Staff Management Solutions, LLC et al v. Feltman et al

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------------------------------------------x
In re:
CORPORATE RESOURCE SERVICES, INC., et al.,1
Debtors.
-----------------------------------------------------------------------x
NOT FOR PUBLICATION
Chapter 11
Case No. 15-12329 (MG)
STAFF MANAGEMENT SOLUTIONS, LLC and
PEOPLESCOUT MSP, LLC,
Plaintiffs,
Adv. Proc. No. 19-01371 (MG)
v.
JAMES S. FELTMAN, as Chapter 11 Trustee of the
Estate of Corporate Resource Services, Inc., et al.,
WELLS FARGO BANK, N.A., and
NOOR STAFFING GROUP, LLC,
Defendants.
-----------------------------------------------------------------------x
MEMORANDUM OPINION AND ORDER (I) GRANTING WELLS FARGO BANK N.A.’S
MOTION TO DISMISS AND (II) STAYING THE ADVERSARY PROCEEDING AGAINST
THE CHAPTER 11 TRUSTEE AND NOOR STAFFING GROUP, LLC
A P P E A R A N C E S:
Togut, Segal & Segal LLP
Attorneys for James S. Feltman, Not Individually
But Solely in His Capacity as Chapter 11 Trustee of
the Estate of Debtors Corporate Resource Services, Inc., et al.
One Penn Plaza, Suite 3335
New York, New York 10119
By: 	Neil Berger, Esq.
Patrick Marecki, Esq.
1 	The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax
identification number, are: (1) Corporate Resource Services, Inc. (1965); (2) Accountabilities, Inc. (5619); (3)
Corporate Resource Development, Inc. (1966); (4) Diamond Staffing Services, Inc. (7952); (5) Insurance Overload
Services, Inc. (9798); (6) Integrated Consulting Services, Inc. (2385); (7) The CRS Group, Inc. (1458); and (8) TS
Staffing Services, Inc. (8647).
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 1 of 25

2
Otterbourg P.C.
Attorneys for Wells Fargo Bank, National Association
230 Park Avenue
New York, New York 10169
By: 	Richard G. Haddad, Esq.
John Bougiamas, Esq.
The Hughes Firm, LLC
Attorneys for Staff Management Solutions, LLC and
PeopleScout MSP, LLC
2027 West Division Street, Suite 122
Chicago, Illinois 60622
By: 	Ray Hughes, Esq.
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
Pending before the Court are the motions of James S. Feltman, as chapter 11 trustee (the
“Trustee”) of the estate of Debtors Corporate Resource Services, Inc., et al. (the “Debtors”) and
Wells Fargo Bank N.A. (“Wells Fargo,” and together with the Trustee, the “Defendants”),
seeking to dismiss the amended complaint (the “Amended Complaint,” ECF Doc. # 10) filed by
Staff Management Solutions, LLC and PeopleScout MSP, LLC (collectively, “Staff
Management”). (“Trustee Motion to Dismiss,” ECF Doc. # 23 and “Wells Fargo Motion to
Dismiss,” ECF Doc. # 24 (collectively, the “Motions to Dismiss”).) The Wells Fargo Motion to
Dismiss is supported by a declaration of John Bougiamas (the “Bougiamas Declaration,” ECF
Doc. # 25) and a memorandum of law (“Wells Fargo MOL,” ECF Doc. # 26).
On April 13, 2020, Staff Management filed oppositions to the Motions to Dismiss.
(“Opposition to Trustee,” ECF Doc. # 32; “Opposition to Wells Fargo,” ECF Doc. # 33.) On
April 17, 2020, the Trustee and Wells Fargo filed replies. (“Trustee Reply,” ECF Doc. # 38;
“Wells Fargo Reply,” ECF Doc. # 39.)
For the following reasons, the Court grants the Wells Fargo Motion to Dismiss with
prejudice. The Court stays this adversary proceeding, including adjudication of the Trustee
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 2 of 25

3
Motion to Dismiss, pending resolution of the Illinois Lawsuit (as defined below) because Staff
Management’s recovery from the Trustee in this case at a minimum depends on Staff
Management losing the Illinois Lawsuit.
I. 	BACKGROUND 2
A. 	General Background
This case is the fourth lawsuit—three in this Court and one in the U.S. District Court for
the Northern District of Illinois—involving over $1.5 million in funds transferred by Staff
Management to a specific account at Wells Fargo (the “Wells Fargo Account”) paying invoices
submitted to Staff Management by Noor Staffing Group, LLC (“Noor”). Staff Management was
not a party in the two earlier lawsuits in this Court; but Staff Management is the plaintiff in this
adversary proceeding, and it is the defendant and counterclaimant in the Illinois action filed by
Noor against Staff Management.
In one of the two earlier lawsuits in this Court, the Trustee sued Noor alone, seeking to
recover damages for breach of contract and for release to the Trustee of funds deposited by Staff
Management in the Wells Fargo Account; in the other lawsuit, the Trustee sued Wells Fargo
alone seeking release to the Trustee of the funds in the Wells Fargo Account. The Trustee’s
lawsuit against Noor alleged that the funds in the Wells Fargo Account were property of the
Debtors’ estates and should be turned over to the Trustee; Noor’s defense asserted in part that the
funds in the Wells Fargo Account were payments by Staff Management for services provided by
2 	The facts set forth below are drawn primarily from Staff Management’s Amended Complaint and the
Motions to Dismiss. The Court also takes judicial notice of certain court filings in related adversary proceedings
and the Illinois Lawsuit (as defined below). The Court considers these filings to establish “the fact of such litigation
and related filings,” not for the truth of the matters asserted in them. See Glob. Network Commc’ns, Inc. v. City of
New York, 458 F.3d 150, 157 (2d Cir. 2006) (internal quotation marks and citations omitted); see also Staehr v.
Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425 (2d Cir. 2008) (“[I]t is proper to take judicial notice of the fact
that press coverage, prior lawsuits, or regulatory filings contained certain information, without regard to the truth of
their contents.”) (emphasis in original).
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 3 of 25

