In Re: Mosdos Chofetz Chaim Inc.

District Court, S.D. New York·Decided October 3, 2022·No. 7:21-cv-10441·Unknown

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK RABBI MAYER ZAKS, et al., MEMORANDUM OPINION Appellants, AND ORDER

-against- 21-CV-10441 (PMH) MOSDOS CHOFETZ CHAIM, INC., et al.,

Appellees. PHILIP M. HALPERN, United States District Judge: This appeal concerns three Orders entered by Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) in the underlying adversary proceeding captioned Congregants of Mosdos Chofetz Chaim Inc. v. Mosdos Chofetz Chaim, Inc., et al., No. 21-07023 (Bankr. S.D.N.Y. 2021). (Br. Doc. 54, “Contempt Order”; Br. Doc. 89, “Reconsideration Order”; and Br. Doc. 122, “Enforcement Order”).1 The Contempt Order, dated June 15, 2021, found Rabbi Mayer Zaks (“Rabbi Mayer”), Shimon Zaks (“Shimon”), and Yisroel Hochman (“Yisroel”) in contempt of Court for violating the Bankruptcy Court’s May 25, 2021 Injunction (Br. Doc. 24, “Injunction”) and ordered coercive sanctions to be imposed against the aforementioned contemnors as well as alleged contemnors— Nochum Brody (“Brody”), Leah Toby Zaks Brody (“Leah Brody”), Faige Hochman (“Faige”), Sima Weintraub Zaks (“Sima Zaks”), and Leah Bergman Zaks (“Leah Zaks,” and together with Rabbi Mayer, Shimon, and Yisroel, “Appellants”)—and any persons acting in concert with them

1 Citations to “Br. Doc.” refer to docket entries in the underlying adversary proceeding whereas citations to “Doc.” refer to docket entries in this matter. “The Court may take judicial notice of the bankruptcy docket, and documents on the docket not included in Appellant’s designation of the record on appeal, including hearing transcripts.” Morillo v. Wells Fargo Bank, N.A., No. 19-CV-08183, 2020 WL 2539068, at *1 n.2 (S.D.N.Y. May 19, 2020) (citing Fed. R. Evid. 201). in the amount of $5,000 per person per violation of the Injunction. (Contempt Order at 4-5). The Reconsideration Order, dated July 29, 2021, denied Appellants’ motion for reconsideration (made pursuant to Fed. R. Civ. P. 59(e) and 60(b), applicable to the adversary proceeding pursuant to Fed. R. Bankr. P. 9023 and 9024) of the Contempt Order. (Reconsideration Order at 2). The

Enforcement Order, dated September 8, 2021: (i) found that Appellants continued to violate the Injunction; (ii) declined to impose monetary sanctions because of Appellants’ belief that they were entitled to enter “the Property” (1-50 Kiryas Radin Drive, Spring Valley, New York 10977) under purported rights under the United States Constitution and New York State real property law; (iii) clarified that Appellants “have no right under the United States Constitution, the New York State Constitution, or any applicable law, to enter onto the CRDI Property or into the CCI Building, or to remain thereupon”; (iv) clarified that the Injunction remained fully extant and enforceable; and (v) ordered that coercive sanctions be imposed against in the amount of $5,000 per person per violation of the Injunction, effective as of 5:00 p.m. on September 8, 2021. (See generally Enforcement Order).

Appellants challenged each of these three Orders in separate appeals—an appeal of the Contempt Order (pending under Docket No. 21-CV-09186), an appeal of the Reconsideration Order (pending under Docket No. 21-CV-09256), and an appeal of the Enforcement Order (pending under Docket No. 21-CV-10441)—all of which were consolidated into the instant matter on December 9, 2022. (Doc. 6). Appellants filed a consolidated opening brief on January 21, 2022 (Doc. 8, “App. Br.”), Appellees filed their consolidated opposition on March 25, 2022 (Doc. 18, “Opp. Br.”), and the appeal was fully submitted upon the filing of Appellants’ reply brief on April 7, 2022 (Doc. 19, “Reply”). For the reasons set forth below, all three Orders are AFFIRMED. BACKGROUND This appeal involves the Bankruptcy Court’s enforcement of its May 25, 2021 Injunction against Appellants and other individuals associated with them. The Bankruptcy Court’s Injunction had been challenged but was affirmed by this Court on January 6, 2022. Congregants of Mosdos

Chofetz Chaim Inc. v. Mosdos Chofetz Chaim Inc., No. 21-CV-05654 (S.D.N.Y.) (“Injunction Appeal,” Doc. 29). The Injunction, inter alia, prohibited Appellants and those with whom they acted in concert with from: (i) “Entering onto or remaining on the real property owned by CRDI”; (ii) “Denying or obstructing access by any person to the . . . Property”; (iii) “Disrupting, conducting or interfering with any religious service or study taking place on the . . . Property”; and (iv) “Instructing or advising any resident of any residential unit located on the CRDI Property not to pay rent for the same, or otherwise interfering with CRDI’s collection of rent or any tenant’s payment of rent.” (Injunction at 3-4). The Injunction was modified on June 14, 2021, however, to clarify that “this Order shall not be construed as permitting CRDI or CCI to bar any person who (i) has a valid written lease from CRDI, or (ii) has the legal right to possession of such residential

unit pursuant to New York law (and is not a squatter) from entering the CRDI Property for the purpose of entering, occupying or exiting his or her leased unit thereon or any other appurtenant rights.” (Br. Doc. 49 at 2). The Bankruptcy Court, on June 15, 2021, held Rabbi Mayer, Shimon, and Yisroel in contempt for their willful violation of the Injunction and imposed coercive, prospective monetary sanctions against Appellants in the amount of $5,000 per violation. (Contempt Order at 4). On July 29, 2021, upon the parties’ briefing and oral argument held on July 26, 2021, the Bankruptcy Court denied reconsideration of the Contempt Order. (Reconsideration Order at 2). Appellees, on July 7, 2021 filed a motion for sanctions to enforce the Injunction, supported by evidence that Appellants continued to enter onto the Property, and requested the entry of monetary judgments as well as a Writ of Bodily Attachment for removal of Appellants from the Property except to the extent they do so to come or go from a residential unit. (Br. Doc. 65). The

Bankruptcy Court, at a hearing on Appellees’ motion on August 30, 2021, heard testimony from witnesses and entertained oral argument by the parties. At the conclusion of the hearing, the Bankruptcy Court issued its findings on the record and determined that Appellants had entered onto the Property in violation of the Injunction. (Br. Doc. 124, “Tr.” at 240). The Bankruptcy Court, however, determined that “it was subject to a [fair] doubt under the Taggart standard” up to that point in time whether Appellants’ purported defenses under the United States Constitution and New York State property law applied. (Tr. at 239-41). Although the Bankruptcy Court determined that those defenses did not ultimately apply, it decided not to impose monetary sanctions at that time against any past contemnor; and instead, again, implemented coercive, prospective sanctions of $5,000 per violation against Appellants. The Bankruptcy Court made

clear that “there is no further justification for any person who is specifically notified by the movants, that they may not enter all or any part of the Property, that if they do so thereafter, they will be in contempt.” (Tr. at 241:08-12). The Bankruptcy Court, on September 8, 2021, issued the written Enforcement Order, codifying the aforementioned bench ruling.

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In Re: Mosdos Chofetz Chaim Inc., (S.D.N.Y. 2022).

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