UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

In re

ARISTA IMAGING OF N. MIAMI, LLC,

Debtor.

 Case No. 19-26519-AJC

 Chapter 11

Jointly Administered

In re

PRESGAR IMAGING OF CMI NORTH, L.C.,

Debtor.

 Case No. 19-26520-AJC

 Chapter 11

MEMORANDUM ORDER GRANTING JOINT MOTION 

TO DISMISS CHAPTER 11 CASE 

THIS MATTER came before the Court for hearing on January 9, 2020 upon the Joint 

Motion of NSR Imaging LLC and Daniele Mugnai to Dismiss Chapter 11 Case for Lack of 

Authority to File and for Bad Faith Pursuant to 11 U.S.C. § 1112(b) [ECF No. 17] (“Motion to 

Dismiss”) filed by NSR Imaging, LLC (“NSR) and Danielle Mugnai (“Mugnai” and collectively 

A. Jay Cristol, Judge

United States Bankruptcy Court

_____________________________________________________________________________

ORDERED in the Southern District of Florida on February 7, 2020.

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with NSR, the “Movants”), The Court having considered the Motion to Dismiss, Debtors’ 

Response In Opposition to Motion To Dismiss [ECF No. 71] filed by Arista Imaging of North 

Miami, LLC (“Arista Imaging”) and Presgar Imaging of CMI North, LLC (“Presgar”, and 

collectively with Arista Imaging, the “Debtors”), the Parties’ declarations, documentary evidence 

and supplemental submissions, and having conducted a hearing at which extensive argument was 

presented, the Court grants the Motion to Dismiss. 

The Court provided Debtor’s counsel the opportunity, post-hearing, to submit additional 

authority that might persuade this Court that the filing of the petitions was authorized. The Court 

was unpersuaded by the Debtors’ post-hearing filings. The following are the Court’s findings of 

fact and conclusions of law in conformity with Rule 52(a)(1) of the Federal Rules of Civil 

Procedure, made applicable to this contested matter pursuant to Rules 7052 and 9014 of the Federal 

Rules of Bankruptcy Procedure.

I. BACKGROUND

A. The Commencement of the Chapter 11 Cases

1. The Debtors commenced these chapter 11 cases by the filing of voluntary petitions 

on December 10, 2019.

2. Those petitions were signed by Martin Farrell (“Farrell” or “Mr. Farrell”) in the 

stated capacity of “Managing Member” of Arista Imaging and filed by the Debtors four days after 

entry of an order by the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade 

County, Florida (the “State Court”) in Civil Action Case No. 2019-007383-CA-01 (the 

“Litigation”). That order appointed a neutral receiver with full control over all assets and 

operations of both Arista Imaging and Presgar and expressly ordered that, “[e]ffective immediately

Farrell will cease to have any involvement in, or control over, any matter relating to Presgar or 

Arista Imaging during the pendency of this litigation while this Order is in place.” Order Granting 

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Temporary Injunction To Prevent Farrell From Managing Arista Imaging and Presgar And For 

Appointment of a Receiver, ECF No. 17-3 (the “Injunction Order”) at 13. 

B. The Debtors’ Corporate Structure and Business

3. Arista Imaging was formed as a Texas limited liability company in 2009 with a 

principal place of business in Miami, Florida. Declaration of Daniele Mugnai (the “Mugnai 

Declaration”), at Exhibit A, Operating Agreement of Arista Imaging of N. Miami, LLC dated as 

of March 27, 2009 (the “Operating Agreement”), ECF No. 17-2.

4. Presgar is a Florida limited liability company, formed in or around 1999, with its 

principal place of business in Miami, Florida, and is a wholly-owned subsidiary of Arista Imaging. 

Debtors’ Response in Opposition to Motion to Dismiss (the “Opposition”), ECF No. 71, at ¶ 1.

Presgar’s business is a local MRI imaging center in North Miami, Florida located at 1860 NE 

Miami Gardens Drive, Miami, Florida. Motion to Dismiss, ECF No. 17, at ¶ 2. Despite the center’s 

small size, Presgar has one of the highest scan volumes in the South Florida area. See Declaration 

of Martin J. Farrell in Support of First-Day Motions (the “Farrell Declaration”), ECF No. 18, at ¶ 

29.

5. In 2009, Daniele Mugnai and his business partner Manuel Vadillo, and Mr. Farrell 

and his business partner Eric Stetenfeld (collectively, the “Original Investors”) agreed to purchase 

the imaging center currently owned by Presgar. Farrell Declaration, ECF No. 18, at ¶ 19. They 

decided to use Arista Imaging as the entity that would purchase Presgar from its original owner 

and operate the imaging center. Id.

6. Each of the four Original Investors and certain other later investors owned or 

controlled their interests in Arista Imaging through ownership vehicles. As of January 1, 2011, 

the ownership interests in Arista Imaging were held as follows:

• Oidhreacht Investments (“Oidhreacht”) held Mr. Farrell’s 27.5% membership 

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interest;

• Wolfgang Investments held Mr. Stetenfeld’s 19.2 % ownership interest;

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• Sweetpea Ventures held a separate 5.3% interest for Elizabeth Stetenfeld;

• Arista Management, LLC (“Arista Management”) held an additional 4.0% for 

Mr. Farrell and Mr. Stetenfeld; 

• NSR held a 42% membership interest for Mr. Mugnai and Mr. Vadillo;

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• JPT Investments held a 1% ownership interest; and

• Carl Baggett held a 1% ownership interest.

