Rand International Leisure Products, LLC,

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------------------------------X
In re: 	Case No. 10-71497-ast
Rand International Leisure Products, LLC, 	Involuntary Chapter 7
Alleged Debtor.
-------------------------------------------------------------X
DECISION AND ORDER DENYING MOTION FOR SUMMARY JUDGMENT
Pending before the Court is the Motion for Summary Judgment or, Alternatively, for
Abstention Dismissing Voluntary Petition (the “Motion”) [dkt item 26], filed on May 6, 2010, by
Rand International Leisure Products, LLC, as alleged debtor (“Alleged Debtor”), as well as
evidence in support thereof. Also pending is the Motion to Dismiss Amended Involuntary
Chapter 7 Petition filed on May 25, 2010, by the Alleged Debtor (the “Dismissal Motion”). [dkt
item 56] Responses have been filed by Century Sports, Inc., Executive Importers, LLC, Allen
Goldmeier and Steven Goldmeier (collectively, the “Goldmeiers”), and various replies have also
been filed. [dkt items 69-73] This Court conducted a hearing on the Motion and the Dismissal
Motion on June 16, 2010.
By the Motion, the Alleged Debtor seeks summary judgment dismissing this involuntary
petition, or, in the alternative, requests this Court abstain from hearing this bankruptcy case. By
the Dismissal Motion, the Alleged Debtor seeks dismissal of this involuntary petition, essentially
for alleged bad faith by the petitioning creditors, and also by arguing for abstention. For the
reasons herein, this Court denies the request for summary judgment and defers ruling on the
requests for abstention and dismissal.
Summary Judgment Decision and Order - p. 1
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

Procedural History
On March 8, 2010, an Involuntary Petition under Chapter 7 of the Bankruptcy Code was
filed against the Alleged Debtor by various petitioning creditors. [dkt item 1] As the result
thereof, on April 2, 2010, this Court entered an Order directing the Alleged Debtor and its
counsel, the petitioning creditors and their counsel, if any, to appear at a pretrial conference April
14, 2010. [dkt item 7] As a result of the pretrial conference, this Court issued a Scheduling Order
on April 27, 2010, which established various discovery deadlines, and scheduled a trial to
commence on June 16, 2010 (the “Scheduling Order”). [dkt item 16] The Goldmeiers were
required to serve the Scheduling Order upon all of the parties who were then petitioning
creditors: 1
11. 	Counsel 	for 	Petitioning 	Creditors 	Century 	Sports, 	Inc., 	Allen
Goldmeier and Steven Goldmeier shall serve a copy of this Order
within three (3) business days of entry upon each of the remaining
Petitioning Creditors and the 	Alleged Debtor, and shall file an
affirmation of service within three (3) days thereafter.
[dkt item 16]2
An Amended Involuntary Petition was filed against the Alleged Debtor on May 14, 2010.
[dkt item 45] The Amended Involuntary Petition deleted petitioning creditors Matang Gonzales,
Club Marketing Services, and Design Edge, Inc., and added Cookie Jar Entertainment, Inc. On
May 17, 2010, this Court entered an Order which provides, inter alia, as follows:
ORDERED, that by 5 p.m. on May 17, 2010, Counsel for the
Petitioning Creditors shall serve a copy of this Order and the
1 As is noted, infra, the petitioning creditor body has changed from those who signed the original
involuntary petition.
2 The trial has been adjourned to June 18, 2010, to allow time for argument to be presented on the motions
addressed herein, as well as to address a discovery dispute and a video appearance motion. The video appearance
motion has been resolved by a Decision and Order entered June 16, 2010. [dkt item 118]
Summary Judgment Decision and Order - p. 2
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

