Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`UNITED STATES BANKRUPTCY COURT
`EASTERN DISTRICT OF NEW YORK
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`In re:
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`CESAR CEDILLO,
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`Debtor.
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`WEB HOLDINGS, LLC,
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`Chapter 7
`Case No. 13-42445-ess
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`Adv. Pro. No. 15-01048-ess
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`Plaintiff,
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`-against-
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`CESAR CEDILLO,
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`Defendant.
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`MEMORANDUM DECISION ON WEB HOLDINGS, LLC’S
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`Appearances:
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`Eric C. Zabicki, Esq.
`Pick & Zabicki LLP
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`369 Lexington Avenue
`12th Floor
`New York, New York 10117
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`Attorneys for Web Holdings, LLC
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`Norma E. Ortiz, Esq.
`Ortiz & Ortiz LLP
`32-72 Steinway Street
`Suite 402
`Astoria, New York 11103
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`Attorneys for Cesar Cedillo
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`HONORABLE ELIZABETH S. STONG
`UNITED STATES BANKRUPTCY JUDGE
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`Introduction
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`Before the Court is the motion of Web Holdings, LLC (“Web Holdings”) for partial
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`summary judgment on two claims asserted in the Complaint dated April 13, 2015 (the “Summary
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`Judgment Motion”), on grounds that there is no genuine dispute as to a material fact as to each
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`element of these claims and that as a result, Web Holdings is entitled to the entry of judgment as
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`a matter of law.
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`Web Holdings moves for summary judgment on its claim against the debtor, Cesar
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`Cedillo, arising under Bankruptcy Code Section 727(a)(2), to deny Mr. Cedillo a discharge in his
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`Chapter 7 bankruptcy case, on grounds that Mr. Cedillo transferred all of his right, title, and
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`interest in assets of a hardware store owned by him, within one year of the petition date, and with
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`the intent to hinder, delay, or defraud creditors of his estate, including Web Holdings. And Web
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`Holdings moves for summary judgment on its claim against Mr. Cedillo arising under
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`Bankruptcy Code 727(a)(4), to deny Mr. Cedillo a discharge here, on grounds that Mr. Cedillo,
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`knowingly and fraudulently, in connection with his bankruptcy case, made false oaths and
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`accounts.
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`Mr. Cedillo opposes Web Holdings’ Summary Judgment Motion on grounds, among
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`others, that he has been forthcoming with respect to his financial condition in connection with
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`this bankruptcy case, and that any errors and omissions in his Schedules and Statements were
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`inadvertent and unintentional and do not provide a basis for the harsh remedy of denial of his
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`bankruptcy discharge. And at a minimum, Mr. Cedillo argues, Web Holdings has not shown that
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`there is no genuine dispute as to a material fact as to whether he acted with intent to defraud his
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`creditors, or that he knowingly and fraudulently made a false statement in this bankruptcy case.
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`Jurisdiction
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`This Court has jurisdiction over this adversary proceeding pursuant to Judiciary Code
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`Sections 157(b)(1) and 1334(b), and the Standing Order of Reference dated August 28, 1986, as
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`amended by the Order dated December 5, 2012, of the United States District Court for the
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`Eastern District of New York. In addition, this Court may adjudicate these claims to final
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`judgment to the extent that they are core proceedings pursuant to Judiciary Code Section 157(b),
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`and to the extent that they are not core proceedings, pursuant to Judiciary Code Section 157(c)
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`because the parties have stated their consent to this Court entering a final judgment. See
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`Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1940 (2015) (holding that in a non-core
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`proceeding, a bankruptcy court may enter final orders “with the consent of all the parties to the
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`proceeding.”).
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`Background
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`Mr. Cedillo’s Chapter 7 Bankruptcy Case
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`The Petition
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`On April 24, 2013 (the “Petition Date”), Cesar Cedillo filed a voluntary petition for relief
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`under Chapter 7 of Title 11 of the United States Code. That same day, Alan Nisselson was
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`appointed as the Chapter 7 Trustee.
