Nedbank Ltd. v. Peykar International Co., Inc. et al, No. 1:2013cv08195 - Document 19 (S.D.N.Y. 2014)
Court Description: OPINION. Based on the conclusions set forth above, (i) the Decision is hereby affirmed in all respects; and (ii) the appeals of the Decision filed by Mitch and Mehran are hereby dismissed. Submit judgment on notice. It is so ordered. Re: 10 MOTION for Judgment in accordance with the proposed findings of fact and conclusions of law set forth in the decision after trial of U.S. Bankruptcy Judge Robert E. Gerber, dated October 11, 2013, and for other relief filed by Gregory Messer, 13 MOTION to Amend/Correct filed by Mitch Peykar, 14 MOTION to Amend/Correct filed by Mehran Peykar. (Signed by Judge Robert W. Sweet on 4/10/2014) (rjm) Modified on 4/11/2014 (rjm).
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UNITED STATES DISTRICT COURT SOUTHERN DISTRI OF NEW YORK ----------x GREGORY MESSER, as Chapter 7 Trustee of Fine Diamonds, LLC, PIa inti 13 C o - against - PEYKAR INTERNATIONAL CO., INC., MITCH PEYKAR, AND MEHRAN PEYKAR, PIN ION Adversary Proceeding No. 09-1033 (REG) Defendants. ----------- ----X In re: Chapter 7 Case No. 09-10492( FINE DIAMONDS, LLC, Debtor. --------------- --------------- ----- -x A P PEA RAN C E S: ATTORNEYS FOR PLAINTIFF CHAPTER 7 TRUSTEE GREGORY MESSER WILK AUSLANDER LLP 1515 Broadway, 43rd Floor New York, NY 10036 By: Eric J. Snyder, Esq. Jessica Taran, Esq. PRO SE DEFENDANTS MITCH PEYrCAR 144-50 69 Road Flushing, NY 11367 MEHRAN PEYKAR 69-66 180 Street Fresh Meadow, NY 11365 1 Sweet, D. J. Plaintiff Gregor Messer ("Plaintiff" or "Trustee"), the Chapter 7 Trustee of Fine Diamonds, LLC, the debtor (" Diamonds" or "Debtor") moves ne an order (i) adopting the findings of fact and conclusions of law (the "Proposed Findings") set forth the sion after Trial of the Honorable Judge Gerber, dated October 11, 2013, Diamonds, In re 501 B.R. 159 (Bankr. S.D.N.Y. 2013) ne (the "Decision"), pursuant to 28 U.S.C. § 157(c), Bankruptcy Rule 8011, Local Rule 9033-1 of the Unites States Bankruptcy Court for the Southern strict New York ("SONY Rule 9033-1"), the District Court's Amended Standing Order of Reference re: T 11, dated January 31, 2012 (Preska, C.J.) and Ie (the "Standing Order") order of the Honorable United States Bankruptcy Court Judge Robert E. Gerber, dated November 18, 2013; (ii) directing Clerk of the Court to enter a money judgment in the amount of $37,593,930.34, plus pre-judgment interest at 9% from of t December 7, 2008 through the di jUdgment; ssing the appeals of the Decision fi Peykar ("Mitch") and Mehran kar ("Mehran") by fendants Mitch (collectively, the "Peykars," together with Peykar International Co., ("Peykar" or "Pey "Defendants"); and (iii) Inc. r International"), collectively, the ) for such ot 2 and her relief as the low, sed on the reasoning Court deems just and proper. Plaintiff's motions are granted. Prior Proceedings The non-core action is related to an involuntary chapter 7 bankruptcy pet February 4, 2009 by creditor Nedbank Ltd. Fine amonds, 501 B.R. at 174. among other things, moved The same day, Nedbank, the immediate appointment of an chapter 7 trustee, and filed the underlying adversary proceeding (t "Adversary Pro ng"), seeking to recover, on behalf of the Debtor, "over $36 million" of "Trans rred Diamonds") allegedly convert the Debtor. of t In re ("Nedbank"). Nedbank is a bank that is owed more than $10 million by the Debtor. inte ed on ion against the Debtor init Id. T amonds (the or embezzled from Trustee was appointed under Section 303(g) Bankruptcy Code on February 6, 2009. On July 24, 2009, the Trustee filed an Amended Complaint substituting himself as Proceeding. aintiff in the Adversary The Amended Complaint sought relief on r separate grounds: turnover, under Section 542 of the Bankruptcy Code; fraudulent transfer doctrine; conversion; and fraudulent misrepresentation. Id. at 176. 