UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF FLORIDA

Miami Division

MOSHE ENBAR, et al., Case No. 1:20-cv-22360-KMW

Appellants,

v.

Fred Goodstein, et ux.

Appellee.

/

APPELLEE’S INITIAL BRIEF

WEG AND MYERS, P.C.

Attorneys for 

Defendants/Appellees

Federal Plaza

52 Duane Street, 2nd Floor

New York, New York 10007

Telephone: (212) 227-4210

Facsimile: (212) 349-6702

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 1 of 24
i

TABLE OF CONTENTS

TABLE OF AUTHORITIES..............................................................................ii

COUNTER-QUESTIONS PRESENTED................................................................................... 1

PRELIMINARY STATEMENT ................................................................................................. 1

DEFENDANTS’ STATEMENT OF MATERIAL FACTS ...................................................... 3

PROCEDURAL HISTORY ........................................................................................................ 5

ARGUMENT................................................................................................................................. 6

POINT I

THE BANKRUPTCY COURT CORRECTLY CONCLUDED THAT THE SETTLEMENT 

AGREEMENT DOES NOT BAR THE GOODSTEINS FROM PROSECUTING THE NEW 

YORK ACTION......................................................................................................................... 6

POINT II

THE COURT WAS CORRECT IN HOLDING THAT THE BANKRUPCTY COURT HAD 

NO AUTHORITY TO RELEASE THE GOODSTEINS' CLAIMS ....................................... 10

POINT III

THE BANKRUPTCY COURT DID NOT DEFER TO THE NEW YORK COURT, IT 

SIMPLY REACHED THE SAME, INESCAPABLE CONCLUSION ................................... 15

CONCLUSION ........................................................................................................................... 20

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 2 of 24
ii

TABLE OF AUTHORITIES

Page(s)

Cases

A.H. Robins Co., Inc. v. Piccinin,

788 F2d 994 (4th Cir. 1986).................................................................................13

Buchwald v. The Renco Grp., Inc. (In re Magnesium Corp. of Am.),

399 B.R. 722 (Bankr. S.D.N.Y. 2009) ...................................................................9

Hirsch v. Arthur Anderson & Co.,

178 B.R. 40 (D.Conn. 1994)...................................................................................8

In re C.D. Jones & Co. Inc.,

482 B.R. 449 (Bankr. N.D. Fla 2012) ........................................................... 11, 12

In re Cabrini Med. Ctr.,

2012 WL 2254386 (Bankr. S.D.N.Y. June 15, 2012)............................................8

In re Conseco, Inc.,

305 B.R. 281 (Bankr. N.D. Ill. 2004)...................................................................19

In re FedPak Sys., Inc.,

80 F.3d 207 (7th Cir. 1995)..................................................................................19

In re Flagship Healthcare, Inc.,

269 B.R. 721 (Bankr. S.D. Fla. 2001)............................................................. 7, 11

In re Hanks,

182 B.R. 930 (Bankr. N.D. Ga. 1995)..................................................................17

In re Valdez Fisheries Development Assoc., Inc.,

439 F.3d 545 (9th Cir. 2006)......................................................................... 17, 18

In re Zwirn,

362 B.R. 536 (Bankr. S.D. Fla. 2007)..................................................................11

Klingman,

158 B.R. 109 (N.D. Ill. 1993)........................................................................ 11, 12

Kokkonen v. Guardian Life Ins. Co. of America,

511 U.S. 375 (1994) .............................................................................................16

Queenie, Ltd. V. Nygard Intl.,

321 F.3d 282 (2d Cir. 2003).................................................................................15

Securities Investor Protection Corporation v. Bernard L. Madoff Investment 

Securities LLC,

490 B.R. 59 (S.D.N.Y. 2013) ........................................................................ 14, 15

Shafferman v. Queens Borough Pub. Library (In re JMK Constr. Grp., Ltd.),

502 B.R. 396 (Bankr. S.D.N.Y. 2013) ...................................................................8

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 3 of 24
iii

Zerand-Bernal Group, Inc. v. Cox,

158 B.R. 459 (Bankr. N.D. Ill. 1993)...................................................................19

Statutes

28 U.S.C. Section 1334............................................................................................16

Bankruptcy Code 546...............................................................................................11

New York Debtor and Creditor Law §§ 276, 278-a, and/or 279...............................4

Section 546(a) ..........................................................................................................12

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 4 of 24
1

COUNTER-QUESTIONS PRESENTED 

1. Did the Court below err in finding that the clear language of the 

Stipulation should control, and that therefore the Goodsteins’ claims against the 

debtor were not extinguished?

