Rahmi v. Trumble

464 B.R. 710, 2011 WL 6887867, 2011 U.S. Dist. LEXIS 149565
CourtDistrict Court, N.D. West Virginia
DecidedDecember 29, 2011
DocketCivil Action No. 3:11-CV-61; Bankruptcy No. 09-2621
StatusPublished
Cited by3 cases

This text of 464 B.R. 710 (Rahmi v. Trumble) is published on Counsel Stack Legal Research, covering District Court, N.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rahmi v. Trumble, 464 B.R. 710, 2011 WL 6887867, 2011 U.S. Dist. LEXIS 149565 (N.D.W. Va. 2011).

Opinion

MEMORANDUM OPINION AFFIRMING ORDER OF THE BANKRUPTCY COURT

JOHN PRESTON BAILEY, Chief Judge.

Pending before the Court is an appeal filed by Alex Rahmi challenging the June 21, 2011, decision of the United States Bankruptcy Court for the Northern District of West Virginia (“Bankruptcy Court”). In that decision, the Bankruptcy Court denied Mr. Rahmi’s Motion to Amend Judgement [sic] dated April 20, 2011[,] and to Invalidate [Fjoreclosure [S]ale. This Court has already addressed the interlocutory appeal of the Bankruptcy Court’s conflict of interest ruling in a previous order [See Doc. 18]. As such, in this Order, this Court will address only the portion of the appeal concerning the Motion to Invalidate [F]oreelosure [S]ale. For the reasons more fully stated below, this Court finds that the appellant’s appeal of that portion of the June 21, 2011, order should be DENIED.

I. BACKGROUND

On November 17, 2009, Bon-Air Partnership (“Bon-Air”) filed a voluntary Chapter 7 bankruptcy petition [Doc. 1-21]. [713]*713On May 24, 2010, trustee Robert W. Trum-ble (“Mr. Trumble” or “trustee”) filed a Motion to Sell Property and Notice of Upset Bid Procedures [Doc. 1-4] with the Bankruptcy Court. In that filing, the trustee proposed to sell the two parcels of real property for $1.2 million [Id. at 2]. At that time, Bon-Air had valued its interest in the property at $750,000 [Id.]. On May 28, 2010, the trustee filed an Amended Motion to Sell Property [Doc. 1-8]; no changes were made to the proposed sale price or Bon-Air’s estimated value [See id.]. Bon-Air filed an Objection to Trustee’s Motion to Sell Property [Doc. 1-5] on June 22, 2010. In its objection, Bon-Air requested the Bankruptcy Court to “delay the sale of the property in order for the [tjrustee to continue to market the property in an effort to raise the selling price” [Id. at 2], On June 25, 2010, the Bankruptcy Court entered a Notice of Hearing informing the parties that the Bankruptcy Court would address the Amended Motion to Sell as well as any timely filed objections on July 8, 2010 [Doc. 1-6 at 1]. On August 11, 2010, the trustee filed a Notice of Upset Bids and Private Auction, which stated that the upset bid private auction would take place on September 2, 2010 [Doc. 1-9]. The winning bid was three million dollars, and the Bankruptcy Court entered its order approving the sale on September 22, 2010 [BR Case 3:09-bk-02621 Doc. 105 at 5].

Roughly six months later, on April 1, 2011, the appellant, Alex Rahmi, (“appellant” or “Mr. Rahmi”) filed a Motion to Remove Trustee for Conflict of Interest [Doc. 1-10]. In support of his filing, the appellant states that the trustee was maintaining control of Bon-Air’s estate at the same time that the trustee’s law firm was representing a party seeking a judgment against Mr. Rahmi [Id. at 1]. On April 11, 2011, the trustee filed an Objection to Motion to Remove Trustee for Conflict of Interest [Doc. 1-11]. In his objection, the trustee noted that Mr. Rahmi is merely a partner in Bon-Air [Id. at 1], He further stated that he was “appointed to administer the Bankruptcy Estate of Bon-Air [ ] and not the individual partners” [Id.]. On April 12, 2011, Behrouz Rahmi also filed an Objection to Motion to Remove Trustee for Conflict of Interest [Doc. 1-12]. In that filing, Behrouz Rahmi stated that Mr. Rahmi is not authorized to represent Bon-Air before the Bankruptcy Court [Id. at 1] and requested the Bankruptcy Court to strike Mr. Rahmi’s motion [Id. at 2]. Beh-rouz Rahmi further stated that “neither the [t]rustee’s firm nor the [t]rustee holds any interests adverse to the estate” of Bon-Air and, therefore, does not have a conflict [Id.].