3 The trial on the Adversary Proceeding was held on March 17 and 18, 2011 (the "Trial"). On October 11, 2013, the Bankruptcy Court entered the Decision, a 43-page long opinion in which the Bankruptcy Court entered judgment in favor of the Trustee and aga t the Defendants, jointly and severally, in the amount of $37,593,930.34, plus -judgment interest at 9% from December 7, 2008 through the date of the judgment. In the Decision, the Bankruptcy Court concluded that it possessed the constitutional authority to enter final decisions only with respect to certain claims (the two fraudulent conveyance claims and t turnover aim), but did not have the requisite authority to enter a final decision regarding the conversion claim. Id. at 164 n.3. Bankruptcy Court respect to which it Rather than sever the claims, the fer red ent of judgment on the claims with s the constitutional power to enter final judgment in order to permit the District Court to: any objections to the De regarding findings sion; (i) entertain (ii) make a final determination facts and conclusions of law regarding all of the claims; and (iii) enter a judgment against the Defendants. In an order ("Implementation Order I") entered by the Bankruptcy Court simultaneously with the Decision (Case No. 09 4 01033, ECF No. 109), the Bankruptcy Court gave the Defendants 28 days to interpose any objections to the Decision. The Defendants were served with copies of the Decision on or about October 16, 2013 (see id., ECF No. 111), and the Defendants were required to interpose objections to the decis n on or before November 14, 2013. No objections were filed by any of the Defendants within that deadline in accordance with Bankruptcy Rule 9033 and 28 U.S.C. § 157. The Peykars did file notices of appeal of the Decision on October 23, 2013. (Id., ECF Nos. 112 and 114). On November 6, 2013, the Peykars filed the designations docked as "Designation of Contents and Statements of Issues u "Designations U ) (Id., ECF Nos. 116 and 117). (the However, none of the Defendants interposed any objections to the Decision. The Bankruptcy Court then entered an order ("Implementation Order II") directing the Bankruptcy Court clerk to trans the reco to the District Court and to request that a case be opened to allow the District Court to take the necessary action to implement the Decision. Plaintiff filed the instant motion on November 26, 2013. On November 27, 2013, the Peykars each filed a "Motion to 5 the instant action, requesting Correct Error" as objections to the Propos Designations be consi Fi ngs. The matter was marked fully submitt on December 11, 2013. Findings Of Fact In The Decision findings of fact made by the Bankruptcy Court Trial is set fo after in detail the Decision. Only the salient facts are set forth below. or was a New York 1 The ted liabil y company owned by Lester Meents ("Lester") and Jeffrey Meents ("Jeffrey"). Doran Meents ("Doran"), Jeffrey's son, was the sole employee of Debtor. Id. at 165. The Debtor sold fished diamonds to wholesalers and retail outlets in Id. Manhattan. Louis Meents, Jef grandfather, sta ("Festdiam"), a South early 1960s. suppli Festdiam 's father and Doran's amond ting Wor rican privately he company, in the Festdiam is owned by Jeffrey and Lester and the Debtor with fini diamonds. Id. Between 2003 and 2006, Doran's business with the Peykars was limited and involved traditional purchase and sale 6 transactions, with credit extended. Id. at 166. At the end of 2006, Mehran asked if Doran would agree to consign diamonds to him "on memo," as was often done in the diamond bus ss. Id. Beginning in early 2007, Doran began providing diamonds to the Peykars on consignment. Id. From approximately April 2007 continuing through the end of 2008, virtually all the sa s and distribution of the Debtor's diamonds flowed through Peykar, Mitch and Mehran. Peykar became the principal distributor and broker of for Fine Diamonds. Id. at 167. amonds The Peykars would sell the diamonds to customers and remit payment back to the Debtor. Id. The Debtor delivered numerous diamonds to Peykar in the period from April 1, 2007 through November 2008 reflected on spreadsheets maintained in the ordinary course of the Debtor's business. Each of the spreadsheets reflected ci diamonds that Doran delivered to either Mitch or Mehran, along with the cumulative price for each batch that