’s petition –
and to relevant law permit intelligent appellate review.
The undisputed evidence also supports the district court’s conclusion that
the December 20, 2007 transfer of over $7.4 million from the Stock Trust’s UBS
Account to the Marital Trust’s Merrill Lynch account constituted actual fraud
under N.Y. D.C.L. § 276.2 See Wall St. Associates v. Brodsky, 257 A.D.2d 526, 529
(1st Dep’t 1999). First, the Rubins’ own deposition testimony reveals that Robert
was an insider who improperly managed the trusts, and that Margery abdicated
her role as Trustee of the Stock Trust, Marital Trust, and Realty Trust, and
permitted Robert to make every decision regarding the Trusts’ assets. See
Lending Textile, Inc. v. All Purpose Accessories Ltd., 664 N.Y.S.2d 979, 981 (1st Dep’t
2 Although a total of four transfers were at issue, we need only address the 2007 transfer because it is sufficient to support the district court’s imposition of liability.
4 1997). Moreover, the 2007 transfer’s timing – occurring roughly three weeks after
the Stock Trust received a Notice of Default from Ace – is a signature “badge[] of
fraud.” See In re Kaiser, 722 F.2d 1574, 1582‐83 (2d Cir. 1983).
Having determined that appellants were liable for actual fraud, the district
court had authority to impose judgment on all appellants even though the Utah
Judgment was against the Stock Trust only. When fraudulently transferred
assets no longer exist or are no longer in the transferee’s possession, “a money
judgment may be entered against the transferee in an amount up to the value of
the fraudulently transferred assets.” In re Adelphia Recovery Trust, 634 F.3d 678,
693 (2d Cir. 2011) (quoting 30 N.Y. Jur. 2d Creditors’ Rights & Remedies § 446).
Given the magnitude of the 2007 transfer and the fact that the Rubins
participated in and benefited from the 2007 transfer, liability against the Rubins
and the Marital and Realty trusts was proper. See FDIC v. Porco, 75 N.Y.2d 840,
842 (1990) (per curiam).
The district court’s award of attorneys’ fees was also proper. The Utah
Judgment entitled Ace to “attorneys fees to collect the judgment.” Ace Investors,
LLC v. Margery Rubin, as Trustee of the Rubin Family Irrevocable Stock Trust, Order,
No. 2:08‐cv‐289 TS (D. Utah May 17, 2010). We have no reason to believe that
5 any of the subject fees were incurred for purposes other than to collect the Utah
Judgment.
Finally, the record supports the district court’s decision to deny appellants’
Rule 60(b)(3) motion, which we review for abuse of discretion. See Malik v.
McGinnis, 293 F.3d 559, 561 (2d Cir. 2002). Rule 60(b)(3) motions “cannot serve as
an attempt to relitigate the merits” and may only be granted when the movant
establishes a material misrepresentation or fraud by “clear and convincing
evidence.” Fleming v. New York Univ., 865 F.2d 478, 484 (2d Cir. 1989).
Appellants premise their motion on the claim that Ace procured the April
23 and May 8 judgments through fraud by misrepresenting to the district court
that the UBS account involved in the 2007 transfer belonged to the Stock Trust.
To support this claim, appellants rely on a July 30, 2013 affidavit and
corresponding exhibits that, according to appellants, confirm that the UBS
account belonged to the Marital Trust. Even were we to consider this evidence,
the record at the time of the district court’s prior judgments supported Ace’s
claim that the UBS account belonged to the Stock Trust; in fact, the Rubins had
previously provided Ace with a document that unequivocally identified the UBS
account as belonging to the Stock Trust. Moreover, because appellants have not
6 justified their failure to timely raise this argument, which relies on documents in
the Rubins’ control, we consider the argument forfeited as it applies to
appellants’ arguments on the merits. See Taylor v. Vermont Department of
Education, 313 F.3d 768, 794‐95 (2d Cir. 2002).
We do find one error in the Augmented Judgment that requires remand.
Specifically, the district court improperly awarded Ace costs attributable to Ace’s
expert witness. District courts have “no discretion to award costs not authorized
by statute or contractual provision,” and, with respect to experts, 28 U.S.C. § 1920
permits shifting costs for court appointed experts only. U.S. Use & Benefit of
Evergreen Pipeline Const. Co. v. Merritt Meridian Const. Corp., 95 F.3d 153, 171, 173
(2d Cir. 1996). As such, we vacate the Augmented Judgment to the extent it
improperly awarded costs as to Ace’s experts, and remand so that the district
court may correspondingly revise the Augmented Judgment.
We have considered appellants’ remaining arguments and find them to be
without merit. For the reasons stated above, the judgment of the district court is
AFFIRMED in part, and VACATED and REMANDED in part. The Clerk of the
Court is directed to issue the mandate within seven days from the filing of this
7 order unless defendants obtain a stay from the Supreme Court of the United
States of America.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk