Barry Siskin

UNITED STATES BANKRUPTCY COURT 	NOT FOR PUBLICATION
SOUTHERN DISTRICT OF NEW YORK
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In re: 	:
: 	Chapter 7
BARRY SISKIN, 	: 	Case no. 02-10373 (SMB)
:
Debtor. 	:
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MEMORANDUM DECISION AND ORDER DENYING
DEBTOR’S MOTION FOR REARGUMENT, OTHER,
RELATED RELIEF, OR TO STAY THE ORDER FOR RELIEF
A P P E A R A N C E S:
SCHRADER & SCHOENBERG, LLP
Attorneys for Debtor
420 Lexington Avenue, Suite 628
New York, New York 10170
David A. Schrader, Esq.
Of Counsel.
BRYAN CAVE LLP
Attorneys for Robert L. Geltzer, Chapter 7 Trustee
1290 Avenue of the Americas
New York, New York 10104
Robert A. Wolf, Esq.
Of Counsel
MICHAEL J. GARCIA
United States Attorney for the
Southern District of New York
Attorney for the United States
86 Chambers Street – 3 rd Floor
New York, New York 10007
Heather K. McShain
Assistant United States Attorney
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DEIRDRE MARTINI
United States Trustee
33 Whitehall Street - 21 st Floor
New York, New York 10004-2112
Greg M. Zipes, Esq.
Of Counsel
STUART M. BERNSTEIN
Chief United States Bankruptcy Judge
By order dated January 26, 2006, the Court converted this case from chapter 11 to
chapter 7. The debtor has now moved for reargument and reconsideration, to alter or amend the
judgment, for a stay of the order for relief, and for relief from the conversion order. For the
reasons that follow, his motion is denied.
BACKGROUND
The debtor is a New York attorney who filed a chapter 11 petition on January 28, 2002.
According to the allegations in his current motion, the debtor handled a personal injury case,
Woodson v. Mendon Leasing Corp., in the mid-1990s. He obtained an approximate $4 million
default judgment against the driver of the motor vehicle involved in the underlying accident, and
obtained a litigated judgment against the vehicle owner in excess of $2.9 million. The owner’s
insurer paid the latter judgment, and the debtor received a contingent fee of approximately $1
million, although half of the fee was paid to his trial counsel.
Thereafter, the owner’s insurer successfully moved to vacate the $ 2.9 million judgment.
By that time, the debtor had spent the attorneys’ fees. The insurer then moved for an order of
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1 At the end of his moving affidavit, the debtor asked for the right to supplement
the record to respond to the facts alleged in New York’s joinder papers. (See Affidavit of Barry
Siskin, sworn to Jan. 31, 2006, at ¶ 25) (“Siskin Affidavit”) (ECF Doc. # 196.) The request is
denied. New York filed its joinder one month before the January 26 th hearing, and the debtor
had plenty of time to respond. Moreover, the debtor does not contest the essential facts
regarding non-payment of the post-petition withholding taxes asserted in New York’s joinder.
3
disgorgement. The debtor filed his chapter 11 petition on the day before the disgorgement
hearing, primarily to appeal the order vacating the judgment and to stay the disgorgement
proceedings. The Appellate Division affirmed the order vacating the judgment.
On May 6, 2003, the New York Court of Appeals reversed the lower courts and
reinstated the judgment. See Woodson v. Mendon Leasing Corp., 790 N.E.2d 1156 (N.Y.
2003). This ruling relieved the debtor of all of the reasons cited for filing the chapter 11 case.
One would assume, therefore, that the debtor would immediately have moved to dismiss his
case. This, the debtor did not do. Instead, he languished in chapter 11, ignoring the rules
promulgated by the United States Trustee, the United States Congress, and this Court. For
example just prior to the reversal by the Court of Appeals, Judge Blackshear imposed a monetary
sanction against the debtor in the amount of $72,000, based upon his failure to abide by previous
discovery orders. (ECF Doc. # 111.) The debtor is still paying off that award. According to the
Government, the debtor regularly failed to file and/or pay his personal federal income, FICA and
FUTA taxes prior to the petition, and post-petition, failed to pay his federal withholding, FICA
and unemployment taxes (the debtor employs six people in his law office). The debtor also
failed to file numerous federal tax returns post-petition. He similarly failed to file numerous
New York tax returns, or filed returns without including the tax payment.1 Many of the unpaid
federal and state taxes are “trust fund” taxes which the debtor is required, by law, to collect from
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2 In fact, the Government had filed a separate motion to dismiss or convert in
December 2004, based primarily upon the debtor’s failure to file his personal federal income tax
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his employees and turn over to the appropriate taxing authority. At oral argument, the debtor’s
lawyer attributed the non-payment of taxes to the need to pay the discovery sanction. (Transcript
of hearing, held Jan. 26, 2006, at 7 (“Tr.”); accord Siskin Affidavit ¶ 21).) In other words, the
taxes are being used to fund the sanctions award. Finally, the debtor consistently failed to file
his operating reports in a timely manner.
Despite these frequent failures, the debtor clings to chapter 11. He insists that the pot of
gold at the end of this process is the unresolved claim against the insurer to collect the
unsatisfied $4 million default judgment which, with accrued interest, currently totals $8 million.
The trial has been scheduled frequently, and adjourned just as often. It is presently scheduled for
April 2006. The debtor believes that if Woodson prevails, the fees generated by collection of the
judgment, even after giving credit for the $2.9 million previously paid, will be sufficient to
satisfy all of his creditors.
The Motion to Dismiss or Convert
The United States Trustee moved to convert or dismiss this case in February 2003. (ECF
Doc. # 101.) The motion was apparently adjourned from time to time because it was still
pending when I took over the matter after Judge Blackshear’s retirement on March 31, 2005. At
several adjourned hearings that I conducted, the debtor explained that the trial of the final
Woodson matter was imminent, and that he needed some more time to file his missing federal
tax returns. 2 I continued to adjourn the matter.
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returns for the years 1998 through 2003. (See ECF Doc. ## 143-45.) The Government withdrew
the motion after the debtor filed the missing returns. (See ECF Doc. # 190.) The debtor has still
not filed his 2004 individual or fiduciary federal tax returns, or the FICA and withholding tax
returns for the quarters ended September 30, 2002, December 31, 2003, March 31, 2004,
September 30, 2004, December 31, 2004, March 31, 2005, June 30, 2005 and September 30,
2005. (Declaration of Paul de la Vega, dated Feb. 14, 2006)(ECF Doc. # 207.)
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Prior to the adjourned hearing held on January 26, 2006, New York joined in the United
States Trustee’s motion. (ECF Doc. # 189.) New York argued that the debtor had not filed a
plan or disclosure statement, the delay in doing so was unreasonable and prejudicial to the
creditors, the debtor was unable to confirm or consummate a plan, and the debtor had failed to
pay nearly $38,000 in post-petition withholding taxes. On the return date, the Court granted the
motion, ruling:
This case is about to enjoy its fourth birthday or anniversary.
There has been no progress in the case. I know why the Debtor filed it,
because he had problems with the IRS. But, whatever Chapter 11 is, it’s not just
some – simply a safe haven where people hang out hoping for things to improve.
The Debtor has failed to pay administrative expenses, which will result in
substantial prejudice to the Estate. He’s a serial late filer of tax returns and
operating reports. And under the circumstances, he has failed to adhere to the
obligations imposed upon the Debtor and [sic] possession, which he willingly
undertook when he was looking for protection from the IRS.
(Tr. at 11.)
The debtor has now moved for relief from the conversion order on a variety of procedural
theories. The United States Trustee, the Government and the chapter 7 trustee oppose the
debtor’s motion.
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3 The parties’ motions refer to “reconsideration” while the Local Bankruptcy Rule
9023-1 refers only to “reargument.” The terms are used interchangeably in this decision.
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DISCUSSION
A. 	Motion for Reargument
Motions for reargument or reconsideration3 are governed by Local Bankruptcy Rule
9023-1(a), BANKR . S.D.N.Y. R. 9023-1(a), which states:
A motion for reargument of a court order determining a motion shall be
served within 10 days after the entry of the Court's order determining the original
motion, or in the case of a court order resulting in a judgment, within 10 days
after the entry of the judgment, and, unless the Court orders otherwise, shall be
made returnable within the same amount of time as required for the original
motion. The motion shall set forth concisely the matters or controlling decisions
which counsel believes the Court has not considered. No oral argument shall be
heard unless the Court grants the motion and specifically orders that the matter be
re-argued orally.
The movant must show that the court overlooked controlling decisions or factual matters
“that might materially have influenced its earlier decision.” Anglo-American Ins. Group, P.L.C.
v. CalFed Inc., 940 F. Supp. 554, 557 (S.D.N.Y. 1996)(quoting Morser v. AT & T Information
Sys., 715 F. Supp. 516, 517 (S.D.N.Y. 1989)); accord Banco de Seguros Del Estado v. Mutual
Marine Offices, Inc., 230 F. Supp. 2d 427, 428 (S.D.N.Y. 2002), aff’d 344 F.3d 255 (2d Cir.
2003); Griffin Indus., Inc. v. Petrojam, Ltd., 72 F. Supp. 2d 365, 368 (S.D.N.Y. 1999); Farkas v.
Ellis, 783 F. Supp. 830, 832-33 (S.D.N.Y.), aff’d, 979 F.2d 845 (2d Cir. 1992). “Alternatively,
the movant must demonstrate the need to correct a clear error or prevent manifest injustice.”
Griffin Indus., 72 F. Supp. 2d at 368 (internal quotation marks and citations omitted); accord
Banco de Seguros Del Estado, 230 F. Supp. 2d at 428.