Peykar agreed to pay Fine Diamonds. Id. The spreadsheets contained line items for each stone, listing the weight (by carat), co and other physical characteristics. r, cIa y, In addition, there was a listing for the "Rappaport" price (which is a trade publication that lists the values of diamonds), along wi 7 a discount each stone that had the particular transaction and a price kars. been agreed upon between Doran and one or both of the Id. Doran made contemporaneous handwritten notes of any payments he received from Peykar with respect to each batch of the Debtor's diamonds that had been delivered to Mitch or Mehran. Id. On bottom right of most of the spreadsheets was a date indicating the date that the spreadsheet was prepared. The diamonds were delivered to Peykar International Id. on that date or shortly thereafter. During the early part of 2008, the amount owed to Fine Diamonds by Peykar began to increase, eventually exceeding $37 million by at 168. end of the summer. In re Fine Diamonds, 501 B.R. In September 2008, Doran noticed that the payments from Peykar International were slowing down. Doran expressed his concern on numerous occasions to Mitch and Mehran that the Peykars were holding a large amount of Fine Diamonds' property while the money was coming in at a much slower pace. told by Mitch and Mehran that the diamonds were safely under their control, locked in sa times either in New York or Tel Aviv. 8 Id. Doran was ng kept s and available at all Doran, Lester and Lester's daughter confronted Mehran about the diamonds on December 7, 2008 at t Tel Aviv amond Exchange, where Mehran's office was located. Id. at 171. When they did so, Mehran immediately told them that he was holding Mehran then produced a $47 million of diamonds. t r boxes, and parcels of loose diamonds which he acknowledged belonged to Fine Diamonds, and which he said were kars to as credit for what was owed by the Id. the Un Diamonds. that some diamonds had Mehran also cIa bro ing returned given to a ed States to sell to customers Mehran could provi . But no name for the broker, nor any documentation for this alleged transfer. Mehran reiterated Id. that $6 million in diamonds had been shipped to Fine Diamonds New York two days ior, but to support this either. of Fine he amonds' in a sa in Id. could produce no documentation Mehran cIa that remainder amond stock was in sealed cachet boxes being basement of the Iding. The following morning, the cachets were opened revealing the cachets maintained by Mehran were empty, except for one box. , 85 to 90% of amonds, 501 B.R. at 172. In re Fine In parcels (small envelopes which would normally contain one diamond each) were completely empty, and those parcels that did contain diamonds were immediately 9 identifiable as diamonds that had been swapped out, because they did not correspond to the value of the diamond listing on t face of the box. est ished litt rd. er inspecting these diamonds, ster these were diamonds of inferior quality having value. On December 9, 2008, Lester had a phone conversation with Mehran that he recorded using a service available in Israel. rd. at 173. In this conversation, Mehran did not dispute that Peykar owed money to Fine Diamonds. rd. Mehran disputed only the amount owed, claiming that the amount was approximately $23 million, rather than ely $37 approx million shown as outstanding in Doran's records. rd. On the same day, Doran went to Mitch's New York office with Doran's father Jeffrey. rd. Doran brought a digital audio recording device with him to the meeting, which he used to record the entire exchange. Doran also brought with him the chart that he had sent to Mehran on December 5, listing the batches of diamonds delive Mit and the payments recei rd. acknowledged on several occasions owing money to Fine Diamonds, but he never agreed on the amount. rd. claimed that the amount was between $15 and $18 million. 