Rosen v. Chowaiki & Co. Fine Art Ltd.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------------------
In re:
CHOWAIKI & CO. FINE ART LTD.,
Debtor.
--------------------------------------------------------------------
x
:
:
:
:
:
:
:
x
Chapter 7
Case No. 17-13228 (MKV)
SHAY ROSEN,
Plaintiff,
v.
CHOWAIKI & CO. FINE ART LTD.,
Defendant.
--------------------------------------------------------------------
:
:
:
:
:
:
:
:
:
:
x
Adv. Pro. No. 17-01242 (MKV)
AMENDED ERRATA ORDER (ATTACHING CORRECTED OPINION)
ORDERED that the Court’s Opinion and Order granting Defendant’s Motion to Dismiss
entered on November 16, 2018 [ECF No. 42] be corrected as follows:
On page 32, the phrase “the transaction involving the Kandinsky was an arms-length
commercial transaction and a joint venture.” is deleted and replaced with “the transaction
involving the Kandinsky was an arms-length commercial transaction and not a joint venture.”
For convenience, a copy of the Opinion and Order, incorporating the corrections listed in
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 1 of 36

2
this Order, is attached as Exhibit “A” to this Order.
It is so ordered.
Dated: New York, New York
November 20, 2018
s/ Mary Kay Vyskocil
Honorable Mary Kay Vyskocil
United States Bankruptcy Judge
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 2 of 36

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------------------
In re:
CHOWAIKI & CO. FINE ART LTD.,
Debtor.
--------------------------------------------------------------------
x
:
:
:
:
:
:
:
x
Chapter 7
Case No. 17-13228 (MKV)
SHAY ROSEN,
Plaintiff,
v.
CHOWAIKI & CO. FINE ART LTD.,
Defendant.
--------------------------------------------------------------------
:
:
:
:
:
:
:
:
:
:
x
Adv. Pro. No. 17-01242 (MKV)
MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO DISMISS
A P P E A R A N C E S:
LAW OFFICE OF MATTHEW C. HEERDE
Attorneys for Shay Rosen
222 Broadway, 19th Floor
New York, New York 10038
By: 	Matthew C. Heerde
Arthur Palmieri
TOGUT, SEGAL & SEGAL LLP
Counsel to the Chapter 7 Trustee, Albert Togut
One Penn Plaza, Suite 3335
New York, New York 10119
By: 	Neil Berger
Minta Nester
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 3 of 36

2
MARY KAY VYSKOCIL
UNITED STATES BANKRUPTCY JUDGE
Shay Rosen (“Rosen” or “Plaintiff”) commenced this action (the “Adversary
Proceeding”) seeking a declaratory judgment that Chowaiki & Co. Fine Art Ltd. (the “Gallery”
or “Debtor”), acting through one of its principals, Ezra Chowaiki (“Chowaiki”), fraudulently
induced Rosen to transfer $230,000 (the “Wired Funds”) to the Gallery’s bank account pre-
petition. See First Amended Adversary Complaint For Declaratory Judgment; Imposition of
Constructive Trust; And Turnover of Funds (the “Amended Complaint” or “Am. Compl.”) [ECF
No. 5], ¶¶ 37-43 (Count One). Rosen also seeks a declaration that the Wired Funds are not
property of the Gallery’s bankruptcy estate within the meaning of section 541(d) of the
Bankruptcy Code, (Am. Compl. ¶¶ 44-48) (Count Two), and the imposition of a constructive
trust for the benefit of Rosen and turnover of the Wired Funds. (Am. Compl. ¶¶ 49-53) (Count
Three).
Albert Togut, not individually but solely in his capacity as Chapter 7 trustee (the
“Trustee”) of the Gallery, moved to dismiss this adversary proceeding pursuant to Rules 9(b) and
12(b)(6) of the Federal Rules of Civil Procedure.1 See Motion to Dismiss the First Amended
Complaint for Declaratory Judgment; Imposition of Constructive Trust and Turnover of Funds
(the “Motion to Dismiss”) [ECF No. 6]. Rosen filed a Memorandum of Law in Opposition to the
Motion to Dismiss (the “Opp. Memo”) [ECF No. 14], to which the Trustee filed a Reply in
response [ECF No. 15]. The Court heard oral argument on the Motion to Dismiss (the “First
1 On February 8, 2018, the Court granted the Motion of Bogomila Welsh-Ovcharov for Limited Intervention in
Support of the Trustee’s Motion for Dismissal of the First Amended Complaint of Plaintiff Shay Rosen [ECF No.
9], allowing Bogomila Welsh-Ovcharov to intervene in this adversary proceeding for the limited purpose of
supporting the Motion to Dismiss. See Order Granting Motion of Bogomila Welsh-Ovcharov for Limited
Intervention [ECF No. 18]. Welsh-Ovcharov filed a Joinder Motion in support of the Trustee’s Motion to Dismiss
[ECF No. 16] and was represented by counsel at the First Hearing.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 4 of 36

3
Hearing” or “First Hr’g”) and, at the close of the Hearing, requested supplemental briefing on
whether Rosen had standing to initiate this adversary proceeding. Thereafter, the Court held
another hearing on the Motion to Dismiss (the “Second Hearing” or “Second Hr’g”).
Having considered all arguments raised by the parties, for the reasons set forth below, the
Motion to Dismiss is GRANTED under Rule 12(b)(6) on the ground that Rosen has failed to
state a claim upon which relief can be granted.
JURISDICTION AND VENUE
The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334
and 157(a) and the Amended Standing Order of Referral of Cases to Bankruptcy Judges of the
United States District Court for the Southern District of New York (M-431), dated January 31,
2012 (Preska, C.J.). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(a). Venue is
proper pursuant to 28 U.S.C. § 1409. Both the Trustee and Rosen have consented to the entry of
a final order or judgment by this Court. See Statement of Consent to Final Orders or Judgment
[ECF No. 27]; Trustee’s Standing Memo at 15 n.6; First Hr’g Tr. 20:1-23 [ECF No. 21].
BACKGROUND
A. 	Chowaiki and Rosen’s Pre-Petition Transaction
For purposes of the Motion to Dismiss, the Court accepts as true the following facts as
alleged in the Amended Complaint (and the exhibits thereto)2 and the Supporting Declarations.
See Gregory v. Daly, 243 F.3d 687, 691 (2d Cir. 2001).
2 For purposes of a rule 12(b)(6) analysis, a complaint is “deemed to include any written instrument attached to it as
an exhibit or any statements or documents incorporated in it by reference.” Cortec Indus. V. Sum Hldg. L.P., 949
F.2d 42, 77 (2d. Cir. 1991).
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 5 of 36

