08-5791-bk
In re Haworth
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO SUM M ARY
ORDERS FILED AFTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY TH IS CO URT’S
LOCAL RULE 32.1 AND FEDERAL RULE OF APPELLATE PROCEDURE 32.1. IN A BRIEF OR OTHER
PAPER IN WHICH A LITIGANT CITES A SUM M ARY ORDER, IN EACH PARAGRAPH IN WHICH A
CITATION APPEARS, AT LEAST ONE CITATION M UST EITHER BE TO THE FEDERAL APPENDIX OR
BE ACCOM PANIED BY THE NOTATION: “(SUM M ARY ORDER).” A PARTY CITING A SUM M ARY
O RDER M UST SERVE A COPY OF THAT SUM M ARY ORDER TOGETHER W ITH THE PAPER IN
W HICH THE SUM M ARY ORDER IS CITED ON ANY PARTY NOT REPRESENTED BY COUNSEL
UNLESS THE SUM M ARY ORDER IS AVAILABLE IN AN ELECTRO NIC D ATABASE W HICH IS
PUBLICLY ACCESSIBLE W ITHOUT PAYM ENT OF FEE (SUCH AS THE DATABASE AVAILABLE AT
HTTP://W W W .CA2.USCOURTS.GOV/). IF NO COPY IS SERVED BY REASON OF THE AVAILABILITY
OF THE ORDER ON SUCH A D ATAB ASE, THE CITATION M UST INCLUDE REFERENCE TO THAT
DATABASE AND THE DOCKET NUM BER OF THE CASE IN W HICH THE ORDER W AS ENTERED.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 16 th day of December, two thousand nine.
PRESENT: RALPH K. WINTER,
REENA RAGGI,
DEBRA ANN LIVINGSTON,
Circuit Judges.
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In Re: JOHN BRIAN HAWORTH,
Debtor,
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JEFFERY DIEFFENBACH,
Appellant,
v. No. 08-5791-bk
JOHN BRIAN HAWORTH, TRUSTEE BARBARA
KATZ,
Appellees.
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APPEARING FOR APPELLANT: JEFFERY DIEFFENBACH, pro se, Newport,
Rhode Island.
APPEARING FOR APPELLEES: FRANCIS J. BROWNE, Stamford, Connecticut,
for John Brian Haworth.
BARBARA H. KATZ, pro se, New Haven,
Connecticut.
Appeal from the United States District Court for the District of Connecticut
(Christopher F. Droney, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment entered on October 29, 2008, is AFFIRMED.
In 2004, pro se appellant Jeffery Dieffenbach moved to reopen his former father-in-
law John Brian Haworth’s chapter 7, “no asset” bankruptcy. See 11 U.S.C. § 701 et seq.
Dieffenbach now appeals from the district court’s affirmance of the bankruptcy court’s
orders (1) declining to remove Barbara Katz as bankruptcy trustee, and (2) denying
Dieffenbach’s request for damages from Haworth’s estate. “[W]e review the bankruptcy
court decision independently, accepting its factual findings unless clearly erroneous but
reviewing its conclusions of law de novo.” In re Enron Corp., 419 F.3d 115, 124 (2d Cir.
2005). In doing so, we assume the parties’ familiarity with the facts and the record of prior
proceedings, which we reference only as necessary to explain our decision to affirm.
1. Removal of Trustee Katz
The bankruptcy “court . . . may remove a trustee . . . for cause.” 11 U.S.C. § 324(a).
In defining “cause” for removal, “‘[w]e have traditionally stressed the elements of fraud and
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actual injury to the debtor interests.’” In re Freeport Italian Bakery, Inc., 340 F.2d 50, 54 (2d
Cir. 1965) (quoting Schwartz v. Mills, 192 F.2d 727, 729 (2d Cir. 1951)); accord In re
Lundborg, 110 B.R. 106, 108 (Bankr. D. Conn. 1990); see also 3 Collier on Bankruptcy
¶ 324.02 (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2009) (“Generally, the courts
will not remove a trustee absent fraud or injury.”). We review the bankruptcy court’s
removal decision for abuse of discretion, see In re Eloise Curtis, Inc., 326 F.2d 698, 701 (2d
Cir. 1964); In re Paramount Publix Corp., 68 F.2d 703, 705 (2d Cir. 1934), and we detect
none here.