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`The Schedules and Statements
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`On May 8, 2013, Mr. Cedillo, under the penalty of perjury, filed Schedules and
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`Statements in connection with his bankruptcy case.1
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`1 See Case No. 13-42445, ECF No. 12. Unless stated otherwise, all references to documents
`correspond to Adv. Pro. No. 15-01048.
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`2
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`Mr. Cedillo does not list any real property on his Schedule A – Real Property. He lists
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`personal property totaling $13,853 on his Schedule B – Personal Property. Specifically, in
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`response to Question 13, Mr. Cedillo lists a five percent ownership interest in “Katy & Tania”
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`valued at $1.00, and in response to Question 18, he lists a 2012 tax refund valued at $4,000. In
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`response to Question 21, “other contingent and unliquidated claims of every nature, including tax
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`refunds, counterclaims of the debtor, and rights to setoff claims,” Mr. Cedillo lists two items of
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`personal property. These are an action by him against Web Holdings pending in the New York
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`Supreme Court, Kings County, valued at $1.00, and a note from NY Electric Supplies LLC (“NY
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`Electric”) dated October 1, 2012, for $50,000, for the sale of inventory and fixtures from Kevin
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`& Richard Hardware Corp. (“K&R Hardware”), also valued at $1.00. Case No. 13-42455,
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`Schedule B, ECF No. 12, at 3. And Mr. Cedillo lists his interest in “machinery, fixtures,
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`equipment, and supplies used in business” in the aggregate amount of $7,500. Id.
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`On August 6, 2013, Mr. Cedillo filed an amended Schedule B. His amended Schedule B
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`omits descriptions of his personal property that were included in his initial Schedule B filed on
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`May 8, 2013.
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`On his Schedule E – Creditors Holding Unsecured Priority Claims, Mr. Cedillo lists one
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`creditor, the New York State Department of Taxation & Finance (“New York State”), as holding
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`an unsecured priority claim in the aggregate amount of $150,000. On his Schedule F, he lists
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`several creditors holding unsecured, nonpriority claims, including a judgment in favor of Carver
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`Federal Savings Bank (“Carver”) in the amount of $166,447.29, and an unsecured, nonpriority
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`claim held by Web Holdings in an unknown amount.
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`Mr. Cedillo does not list any co-debtors on his Schedule H – Codebtors. On his Schedule
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`I – Current Income of Individual Debtor, he states that he was employed as a plumber for one
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`week, but does not provide his exact dates of employment. He also states that he received other
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`monthly income in the amount of $600, and lists his combined average monthly income as
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`$2,600. He does not identify any contributors. Mr. Cedillo lists expenses totaling $2,600 on his
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`Schedule J – Current Expenditures of Individual Debtor, and these expenses include food,
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`clothing, taxes, “payment to roommate for Rent, Utilities, Phone and Food,” “Personal Care and
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`Grooming,” and “Vehicle Fuel and Maintenance.” Case No. 13-42455, Schedule J at 1-2.
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`Mr. Cedillo also filed a Statement of Financial Affairs. In response to Question 18, he
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`identifies four businesses in which he had an interest within six years preceding the Petition
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`Date. These are Kathy & Tania Inc., 654 Myrtle Ave. Corp., 1111 Willoughby Ave. Realty
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`Corp., and Troutman Realty Corp. In response to Question 10, Mr. Cedillo lists the transfer of a
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`hardware store to NY Electric. In response to Question 19, Mr. Cedillo identifies Humbert
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`Suremott as having kept his books of accounts and records within the two years preceding his
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`filing for bankruptcy.