Operating Agreement, ECF No. 17-2, at Exhibit A.

7. From its formation, Arista Imaging’s governance was dictated by the Operating 

Agreement. The management of the business and affairs of Arista Imaging (and of its only asset, 

Presgar) was delegated to Mr. Farrell and Mr. Stetenfeld as the members of the Board of Directors. 

Operating Agreement, ECF No. 17-2, at § 3.1. Although Mr. Stetenfeld was also originally

appointed manager of Arista Imaging, Mr. Farrell began to exclusively manage Arista Imaging 

and Presgar as of 2012. Farrell Declaration, ECF No. 18, at ¶ 26.

8. The Operating Agreement identifies several levels of consent necessary for Arista

Imaging to act. Control not otherwise allocated in the Operating Agreement is delegated, in the 

first instance, to the Board of Directors, which decides based on the majority vote of the thenpresent quorum. Operating Agreement, ECF No. 17-2, at § 3.1. The Operating Agreement, 

however, expressly identifies certain actions delegated to the exclusive authority of the members 

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In 2012, as part of divorce proceedings between Eric and Elizabeth Stetenfeld, a Texas court ordered Mr. Stetenfeld 

to turnover his membership units in Arista Imaging for levy to Mrs. Stetenfeld’s counsel. Thus, as a result of the 

Stetenfelds’ divorce, Wolfgang Investment’s entire 19.20% ownership interest in Arista Imaging was to be transferred 

to Elizabeth Stetenfeld or her entity, Sweetpea Ventures. Farrell Declaration, ECF No. 18, at ¶ 26.

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Although the record owners of NSR Imaging are Mr. Mugnai’s mother (Maristella Nanni) and Mr. Vadillo’s wife 

(Josie Vadillo), Mr. Mugnai and Mr. Vadillo assert they are the beneficial owners. See Mugnai Declaration, ECF 

No.17-2, at p. 1 n.1.

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and further identifies the requisite vote of those members required to authorize the action. See 

Operating Agreement, ECF No. 17-2, at § 3.8.

9. Under section 3.8 of the Operating Agreement both the Board of Directors and the 

manager are prohibited, “[n]otwithstanding any provision [of the Operating Agreement] to the 

contrary,” from taking certain actions without the prior approval of a “Super-Majority-In-Interest,” 

defined in the Operating Agreement as “Members owning at least seventy five percent (75%) of 

the Outstanding Units of the Company.” Id. at § 3.8.

10. The actions that require the “prior approval” of a “Super-Majority-in-Interest”

include: (a) “[d]o[ing] any act that is unrelated to the purpose of the Company or that otherwise 

contravenes any provision of this Agreement;” (b) [m]ak[ing] an assignment for the benefit of 

creditors of the Company or [f]iling a voluntary petition in bankruptcy or appoint[ing] a receiver 

for the Company; ... (e)... enter[ing] into any contract or agreement that [] creates a monetary 

obligation on the part of the Company greater than . . . $150,000; or (f) [e]xpel[ling] a Member . . 

. .” Id. (emphasis added).

11. Section 12.9 of the Operating Agreement further provides that any amendment to 

the Operating Agreement requires the “unanimous written agreement of all Members.” Id. at §

12.9.

C. The Member Controversy and Litigation

12. During early 2018, controversy regarding the management and operations of Arista 

Imaging and Presgar arose between a subset of the Arista Imaging members. Farrell Declaration, 

ECF No. 18, at ¶ 22. NSR expressed concern to Mr. Farrell in his then-capacity as managing 

member regarding a perceived lack of access to meaningful financial information regarding 

Presgar’s business activities. Id. Through outside counsel, NSR demanded from Mr. Farrell that 

he provide certain financial information, including Presgar’s profit and loss statements from 2014-

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2017, pursuant to Sections 3.4 and 4.2 of the Operating Agreement. Id. at ¶ 48. Mr. Farrell did not 

provide the requested information. See Injunction Order, ECF No. 17-3, at p. 10.

13. On October 26, 2018, NSR again requested this (and other) financial information 

and explained that it appeared that Mr. Farrell was breaching his duties and obligations to Presgar, 

Arista Imaging, and the members of Arista Imaging. Farrell Declaration, ECF No. 18, at ¶ 48. 

NSR also asserted that it had become aware of various unauthorized expenses that Mr. Farrell had 

caused Presgar to incur to benefit Mr. Farrell and companies he alone owns. Motion to Dismiss, 

ECF No. 17, at ¶ 13.

14. Rather than produce the financial information requested, Mr. Farrell and Epic 

Management LLC (“Epic”), one of the entities wholly owned by Mr. Farrell, engaged the law firm 

of Greenberg Traurig, LLP (“Greenberg Traurig”) and filed a lawsuit on November 1, 2018 against 

Mr. Mugnai personally. Farrell Declaration, ECF No. 18, at ¶ 55. In the lawsuit, Mr. Farrell 

alleged that Mr. Mugnai “tortiously interfered” with Epic’s alleged agreement and/or business 

relationship with Presgar by “demand[ing] records” of Presgar, Epic, Farrell, and Farrell’s other 

companies. Id. at ¶ 57. That action remains pending.