2. Did the Court below err in failing to find that the Goodsteins’ 

judgments against Mr. Enbar are void?

These questions should be answered in the negative.

PRELIMINARY STATEMENT

The instant appeal consists of a last-ditch effort to avoid the determination of

the United States Bankruptcy Court for the Southern District of Florida, Miami 

Division, by Judge A. Jay Cristol, and its interpretation of its own Order, wherein it 

concluded that the Settlement Hearing that it presided over and the subsequent Order 

issued in connection with that Hearing, did not preclude the Defendants herein from 

continuing to pursue their action against other parties in an existing action being 

litigated in New York State Court. 

Plaintiff’s’ instant appeal is nothing more than a continuation of the ongoing 

dilatory tactics and gamesmanship engaged in in his effort to avoid any 

consequences resulting from his scheme to convert a loan to an LLC to assets 

enjoyed by various of Plaintiff’s family members. In further carrying out this 

scheme, Plaintiff filed the instant adversary proceeding against Defendants in which 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 5 of 24
2

it seeks to enjoin them from pursuing their claims against Debtor Moshe Enbar’s

family members—all individuals who were the beneficiaries of a series of fraudulent 

conveyances which had the effect of making the LLC to whom Defendants loaned 

money judgment-proof. 

The relief sought by Plaintiffs and the basis of said relief are in direct 

contradiction to the explicit language of the Stipulation Upon Order to which the 

Complaint and Motions refer. This Stipulation states: “The Stipulation shall be 

binding and upon and inure to the benefit of the Parties hereto and their respective 

successors and assigns. However, the Stipulation shall not be binding on any 

creditors, or otherwise affect the rights of any creditors, of the Estate.” See, Docket 

No. 32, at Exhibit “B”. The language in this Stipulation cannot be any clearer in that 

it does not bind or prevent any third-party creditors, including the Goodsteins, from 

enforcing their rights against others.

Further, as the Goodsteins were not party to that Stipulation or settlement, 

there would have been no authority for the Goodsteins’ claims to be released, even 

if that was the purpose of the Stipulation, which it explicitly was not.

Plaintiffs also take issue with the New York Court’s ability to determine 

whether the Stipulation released the Goodsteins claims, now arguing that New York 

did not have jurisdiction to make such a determination. However, not only is there 

no legitimate basis to contend that the New York State Court hearing the case lacks 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 6 of 24
3

jurisdiction, but, ironically, it was the Plaintiffs who affirmatively sought similar 

relief in the New York Court. It is obvious that they are only claiming a “lack of 

jurisdiction” is because they were unhappy with that Court’s decision. 

Lastly, Plaintiffs argue that the New York action should be stayed, pursuant 

to the Bankruptcy Code’s automatic stay provisions. As discussed in detail below, 

the automatic stay does not apply to proceedings against non-bankrupt entities such 

as Adam Enbar and Melissa Benzel except in very limited circumstances which are 

not present at bar.

DEFENDANTS’ STATEMENT OF MATERIAL FACTS

On September 20, 2017, in the matter entitled In re: MOSHE ENBAR, Case 

No. 16-21262-AJC, in the United States Bankruptcy Court for the Southern District 

of Florida, Miami Division, Judge A. Jay Cristol issued an Order approving the 

trustee’s Motion and Stipulation to Compromise Controversy (hereinafter the 

“Stipulation”). This Stipulation was entered into by and between the Settling Parties, 

Moshe Enbar, Linda Enbar, Adam Enbar and Melissa Benzel. See, Docket No. 32, 

at Exhibit “B” 

The terms of the Stipulation were outlined in the September 19, 2017 

Settlement Transcript for In re: MOSHE ENBAR Case No. 16-21262-AJC, in the 

United States Bankruptcy Court for the Southern District of Florida, Miami Division 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 7 of 24
4

(hereinafter the “Settlement Transcript”). See, Docket No. 32, at Exhibit “C.” 