10 Mitch rd. When subsequent attempts by Lester to meet with Mehran proved fruitless, Lester contact Israeli police in Tel Aviv and fil 174. the Fraud Department of the a formal complaint. Id. at On Sunday, December 14, 2008, Mehran was arrested in Israel, and his home and office were searched by the Israeli police, on suspicion of grand larceny. Id. The Israeli police confirmed that there was no additional safe at Mehran's of in Tel Aviv. ce Id. The Decision made several conclusions with regards to Debtor's claims, including: ¢ Claim for turnover suant to 11 U.S.C. 542: The Bankruptcy Court found, "as a fact or mixed question of fact and law, that the diamonds given by the debtor to Peykar beginning in 2007 were entrusted to Peykar on consignment, and were not sold on credit." In re Fine Diamonds, 501 B.R. at 180. Accordingly, the Bankruptcy Court concluded that "title did not pass to the Peykars during these consignment transactions, and the Transferred Diamonds remained property of the estate, subject to t turnover provision, section 542." Id. The De sion further found that "[w]ith no basis for a finding that Peykar International can return those diamonds in kind, judgment must entered against Peykar International in that amount." ¢ Claim for fraudulent transfer suant to 11 U.S.C. 548: The Decision found that "Peykar [] caused the missing diamonds to be transferred to itself, and for no consideration" and that "the transfers were made when [the Debtor] was insolvent, or rendered it so." Id. Bankrupt Court imposed fraudulent trans liability on , but not on Mitch and Mehran. Id. at 181-82. 11 ¢ pursuant to 11 U.S.C. § 544 aim for fraudulent trans 273 of the New York Debtor and Creditor Law: and The Bankruptcy Court found that the transfers to Peykar International were fraudulent and must be voided under New York Debtor and Creditor Law § 273, made applicable by 11 U.S.C. § 544, because they were made "without [] fair consideration" and Defendants failed to show any evidence of the Debtor's solvency at t time of the transfer. Id. at 182. suant to 11 U.S.C. 550: ¢ Claim The Decision found that, given that the courts lack t ability to achieve the return of the Transferred Diamonds themselves, a money judgment the value of the diamonds in the amount of $37,593,930.34 is appropriate against Peykar but not against Mitch and Mehran. Id. ¢ Claim for conversion: The Bankruptcy Court found that "Peykar International is plainly liable for conversion of the Trans rred amonds." Id. at 184. The Bankruptcy Court further found that Mitch and Mehran, as the principals and sole shareholders of the debtor, are also liable for conversion because (i) they knew of it but failed to "set it right" and (ii) were the rect beneficia es of the conversion. Id. ¢ Claim for fraudulent mis sentation: The Decision found that the Trustee "did not meet his burden of proof on the extent to which Mitch or Mehran made any lse representations fore Doran gave Peykar [] more diamonds, and that either made false statements upon which Doran or anyone else at [the Debtor] relied." Id. at 186 87. ¢ The Decision concluded that the Trustee is entitled to pre judgment interest on its conversion claim, at a statutory rate of 9% per annum in accordance with N.Y. C.P.L.R. § 5004, beginning from December 7, 2008, which is the date on which Doran and Lester first demanded return of the Transferred Diamonds. Id. at 187-88. Discussion 12 Th icable Standards Plaintiff see relief pursuant to 28 u.s.c. § 157(c), Bankruptcy Rules 8011 and 9033, and SDNY Rule 9033 1, and Standing Order. 28 U.S.C. §157(c} provides in non-core proceedings, the Bankruptcy Court: shall submit proposed ngs of ct and conclusions of law to the strict court, and final 0 r of judgment shall be entered by the district judge after considering the bankruptcy j 's proposed findi and conclusions and after reviewing de novo those matters to which any y has t ly and fically objected. 28 U.S.C. § Ru 157 (c). 9033(d} of the Bankruptcy Rules, in turn, provides: The dist ct judge shall rna a de novo review upon record, or after additional evidence, of any portion of bankruptcy judge's findings of fact or conc ions of law to which specific written objection has made in accordance with this rule. district judge may accept, reject, or modify the proposed findings of fact or conclusions of law, receive her evi , or recommit the matter to the bankruptcy judge with instructions. 