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`On August 6, 2013, Mr. Cedillo filed an amended Statement of Financial Affairs. He
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`amended his response to Question 18, concerning businesses in which he had an interest within
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`six years preceding the Petition Date, to include an interest in Kevin & Richard Plumbing &
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`Heating Serv., and also updated the status or disposition of the suits and administrative
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`proceedings in which he is or was a party within one year preceding the Petition Date to include
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`Carver’s state court action against him. Mr. Cedillo also updated his description of Web
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`Holdings, LLC v. Steal Corp., et al., Index No. 41979-2007, from “unknown,” to “judgment.”
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`Case No. 13-42445, Stmt. of Fin. Affairs at 2; Am. Stmt. of Fin. Affairs at 2.
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`The Proofs of Claim
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`The deadline for filing proofs of claim in Mr. Cedillo’s bankruptcy case was June 20,
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`2014, and three creditors filed timely claims. On July 19, 2013, Carver filed a timely proof of
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`claim in the unsecured amount of $408,030.66. Just over one month later, on August 21, 2013,
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`Web Holdings, the plaintiff in this action, filed a timely proof of claim in the secured amount of
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`$506,665.21. Web Holdings alleges that its proof of claim arises from an October 25, 2010
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`judgment entered by the New York Supreme Court, Kings County, in the amount of
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`$413,812.49, in an action entitled Web Holdings, LLC v. Steal Corp., Index No. 41979/07 (the
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`“State Court Action”). Compl., ECF No. 1, ¶ 6. New York State’s proof of claim followed, and
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`on April 17, 2014, it filed a timely proof of claim in the amount of $63,762.32, $51,898.70 of
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`which is a priority claim.
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`The last day to object to Mr. Cedillo’s discharge was August 5, 2013. From time to time,
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`Mr. Cedillo and Web Holdings, among others, agreed by stipulation to extend the time to object
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`to Mr. Cedillo's discharge, and on March 11, 2015, the Court entered a Stipulation and Order,
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`extending the time of Web Holdings, among others, to object to Mr. Cedillo’s discharge until
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`April 17, 2015.
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`The Rule 2004 Examination and Section 341 Meeting of Creditors
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`On November 14, 2013, the Court entered an Order pursuant to Bankruptcy Rule 2004,
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`directing Mr. Cedillo to produce documents and appear for an examination pertaining to his
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`bankruptcy case. Web Holdings alleges that pursuant to that Order, on September 10, 2014,
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`counsel for Web Holdings and counsel for Carver examined Mr. Cedillo.2 And as described
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`2 Carver is also the plaintiff in an action entitled Carver Federal Savings Bank. v. Cesar Cedillo,
`Adv. Proc. No. 15-01001, and on September 11, 2017, this Court entered a memorandum
`decision on Carver’s Motion for Partial Summary Judgment in that case.
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`below, Web Holdings alleges that Mr. Cedillo’s Rule 2004 Examination and Section 341
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`meeting of creditors (the “Section 341 Meeting”) brought to light several inconsistencies in his
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`bankruptcy filings.
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`This Adversary Proceeding
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`On April 13, 2015, Web Holdings commenced this adversary proceeding against Mr.
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`Cedillo by filing a complaint. Web Holdings alleges that Mr. Cedillo failed to make several
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`required disclosures on his Schedules and Statements. Web Holdings also alleges that Mr.
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`Cedillo did not disclose that he was an officer, director, or shareholder of K&R Hardware within
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`the six years preceding this bankruptcy case. Web Holdings further alleges that Mr. Cedillo did
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`not disclose his legal and equitable ownership interest in a plumbing store as an asset of his
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`bankruptcy estate. Additionally, Web Holdings alleges that Mr. Cedillo did not disclose a
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`security interest in assets of a hardware store that K&R Hardware operated, that was granted to
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`him by NY Electric when it acquired those assets from him. And Web Holdings alleges that Mr.
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`Cedillo did not disclose NY Electric’s assumption of two debts, for which he was personally
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`liable. Finally, Web Holdings alleges that Mr. Cedillo did not identify income that he received
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`separate from his full-time employment income.