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4 The Government has also filed a pre-petition priority tax claim in the sum of
$206,252.51.
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The rule permitting reargument is strictly construed to avoid repetitive arguments on
issues that the court has already fully considered. Griffin Indus., 72 F. Supp. 2d at 368;
Monaghan v. SZS 33 Assocs. L.P., 153 F.R.D. 60, 65 (S.D.N.Y. 1994); Farkas, 783 F. Supp. at
832. In addition, the parties cannot advance new facts or arguments; a motion for reargument is
not a vehicle for “presenting the case under new theories, securing a rehearing on the merits, or
otherwise taking a ‘second bite at the apple.’” Sequa Corp. v. GBJ Corp., 156 F.3d 136, 144 (2d
Cir. 1998)(discussing Rule 59); accord Griffin Indus., 72 F. Supp. 2d at 368 (discussing motions
for reargument).
Although the parties have introduced a variety of new facts on this motion, the essential
facts relied on in granting the motion were neither disputed nor overlooked – no plan or
disclosure statement was filed in four years, the debtor repeatedly failed to file tax returns, pay
taxes and file operating reports, and disregarded orders of this Court regarding discovery and the
filing of operating reports. The debtor’s failure to pay administrative taxes caused severe
prejudice to the creditors. The Government has filed an administrative tax claim in the sum of
$193,102.58, and as noted, New York is owed approximately $38,000 in post-petition taxes. 4
The Court’s ruling does contain one factual error, but the error is harmless and does not
change the result. I was under the impression that the debtor filed this case to avoid an imminent
seizure by the IRS. As it turns out, the debtor filed the case to avoid an imminent seizure by a
creditor seeking disgorgement. It was the fact of the imminent seizure, not the identity of the
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seizing party, that was important.
The substance of the debtor’s motion is that he should be permitted to complete the final
Woodson matter. He believes that if Woodson prevails and recovers an approximate $5 million
judgment ($8 million less the $2.9 million already paid), his one-sixth contingent fee will be
enough to pay all of his creditors in full, or nearly in full.
The debtor made this same argument to me on several occasions at the various adjourned
hearings, including the last one. I have lost confidence in the debtor’s ability to bring this matter
to a close, based primarily on the debtor’s many previous unfulfilled promises that this matter
was about to be brought to a close, and the manner in which he has performed his obligations as
a debtor in possession. In addition, the debtor has retained trial counsel, and it is not even clear
that his participation is necessary. Finally, the chapter 7 trustee can decide whether the estate
needs the debtor to try the case or participate in the trial, and can distribute the estate’s share of
any recovery to the creditors.
B. 	The Motions for Reconsideration, to Alter or Amend the Conversion Order, or for
Relief from the Conversion Order
The Federal Rules of Civil Procedure do not mention motions for reconsideration.
Broadway v. Norris, 193 F.3d 987, 989 (8th Cir. 1999); 12 JAMES WM. M OORE , M OORE ’ S
FEDERAL PRACTICE § 59.30[7], at 59-112 (3rd ed rev. 2005) (“M OORE ”). Nevertheless, courts
have generally held that regardless of the title, a motion filed within ten days of the entry of
judgment is treated as a motion to alter or amend the judgment under FED . R. CIV . P. 59(e), while
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one filed more than ten days after the entry of the judgment is treated as a motion for relief from
the judgment under FED . R. CIV . P. 60(b) . 12 M OORE § 59.30[7], at 59-112
to 59-114.
The debtor has not articulated a ground to alter or amend the conversion order, or to
vacate it. The Court has already explained the reasons why the case was converted. The debtor
has not shown that the Court was mistaken in its conclusion that the debtor failed to file a plan or
disclosure statement after four years, failed to comply with the Court’s discovery orders and
orders directing the filing of operating reports, failed to file his various tax returns and/or pay his
post-petition taxes, or that the substantial unpaid administrative taxes have caused prejudice to
the estate and its creditors.
C. 	Motion for a Stay
Finally, the debtor seeks a brief stay of the conversion order to allow him to participate in
the trial. According to his motion papers, the trial was scheduled for February 28, 2006.
However, it has been rescheduled for April 25, 2006. The debtor’s apparent theory for the stay
request is that the final Woodson matter will bring in enough in fees to satisfy all or nearly all of
his creditors.
Putting to one side the numerous conditions that must occur before the debtor sees any
money from the litigation, there is no reason why the chapter 7 trustee cannot collect the money
and make distribution in accordance with 11 U.S.C. § 726. In fact, given the debtor’s many
instances of non-compliance with the Court’s orders and the federal and state tax codes, the
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estate and its creditors are much better served by having the chapter 7 trustee, rather than the
debtor, administer and distribute those funds.
Dated: New York, New York
February 22, 2006
/s/ Stuart M. Bernstein
STUART M. BERNSTEIN
Chief United States Bankruptcy Judge
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