Present at this hearing was Mr. Angueira, the Chapter 7 Trustee in that case, and the 

debtor, Mr. Enbar. The Settlement Transcript made clear that, “this is an agreement 

between the trustee and debtor, and would have no affect on other parties, creditors, 

or interested parties...” See, Docket No. 32, at Exhibit “C.” 

Importantly, at the time that this Settlement was entered into, the Court was 

cognizant of the fact that the New York Action had already been initiated, on August 

4, 2016, prior to the initial filing of the debtor’s bankruptcy petition herein. On 

March 13, 2019 Defendants filed a motion to amend its complaint to inter alia add 

causes of action against Melissa Benzel. These causes of action were for Fraudulent 

Conveyance under New York Debtor and Creditor Law §§ 276, 278-a, and/or 279.. 

By Decision and Order dated November 1, 2019, See, Docket No. 32, at Exhibit “D”,

the New York Court granted Defendants’ motion. In so doing, it rejected these same 

Plaintiffs’ claim that the settlement in the Bankruptcy Court precluded the 

Goodsteins’ motion to amend their complaint. 

Notwithstanding the fact that the New York Court granted the amendment of 

the Defendant’s complaint on November 1, 2019, it was not until January 28, 2020 

that Plaintiffs herein commenced their Adversary Proceeding against Defendants, 

followed by the filing of a motion for summary judgment and motion for a 

preliminary injunction on May 1, 2020. See Docket Nos. 4 and 7. This procedural 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 8 of 24
5

posture, in and of itself, raises a question as to the motive behind the filing and of 

this appeal. 

PROCEDURAL HISTORY

The underlying Bankruptcy was filed as a voluntary Chapter 7 petition 

commenced by the Debtor through his former counsel, Christian J. Olsen, Esq. on 

August 16, 2016. Robert A. Angueira (the “Trustee”) was appointed to serve as the 

Chapter 7 Trustee which was assigned Case No.: 16-21262-AJC (the “Main 

Action”). The Trustee’s Motion and Stipulation to Compromise Controversy was 

so-ordered on September 21, 2017. See, Docket No. 32, at Exhibit B.

On January 13, 2017, the Goodsteins filed their Adversary Complaint which 

was assigned Adv. No.: 17-01018-AJC (the “Adversary Action”). See Adversary 

Action ECF Doc. No. 1. On or about January 17, 2017, this Court issued a Summons 

and an Order Setting Filing and Disclosure Requirements for Pretrial and Trial in 

the Adversary Action. See Adversary Action ECF Doc. No. 2.

On January 28, 2020 Plaintiffs filed the below adversary action under Adv. 

No.: 20-1028-BKC-AJC-A, seeking to enjoin the New York Action. On January 29, 

2020, Plaintiffs filed their motion for preliminary injunction, and on January 30, 

2020, they filed their motion for summary judgment. Both motions were denied by 

the appealed-from Order, dated May 26, 2020 (the “Decision”).

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 9 of 24
6

ARGUMENT

POINT I

THE BANKRUPTCY COURT CORRECTLY CONCLUDED THAT THE 

SETTLEMENT AGREEMENT DOES NOT BAR THE GOODSTEINS

FROM PROSECUTING THE NEW YORK ACTION

The contours of the Subject Settlement Agreement to which Plaintiffs seek to 

use as a sword against the Defendants, was outlined in the September 19, 2017 

Settlement Transcript in front of Judge A. Jay Cristol. See, Docket No. 32, at Exhibit

“C.” Those present at the hearing were Mr. Angueira, the Chapter 7 Trustee in this 

case, Kevin Gleason, Esq., on behalf of Moshe Enbar and Amanda Peterson, Esq., 

on behalf of Michele Goodstein. The purpose of the hearing was to approve the 

“agreement between the trustee and the debtor.” See, Docket No. 32, at Exhibit “C” 

at 3. This agreement, according to the Court transcript, “would have no affect on 

other parties, creditors, or interested parties in regard to Mr. Enbar.” See, Docket 

No. 32, at Exhibit “C” at 3. At the time of the hearing, no one objected to the 

limitations contained in the motion to approve the stipulation and it was made clear 

that only the “trustee would be bound by the terms of the stipulation as far as the 

debtor, related parties, interested parties...” See, Docket No. 32, at Exhibit “C” at 3. 