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`Web Holdings also alleges that Mr. Cedillo transferred all of his right, title, and interest
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`in assets of the hardware store (the “Hardware Store Assets”) that K&R Hardware operated (the
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`“Hardware Store”) to NY Electric on October 1, 2012, within one year of the Petition Date of
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`April 24, 2013, and that he did so with the intent to hinder, delay, or defraud creditors of his
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`estate, including Web Holdings.
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`The Parties
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`Web Holdings, the plaintiff in this adversary proceeding, is a New York limited liability
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`company and the sub-lessor of commercial real property located at 285-289 Kent Avenue in
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`Brooklyn. Web Holdings began to work with Mr. Cedillo in 2003, and entered into a sublease
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`with Mr. Cedillo for the Kent Avenue property in 2006, in connection with Mr. Cedillo’s plans
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`to develop and open a nightclub at that location.
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`Ultimately, those plans were not successful. As Mr. Cedillo states, “[a]fter years of
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`trying unsuccessfully to obtain a liquor license and final certificate of occupancy, [he] discovered
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`that the Nightclub’s location was not zoned for the use as a nightclub,” and as a result, the
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`nightclub was unable to open. Opp., ECF No. 21, Ex. 1 (Declaration of Cesar Cedillo) (“Cedillo
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`Decl.”) ¶¶ 23-24. Mr. Cedillo states that he “was incapable of paying the rent pursuant to the
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`Nightclub Lease,” and in 2007, Web Holdings evicted Mr. Cedillo from the premises. Cedillo
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`Decl.¶ 24.
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`Following the eviction, Web Holdings commenced the State Court Action against Mr.
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`Cedillo, and on October 25, 2010, a default judgment was entered against him for unpaid rent in
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`the amount of $413,812.49. Web Holdings has filed a proof of claim in that amount in Mr.
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`Cedillo’s bankruptcy case.
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`Mr. Cedillo, the defendant in this adversary proceeding, is the debtor in a Chapter 7
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`bankruptcy case filed in this Court on April 24, 2013.
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`Mr. Cedillo’s Alleged Nondisclosures with Respect to the Hardware Store and the Hardware
`Store Transfer
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`Web Holdings alleges that on October 30, 1996, K&R Hardware was incorporated under
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`New York law, and that Mr. Cedillo was its president and its sole legal and equitable owner.
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`Web Holdings alleges that K&R Hardware operated the Hardware Store located at 645 Myrtle
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`Avenue in Brooklyn. And Web Holdings alleges that some fourteen years later, on January 26,
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`2011, K&R Hardware was dissolved by proclamation of the New York Secretary of State. Web
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`Holdings alleges that “[s]ubsequent to and as a result of the dissolution of K&R Hardware, the
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`Hardware Store was operated by [Mr. Cedillo] as a sole proprietorship.” Compl. ¶ 23.
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`Web Holdings alleges that in his amended Statement of Financial Affairs, Mr. Cedillo
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`failed to disclose that he was an officer, director, or shareholder of K&R Hardware within the six
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`years preceding this bankruptcy case.
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`Mr. Cedillo responds that he inadvertently failed to disclose that he was an officer,
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`director, or shareholder of K&R Hardware, but argues that he was forthcoming about his interest
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`in K&R Hardware because, among other reasons, he listed the transfer of the Hardware Store to
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`NY Electric in response to Question 10 of his Statement of Financial Affairs.
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`Web Holdings also alleges that on September 20, 2012, NY Electric was incorporated
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`under New York law, and that Rosa Vasquez, a/k/a Sylvia Vasquez, a/k/a Rosa Sylvia Vasquez
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`is its sole managing member. Web Holdings also alleges that Mr. Cedillo and Ms. Vasquez have
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`been married since 2013, and that prior to their marriage, they were live-in companions for thirty
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`years.
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`Web Holdings alleges that pursuant to a bill of sale executed on October 1, 2012, Mr.