4
Noor and that the funds belonged to Noor. The Trustee and Noor settled the action. Most
importantly for this case, the settlement included Noor’s release of any claims to the funds held
in the Wells Fargo Account. Despite Noor’s release of any claims to the funds in the Wells
Fargo Account, following the settlement with the Trustee, Noor filed its lawsuit against Staff
Management in Illinois claiming that Noor is entitled to recover from Staff Management the
amount that Noor expressly released in the settlement with the Trustee. Not surprisingly, Staff
Management argues otherwise, but as explained below, that is an issue for the district court in
Illinois, not for this Court.
B. 	The Temporary Staffing Business of Noor and Corporate Resource
Development
Staff Management is in the temporary staffing business. Staff Management
subcontracted work to Debtor Corporate Resource Development, Inc. (“CRD”). (See “Injunction
Opinion,” ECF Doc. # 34 at 3; see also Amended Complaint ¶ 1.) On September 29, 2014, CRD
provided Staff Management with written authorization to make payments to CRD by electronic
transfer to the Wells Fargo Account; Staff Management thereafter made payments to the Wells
Fargo Account for services provided by CRD. (Amended Complaint ¶¶ 18–19.)
On January 10, 2015, Staff Management entered into a written supplier non-exclusive
master service agreement with CRD (the “CRD Contract”). (Id. ¶ 16.) Pursuant to the CRD
Contract, CRD supplied temporary labor to Staff Management clients, and Staff Management
processed and forwarded payments from those clients to the Wells Fargo Account. (Id. ¶ 17.)
On February 26, 2015, CRD transferred its business to Noor by entering into an Asset
Purchase Agreement with Noor. (Id. ¶¶ 20–21.) Staff Management entered into a new written
supplier non-exclusive master service agreement with Noor, effective March 21, 2015 (the “Noor
Contract”). (Id. ¶ 22.) Pursuant to the Noor Contract, Noor was required to supply temporary
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 4 of 25

5
labor to Staff Management’s client, and in exchange, Staff Management would process and
forward payments from that client. (Id. ¶ 23.)
C. 	Bankruptcy Proceedings
On July 23, 2015, the Debtors, including CRD, filed voluntary chapter 11 petitions which
were jointly administered in this Court in In re Corporate Resource Services, Inc., et al., Case
No. 15-12329 (MG) [hereinafter “Main Case”]. (Id. ¶ 25.) Staff Management alleges that
during the transition of the business from CRD to Noor, Staff Management was not aware that
CRD was experiencing financial difficulties and it did not receive notice of the CRD bankruptcy
proceedings at that time. (Id. ¶ 24.)
D. 	Payments from Staff Management to the Wells Fargo Account
Staff Management alleges that due to a mistake during the transition of the business from
CRD to Noor, it continued sending payments to CRD’s Wells Fargo Account. (Id. ¶ 27.) After
CRD transferred the business to Noor, Staff Management made eighty-four (84) payments to the
Wells Fargo Account from April 8, 2015 through January 27, 2016, totaling $1,541,056.31. (Id.
¶ 28.)
Some of the funds transferred by Staff Management to the Wells Fargo Account were
then transferred to the Trustee. (Id. ¶ 33.) An itemized list of the transfers provided by Wells
Fargo to Staff Management shows that Wells Fargo transferred funds in the Wells Fargo
Account to the Trustee on the following dates and in the following amounts:
 	12/3/2015: $340,161.52
 	12/4/2015: $16,239.69
 	12/11/2015: $38,396.32
 	12/18/2015: $65,534.14
 	12/23/2015: $50,047.45
 	12/30/2015: $28,010.90
 	1/8/2016: $20,663.49
 	1/15/2016: $71,170.43
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 5 of 25

6
 	1/22/2016: $100,924.59
 	1/27/2016: $21,082.86
 	7/18/2017: $67,626.86
(Id. ¶ 34.)
A total of $819,858.25 was transferred from the Wells Fargo Account to the Trustee in
these eleven transactions. (Id.) On January 15, 2020, Ray Hughes, Esq., counsel to Staff
Management, filed a declaration in further support of Staff Management’s Motion for
Preliminary Injunction (“Injunction Motion,” ECF Doc. # 13). (“Hughes Declaration,” ECF
Doc. # 17.) The Hughes Declaration states that a spreadsheet prepared by counsel to Wells
Fargo demonstrates that $1,058,952.80 was transferred to the Trustee from the funds that Staff
Management sent to the Wells Fargo Account. (Id. ¶ 4; id., Ex. E.) The spreadsheet also shows
that Wells Fargo transferred $482,103.51 from the Wells Fargo Account to Noor. (Id., Ex. E.)
The Amended Complaint alleges that Wells Fargo removed funds from the Wells Fargo
Account for use by Wells Fargo. (Amended Complaint ¶ 35.) The Amended Complaint also
alleges that Wells Fargo loaned the Debtors approximately $80 million, and as part of that
transaction, Wells Fargo had a lien on most of the Debtors’ assets (id. ¶ 36); and that funds from
the Wells Fargo Account were used to satisfy amounts the Debtors’ allegedly owed to Wells
Fargo. (Id.) For example, the Trustee’s Monthly Operating Report, dated October 27, 2017,
states “the Debtor’s former lender received and applied material amounts of accounts receivable
collections. The lender set off and paid certain costs and fees associated with their loan as well
as winding down the Debtor affairs and certain costs of affiliates.” (Id. (citing Main Case, ECF
Doc. # 707 at 1).)
Staff Management alleges that the Trustee and Wells Fargo knew that the funds
transferred from the Wells Fargo Account included funds from Staff Management that did not
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 6 of 25