4
Rosen is an Israeli national and operates an art consulting business. Rosen Decl. ¶ 1. On
or around October 11, 2017, Rosen was introduced to Chowaiki through a mutual colleague,
Christine Barberi (“Barberi”). Am. Compl. ¶ 11. Rosen had known Barberi for around 10 years
and previously had completed art transactions with her. Id. Barberi suggested to Rosen the
possibility of entering into a transaction with the Gallery, through Chowaiki, with regard to a
watercolor and ink painting entitled Schichtenweise by the late Russian Expressionist-Abstract
painter Wassily Kandinsky (the “Kandinsky”). Id. ¶ 1, 11. In an email dated October 11, 2017,
Barberi explained to Rosen that the Gallery was “looking to either sell [the Kandinsky] and make
a profit or buy it from [its] current owner and share the investment with a partner and then resell
[it] and make a substantial profit.” Id. ¶ 11. Barberi stated that “time was of the essence”
because Chowaiki was concerned that “another buyer [would] buy it before he [got] the funds
together.” Id. Barberi represented to Rosen that Chowaiki was trustworthy and that they were
close friends, having engaged in “a lot of business together [in the past].” Id.
Rosen spoke with Chowaiki by telephone on October 12, 2017, whereupon they
discussed the Kandinsky offer and Chowaiki proposed that Rosen could participate in a joint
purchase of the Schichtenweise painting with Barberi and the Gallery. Id. ¶ 12. After the phone
call, Chowaiki sent Rosen a follow up email discussing the terms of the offer. Id. ¶ 13; see id.
Exh. A (Chowaiki email to Rosen). In the email, Chowaiki estimated that he could obtain the
painting for about one million dollars and stated that he was willing to sell a half share in the
piece. Exh. A. Chowaiki further represented in the email that he believed the painting could be
resold “for anywhere between $1.5-2m.” and that “[o]f course, Christine [Barberi needs] to be
added on top.” 3 Id.
3 According to the Amended Complaint, this was not the Gallery’s first agreement made with an investor to jointly
purchase and sell the Kandinsky. Previously, around September 28, 2017, Chowaiki had executed a joint venture
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 6 of 36

5
Chowaiki sent Rosen another email on October 20, 2017, stating that he “[had] a client
already interested in the picture. It looks like he will be willing to pay $1.2m to own it outright
and he will let me resell it one day when he feels like selling it.” Id. ¶ 14. Chowaiki clarified
that the Gallery would be required to pay $950,000 to buy the painting before re-selling it for
$1.2 million and that if Rosen was interested in participating they could make the return
proportional. Id. After engaging in negotiations, Rosen and Chowaiki agreed that for a 24%
interest in the Kandinsky, Rosen would pay $230,000. Id.
On October 23, 2017, Rosen caused $230,000 (the “Wired Funds”) to be transferred from
his wife’s bank account (the “Bank Account” or “Account”) to the Gallery’s bank account in
New York. Id. ¶ 16; see also id. at Exh. B (Wire Transfer Confirmation). Rosen did not hear
from Chowaiki again after transmitting the Wired Funds. Id. ¶ 17.
By November, the Gallery was facing multiple lawsuits from numerous creditors. Id. ¶¶
28-31. On or around November 9, 2017, Barberi contacted Rosen to tell him that the Gallery had
been closed and was filing for bankruptcy. Id. ¶ 19. In addition, she reported that Chowaiki and
the Gallery’s majority owner, David Dangoor, were being accused of fraud in which they had
allegedly lured investors and collectors into paying money for artworks by renowned artists that
neither the Gallery nor its principles owned or had any right to sell. Id.; see also id. at 6 n.1. By
November 4, 2017, any opportunity the Gallery had of acquiring the Kandinsky had evaporated
when, because of Chowaiki’s non-response to his emails, the seller of the Kandinsky took the
painting elsewhere. Id. Exh. D (Email from Carosso to Chowaiki).
agreement to purchase “the very same Kandinsky 50%-50% with Carpenter Fine Violins & Collectibles LLC for a
total price of $625,000.” Am. Compl. ¶ 24; see also id. Exh. C (Joint Venture Agreement). Pursuant to this joint
venture agreement, the Gallery had committed itself to acting as the joint venture’s principal agent and was responsible
for both the purchase of the painting as well as its sale for the benefit of the two parties. Id. Exh. C.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 7 of 36

6
On December 12, 2017, the United States Attorney for the Southern District of New
York commenced a criminal case against Chowaiki: USA v. Chowaiki, Case No. 1:18-cr-00323-
JSR (the “Criminal Case”). On May 3, 2018. Chowaiki pled guilty for having “devised a scheme
and artifice to defraud and for obtaining money and property by means of false and fraudulent
pretenses . . .” involving at least twenty-five pieces of art. Criminal Case, Dkt No. 15.
B. 	Bankruptcy
On November 13, 2017 (the “Petition Date”), the Gallery filed a voluntary petition for
relief pursuant to chapter 7 of Bankruptcy Code and, on the following day, Albert Togut was
appointed chapter 7 trustee. Soon thereafter, on November 27, 2017, the Gallery filed its
schedules of assets and liabilities, listing assets of $276,681.59 and liabilities of $11,877,011.03.
See Summary of Assets and Liabilities for Non-Individuals [Case No. 17-13228, ECF No. 7].
C. 	Adversary Proceeding
Shortly after the Petition Date, Rosen initiated this adversary proceeding4 seeking: (i) a
declaratory judgment finding that the Gallery had fraudulently induced Rosen to transfer the
Wired Funds to the Gallery’s bank account in New York (“Count I”); (ii) a declaratory judgment
that under both section 541(d) of the Bankruptcy Code and New York state law, the Gallery has
no equitable interest in the Wired Funds and thus they are not part of the Gallery’s bankruptcy
estate (“Count II”); and (iii) the imposition of a constructive trust and the immediate turnover of
the Wired Funds to Rosen (“Count III”). Am. Compl. at 12. In lieu of an answer, the Trustee
moved to dismiss under Rules 9(b) and 12(b)(6).
4 Rosen initially filed a Complaint [ECF No. 1], in response to which the Trustee filed a Motion to Dismiss [ECF
No. 3]. Rosen subsequently filed the Amended Complaint [ECF No. 6], which is the pleading at issue on this
motion.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 8 of 36