13 Bankruptcy Rule 9033(d) SDNY Rule 9033-1, provides that: If the Court determines that it cannot enter a final order or judgment consistent with Article III of the United States Constitution in a particular proceeding referred to the Court and designated as core under section 157(b) of title 28, and the Court hears the proceeding, Rule 9033(a), (b), and (c) of the Federal Rules of Bankruptcy Procedure shall apply as if it is a non-core proceeding. SDNY Rule 9033 1. The Standing Order provides, in relevant part, as follows: If a bankruptcy judge or district judge determines that entry of a final order or judgment by a bankruptcy judge would not consistent with Article III of the United States Constitution in a particular proceeding referred under this order and determined to be a core matter, the bankruptcy judge shall, unless otherwise ordered by the district court, hear the proceeding and submit proposed findings of ct and conclusions of law to the district court. See Snyder Decl., Ex. B. 14 Defendants' Failure To Object To The Proposed Findings Waives Their Right To De Novo Review Pursuant to Bankruptcy Rule 9033{d), the district court "shall [only] make a de novo review . of any portion of the bankruptcy judge's findings of to which speci s rule." with S c larly, § or conclusion of law tten objection has been made Bankruptcy Rule 9033 (d) accordance (emphasis added). 157(c) of the Bankruptcy Code mandates de novo review only of "those matters to which any party has timely and specifically objected." 28 U.S.C. § 157(c). Defendants have not filed any objections to the Propos Findings either within the time proscribed by Bankruptcy Rule 9033 and Implementation Order I or othe se. Defendants have thus waived their right to object to the Proposed Findings. See In re Ionosphere Clubs, Inc., No. 94 CIV 0659 (MBM), 1996 WL 361531, at *1 (S.D.N.Y. June 28, 1996) ("failure to comply with the ci would be suf Rule in pursuing s appeal cient reason for finding that [appellant] has waived his objections and affirming the order at issue."); In re Golodetz Corp., 198 B.R. 441 (Bankr. S.D.N.Y. 1996) (reasoning that, pursuant to Bankruptcy Rules 9020(c) and 9033(b), a potential contemnor has ten days within which to file an 15 objection to the finding of contempt or the right to de novo the finding by the district court is deemed waived); review Hagan v. Okony, No. 1:08-cv-732, 2008 WL 4722747, at *1 (W.O. Mich. Oct.22, 2008) (stating that where no party files objections to the bankruptcy court's rt and recommendation, it "stand[s] without objection"); see also Infrastructure Service Co., LLC v. Firestone, 328 B.R. 804 (C.D. Cal. 2005) (denying plaintiff's motion for relief from a judgment adopting the bankruptcy court's proposed findings where plaintiff to file objections to t proscribed proposed findings within t a Motion to Correct Error. each contained six I 's motion, the Peykars each The Motions to Correct Error requesting that the Designations considered as objections to the Proposed Findings. authority was provided supporting t Court time Bankruptcy Rule 9033). In response to Plainti fil iled No legal Peykars' request, and the s not found a case opining on the issue. A motion to correct an error is usually brought pursuant to Fed. R. Civ. Pro. 59(e), or 60(a), but se es address correcting or amending a judgment or order, whereas the Peykars seek to "correct" their own papers. While Defendants are now appearing pro se in this 16 action, their pro se standing does not excuse them from complying with the Federal Rules of Civil Procedure or the Bankruptcy Rules. Pleadings by pro se parties are "construed liberally,U but "'pro se status does not exempt a party from compliance with relevant rules of procedural and substantive law.'u (2d Triestman v. Fed. Bureau r. 2006) Cir. 1983)). Prisons, (quoting Traguth v. Zuck, 470 F.3d 471, 477 710 F.2d 90, 95 (2d A pro se party is liable for his failure to timely object to the bankruptcy court's proposed with Bankruptcy Rule 9033. ndings in accordance In re Ionosphere Clubs, Inc., No. 94 CIV 0659 (MBM), 1996 WL 