7
belong to the Debtors. (Id. ¶ 37.) In Staff Management’s Injunction Motion, Staff Management
pointed to the complaint filed on March 4, 2016 by the Trustee in the Noor adversary proceeding
to support its view. (Injunction Motion ¶ 31; “Noor Complaint,” Adv. Proc. No. 16-01037 (the
“Noor Adversary Proceeding”), ECF Doc. # 1.) In the Noor Complaint, the Trustee, inter alia,
sought: (i) the immediate turnover of the past due payments under the Asset Purchase Agreement
and all cash collected on account of any CRD Receivables pursuant to section 542 of the
Bankruptcy Code; (ii) the avoidance of the CRD sale as a constructive fraudulent transfer
pursuant to sections 548 and 550 of the Bankruptcy Code; (iii) a judgment that Noor’s failure to
pay the amounts past due under the Asset Purchase Agreement and withholding collections from
the CRD Receivables violated the automatic stay pursuant to section 362 of the Bankruptcy
Code; and (iv) a declaratory judgment that certain funds held at, or distributed by Wells Fargo,
were property of the estate pursuant to section 541 of the Bankruptcy Code. (Trustee Motion to
Dismiss ¶ 15 (citing Noor Complaint).)
The Noor Complaint alleged that “Noor represented that it could not pay the Trustee
because Wells Fargo had collected and retained the monies collected on account of the Noor
Receivables that belong to Noor and that those amounts were material to Noor.” (Noor
Complaint ¶ 144.) 	The Noor Complaint also states that “Wells Fargo holds approximately $1.3
million of CRD-Noor Disputed Funds” and sought a declaration that those funds were property
of the estate under section 541 of the Bankruptcy Code. (Id. ¶¶ 239, 244.) Lastly, the Noor
Complaint provides that “various Noor customers—who used to be customers of CRD until the
Transaction—have continued to pay Wells Fargo by accident because of a failure to change bank
payment information (and human error).” (Noor Adversary Proceeding, ECF Doc. # 1-6 ¶ 5.)
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 7 of 25

8
E. 	The Noor Settlement
On May 30, 2017, the Trustee and Noor settled the Noor Adversary Proceeding (the
“Noor Settlement,” Noor Adversary Proceeding, ECF Doc. # 97-2); the Noor Settlement was
approved by the Court on June 2, 2017. (See Trustee Motion to Dismiss ¶ 16 (citing Noor
Adversary Proceeding, ECF Doc. # 102).) The Noor Settlement provided, among other things,
the following settlement consideration:
Settlement Consideration. Upon approval of this Settlement Agreement:
a. 	Defendants release any claims to money that Defendants allege
the Trustee has received from Wells Fargo (the “Wells Fargo
Amounts”), the amount and ownership of which is subject to a
dispute between the Trustee and Defendants, and
b. 	Defendants release any claims to the entirety of the CRD-Noor
OAP held by Wells Fargo, the ownership of which is disputed,
and which Wells Fargo has confirmed is $1,241,806.79 as of
April 26, 2017, to the Trustee. . . .
(Id. (quoting Noor Settlement ¶¶ 1(a)–(b)).)
The Noor Settlement provided that “[t]here will be no reconciliation of the CRD-Noor
OAP, the Wells Fargo Amounts, or any other amounts related thereto.” (Id. ¶ 17 (quoting Noor
Settlement ¶ 1(e)).)
The Noor Settlement further provided the following release (the “Release”) from Noor to
the Trustee and the Debtors:
Defendants on behalf of themselves, their heirs, representatives and assigns,
do hereby fully, finally and forever waive, release and/or discharge the
Trustee, the Debtors, their estates, and their respective heirs, successors,
assigns, affiliates, officers, directors, shareholders, members, associates,
partners, subsidiaries, predecessors, successors, employees, attorneys, and
agents from any and all of Defendants’ claims, causes of action, suits, debts,
obligations, 	liabilities, 	accounts, 	damages, 	defenses, 	or 	demands
whatsoever, known or unknown, asserted or unasserted, which arise from
or otherwise relate to the transactions referenced in the Adversary
Proceeding or the Claim or result from any act or omission with respect
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 8 of 25

9
to the Adversary Proceeding or the Claim to the extent permitted by
law. . . .
(Id. ¶ 18 (quoting Noor Settlement ¶ 10) (emphasis in original).)
F. 	The Wells Fargo Settlement
On November 2, 2015, the Trustee filed an adversary proceeding against Wells Fargo
styled James S. Feltman, as Trustee v. Wells Fargo Bank, N.A., Case No. 15-01391 (MG) (the
“Wells Fargo Proceeding”) seeking to recover at least $2.7 million of funds that Wells Fargo
held in the Wells Fargo Account, including an estimated $1.241 million that both the Trustee and
Noor claimed an interest in (the “CRD-Noor OAP”). (Wells Fargo MOL at 8.) On November
23, 2015, the Trustee and Wells Fargo settled the Wells Fargo Proceeding. (“Wells Fargo
Settlement,” Wells Fargo Proceeding, ECF Doc. ## 21–22.) The Wells Fargo Settlement
provides that Wells Fargo shall be deemed a conduit that is not liable for any claims that may
arise from the turnover of the disputed funds to the Trustee. (Id. at 8–9.) The Wells Fargo
Settlement provided that:
With regard to all monies received and turned over to the Trustee by Wells
Fargo pursuant to this Stipulation, Wells Fargo shall be deemed a mere
conduit and will transfer to the Trustee all right, title, and interest in and to,
the turned over funds without any representation or warranty other than that
it is turning over all monies received and the Trustee assumes any and all
liabilities, cost and expenses in connection with such monies, including any
liabilities for returned checks and mistaken or improper payments. Those
liabilities, if any, shall be the obligations of the Debtors to be dealt with by
the Trustee and not Wells Fargo.
(Id. at 9 (citing Wells Fargo Settlement ¶ 14).)
The Wells Fargo Settlement also provided that:
Wells Fargo has agreed to turnover the Disputed OAP [disputed unapplied
cash collections] to the Trustee following the occurrence of the earlier of (i)
entry of an order approving a stipulation between the Trustee and any party
claiming an interest in a portion of the Disputed OAP pursuant to which
among other things Wells Fargo is released in connection with such
Disputed OAP, or (ii) entry of an order of the Court in a form reasonably
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 9 of 25