The Court went further to articulate this limitation so that there could be no question 

as to the limited scope of the settlement that was being entered into. In that regard, 

the Court made it clear that, “if this order is granted it would have no affect on the 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 10 of 24
7

rights of [Michele Goodstein].” See, Docket No. 32, at Exhibit “C” at 4. With no 

objections to this limitation, Mr. Angueira was directed by the Court to draw the 

order, spelling out again that, “this is a settlement between the trustee and Mr. Enbar, 

and has no affect or impact upon any of the rights of any parties, interested parties, 

creditors, claimants, whatever.” See, Docket No. 32, at Exhibit “C” at 5.

Accordingly, to be charitable, Plaintiffs’ continued claim that this Settlement 

barred the Goodsteins’ right to seek to initiate and prosecute claims in the New York 

Action are misguided at best. Given the fact that Plaintiffs’ current counsel was 

present at the hearing, it is difficult to understand how he believes that the adversary 

proceeding and this instant appeal has any legitimacy. The Bankruptcy Court could 

not have provided more clarity than it did on this matter--the Settlement has no effect 

on the rights of the Goodsteins. 

Putting aside these express limitations, the Goodsteins’ causes of action to 

which Plaintiffs herein seek to preclude Defendants from pursuing in the New York 

Action belongs solely to them and, therefore, the trustee would not have even have 

had standing to assert or release this cause of action through the Settlement. See, In 

re Flagship Healthcare, Inc., 269 B.R. 721, 727 (Bankr. S.D. Fla. 2001) (“the only 

causes of action belonging to the debtor at the commencement of the case are 

property of the estate that a trustee can pursue... thus, if a specific cause of action is 

not property of the estate, a trustee has no authority to bring such an action... there 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 11 of 24
8

is no statutory authority [under which] a trustee may collect money not owed to the 

estate... a trustee ha[s] no standing to assert claims on behalf of specific creditors of 

a debtor.”)

In order to determine whether or not a trustee has standing to sue, and 

therefore could seize control over a cause of action, a court looks to the complaint 

and the damages being alleged by the creditors. If, as in the New York Action at 

issue, the damages were suffered by the creditors and not the debtor, the trustee 

cannot pursue the cause of action. See, Hirsch v. Arthur Anderson & Co., 178 B.R. 

40, 44 (D.Conn. 1994) (ruling that the defendant’s conduct in recommending the 

purchase of unworthy properties caused damage to the creditors, not the debtor... 

and therefore the trustee could not pursue a cause of action.) Another key to 

understanding whether or not the trustee has this standing is determining whether 

the creditor alleges a particularized injury which would not be a general one which 

could have been brought by any creditor. Shafferman v. Queens Borough Pub. 

Library (In re JMK Constr. Grp., Ltd.), 502 B.R. 396, 404 (Bankr. S.D.N.Y. 2013). 

A cause of action is “considered personal if there is injury to only one or a select 

group of specific creditors, and other creditors have no interest in the action.” In re 

Cabrini Med. Ctr., 2012 WL 2254386, at *7 (Bankr. S.D.N.Y. June 15, 2012). A 

court may consider multiple factors when deciding whether or not an injury was 

personal to a specific creditor, including:

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 12 of 24
9

To whom any allegedly breached duty was owed; what 

was the injury underlying the claims; who suffered the 

injury; who would gain from the recovery, or lose out if 

the recovery were awarded to a different successful 

plaintiff; and, to the extent different from any of the 

foregoing, whether any creditor of the debtor could assert 

the claim... or just those creditors suffering a 

particularized injury.

Buchwald v. The Renco Grp., Inc. (In re Magnesium Corp. of Am.), 399 B.R. 

722, 758 (Bankr. S.D.N.Y. 2009).

As indicated, the New York claims belong solely to the Goodsteins and has 

stood unaffected by the Settlement and never belonged to the Trustee to begin with, 

as was made explicitly clear by this Court. The fact that the Stipulation states that 

the Bankruptcy Court “shall retain sole and exclusive personal and subject matter 

jurisdiction over the Parties and the subject matter, interpretation, effectuation, and 

enforcement of the terms of the Stipulation” does not affect the Goodsteins’ cause 

of action because that cause of action was never intended to be governed by or 

addressed by said Stipulation. Consequently, Plaintiffs’ claim and the relief sought 

is made in complete disregard to the contours of the settlement that was approved 

by this Court, as reflected in the September 19, 2017 transcript. 

