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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re:
Chapter 7
Michael A. Wolf,
Case No. 14 B 27066
Debtor
Hon. Deborah L. Thorne
N. Neville Reid, not individually but solely in his
capacity as Chapter 7 Trustee for the bankruptcy
estate of Michael A. Wolf,
Plaintiff
vs.
Adversary No. 16-00066
Michael Wolf, Scott Wolf, Peter Wolf, Zig-Zag,
Corp., ZZC, Inc. (IL), ZZC, Inc. (DE), MMQB,
Inc., Hound Ventures, Inc., SHBM, Inc., Ma Cherie
LLC, Melissa Skolnick, Four Legs, Inc., and all
other dummy or sham corporations created or used
by, or for the benefit of the individual defendants,
Defendants.
NOTICE OF MOTION
PLEASE TAKE NOTICE that on May 18, 2016, at 9:30 a.m., we shall appear before the
Honorable Deborah L. Thorne, Courtroom 613, Dirksen Federal Building, 219 South Dearborn
Street, Chicago, Illinois, or anyone sitting in her stead, to present the attached MOTION FOR
RECONSIDERATION OF ORDER REGARDING DEFENDANTS MELISSA
SKOLNICK AND FOUR LEGS, INC.’S MOTION TO DISMISS FOR MISJOINDER, at
which time and place you may appear if you so desire.
Respectfully submitted,
MELISSA SKOLNICK AND FOUR LEGS,
INC.
Dated: May 12, 2016
{11614-001 MOT A0438461.DOCX 3}
By:
/s/ Gordon E. Gouveia
One of their attorneys
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Robert M. Fishman (3124316)
Gordon E. Gouveia (6282986)
Christina M. Sanfelippo (6321440)
Shaw Fishman Glantz & Towbin LLC
321 North Clark Street, Suite 800
Chicago, IL 60654
Phone: (312) 541-0151
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CERTIFICATE OF SERVICE
Gordon E. Gouveia, the undersigned attorney, hereby certifies that on May 12, 2016, he
caused the foregoing MOTION FOR RECONSIDERATION OF ORDER REGARDING
DEFENDANTS MELISSA SKOLNICK AND FOUR LEGS, INC.’S MOTION TO
DISMISS FOR MISJOINDER to be served upon all parties requesting notice via CM/ECF.
/s/ Gordon E. Gouveia
Mailing Information for Case 16-00066
Electronic Mail Notice List
The following is the list of parties who are currently on the list to receive email notice/service
for this case.
Daniel P. Dawson [email protected], [email protected]
Maria A Diakoumakis [email protected], [email protected]
Robert M Fishman [email protected], [email protected]
Gordon E. Gouveia [email protected], [email protected]
Christina Sanfelippo [email protected], [email protected]
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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re:
Chapter 7
Michael A. Wolf,
Case No. 14 B 27066
Debtor
N. Neville Reid, not individually but solely in his
capacity as Chapter 7 Trustee for the bankruptcy
estate of Michael A. Wolf,
Plaintiff
vs.
Hon. Deborah Thorne
Adversary No. 16-00066
Michael Wolf, Scott Wolf, Peter Wolf, Zig-Zag,
Corp., ZZC, Inc. (IL), ZZC, Inc. (DE), MMQB,
Inc., Hound Ventures, Inc., SHBM, Inc., Ma Cherie
LLC, Melissa Skolnick, Four Legs, Inc., and all
other dummy or sham corporations created or used
by, or for the benefit of the individual defendants,
Defendants.
MOTION FOR RECONSIDERATION OF ORDER REGARDING
DEFENDANTS MELISSA SKOLNICK AND FOUR LEGS, INC.’S
MOTION TO DISMISS FOR MISJOINDER
Defendants Melissa Skolnick (“Skolnick”) and Four Legs, Inc. (“Four Legs” and together
with Skolnick, “Defendants”), through their undersigned counsel, hereby move this Court (the
“Motion”),1 pursuant to Rule 9023 of the Federal Rules of Bankruptcy Procedure, for
reconsideration of the Order dated April 29, 2016 [Doc. 79] (the “Order”) denying in part
Defendants’ motion to dismiss for misjoinder (the “Dismissal Motion”). In support of the
Motion, Defendants state as follows:
Any capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the
Complaint [Doc. 1] (the “Complaint”).
1
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Introduction
1.
Defendants respectfully request that the Court reconsider and modify the Order to
provide for dismissal of Skolnick and Four Legs without prejudice on all counts of the
Complaint. In denying Defendants’ Dismissal Motion in part as to the Plaintiff’s turnover
actions,2 the Court appears to have mistakenly relied on a non-existent allegation that Skolnick
and/or Four Legs are holding Monday Morning Quarterback business income as a common
question of law and fact that supports joinder. Accordingly, the Court also appears to have
incorrectly assumed that Skolnick and Four Legs are potentially jointly liable with other
defendants who are allegedly holding property of the estate.