10
agreed to by Wells Fargo and the Trustee following notice to all parties
known to have asserted an interest in any portion of the Disputed OAP
(“Disputing Parties”), that approves the release of the Disputed OAP from
Wells Fargo to the Trustee and finds that Wells Fargo shall have no liability
to either CRS or the Disputing Parties with respect to the Disputed OAP
funds so released.
(Id. (citing Wells Fargo Settlement ¶ 5).)
The Wells Fargo Settlement included a specific provision addressing the CRD-Noor
OAP, providing that Wells Fargo would not be required to release such funds unless Wells Fargo
was relieved from any and all liability with respect to such funds. (Id. (citing Wells Fargo
Settlement ¶ 16).)
G. 	The Staff Management Illinois Lawsuit
On January 25, 2019, Noor filed an action against Staff Management in the United States
District Court for the Northern District of Illinois, captioned Noor Staffing Group, LLC d/b/a
J.D. & Tuttle Hospitality Staffing v. Staff Management Solutions LLC and PeopleScout MSP,
LLC, Case No. 1:19-cv-00529 (the “Illinois Lawsuit”), seeking to recover the funds that Staff
Management sent to the Wells Fargo Account. (Illinois Lawsuit, ECF Doc. # 1.) Noor’s
complaint in the Illinois Lawsuit alleges that “Staff Management directed a portion of the
payments for the labor services performed by [Noor] Staffing to a bank account, which was not
owned by [Noor] Staffing.” (Id. ¶ 25.) Noor alleges that Staff Management owes $1,082,447.29
to Noor under the Noor Contract. (Id. ¶¶ 18–31.)
On June 24, 2019, Staff Management filed its answer and counterclaims against Noor in
the Illinois Lawsuit. (Illinois Lawsuit, ECF Doc. # 24 at 6–14.) Staff Management asserted
counterclaims for unjust enrichment and a declaratory judgment that “the [Noor] Settlement
Agreement release[d] any claims by Noor against [Staff Management] regarding the funds sent
by Staff Management to the Wells Fargo Account.” (Id. at 13.) Staff Management’s unjust
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 10 of 25

11
enrichment claim against Noor is premised on the fact that Noor negotiated with the Trustee for
the Noor Settlement while simultaneously making a claim to funds in the Wells Fargo Account.
(Id. at 14.) Noor was therefore allegedly enriched by, and benefited from, the funds paid by
Staff Management. (Id.)
On March 6, 2020, Noor responded to Staff Management’s counterclaims and (i) denied
that it authorized Staff Management to send payments to the Wells Fargo Account, (ii) admitted
that, while making claim to those funds, Noor negotiated the Noor Settlement with the Trustee,
and (iii) denied that it was enriched by, and benefited from, the funds paid by Staff Management.
(Illinois Lawsuit, ECF Doc. # 59 at 5.)
On April 8, 2020, at oral argument before this Court on the Injunction Motion, the
Trustee argued that Staff Management’s defenses and counterclaims against Noor in the Illinois
Lawsuit are duplicative of Staff Management’s claims against the Trustee in this adversary
proceeding. According to the Trustee, Staff Management should fully prosecute its claims
against Noor in the Illinois Lawsuit, instead of substituting the Trustee for Noor in the present
case by asserting the same claims.
On April 20, 2020, at oral argument on the pending Motions to Dismiss, Ray Hughes,
Esq., counsel to Staff Management, conceded that Staff Management’s claims for unjust
enrichment and money had and received in the pending case could not be sustained if Staff
Management prevailed in the Illinois Lawsuit.
H. 	Staff Management’s Motion to Enforce the Noor Settlement
On August 8, 2019, Staff Management filed a motion in the Debtors’ chapter 11 case to
enforce the Noor Settlement. (Trustee Motion to Dismiss ¶ 19 (citing “Settlement Enforcement
Motion,” Main Case, ECF Doc. # 965).) In the Settlement Enforcement Motion, Staff
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 11 of 25

12
Management argued that Noor’s Release in the Noor Settlement covered the funds in the Wells
Fargo Account that were being litigated in the Illinois Lawsuit, thus precluding Staff
Management from any liability. (Id.; see, e.g., Settlement Enforcement Motion ¶¶ 1, 18–20, 26–
27, 32–33, 36, 38–39, 41–42, 44–45, 48.)
On October 10, 2019, the Court entered an order denying the Settlement Enforcement
Motion. (“Settlement Enforcement Order,” Main Case, ECF Doc. # 991.) The Settlement
Enforcement Order found that the “[Noor Settlement] provided, among other things, that Noor
released all claims related to the Wells Fargo Account” and the “the terms of the [Noor
Settlement] protect the Trustee, the Debtors, [and] their estates.” (Id. at 4, 15; Trustee Motion to
Dismiss ¶ 20.) However, the Court found that Staff Management did not have standing directly
to enforce the Noor Settlement because Staff Management was not a party to the Noor
Settlement and was not unambiguously included in Noor’s Release. (Settlement Enforcement
Order at 14; Trustee Motion to Dismiss ¶ 20.) The Settlement Enforcement Order expressly
declined to decide whether the Noor Settlement and Noor’s Release barred any claims that Staff
Management could assert against the Debtors’ estates related to the Wells Fargo Account, as
that issue was not before the Court. (Settlement Enforcement Order at 7 n.2; Trustee Motion to
Dismiss ¶ 21.)
I. 	The Amended Complaint
On November 29, 2019, Staff Management filed the Amended Complaint in this
adversary proceeding, seeking to recover from the Trustee and Wells Fargo funds that were
mistakenly sent to the Wells Fargo Account, so that they can be paid to Noor. (Amended
Complaint ¶ 39 (“Staff Management seeks recovery of the funds that were mistakenly sent to the
Wells Fargo Account from the Trustee and Wells Fargo, so that they can be paid to Noor.”).)
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 12 of 25