361531 (S.D.N.Y. June 28, 1996). Procedural rules in c as to excuse mista McNeil v. U.S., 1 litigation cannot "be interpreted so s by those who proceed without counsel. u 508 U.S. 106, 113, 113 S. Ct. 1980, 1984 (1993) (affirming dismissal of pro se plaintiff's suit given his failure to comply with the governing statute) . Several other factors compel against leniency for the Peykars' pro se status. Defendants early had notice of the Proposed Findings, since they filed notices of appeal. kars also had not The of the instant motion, as they each filed their Motions to Correct Error in the instant proceeding. Further, Defendants were represented by counsel throughout the Adversary Proceeding and are sophisticated part 17 s: they are international businessmen dealing in millions of dollars worth of goods. In addition, Bankruptcy Rule 9033(d) and § 157(c) of the Bankruptcy Code call for spe ficity in any objections. Neither the Peykars' Motion to Correct Error nor Designations contain sufficient speci city to qualify as objections. Even if the Motions to Correct Error were granted, the Designations do not constitute objections to the Proposed Findings. Designations list statements of issues (the "Issues U ), The but the Issues are mostly bare statements or questions for a court. (See, Case No. 09 01033, ECF Nos. 116 and 117). have not pointed to any spe The Peykars fic portions of the Decision to which they object in both the Designations and the Motions to Correct Error nor provided any speci city as to why the factual determinations or legal conclusions are incorrect. Bare statements that are devoid of any reference to specific findings or recommendations to which a party objects and why, and unsupported by legal authority, are not sufficient to constitute actionable objections. Inc., Seer e.g., Mario v. P & C Food Markets, 313 F.3d 758, 766 (2d Cir. 2002) (finding party who filed bare bones objections to magistrate judge's report and recommendation failed to adequately object under Fed. R. Civ. P. 72(b)); Bowens v. Atlantic Maintenance Corp., 546 F. Supp. 2d 18 55, 59 (E.D.N.Y., April 23, 2008) (holding that defendant's general and conclusory objections to t magistrate's report and recommendations were not specific enough to preserve review and thus Power, Inc. aims purported objections were waived); Healing v. Ace Continental Exports, Ltd., 2008 WL 4693246 (E.D.N.Y. October 17, 2008) (rejecting pro se defendants' letter to the Court purporting to object to a magistrate's report and recommendations and, upon review for c in their entirety).l r error, adopting them Peykars' Motion to Correct Error and Designations have not made any "timely and cific[]" objections as required under 28 U.S.C. § 157(c) or any "spe fic written objection[s]" pursuant to Bankruptcy Rule 9033(d), whi novo review of the Proposed Findings. obviates re Perry H. Koplik & Sons, Inc., 2013) See, e.g., In 499 B.R. 276, 288 n.6 (S.D.N.Y. ("Because the Bankruptcy Court did not find the Officers to be liable in connect with those transactions, and because no party has raised an objection to those findings, the Court The case law on objections to magistrate j 's orders or is analogous to the current action. The language of Bankruptcy Rule 9033(b) is extremely similar to that of Federal Rule of Civil Procedure 72(b), which sets out the standard for objections to a magistrate j 's orders or findings. See Fed. R. Civ. P. 72(b). The drafters of Rule 9033(b) indicated that the rule "is derived from [Rule 72(b)], which governs objections to a recommended disposition by a magistrate." See Fed. R. Bankr. P. 9033(b) advisory committee notes. Other Circuits have found that due to the simi between the two statutes, "a bankruptcy court's proposed resolution should be the same effect as a magistrate's proposed resolution as far as an adversely affected party's responsibilities are concerned. In re Nantai1ala, ViI ,Inc., 976 F.2d 876, 880 (4th Cir. 1992) . 1 II 19 need not address them."