Finally, and perhaps most telling, Plaintiffs have themselves sought relief in 

the New York Court regarding this matter. Not surprisingly, the only time Plaintiffs 

have sought to claim that the New York Court lacked the jurisdiction to “interpret” 

the Settlement Agreement, was after they sought relief from the New York Court 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 13 of 24
10

with respect to said agreement and then received an unfavorable decision from the 

New York Court. Such actions go beyond blatant forum shopping and borders on 

abuse of process.

The simple fact remains that the Order approving the Stipulation was explicit 

in that it had no effect on the rights of any creditors, including the Goodsteins. The 

Bankruptcy Court was correct when it noted same, and when it went on to state that 

“the New York state court appropriately determined the exact same from the 

unambiguous language in this Court’s Order.” See, Docket No. 43.

POINT II

THE COURT WAS CORRECT IN HOLDING 

THAT THE BANKRUPTCY COURT HAD NO 

AUTHORITY TO RELEASE THE GOODSTEINS’ CLAIMS

The Bankruptcy Court, in denying Plaintiffs’ motion and dismissing the 

Adversary Proceeding, goes on to state that the Stipulation “does not, and cannot, 

extinguish the Defendants’ claims against non-debtor Plaintiffs for the alleged 

fraudulent transfer of funds from the LLC. The LLC was not a party to the 

bankruptcy proceeding, and the Court had no authority to release the Goodsteins’ or 

the LLC’s claims against the non-debtor Plaintiffs concerning the transfer of funds 

from the LLC to them.” See, Docket No. 43 at p. 8. The Court went on to correctly 

point out that “the trustee’s authority extended only to property of the Debtor’s 

estate, not property belonging to the LLC or the Goodsteins.” See, Docket No. 43 at 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 14 of 24
11

p. 8. citing, In re Flagship Healthcare, Inc., 269 B.R. 721, 727 (Bankr. S.D.Fla. 

2001).

Plaintiffs seek to get around this ruling by arguing that “creditors are 

precluded from independently pursuing causes of action settled by a bankruptcy 

trustee.” See, Defendants Brief p. 15, citing, In re Zwirn, 362 B.R. 536, 542 (Bankr. 

S.D. Fla. 2007). Plaintiffs correctly note that, under normal circumstances, the 

trustee has the exclusive jurisdiction to commence fraudulent conveyance actions. 

However, this is only true for the first two years after a petition is filed. Outside of 

that time period, other creditors also have the right to bring such an action pursuant 

to Bankruptcy Code 546. See, In re C.D. Jones & Co. Inc. 482 B.R. 449, 459-60 

(Bankr. N.D. Fla 2012) citing, Zwirn, supra and In re Klingman, 158 B.R. 109, 113 

(N.D. Ill. 1993). In C. D. Jones & Co., supra., the debtor, CD Jones & Company, 

Inc. (“Jones”) entered into a business transaction with the creditors, the Daakes. Id.

at 452. A dispute arose between the parties, and in 2004 the Daakes sued the debtor 

for inter alia, breach of contract. Id. The Daakes were successful at trial and obtained 

a verdict in its favor in July of 2009. The Debtor filed its Chapter 7 petition on July 

30, 2009, which was after the jury verdict but was prior to the Final Judgment being 

signed by the Court. Id. The Daakes were the Debtor’s largest unsecured creditor. 

Id. The Debtor’s original “founders, principals and co-owners were Dennis and 

Cynthia Jones.” Id. At some point during the litigation, Dennis and Cynthia Jones 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 15 of 24
12

transferred their ownership interests in the Debtor to their son and his partner. Id. In 

April of 2007, the Debtor completed a transaction with the son and partner that 

resulted in the partner becoming the Debtor’s sole remaining shareholder. Id.

The Jones Trustee was appointed on July 31, 2009. Id. The Trustee never filed 

any fraudulent conveyance actions. Id. As of June 2012, “after the expiration of the 

time provided under Section 546(a), but without notice to or consent by the Trustee, 

the Daakes filed a new law suit in state court against Dennis Jones, as Trustee of the 

“Jones Trust”, and the fiancée of the Joneses’ son. Id. at 453. Therein, the Daakes 

alleged that while Dennis and Cynthia Jones still owned their shares in the Debtor, 

they made various fraudulent transfers to the Jones Trust and the fiancée. Id.