Amended Involuntary Petition upon the Alleged Debtor,
counsel for the Alleged Debtor, the Office of the United States
Trustee, and the Petitioning Creditors, and file an affidavit of
such service; and it is further
ORDERED, that any response to the Amended Involuntary Petition
(“Response”) shall be filed by May 21, 2010.
[dkt item 47] The parties agreed to extend the Alleged Debtor’s time to respond to the Amended
Involuntary Petition until May 25, 2010, which extension this Court approved. [dkt item 52]
The Scheduling Order was amended on May 17, 2010, as the result of one of a series of
discovery disputes between the Goldmeiers and the Alleged Debtor (the “Supplemental Order”).
[dkt item 48] The Supplemental Order provides, inter alia, as follows:
ORDERED, that the remaining dates established by this
Court’s Scheduling Order dated April 27, 2010 [dkt item 16]
shall remain in effect; and it is further
ORDERED, that this Court may treat any failure to comply
with this Order and/or the April 27 Order as a contempt of
court, and subject to the remedies provided in Rule 37(b)(2),
including, 	but 	not 	limited 	to, 	striking 	the 	involuntary
Petitioning filed by Petitioning Creditors, and/or striking the
answer filed by the Alleged Debtor[.]
[dkt item 48, p.3] The Supplemental Order was served upon all of the then petitioning creditors.
Although the Alleged Debtor did move to dismiss the Amended Involuntary Petition, it
did not oppose the deletion and addition of petitioning creditors. Thus, on June 1, 2010, this
Court entered an Order which provides, inter alia, as follows:
The Petitioning Creditors are now: Cookie Jar Entertainment,
Inc., Bargain Furniture Inc.,Century Sports, Inc., Executive
Importers, LLC, G Squared Promotion Ltd., Allen Goldmeier,
Steven Goldmeier, KKG, Inc. d/b/a Kendal King Group, L.V.
International, Joseph Sandbrook, and Sales Chief Ent. (Hong
Kong) Co., Ltd. (collectively, “Petitioning Creditors”).
Summary Judgment Decision and Order - p. 3
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

[dkt item 62]
Discussion
The Standard for Summary Judgment
Pursuant to Rule 56© of the Federal Rules of Civil Procedure (“FRCP”) , incorporated by
Rule 7056 © of the Federal Rules of Bankruptcy Procedure (“FRBP”), summary judgment should
be granted to the moving party if the Court determines that “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting FRCP 56 ©).
A movant has the initial burden of establishing the absence of any genuine issue of
material fact. Celotex, 477 U.S. at 322-23. A fact is “material” if it “might affect the outcome of
the suit under the governing law.” Anderson, 477 U.S. at 248. An issue of fact is genuine “if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.
“When summary judgment is sought, the moving party bears an initial burden of demonstrating
that there is no genuine dispute of material fact to be decided with respect to any essential
element of the claim in issue; the failure to meet this burden warrants denial of the motion.” Smith
v. Goord, No. 9:06-CV-401(FJS/DEP), 2008 WL 902184 *4 (N.D.N.Y. Mar. 31, 2008) (citing
Anderson, 477 U.S. at 250 n.4).
If the movant meets its initial burden, the nonmoving party “must do more than simply
show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co.,
Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, it must present “significant
probative evidence” that a genuine issue of fact exists. Anderson, 477 U.S. at 249 (quotation
omitted). “There is no issue for trial unless there exists sufficient evidence in the record favoring
Summary Judgment Decision and Order - p. 4
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