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`Cedillo transferred all of his right, title, and interest in and to the Hardware Store and its assets to
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`NY Electric for the stated consideration of $50,000 (the “Hardware Store Transfer”). Web
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`Holdings alleges that the Hardware Store Assets included, among other things, trade fixtures,
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`inventory, a cash register, a key cutting machine, and other hardware tools. Web Holdings
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`alleges that following the Hardware Store Transfer, NY Electric immediately assumed the
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`management and operation of the Hardware Store at the 645 Myrtle Avenue location.
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`Web Holdings alleges that NY Electric, through Ms. Vasquez, executed a chattel
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`mortgage stating that the $50,000 purchase price was payable to Mr. Cedillo, by NY Electric, in
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`thirty-six consecutive monthly payments of $1,454.06, commencing on November 1, 2012, and
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`continuing through October 1, 2015, with interest at an annual rate of three percent (the “Chattel
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`Mortgage”). Web Holdings alleges that pursuant to the Chattel Mortgage, and as security for
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`NY Electric’s payment, NY Electric granted Mr. Cedillo a security interest in the Hardware
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`Store Assets. Web Holdings alleges that Mr. Cedillo failed to identify or disclose this security
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`interest as an asset of his bankruptcy estate.
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`Additionally, Web Holdings alleges that NY Electric has made no payments to Mr.
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`Cedillo in connection with the Hardware Store Transfer. And Web Holdings alleges that Mr.
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`Cedillo lists the amount owed to him by NY Electric as $1.00, not in excess of $50,000, on his
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`Schedule B.
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`Mr. Cedillo responds that on October 1, 2012, he executed a bill of sale that transferred
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`the Hardware Store Assets to NY Electric, and that the bill of sale provided that he, “individually
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`and as sole shareholder of [K&R Hardware],” transferred the assets. Answer ¶ 33. But Mr.
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`Cedillo also responds that he caused K&R Hardware to transfer the Hardware Store Assets to
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`NY Electric, and that he, himself did not transfer the assets to NY Electric.
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`Mr. Cedillo also responds that he disclosed the Chattel Mortgage as an asset of his estate.
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`And Mr. Cedillo does not dispute that NY Electric has made no payments on account of the
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`Hardware Store Transfer, and that he listed the amounts due and owing to him by NY Electric as
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`$1.00, not in excess of $50,000, on his Schedule B.
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`Mr. Cedillo’s Alleged Nondisclosures with Respect to Kevin & Richard Plumbing & Heating
`Supplies Corp.
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`Web Holdings alleges that on June 14, 2010, Kevin & Richard Plumbing & Heating
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`Supplies Corp. (“K&R Plumbing”) was incorporated under New York law, and that thereafter, it
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`operated a plumbing supply store located at 525 Park Avenue in Brooklyn (the “Plumbing
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`Store”).
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`Web Holdings alleges that both before and after the Petition Date, Mr. Cedillo has
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`maintained that he has no ownership interest in K&R Plumbing. But Web Holdings alleges that
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`on December 17, 2012, the court in the State Court Action found that Mr. Cedillo owned, among
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`other things, K&R Plumbing. Web Holdings alleges that Mr. Cedillo failed to identify or
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`disclose his legal and equitable ownership interest in K&R Plumbing and the Plumbing Store as
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`an asset of his bankruptcy estate on his Schedule B.
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`Mr. Cedillo responds that he did not disclose his legal and equitable ownership interest in
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`K&R Plumbing and the Plumbing Store as an asset of his bankruptcy estate on his Schedule B.
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`Answer ¶ 48.
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`Mr. Cedillo’s Alleged Nondisclosures with Respect to the New York State Tax Debt and the
`Small Business Administration Debt
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`Web Holdings alleges that at both the Rule 2004 Examination and the Section 341
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`Meeting, Mr. Cedillo testified that NY Electric agreed to assume certain of his personal
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`obligations, including a $150,000 debt listed on his Schedule E that he owed to New York State
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`on account of the Hardware Store’s unpaid sales and withholding taxes (the “NYS Tax Debt”).