13
Staff Management also alleges that Wells Fargo took some of the funds sent from the Wells
Fargo Account for use by Wells Fargo. (Id. ¶ 35.) Staff Management brought claims for unjust
enrichment and money had and received against both the Trustee and Wells Fargo. (Id. ¶¶ 40–
59.) Staff Management also seeks a declaratory judgment that the funds sent by Staff
Management to the Wells Fargo Account are not property of the Debtors’ estates and directing
turnover of those funds to Staff Management. (Id. ¶¶ 60–65.)
J. 	The Injunction Opinion
On December 24, 2019, Staff Management filed the Injunction Motion, seeking a
preliminarily injunction barring the Trustee from taking any action with respect to $1,020,182.46
in cash referenced in the Corporate Monthly Operating Report (Main Case, ECF Doc. # 1017).
(Injunction Motion.) On April 15, 2020, this Court entered the Injunction Opinion. First, the
Court found that Staff Management’s claims against the Trustee in the pending adversary
proceeding and Injunction Motion are duplicative of the issues currently being litigated by Staff
Management and Noor in the Illinois Lawsuit. Second, the Court held that Staff Management
had not made a clear showing of irreparable harm absent the relief requested, a likelihood of
success on the merits in the pending adversary proceeding, or that the balance of the equities tip
decidedly in its favor.
K. 	The Motions to Dismiss
The Defendants argue in their Motions to Dismiss that the Noor Settlement and Staff
Management’s prior admissions in the Settlement Enforcement Motion bar recovery from the
Debtors’ estates and from Wells Fargo in this adversary proceeding. (Trustee Motion to Dismiss
¶¶ 28–34; Wells Fargo MOL at 15–16.) The Trustee further argues that, although Staff
Management may have defenses to Noor’s claims in the Illinois Lawsuit, those defenses do not
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 13 of 25

14
constitute affirmative claims against the Debtors’ estates or the Trustee. (Trustee Motion to
Dismiss at 7–8.)
The Defendants argue that Staff Management’s equitable claims must be dismissed
because Staff Management has not met the heightened pleading standard under Federal Rule of
Civil Procedure 9(b) to invoke the mistake of fact doctrine. (Trustee Motion to Dismiss ¶¶ 35–
42 (citing Injunction Motion ¶¶ 50–51); Wells Fargo MOL at 17–19.) Additionally, the Trustee
contends that it detrimentally relied on Staff Management’s mistaken payments to the Wells
Fargo Account for the Noor Settlement, precluding any recovery based on Staff Management’s
mistake. (Trustee Motion to Dismiss ¶ 38 (citing Bank Saderat Iran v. Amin Beydoun, Inc., 555
F. Supp. 770, 773 (S.D.N.Y. 1983)); Wells Fargo MOL at 18–19.)
The Trustee maintains that Staff Management’s request for declaratory relief is redundant
of its equitable claims and should be dismissed on the same grounds. (Trustee Motion to
Dismiss ¶ 43.) Alternatively, the Court should exercise its considerable discretion and refrain
from deciding whether a declaratory judgment should be entered. (Id. ¶ 44 (citing Dow Jones &
Co. v. Harrods Ltd., 346 F.3d 357, 359–60 (2d Cir. 2003)).)
Wells Fargo moves to dismiss the Amended Complaint on a separate ground. Wells
Fargo argues that there are no plausible claims that Staff Management can assert against Wells
Fargo because, pursuant to this Court’s orders, Wells Fargo turned over all the funds it held on
CRD’s behalf either to the Trustee or to Noor. (Wells Fargo MOL at 6, 13–14 (citing Wells
Fargo Settlement; Noor Settlement).) In addition, Wells Fargo argues, in its initial Injunction
Motion, Staff Management attached and relied upon a spreadsheet showing that Wells Fargo is
no longer holding any of the funds transferred by Staff Management to the Wells Fargo Account.
(Id. at 12, 13–15 (citing Hughes Declaration, Ex. E).) Wells Fargo argues it could not have
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 14 of 25

15
“benefitted” from receipt of Staff Management funds sufficient to sustain its equitable claims.
(Id. at 18.) Further, Staff Management’s request for declaratory relief is moot because Wells
Fargo no longer holds any of Staff Management’s funds. (Id. at 19.)
L. 	Staff Management’s Oppositions
In response to the Trustee Motion to Dismiss, Staff Management argues that the
Amended Complaint alleges with sufficient particularity the factual requirements to state a claim
under Rules 8 and 9(b) of the Federal Rules of Civil Procedure. (Opposition to Trustee ¶¶ 2–5.)
Staff Management also rejects Defendants’ arguments that the Noor Settlement and
Wells Fargo Settlement released the Trustee and Wells Fargo from any disputes relating to the
Wells Fargo Account. (Id. ¶¶ 6–7; Opposition to Wells Fargo ¶¶ 7–11.) Staff Management
argues that the Noor Settlement and Wells Fargo Settlement do not apply to claims by Staff
Management against Wells Fargo or the Trustee for the disputed funds since Staff Management
was not a party to the settlements. (Opposition to Trustee ¶ 6; Opposition to Wells Fargo ¶ 8.)
Staff Management also argues that Wells Fargo and the Trustee cannot raise a change in
position defense to the mistake of fact doctrine because they were aware that they had funds that
did not belong to them, and did not notify Staff Management. (Opposition to Trustee ¶¶ 9–10;
Opposition to Wells Fargo ¶ 12 (citing 82 N.Y. Jur. 2d Payment and Tender § 106 n.6 (2020).)
Furthermore, a change of position defense is an affirmative defense, which must be proven by
the Trustee, not merely asserted in a motion to dismiss without sufficient evidence. (Trustee
Motion to Dismiss ¶ 9 (citing Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 74 (2d Cir.
1998) (“An affirmative defense may be raised by a pre-answer motion to dismiss under Rule
12(b)(6), without resort to summary judgment procedure, if the defense appears on the face of
the complaint.”)). Finally, Staff Management argues that under section 541 of the Bankruptcy
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 15 of 25