2.
Unlike other defendants (namely the entities controlled by Scott Wolf including
MMQB, Hound Ventures and SHBM), the Plaintiff does not allege that Skolnick and Four Legs
are nominal owners of the Monday Morning Quarterback business or that they are holding
property of the estate. Instead, the Plaintiff alleges that Skolnick and Four Legs received
fraudulent transfers of income generated by the Monday Morning Quarterback business from the
allegedly nominal owners, MMQB and SHBM. Indeed, the Court dismissed the Plaintiff’s
turnover actions against Peter Wolf based on this very distinction and the Plaintiff’s failure to
allege that Peter Wolf is holding property of the estate.3 As such, there is neither a common
issue of fact or law between the allegedly nominal owners of the Monday Morning Quarterback
business and Skolnick/Four Legs, nor potential joint liability between these parties to warrant
joinder in the Plaintiff’s turnover actions. For these reasons, as discussed more fully below, the
2
The Court collectively referred to Counts I-IV as the “turnover actions” and the same meaning is
intended here.
3
The Court’s rationale for dismissing Peter Wolf from the turnover actions applies with equal force to
Defendants Skolnick and Four Legs. If necessary, Defendants will file a Rule 12(b)(6) motion to dismiss.
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Court should modify the Order to provide for dismissal of Skolnick and Four Legs without
prejudice on all counts of the Complaint.
Background
3.
In the Background section of the Order, the Court noted that “Plaintiff alleges that
Debtor transferred the business to entities controlled by his son, Scott Wolf, in order to hinder,
delay, or defraud his creditors, namely his estranged wife.” Id. at 1; see also Complaint at ¶ 8.
Indeed, the Plaintiff alleges in the Complaint that MMQB, Hound Ventures and SHBM were
sham entities in which “in which Michael Wolf and/or his sons have placed nominal ownership
of the Monday Morning Quarterback business.” Id. at ¶¶ 72, 79, 97.
4.
In contrast to the Plaintiff’s allegations regarding these alleged nominal owners of
the Monday Morning Quarterback business, the Plaintiff alleges that Four Legs is a “sham entity
used by Michael Wolf and/or his sons to transfer income from the Monday Morning
Quarterback business to Scott Wolf’s girlfriend, Melissa Skolnick.” Id. at ¶ 106 (emphasis
added). The Plaintiff does not allege that Four Legs was a nominal owner of the Monday
Morning Quarterback business. Moreover, the Plaintiff acknowledges that the alleged transfers
to Four Legs were made on account of invoices and services. Id. at ¶ 110-112.4
5.
Similar to his allegations regarding alleged transfers to Skolnick and Four Legs,
the Plaintiff alleges that income generated by the Monday Morning Quarterback business was
improperly transferred to Peter Wolf. See Complaint at ¶¶ 36, 38-40, 51, 80-81 (complaining
about salary that Peter Wolf allegedly received from Hound Ventures, one of the allegedly
nominal entities).
4
While the Plaintiff alleges that Four Legs is a “sham entity” (whatever that means), he also alleges that
Four Legs is a Delaware corporation. See Complaint at ¶ 105. The Court should not attribute any
significance to the Plaintiff’s conclusory and internally inconsistent labeling of Four Legs as a sham
entity. Critically, Four Legs is not alleged to be a nominal owner of the Monday Morning Quarterback
business and thus not the proper target of the Plaintiff’s turnover actions.
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Based on the Trustee’s failure to allege that Peter Wolf is holding property of the
estate (i.e., Monday Morning Quarterback business income), and notwithstanding the Plaintiff’s
allegations that Peter Wolf received fraudulent transfers of such income, the Court dismissed the
Plaintiff’s turnover actions against Peter Wolf. See Order at 4. In doing so, the Court implicitly
recognized an important distinction between (i) recovery of the actual assets of the Monday
Morning Quarterback business sought through the turnover actions, and (ii) recovery of
previously transferred assets of the Monday Morning Quarterback business which could only be
obtained through fraudulent transfer actions – all assuming the Plaintiff can first establish that
the alleged nominal owners of the Monday Morning Quarterback business are alter egos of the
Debtor.
7.
In the Order, the Court granted Defendants’ Dismissal Motion as to the Plaintiff’s
fraudulent transfer claims, but denied the Dismissal Motion with respect to the Plaintiff’s
turnover actions. The Court reasoned as follows:
But, if the [Monday Morning Quarterback] business income is found to be property of the
estate, Melissa is appropriately joined in the complaint concerning the turnover actions.
There is a common question of law and fact (is she holding business income through her
entity’s bank account) and she is potentially jointly liable with any other defendants
holding property of the estate.
Id. at 9.
8.
