Court Opinion

ID: 52894
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:20:41+00
Date Added: 2024-06-11T09:34:21.661045
License: Public Domain

[DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT              FILED
                        ________________________   U.S. COURT OF APPEALS
                                                     ELEVENTH CIRCUIT
                                                         June 29, 2007
                              No. 06-14003           THOMAS K. KAHN
                        ________________________         CLERK

                            D. C. Docket Nos.
                  06-20447-CV-CMA & 04-41581 BKC-RA

In Re: ROSACOMETTA, S.R.L.,

Debtor,

__________________________________________________________________

EMPIRE MARBLE AND GRANITE, INC.,
SAL HASBUN,

                                                               Plaintiffs,

STUART R. KALB, Trustee and Assignee,

                                                      Plaintiff-Appellant,

                                  versus

ANTONIO ADINOLFI, curator in the liquidation of
Rosacometta, S.R.L.,

                                                    Defendant-Appellee.
                              ________________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            _________________________

                                      (June 29, 2007)

Before CARNES, WILSON, Circuit Judges and WALTER,* District Judge.

PER CURIAM:

       Stuart Kalb appeals the bankruptcy court’s order granting relief to the

foreign debtor, Rosacometta. The bankruptcy court order enjoined Kalb and

Empire Marble from collecting on a writ of garnishment that Kalb had obtained in

state court against a debtor of Rosacometta, Gem Paver. Kalb argues that the

bankruptcy court acted outside its jurisdiction in ordering the transfer of funds to

the Italian bankruptcy trustee, Antonio Adinolfi. He further argues that the

bankruptcy court erred in granting comity to a foreign proceeding while failing to

give full faith and credit to a state court decision.

        Empire Marble filed a state court action against Rosacometta in January

2001. Rosacometta initially defended the suit, but failed to continue to do so after

entering Italian bankruptcy proceedings in January 2003. Empire Marble, having

received no notice of the Italian bankruptcy, obtained a default judgment against

       * Honorable Donald E. Walter, United States District Judge for the Western District of
Louisiana, sitting by designation.

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Rosacometta on March 27, 2003 for $1.38 million. Rosacometta reached a $1.7

million settlement in a separate state action with debtor Gem Paver. Kalb, who

purchased the Empire Marble judgment, served a writ of garnishment on Gem

Paver although Kalb was aware of the Italian bankruptcy proceedings. Adinolfi,

Rosacometta’s Italian bankruptcy trustee, filed a motion in state court to have the

writ dissolved, which was denied. Adinolfi then filed an ancillary bankruptcy

proceeding in the United States Bankruptcy Court and asked the court to enjoin

Empire Marble and Kalb from enforcing Empire’s claim against Rosacometta

except in the Italian Bankruptcy court, pursuant to 11 U.S.C. § 304. In ruling on

the parties’ cross-motions for summary judgment, the bankruptcy court granted the

injunction, and ordered the settlement funds transferred to the Italian trustee for

administration in the Italian bankruptcy proceedings.

       We review the bankruptcy court’s grant of summary judgment de novo. In

re Club Associates, 951 F.2d 1223, 1229 (11th Cir. 1992). Section 304 of the

Bankruptcy Code requires an exercise of judicial discretion. In re Treco, 240 F.3d
148, 154-55 (2d Cir. 2001). Therefore, the bankruptcy court’s analysis of the §

304 factors is reviewed for an abuse of discretion. Id. at 155.

      The bankruptcy court did not abuse its discretion in weighing the § 304(c)

factors and granting § 304(b) relief. Before exercising the § 304(b) relief, the

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bankruptcy court was required by the Bankruptcy Code to consider § 304(c)

factors, including the (1) just treatment of all claim holders in the estate; (2)

protection of United States claim holders against prejudice and inconvenience in

foreign bankruptcy proceeding; (3) prevention of preferential or fraudulent

dispositions of the estate; (4) distribution of the estate substantially in accordance

with United States bankruptcy code; and (5) comity. While comity is the ultimate

consideration, it does not automatically override the other statutory factors. Treco,
240 F.3d at 156. Comity should not be withheld unless it is against the interests of

the United States. Cunard S.S. Co. Ltd. v. Salen Reefer Services AB, 773 F.2d 452,

457 (2d Cir. 1985).

      Kalb does not argue that the comity standards are not met; instead, he argues

that the prejudicial effect to his interest outweighs its application. Even assuming

that prejudice would occur, we cannot find that the bankruptcy court abused its

discretion. Prejudice is just one of five factors for the court to consider, and not

even the “ultimate” factor. See Treco, 240 F.3d at 156. In this case, the other

factors, including comity, weigh in favor of granting Rosacometta relief.

Therefore, given the unique facts of this case and the equities involved, we can find

no abuse of discretion.

      Furthermore, under § 304(b), the bankruptcy court is given broad powers to

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grant relief to a foreign debtor who is in bankruptcy proceedings in a foreign

jurisdiction. The bankruptcy court is permitted to enjoin the commencement or

continuation of collection actions against a foreign debtor involved in a foreign

bankruptcy proceeding. 11 U.S.C. § 304(b)(1). Section 304(b)(2) permits the turn

over of property of a foreign debtor’s estate to a foreign representative, while §

304(b)(3) allows the court to order “other appropriate relief.” Given this broad

grant of power, the bankruptcy court was within its jurisdiction in issuing the order

to enjoin the collection action by domestic creditors and turn over the funds to the

foreign representative.

      After reviewing the parties briefs, and having had the benefit of oral

argument, we find no reversible error in the bankruptcy court’s order. The

bankruptcy court acted within its discretion in weighing the § 304(c) factors, and

fashioned a remedy that was within its power under § 304(b). Therefore, we affirm

the district court’s holding that the bankruptcy court did not abuse its discretion.

AFFIRMED.

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