7
At the hearing on the Motion to Dismiss, the Trustee raised the issue of Rosen’s standing
to bring this adversary proceeding. See First Hearing Tr. 21-22:20-7. The Trustee argued that it
was unclear who was the real party in interest in this case, since the Wired Funds had been
transferred from a bank account belonging to Rosen’s wife, rather than Rosen himself. See id.
23:7-13. While Rosen conceded that the Wired Funds were transferred from his wife’s account,
he maintained that he had standing because the Wired Funds in fact belonged to him,
notwithstanding the name on the account. See id. 41:6-13. Rosen also argued that as husband
and wife, he and the account owner should be considered one economic unit. See id. 42-43:24-1.
Because the standing issue was first introduced at the First Hearing, the Court ordered
supplemental briefing regarding the standing issue. 5 See id. 68-69:23-10; So-Ordered
Stipulation Scheduling Supplemental Briefing [ECF No. 19]. After further briefing on standing,
the Court held a Second Hearing on the Motion to Dismiss.
(i) 	The Record with Respect to the Bank Account
from which the Funds were Transferred
It is undisputed, and the evidence submitted in connection with the supplemental briefing
on the standing issue confirms, that the Bank Account from which Rosen caused the Wired
Funds to be transferred is an account at Edmond de Rothschild Bank registered in the name of
Orian Levin, who is Rosen’s wife. See Rosen Decl. ¶¶ 3-4; Levin Decl. ¶¶ 3-4. Levin opened
5 On February 12, 2018, the Court “So-Ordered” a Stipulation Scheduling Supplemental Briefing [ECF No. 19], which,
inter alia, required the Trustee and Rosen to file simultaneous briefing regarding Rosen’s standing to commence this
adversary proceeding. Accordingly, the Trustee filed the Trustee Standing Memo and Rosen filed the Memorandum
of Law Regarding Plaintiff Shay Rosen’s Standing (the “Rosen Standing Memo”) [ECF No. 23], which was supported
by three declarations: (i) Declaration of Matthew C. Heerde (“Heerde Decl.”) [ECF No. 24]; (ii) Declaration of Shay
Rosen (“Rosen Decl.”) [ECF No. 25]; and (iii) Declaration of Orian Levin (“Levin Decl. together with the Heerde
Decl. and the Rosen Decl., the “Supplemental Declarations.”) [ECF No. 26]. Although not authorized, the Trustee and
Rosen each filed two reply briefs in connection with the standing issue. See Trustee’s Reply Memorandum of Law
Regarding Plaintiff’s Lack of Standing (“Trustee 1st Standing Reply”) [ECF No. 28]; Reply Memorandum of Law
Regarding Plaintiff Shay Rosen’s Standing (“Rosen 1st Standing Reply”) [ECF No. 29]; Supplemental Briefing
Concerning Plaintiff Shay Rosen’s Standing (“Rosen 2nd Standing Reply”) [ECF No. 33]; Reply to Plaintiff’s
Supplemental Briefing Concerning Plaintiff Shay Rosen’s Standing (“Trustee 2nd Standing Reply”) [ECF No. 34].
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 9 of 36

8
the Bank Account on March 12, 2006, and on the same day she, granted Rosen power of attorney
over the Bank Account. See Heerde Decl. Exh. A; Levin Decl. Exh. A. Additionally, on July
21, 2011, Rosen and Orion Levin filed with the Bank a document called Form A – Declaration of
Identity of the Beneficial Owner, which listed both Rosen and Levin as beneficial owners of the
funds in the Account. See Levin Decl. Exh. C (Form A).
Rosen and Levin have each submitted declarations attesting that although the Bank
Account is in Levin’s name, they “consider[ed] all the funds in the Account to be joint property”
and that it is their “mutual understanding that each of [them is] equally entitled to use all the
funds in the Account.” Rosen Decl. ¶ 7. See also Levin Decl. ¶ 8 (“Shay [Rosen] and I consider
all funds in the Account to be our joint property. It is our mutual understanding that each of us
are equally entitled to use all the funds in the Account.”). Each also attested that Rosen manages
the Account, communicates with the Bank regarding the Account, and uses funds in the Account
in his discretion, for example, by executing withdrawals and deposits for purchases and sales of
art relating to his art business. See Rosen Decl. ¶ 8; Levin Decl. ¶ 9.
(ii) 	Supplemental Briefings on the Issue of Standing
In his supplemental memorandum on the standing issue, the Trustee contends that Rosen
lacks standing because both the complaint and the attached exhibits demonstrate that the Wired
Funds – the subject of this adversary proceeding – were transferred from Levin’s account, and
therefore, Rosen could not allege injury to property in which he held an interest. See Trustee’s
Standing Memo. ¶16. The Trustee argues that New York law presumes that once funds are
deposited into a bank account, the account holder is the party that has title to those funds. Id.
¶17. 6 	The Trustee also disputes Rosen’s assertions that a husband and wife should be
6 Rosen concedes that the New York state law presumption of ownership pertaining to funds deposited in a bank
account applies to the Bank Account, see Rosen 2nd Standing Reply at 2 (“For purposes of the Court’s
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 10 of 36

9
considered one economic unit. Id. ¶ 20. Moreover, the Trustee argues, leave to further amend
should not be granted on the grounds of futility, since even if Levin were to be substituted as the
named plaintiff, she would be unable to factually maintain the causes of action that Rosen pleads
since there were no allegations that Chowaiki made any (mis)representations to her upon which
she relied. Id. ¶ 29, 31.
Rosen argues in his supplemental memorandum that his allegations, if taken as true, are
sufficient to establish standing. See Rosen’s Standing Memo. at 3. In connection with his
supplemental briefing, Rosen filed his declaration and a declaration from his wife. Rosen also
supplemented the record with documentation reflecting that he has power of attorney over the
account, and that he is listed as a beneficial owner of the account pursuant to the Form A
document. See Levin Decl. Exh. A. Rosen argues that, taken in its totality, this evidence
demonstrates that he has a sufficient interest in the Account to satisfy the injury-in-fact
requirement for standing. Rosen Standing Memo at 3-4.
In reply, the Trustee disputes the significance of Rosen’s supporting documents. Reply
to Plaintiff’s Supplemental Briefing Concerning Plaintiff Shay Rosen’s Standing § I ¶2, § II ¶8-
11 (“Trustee 2nd Standing Reply”) [ECF No. 34]. The Trustee argues that the designation of
Rosen as a “beneficial owner” on Form A is simply a banking formality required by Swiss
authorities as part of their anti-money laundering statutes; it does not equate to an ownership
interest sufficient enough to confer standing to bring an adversary proceeding.7 	Trustee 2nd
determination on standing, Rosen concedes that the rebuttable presumption under New York law regarding title to
funds deposited in a bank account applies in this case, even though the Wired Funds originate from a Swiss bank
account.”), but contends that he has rebutted the presumption that the Funds belong solely to his wife.
7 Although Rosen argues that Form A supported his and his wife’s oral agreement that the money in the account was
jointly owned, Rosen concedes that the ultimate purpose of Form A is related to money laundering regulations.
Second Hearing Tr. 39:17-19. Further, Rosen concedes that Form A is likely required whenever any person or
entity holds a power of attorney over a bank account in which they are not the named owner. Id. 40:49.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 11 of 36