15. Then, on January 19, 2019, Mr. Farrell sent NSR a letter claiming that NSR “was 

expelled as a member of Arista.” See generally id. at ¶¶ 59-61, 64; Opposition, at ¶ 13. According 

to the letter, Oidhreacht Investments (owned and controlled by Farrell) and Sweetpea Ventures 

“approved the expulsion,” without the vote of a Super-Majority-In-Interest of Members and 

without solicitation of NSR’s vote. See Farrell Declaration, ECF No. 18 at ¶ 61; Injunction Order, 

ECF No. 17-3, at p. 11-12.

16. Mr. Farrell’s position, championed by the Debtors in these chapter 11 cases, is that 

Arista Imaging was converted from a Texas limited liability company to a Delaware limited 

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liability company in December 2018 based on the vote of what he admits is a mere majority of the 

Arista Imaging membership. Farrell Declaration, ECF No. 18, at ¶ 59; Opposition, ECF No. 71, 

at ¶ 9. Mr. Farrell further asserts and Debtors further adopt the position that, post-conversion, the 

requisite membership interest holders of Arista Imaging voted to both amend the Operating 

Agreement—an action that Section 12.9 of the Operating Agreement conditions on unanimous 

acceptance of the membership—and expel NSR as a member—an action that the Operating 

Agreement conditions on acceptance by 75% of the membership—without solicitation of NSR’s 

42% vote. See Opposition, ECF No. 71, at ¶¶ 9-10.

17. Mr. Farrell asserts that Arista Imaging’s “change in jurisdiction and amendments 

to the operating agreement were made in accordance with the provisions of the original 2009 Arista 

Miami operating Agreement,” Farrell Declaration, ECF No. 18, at ¶ 59. He states that both the 

conversion and the amendment could be affected by the vote of a “Majority-in-Interest” defined 

in the Operating Agreement as “Members owning a simple majority of the Outstanding Units of 

the Company.” Id. at ¶ 60. Mr. Farrell further asserts that he, acting through Oidhreacht 

Investments and Sweetpea Ventures, held aggregate interests of 56%, and voted “in accordance 

with the December 2018 operating agreement . . . to expel NSR.” Id. at ¶ 61.

18. Under Section 12.9 of the original Operating Agreement as executed in 2009, the 

amendments to the Operating Agreement to expel NSR from Arista Imaging required unanimous 

approval by the members. See Operating Agreement, ECF No. 17-2, at § 12.9. Mr. Farrell does 

not assert, and it is undisputed, that NSR’s consent to amend the Operating Agreement was not 

sought and was not given. Mr. Farrell also does not assert, and it is undisputed, that the consent 

of two additional Arista Imaging members, JPT Investments and Carl Baggett, was neither sought 

nor received. Opposition, ECF No. 71, at ¶¶ 9-10.

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19. After the alleged ouster of NSR, on March 14, 2019, NSR filed a derivative lawsuit 

on behalf of both Presgar and Arista Imaging against Farrell, Oidhreacht Investments, and 

Sweetpea Ventures (the “Defendants”) with the State Court commencing the Litigation. 

Opposition, ECF No. 71, at ¶ 18. Through the Litigation, NSR asserted on behalf of Arista Imaging

and Presgar the following causes of action against Farrell: accounting under Fla. Stat. § 605.0411 

(Count 1); breach of Farrell’s fiduciary duties as an officer of Presgar and as manager and director 

of Arista Imaging (Counts 2-4); breach of the Operating Agreement (Count 5); and conversion 

and/or civil theft of Presgar’s and Arista Imaging’s assets (Counts 6 and 7). Injunction Order,

ECF No. 17-3, at p. 2; Motion to Dismiss, ECF No. 17, at ¶ 16.

20. In addition to seeking damages, NSR, for and on behalf of Presgar and Arista

Imaging, sought injunctive relief prohibiting Farrell from continuing to manage Presgar and Arista 

Imaging and also sought the appointment of a receiver during the pendency of the case. Injunction 

Order, ECF No. 17-3, at p. 2. The TRO Motion was contested by Mr. Farrell and his wholly owned 

entities through Mr. Farrell’s counsel, Greenberg Traurig. See id. at p. 1-2.

D. The State Court Decision

21. On September 18, 2019, the State Court held an evidentiary hearing regarding the 

injunctive relief and receivership appointment sought by Presgar and Arista Imaging derivatively 

through NSR. Id. Following a seven hour evidentiary hearing and based on the substantial record 

before it, the State Court entered an Order on December 6, 2019, finding that: (i) the efforts to 

expel NSR from the Arista Imaging membership were not successful and NSR remained a 42% 

voting member of Arista Imaging for all purposes; (ii) avoidance of irreparable harm to Arista

Imaging and Presgar required enjoining Mr. Farrell from having any access to or control over 

Arista Imaging or Presgar; and (iii) a receiver would be appointed to take control over the assets 

and operations of Arista Imaging and Presgar. Id. at 13-14.

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22. Mr. Farrell made the same assertions regarding NSR’s alleged expulsion from 

Arista Imaging in the State Court that are adopted in proxy by the Debtors before this Court. After 

seven hours of testimony, extensive documentary evidence and briefing, the State Court found that 

“[t]he purported expulsion ... was ineffective.” Id. at p. 11.

