Free Motion for Sanctions - District Court of Delaware - Delaware

Case 1:08-cv-00258-JJF

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ) ) VII HOLDINGS COMPANY ) ) Involuntary Debtor. ) ____________________________________) ) ARA ERESIAN, JR., ) Appellant ) v. ) ) CAMBRIDGE PROPERTIES LLC, ) SOUTHBRIDGE SAVINGS BANK ) ) Appellees ) ) In re:

Bankr. Case No. 06-10935 (BLS) Bankr. Appeal No. 08-16

Civil Action No. 08-258-JJF

MOTION OF CAMBRIDGE PROPERTIES, LLC AND SOUTHBRIDGE SAVINGS BANK FOR SANCTIONS UNDER FEDERAL RULE OF CIVIL PROCEDURE 11(c)

Cambridge Properties, LLC and Southbridge Savings Bank (collectively, the "Appellees") hereby move this Court pursuant to Rule 11 of the Federal Rules of Civil Procedure ("Rule 11") for an order imposing sanctions on Ara Eresian, Jr. and Zu Zu Realty Trust (collectively, "Eresian").1 In support of this motion, the Appellees state as follows: 1. On April 3, 2008, Eresian filed a notice of appeal appealing the Bankruptcy

Court's "Order Denying Motion to Reopen Chapter 7 Bankruptcy Case" ("Denial Order"). 2. Eresian is neither a creditor nor equity holder of the involuntary debtor (the

"Purported Debtor"). Eresian's motion to reopen, like the involuntary petition filed against the Purported Debtor which was dismissed as a bad faith filing, was intended for the sole purpose of

1

As certified in Exhibit A hereto, a copy of this motion was served on Mr. Eresian more than 20 days ago.

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delaying and frustrating the Appellees' rights at state law. The appeal of the Denial Order is merely a continuation of Eresian's efforts to use the legal process for an improper purpose. Eresian has never stated any legitimate basis for either the motion to reopen or his appeal of the order denying that motion. 3. Eresian's appeal is untimely by more than 70 days. Even a cursory review of the

procedural rules would have revealed that the notice of appeal should not have been filed. Under Bankruptcy Rule 8002(a), Eresian had 10 days from entry of the Denial Order in which to file the notice of appeal. Alternatively, Eresian was required to move within the time limits set forth in Bankruptcy Rule 8002(c) for an extension of the time to file a notice of appeal. Eresian did neither. 4. By letter dated April 10, 2008, which was a follow up to an earlier telephone

discussion, Mr. Eresian was warned that the appeal was untimely and the untimeliness was incurable. Despite ample opportunity to withdraw the notice of appeal, knowing the appeal could not be prosecuted, Mr. Eresian failed to withdraw the appeal. This is not a simple case of ignorance of the rules by a pro se party.2 As was discussed at some length in the filings with the Bankruptcy Court in the Chapter 7 case, both in seeking dismissal of the involuntary petition by a Mr. Wilson, an individual who by no coincidence has some history with Mr. Eresian, and in seeking denial of the motion to reopen, Mr. Eresian is not a stranger to the legal system,

2

It is black letter law a trust may not be represented pro se through its trustee or any non-lawyer. Van De Berg v. Commissioner, 175 Fed. Appx. 539 (3d Cir. 2006) ("a non-lawyer trustee... may not represent a trust pro se before this Court."); see also Rowland v. California Men's Colony, 506 U.S. 194, 201-02 (1993) ("It has been the law for the better part of two centuries... that a corporation may appear in the federal courts only through licensed counsel."). Because Mr. Eresian, a non-lawyer, filed the Motion to Reopen, purporting to represent his Zu Zu Realty Trust pro se before this Court, the Motion to Reopen must be denied. The issue of Mr. Eresian's representation of Zu Zu Realty Trust was raised before the Bankruptcy Court. The Bankruptcy Judge however deferred on the issue given that the motion to reopen was denied from the bench for other reasons..

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particularly bankruptcy matters, and intentional delays and protracted litigation appear to be his modus operandi. 5. Federal Rule of Civil Procedure 11(b) provides that, by presenting a pleading or

other paper to the court, an attorney or unrepresented party certifies, among other things, that to the best of his knowledge, information, belief, formed after an inquiry reasonable under the circumstances, it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needlessly increase the cost of litigation. Eresian's filing of the notice of appeal despite the clear dictates of Bankruptcy Rule 8002(a) and (c) as well as the fact that Eresian's filings do not serve a legitimate purpose violate that certification. At a minimum, Mr. Eresian, a sophisticated litigant in state court and bankruptcy matters, including bankruptcy appeals, was required to make a reasonable review of the applicable laws and procedural rules before doing anything. Reasonable inquiry into the rules governing appeals would have revealed that after January 21, 2008, Eresian could not bring an appeal without first seeking an extension of time within the time limits set forth in Bankruptcy Rule 8002(c). For the reasons stated in the Appellee's motion to dismiss the appeal, which is incorporated by reference herein, Eresian's appeal was filed for an improper purpose. Under the circumstances, sanctions are warranted.