10
Standing Reply at § III. The Trustee references the definition of “beneficial owner” set out by
the Financial Action Task Force, an inter-governmental body that develops policies to protect
against money laundering:
The natural person(s) who ultimately owns or controls a customer
and/or the natural person [on] whose behalf a transaction is being
conducted. 	It also includes those persons who exercise ultimate
effective control over a legal person or arrangement.
Id. ¶ 14; see FATF, International Standards on Combating Money Laundering and the
Financing of Terrorism and Proliferation: The FATF Recommendations, at 111 (2012). The
Trustee argues that the “beneficial owner” designation merely refers to the entity that exercises
control over the legal owner of the account; however, such control over the legal person does not
equate to legal ownership for the purposes of standing. Id. Similarly, the Trustee emphasizes
that the policy behind requiring account holders to name “beneficiary owners” is to combat
money laundering, not to construe civil ownership of funds. Id. ¶ 15. Thus, the Trustee argues,
the “beneficiary owner” designation does not stand for the proposition that Rosen has a property
interest in the funds in the account. Id.
LEGAL STANDARDS
A. 	Rules 12(b)(1) and 12(h)(3) of the Federal Rules of Civil Procedure
Standing to maintain an adversary proceeding is assessed as a matter of subject matter
jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, made applicable
to this adversary proceeding pursuant to Rule 7012 of the Federal Rules of Bankruptcy
Procedure. In re Magnesium Corp. of Am., 583 B.R. 637, 646 (Bankr. S.D.N.Y. 2018) (citing
All. For Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 87–88 (2d Cir. 2006)).
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 12 of 36

11
Article III standing is a prerequisite for jurisdiction. See, e.g., Fulani v. Bentsen, 35 F.3d
49, 51 (2d Cir. 1994); see also Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). Questions of
subject matter jurisdiction are threshold issues that must examined by the Court before any other
issue is resolved. See, e.g., Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102 (1999). 	In
the absence of such jurisdiction, federal courts lack the power to adjudicate the merits of the
case, and “the only function remaining to the court is that of announcing the fact and dismissing
the cause.” Id. at 94.
Federal Rule of Civil Procedure 12(h)(3) provides that “[i]f the court determines at any
time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed. R. Civ. P.
12(h)(3); see Liranzo v. United States, 690 F.3d 78, 83 (2d Cir. 2012). Subject matter
jurisdiction may not be waived and can be raised at any time prior to final judgment. Grupo
Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 571 (2004). Significantly, a party of interest
can raise the issue of subject matter jurisdiction without a formal motion and, if found to be
valid, the court is obligated to dismiss the case sua sponte. See Bernstein v. Universal Pictures,
Inc., 517 F.2d 976, 979 (2d Cir. 1975) (“[L]ack of jurisdiction is so fundamental a defect that the
rule permits a judge to recognize it sua sponte at any time.”); see also 5C Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 1393 (Waiver of Certain Defenses—Rule
12(h)(3)) (3d ed. 2018).
The analysis for determining subject matter jurisdiction is the same pursuant to both Rule
12(b)(1) and Rule 12(h)(3). See Cruz v. AAA Carting & Rubbish Removal, Inc., 116 F. Supp. 3d
232, 239 (S.D.N.Y. 2015) (“[T]he difference between a motion made under Rule 12(b)(1) and
one made under Rule 12(h)(3) is largely academic, and the same standards are applicable to both
types of motions.”) (quotations and citations omitted). In deciding a Rule 12(b)(1) motion to
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 13 of 36

12
dismiss, the party that invokes federal jurisdiction bears the burden of establishing the elements
of standing. Lujan, 504 U.S. at 561. Courts “must take all uncontroverted facts in the
complaint . . . as true, and draw all reasonable inferences in favor of the party asserting
jurisdiction.” Tandon v. Captain’s Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir.
2014). However, jurisdiction “must be shown affirmatively, and that showing is not made by
drawing from the pleadings inferences favorable to the party asserting it.” APWU v. Potter, 343
F.3d 619, 623 (2d Cir. 2003). In ruling on subject matter jurisdiction under Rule 12(b)(1), a
court may refer to evidence outside the pleadings. Makarova v. United States, 201 F.3d 110, 113
(2d Cir. 2000); see Zappia Middle E. Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 253
(2d Cir. 2000) (“On a Rule 12(b)(1) motion challenging the district court's subject matter
jurisdiction, the court may resolve the disputed jurisdictional fact issues by referring to evidence
outside of the pleadings, such as affidavits, and if necessary, hold an evidentiary hearing.”).
B. 	Rule 12(b)(6) of the Federal Rules of Civil Procedure
Rule 7012(b) of the Federal Rules of Bankruptcy Procedure makes Rule 12(b)(6) of the
Federal Rules of Civil Procedure applicable to adversary proceedings. On a Rule 12(b)(6)
motions to dismiss for failure to state a claim for relief, a court must accept as true all material
facts alleged in the complaint and draw all reasonable inferences in favor of the plaintiff. See
Walker v. City of New York, 974 F.2d 293, 298 (2d Cir. 1992). However, it is “not bound to
accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S.
265, 286 (1986). Moreover, “[t]hreadbare recitals of the elements of a cause of action supported
by conclusory statements” do not constitute sufficient factual allegations. See Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). “To survive a motion to dismiss, a complaint must contain sufficient
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 14 of 36

13
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id.
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
A complaint states a claim that is facially plausible when the factual content pleaded
therein is sufficient to “allow[] the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. (internal citation omitted). “The plausibility standard is
not akin to a probability requirement, but it asks for more than a sheer possibility that a
defendant has acted unlawfully.” Id. (internal quotation marks omitted) (quoting Twombly, 550
U.S. at 557). “Plausibility thus depends on a host of considerations: the full factual picture
presented by the complaint, the particular cause of action and its elements, and the existence of
alternative explanations so obvious that they render plaintiff’s inferences unreasonable.” L–7
Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 430 (2d Cir. 2011) (citing Iqbal, 556 U.S. at 547–
82). Accordingly, courts are “not required to draw unreasonable inferences or to credit legal
conclusion at odds with the plaintiff’s own factual allegations.” BLT Rest. Grp. LLC v.
Tourondel, 855 F. Supp. 2d 4, 15 (S.D.N.Y. 2012) (quoting Solow v. Stone, 994 F. Supp. 173,
181 (S.D.N.Y. 1998)).
DISCUSSION
A. 	Rule 12(b)(1) - Article III Standing
1. 	Injury-in-Fact Requirements
In order to maintain a case, the plaintiff is required to “allege[] such a personal stake in
the outcome of the controversy as to warrant his invocation of federal-court jurisdiction.”
Summers v. Earth Island Institute, 555 U.S. 488, 493 (2009) (citing Warth v. Seldin, 422 U.S.
490, 498-499 (1975)). To establish constitutional standing, the plaintiff must: (1) “have suffered
an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3)
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 15 of 36