23. The State Court’s findings regarding the ineffectiveness of the purported expulsion 

of NSR from the Arista Imaging membership included the following:

• “Section 3.8(f) if the Operating Agreement requires prior approval of a “SuperMajority-In-Interest” (i.e. 75% of the outstanding units of Arista Imaging) before a 

member may be expelled. This requirement ... exists ‘[n]otwithstanding any 

provision herein to the contrary.’ ... At the time of the purported expulsion in 

January 2019, NSR owned 42% of the outstanding units of Arista Imaging. As a 

result, without NSR’s approval (which NSR obviously did not provide) Defendant 

Farrell could not—and did not—obtain the requisite 75% approval.” Id. at p. 11-

12.

• “[T]he purported expulsion did not comply with section 8.5[’s] ... require[ment] 

that upon expulsion, [Arista Imaging] purchase the expelled member’s units for a 

purchase price equal to the member’s ‘positive capital account balance’ with [Arista

Imaging] as of the last day of the preceding capital quarter,” having proffered only 

$55,720 when tax filings indicated the NSR capital account balance to be $117,134.

Id. at p. 12.

• In accordance with the terms of the Operating Agreement, Mr. Farrell’s “‘theft 

embezzlement or unauthorized taking’ of Presgar’s funds, which had been 

occurring since at least 2014” stripped his membership owning entity, Oidhreacht 

Investments, of the right to vote, which, coupled with the partial disqualification of 

the other voting member, Sweetpea Ventures, vote of those interests obtained 

through a divorce proceeding, rendered achieving the requisite 75% super-majority 

a mathematical impossibility. Id. at p. 13 n. 16.

24. The State Court also ordered that Mr. Farrell “will cease to have any involvement 

in, or control over, any matter relating to Presgar or Arista Imaging, during the pendency of this 

litigation while this Order is in place,” premising that order on the following findings, among 

others:

• After “reviewing the record evidence and conducting an evidentiary hearing, ... 

Plaintiff is entitled to an order enjoining Defendant Farrell from continuing to 

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oversee and/or manage the imaging center (i.e., Presgar) and from having any 

access to any of the imaging center’s assets and funds.” Id. at p. 3; 

• There exists a substantial likelihood that Defendant Farrell has, among other things, 

breached his fiduciary duties to the Companies and engaged in conversion and civil 

theft of the Companies’ assets and funds. Id. at p. 8-10; 

• Farrell spent approximately $200,000 on personal entertainment and travel 

expenses for himself, his wife, and two children, and embezzled “millions of 

dollars” through entities owned by him. Id. at p. 4-8;

• “Farrell misappropriated Presgar’s funds using two methods; First, Farrell 

repeatedly used Presgar’s bank accounts for personal expenses ... Second, evidence 

revealed Farrell misappropriated funds from Presgar by causing Presgar to pay for 

unspecified services allegedly provided to the imaging center by two separate 

entities solely owned by Farrell.” Id. at p. 3-4.

• The Defendant Farrell’s misconduct will cause irreparable harm to the Companies 

if he is not enjoined from further access to and control over the imaging center’s 

operations and funds, leaving Plaintiff with no adequate remedy at law. Id. at p. 3. 

25. Separately, through an order dated December 6, 2019, the State Court appointed

Melissa D. Visconti, Esq. as Receiver, and directed the Receiver to immediately take possession 

and control of all assets and operations of Presgar and Arista Imaging so that the Receiver may aid 

in the transition of all operations of Presgar to Ms. Jessica Vidaurre and undertake a full accounting 

of historical operations, further ordering Mr. Farrell to surrender control and cooperate with that 

process, among other relief. See Order Appointing Receiver, NSR Imaging, LLC v. Farrell, Case 

No. 2019-007383-CA-01 (the “Receivership Order”), ECF No. 17-4. Mr. Farrell appealed the State

Court’s order and sought a stay of that order. The stay was denied. The appeal remains pending.

E. The Commencement of the Chapter 11 Cases

26. Just four days after the State Court ordered Mr. Farrell “cease to have any 

involvement in, or control over, any matter relating to Presgar or Arista Imaging” [finding that 

Arista Imaging and Presgar would suffer irreparable harm if Mr. Farrell had continued access to 

Presgar’s operation and funds], and after the State Court determined that the attempted expulsion 

of NSR from the Arista Imaging membership was ineffective so that NSR continued to hold a 42% 

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membership interest in an entity that required a 75% supermajority to commence a bankruptcy 

case or appoint a receiver to take possession of and control over Debtors’ assets, Mr. Farrell, in 

direct violation of that order, signed a series of documents commencing these chapter 11 cases.

27. Despite the December 6, 2019 State Court order expressly holding that NSR 

continued to hold 42% of the membership interest in Arista Imaging, on December 10, 2019 Mr. 

Farrell signed a Written Consent Of A Supermajority Of The Members Of Arista Imaging Of N. 

Miami, LLC indicating that a document not bearing the signature of NSR through its authorized 

agent, constituted evidence of the authority of “a supermajority of the membership interests of 

Arista Imaging of N. Miami, LLC ... acting on behalf of Arista Miami and its wholly owned 

subsidiary Presgar Imaging of CMI North LC....” See Voluntary Petition for Non-Individuals 

Filing for Bankruptcy, ECF No. 1, at p. 5.

28. Despite the State Court order that Mr. Farrell “cease to have any involvement in, or 

control over, any matter relating to Presgar or Arista Imaging,” Mr. Farrell signed voluntary 

petitions under chapter 11 for both Presgar and Arista Imaging as Managing Member of Arista

Imaging. See Voluntary Petition for Non-Individuals Filing for Bankruptcy, ECF No. 1; In re 

Presgar Imaging of CMI North, L.C., Case No. 19-26520-AJC, Voluntary Petition for NonIndividuals Filing for Bankruptcy, ECF No. 1.