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Conclusion The Appellees respectfully request that their motion for sanctions under Rule 11(c) be granted, and that this Court order Mr. Eresian and Zu Zu Realty Trust, jointly and severally, to reimburse Appellees for all legal fees incurred by Appellees in responding to Eresian's notice of appeal and any other filings in this appeal. Dated: June 10, 2008 Wilmington, Delaware Respectfully submitted, PEPPER HAMILTON LLP

/s/ David M. Fournier David M. Fournier (DE No. 2812) Hercules Plaza, Suite 5100 1313 N. Market Street P.O. Box 1709 Wilmington, Delaware 19899-1709 Telephone: (302) 777-6500 Facsimile: (302) 421-8390 - and James T. Hargrove, Esq. (BBO # 550975) Peter D. Bilowz, Esq. (BBO # 651383) GOULSTON & STORRS, P.C. 400 Atlantic Avenue Boston, Massachusetts 02110-3333 Telephone: (617) 482-1776 Facsimile: (617) 574-7621 Counsel for Cambridge Properties, LLC, Southbridge Savings Bank

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EXHIBIT A

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE In re: ) ) VII HOLDINGS COMPANY ) ) Involuntary Debtor. ) ____________________________________) ) ARA ERESIAN, JR., ) Appellant ) v. ) ) CAMBRIDGE PROPERTIES LLC, ) SOUTHBRIDGE SAVINGS BANK ) ) Appellees ) )

Bankr. Case No. 06-10935 (BLS) Bankr. Appeal No. 08-16

Civil Action No. 08-258-JJF

ORDER IMPOSING SANCTIONS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 11(c) UPON CONSIDERATION of the Motion Of Cambridge Properties, LLC And Southbridge Savings Bank ("Appellees") For Sanctions Under Federal Rule Of Civil Procedure 11(c) (the "Motion"), adequate notice of the same having been provided and the Court finding that good cause exists to grant the relief requested therein, it is hereby ORDERED, that the Motion is GRANTED; and it is further ORDERED that sanctions are hereby imposed against Ara Esesian, Jr. and ZuZu Realty Trust, jointly and severally, pursuant to Federal Rule of Civil Procedure 11(c), in an amount equal to (i) all attorneys' fees and expenses and all mediation costs incurred by Appellees related to the above-captioned appeal, and (ii) all attorneys' fees and expenses incurred or to be incurred by Appellees in connection with the Motion and Certification (collectively, the "Sanctions

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Award"), in favor of Appellees. Appellees shall file a certification of such fees, expenses and costs (the "Certification") within ten days following entry of this Order, together with a proposed form of judgment. Any opposition to the Certification must be filed with the Court within ten days after the date of filing of the Certification. In the absence of a timely-filed opposition to the Certification, the Court shall enter judgment in favor of Southbridge Savings Bank and Cambridge Properties, LLC jointly, and against Ara Eresian, Jr. and ZuZu Realty Trust jointly and severally, in the amount reflected in the Certification.

Dated: ____________, 2008

_______________________________ Joseph J. Farnan, Jr. United States District Judge

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Certificate of Service I, David M. Fournier, hereby certify that on the 10th day of June, 2008, I caused the foregoing Motion of Cambridge Properties, LLC and Southbridge Savings Bank for Sanctions under Federal Rule of Civil Procedure 11(c) to be served upon the following parties by first-class mail, postage prepaid, or in the manner indicated
Ara Eresian, Jr. Trustee of Zu Zu Realty Trust P.O. Box 449 Shrewsbury, MA 01545 Via First Class Mail and Priority Mail VII Holdings Company 2711 Centerville Road, Suite 400 Wilmington, DE 19805 Via First Class Mail John Wilson 196 West River Street Orange, MA 01364 Via First Class Mail

David Buchbinder, Esquire Office of the United States Trustee 844 King Street Room 2207 Wilmington, DE 19899-0035 Via First Class Mail

/s/ David M. Fournier David M. Fournier

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