14
that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct.
1540, 1547 (2016) (citing Lujan, 504 U.S. at 560-61 (1992)). Moreover, it “must be ‘likely,’ as
opposed to merely ‘speculative’ that the injury will be ‘redressed by a favorable decision.’”
Lujan, 504 U.S. at 561.
Regarding the first element, “[t]o establish injury in fact, a plaintiff must show that he or
she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and
actual or imminent, not conjectural or hypothetical.’” Spokeo, 136 S.Ct. at 1548 (citing Lujan,
504 U.S. at 560). For an injury to be “particularized” it must “affect the plaintiff in a personal
and individual way.” Id. For an injury to be “‘concrete’ it must actually exist.” Id. (citing
Black’s Law Dictionary 479 (9th ed. 2009)). “Any monetary loss suffered by the plaintiff
satisfies [the injury element]; ‘even a small financial loss.’” Carter v. HealthPort Technologies,
LLC, 822 F.3d 47, 55 (2d Cir. 2016). However, the injury must be to a legally protected interest
of the plaintiff, and not of a third party. Warth, 422 U.S. at 499.
Because standing is not merely a “pleading requirement but rather an indispensable part
of the plaintiff’s case, each element must be supported in the same way as any other matter on
which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence
required at [each] successive stage[] of litigation.” Alabama Legislative Black Caucus v.
Alabama, 135 S. Ct. 1257, 1276 (2015) (quoting Lujan, 504 U.S. at 561). As a result, “the
showing that must be made in order to withstand a dismissal for lack of standing increases as the
suit proceeds.” Carter, 822 F.3d at 55 (quoting Lujan, 504 U.S. at 561). For example, “[a]t the
pleading stage, general factual allegations of injury resulting from the defendant’s conduct may
suffice, for on a motion to dismiss we ‘presume that general allegations embrace those specific
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 16 of 36

15
facts that are necessary to support the claim.’” Lujan, 504 U.S. at 561 (citing Lujan v. National
Wildlife Federation, 497 U.S. 871, 889 (1990)).
2. 	Rosen’s Alleged Injury
The Trustee contends Rosen has failed to allege an injury in fact that he has personally
suffered as required to establish a “case or controversy” and therefore lacks standing to prosecute
this Adversary Proceeding. In support of this contention, the Trustee argues that, pursuant to
New York state law, once funds are deposited in a bank account, the account holder is presumed
to have title to those funds. It is undisputed that the Wired Funds were transferred from a bank
account owned by Orion Levi, Am. Compl. ¶16, and not Plaintiff Rosen. Hence, the Trustee
asserts that the Amended Complaint does not allege injury to property in which Rosen owns an
interest and therefore Rosen cannot establish an actual, personal injury in fact sufficient to
establish his constitutional standing.
Rosen argues that the Trustee’s argument fails for two reasons. First, he contends that
there is no inherent inconsistency in the allegation that Rosen owned funds in an account under
Orion Levin’s name, and, on a motion to dismiss, the Court is required to accept as true Rosen’s
factual allegations relating to standing. Next, Rosen urges that the Supplemental Declarations
establish that while the Account is maintained under Levin’s name, Rosen and Levin have
mutual ownership of the funds in the Bank Account, thereby rebutting the New York state law
presumption of ownership.
This Court finds that Rosen has meet his burden in alleging facts that affirmatively and
plausibly suggest that he suffered a concrete injury sufficient to satisfy the injury-in-fact
requirement of Article III standing.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 17 of 36

16
As a general rule, New York law presumes that “once funds are deposited in a bank
account, the account holder has title to and control over those funds.” LFD Operating, Inc. v.
Ames Dep’t Stores, Inc. (In re Ames Dept. Stores, Inc.), 274 B.R. 600, 617 (Bankr. S.D.N.Y.
2002); see also Capital One Equipment Finance Corp., dba Capital One Taxi Medallion Finance
v. Singh (In re Singh), 585 B.R. 330, 338 (Bankr. E.D.N.Y. 2018) (citing McHale v. Boulder
Capital LLC (In re 1031 Tax Group, LLC), 439 B.R. 47, 70-71 (Bankr. S.D.N.Y. 2010).
However, this presumption of ownership “may be rebutted by evidence that another person
actually owns the property, either by showing that he effectively exercises control over the
property or that the ostensible owner holds the property for his benefit.” In re Suntech Power
Holdings Co., 520 B.R. 399, 411 (Bankr. S.D.N.Y. 2014) (citing Karaha Bodas Co. v.
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70, 86 (2d Cir. 2002)).
In his Amended Complaint, Rosen described his relationship to the funds only by the
short statement that “[t]he Wired Funds are the property of Rosen.” Am. Compl. ¶ 35. While
this claim is called into question by the additional fact plead in Amended Complaint that the
funds came from his wife’s bank account, Am. Compl. ¶ 16, at the pleadings stage, “the court
must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of
plaintiff.” Natural Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir.2006); see also Duff
& Phelps, LLC v. Vitro S.A.B. de C.V., 18 F. Supp. 3d 375, 382 (S.D.N.Y. 2014). Further, for
the purposes of a Rule 12(b)(1) or 12(h)(3) analysis in resolving a motion to dismiss for lack of
subject matter jurisdiction, the Court may reference the Supplemental Declarations submitted by
Rosen and his wife. See Makarova, 201 F.3d at 113 (observing that in resolving a motion to
dismiss for lack of subject matter jurisdiction, court may refer to evidence outside the pleadings).
The Court finds that the Supplemental Declarations and the exhibits annexed thereto demonstrate
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 18 of 36

17
that Rosen held a cognizable interest in the Wired Funds sufficient to establish Article III
standing.
While “a bare assertion of ownership of the res without more is inadequate to prove an
ownership interest sufficient to establish standing,” Olivo v. U.S., 1997 WL 23181, at *7
(S.D.N.Y. Jan. 22, 1997) (quoting United States v. $38,570 in U.S. Currency, 950 F.2d 1108,
1112 (5th Cir. 1992)), a party can rebut the New York presumption against ownership by
proving a “possessory or ownership interest by actual possession, dominion, control, title, or
financial stake” of the account funds. United States v. $79,000 in Account No. 2168050/6749900
at Bank of New York, 1996 WL 648934, at *3 (S.D.N.Y. Nov. 7, 1996); see also U.S. v. One
1982 Porsche 928, 732 F. Supp. 447, 451 (S.D.N.Y. 1990). According to Black’s Law
Dictionary, “control” means “[t]he direct or indirect power to govern the management and
policies of a person or entity, whether through ownership of voting securities, by contract, or
otherwise; the power or authority to manage, direct, or oversee.” Black’s Law Dictionary (10th
ed. 2014). “Dominion” is defined as “[c]ontrol; possession.” Id.
Rosen has alleged facts that amply demonstrate dominion and control over the funds.
Through exhibits attached to the Supplemental Declarations, Rosen establishes that he has power
of attorney over the Bank Account that authorizes him to execute all transactions. Heerde Decl.
Exh. A; Levin Decl. Exh. A. He regularly deposits funds into the Bank Account from art sales
and makes withdraws for purchases. Rosen Decl. ¶ 8; Levin Decl. ¶ 9. Further, both Rosen and
his wife have an understanding that the funds held in the Bank Account are intended to
ultimately benefit their family and, notwithstanding the title of the account holder, both Rosen
and Levin consider all of the funds held in the Bank Account to be joint property. Rosen Decl. ¶
7; Levin Decl. ¶ 8.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 19 of 36

