Sapir v. Grabowski (In re Grabowski)

126 B.R. 24, 1991 Bankr. LEXIS 623
CourtDistrict Court, S.D. New York
DecidedApril 17, 1991
DocketBankruptcy No. 89 B 20187; No. 90 ADV. 6054
StatusPublished
Cited by1 cases

This text of 126 B.R. 24 (Sapir v. Grabowski (In re Grabowski)) 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
Sapir v. Grabowski (In re Grabowski), 126 B.R. 24, 1991 Bankr. LEXIS 623 (S.D.N.Y. 1991).

Opinion

DECISION ON MOTION FOR AN ORDER DISMISSING COMPLAINT

HOWARD SCHWARTZBERG, Bankruptcy Judge.

The trustee in bankruptcy in this voluntary Chapter 7 case filed by the debtor, Joseph L. Grabowski, has commenced an adversary proceeding pursuant to 11 U.S.C. § 363(h) to sell a parcel of developed residential real estate which the trustee claims is owned by the debtor and his nondebtor wife as tenants by the entirety. The debt- or resists the trustee’s claim on the ground that the real estate is owned entirely by his nondebtor wife as a result of the debtor’s conveyance of his interest in the entirety to his wife on March 26, 1973. The trustee counters with the argument that the March 26, 1973 conveyance to the debtor’s wife was set aside as a fraudulent conveyance by the Supreme Court of the State of New York, Westchester County, in August of 1988, which decision was affirmed on appeal to the Appellate Division, Second Judicial Department in March of 1990. The debtor’s motion for reargument of the appeal was denied.

The debtor now moves pursuant to Fed. R.Civ.P. 12(b)(6) and made applicable by Bankruptcy Rule 7012, to dismiss the trustee’s complaint for failing to state a claim for which relief may be granted because the state court judgment is void on its face. Alternatively, the debtor has moved for summary judgment pursuant to Fed.R. Civ.P. 56 and Bankruptcy Rule 7056 on the ground there is no genuine issue as to any material ultimate fact contained in the complaint.

The noncontroversial paragraphs in the trustee’s complaint relate to the factors required to satisfy 11 U.S.C. § 363(h). Thus, the complaint alleges that partition of the real estate is impracticable; a sale of the estate’s undivided interest in the property would realize significantly less than the sale of the property free of the interests of the debtor and his wife; the benefit to the estate of a sale free of the interests of the co-owners outweighs any detriment to them; and the premises are not used in [26]*26the production or distribution of natural or synthetic gas.

The controversial paragraphs in the complaint are paragraphs # 3 and # 4, which allege that the debtor, rather than his wife, is the actual owner of the property by reason of the state court's avoidance of the debtor’s conveyance of his interest to his wife. The transfer was ruled to be a fraudulent conveyance. The questionable paragraphs in the complaint state as follows:

On or about March 12,1990, the Appellate Division, 2nd Department affirmed a judgment obtained by Mr. Sidney Fread against the debtor setting aside a fraudulent conveyance of real property by the debtor to his wife, AGNES GRABOW-SKI.
As such, the property of the Debtor, known as 17 Stanley Avenue, Hastings-on-Hudson, New York, is owned as tenants by the entirety by the Debtor and his wife.

The Complaint

In considering a motion to dismiss a complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, as made applicable under Bankruptcy Rule 7012, on the ground that the complaint fails to state a claim upon which relief can be granted, the court must accept as true all of the well-pleaded facts alleged in the complaint. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Bloor v. Carro, Spanbock, Landin, Rodman & Fass, 754 F.2d 57 (2d Cir.1985). The motion must be granted when it appears with certainty that no set of facts could be proven at trial which would entitle the plaintiff to any relief. Conley v. Gibson, Id.; Dioguardi v. Durning, 139 F.2d 774 (2d Cir.1944); In re Rudaw/Empirical Software Products, Inc., 83 B.R. 241 (Bankr.S.D.N.Y.1988); Transworld Airlines, Inc., et al, v. Texaco Inc., (In re Texaco), 81 B.R. 813 (Bankr.S.D.N.Y.1988).

In the instant case, there is nothing in the language of the complaint that would suggest that the state court judgment, which set aside the debtor’s conveyance of his interest in the property in question to his wife, is an invalid, non-final judgment. Accordingly, it cannot be said that the trustee could not prove any facts at the trial which would entitle him to the relief sought in the complaint.

Summary Judgment

In ruling on a motion for summary judgment the court’s function is to determine whether a genuine issue as to any material fact exists, not to resolve any factual issues, Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The court must deny summary judgment where there is a genuine issue as to any material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and grant summary judgment where there is no such issue and the movant is entitled to judgment as a matter of substantive law. Hamilton v. Smith, 773 F.2d 461 (2d Cir.1985). The moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts which entitled him to judgment as a matter of law. Katz v. Goodyear Tire & Rubber Company, 737 F.2d 238, 244 (2d Cir.1984); See J. Moore, A. Vestal, P, Kurkland, Moore’s Federal Practice and Procedure § 17.10 at 17-34 (2d ed. 1987).

The debtor in this case urges various grounds in support of his motion for summary judgment dismissing the trustee’s adversary proceeding bottomed on 11 U.S.C. § 363(h). The debtor’s first ground is that the complaint filed in the state court by the creditor, Sidney Fread, which alleged a fraudulent conveyance of the real estate by the debtor to his wife, did not state a cause of action. The debtor also argues that the state court decision which set aside the debtor’s transfer as a fraudulent conveyance did not contain a finding that Sydney Fread was a creditor of the debtor at the time of the fraudulent conveyance. Both of these points were rejected on the debtor’s appeal to the New York Appellate Division, Second Department, which ruled in relevant part as follows:

[27]*27The complaint, however, clearly sets forth a cause of action sounding in actual fraud in connection with the conveyance, alleging that the Grabowskis intentionally deceived Fread (Nasaba Corp. v. Harfred Realty Corp.,

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Bluebook (online)
126 B.R. 24, 1991 Bankr. LEXIS 623, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sapir-v-grabowski-in-re-grabowski-nysd-1991.