On April 20, 2011, the Bankruptcy Court entered an order denying Mr. Rahmi’s Motion to Remove Trustee for Conflict of Interest [Doc. 1-13 at 1-2] and addressing two motions in another bankruptcy proceeding. Mr. Rahmi filed a Motion to Reconsider the April 20, 2011, Order on May 2, 2011 [Doc. 1-14]; in support of the motion, Mr. Rahmi stated that Mr. Trum-ble had been “holding funds for the benefit of [Mr.] Rahmi, and [Mr. Trumble’s] firm ha[d] been representing creditors against [Mr.] Rahmi[ ] during the last two years” [Id. at 2]. On May 4, 2011, the Bankruptcy Court entered an Order denying the Motion to Reconsider on the grounds that Mr. Rahmi “failed to state grounds for reconsideration under [Rule 9023 of the Federal Rules of Bankruptcy Procedure]” [Doc. 1-15 at 2].

On May 16, 2011, Mr. Rahmi filed a Motion to Amend Judgement [sic] dated April 20, 2011[,] and to Invalidate [F]ore-[714]*714closure [S]ale [Doc. 1-16] as well as a similar motion for a different bankruptcy case involving the estate of another business, Alex Chevrolet [Doc. 1-17]. In the motion relevant to this appeal [Doc. 1-16], Mr. Rahmi reiterated his conflict of interest argument and argued that the trustee breached his fiduciary duty in the foreclosure sale because the “[t]rustee sold more of Bon-Air property than was necessary to satisfy the creditors” [Id. at 2], On May 24, 2011, Behrouz Rahmi filed an Objection to Motions to Amend [Doc. 1-18]. In the objections, Behrouz Rahmi stated that Mr. Rahmi “does not advance any new arguments in support of his continuing attempts to remove the [tjrustee, and[,] therefore[,] he gives the [Bankruptcy] Court no reason to reverse its earlier rulings” [Id. at 1]. With regard to the argument that the [t]rustee sold more property than necessary, Behrouz Rahmi stated that the case law upon which Mr. Rahmi’s argument rests is not relevant to the instant case because it “dealt with a trustee to a deed of trust under state law, not a federal bankruptcy trustee” [Id. at 1-2], The trustee also filed an objection to the Motion to Amend on May 27, 2011 [Doc. 1-19].

On June 21, 2011, the Bankruptcy Court decided that the case law upon which Mr. Rahmi relied in his Motion to Amend Judgement [sic] and to Invalidate [F]ore-closure [S]ale was not relevant to bankruptcy proceedings and further stated that there is no limit on the amount of property that can be sold by a trustee during liquidation in a Chapter 7 bankruptcy case [Doc. 1-20 at 2]. The Bankruptcy Court further stated that the “purpose of Chapter 7 is to liquidate all of debtor’s unencumbered, non-exempt assets for the satisfaction, albeit often incomplete, of unsecured creditors” [/<&]. As such, the Bankruptcy Court denied the appellant’s Motions to Amend Judgment [Id.l

On July 1, 2011, Mr. Rahmi filed a Notice of Appeal of the June 21, 2011, Bankruptcy Court Order [See Doc. 1-21 at 18]. On August 2, 2011, the Notice of Appeal from Bankruptcy Court was filed with this Court [Doc. 1], On August 19, 2011, appellant filed his brief in this proceeding [Doc. 5]. In his brief, Mr. Rahmi designates four issues to be considered in this appeal:

1) Whether the Bankruptcy Court erred in determining that the trustee did NOT sell the Bon[-]Air Real Estate for far less than its Fair Market Value[;]
2) Whether the Bankruptcy Court erred in determining that the trustee was NOT engaged in a Conflict of Interest, and trustee’s breach of fiduciary duty, by NOT concealing his activities with intent to maximize his financial gainst;]

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Related

In re Javed
592 B.R. 615 (D. Maryland, 2018)
Joseph v. Cooper
539 B.R. 489 (W.D. North Carolina, 2015)
Bon-Air Partnership v. Robert Trumble
521 F. App'x 131 (Fourth Circuit, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
464 B.R. 710, 2011 WL 6887867, 2011 U.S. Dist. LEXIS 149565, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rahmi-v-trumble-wvnd-2011.