In Re: Bruce J. Paswall ( 2023 )

21-1989-bk
In Re: Bruce J. Paswall
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
23rd day of January, two thousand twenty-three.
Present:
DEBRA ANN LIVINGSTON,
Chief Judge,
BARRINGTON D. PARKER,
ALISON J. NATHAN,
Circuit Judges.
_____________________________________
IN RE: BRUCE J. PASWALL,
Debtor.
_____________________________________
GRANT PASWALL, REID PASWALL,
Appellants,
v. 21-1989-bk
MARK S. TULIS, as Chapter 7 Trustee of the Estate of
Bruce J. Paswall,
Appellee.
_____________________________________
For Appellants: LOWELL B. DAVIS, Carle Place, NY.
For Appellee: LON J. SEIDMAN (Salvatore LaMonica, on the brief),
LaMonica Herbst & Maniscalco, LLP, Wantagh, NY.
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Appeal from a judgment of the U.S. District Court for the Southern District of New York
(Karas, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Appellants Grant Paswall and Reid Paswall appeal from a judgment of the district court
affirming the bankruptcy court’s grant of default judgment to Appellee Mark Tulis, which avoided
and set aside the deed by which Bruce Paswall transferred his interest in a home located at 13
Logging Road, Katonah, New York, to Appellants, and vacating the stay of the sale of the home.
For the reasons set forth below, we affirm the judgment of the district court. 1 We assume the
parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on
appeal.
* * *
This Court conducts a plenary review of orders of the district courts in their capacity as
appellate courts in bankruptcy cases. In re Duplan Corp., 212 F.3d 144, 151 (2d Cir. 2000).
The Court reviews the bankruptcy court’s conclusions of law de novo and its factual findings for
1
Appellee argues that the appeal is constitutionally moot. A case becomes moot “only when it
is impossible for a court to grant any effectual relief whatever to the prevailing party.” Chafin v.
Chafin, 568 U.S. 165, 172 (2013). Here, Appellants argue that they are entitled to effective relief
in the form of the proceeds of the sale of the home. Even if that argument fails on the merits, the
appeal is nevertheless not constitutionally moot when such relief may be available. See Trinity
83 Dev., LLC v. ColFin Midwest Funding, LLC, 917 F.3d 599, 601–02 (7th Cir. 2019). Further,
we decline to address Appellee’s statutory mootness argument because we have found that “the
jurisdictional issues are complex and the substance of the claim is plainly without merit.” United
States ex rel. Hanks v. United States, 961 F.3d 131, 137 (2d Cir. 2020) (citation omitted).
Similarly, we are not required to address equitable mootness before considering the merits. See
In re Metromedia Fiber Network, Inc., 416 F.3d 136, 144 (2d Cir. 2005).
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clear error. Id. An entry of a default judgment is reviewed for abuse of discretion. Enron Oil
Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993).
We leave the decision whether to set aside a default to the sound discretion of the district
court because “it is in the best position to assess the individual circumstances of a given case and
to evaluate the credibility and good faith of the parties.” Id. A court may set aside the entry of
default for “good cause.” Fed. R. Civ. P. 55(c). In deciding whether to relieve a party from a
default judgment, courts consider “(1) whether the default was willful; (2) whether setting aside
the default would prejudice the adversary; and (3) whether a meritorious defense is presented.”
Enron Oil Corp., 10 F.3d at 96.
The bankruptcy court did not abuse its discretion in entering default judgment, nor did the
district court err in declining to set aside the default. Appellants have forfeited any argument that
their default was not willful by failing to address the issue in their opening brief. See Norton v.
Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998) (“Issues not sufficiently argued in the briefs are
considered waived and normally will not be addressed on appeal.”). Moreover, Appellants have
not disputed that they were served with the adversary complaint or that they did not timely respond
to the complaint.
In addition, Appellants have not presented a meritorious defense. Appellants primarily
argue that Appellee’s complaint failed to plead that Appellants were aware that the conveyance
was fraudulent. However, even if that were true, a “creditor may have a fraudulent conveyance
set aside as against any person except a purchaser for fair consideration without knowledge of the
fraud at the time of the purchase, or one who has derived title immediately or mediately from such
a purchaser.” Liebowitz v. Arrow Roofing Co., 259 N.Y. 391, 395 (1932). Appellants did not
present any evidence that Bruce Paswall received fair consideration, and the trustee asserted that
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Brenda Paswall was aware that the transfer was intended to shield the home from a discrimination
action judgment. The bankruptcy court’s factual findings regarding the fraudulent conveyance
are not clearly erroneous. Appellants also cannot rely on an affidavit that was properly stricken
by this Court’s motion order. 2d Cir. 21-1989, doc. 147 (Mar. 1, 2022 Motion Order); see also
Fed. R. App. P. 10(a)(1) (stating that the record on appeal consists of “the original papers and
exhibits filed in the district court”); Int’l Bus. Machs. Corp. v. Edelstein, 526 F.2d 37, 45 (2d Cir.
1975) (“[A]bsent extraordinary circumstances, federal appellate courts will not consider rulings or
evidence which are not part of the trial record.”). Therefore, Appellants have failed to
demonstrate good cause for relief from default judgment.
* * *
We have considered Appellants’ remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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