Froman v. Fein (In re Froman)

566 B.R. 641
CourtDistrict Court, S.D. New York
DecidedMarch 20, 2017
DocketNo. 16-CV-5322 (CS), No. 16-CV-5324 (CS), No. 16-CV-5898 (CS)
StatusPublished
Cited by19 cases

This text of 566 B.R. 641 (Froman v. Fein (In re Froman)) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Froman v. Fein (In re Froman), 566 B.R. 641 (S.D.N.Y. 2017).

Opinion

OPINION AND ORDER

CATHY SEIBEL, U.S.D.J.

Before the Court are the appeals of Appellant Ann Froman (Doc. 1 (16-CV-5898); Doc. 1 (16-CV-5322); Doc. 1 (16-CV-5324)), from United States Bankruptcy [645]*645Court Judge Cecelia G. Morris’s July 1, 2016 and July 14, 2016 orders i) converting Ms. Fromaris case under Chapter 13 of the Bankruptcy Code to one under Chapter 7 pursuant to 11 U.S.C. § 1307, (Bankr. Doc. 70),1 ii) granting the motion of Appellee Judy Fein for relief from the automatic stay pursuant to 11 U.S.C. § 362(d), (Bankr. Doc. 56), and iii) denying Ms. Fromaris motion pursuant to 11 U.S.C. §§ 362(a), (k) for an order finding that Ms. Fein violated the automatic stay and awarding attorneys’ fees, costs, damages, and sanctions, (Bankr. Doc. 57).

I. Background

Only the facts relevant to this appeal will be discussed. In March 2011, Ms. Fein, individually and on behalf of the estate of Benjamin Fein, sued Ms. Froman in New York state court to recover “Survival,” a sculpture that Ms. Froman allegedly removed without permission from Mr. Fein’s premises in 2010. (Fein Mem. 5322 Part II, at ER000068-75.)2 On May 17, 2012, to resolve the state court action, the parties entered into a settlement agreement that required Ms. Froman to pay Ms. Fein $115,000 and granted Ms. Fein a security interest in Survival. (Id. Part II, at ER000084-89.) Ms. Froman did not make the agreed-upon payment and on July 7, 2014, a money judgment was entered in favor of Ms. Fein and the estate of Benjamin Fein in the amount of $137,181.25. (Id. Part V, at ER000293-94.) After a period of delay, during which Ms. Froman twice failed to appear for a deposition, (id. Part V, at ER000317-22), and unsuccessfully sought a set-off of her debt to Ms. Fein, (id. Part VIII, at ER000683-85), the Office of the Dutchess County Sheriff (the “Sheriffs Office”) seized Survival, and a sale of the sculpture was scheduled for December 12, 2015, (id. Part VIII, at ER000721). At the sale Rodney Silvernail, to whom Ms. Froman sometimes refers as her husband, placed the winning bid of $180,000, but he ultimately defaulted on the purchase. (Id. Part VIII, at ER000690, ER000692-93, ER000723-24.)3 On February 25, 2016, the state court issued to Ms. Froman, Mr. Silvernail, and the Sheriffs Office an order to show cause on May 6, 2016 why, among other things, an order should not issue directing the Sheriffs Office to schedule a new sale of the sculpture. (Id. Part IX, at ER000804-07.)

On April 5, 2016, Ms. Froman filed a voluntary Chapter 13 petition in the United States Bankruptcy Court for the Southern District of New York. (Bankr. Doc. 1.) Ms. Fromaris bankruptcy schedules indicate that she had over $18,000,000 in assets and approximately $800,000 in liabilities. (See Fein Mem. 5322 Part IX, at ER000811.) Her proposed Chapter 13 plan obligated her to pay the trustee $300 per month from May 1, 2016 through April 1, 2021, and to sell Survival, in order to satisfy her creditors. (Id. Part IX, at ER000859, ER000864.) On April 8, 2016, Ms. Froman demanded that the Sheriffs Office turn Survival over to her. (Id. Part XI, at ER001032-34.) From approximately April 11, 2016 to May 4, 2016, as discussed in more detail below, the parties agreed that Survival would remain in the possession of the Sheriffs Office while arrangements were made to safely transport, store [646]*646and ultimately sell the sculpture. (Id. Parts XI, XII, at ER0001030-89.)