29. Later, on January 7, 2020, Mr. Farrell, in the stated capacity of managing member 

of Arista Imaging and Presgar, signed schedules and a statement of financial affairs for and on 

behalf of both Arista Imaging and Presgar. See ECF Nos. 72, 73.

30. The schedules reveal the following:

• Arista Imaging

o Assets

 $52,402 in cash

 Unstated value of its 100% interest in Presgar

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o Liabilities

 $0.00

• Presgar

o Assets

 $4,252,934.12

• Inclusive of $28,219.06 in cash.

o Liabilities

 $382,714.69

ECF Nos. 72, 73.

31. The Debtors’ schedules, therefore, suggest that the Debtors have more than $3.8 

million in net asset value on approximately $4.3 million of consolidated asset value. ECF Nos. 72, 

73.

32. The vast bulk of the $382,714.69 of Presgar liabilities consists of a $330,000 claim 

by the law firm of Greenberg Traurig scheduled as disputed, contingent and unliquidated. See 

Official Form 206, ECF No. 73, at p. 11. In its January 21, 2020 Motion For Leave To Withdraw 

As Counsel For Non-Debtor Defendants filed in Adv. Pro. No. 19-01927-AJC before this Court,3

Greenberg Traurig suggested that it held no claim against either Debtor, stating, “Greenberg 

Traurig did not represent either of the Debtor Defendants, Arista Imaging of N. Miami LLC or 

Presgar Imaging of CMI North, LLC in the State Court Action. Greenberg Traurig did not file the 

underlying Chapter 11 cases or the removal of the State Court Action to this Court.” NSR Imaging, 

LLC, et al. v. Farrell et al. (In re Arista Imaging of N. Miami, LLC), Adv. Pro. No. 19-01927-AJC,

Adv. Pro. ECF No. 4, at ¶ 2.

33. Greenberg Traurig’s statement that it is not owed money by either Debtor entity is 

supported by the testimony of Mr. Farrell before the State Court during the evidentiary hearing 

3

On December 13, 2019, Farrell, on behalf of the Debtors as Nominal Defendants, filed a Notice of Removal, removing 

the Litigation before this Court and commencing Adversary Proceeding No. 19-01927-AJC. See Notice of Removal, 

ECF No. 6.

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conducted on September 18, 2019 in the Litigation (the “State Court Hearing”). The State Court 

Hearing transcript reveals the following testimony:

BY MR. CUVA [sic]:

Q. What I want to know -- and we're going to test this, and remember you're under oath. 

What I want to know is have the funds of Presgar been used directly or indirectly to pay 

for your legal fees?

A. Not to my knowledge, no.

Q. How are you paying for your legal fees?

A. I pay through Epic Management.

Q. And where is Epic Management getting the funds to pay your legal fees?

A. Well, we have a number of clients that we charge management fees to.

Q. Are any of the fees, are any of the monies that Epic is using to pay Greenberg, do any 

of those monies come from Presgar?

A. No.

Q. Are you 100 percent certain because we're going to test it?

A. Yes. We get management fees, and we have to pay from Epic Management, but it has 

to be from our management revenue.

See Statement and Reservation of Rights of NSR Imaging, LLC and Daniele Mugnai Regarding 

Debtors’ Motions Scheduled for Hearing on December 23, 2019, at Exhibit A, Excerpted 

Transcript of September 18, 2019 State Court Hearing, ECF No. 44-1, at 82.

34. That Greenberg Traurig is not owed money by either Debtor is also supported by 

Mr. Farrell’s own declaration filed with this Court on the December 10, 2019. In that first day 

declaration, Mr. Farrell stated as follows: “I had no choice but to hire a lawyer to respond and to 

defend myself and my companies against the escalating aggressive tactics by Mr. Mugnai. To that 

end I retained the services of Greenberg Traurig, who advised me to file suit to stop Mr. Mugnai’s 

attacks.” Farrell Declaration, ECF No. 18, at ¶ 55 (emphasis added). Later in that same 

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declaration, Mr. Farrell reiterated that the services rendered by Greenberg Traurig were for Mr. 

Farrell’s benefit, not for the benefit of the Debtors, stating, “[o]n November 1, 2018, I filed a 

complaint in Florida state court initiating the case styled Epic Management Group, LLC et al v. 

Daniele Mugnai, et al., Case No. 2018-037172-CA-01 (the ‘Original Case’).” Id. at ¶ 56.

35. Subtracting the claim scheduled as disputed, unliquidated and contingent of 

Greenberg Traurig from the liabilities of Presgar listed in its schedules reveals that total assets of 

the consolidated debtor entities are over $4.3 million and total liabilities are approximately 

$53,000, or less than the over $80,000 in cash on hand of the two Debtors. See ECF No. 73.

36. When pressed for the rationale supporting their chapter 11 petition, the Debtors 

indicate disagreement with the State Court’s finding that “the Defendant Farrell’s misconduct will 

cause irreparable harm to the Companies if he is not enjoined from further access to and control 

over the imaging center’s operations and funds,” instead offering the contrary opinion of counsel 

that the “ruling could put the company out of business.” See Transcript of January 8, 2020 

Hearing in Bankruptcy Court on ECF Nos. 17, 58, 22, 59, 65, 32, 30 (the “Hearing Transcript”),

at 38:10-11.

