Dreyfuss v. Cory et al
Filing
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ORDER that appellant's bankruptcy appeal is DENIED and this action is DISMISSED in its entirety. IT IS FURTHER ORDERED that 3 Appellee's Motion to Strike Designation of Record of DENIED as moot. Signed by Judge Larry R. Hicks on 2/12/13. (Copies have been distributed pursuant to the NEF - cc: Bankruptcy Court - EDS)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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In Re:
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SHELDON H. CLOOBECK,
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Debtor.
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GILBERT DREYFUSS,
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Appellant,
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v.
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TIMOTHY S. CORY,
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Appellee.
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_____________________________________ )
2:12-CV-1506-LRH-VCF
ORDER
Before the court is appellant Gilbert Dreyfuss’ (“Dreyfuss”) appeal from an order of the
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United States Bankruptcy Court denying his objection to the Chapter 7 Trustee’s final report.
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Doc. #6.1 Timothy S. Cory (“Cory”), the Chapter 7 Trustee for the Estate of debtor Sheldon H.
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Cloobeck (“Cloobeck”), filed an answering brief. Doc. #8.
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Also before the court is Cory’s motion to strike portions of Dreyfuss’ designation of record.
Doc. #3.
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Refers to the court’s docketing number.
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I.
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Facts and Background
On January 12, 2005, debtor Cloobeck initiated the underlying bankruptcy by filing a
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voluntary Chapter 11 petition. The bankruptcy case was subsequently converted to a Chapter 7
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action on October 12, 2005, at which time Cory was appointed as the Chapter 7 Trustee for the
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debtor’s estate.
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On May 13, 2009, Cory, as trustee, made a payment in the amount of $340,895.00 to the
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Internal Revenue Service (“IRS”) for purported income tax liability of the estate incurred for the
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tax year 2005. Three years later, on May 9, 2012, Cory filed his Trustee’s Final Report with the
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bankruptcy court. In response, on June 13, 2012, Dreyfuss, the single largest creditor of the estate,
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filed an objection to the final report contesting the $340,895.00 payment to the IRS.
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On July 6, 2012, the bankruptcy court conducted a hearing on the Trustee’s Final Report
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and Dreyfuss’ objection thereto. At the hearing, the bankruptcy court denied Dreyfuss’ objection as
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procedurally improper and lacking evidentiary support. Subsequently, the bankruptcy court
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approved the Trustee’s Final Report, including the $340,895.00 payment to the IRS. Thereafter,
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Dreyfuss initiated the present appeal. Doc. #1.
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II.
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Legal Standard
A bankruptcy court’s resolution of an objection is reviewed for abuse of discretion. Bitters
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v. Networks Elec. Corp., 195 B.R. 92, 96 (9th Cir. BAP 1996). “An abuse of discretion occurs
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when no reasonable person could take the view adopted by the court.” Konop v. Hawaiian Airlines,
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Inc., 386 B.R. 251, 257 (D. Hawaii 2008).
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A district court reviews a bankruptcy court’s findings of fact for clear error. In re Rucker,
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570 F.3d 1155, 1160 (9th Cir. 2009). A bankruptcy court’s findings are clearly erroneous when the
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reviewing court “is left with a definite and firm conviction that a mistake has been committed.” In
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re Clark, 262 B.R. 508, 514 (9th Cir. BAP 2001).
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III.
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Discussion
In his appeal, Dreyfuss contends that the bankruptcy court erred in denying his objection
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and affirming the Trustee’s Final Report. Specifically, Dreyfuss argues that there was no basis for
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the trustee to pay the IRS tax and therefore, it was error for the bankruptcy court to approve any
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final report that included such a payment. See Doc. #6.
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The court has reviewed the documents and pleadings on file in this matter and finds that the
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bankruptcy court did not abuse its discretion in denying Dreyfuss’ objection for both procedural
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and evidentiary deficiencies. First, the court agrees with the Bankruptcy court that Dreyfuss’s
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objection was severely untimely. Dreyfuss knew of the payment to the IRS back in 2009, but did
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not file an objection to the payment until the final report in 2012, three years after the payment had
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been made.
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Second, the court agrees with the bankruptcy court that Dreyfuss’ objection was not
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supported by any evidence and failed as a substantive matter. In particular, Dreyfuss failed to
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provide the 2005 tax return that was the subject of his objection. Further, Dreyfuss failed to submit
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any evidence that the estate did not owe or incur any tax obligations for that year. Rather, Dreyfuss’
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objection was based solely on unsubstantiated speculation and unsupported argument. In contrast,
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at the hearing the bankruptcy court found that “there’s sufficient evidence to find that the Trustee
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acted responsibly and reasonably with respect to filing the tax returns of the estate. Not only was
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the estate’s accountant used to prepare those returns, but they were . . . checked independently by
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Price Waterhouse.” Doc. #9, Exhibit 1, p.23. Thus, based on the evidence before the bankruptcy
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court at the hearing, there was no basis to sustain Dreyfuss’ objection. Therefore, the court finds
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that the bankruptcy court did not err in denying Dreyfuss’ untimely and unsupported objection to
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the Trustee’s Final Report and the court shall dismiss his appeal accordingly.
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IT IS THEREFORE ORDERED that appellant’s bankruptcy appeal (Doc. #1) is DENIED
and this action, 2:12-cv-1506, is DISMISSED in its entirety.
IT IS FURTHER ORDERED that appellee’s motion to strike designation of record
(Doc. #3) is DENIED as moot.
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IT IS SO ORDERED.
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DATED this 12th day of February, 2013.
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__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE
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