the party opposing summary judgment to support a jury verdict in that party’s favor.” Cadle Co.
v. Newhouse, No. 01 Civ. 1777(DC), 2002 WL 1888716 *4 (S.D.N.Y. 2002) (citing Anderson,
477 U.S. at 249); see also Anderson, 477 U.S. at 250 (finding that summary judgment is
appropriate only when “there can be but one reasonable conclusion as to the verdict”).
Summary judgment is a proper procedural device to utilize to seek dismissal of an
involuntary petition. See In re Arminian, No. 07-12957 (AJG), 2008 WL 793574 (Bankr.
S.D.N.Y. 2008)(addressing cross motions for summary judgment to enter an order for relief on
dismiss an involuntary petition).
The Summary Judgment Standard as Applied to this Involuntary Petition
The filing of an involuntary petition is governed by 11 U.S.C. § 303. Section 303
provides in pertinent part:
(b) An involuntary case against a person is commenced by the filing with the
bankruptcy court of a petition under chapter 7 or 11
of this title -
(1) by three of more entities, each of which is either a holder
of a claim against a person that is not contingent as to
liability or the subject of a bona fide dispute as to liability
and amount... if such noncontingent undisputed claims
aggregate at least $13,475 more than the value of any lien
on property of the debtor securing such claims held by the
holders of such claims;
11 U.S.C. § 303(b); see also In re Ishaky, No. 09-40387 (DEM), 2010 WL 935572 *2 (Bankr.
E.D.N.Y. Mar. 11, 2010).
The Alleged Debtor asserts that it has demonstrated that there is no genuine issue of
material fact and that it has proven as a matter of law that there are less than three petitioning
creditors who hold claims against it that are not contingent as to liability or the subject of a bona
Summary Judgment Decision and Order - p. 5
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

fide dispute as to liability and amount, in accordance with Section 303(b)(1). The Alleged Debtor
does not seek summary judgment on the basis that it is generally paying its debts as they come
due, unless such debts are the subject of a bona fide dispute as to liability or amount, in
accordance with Section 303(h)(1) .
The standard of proof required to demonstrate the existence of a bona fide dispute is
discussed well in Ishaky:
The Court of Appeals for the Second Circuit adopted an “objective test” to
define the term “bona fide dispute.” Key Mechanical, Inc. v. BDC 56 LLC (In
re BDC 56 LLC), 330 F. 3d 111, 118 (2d. Cir. 2003). To determine whether
a bona fide dispute exists, the bankruptcy court ‘must determine whether there
is an objective basis for either a factual or a legal dispute as to the validity of
[the] debt.’ Id. at 117. The objective standard allows a creditor to be
disqualified whenever there is any legitimate basis for the debtor not paying
the debt, factual or legal. The Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (“BAPCPA”) amended Section 303 and expanded the
issue of a bona fide dispute to encompass not only issues of liability but also
issues of the amount owed.
When applying the objective test, the Second Circuit also adopted a burden
shifting framework. In re BDC 56 LLC, 330 F. 3d at 118. A petitioning
creditor must first establish a prima face [sic] case that no bona fide dispute
exists before the burden shifts to the debtor. See id. “Because the standard is
objective, neither the debtor’s subjective intent nor his subjective belief is
sufficient to meet this burden.” Id.
Ishaky, No. 09-40387 (DEM), 2010 WL 935572 at *3 (some internal citations omitted); see also
Arminian, No. 07-12957 (AJG), 2008 WL 793574 at *2 (acknowledging that “in order to qualify
as a petitioning creditor, the creditor must hold a claim that is ‘not contingent as to liability or the
subject of a bona fide dispute as to liability or amount.’ A creditor must satisfy both prongs of this
test; the claim must not be subject to a bona fide dispute as to either liability or a dispute as to
amount.”); In re Mountain Dairies, 372 B.R. 623 (Bankr. S.D.N.Y. 2007).
After due consideration of the pleadings and evidence properly submitted, this Court has
Summary Judgment Decision and Order - p. 6
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