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`Web Holdings alleges that the NYS Tax Debt assumed by NY Electric remains outstanding.
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`And Web Holdings alleges that Mr. Cedillo failed to identify or disclose NY Electric’s
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`obligation to pay the NYS Tax Debt as an asset of his bankruptcy estate on his Schedule B, and
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`similarly failed to identify or disclose NY Electric as a co-debtor on his Schedule H.
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`Web Holdings also alleges that NY Electric agreed to assume Mr. Cedillo’s debt to the
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`United States Small Business Administration (the “SBA”), which similarly arose from an unpaid
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`obligation of the Hardware Store for which he was personally liable (the “SBA Debt”). Web
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`Holdings alleges that during the Rule 2004 Examination, Mr. Cedillo testified that the SBA Debt
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`has not been fully paid, either by him or by NY Electric. And as with the NYS Tax Debt, Web
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`Holdings alleges that the SBA Debt was not disclosed as a claim on Mr. Cedillo’s Schedules and
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`Statements.
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`Mr. Cedillo responds that “he did not list NY Electric as a co-debtor or list NY Electric’s
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`assumption of state tax debt as an asset of the estate.” Answer ¶ 36. Mr. Cedillo also
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`acknowledges that he did not disclose the SBA Debt on his Schedules and Statements.
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`Mr. Cedillo’s Alleged Nondisclosures with Respect to His Income and Expenses
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`Web Holdings also alleges that during the Rule 2004 Examination, Mr. Cedillo testified
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`with respect to his relationship with Ms. Vasquez. Specifically, Web Holdings alleges that Mr.
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`Cedillo testified that he and Ms. Vasquez shared a household for approximately the last thirty
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`years, were married in 2013, and shared in the payment of household and family living expenses.
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`And Web Holdings alleges that Mr. Cedillo testified that Ms. Vasquez was employed full-time.
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`Web Holdings alleges that neither Ms. Vasquez’s income nor the amounts contributed by her for
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`the payment of their shared household and living expenses were disclosed by Mr. Cedillo on his
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`Schedule I and Schedule J.
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`Web Holdings further alleges that Mr. Cedillo testified that in addition to the amounts
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`received with respect to his employment with K&R Plumbing, he had various “side jobs,” for
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`which he received payment for work and labor. Compl. ¶ 52. Web Holdings alleges that Mr.
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`Cedillo did not identify or disclose the amounts received on either his Schedule I or his
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`Statement of Financial Affairs.
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`And finally, Web Holdings alleges that Mr. Cedillo failed to disclose additional income
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`received prior to the Petition Date, including amounts that he received in 2011, totaling $17,500,
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`the amounts distributed to and withdrawn by him from K&R Plumbing, K&R Hardware, and NY
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`Electric, and the amounts paid on his behalf by those same entities.
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`Mr. Cedillo responds that neither Ms. Vasquez’s income nor the amounts contributed by
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`her for the payment of their shared household and living expenses were disclosed by him on his
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`Schedule I and Schedule J. Mr. Cedillo acknowledges that he testified to receiving modest
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`amounts of income from “side jobs,” and denies that he failed to disclose this additional income
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`on his Schedules and Statements. Answer ¶¶ 52-53. Mr. Cedillo also states that he failed to
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`disclose additional income that he received prior to the Petition Date.
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`The Claims for Relief
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`Web Holding asserts five claims for relief, and seeks summary judgment with respect to
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`the First and Third Claims only.
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`In its First Claim for Relief, asserted under Bankruptcy Code Section 727(a)(2), Web
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`Holdings claims that within the year preceding the Petition Date, Mr. Cedillo “transferred,
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`removed, destroyed, mutilated, or concealed assets,” including the Hardware Store Assets and
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`his legal and equitable interests in K&R Plumbing, and did not receive any consideration in
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`return. Compl. ¶ 58. And as a result, Web Holdings seeks a judgment denying a discharge to
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`Mr. Cedillo, and moves for summary judgment on this claim.