The Jones Court, in rejecting the Debtor’s attempt to dismiss the state court 

action, held as follows: 

[a]ny claims asserted in state court that belonged to the 

Debtor prepetition are Section 541 property of the 

bankruptcy estate that the Chapter 7 Trustee has standing 

to pursue. Any recovery from state court fraudulent 

transfer claims became property of the estate by virtue of 

Section 544(a) and the Trustee had exclusive standing to 

pursue such claims until the expiration of the limitations 

period of Section 546(a), at which point the [Plaintiffs] 

also had standing to pursue such claims. Whether the 

Trustee no longer has standing to pursue fraudulent 

transfer claims is an issue for the state court to decide.

Id. at 452.

At bar, the Debtor’s petition in Bankruptcy was filed on August 16, 2016.

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 16 of 24
13

Since this filing, the Trustee has not sought to commence any actions against the 

non-debtor Plaintiffs. As it has been more than two years since the filing of the 

Petition, the Trustee no longer has the exclusive jurisdiction to bring a fraudulent 

conveyance action or for any other claims, such as those claims asserted in the New 

York Action. As such, any suggestion that the Trustee currently has exclusive 

jurisdiction to assert such claims lacks merit. 

Finally, the claims being asserted against the Plaintiffs in the New York 

Action do not sound in “fraudulent conveyance” per se and therefore cannot be 

subject to an Automatic Stay. As found by the New York Court in analyzing same, 

it held 

[a] bankruptcy court will stay proceedings against nonbankrupt co-defendants in the ‘unusual situation’ where 

‘there is such identity between the debtor and the thirdparty defendant that the debtor may be said to be the real 

party defendant and that a judgment against the third-party 

defendant will in effect be a judgment or finding against 

the debtor.

See, Docket No. 32 at Exhibit D, citing, A.H. Robins Co., Inc. v. Piccinin, 788 

F2d 994, 999 (4

th Cir. 1986). Specifically, the New York Court noted that it was not

persuaded that plaintiffs’ original claims against Maurice 

are so intertwined with the current claims that the 

automatic stay in the Bankruptcy Proceeding encompasses 

this action. An action claiming breach of contract and 

conversion as against one party is quite different from a 

suit alleging the fraudulent transfer of assets to and among 

the settling parties of a bankruptcy proceeding and other 

nonparty entities. Here, as in Madoff, ‘the non-debtor’s 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 17 of 24
14

liability rests upon [their] own breach of duty,’ namely the 

alleged fraudulent transfers of funds now held in the bank 

accounts of Magnum Realty, and by Linda to family trusts 

for the benefit of the family, and the bankruptcy stay is not 

at issue (Madoff at 68). Notably, the trustee specifically 

stated that he had found no evidence that Maurice had 

transferred or concealed property ‘within one year before 

the date of the filing of the petition’ (NYSCEF Doc. No. 

150, Bankruptcy Proceeding, motion to approve 

stipulation paragraph 8 [emphasis added]), and although 

the trustee investigated “transactions” related to Turnberry 

and 345 Broadway, and the Laura Enbar Asset Trust and 

the “Lawrence Enbar Trust” (see NYSCEF Doc No. 150, 

Bankruptcy Proceeding, motion to approve Stipulation, 

paragraph 12), it is unclear whether the ‘Lawrence Enbart 

Trust’ examined by the trustee is the ‘Enbar Lawrence 

Trust,’ identified throughout plaintiffs’ papers as allegedly 

consisting of both pieces of real property.

See, Docket No. 32 at Exhibit D, p. 20.

In Securities Investor Protection Corporation v. Bernard L. Madoff 

Investment Securities LLC, 490 B.R. 59 (S.D.N.Y. 2013), the Madoff Court held 

that non-fraudulent conveyance causes of action such as those in the New York 

action, do not get estopped, notwithstanding bankruptcy proceedings. In Madoff, the 

bankruptcy trustee claimed that the plaintiffs, who had brought suit against four nondebtor investment funds which were related to Bernard Madoff’s company 

(“BLMIS”), were subject to the automatic stay. The trustee sought “the return of 

certain fraudulent conveyances allegedly transferred from BLMIS” to the 

defendants, and argued that “a third-party action to recover fraudulently transferred 

property is properly regarded as undertaken ‘to recover a claim against the debtor’”. 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 18 of 24
15

Id. at 67. The Madoff court ruled that the proposed settlement between the parties 

did not violate the automatic stay, as the plaintiffs’ claims were “separate and 

distinct” from the claims of the BLMIS estate and not the property of the BLMIS 

estate. Id. Where, as is the case at bar, the “non-debtor’s liability rests upon his own 

breach of duty, a stay clearly cannot be extended to the non-debtor.” Id. at 68. This 

analysis was adopted by the Bankruptcy Court in properly deciding the underlying 

motion.