On May 5, 2016, after these negotiations broke down, Ms. Fein sent a letter to the Sheriffs Office stating that she did not consent to the removal of Survival from the Sheriffs Office and that she would be filing appropriate motion papers with the Bankruptcy Court. (Id. Part XII, at ER001094-95.) On May 6, 2016, Ms. Fro-man demanded that the Sheriffs Office release Survival to her. (Id. Part XII, at 1099-1100.) That same day, Ms. Fein filed in the Bankruptcy Court a motion for i) relief from the automatic stay, pursuant to 11 U.S.C. § 362(d), ii) adequate protection, pursuant to 11 U.S.C. § 363(e), or iii) dismissal of Ms. Froman’s Chapter 13 case for cause, pursuant to 11 U.S.C. § 1307. (Bankr. Doc. 15.) Ms. Fein requested a hearing on her motion on shortened notice and a temporary restraining order prohibiting Ms. Froman from moving Survival pending the Bankruptcy Court’s ruling on her motion. (Id. ¶ 5.) On May 9, 2016, the Bankruptcy Court granted Ms. Fein’s request for a hearing on shortened notice and enjoined Ms. Froman and her representatives and agents from removing Survival from the Sherriff s Office pending the decision on the motion. (Bankr. Doc. 21.) That same day — presumably before the Bankruptcy Court injunction came to Ms. Froman’s attention — Mr. Silvernail retrieved Survival from the Sheriffs Office. (Fein Mem. 5322 Part XII, at ER001113.)

On May 17, 2016, the Bankruptcy Court held a preliminary hearing on Ms. Fein’s motion, at which time Ms. Froman agreed to retain a broker and sell Survival by September 30, 2016. (See Bankr. Doc. 81 at 33:11-17.) The Bankruptcy Court adjourned the hearing on Ms. Fein’s motion to allow Ms. Froman to begin to carry out the agreed-upon sale' of Survival. (Id. at 32:13-33:12.) On May 24, 2016, Ms. Fro-man moved for an order finding that Ms. Fein had violated the automatic stay and awarding attorneys’ fees, costs, damages, and sanctions pursuant to 11 U.S.C. §§ 362(a), (k). (Bankr. Doc. 36.)

On June 28, 2016, the parties reconvened before the Bankruptcy Court to continue the hearing on Ms. Fein’s motion and to address Ms. Froman’s motion. (Bankr. Doc. 68.) The Bankruptcy Court analyzed the factors commonly regarded as indicative of bad faith warranting conversion or dismissal under 11 U.S.C. § 1307, (see id. at 9:17-11:10), and found that Ms. Froman had filed her case in bad faith, (see id. at 10:6-7; 14:3-5). Judge Morris therefore announced that she would convert the case to one under Chapter 7, (see id. at 12:10), lift the stay, (see id. at 14:7), and deny Ms. Froman’s application for sanctions for the alleged stay violation, (see id. at 14:8, 16:11-13).

On July 1, 2016, the Bankruptcy Court entered its order granting Ms. Fein’s motion for relief from the automatic stay because Ms. Froman had filed her petition in bad faith and allowing Ms. Fein to enforce her rights and remedies in and to Survival. (Bankr. Doc. 56.) That same day, the Bankruptcy Court entered its order denying Ms. Froman’s motion brought under 11 U.S.C. § 362 for an order finding that Ms.

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Cite This Page — Counsel Stack

Bluebook (online)
566 B.R. 641, Counsel Stack Legal Research, https://law.counselstack.com/opinion/froman-v-fein-in-re-froman-nysd-2017.