496 B.R. 713
Bankr. S.D.N.Y.2013Background
- Surabians filed four combined motions seeking Vacate, Late Opposition, Madoff Subpoena, and Records Subpoena in SIPA liquidation proceedings.
- Trustee already expunged claims of Surabians as they did not show evidence of investing with BLMIS; order entered to expunge with prejudice.
- Surabians alleged they had customer status but provided no documentary evidence after multiple opportunities.
- Court held Surabians’ notices of hearing were not sufficient to overcome the Expungement Order; motions treated as Rule 60(b) reconsideration requests.
- Court found no meritorious defense, assessed willfulness of nonparticipation, and determined substantial prejudice to the estate by reopening the expungement.
- Madoff subpoena treated as habeas corpus ad testificandum request; court denied due to minimal probative value and significant costs/security concerns.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 60(b) reconsideration of the Expungement Order is warranted | Surabians contend excusable neglect and meritorious defenses justify reconsideration. | Trustee argues neglect was willful, no meritorious defense, and prejudice to estate; no basis for relief. | Not warranted; motions denied. |
| Whether Madoff’s testimony should be compelled via habeas corpus ad testificandum | Surabians seek Madoff to support claims of direct investment. | Testimony would be of little value and costly; prisoner cannot be easily compelled; credibility concerns. | Denied; not substantially beneficial and costs/risks outweigh benefit. |
| Whether to compel discovery of BLMIS books/records and SIPA Trustee/SIPC records | Records will show Surabians’ investments and inform claim determinations. | Requests are not relevant to Surabians’ claims and are unduly burdensome; proceeding already public. | Denied; requests irrelevant or unduly burdensome. |
| Whether Surabians’ Late Opposition and related motions should be granted or reconsidered | Late filings show error in initial denial and warrant relief. | Delay was willful with prejudice; no meritorious defense. | Denied; motions rejected. |
Key Cases Cited
- American Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57 (2d Cir. 1996) (three-factor test for excusable neglect under Rule 60(b)(1))
- In re Enron Corp., 325 B.R. 114 (S.D.N.Y. 2005) (strong diligence on strongest arguments; pro se pleadings construed liberally)
- United States v. Int'l Bhd. of Teamsters, 247 F.3d 370 (2d Cir. 2001) (excusable neglect factors and prejudice considerations)
- In re MF Global Inc., 491 B.R. 355 (S.D.N.Y. 2013) (burden of proof for customer status where records do not reflect accounts)
- Mishkin v. Siclari (In re Adler, Coleman Clearing Corp.), 277 B.R. 520 (S.D.N.Y. 2002) (burden to prove customer status under SIPA)
- Pioneer Investment Services Co. v. Brunswick Associates Ltd., 507 U.S. 380 (Supreme Court 1993) (criteria for excusable neglect under stricter Pioneer standard)