As noted above, the Plaintiff does not allege that Four Legs or Skolnick are
holding Monday Morning Quarterback business income. The Plaintiff merely alleges that Four
Legs and Skolnick received fraudulent transfers of the Monday Morning Quarterback business
income. Complaint at ¶ 106. Accordingly, there is no common question of law and fact as
between alleged transferees Four Legs and Skolnick, on one hand, and the alleged nominal
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business owners/transferors, on the other hand.5 Furthermore, in the absence of express factual
allegations to support joint liability for the turnover actions, Defendants Four Legs and Skolnick
are not, and cannot be, potentially jointly liable with other defendants who are allegedly holding
property of the estate subject to the turnover theory.
Relief Requested and Basis for Relief
9.
Defendants Four Legs and Skolnick respectfully request that the Court reconsider
and modify the Order to provide for dismissal of Four Legs and Skolnick without prejudice on
all counts.
10.
Rule 9023 incorporates, in part, Rule 59 of the Federal Rule of Civil Procedure,
which provides as follows:
(a) (1) The court may, on motion, grant a new trial on all or some
of the issues—and to any party—as follows:
...
(B) after a nonjury trial, for any reason for which a
rehearing has heretofore been granted in a suit in equity in federal
court.
(2) Further Action After a Nonjury Trial. After a nonjury trial,
the court may, on motion for a new trial, open the judgment if one
has been entered, take additional testimony, amend findings of fact
and conclusions of law or make new ones, and direct the entry of a
new judgment.
Fed. R. Civ. P. 59(a). A motion under Rule 59 should be granted “if there exists a manifest error
of law or fact, so as to enable the court to correct its own errors and thus avoid unnecessary
appellate procedures.” Gasunas v. Yotis (In re Yotis), No. 14-ap-321, 2014 WL 3945927, at *2
(Bankr. N.D. Ill. Aug. 12, 2014) (internal quotations omitted).
11.
The Court’s rationale for denying that portion of the Dismissal Motion respecting
misjoinder as to the turnover actions is based on a manifest error of fact and law. As described
5
The Plaintiff did not identify any common factual or legal issues to support joinder in his response to the
Dismissal Motion.
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above, the Plaintiff does not allege that Four Legs and Skolnick are holding Monday Morning
Quarterback business income. The Plaintiff merely alleges that Four Legs and Skolnick received
fraudulent transfers of the Monday Morning Quarterback business income. As such, the Court
relied on a fact that is not even alleged by the Trustee to identify a common question of fact and
law. In fact, based on the allegations of the Complaint, there is no common question of law and
fact as between alleged transferees Four Legs and Skolnick and the alleged nominal business
owners/transferors to support joinder in the turnover actions. If the allegations in the Complaint
warrant joinder of Defendants’ in the Plaintiff’s turnover actions, the Plaintiff could theoretically
join any party who received payment from the alleged nominal business owners, including all
former employees, vendors and various other third parties. And there certainly would be no
reason to distinguish Defendants from Peter Wolf, who has already been dismissed from the
Plaintiff’s turnover actions for essentially the same reason.
12.
Furthermore, because Four Legs and Skolnick are not even alleged to be holding
property of the estate, they are not potentially jointly liable with other defendants who are being
sued for turnover based on such an allegation. Any liability that Four Legs and Skolnick might
have to the estate on account of potential fraudulent transfer claims exists separate and apart
from the Plaintiff’s turnover actions.6
13.
Binding Four Legs and Skolnick to this adversary proceeding under a flawed
turnover theory adds nothing to the relief sought by the Plaintiff, but it would impose substantial
costs and hardships on Four Legs and Skolnick by subjecting them to multiple suits, including
the instant action which involves a litany of unrelated claims, separate and distinct transactions,
unrelated witnesses and substantial additional attorneys’ fees and expenses. In contrast, strictly
construing the commonality requirement of Rule 20 and dismissing Defendants for the reasons
6
Of course, Four Legs and Skolnick deny any such liability.
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set forth herein and in the Dismissal Motion is consistent with the principle that enforcement of
Rule 20 “promotes one of the goals of the judicial system, which is to ensure fundamental
fairness to all parties.” Intercon Research Associates, Ltd. v. Dresser Industries, Inc., 696 F.2d
53, 57-58 (7th Cir. 1982).
WHEREFORE, Defendants respectfully request that this Court enter an order granting
the relief requested in this Motion by modifying the Order to provide for dismissal of Skolnick
and Four Legs without prejudice on all counts of the Complaint, and granting such other or
further relief as the Court deems appropriate under the circumstances.
Respectfully submitted,
MELISSA SKOLNICK AND FOUR LEGS,
INC.
Dated: May 12, 2016
By:
Robert M. Fishman (3124316)
Gordon E. Gouveia (6282986)
Christina M. Sanfelippo (6321440)
Shaw Fishman Glantz & Towbin LLC
321 North Clark Street, Suite 800
Chicago, IL 60654
Phone: (312) 541-0151
{11614-001 MOT A0438461.DOCX 3}
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/s/ Gordon E. Gouveia
One of their attorneys