Further, “[t]he automatic stay can apply to non-debtors, but normally does so 

only when a claim against the non-debtor will have an immediate adverse economic 

consequence for the debtor’s estate.” Queenie, Ltd. V. Nygard Intl., 321 F.3d 282, 

287 (2d Cir. 2003). At bar, there have been no allegations that there will be any 

economic consequence for the debtor’s estate whatsoever, should the New York 

action be correctly permitted to continue.

POINT II

THE BANKRUPTCY COURT DID NOT DEFER TO THE NEW YORK 

COURT, IT SIMPLY REACHED THE SAME, INESCAPABLE

CONCLUSION

Plaintiffs go on to argue, with no authority, that the Bankruptcy Court should 

not have deferred to the New York Court. First, Plaintiffs fail to state where they 

believe the Bankruptcy Court “deferred” to the New York Court in any way. Rather, 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 19 of 24
16

the Bankruptcy Court simply agreed with the New York Court’s ruling as to the clear 

and unambiguous meaning of the Stipulation. See, Docket No. 43.

In an attempt to avoid the preclusive effect of the New York Decision and 

Order on this issue, Plaintiffs argue that the Bankruptcy Court has exclusive 

jurisdiction to interpret the settlement agreement reached between themselves and 

the non-debtor Enbar entities and the Chapter 7 trustee with respect to ancillary 

claims. Notably, the trustee settlement expressly provided that creditors were not 

bound by the agreement. See, Exhibit “B”. Bankruptcy courts, as courts of limited 

jurisdiction, may exercise subject matter jurisdiction on two grounds: i) ancillary 

jurisdiction, and ii) statutory jurisdiction under 28 U.S.C. Section 1334. Here, only 

the first basis is relevant. 

In Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375 (1994), the 

Supreme Court held that federal courts may assert ancillary jurisdiction for two 

separate, though sometimes related purposes: 1) to permit disposition by a single 

court of claims that are, in varying respects and degrees, factually interdependent, 

and 2) to enable a court to function successfully, to manage its proceedings, vindicate 

its authority, and effectuate its decrees. Absent retention of jurisdiction over a 

settlement, “enforcement of the settlement agreement is for state courts, unless there 

is some independent basis for federal jurisdiction.” Id. The Order approving the 

settlement must either expressly retain jurisdiction over the agreement or incorporate 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 20 of 24
17

the terms of the agreement in the order. Id. Here, while the Bankruptcy Court 

retained jurisdiction over the settling parties and interpretation of the trustee 

stipulation, the stipulation was specifically crafted so as not to be binding on any 

creditors or otherwise affect the rights of any creditors of the Estate. It therefore 

follows: 1) this Court has no independent basis to hear or otherwise stay the 

Goodsteins’ New York action, 2) the stipulation did not incorporate or otherwise 

release claims between the Goodsteins and non-debtor entities, 3) the Court did not 

retain jurisdiction over claims between creditors of the Estate and non-debtor 

entities, 4) the resolution of the Goodsteins New York action will have no impact on 

the administration of the Estate or distribution to creditors of the Estate.

In In re Valdez Fisheries Development Assoc., Inc., 439 F.3d 545 (9th Cir. 