}; In re Ionosphere Clubs, Inc., No. CIV 0659 (MBM) , 1996 WL 361531, at *1 94 (S.D.N.Y. June 28, 1996) (declining to review de novo bankruptcy court's order where pro se party fail to object). standards The Peykars have clearly failed to meet t set forth in Bankruptcy Rule 9033(d) and 28 U.S.C. Given such, the § 157(c). sion is affirmed absent any object The Proposed Findings Were Not Made In Clear Error Even if the Designations were proper objections pursuant to Bankruptcy Rule 9033(d) and 28 U.S.C. § 157(c), the objections do not compel findings contrary to the Proposed Findings. A district court reviews the kruptcy court's factual findings for clear error and its I novo. 990); I conclusions de In re Ionosphere Clubs, Inc., 922 F.2d 984, 988 In re MF (2d Cir.1 obal Holdings, No. 13 Civ. 3532(AT), 2014 WL 231130, at *1 (S.D.N.Y. Jan. 22, 2014). and law are also reviewed novo. Mixed questions of fact In re Vebeliunas, 332 F.3d 85, 90 (2d Cir. 2003). Most of the Issues are accusations against 20 Bankruptcy Court, creditor Nedbank, and counsel and are not relevant to the Proposed Findings. t Proposed Findings The Issues that relate to so in a conclusory and general matter. The Issues that do relate to the Proposed Findings mostly raise factual issues, none of which amount to clear error. The Defendants' objections that contain any specificity are as follows: The Defendants contend in the Designations that the Bankruptcy Court "erred in refusing to determine . Exhibit 3 was properly admit testimony." . WHETHER based on one sided foundational (See Case No. 09-01033, ECF Nos. 116 and 117, at 2 (emphasis in original)). Exhibit 3 was admitted "after extensive foundation testimony, at trial," supported by testimony of Doran, who was cross-examined and "was established to the satisfaction of t B.R. at 168. Court." In re Fine Diamonds, 501 The Defendants presented no evidence to challenge the specifics of Exhibit 3, but the Bankruptcy Court "nevertheless considered credibility." Id. necessary to gauge Doran's The Decision therefore did not "refus[e] to determine" whether Exhibit 3 was properly admitted (Defendants' speci c objection), and the court did properly admit the exhib 21 The De Bankruptcy r propose that ndants Court "erred in refusing to determine . WHETHER the [Bankruptcy] Court erred In failing to cons that title in any alleged Transferred r Evidence showing amonds [sic] was with (See Case No. 09-01033, ECF Nos. 116 and 117, at 3 Peykar." ginal)). (emphasis in However, Defendants do not nt to the "Evidence" the Bankruptcy Court allegedly failed to cons r. ext ens The Decision also explicitly found, after an review of the and law, that s, "as a ct or xed question of diamonds given by Fine Diamonds to kar International beginning in 2007 were entrusted to Peykar International on consignment, and were not sold on credit." re Fine Diamonds, 501 B.R. at 180. Diamonds reta at 183-84. Court It also found that "Fine title to the Transferred diamonds were trans In amonds when the rred to the Peykars on consignment." Absent any evidence to the contrary, Id. Bankrupt d not err as contended by Defendants. Defendants have also asked whether " [Bankruptcy] Court erred in misstating Mehran's testimony referenced in the Answer to to Amended Summons and Complaint, t Mehran never admitted to a consignment arrangement between Peykar International and Fine Diamonds." 09-01033, ECF Nos. 116 and 117, at 3). 22 (See Case No. However, Mehran admitted in Mehran Answer to Amended Complaint that the Debtor and Peykar International "entered into a business relationship . wherein the Debtor agreed that it would consign diamonds to Peykar [International] for sale to third parties." Diamonds, 501 B.R. at 166 n.l0. In re Fine The consignment relationsh was also established by Mitch's testimony at trial, unequivocally admitting that the arrangement between the Debtor and Peykar [International] was "strictly on a consignment basis." Id. at 166 n.9 ("Q. The arrangement was st consignment basis, is that correct? ctly on a A. My understanding, yes.") . The Defendants propose that the Bankruptcy Court "erred by not taking recognition that no invoices were presented to support t trans of any of the alleged Trans rred Diamonds which is unheard of in the industry" and "resting its decision