37. In the Opposition, the Debtors stated the following:

The Debtors did not have a full and fair opportunity to be heard in 

the State-Court litigation that resulted in the Receivership Orders 

being entered improvidently by the State Court. . . . [T]he Debtors 

did not have a full opportunity to conduct discovery before the first 

evidentiary hearing conducted on September 18, 2019; numerous 

motions—some of them threshold motions that should have been 

heard and ruled upon early in the case—were left unresolved. 

Procedural improprieties and irregularities abounded, in violation of 

the Debtor’s due process rights. In the first instance, NSR lacked 

standing to file the complaint derivatively, having been expelled 

from the membership in January 2019. The owners of NSR refused 

to be deposed in the case. And the Receivership Orders included

findings—drafted by the Movants—that had no basis in the 

evidence.

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Opposition, ECF No. 71, at ¶ 95.

38. That statement, however, evidences conflation of Mr. Farrell’s position with the 

Debtors’. The Debtors were the plaintiffs in the State Court, derivatively through NSR. See 

Injunction Order, at p. 1. The Debtors were the beneficiaries of the State Court’s determination 

that, “it appears Farrell has misappropriated millions of dollars from [Arista Imaging and Presgar]” 

that could be recovered for the stakeholders of the Debtors. See Injunction Order, ECF No. 17-3, 

at p. 4. The Debtors appear to have been given the opportunity to recover misappropriated funds, 

and it would seem it is in their best interest to leave Mr. Farrell to whatever appellate rights he 

may have while they follow a pathway to recovery. See generally, Injunction Order, ECF No. 17-

3, at p. 13-14.

39. NSR in its capacity as member of Arista Imaging and Daniele Mugnai in his 

capacity as a creditor of Presgar jointly filed the instant Motion to Dismiss, seeking dismissal of

the chapter 11 cases of both Debtors pursuant to section 1112(b) of the Bankruptcy Code for cause.

Motion to Dismiss, ECF No. 17, at p. 1. The joint movants assert that cause for dismissal includes 

that the chapter 11 petitions were not authorized in accordance with the terms of the Debtors’

governance documents or applicable state law, and that both cases were filed in bad faith. Id. at ¶¶ 

30-48.

II. LEGAL ANALYSIS

Pursuant to section 1112(b) of the Bankruptcy Code, “on request of a party in interest, and 

after notice and a hearing, absent unusual circumstances specifically identified by the court that 

establish that the requested conversion or dismissal is not in the best interests of creditors and the 

estate, the court shall . . . dismiss a case under this chapter, . . . if the movant establishes cause.” 

11 U.S.C. § 1112(b). Although section 1112(b)(4) provides certain examples of “cause” sufficient 

to warrant dismissal of a chapter 11 case, the list is not exhaustive, and courts have recognized that 

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lack of corporate authority to commence a case is cause for dismissal. See In re Orchard at Hansen 

Park, LLC, 347 B.R. 822, 825 (Bankr. N.D. Tex. 2006). It is clear that “a party cannot subject an 

entity to bankruptcy without authority.” In re FKF Madison Park Grp. Owner, LLC, No. 10-11867 

(KG), 2011 WL 350306, at *3 (Bankr. D. Del. Jan. 31, 2011) (citing Price v. Gurney, 324 U.S. 

100, 105-07 (1945)); In re S & R Groundview, LLC, No. 13-03098-8-RDD, 2013 WL 5525729, at 

*1 (Bankr. E.D.N.C. Oct. 4, 2013) (“A bankruptcy court cannot establish jurisdiction over a 

petitioning entity where the individual instituting the proceeding lacks authority under state law or 

the corporate governing documents.”). The Court believes the record before it indicates “cause” is 

present here on the basis that the Debtors’ chapter 11 cases were commenced improperly by 

Farrell, an ousted manager subject to a validly issued state court order that he not have any 

involvement in or control over any matter relating to either of the Debtors and who acted without 

requisite corporate authority under the governing Operating Agreement, state law, and the orders 

of the State Court. 

Each Voluntary Petition filed herein was signed by Mr. Farrell, purporting to be the 

“Managing Member” of Arista Imaging, and through that entity, Presgar. See ECF No. 1. 

Accompanying each Voluntary Petition is a form of “Written Consent of a Supermajority the 

Members,” signed by Farrell again as “Managing Member” and by Elizabeth Stetenfeld, 

individually as “member” of Arista Imaging. These filings, however, were in violation of the 

Operating Agreement, and the execution of each voluntary petition was ineffective because it was 

done by an individual who had been stripped of authority to act for or on behalf of Arista Imaging 

or Presgar. 

The State Court’s Order expressly enjoined Mr. Farrell from “having any involvement in, 

or control over, any matter relating to Presgar or Arista Imaging.” Injunction Order, at p. 13. It 

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also appointed a receiver and accorded that receiver the exclusive authority to maintain possession 

and control of the Debtors’ assets and operations. See Receivership Order at 1. As of the Petition 

Date, Farrell had no authority to act or sign on behalf of Arista Imaging or Presgar (whether as 

“Managing Member” or otherwise), to prepare the Written Consent authorizing the 

commencement of the chapter 11 cases for both Debtors, or to sign and file the Voluntary Petitions. 

