16-1233
In Re: 11 East 36th, LLC
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Thurgood Marshall United
3 States Courthouse, 40 Foley Square, in the City of New York,
4 on the 16th day of December, two thousand sixteen.
5
6 PRESENT: DENNIS JACOBS,
7 JOSÉ A. CABRANES,
8 BARRINGTON D. PARKER,
9 Circuit Judges,
10
11 - - - - - - - - - - - - - - - - - - - -X
12 IN RE: 11 EAST 36TH, LLC,
13 Debtor,
14
15 VICTORIA GUTHRIE,
16 Claimant-Appellant,
17
18 -v.- 16-1233
19
20 11 EAST 36TH, LLC, MORGAN LOFTS, LLC,
21 Debtors-Appellees,
22
23 - - - - - - - - - - - - - - - - - - - -X
24
25 FOR APPELLANT: ANTHONY F. GIULIANO, Pryor &
26 Mandelup, L.L.P., Westbury, New
27 York.
28
1
1 FOR APPELLEES: JONATHAN S. PASTERNAK, DelBello
2 Donnellan Weingarten Wise &
3 Wiederkehr, LLP, White Plains,
4 New York.
5
6 Appeal from judgment of the United States District
7 Court for the Southern District of New York (Torres, J.,
8 Grossman, B.J.).
9 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
10 AND DECREED that the judgment of the district court be
11 AFFIRMED.
12 Victoria Guthrie appeals from the judgment of the
13 United States District Court for the Southern District of
14 New York (Torres, J., Grossman, B.J.) expunging her claim
15 and declining to consider her constructive trust argument.
16 We assume the parties’ familiarity with the underlying
17 facts, the procedural history, and the issues presented for
18 review. We affirm the district court’s judgment because
19 Guthrie can no longer sue either in rem or in personam, and
20 because she has waived her constructive trust claim.
21 In 2007, Guthrie mortgaged a condominium and loaned the
22 proceeds to the Morgan Investment Fund, LLC (the “Morgan
23 Fund”). When the loan was about to mature, Guthrie agreed
24 to extend it if she received additional security. Avi
25 Bobker, who managed the Morgan Fund, arranged for several
26 other entities controlled by his family to sign pledge
2
1 agreements putting up collateral in exchange for the loan
2 extension. One entity that signed a pledge agreement was 11
3 East 36th, LLC (“11 East”). 11 East had a 100% interest in
4 an entity called Morgan Lofts, LLC (“Morgan Lofts”), and
5 Morgan Lofts in turn owned several condominium units. 11
6 East pledged its ownership interest in Morgan Lofts as
7 security for the Morgan Fund’s debt to Guthrie, and Avi
8 Bobker filed a UCC financing statement for the pledge on
9 Guthrie’s behalf. 11 East received no benefit from the
10 transaction.
11 A few years later, 11 East and Morgan Lofts have both
12 entered bankruptcy, and Guthrie has filed a Proof of Claim.
13 However, the bankruptcy court discovered that the financing
14 statement was inconsistent with the pledge: the financing
15 statement described the collateral as the apartments Morgan
16 Lofts owned, but the collateral pledged was actually 11
17 East’s ownership interest in the Morgan Lofts entity itself.
18 The bankruptcy court found that the financing statement was
19 "seriously misleading," that it was therefore ineffective to
20 perfect Guthrie's security interest, and that Guthrie’s
21 resulting unperfected claim was avoided under 11 U.S.C. §
22 544(a). She was left with no claim whatsoever, and the
23 district court affirmed.
3
1 Guthrie does not appeal the holdings that the UCC
2 statement was materially misleading, that her claim was
3 therefore unperfected, or that it was properly avoided under
4 the Bankruptcy Code. Her argument on appeal is that her
5 claim should have been allowed to persist as an unsecured
6 claim, rather than being expunged.
7 As Guthrie concedes, she never had a right to sue 11
8 East in personam for the debt owed to her by the Morgan
9 Fund; and the bankruptcy court avoided her right to proceed
10 in rem against the collateral (11 East’s interest in Morgan
11 Lofts). Guthrie has failed to persuade us that any other
12 claim against the bankruptcy estate remains, and we decline
13 to look for one. Since 11 East received no benefit from its
14 pledge to Guthrie, and in the absence of a clear right to a
15 claim, she has failed to show why she should share, pari
16 passu, with the other unsecured creditors of 11 East. Even
17 if we could posit some sort of non-in rem, non-in personam
18 claim, it is difficult to see how the bankruptcy court could
19 (other than by speculation) determine the dollar value of
20 Guthrie’s claim, given uncertainty as to whether the Morgan
21 Fund will default, whether the other pledging entities can
22 pay, and whether the starting point for the value of a claim
23 should be the value of the Morgan Fund’s debt or the value
24 of 11 East’s interest in Morgan Lofts, whatever that may be.
4
1 The district court had discretion to address Guthrie’s
2 constructive trust claim despite her failure to raise it
3 before the bankruptcy court. Davis v. Shah, 821 F.3d 231,
4 246 (2d Cir. 2016). It did not abuse its discretion by
5 declining to do so: the factual predicates for a
6 constructive trust claim are disputed, and there is no
7 manifest injustice in holding that she has waived her claim.
8 Id.
9 For the foregoing reasons, and finding no merit in the
10 parties’ other arguments, we hereby AFFIRM the judgment of
11 the district court.
12
13
14 FOR THE COURT:
15 CATHERINE O’HAGAN WOLFE, CLERK
16
5