heavily upon a finding that a sufficient foundation was laid to establish that computer generated Excel spreadsheets were fact the true business records of Fine Diamonds or less so the records of stones supposed transferred to Peykar [International]." at 3). (See Case No. 09 01033, ECF Nos. 116 and 117, However, the Decision found that "[t]he speci cs of t deliveries were documented to the Court's satisfaction" by "Plaintiff's Exhibit 1, a binder containing Microsoft Excel 23 spreadsheets . . . with respect to which foundation was satis ctorily laid to admit them as bus e Diamonds, 501 B.R. at 167. extensively analyz speci In re Further, the Decision the Excel spreadsheets and noted "[t]he cs of the deliveries were documented to t satisfaction." ana ss records." . at 167. The De Court's ndants have provided no is or authority to establish that the Bankruptcy Court's conclusion was incorrect. The Defendants also questioned whet r the Bankruptcy Court "erred in naming Mehran [ ] as a defendant since he never had any form of interest in Peykar [International]." No. 09-01033, ECF Nos. 116 and 117, at 3). Decision explo (See Case However, the the issue and noted that "[a]n of cer or director of a corporate defendant may be liable for conversion if he or she rsonally foste the conversion and decli Diamonds, 501 B.R. at 184 the conversion or was aware of to set it right." ( In re Fine ing Am. Feeds and Livestock Co. v. Kalfco, Inc., 149 A.D.2d 836, 837, 540 N.Y.S.2d 354, 356 (3d Dep't 1989)). The Defendants have not provided any authority contrary to the Decisions' conclusion, and the authorities cited by the Bankrupt Court are on point. See, e.g., Kalfco, A.D.2d 836, 837, 540 N.Y.S.2d 354, 356; Prudential-Bache Secs. Golden Larch-Sequoia, Inc., Inc. v. 118 A.D.2d 487, 488, 500 N.Y.S.2d 1, 24 2 (1st Dep't 1986); Edwards v. Horsemen's Sales Co., 148 Misc.2d 212, 560 N.Y.S.2d 165 (Sup. Ct. N.Y. Cnty. 1989). In the end, Defendants do not point to a evidence or authority contradictory to the Proposed Findings or that the Bankruptcy Court failed to contemplate. This lack of anal is on the Decisions' determinations applies to all of the Issues. As such, the Bankruptcy Court's well-reasoned ctual erminations were not made in clear error, and the legal conclusions were correct. Given t sion's Defendants' ilure to object with any specificity to any findings of fact or conclusions of law, the Court adopts the Proposed Findings by the Honorable Robert E. Gerber in the De sion in its entirety. The Peykars Have Waived Their Right For Appeal Plaintiff contends that the failure of a defendant to object to proposed findings of fact or conclusions of law also results in t waiver of that defendant to appeal the underlying decision. A party's failure to address a bankruptcy court's order in its district court brief constitutes waiver of that party's right to appeal on that issue. eep Products, Inc., to press its cIa See In re 78 F.3d 18, 29 (2d Cir. 1996) fore the district court, 25 ("By ein iling [appellant] did not preserve that issue court or review by either t district s Court."); see also In re Nantahala Village, Inc., 976 F.2d 876 (4th Cir. 1992) (Chapter 11 debtor, by not timely filing written objections to bankruptcy court's recommendation, waived its right to appeal district court's order adopting bankruptcy court's recommendation); 1177-78 (8th Cir. 1993) In re Ragar, 3 F.3d 1174, (recognizing that, where a bankruptcy court makes proposed findings of fact and conclusions of law in a non-core proceeding "[i]ts action would effective if [a party] become final and [did] not file [ ] timely objections") (citing Fed. R. Bankr.P. 9033(d)). Defendants failed to properly object to the Decision or the Proposed Findings, and their failure waives their right to appeal the contained herein. 26 ndings Conclusion Based on the conclusions set forth above, (i) Decision is hereby affirmed in all respects; and (ii) the appeals of the Decision fil dismissed. by Mitch and Mehran are hereby Submit judgment on notice. It is so ordered. New York, NY April iP , 2014 U.S.D.J. 27
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