18
These alleged facts undoubtedly elevate Rosen’s interest in the funds beyond “bare
assertions of ownership.” Cf $79,000 in Account No. 2168050/6749900, 1996 WL 648934, at *4
(Claimant could not show dominion and control over account where they failed to allege that
they “had any signatory authority over the . . . account, any security interest in the account, or
any power to direct the disposition of funds in the . . . account”). Moreover, although Rosen did
argue that the Court should treat him and his wife as “one economic unit” for purposes of
evaluating standing, First Hearing Tr. 42-43:24-1, Rosen’s standing is not predicated solely on
his spousal relationship with the account holder. Cf. United States v. All Funds on Deposit at
Citigroup Smith Barney Account No. 600-00338, 617 F. Supp. 2d 103, 118 (E.D.N.Y. 2007)
(“The mere fact that an individual is related to a property owner in no way conveys the type of
ownership or possessory interest that is sufficient to establish standing.”). Nor does he rely
solely on his power-of-attorney authority over the account. See Advanced Magnetics, Inc. v.
Bayfront Partners, Inc., 106 F.3d 11, 17-18 (2d Cir. 1997) (“Standing alone, a power of attorney
does not enable the grantee to bring suit in his own name.”).
Rather, it is the cumulative assertions contained in the Supplemental Declarations that
demonstrate that Rosen “effectively exercises control over the property.” In re Suntech, 520
B.R. at 411. Rosen routinely withdraws and deposits money into the account, communicates
with the bank regarding the account, and manages it based on a mutual understanding with his
wife that the funds are jointly owned. Rosen Decl. ¶ 7-8; Levin Decl. ¶ 8-9. See id. (debtor was
able to rebut New York presumption against ownership by showing that it “had complete and
unfettered control over the funds” and where the parties’ “conduct confirmed their
understanding” that the debtor maintained ownership of the funds); cf United States v.
$541,395.06 U.S. Currency, 2012 WL 3614294, at *4 (W.D.N.Y. Aug. 21, 2012) (claimant
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 20 of 36

19
could not prove dominion over deposited funds where they “failed to show a mutual agreement
with M & T Bank that the claimant would retain ownership of the deposited funds”).
Other cases have found facts similar to those alleged by Rosen to be sufficient to rebut
the New York presumption regarding ownership of bank account funds. For example, in United
States v. Contents of Account Numbers 208-06070 & 208-06068-1-2, 847 F. Supp. 329
(S.D.N.Y. 1994), two accounts were, as here, held only in the name of the plaintiff’s wife name.
Defendants moved for summary judgment on the ground that the plaintiff did not have any
interest in the accounts and therefore lacked standing. The court ruled that the plaintiff’s sworn
statement was enough to defeat summary judgment where he alleged that he and his wife
“permitted the other access to the other's individual accounts. As husband and wife, they shared
jointly in their property holdings. He had authority to sign his wife's name and make
withdrawals or deposits as the need arose.” Id. at 333. See also All Funds on Deposit at
Citigroup Smith Barney Account, 617 F. Supp. 2d at 117-18 (finding that, while claimant
“clearly. . . has no ownership interest in the Defendant Accounts,” she might nonetheless be
entitled to standing, where she stated that she “had involvement with and directed activity in one
of the accounts, including but not limited to, that [she] had and exercised the right to use funds
from the account, both for [her] benefit and [her] three minor children's benefit”).
In sum, Rosen exerts sufficient control over the Bank Account to demonstrate an interest
in the funds within, rebutting the presumption that only the account holder has title to and control
over the funds. Rosen’s purported injury is also clearly traceable to Chowaiki’s conduct and
would likely be redressed by a favorable decision that compensated Rosen for his losses,
satisfying the second and third prongs of the standing analysis. As such, Rosen has met his
burden of establishing Article III standing to pursue his claims against Chowaiki.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 21 of 36

20
B. 	Rule 12(b)(6) - Failure to State a Claim
1. 	Count I - Fraudulent Inducement
Pursuant to Count I of the Amended Complaint, Rosen seeks a declaratory judgment that
he was fraudulently induced to enter into a transaction pursuant to which he transferred the
Wired Funds to the Debtor and that he has been injured by the Debtor’s alleged fraud in at least
the amount of the Wired Funds. Am. Compl. ¶ 37-43.
In order to state a claim for intentional or fraudulent misrepresentation in New York, a
plaintiff must allege: (1) a misrepresentation or a material omission of fact, (2) which was false
and known to be false by the defendant, and (3) made for the purpose of inducing the other party
to rely upon it, (4) justifiable reliance of the other party on the misrepresentation or material
omission, and (5) injury. Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 178, 944
N.E.2d 1104 (N.Y. 2011).
Fraudulent inducement claims are subject to the heightened pleading standard of Rule
9(b), which is made applicable in this proceeding by Bankruptcy Rule 7009. “In alleging fraud
or mistake, a party must state with particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.”
Fed .R. Civ. P. 9(b). “[T]he requisite intent of the alleged speaker of the fraud need not be
alleged with great specificity,” Chill v. Gen. Elec. Co., 101 F.3d 263, 267 (2d Cir.1996), because
‘“a plaintiff realistically cannot be expected to plead a defendant’s actual state of mind.’” Id.
(quoting Conn. Nat’l Bank v. Fluor Corp., 808 F.2d 957, 962 (2d Cir. 1987)). At the pleadings
stage, the alleged fraud need only be plausible based on the complaint; it need not be more likely
than other possibilities. Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160,
174 (2d Cir. 2015); see Twombly, 550 U.S. at 556 (“[A] well-pleaded complaint may proceed
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 22 of 36

21
even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery
is very remote and unlikely.”).
The fraud alleged by Rosen is fraudulent inducement to enter into a contract. Such a
claim “arises from a promisor’s successful attempts to induce a promisee to enter into a
contractual relationship despite the fact that the promisor harbored an undisclosed intention not
to perform under the contract.” Barrie House Coffee Co. v. Teampac, LLC, 2016 WL 3645199,
at *7 (S.D.N.Y. June 30, 2016) (citing Neckles Builders, Inc. v. Turner, 117 A.D.3d 923, 925,
986 N.Y.S. 494, 497 (2d Dep’t 2014)). “There is no doubt that a misrepresented intention to
perform a contract may constitute actionable fraud.” Neckles Builders, 117 A.D.3d at 925
(internal citation omitted). Although predictions typically cannot be fraudulent, a “relatively
concrete representation as to . . . future performance, if made at a time when the speaker knows
that the represented level of performance cannot be achieved, may ground a claim of fraud.”
Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994).
Here, Rosen alleges with specificity that Chowaiki sent emails to him and spoke on the
phone with him, provides that dates of communications, and quotes the specific statements
purportedly made by Chowaiki on behalf of the Debtor. Am. Compl. ¶ 12-15. In certain
instances, Rosen attaches to the Amended Complaint the emails on which he bases his claim.
See id. Exh. A. He further alleges that, unbeknownst to Rosen, at the time Chowaiki was
negotiating the transaction with Rosen, Chowaiki had already entered into a finalized agreement
regarding the identical artwork with someone else, evidencing Chowaiki’s intent not to perform
under the agreement with Rosen. Id. ¶ 21-25; id. Exh. C. Rosen further alleges that after
transferring the Wired Funds to the Debtor, he never heard from Chowaiaki again. Id. ¶ 17.
The Court concludes that these allegations meet the heightened pleading requirement of Rule
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 23 of 36