16
Code, claims for a declaratory judgment are not duplicative of claims for money had and
received and unjust enrichment. (Id. ¶ 17.)
With respect to Wells Fargo’s argument that it no longer has the funds in the Wells Fargo
Account, Staff Management states that this is a question of fact necessitating further discovery.
(Opposition to Wells Fargo ¶ 5.)
M. 	The Replies
Relying on the Injunction Opinion, the Trustee argues that Staff Management is unlikely
to succeed on the merits of its equitable claims under the mistake of fact doctrine. 	(Trustee
Reply ¶ 3.) Staff Management also cannot sustain its claims for money had and received and
unjust enrichment because Staff Management cannot show that equity and good conscience
requires the Trustee to pay back the funds. (Id. ¶ 5.) Further, dismissing Staff Management’s
claims against the Trustee does not consign Staff Management to “paying twice” for the
temporary staffing services that it procured for its clients since Staff Management has
counterclaims in the Illinois Lawsuit. (Id. ¶ 6.)
Wells Fargo separately argues that there is no issue of fact regarding whether Wells
Fargo dispersed the funds in the Wells Fargo Account pursuant to the Wells Fargo Settlement
and Noor Settlement. (Wells Fargo Reply at 4.) In fact, Staff Management admitted in the
Hughes Declaration that Wells Fargo no longer has the funds. (Id. at 5.) As such, the Wells
Fargo Settlement and Noor Settlement preclude a finding of liability against Wells Fargo. (Id. at
8–9.) Finally, Wells Fargo requests that its dismissal from this adversary proceeding be with
prejudice. (Id. at 10.)
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 16 of 25

17
II. 	LEGAL STANDARD
The Trustee and Wells Fargo seek dismissal of Staff Management’s Amended Complaint
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Court therefore addresses
Staff Management’s pleading burden below. The Court also considers whether a stay of this
action against the Trustee and Noor is appropriate pursuant to the first-filed rule.
A. Motion to Dismiss Pursuant to Rule 12(b)(6)
Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). To
survive a motion to dismiss pursuant to Civil Rule 12(b)(6), made applicable to this adversary
proceeding pursuant to Bankruptcy Rule 7012(b), “a complaint must set out only enough facts to
‘state a claim to relief that is plausible on its face.’” Vaughn v. Air Line Pilots Ass’n, Int’l, 604
F.3d 703, 709 (2d Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (emphasis in
original)). “Where a complaint pleads facts that are merely consistent with a defendant’s
liability, it stops short of the line between possibility and plausibility of entitlement to relief.”
Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (internal
quotation marks omitted)). Plausibility “is not akin to a probability requirement,” rather
plausibility requires “more than a sheer possibility that a defendant has acted unlawfully.” Id.
(citations and internal quotation marks omitted).
Following the Supreme Court’s decision in Iqbal, courts use a two-prong approach when
considering a motion to dismiss. See, e.g., In re ResCap Liquidating Trust Mortg. Purchase
Litig., 524 B.R. 563, 583 (Bankr. S.D.N.Y. 2015); McHale v. Citibank, N.A. (In re the 1031 Tax
Grp.), 420 B.R. 178, 189–90 (Bankr. S.D.N.Y. 2009); Weston v. Optima Commc’ns Sys., Inc.,
No. 09 Civ. 3732(DC), 2009 WL 3200653, at *2 (S.D.N.Y. Oct. 7, 2009) (Chin, J.)
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 17 of 25

18
(acknowledging a “two-pronged” approach to deciding motions to dismiss). First, the court must
accept all factual allegations in the complaint as true, discounting legal conclusions clothed in
the factual garb. See, e.g., Iqbal, 556 U.S. at 677–78; Kiobel v. Royal Dutch Petroleum Co., 621
F.3d 111, 124 (2d Cir. 2010) (stating that a court must “assum[e] all well-pleaded,
nonconclusory factual allegations in the complaint to be true”). Second, the court must
determine if these well-pleaded factual allegations state a “plausible claim for relief.” Iqbal, 556
U.S. at 679 (citation omitted).
Courts do not make plausibility determinations in a vacuum; it is a “context-specific task
that requires the reviewing court to draw on its judicial experience and common sense.” Id.
(citation omitted). A claim is plausible when the factual allegations permit “the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678 (citation
omitted). “A pleading that offers labels and conclusions or a formulaic recitation of the elements
of a cause of action will not do.” Id. (quoting Twombly, 550 U.S. at 555 (internal quotation
marks omitted)). “Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id. (citation omitted). “The pleadings must create the
possibility of a right to relief that is more than speculative.” Spool v. World Child Intern.
Adoption Agency, 520 F.3d 178, 183 (2d. Cir. 2008) (citation omitted).
Courts deciding motions to dismiss must draw all reasonable inferences in favor of the
nonmoving party and must limit their review to facts and allegations contained in (1) the
complaint, (2) documents either incorporated into the complaint by reference or attached as
exhibits, and (3) matters of which the court may take judicial notice. See Blue Tree Hotels Inv.
(Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004)
(citation omitted); Chambers v. Time Warner, Inc., 282 F.3d 147, 152–53 (2d Cir. 2002); DDR
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 18 of 25