The suggestion that this Court not give effect to the injunction imposed by the State Court offends 

basic notions of comity.

The Debtors take the position, inexplicably, that the Injunction Order is an unconstitutional 

restraint on the Debtors’ right to seek the protections of the Bankruptcy Code. The Court disagrees. 

The Debtors could have filed chapter 11 petitions without running afoul of the State Court’s order 

if the Receiver authorized and signed the chapter 11 petitions. See JY Creative Holdings, Inc. v. 

McHale, 2015 WL 541692 (M.D. Fla. Feb. 10, 2015) (“Accordingly, it appears that under Florida 

law, when a receiver is appointed, the receiver steps into the shoes of the board of directors and 

can act for and on behalf of the entity without first obtaining the board’s consent.”). The Debtors 

might even have been able to invoke this Court’s jurisdiction if a super-majority vote of the 

members of Arista Imaging, inclusive of NSR and exclusive of Mr. Farrell’s ownership interests,

voted to authorize somebody other than Mr. Farrell—presumably the Receiver-- to sign and file 

the petitions. However, Mr. Farrell is the one individual prohibited by the State Court from 

“having any involvement in, or control over, any matter relating to Presgar or Arista Imaging” and 

cannot therefore authorize or execute the petitions commencing these chapter 11 cases, particularly 

without receiving the consent of NSR, the party holding a membership interest large enough to 

afford it veto power over such filing.

A bankruptcy case must be dismissed where the petition was signed by a member who was 

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previously removed as a manager and therefore lacked authority to file the case. See In re H & W 

Food Mart, LLC, 461 B.R. 904, 910 (Bankr. N.D. Ga. 2011). The determination of whether a 

filing is properly authorized is determined by state law. See In re Nica Holdings, Inc., 810 F.3d 

781, 789 (11th Cir. 2015) (“In determining whether a bankruptcy filing was authorized, we look 

to state law.”); In re Fla. Men's Med. Clinic, LLC, 6:14-BK-08623-KSJ, 2014 WL 3973161, at *1 

(Bankr. M.D. Fla. Aug. 7, 2014) (quoting In re H & W Food Mart, LLC, 461 B.R. 904, 907 (Bankr. 

N.D. Ga. 2011)).

Under the law of Arista Imaging’s place of formation, Texas, the authority of a limited 

liability company to file a bankruptcy petition is generally governed by the operating agreement. 

See In re Orchard at Hansen Park, LLC, 347 B.R. 822, 826 (Bankr. N.D. Tex. 2006); TEX. BUS.

ORGS. CODE ANN. § 101.052 (providing that company agreement of a limited liability company 

will govern “(1) the relations among members, managers, and officers of the company, assignees 

of membership interests in the company, and the company itself; and (2) other internal affairs of 

the company” and the Texas Business Organizations Code will fill in only where the agreement 

has not included a particular provision). 

The Operating Agreement at issue provides in relevant part:

3.8 MATTERS REQUIRING SUPER-MAJORITY-IN-INTEREST APPROVAL.

Notwithstanding any provision herein to the contrary, neither the Board of Directors nor 

the Manager will have the authority to do any other following on behalf of the 

Company (whether for the account of the Company or of any other legal entity represented 

by the Company) without prior approval of a Super-Majority-In-Interest: . . . 

(c) Make an assignment for the benefit of creditors of the Company, file a 

voluntary petition in bankruptcy or appoint a receiver for the Company; . . . .

Operating Agreement, ECF No. 17-2, at § 3.8(c) (emphasis added).

The Operating Agreement defines a “Super-Majority-in-Interest” to mean “Members 

owning at least seventy five percent (75%) of the Outstanding Units of the Company.” Operating 

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Agreement, ECF No. 17-2, at § 1.9(w). Under the plain terms of the Operating Agreement, because 

NSR holds 42% of the outstanding membership interests in Arista Imaging – a fact that was 

determined by the State Court in the Injunction Order – NSR holds an absolute veto power over 

any activity described in Section 3.8, including the filing of a bankruptcy case. See Injunction 

Order, ECF No. 17-3, at 11-12. In conclusion, the State Court’s well-reasoned fourteen-page 

decision finds “[t]he purported expulsion ... was ineffective.” Injunction Order, ECF No. 17-3,

at p. 11. 

“[F]or the purposes of issue preclusion, (as distinguished from merger and bar) ‘final 

judgment’ includes any prior adjudication of an issue in another action that is determined to be 

sufficiently firm to be accorded conclusive effect.” Christo v. Padgett, 223 F.3d 1324, 1329 n.47 

(11th Cir. 2000). The State Court’s decision on the issue of the ineffectiveness of the purported 

expulsion of NSR from Arista Imaging was material to the matters before that court and were a 

central focus of the 7-hour evidentiary hearing. The State Court’s finding that Mr. Farrell’s 

attempted expulsion of NSR was ineffective should not and will not be reviewed by this Court in 

a quasi-appellate capacity, as the Debtors and Mr. Farrell urge. 

