459 B.R. 850
Bankr. M.D. Fla.2011Background
- Debtors filed a Chapter 7 petition in the M.D. Florida; the Chapter 7 Trustee sought a Rule 2004 examination of Kaveri Marathe, the Debtors’ daughter and co-owner of the New York apartment.
- Debtors disclosed an undetermined 1/2 interest in a cooperative apartment at 26 Cornelia St., New York, noting no liens and no exemption claim; value was unknown.
- Trustee alleged the apartment was purchased by Debtors and purportedly held with Kaveri, with New York public records reflecting joint ownership with Kaveri.
- Trustee sought information about consideration paid by Kaveri, relative interests, unrecorded transfers, and current use of the apartment.
- Kaveri contends the proposed Rule 2004 examination violates due process because she resides in New York, is a nondebtor, and lacks minimum contacts with Florida for the examination.
- Court granted Trustee’s Rule 2004 examination; Kaveri moved for reconsideration and protective order challenging due process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the apartment is estate property subject to Rule 2004 examination. | Trustee argues the apartment is estate property. | Kaveri asserts insufficient nexus to Florida due process. | Yes; property is estate asset and subject to examination. |
| Whether the Bankruptcy Court has jurisdiction over Kaveri and the apartment for Rule 2004 examination. | Court has exclusive jurisdiction over estate property worldwide. | Court has jurisdiction; examination permitted. | |
| Whether nondebtors may be examined under Rule 2004 and served cross-district. | Rule 2004 allows examination of any entity; service via Rule 45 is proper. | Nondebtors require due process safeguards. | Nondebtors may be examined with proper service. |
| Whether due process prohibits requiring Kaveri to attend an examination in New York. | Nexus to estate supports examination; location in NY is proper. | Travel burden and contacts may violate due process. | Examination in New York does not violate due process; burden is not constitutionally significant. |
Key Cases Cited
- In re Chambers, 451 B.R. 621 (Bankr.N.D.Ga.2011) (broad scope of estate property law under 541(a))
- In re Lykes Bros. Steamship Co., Inc., 207 B.R. 282 (Bankr.M.D.Fla.1997) (property of the estate wherever located)
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (bankruptcy jurisdiction should be broad and efficient)
- In re Globo Comunicacoes e Participacoes S.A., 317 B.R. 235 (S.D.N.Y.2004) (global reach of 1334(e) over estate property)
- In re Gucci, 309 B.R. 679 (S.D.N.Y.2004) (interpretation of property rights in bankruptcy context)
- In re Youk-See, 450 B.R. 312 (Bankr.D.Mass.2011) (trustee’s examination authority under Rule 2004)
- In re DBSI, Inc., 451 B.R. 373 (Bankr.D.Del.2011) (Rule 7004/Fed. R. Bankr. P. personal jurisdiction and nationwide service rationale)
- In re Enron Corp., 281 B.R. 836 (Bankr.S.D.N.Y.2002) (non-debtor discovery and third-party examination viability)
- In re Symington, 209 B.R. 678 (Bankr.D.Md.1997) (scope of Rule 2004 power extends to non-debtors)
- In re D.T. Industries, Inc., 70 B.R. 235 (Bankr.S.D.Fla.1987) (deposition subpoena authority across districts under Rule 45)