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`In its Second Claim for Relief, asserted under Bankruptcy Code Section 727(a)(3), Web
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`Holdings claims that Mr. Cedillo has “concealed, destroyed, mutilated, falsified, or failed to keep
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`Case 1-15-01048-ess Doc 32 Filed 09/11/17 Entered 09/11/17 14:42:26
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`or preserve” information from which Mr. Cedillo’s financial affairs and condition or business
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`transactions might be ascertained. Compl. ¶ 63. Web Holdings alleges that despite its requests,
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`Mr. Cedillo has failed to produce or provide the information and documents requested, and that
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`his failure to do so is not justified. Compl. ¶¶ 64-67. And as a result, Web Holdings seeks a
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`judgment denying a discharge to Mr. Cedillo.
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`In its Third Claim for Relief, asserted under Bankruptcy Code Section 727(a)(4), Web
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`Holdings claims that Mr. Cedillo “knowingly and fraudulently made a false oath or account in or
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`in connection with” his Chapter 7 bankruptcy case. Compl. ¶ 70. And as a result, Web Holdings
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`seeks a judgment denying a discharge to Mr. Cedillo, and moves for summary judgment on this
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`claim.
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`In its Fourth Claim for Relief, asserted under Bankruptcy Code Section 727(a)(5), Web
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`Holdings claims that Mr. Cedillo has failed satisfactorily to explain “any loss of his assets or
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`deficiency of assets to meet his liabilities.” Compl. ¶ 74. And as a result, Web Holdings seeks a
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`judgment denying a discharge to Mr. Cedillo.
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`In its Fifth Claim for Relief, asserted under Bankruptcy Code Section 727(a)(6), Web
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`Holdings claims that Mr. Cedillo has refused to comply with orders of this Court. And as a
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`result, Web Holdings seeks a judgment denying a discharge to Mr. Cedillo.
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`This Summary Judgment Motion
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`On July 21, 2016, Web Holdings filed this Summary Judgment Motion, supported by a
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`memorandum of law and a statement of undisputed material facts pursuant to Local Bankruptcy
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`Rule 7056-1. On September 3, 2016, Mr. Cedillo filed a declaration in opposition to Web
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`Holdings’ Summary Judgment Motion and a counterstatement of undisputed material facts and
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`objections to evidence pursuant to Local Bankruptcy Rule 7056-1. And on September 6, 2016,
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`Mr. Cedillo filed a memorandum of law in opposition to Web Holdings’ Summary Judgment
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`Motion. On September 20, 2016, Web Holdings filed a reply memorandum of law in further
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`support of its Summary Judgment Motion.
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`The Court held conferences on the Summary Judgment Motion from time to time, at
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`which Web Holdings and Mr. Cedillo, each by counsel, appeared and were heard. The Court
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`heard argument from counsel and closed the record at the November 21, 2016 hearing. Over this
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`same period, and for some time thereafter, the parties engaged in settlement negotiations, both
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`independently and with the assistance of the Court. The settlement negotiations were
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`unsuccessful, and on August 29, 2017, the Court reserved decision.
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`The Applicable Legal Standards
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`The Summary Judgment Standard
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`Federal Rule of Civil Procedure 56(c), made applicable to this adversary proceeding by
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`Bankruptcy Rule 7056, provides that summary judgment is appropriate “if the movant shows that
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`there is no genuine dispute as to any material fact and [that] the movant is entitled to judgment as
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`a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it “might affect the outcome of the
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`suit under the governing law . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
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`A dispute is “‘genuine’ . . . if the evidence is such that a reasonable jury could return a verdict
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`for the nonmoving party.” Anderson, 477 U.S. at 248.