In a recent decision issued by the United States Bankruptcy Court for the Northern District 

of Ohio, the court there also faced with an effort by a debtor to collaterally attack an adverse state 

court decision that was not a final judgment stated the following:

This tactic [of filing a chapter 11 case and challenging a prior-entered state court 

order] appears to violate principles of comity underlying the Rooker-Feldman

doctrine, a doctrine that prohibits state court losers from filing suit in federal court 

after state court proceedings have ended, seeking redress of an injury stemming 

from an adverse state court judgment. Exxon Mobil Corp. Saudi Basic Indus. Corp., 

544 U.S. 280, 291-92, 125 S.Ct. 1517, 1526, 161 L.Ed.2d 454 (2005). Although, 

arguably, the Rooker-Feldman doctrine may not be controlling because there is no 

final judgment in the Mahoning County proceedings, the court finds that the 

principles underlying the doctrine weigh in favor of dismissal of this case . . . .

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In re California Palms, LLC, Case No. 19-42174, at p. 17 (Bankr. N.D. Ohio January 14, 

2020) (slip op.). If Mr. Farrell is unhappy with the Injunction Order, his recourse is to 

pursue his state court appellate rights, not to attempt to use Arista Imaging and Presgar to 

collaterally attack in this Court a state court decision that may well be a victory for the 

Debtors.

In their Opposition, the Debtors assert that NSR’s expulsion was effected under the terms 

of “Section 8.3 of the 2018 Operating Agreement.” Opposition, ECF No. 71, at ¶¶ 38-41. They

assert that the 2018 document titled operating agreement went into effect in December 2018 based 

on a vote of a simple majority of the Arista Imaging members. However, the 2009 Operating 

Agreement required unanimity for amendments thereto. Section 12.9 of the Operating Agreement 

expressly states that “[t]his Agreement may not be amended except by the unanimous written 

agreement of all the Members.” Operating Agreement, ECF No, 17-2, at § 12.9. Without NSR’s 

consent and the consent of the two additional members, the 2018 operating agreement is a nullity. 

Because it is apparent from the Written Consent that NSR did not consent to initiation of 

these chapter 11 cases, the Court concludes the filing of these cases was not properly authorized 

under Section 3.8 of the Operating Agreement, and jurisdiction does not lie in the Bankruptcy 

Court. See, e.g., In re Adv. Vascular Resources of Johnstown, LLC, 590 B.R. 323, 324 (Bankr. 

W.D. Pa. 2018) (filing of voluntary chapter 11 case without super majority required under 

operating agreement was ultra vires act warranting dismissal of case); In re Avalon Hotel Partners, 

LLC, 302 B.R. 377 (Bankr. D. Or. 2003) (operating agreement that provided “Major Decisions,” 

including the filing of a bankruptcy petition, required the approval of members holding “in excess 

of 75% of the Ownership Interests,” and “filing of a bankruptcy petition by [the debtor’s] manager 

without member approval [was] not authorized either by [state] law or the Operating Agreement” 

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but was ultimately ratified by required majorities of members). 

When a bankruptcy petition is filed without the requisite authority, dismissal is mandated. 

See, e.g., In re Al-Wyn Food Dist., Inc., 8 B.R. 42, 43 (Bankr. M.D. Fla. 1980) (dismissing case 

where debtor’s president lacked corporate authority to file under the governing documents and 

state statute); In re Bel-Aire Inv., Inc., 97 B.R. 88, 90 (Bankr. M.D. Fla. 1989) (dismissing 

bankruptcy case filed by company president due to lack of authority); In re Am. Int’l Indus., Inc., 

10 B.R. 695, 696-97 (Bankr. S.D. Fla. 1981) (dismissing case filed by corporate president without 

specific resolution of board of directors authorizing such action as required by state statute); In re 

Minor Emergency Ctr., Inc., 45 B.R. 310, 311-12 (Bankr. S.D. Fla. 1985) (dismissing case filed 

without the requisite authority provided in the governing documents). Because these chapter 11 

cases were filed without the appropriate Super-Majority-In-Interest approval of the filings, by a 

manager without authority to act for the Debtors, dismissal is warranted. 

The Court defers ruling on the issue of whether the Debtors’ bankruptcy petitions, filed 

by an unauthorized representative, were filed in bad faith. Although the joint movants contend 

these cases were filed in bad faith because Farrell commenced them in an effort to use this Court 

as a quasi-appellate forum for review and to prevent the Receiver from gaining access to the 

financial records and assets, the Court believes it need not reach those issues, having found 

dismissal is appropriate for the unauthorized filing of the petitions. Thus, it is

ORDERED AND ADJUDGED that the Joint Motion of NSR Imaging LLC and Daniele 

Mugnai to Dismiss Chapter 11 Case for Lack of Authority to File and for Bad Faith Pursuant to 

11 U.S.C. § 1112(b) [ECF No. 17] is GRANTED, and the chapter 11 petitions of Arista Imaging 

of North Miami, LLC and Presgar Imaging of CMI North, LLC are DISMISSED. 

# # #

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Submitted by:

John J. Monaghan, Esq.

HOLLAND & KNIGHT LLP

10 St. James Avenue

Boston, Massachusetts 02116

Telephone: (617) 523-2700

Facsimile: (617) 523-6850

Email: bos-bankruptcy@hklaw.com

- and -

Jose A. Casal, Esq.

HOLLAND & KNIGHT LLP

701 Brickell Avenue, 33rd Floor

Miami, Florida 33131

Telephone: (305) 374-8500

Facsimile: (305) 789-7799

E-mail: jose.casal@hklaw.com

Attorney Casal is directed to immediately serve a copy of this order to all interested parties listed 

on the service list and shall thereupon file a certificate of service with the Court.

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