22
9(b). 	See U.S. ex rel. Kester v. Novartis Pharm. Corp., 23 F. Supp. 3d 242, 252 (S.D.N.Y.
2014) (“Rule 9(b) requires that a plaintiff set forth the who, what, when, where and how of the
alleged fraud.”) (quoting U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d
899, 903 (5th Cir.1997));
The Court also concludes that the allegations in the Amended Complaint are sufficient to
state a fraud claim that is facially plausible. In Neckles Builders, the Appellate Division held that
similar facts constituted sufficient allegations to state a claim sounding in fraud. 117 A.D.3d at
926. In Neckles Builders, the plaintiff pled that the defendants made a promise to give the
plaintiff an equity stake in a venture if the plaintiff agreed to forego its normal fees and
compensation for the subject work, and that the defendants made that promise while harboring
an undisclosed intention never to give the plaintiff such an equity stake. Id. The Appellate
Division denied the defendant’s motion to dismiss at the pleadings stage based on these
allegations. Id.
Although the Court is inclined to find that Rosen pleads sufficient facts to support a claim
sounding in fraud, the form of relief sought by Rosen (i.e. a declaratory judgment finding the
factual elements of fraud, seemingly as a basis for the imposition of a constructive trust sought in
Count III) compels the Court to dismiss the claim as it is presently pled.
Under the Declaratory Judgment Act, federal courts have the discretionary authority to
grant declaratory relief. See § 28 U.S.C. 2201(a) (“[A]ny court of the United States, upon the
filing of an appropriate pleading, may declare the rights and other legal relations of any
interested party seeking such declaration, whether or not further relief is or could be sought.”).
But that authority is discretionary, and a declaratory judgment must serve a purpose. See Koch v.
Rodenstock, 2012 WL 5844187, at *12 (S.D.N.Y. May 9, 2012); see also James v. Alderton
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 24 of 36

23
Dock Yards, 256 N.Y. 298, 305, 176 N.E. 401 (N.Y. 1931) (Cardozo, J.) (“The use of a
declaratory judgment, while discretionary with the court, is nevertheless dependent upon facts
and circumstances rendering it useful and necessary . . . . It is usually unnecessary where a full
and adequate remedy is already provided by another well-known form of action.”).
It is not clear what purpose a declaratory ruling would serve in this case. A mere finding
by the Court of the underlying facts of fraud, with nothing more, would not alter the legal
relationship between the parties. See Koch, 2012 WL 5844187, at *13 (denying declaratory
relief where the “Plaintiff is merely asking the Court to ‘declare’ the substance of his fraud
allegation.”); see also Restatement (Second) of Judgments § 33 (1982) (“The court should lean
toward declining the action if another remedy, such as a coercive action on an existing claim, is
plainly available and would have wider res judicata effects.”).
Here, a finding of the factual elements of fraud would not facilitate Rosen’s separate
claim for the imposition of a constructive trust, since the two claims are distinct and require
separate legal and factual considerations. See In re First Cent. Fin. Corp., 377 F.3d 209, 216 (2d
Cir. 2004). Rosen’s Amended Complaint acknowledges as much, as it separately lays out the
distinct elements of pleading fraud and the imposition of a constructive trust, in Counts I and III,
respectively.
The Court therefore declines to proceed with Rosen’s Count I claim seeking a declaratory
judgment, where Rosen has other available remedies, including an affirmative action for fraud or
conceivably a nondischargeability action under 523(a). See Restatement (Second) of Judgments
§ 33 (1982) (“A litigant's seeking a declaratory remedy when he could have maintained a
conventional action for coercive relief often signifies that he is in a quandary not only as to what
his rights and duties are, but also as to how to secure their adjudication.”); see also Walsh v.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 25 of 36

24
Andorn, 33 N.Y.2d 503, 507, 311 N.E.2d 476 (N.Y. 1974) (“Where there is no necessity for
resorting to the declaratory judgment[,] it should not be employed.”); Apple Records, Inc. v.
Capitol Records, Inc., 137 A.D.2d 50, 53, 529 N.Y.S.2d 279, 281 (1st Dep't 1988) (“A cause of
action for a declaratory judgment is unnecessary and inappropriate where the plaintiff has an
adequate, alternative remedy in another form of action.”) (citations omitted).8
2. 	Count II - Section 541(d) of the Bankruptcy Code
Pursuant to Count II of the Amended Complaint, Rosen seeks a declaratory judgment
under section 541(d) of the Bankruptcy Code that the Debtor does not hold any equitable or
ownership interest in the Wired Funds because they were obtained as the result of the alleged
fraud perpetrated by Chowaiki. Am. Compl. ¶ 44-48.
Section 541(a)(1) of the Bankruptcy Code defines “property of the estate” as including
“all legal or equitable interests of the debtor in property as of the commencement of the case.” 11
U.S.C. § 541(a)(1). Section 541(d) provides:
(d) Property in which the debtor holds, as of the commencement of
the case, only legal title and not an equitable interest . . . becomes
property of the estate under subsection (a)(1) or (2) of this section
only to the extent of the debtor’s legal title to such property, but not
to the extent of any equitable interest in such property that the debtor
does not hold.
The Court finds that Count II similarly seeks futile and unnecessary declaratory relief,
especially in light of Count III, which seeks the imposition of a constructive trust. At best, a
8 Even if a declaratory judgment here would in some way facilitate a future action, the Court declines to entertain
piecemeal litigation when a future global resolution would otherwise be possible. See Elec. Data Sys. Corp. v.
Xerox Corp., 273 A.D.2d 28, 29, 709 N.Y.S.2d 46, 47 (1st Dep’t 2000) (“A declaration should not be made where it
results in trying a controversy piecemeal”); Smith v. W.U. Tel. Co., 276 A.D. 210, 213, 93 N.Y.S.2d 653 (1st Dep’t
1949) (“A declaratory judgment should not be granted where the action serves to increase rather than to decrease
litigation or where it results in trying a controversy piecemeal.”).
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 26 of 36