Dieffenbach submits that Katz should have been removed for (1) failing to
acknowledge and administer putative undisclosed assets; (2) failing to furnish requested
financial information to Dieffenbach; and (3) offering to sell the trustee’s claims to
Dieffenbach. We are not persuaded. If Katz had “not fulfilled [her] duty as trustee to press
all legitimate claims of the estate,” In re Freeport Italian Bakery, Inc., 340 F.2d at 55, then
there might have been cause for her removal. But the record shows that Katz thoroughly
investigated each of Dieffenbach’s proposed claims and ultimately concluded, in two detailed
reports, that “no property of the estate exists for a trustee to administer.” Trustee’s Report
at 14. Katz’s conclusion accorded with that of her predecessor trustee, Roberta Napolitano,
who previously examined Dieffenbach’s arguments and similarly concluded there were no
grounds to reopen the Haworth bankruptcy. On this record, we identify no error, much less
abuse of discretion, in the bankruptcy court’s decision not to remove Katz.
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Moreover, even were we to conclude that Katz acted improperly either by declining
to furnish Haworth’s tax returns and bank statements, see 11 U.S.C. § 704(a)(7), or by
offering to sell Dieffenbach any claims to the putative undisclosed assets, see In re
Greenberg, 266 B.R. 45, 48-51 (Bankr. E.D.N.Y. 2001) (discussing standard for allowing
trustee to sell claims); cf. In re Commodore Int’l Ltd., 262 F.3d 96 (2d Cir. 2001) (involving
standing of creditors to bring claims in name of bankruptcy debtors), we would perceive no
“fraud and actual injury to the debtor interests” compelling Katz’s removal as trustee, In re
Freeport Italian Bakery, Inc., 340 F.2d at 54. Accordingly, we affirm the decision of the
bankruptcy court.
2. Request for Damages
Dieffenbach also submits that he is entitled to damages as “an individual injured by
a[] willful violation of” the automatic stay. 11 U.S.C. § 362(k)(1). The automatic stay
applies to any “action or proceeding against the debtor.” Id. § 362(a)(1) (emphasis added).
An “action or proceeding” includes “any pleading that asserts a claim on which relief is
sought.” Koolik v. Markowitz, 40 F.3d 567, 568 (2d Cir. 1994). “Thus, an answer that
asserts a counterclaim against a plaintiff who becomes a bankruptcy debtor is an ‘action or
proceeding against the debtor’ within the meaning of § 362(a)(1).” Id. In determining
whether an action is “against the debtor,” we look to the debtor’s status “at the time of the
original proceeding,” not to “which party is ahead at a particular stage in the litigation.”
Teachers Ins. & Annuity Ass’n of Am. v. Butler, 803 F.2d 61, 65 (2d Cir. 1986).
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Dieffenbach contends that Haworth violated the automatic stay by (1) contesting
Dieffenbach’s post-petition motion to reopen a state court proceeding, which the debtor
brought against Dieffenbach and which resulted in a pre-petition stipulated judgment of
$30,000 for the debtor; and (2) collecting $10,000 of that judgment after filing for
bankruptcy. We disagree. As the district court noted, Dieffenbach failed to file a
counterclaim in the state court proceeding. Thus, we are directed to no “pleading” stating
any claim against the debtor that could violate the automatic stay. Koolik v. Markowitz, 40
F.3d at 568. Dieffenbach’s suggestion that a motion to reopen the state court judgment
qualifies as an action “against the debtor” confuses which party might be ahead at a particular
stage in the litigation with their status at the outset of the proceeding. See Teachers Ins. &
Annuity Ass’n of Am. v. Butler, 803 F.2d at 65. Accordingly, we conclude that, even if
Dieffenbach were injured by Haworth’s appearance contesting his motion to reopen the state
court proceeding, he is not entitled to damages for any violation of the automatic stay.
We have considered Dieffenbach’s other arguments on appeal and conclude that they
lack merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
By: ___________________________________
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