530 B.R. 573
Bankr. E.D.N.Y.2015Background
- Adversary proceeding to bar Debtor Katya Varela’s discharge under 11 U.S.C. § 727(a)(4)(A) by Mare Pergament as Chapter 7 trustee for the estate.
- Debtor asserted four counterclaims against the Trustee and four affirmative defenses in response to the § 727(a)(4)(A) action.
- Trustee sought dismissal of counterclaims and to strike affirmative defenses, and asked for a protective order barring the Debtor’s deposition.
- Counterclaims allege Trustee’s removal of the Debtor’s discharge, interference with mortgage modification, bad faith and fraud, and abuse of process.
- Affirmative defenses include failure to state a claim, Trustee exceeded authority/unreasonable conduct, Trustee not entitled to postpetition payments, and Trustee lacked standing to demand payments.
- Facts include Debtor’s mortgage modification efforts, Trustee’s turnover demand and persistence of postpetition payment discussions, and letters surrounding the loss mitigation and modification process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether counterclaims are barred or properly pleaded | Pergament argues 13(b) permits counterclaims against the Trustee in his representative capacity | Varela argues for personal liability and removal of the Trustee | Counterclaims 2–4 dismissed; First Counterclaim dismissed for failure to move; overall dismissal under Rule 12(b)(6) |
| Whether the Trustee enjoys quasi-judicial immunity | Pergament relies on immunity to shield liability for actions as Trustee | Varela seeks personal liability for alleged misconduct | Immunity extends where acts fall within statutory duties; nonetheless not a bar to merits-based disposition; immunity not absolute in all scenarios |
| Whether the affirmative defenses should be struck | Pergament argues defenses are either immaterial or improperly plead | Varela argues defenses relate to the § 727(a)(4)(A) merits | Second–Fourth affirmative defenses struck; First affirmative defense remains |
| Whether the Trustee’s deposition should be protected | Pergament contends no need for deposition given dismissal of counterclaims | Varela seeks deposition for discovery | Deposition protective order granted |
Key Cases Cited
- In re Casale, 62 B.R. 899 (Bankr.E.D.N.Y.1986) (counterclaims against trustee in representative capacity governed by Rule 13; removal requires proper procedure)
- In re McKenzie, 716 F.3d 404 (6th Cir.2013) (ultra vires and fiduciary duty exceptions to immunity; discretionary acts protected when within statutory duties)
- Stump v. Sparkman, 435 U.S. 349 (1980) (judicial immunity extends to officials acting with discretion comparable to judges)
- Weissman v. Hassett, 47 B.R. 462 (S.D.N.Y.1985) (trustee immunity when acting under court supervision or pursuant to court orders)
- Bernard L. Madoff Inv. Sec. LLC, 440 B.R. 282 (S.D.N.Y.2010) (trustee immunity and business judgment in administering estate assets)