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`The moving party has the burden of demonstrating the absence of a genuine dispute as to
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`any material fact, and all of the inferences to be drawn from the underlying facts must be viewed
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`by the court in the light most favorable to the party opposing the motion. See Hayut v. State
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`Univ. of N.Y., 352 F.3d 733, 743 (2d Cir. 2003) (holding that the court’s role is “to view the
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`evidence in the light most favorable to the party opposing summary judgment, to draw all
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`reasonable inferences in favor of that party, and to eschew credibility assessments”).
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`Accordingly, the moving party must demonstrate that there is no genuine dispute as to a material
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`fact as to each element of its claim. If it does not, then summary judgment will be denied. See
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`Smith v. Goord, 2008 WL 902184, at *4 (N.D.N.Y. Mar. 31, 2008), aff’d, 375 F. App’x 73 (2d
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`Cir. 2010) (citing Anderson, 477 U.S. at 250 n.4) (holding that summary judgment should be
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`denied where the moving party does not show that there is no genuine dispute as to a material
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`fact with respect to each essential element of the claim)).
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`Once the moving party satisfies its initial burden, “the burden then shifts to the
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`nonmoving party to come forward with evidence sufficient to create a genuine dispute as to a
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`material fact for trial.” Silverman v. United Talmudic Acad. Torah Vyirah, Inc. (In re Allou
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`Distribs., Inc.), 446 B.R. 32, 49 (Bankr. E.D.N.Y. 2011). The nonmoving party “must do more
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`than simply show that there is some metaphysical doubt as to the material facts.” Matsushita
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`Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “Where the record taken as a
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`whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine
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`issue for trial.’” Matsushita, 475 U.S. at 587 (citation omitted). See Anderson, 477 U.S. at 249-
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`50 (internal citations omitted) (observing that “if the evidence is merely colorable . . . or is not
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`significantly probative . . . summary judgment may be granted”).
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`“Statements in the pleadings alone are not sufficient to meet this burden.” In re Allou
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`Distribs., Inc., 446 B.R. at 49. Rather, “[e]stablishing such facts requires going beyond the
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`allegations of the pleadings as the moment has arrived to ‘put up or shut up.’” In re Eugenia VI
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`Venture Holdings, Ltd. Litig., 649 F. Supp. 2d 105, 117 (S.D.N.Y. 2008) (quoting Weinstock v.
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`Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000), aff’d, 370 F. App’x 197 (2d Cir. 2010), cert.
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`denied, 540 U.S. 811 (2003)). “Unsupported allegations in the pleadings thus cannot create a
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`material issue of fact.” In re Eugenia VI Venture Holdings, 649 F. Supp. 2d at 117. As the
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`Supreme Court has observed, “Rule 56(e) . . . requires the nonmoving party to go beyond the
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`pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and
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`admissions on file,’ [and] designate ‘specific facts showing that there is a genuine issue for
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`trial.’” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). A party “must ‘set forth’ by affidavit
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`or other evidence ‘specific facts’ to survive a motion for summary judgment . . . and must
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`ultimately support any contested facts with evidence adduced at trial . . . .” Bennet v. Spear, 520
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`U.S. 154, 168 (1997). As one court observed, “[t]he non-moving party may not establish that
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`there is a genuine issue to be resolved at trial through mere allegations or denials of the adverse
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`party's pleadings, but rather must demonstrate by affidavit or other admissible evidence that
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`there are genuine issues of material fact or law.” Beare v. Millington, 2014 WL 1236750, at *3
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`(E.D.N.Y. Mar. 25, 2014), aff’d, 613 F. App’x 56 (2d Cir. 2015).
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`Claims that sound in fraud raise additional considerations. “Although summary judgment
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`may be warranted in certain circumstances even when examining state of mind, courts must be
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`cautions in such cases, and, as a result . . . disputes regarding intent are generally decided after a
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`trial/evidentiary hearing resolving such factual issues.” Adler v. Ng (In re Adler), 395 B.R. 827,
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`843 (Bankr. E.D.N.Y. 2015).
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`Other courts are in accord. In Redden v. Redden (In re Redden)