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The Brown Publishing Co. Liquidating Trust v. Brown

United States District Court, E.D. New York

February 2, 2017

THE BROWN PUBLISHING COMPANY LIQUIDATING TRUST, Appellant,
v.
ROY E. BROWN, CLARENCE J. BROWN, III, CLARENCE BROWN, JR., JOYCE E. BROWN, DOROTHY HAINES, RICHARD HAINES, CATHERINE BROWN BRINNON, CRJ INVESTMENTS LLC, AEG EQUITY LTD., SODALIS, LLC, B'S NEST PARTNERSHIP, and AEG EQUITY HOLDINGS, LTD. Appellees. Bankruptcy No. 10-73295(REG) Adversary Proc. No. 12-08193(REG)

          For Appellant: Edward M. Fox, Esq. Polsinelli PC Eric Todd Moser, Esq. Rich Michaelson Magaliff Moser, LLP Jon Paul Robbins, Esq. Lee S. Shalov, Esq. Wade Christopher Wilkinson, Esq. McLaughlin & Stern, LLP Sonya J. Brouner, Esq. Law Office of Sonya J. Brouner, Esq.

          For Appellees: Roy E. Brown, Clarence J. Brown, III, CRJ Invs. LLC, Sodalis, LLC, B's Nest Alan E. Marder, Esq. Meyer, Suozzi, English & Klein, P.C. Partnership, & AEG Equity Holdings, Ltd. Clarence Brown, Jr. & Joyce E. Brown Charles M. Meyer, Esq. Santen & Hughes Dorothy & Richard Haines David Blansky, Esq. LaMonica Herbst & Maniscalco Catherine Brown Brinnon Adam Kegley, Esq. Frost Brown Todd LLC James Frooman, Esq. Frost Brown Todd LLC Thomas A. Draghi, Esq. Westerman Ball Ederer Miller & Sharfstein, LLP AEG Equity Ltd. James Frooman, Esq. Frost Brown Todd LLC

          MEMORANDUM & ORDER

          Joanna Seybert, U.S.D.J.

         The Brown Publishing Company Liquidating Trust (“Appellant”) filed an adversary proceeding against various defendants alleging claims under federal law and Ohio state law. The remaining defendants are Richard Haines, Dorothy Haines, and Catherine Brinnon Brown (collectively, “Appellees”).[1]

         Three motions are pending before the Court. First, Appellees ask this Court (i) to withdraw the reference of the adversary proceeding from the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”) and (ii) to change venue to the United States District Court for the Southern District of Ohio where the operative facts took place and several witnesses reside. (Mot. to Withdraw, Docket Entry 1.) Second, before being dismissed from the case, Sodalis, LLC (“Sodalis”) moved to join the previous motion. (Joinder Mot., Docket Entry 4.) Third, Appellant moves to strike declarations submitted for the first time in reply papers. (Mot. to Strike, Docket Entry 16.)

         For the reasons set forth below, Appellant's motion is DENIED; Sodalis motion is DISMISSED AS MOOT, and Appellees' motion is GRANTED. Thus, the reference to the Bankruptcy Court is hereby WITHDRAWN, and this case is hereby TRANSFERRED to the United States District Court for the Southern District of Ohio.

         BACKGROUND

         The Court assumes familiarity with the underlying facts and proceedings, which are referenced only as necessary to explain the Court's decision.[2]

         I. Procedural History

         The Brown Publishing Company (“BPC”) was a family-owned newspaper business incorporated under Ohio law. (Mar. 22, 2015 M&O at 5.) The former chief executive officer was Roy Brown. (Am. Compl., Docket Entry 1 at 25-61, ¶ 1.)

         On April 30 and May 1, 2010, the BPC and its debtor affiliates (collectively, the “Debtors”) filed for relief under Chapter 11 of Title 11 of the Bankruptcy Code in the Eastern District of New York. (Am. Compl. ¶ 19.) On May 27, 2011, the Debtors filed a Chapter 11 Plan, which was ultimately confirmed. (Am. Compl. ¶¶ 20-21.)

         On April 30, 2012, Appellant filed an adversary proceeding against Roy Brown, members of his family, and entities that the Browns controlled. (See generally Am. Compl.) Virtually all of the defendants resided in Ohio at one point, and some continue to do so. (Am. Compl. ¶¶ 4-15.) In Appellant's view, the defendants enriched themselves with fraudulent transfers at the expense of BPC creditors. (Am. Compl. ¶¶ 1, 83-207.) Specifically, BPC entered into stock redemption agreements, among others, with Appellees.[3]

         The Amended Complaint asserts, in pertinent part, the following causes of action:

• Count 6: An intentional fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Catherine Brinnon Brown. (Am. Compl. ¶¶ 118-20.)
• Count 7: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Catherine Brinnon Brown. (Am. Compl. ¶¶ 121-24.)
• Count 8: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Catherine Brinnon Brown. (Am. Compl. ¶¶ 125-28.)
• Count 9: An unjust enrichment claim under the Bankruptcy Code and Ohio common law against Catherine Brinnon Brown. (Am. Compl. ¶¶ 129-32.)
• Count 10: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Richard Haines. (Am. Compl. ¶¶ 133-37.)
• Count 11: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Richard Haines. (Am. Compl. ¶¶ 138-41.)
• Count 12: An intentional fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Dorothy Haines. (Am. Compl. ¶¶ 142-45.)
• Count 13: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Dorothy Haines. (Am. Compl. ¶¶ 146-49.)
• Count 14: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Dorothy Haines. (Am. Compl. ¶¶ 150-53.)
• Count 15: An unjust enrichment claim under the Bankruptcy Code and Ohio common law against Dorothy Haines. (Am. Compl. ¶¶ 154-58.)
• Count 21: An intentional fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Catherine Brinnon Brown. (Am. Compl. ¶¶ 183-86.)
• Count 22: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Catherine Brinnon Brown. (Am. Compl. ¶¶ 187-90.)
• Count 23: A constructive fraudulent transfer claim under the Bankruptcy Code and Ohio statute law against Catherine Brinnon Brown. (Am. Compl. ¶¶ 191-93.)
• Count 24: A preferential transfer claim under the Bankruptcy Code against Catherine Brinnon Brown. (Am. Compl. ¶¶ 194-200.)
• Count 26: Disallowance of any claims of Appellees against the Debtors. (Am. Compl. ¶¶ 204-207.)[4]

         Although Appellees demanded a jury trial, they did not file a proof of claim. (See generally Case No. 8-10-73295-reg.) Nor did they assert any counterclaims in their respective answers.[5]

         In July and August 2012, various defendants filed a motion to withdraw the reference from the Bankruptcy Court to this Court.[6] By Memorandum and Order dated July 31, 2013, this Court denied the motions as premature but granted leave to renew when the case was ready for trial. (July 31, 2013 M&O, Case No. 12-mc-00452(JS), Docket Entry 21, at 3.)

         Since then, discovery has been completed, and all substantive motions have been adjudicated. The case is now trial-ready. (See Mar. 22, 2015 M&O at 34.)

         II. Potential ...


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