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In re Hartford Textile Corp.

September 16, 1981

IN RE HARTFORD TEXTILE CORPORATION, OXFORD CHEMICALS, INC., AND WELLINGTON PRINT WORKS, INC., DEBTORS , ROSE SHUFFMAN, AS EXECUTRIX OF THE ESTATE OF OSCAR SHUFFMAN, DECEASED, DEFENDANT-APPELLANT ,
v.
HARTFORD TEXTILE CORPORATION, OXFORD CHEMICALS, INC., AND WELLINGTON PRINT WORKS, INC., PLAINTIFFS-APPELLEES .



Appeal from an order entered January 20, 1981 in the Southern District of New York, Abraham D. Sofaer, District Judge, affirming an order entered January 9, 1980 by Roy Babitt, Bankruptcy Judge, which denied appellant's motion to require the bankruptcy court to reconsider its order entered November 14, 1979 denying appellant's oral application for the appointment of a receiver in a Chapter XI proceeding which had been dismissed more than five years prior thereto and in which the bankruptcy court no longer had jurisdiction over the debtors' assets and affairs. Affirmed, with double costs and $5000 damages assessed against appellant's attorney, David K. Shuffman, Esq.

Before: MOORE, TIMBERS and MESKILL, Circuit Judges .

Per Curiam:

This is the latest in a series of meritless, frivolous appeals, motions and related proceedings*fn1 brought by Attorney David K. Shuffman (hereinafter "Shuffman") purportedly on behalf of his mother, Rose Shuffman, as executrix of the estate of Oscar Shuffman (hereinafter "appellant"), against Hartford Textile Corporation, Oxford Chemicals, Inc., and Wellington Print Works, Inc., three companies formerly in Chapter XI which now are part of The Hartford Corporation, a successor company which itself is the debtor in a pending Chapter XI proceeding.

The specific appeal presently before us is from an order entered January 20, 1981 in the Southern District of New York, Abraham D. Sofaer, District Judge, affirming an order entered January 9, 1980 by Roy Babitt, Bankruptcy Judge, which denied appellant's motion to require the bankruptcy court to reconsider its order entered November 14, 1979 denying appellant's oral application for the appointment of a receiver in a Chapter XI proceeding which had been dismissed more than five years prior thereto and in which the bankruptcy court no longer had jurisdiction over the debtors' assets and affairs.

For the reasons below, we affirm, with double costs and $5000 damages assessed against appellant's attorney, David K. Shuffman, Esq.

I.

Appellant's underlying claims*fn2 stem from a contract which appellant's decedent, Oscar Shuffman, entered into with appellee Hartford Textile Corporation, under the terms of which he was entitled to a finder's fee based on the percentage of deliveries of vinyl to Hartford Textile by Rudd Plastic Fabrics Corporation. Such deliveries were to be made pursuant to a separate contract between Hartford Textile and Rudd. Appellant's multiplicitous claims boil down essentially to two: first, that the Oscar Shuffman contract continued in effect after the filing of the bankruptcy petition and the cessation of deliveries under the Hartford Textile-Rudd contract; and, second, that the determination of appellees' bankruptcy estate should have included purported assets which appellant assert should have been recovered as the result of a series of shareholders' derivative actions brought by certain members of the Magid family. These shareholders' actions were commenced in 1965, eight years prior to the filing of the Chapter XI petition. They had been dormant for eight years prior to the Chapter XI proceeding and they have remained dormant ever since -- a total of sixteen years.

Our Court on December 6, 1978 squarely rejected the first claim of continuing contractual liability. 588 F.2d 872. As for the second claim -- that purported assets should have been included in the bankruptcy estate -- our Court on December 27, 1979 squarely held that the bankruptcy court's order denying reargument on the merits of that claim was not an appealable order. 613 F.2d at 385.

It is in connection with the second essential claim referred to above, as to which our Court more than a year and a half ago ruled as stated above, that the instant appeal has been taken.

The order which is the subject of the instant appeal came about as follows. On November 14, 1979, Shuffman entered the courtroom of the bankruptcy court where a hearing was being held by Judge Babitt on a motion to which neither Shuffman nor his client was a party.*fn3 Without having filed any motion papers and without having given any notice whatsoever to his adversaries (the debtors), Shuffman made an oral application to Judge Babitt for the appointment of a receiver to take control of the assets and affairs of the Hartford Textile Corporation in a Chapter XI proceeding which had been dismissed more than five years prior thereto, on September 5, 1974, at which time the plan of arrangement was confirmed and the debtors were granted a discharge in bankruptcy. Judge Babitt promptly and unequivocally informed Shuffman that "the [Bankruptcy Court] has no appropriate jurisdiction.... This case was confirmed years ago. The property is revested in the debtor." Shuffman's oral application was denied the same day it was made -- on November 14, 1979 -- for lack of jurisdiction. See then applicable Section 367 of the Bankruptcy Act, 11 U.S.C. § 767 (1976) (repealed in part by Bankruptcy Reform Act of 1978; current version at 11 U.S.C. § 1141(a) (Supp. III 1979)).

On November 20, 1979, Shuffman filed a motion in the bankruptcy court for reargument of the denial of his application for the appointment of a receiver, alleging in his supporting affidavit that "[i]t is obvious that the stockholders' derivative action which was deliberately omitted from the Petitions and Schedules is an asset of the debtors, and as such, belongs to creditors." Whether "obvious" or not, our Court has ruled that the order of the bankruptcy court denying reargument on the merits of that claim clearly was not an appealable order. 613 F.2d at 385.

On January 9, 1980, the bankruptcy court denied Shuffman's motion for reargument. Shuffman thereupon appealed to the district court from the orders of the bankruptcy court of November 14, 1979 and January 9, 1980 denying, respectively, his oral application for the appointment of a receiver and his motion for reargument.

From the district court's order of January 20, 1981 dismissing Shuffman's appeal with costs, the ...


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