concluded that the Alleged Debtor has not met its summary judgment burden. Issues of fact exist
that can only be resolved by determinations after a trial on the merits. Therefore, the portion of
the Motion seeking summary judgment dismissing the involuntary will be denied. However, this
is a summary judgment decision only; this Court reserves until after trial the issues as to which
petitioning creditors, if any, hold claims that satisfy the requirements of Section 303(b)(1).
Moreover, this Court has not determined that, as a matter of law, any of the petitioning creditors
have established a prima facie case that no bona fide dispute exists, thus shifting the burden to the
Alleged Debtor in accordance with BDC. See In re BDC 56 LLC, 330 F. 3d 111, 118 (2d Cir.
2002). That determination will be made after the close of the petitioning creditors case-in-chief.
For the foregoing reasons, it is hereby
ORDERED, that the Alleged Debtor’s Motion for Summary Judgment is DENIED.
Abstention and Dismissal
This Court will defer ruling on the Alleged Debtor’s requests for dismissal and abstention,
with the exception of the Alleged Debtor’s request for dismissal under Rule 7012 of the FRBP,
incorporating Rule 12 of the FRCP. On a motion seeking dismissal under FRCP 12(b)(6) motion,
a court is to accept as true all factual allegations in the complaint and draw all inferences in favor
of the plaintiff. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009); Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555-56 (2007); see also Caplaw Enters., 448 F.3d at 521. The involuntary petition
before this Court satisfies the plausibility requirement. Thus, the motion under FRCP 12(b)(6) is
denied.
This Court also denies the Alleged Debtor’s claim or allegation that this Court lacks
jurisdiction over the involuntary petition under FRCP 12(b)(1) because it was not properly
signed. The involuntary petition has been properly signed and/or ratified. In accordance with
Summary Judgment Decision and Order - p. 7
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

FRCP 83 and FRBP 5005(a)(2) and 9029, this Court has established practices and procedures for
the filing, signing, and verification of documents by electronic means. See United States
Bankruptcy Court for the Eastern District of New York General Order No. 559, Revised
Electronic Means for Filing, Signing and Electronic Filing Procedures Verification of Documents
(the “Electronic Order”). This Electronic Order, signed April 23, 2010, and immediately made
effective, applies to all bankruptcy cases and adversary proceedings pending on or after the
effective date of April 23, 2010. Although the original involuntary petition was filed prior to the
effective date of the Electronic Order, and therefore subject to the prior electronic order
procedures under Revised General Order No. 473, the amended petition before the Court was
filed thereafter, and is signed [/s] in conformity with the Electronic Order. Thus, the motion under
FRCP 12(b)(1) is also denied.
Based upon the evidence before the Court on the nondilatory request for dismissal and the
request for abstention, and the arguments made at the hearing, a plausible argument exists that
this involuntary petition filing was engineered to continue what was essentially a two-party
dispute between the Goldmeiers and the Alleged Debtors, and to seek relief from this forum that
which was essentially denied in the state court. The parties acknowledge, and the evidence
establishes, the existence of a state court litigation between the Goldmeiers and the Alleged
Debtor. See Allen Goldmeier et al. v. Rand Int’l Leisure Prods., LLC et al., Index No.
1315/2010, Nassau County, New York (the “State Action”). These parties pursued motion
practice before the State Court, and the Goldmeiers sought injunctive relief and orders of seizure
of the Alleged Debtor’s assets. After a contested hearing, the State Court issued a seventeen-page
decision denying injunctive relief as sought by the Goldmeiers, and denying dismissal of the State
Action as sought by the Alleged Debtor. The Alleged Debtor asserts that denial of the injunctive
Summary Judgment Decision and Order - p. 8
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30

relief before the state court was the catalyst for the Goldmeiers to forum shop and file the current
involuntary petition before this Court. Rather than appeal the denial of injunctive relief, the
Goldmeiers have argued that the state court was wrong in its ruling, and that relief before this
Court would be more expedient.
A bankruptcy court can abstain from hearing an involuntary case if the involuntary filing
is essentially the result of an ongoing two-party dispute and/or abstention is otherwise appropriate
under Section 305. See Mountain Dairies, 372 B.R. at 634-36. A plausible basis to consider such
relief has been established. This does not suggest, however, that the Alleged Debtor’s conduct
has been pristine. This Court has been presented with evidence that, subsequent to the filing of
this involuntary case, four lawsuits have been filed by the Alleged Debtor against various
petitioning creditors.
However, based upon the foregoing, this Court will defer on ruling on the requests for
abstention and dismissal, other than under FRCP 12.
Summary Judgment Decision and Order - p. 9
____________________________
Alan S. Trust
United States Bankruptcy Judge
Dated: June 18, 2010
Central Islip, New York
Case 8-10-71497-ast Doc 131 Filed 06/18/10 Entered 06/18/10 13:34:30