2006), in ruling that the dismissal order did not retain jurisdiction or incorporate the 

terms of the settlement agreement and the court lacked post-dismissal ancillary 

jurisdiction, the Court was asked to decide whether a bankruptcy court, which had 

approved a settlement agreement, had jurisdiction to interpret that agreement in an 

adversary proceeding between two creditors brought after the closing and dismissal 

of the underlying bankruptcy case. The 9th Circuit determined that the bankruptcy 

court’s review of the release of a creditor’s state court claims against another creditor 

could not “conceivably alter the debtor’s rights, liabilities, options, or freedom of 

actions, or in any way impact upon the handling of the administration of the 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 21 of 24
18

bankruptcy estate” and, therefore, the bankruptcy court lacked ancillary jurisdiction 

to enforce the agreement (quoting In re Hanks, 182 B.R. 930 (Bankr. N.D. Ga. 1995) 

((the enforcement of the settlement agreement cannot have a conceivable effect on 

the bankruptcy case as no case is in existence at that time)).

Here, Enbar received his discharge; claims of all creditors have been 

discharged, with the determination of dischargeability as to the Goodsteins claims 

the only remaining issue in the case. The “administration” of this case has long been 

completed. The Goodsteins prosecution of their fraudulent transfer claims against 

the non-debtor Enbar entities has no impact on any distribution to Enbar’s creditors 

or the administration of the Estate; the outcome of the NY action will have no 

bearing on distributions to creditors of this Estate. Thus, the Bankruptcy Court has 

no role in the resolution of the Goodsteins fraudulent transfer claims against the nondebtor entities. The stipulation with the trustee has been fully implemented; the 

stipulation specifically provides that the claims of creditors and other parties are not 

impacted by the settlement. Had the non-debtor entities removed the New York 

Action to the Bankruptcy Court prior to the discharge being entered, then the 

Bankruptcy Court may have, in its discretion, taken jurisdiction of that action. See, 

Valdez Fisheries at 549. Instead, the non-debtor Enbar entities chose to litigate the 

New York action, the New York Court issued an extensive opinion that the action is 

not stayed because of the Enbar bankruptcy; and Enbar and his family members are 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 22 of 24
19

now attempting an end-around, forum shop to see if they can get this Court to stay 

the New York action. 

Thus, the question of whether the Bankruptcy Court maintains jurisdiction 

over the interpretation of the trustee settlement agreement is necessary in order to 

maintain its authority is not at issue herein. The stipulation already carved out claims 

of creditors and specifically recites that the settlement has no effect on creditors. 

There is nothing left to administer in the bankruptcy case and the continued 

prosecution of the New York action against the non-debtor entities has no impact on 

Enbar, the Estate or other creditors of the Estate, all of whom are now discharged. 

See, In re FedPak Sys., Inc., 80 F.3d 207 (7th Cir. 1995) (the bankruptcy court did 

not have jurisdiction to interpret its own order when resolution of the dispute would 

not affect the amount of assets available for distribution to creditors of the estate). 

See, In re Conseco, Inc., 305 B.R. 281 (Bankr. N.D. Ill. 2004) (court could not assert 

‘related to’ jurisdiction as this was a dispute between creditors brought three months 

after almost all of the assets of the estate were distributed; resolution of the case will 

not affect the amount of assets for distribution from the estate or the allocation of 

estate assets between the plaintiffs and defendants-it will have no tangible impact on 

the estate and is precisely the type of “internecine conflict” which the court does not 

have jurisdiction); see, also, Zerand-Bernal Group, Inc. v. Cox, 158 B.R. 459 

(Bankr. N.D. Ill. 1993) (ancillary jurisdiction applied only in unusual circumstances 

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 23 of 24
20

and is strictly limited to cases in which the non-bankruptcy forum cannot provide 

adequate relief).

CONCLUSION

Wherefore, Defendants respectfully request that this Court affirm the 

Decision of the Bankruptcy Court, and for such other and further relief as this Court 

may deem just and proper.

Respectfully, 

WEG & MYERS, P.C. 

52 Duane Street, 2nd Floor

New York, New York 10128

Tel: (212) 227-4210

E-mail: jmallin@wegandmyers.com

BY: /s/ Joshua L. Mallin 

 Joshua L. Mallin, Esq. 

(pro hac vice)

and local counsel

SIEGFRIED RIVERA

201 Alhambra Circle, 11th Floor

Coral Gables, FL 33134

Telephone: 305-442-3334

Fax: 305-443-3292

jberlowitz@siegfriedrivera.com

By: /s/ Jeff Berlowitz 

 Jeff Berlowitz, Esq.

Florida Bar No. 0963739

Case 1:20-cv-22360-AMC Document 9 Entered on FLSD Docket 09/08/2020 Page 24 of 24