19
Const. Servs., Inc. v. Siemens Indus., Inc., No. 09 CIV. 09605 RJH, 2011 WL 982049, at *1
(S.D.N.Y. Mar. 22, 2011). Courts also consider documents not attached to the complaint or
incorporated by reference, but “upon which the complaint solely relies and which [are] integral
to the complaint.” Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007) (internal quotation marks
omitted) (emphasis in original) (quoting Cortec Indus. Inc. v. Sum Holding L.P., 949 F.2d 42, 47
(2d Cir. 1991)); see also Kalin v. Xanboo, Inc., No. 04 Civ. 5931(RJS), 2009 WL 928279, at *8
(S.D.N.Y. Mar. 30, 2009) (Sullivan, J.); Grubin v. Rattet (In re Food Mgmt. Grp.), 380 B.R. 677,
690 (Bankr. S.D.N.Y. 2008) (“A court may even consider a document that has not been
incorporated by reference where the complaint relies heavily upon its terms and effect, which
renders the document integral to the complaint.”) (internal quotation marks omitted) (quoting
Buena Vista Home Entm’t, Inc. v. Wachovia Bank, N.A. (In re Musicland Holding Corp.), 374
B.R. 113, 119 (Bankr. S.D.N.Y. 2007), aff’d, 386 B.R. 428 (S.D.N.Y. 2008), aff’d, 318 F. App’x
36 (2d Cir. 2009)).
B. 	The First-Filed Rule
“As a general rule, where there are two competing lawsuits, the first suit should have
priority.” Emp’rs Ins. of Wausau v. Fox Enter. Grp., Inc., 522 F.3d 271, 274–75 (2d Cir. 2008)
(internal citations and quotation marks omitted); see also Adam v. Jacobs, 950 F.2d 89, 92 (2d
Cir. 1991). The court in which the second-filed action was brought has the authority to stay or
dismiss the action. See Adam, 950 F.2d at 92 (finding that “[t]he decision whether or not to stay
or dismiss a proceeding rests within a district judge’s discretion”). “This discretion arises from
the court’s power to administer its docket to conserve judicial resources, and to promote the
efficient and comprehensive disposition of cases.” Castillo v. Taco Bell of America, LLC, 960 F.
Supp. 2d 401, 404 (E.D.N.Y. 2013). In determining whether to apply the first-filed rule, “the
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 19 of 25

20
court considers whether the lawsuits at issue assert the same rights, and seek relief based upon
the same facts. The lawsuits need not be identical, but the claims and rights raised in the two
actions must not differ substantially.” Id.
The presumption created by the first-filed rule can be overcome “where there is a
showing of balance of convenience or special circumstances.” See Emp’rs Ins. of Wausau, 522
F.3d at 274 (internal citations and quotation marks omitted). In analyzing the “balance of
convenience” exception, courts consider factors that “are essentially the same as those
considered in connection with motions to transfer venue pursuant to 28 U.S.C. § 1404(a).” Id. at
275 (internal citations and quotation marks omitted).
III. 	DISCUSSION
As set forth below, the Court dismisses Staff Management’s Amended Complaint against
Wells Fargo because Staff Management’s equitable claims against Wells Fargo are not plausible
on their face. The Court also stays the pending adversary proceeding, including adjudication of
the Trustee Motion to Dismiss, pursuant to the first-filed rule because the relief sought in Staff
Management’s Amended Complaint is contingent on the outcome of the Illinois Lawsuit.
A. 	Staff Management’s Claims Against Wells Fargo Are Not Plausible On Their
Face
Wells Fargo argues that Staff Management’s claims against it cannot be sustained
because Staff Management admitted in the Hughes Declaration, attached to its Injunction
Motion, that Wells Fargo no longer retains any of the disputed funds. (Wells Fargo MOL at 14;
Wells Fargo Reply at 7.) In response, Staff Management argues that whether or not Wells Fargo
still has the funds transferred by Staff Management to the Wells Fargo Account remains a
question of fact, subject to further discovery. (Wells Fargo Opposition ¶ 5.)
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 20 of 25

21
The Court concludes that Staff Management’s argument lacks merit. On a motion to
dismiss pursuant to Civil Rule 12(b)(6), the court “may consider admissions contained in
[plaintiff’s] briefs (and exhibits thereto). . . .” Scott v. City of White Plains, No. 10 Civ.
1887(KBF), 2012 WL 1267873, at *8 n.7 (S.D.N.Y. Apr. 10, 2012); see also Debora v. WPP
Grp. PLC, No. 91 Civ. 1775 (KTD), 1994 WL 177291, at *9 (S.D.N.Y. 1994) (considering
judicial admission made by plaintiff in prior court filings to dismiss plaintiff’s second amended
complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure). The Second
Circuit issued a recent decision holding that judicial admissions are formal statements of fact
made by a party or its counsel that are “intentional, clear, and unambiguous.” In re Motors
Liquidation Co., Docket No. 18-1954, at *9 (2d Cir. May 6, 2020). “An assertion of fact in a
pleading is a judicial admission by which [a party] normally is bound throughout the course of
the proceeding.” Fiedler v. Incandela, 222 F. Supp. 3d 141, 157 (E.D.N.Y. 2016) (internal
quotation marks and citations omitted); see also Purgess v. Sharrock, 33 F.3d 134, 144 (2d Cir.
1994) (“A court can appropriately treat statements in briefs as binding judicial admissions of
fact.”). Where a third party plaintiff’s admission in a pleading “foreclose[d] any plausible
allegation that third-party defendants breached a legal duty to [him] as would be required to state
a plausible tort claim,” the court recommended that third-party defendants’ motion to dismiss be
granted with prejudice. See United States v. Whitehill, 14-CV-188A(Sr), 2015 WL 13721694, at
*4 (W.D.N.Y. Sept. 15, 2015) (Report and Recommendation), adopted by 14-CV-188-RJA-
MJR, 2018 WL 459300 (W.D.N.Y. Jan. 18, 2018).
Here, the statements in the Hughes Declaration are judicial admissions precluding Staff
Management from recovering from Wells Fargo under theories of unjust enrichment and money
had and received. The Hughes Declaration directly contradicts Staff Management’s basis for
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 21 of 25

