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In re 189-30 Realty Corp.

September 5, 2006


The opinion of the court was delivered by: Sifton, Senior Judge

Chapter 7


On January 21, 2000, Debtor herein, 189-30 Realty Corp., filed a voluntary petition for reorganization under Chapter 11 of the United States Code in the United States Bankruptcy Court. On January 11, 2002, the Bankruptcy Court converted this case from a proceeding under Chapter 11 to one under Chapter 7. John S. Pereira was appointed Chapter 7 Trustee.

This case is presently before this Court on appeal from an order of the Bankruptcy Court. That decision denied the application of Plaintiff-Appellant Louis Barbieri ("Barbieri" or "Plaintiff") to set aside the transfer of property from the Plaintiff to the Debtor, 189-30 Realty Corp. Nina Marie Barbieri ("Nina Barbieri") and Chapter 7 Trustee John S. Pereira ("Trustee") are the Defendants on this application. Plaintiff states that the property transfer is fraudulent and void and seeks the property's return. For the reasons that follow, the Bankruptcy Court's denial of Barbieri's application to set aside the transfer of property is affirmed.


The following facts are drawn from the parties' submissions in relation to this appeal and from the bankruptcy record. Disputes are noted.

Plaintiff Barbieri is an inmate of the Green Haven Correctional Facility ("Green Haven") located in Duchess County, New York. Throughout the events relevant to this case, Barbieri has been serving a sentence after having been convicted of the murder of an attorney. Defendant Nina Barbieri is Barbieri's daughter. The Debtor, 189-30 Realty Corp., is a corporation organized under the laws of New York with its principal office in Flushing, Queens, New York.

Before his incarceration, Barbieri purchased real property located at 189-30 37th Avenue, Flushing, Queens, New York (the "Property") and was the record owner until January 20, 1997. The Property consists of nine one and two-family homes. In late December 1996 or early January 1997, Barbieri contacted Hector Marichal ("Marichal"), a real estate attorney and New York Notary Public, to obtain a mortgage loan on the Property from Madison Home Equities, Inc. ("Madison") to pay off a tax lien which could have resulted in a foreclosure of the Property. Over the course of thirty years, Marichal had represented Barbieri in several real estate matters and was familiar with Barbieri's signature. Barbieri also asked Marichal to form a corporation to which Barbieri could transfer the Property. By creating such a corporation, Barbieri sought to avoid difficulties in obtaining a loan himself that might have arisen because of his felony conviction. Marichal thereafter formed the Debtor corporation 189-30 Realty Corp. in February 1997. He visited Barbieri at Green Haven on April 10, 1997 and, according to Marichal's testimony, which Barbieri disputes, Barbieri executed a Deed transferring the entire Property from Barbieri to the Debtor corporation. Marichal signed the Deed as a witness to Barbieri's signature.

Following the Deed's execution, several insignificant additions were made to the Deed. Lisa Macari, a real estate attorney related to Marichal, who was present at the closing of the loan, added the addresses of Barbieri and the Debtor to the executed Deed, and changed the date of the closing from "7th of July" to "8th of July." She also dated the acknowledgment as "June 6, 1997." The expiration date on Marichal's Notary stamp was corrected to reflect a "7". "Louis Barbieri" was added under his signature and "Queens" was inserted in the acknowledgment.

The closing on the mortgage loan on the property took place on July 8, 1997. Nina Barbieri, Plaintiff's daughter, who was the president, director, and shareholder of the corporation, 189-30 Realty Corp. and who had a power of attorney to represent Barbieri at the closing, appeared at the closing on his behalf and on behalf of the corporation. Nina visited her father the day after the closing on July 9, 1997 and informed him that she had closed the loan. She and Marichal visited her father at Green Haven several times over the course of the next few months.

In February 2003, Plaintiff commenced proceedings before the Bankruptcy Court to declare the Property's transfer fraudulent and void. In January 2004, he also commenced a civil action in Queens County Supreme Court, alleging fraud and conspiracy against Bridge Funding, Inc. (to which Madison Home Equities, Inc. had brokered the loan), Madison Home Equities, Inc., STG Title Co., and Marichal. The Supreme Court dismissed all claims against the defendants upon the defendants' motions.

In the Bankruptcy Court proceedings, Plaintiff asserted that his signature on the Deed was a forgery. He stated that he never intended to transfer the entire Property and that he intended that only one two-family building would be transferred to the Debtor as collateral for the loan transaction. Plaintiff claimed he did not see a copy of the Deed until 2002.

On March 7, 2006, the Bankruptcy Court denied Plaintiff's application to set aside the transfer of the property to the Debtor. The Court determined that the Deed transferring the Property was valid despite the changes in the Deed made after Plaintiff's execution of the document. The Bankruptcy Court also found that Plaintiff failed to meet his burden to prove the Deed was a forgery.

Presently before this Court is Plaintiff's appeal of the Bankruptcy Court's denial of Plaintiff's application to set aside the ...

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