22
asserting equitable claims against Wells Fargo in the Amended Complaint—i.e., that “some of
the funds sent to the Wells Fargo Account by Staff Management have since been taken out of the
Wells Fargo Account for use by Wells Fargo.” (Amended Complaint ¶ 35.) The Hughes
Declaration and the spreadsheet attached to the Hughes Declaration demonstrate that Wells
Fargo no longer has the $1,541,056.31 in funds allegedly transferred by Staff Management to the
Wells Fargo Account. (Hughes Declaration ¶¶ 3–4; Amended Complaint ¶ 28.) The Hughes
Declaration states that “[t]he Wells Fargo spreadsheet shows that $1,058,952.80 was transferred
to the Trustee from the funds that Staff Management sent to the [Wells Fargo Account].”
(Hughes Declaration ¶ 4.) The spreadsheet Hughes relies on for that statement also shows that
Wells Fargo transferred $482,103.51 to Noor from the Wells Fargo Account pursuant to this
Court’s orders. (Hughes Declaration ¶ 4; id., Ex. E.)
At oral argument on the Motions to Dismiss, Hughes conceded that Staff Management’s
claims for unjust enrichment and money had and received against Wells Fargo cannot be
sustained if Wells Fargo no longer holds the funds. (Aug. 20, 2020 Tr. at 13: 5–12.) The Court
agrees with Wells Fargo that Hughes’s admissions in the Hughes Declaration foreclose any
plausible allegation that Wells Fargo retains funds sent by Staff Management to the Wells Fargo
Account, as would be required for Staff Management to state a plausible claim for relief in the
Amended Complaint.
Accordingly, the Court grants the Wells Fargo Motion to Dismiss with prejudice because
providing Staff Management with leave to amend the Amended Complaint would be futile. See
In re Lehman Bros. Mortgage-Backed Secs. Litig., 650 F.3d 167, 188 (2d Cir. 2011) (“[A] denial
of leave to amend is not an abuse of discretion if amendment would be futile.”).
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 22 of 25

23
B. 	A Stay Is Warranted Pursuant to the First-Filed Rule
The Trustee recognizes that the Court has broad judicial discretion to stay or dismiss the
pending adversary proceeding because Staff Management seeks the same relief from the Trustee
in the Amended Complaint that Staff Management seeks in the Illinois Lawsuit. (Trustee Reply
¶ 7; Aug. 20, 2020 Tr. at 20: 8–19.) The Court concludes that the first-filed rule applies because
the parties, facts, claims, and legal issues in the Illinois Lawsuit are substantially similar to those
in the instant adversary proceeding. Accordingly, a stay of this case is warranted pending
resolution of the Illinois Lawsuit, which was filed nine months before the instant adversary
proceeding. See Santana v. Cavalry Portfolio Servs., LLC, 19 Civ. 3773 (PAE), 2019 WL
6173672, at *5 (S.D.N.Y. Nov. 19, 2019) (“Where the first-filed rule applies, a court may
dismiss the second-filed case, transfer it to the first-filed district, or stay the second case pending
resolution of the first-filed case.”).
First, the two actions involve similar parties. The Illinois Lawsuit involves counterclaims
for unjust enrichment by Staff Management against Noor for money transferred to the Wells
Fargo Account. Likewise, the pending adversary proceeding involves Staff Management’s
equitable claims against Noor, the Trustee, and Wells Fargo for recovery of the same funds. The
fact that Wells Fargo and the Trustee are not parties to the Illinois Lawsuit does not “disqualify
[this case] from the first-filed rule. Rather, the core question is whether there are common
violations of law alleged.” Liberty Mut. Ins. Co. v. Fairbanks Co., 17 F. Supp. 3d 385, 393
(S.D.N.Y. 2014) (internal quotation marks and citations omitted).
Second, the two actions involve substantially similar facts, claims, and legal issues. The
Injunction Opinion is instructive:
After this Court denied Staff Management’s Settlement Enforcement
Motion on the ground that Staff Management lacked standing to enforce
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 23 of 25

24
Noor’s release of the Debtors and the Trustee, Staff Management sued the
Trustee in the pending adversary proceeding for the same defenses it raised
against Noor in the Illinois Lawsuit. At oral argument [on the Injunction
Motion], it was revealed that Staff Management filed a counterclaim against
Noor in the Illinois Lawsuit, and that the Illinois Lawsuit is in the middle of
discovery. 	Staff Management’s counterclaim against Noor in the Illinois
Lawsuit includes a cause of action for unjust enrichment. 	Like the
allegations against the Trustee for unjust enrichment in the Amended
Complaint, Staff Management alleges in the Illinois Lawsuit that it sent
payments to the Wells Fargo Account; Noor, while making claim to those
funds, negotiated the Settlement Agreement with the Trustee; and Noor was
therefore enriched by and/or benefited from the funds paid by Staff
Management. 	(Illinois Lawsuit, ECF Doc. # 24 at 14.) 	The Trustee is
correct in arguing that Staff Management should pursue the merits of its
defenses against Noor before the Illinois District Court, where its case has
been pending for fourteen months, instead of seeking injunctive relief
against the Trustee from this Court for identical causes of action.
(Injunction Opinion at 14–15.)
Moreover, Staff Management’s counsel conceded at oral argument on the Motions to
Dismiss that if Staff Management prevails in the Illinois Lawsuit, it will have no legal recourse
against Wells Fargo or the Trustee. (Aug. 20, 2020 Tr. at 16: 6–9.) In the interest of judicial
economy, this Court declines to rule on the Trustee’s Motion to Dismiss until the Illinois court
resolves the issue of Staff Management’s liability for the amount transferred from the Wells
Fargo Account, particularly in light of Noor’s release of any claim relating to those funds. See
Regions Bank v. Wieder & Mastroianni, P.C., 170 F. Supp. 2d 436, 440 (S.D.N.Y. 2001)
(holding that “the interests of judicial economy weigh in favor of staying the entire action”
because if “[plaintiff] succeeds against defendant in the [first-filed action], a decision in this
Court will be rendered unnecessary”).
Finally, the Court finds that no “special circumstances” warrant giving priority to the
current case. Therefore, the similar positions held by Staff Management in both actions and the
“nearly identical claims, parties, facts, and law” warrant application of the first-filed rule. See
Santana, 2019 WL 6173672, at *6.
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 24 of 25

25
IV. 	CONCLUSION
For the foregoing reasons, the Court GRANTS the Wells Fargo Motion to Dismiss with
prejudice and hereby STAYS the adversary proceeding against the Trustee and Noor, including
adjudication of the Trustee Motion to Dismiss, pending resolution of the Illinois Lawsuit.
IT IS SO ORDERED.
Dated: 	May 6, 2020
New York, New York
_____Martin Glenn____________
MARTIN GLENN
United States Bankruptcy Judge
19-01371-mg Doc 46 Filed 05/06/20 Entered 05/06/20 14:18:23 Main Document
Pg 25 of 25