25
declaratory judgment under Section 541(d) would merely declare that certain property held by
the debtor is not part of the estate, rendering it “subject to a duty to reconvey it to the rightful
owner.” In re Fetman, 567 B.R. 702, 705 (Bankr. E.D.N.Y. 2017) (emphasis added). But until a
constructive trust is affirmatively impressed, both the legal and equitable interests in property are
held by the debtor. See In re Omegas Grp., Inc., 16 F.3d 1443, 1448 (6th Cir. 1994) (“Nowhere
in the Bankruptcy Code does it say, ‘property held by the debtor subject to a constructive trust is
excluded from the debtor's estate.’”). Therefore, a declaratory ruling under § 541(d), by itself,
would not impart any equitable interest in the Wired Funds to Rosen. See Kinney v. Gallagher,
524 B.R. 455, 463 (W.D.N.Y. 2015) (“[W]ith no court order imposing a constructive trust, the
Lake Road property was wholly property of Gallagher's estate under Bankruptcy Code Section
541.”); Taub v. Taub (In re Taub), 427 B.R. 208, 220 (Bankr. E.D.N.Y.2010) (“Until the state
court or this court issues an order [imposing a constructive trust], the [properties subject to a
constructive trust action] are ... property of the Debtor's estate under Bankruptcy Code Section
541”). The Court finds Count II without purpose and, ultimately, redundant of the relief sought
under Count III.
3. 	Count III - Imposition of a Constructive Trust
Pursuant to Count III of the Amended Complaint, Rosen seeks the imposition of a
constructive trust and the immediate turnover of the Wired Funds. Am. Compl. ¶ 49-53.
Under New York law, a constructive trust is an equitable remedy, the key purpose of
which is to prevent unjust enrichment. See In re Koreag Controle et Revision S.A, 961 F.2d 341,
354 (2d. Cir. 1992); Simonds v. Simonds, 45 N.Y.2d 233, 242, 380 N.E.2d 189 (N. Y. 1978). A
party seeking the imposition of a constructive trust generally must establish that there is “clear
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 27 of 36

26
and convincing evidence of: (1) a confidential or fiduciary relationship; (2) an express or implied
promise; (3) a transfer in reliance on such a promise; and (4) unjust enrichment.” Atateks
Foreign Trade Ltd. v. Dente, 798 F. Supp. 2d 506, 507 (S.D.N.Y. 2011).
The Court finds that the Amended Complaint, read in a light most favorable to Rosen,
does not sufficiently plead facts to support a finding of unjust enrichment, which is the predicate
injury for the remedy of a constructive trust.
As an initial matter, the Court notes that the Amended Complaint incorrectly frames the
cause of action underlying Count III as “the imposition of a constructive trust.” Am. Compl. ¶
49-53. A constructive trust is a remedy, not a cause of action. The proper pleading would be a
claim for unjust enrichment, with the requested relief of a constructive trust. See Amusement
Indus., Inc. v. Stern, 693 F. Supp. 2d 327, 357 (S.D.N.Y. 2010) (“[A constructive trust] is not an
independent cause of action but a device by which property may be recovered if the person
holding the property was unjustly enriched.”).
Here, Rosen’s true claim is for fraudulent inducement, a common law tort pled
(incorrectly as a claim for declaratory judgment, as discussed above) in Count I of the Amended
Complaint. A claim for unjust enrichment is inappropriate where an overlapping common law
claim is available to the plaintiff. See Benham v. eCommission Sols., LLC, 118 A.D.3d 605, 607,
989 N.Y.S.2d 20 (N.Y. 2014); Corsello v. Verizon New York, Inc., 18 N.Y.3d 777, 791, 967
N.E.2d 1177 (N.Y. 2012) (“An unjust enrichment claim is not available where it simply
duplicates, or replaces, a conventional contract or tort claim.”). In such cases, the plaintiff’s
remedies are limited to those provided under the common law claim, to the exclusion of those
remedies that flow from unjust enrichment. See id. (“Plaintiffs allege that [defendant] committed
actionable wrongs . . . by deceiving them into thinking they were not entitled to compensation.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 28 of 36

27
To the extent that these claims succeed, the unjust enrichment claim is duplicative; if plaintiffs'
other claims are defective, an unjust enrichment claim cannot remedy the defects.”); see also
Samiento v. World Yacht Inc., 10 N.Y.3d 70, 81, 883 N.E.2d 990 (N.Y. 2008).
Nonetheless, the Court will proceed with its constructive trust analysis, since the factual
allegations supporting Count III are identical to those supporting Count I; therefore a successful
claim in Count I could, at least in theory, support an equitable remedy in the form of a
constructive trust. See Comcast of Illinois X, LLC, 2004 WL 1718522, at *8 (“Although a
constructive trust claim is superfluous, a plaintiff still has the option to prove that a constructive
trust is an appropriate equitable remedy if it prevails on other claims.”).
A claim for unjust enrichment and a remedy of a constructive trust is applicable “only in
unusual situations when, though the defendant has not breached a contract nor committed a
recognized tort, circumstances create an equitable obligation running from the defendant to the
plaintiff.” Corsello, 18 N.Y.3d at 790–91. The guiding purpose of a constructive trust, as an
equitable remedy, is to correct such instances of unjust enrichment that would not otherwise be
redressable under common law actions. See Corsello, 18 N.Y.3d at 790–91, 967 (“Unjust
enrichment is not a catchall cause of action to be used when others fail.”); Boyle v. Kelley, 42
N.Y.2d 88, 91, 365 N.E.2d 866 (N.Y. 1977) (“[E]quity will not entertain jurisdiction where there
is an adequate remedy at law.”).
Unjust enrichment exists where “the acts of the parties or others have placed in the
possession of [the defendant] money, or its equivalent, under such circumstances that in equity
and good conscience he ought not to retain it.” Miller v. Schloss, 218 N.Y. 400, 407, 113 N.E.
337 (N.Y. 1916). See In re First Cent. Fin. Corp., 377 F.3d at 213; see also Marini v. Adamo, 12
F. Supp. 3d 549, 552 (E.D.N.Y. 2014), aff'd, 644 F. App'x 33 (2d Cir. 2016) (“To prevail on a
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 29 of 36

28
claim for unjust enrichment in New York, a plaintiff must establish: (1) defendant was enriched;
(2) the enrichment was at plaintiff's expense; and (3) the circumstances were such that equity and
good conscience require defendant[ ] to make restitution.”) (internal quotation marks and
citations omitted).
While a finding of fraud can be grounds for the imposition of a constructive trust outside
of bankruptcy, see, e.g., S.E.C. v. Credit Bancorp, Ltd., 290 F.3d 80, 88 (2d Cir. 2002),
“bankruptcy courts are generally reluctant to impose constructive trusts without a substantial
reason to do so.” In re First Cent. Fin. Corp., 377 F.3d at 217. In the context of bankruptcy,
where – as seems to be the case here – liabilities generally outweigh assets, a court must consider
the equities of all creditors in determining whether there was unjust enrichment. Id. at 218 (“A
constructive trust is fundamentally at odds with the general goals of the Bankruptcy Code.”)
(quoting In re Omegas Grp., 16 F.3d at 1451).
Here, there is no unjust enrichment because the estate is not “unjustly” enriched. In re
Dreier LLP, 429 B.R. 112, 137 (Bankr. S.D.N.Y. 2010) (“Although the trustee's recovery of the
disputed property enriches the bankrupt estate, the estate is not ‘unjustly’ enriched.”). Defendant
Chowaiki may have personally benefited from his fraudulent activities, at least in the short term,
but Rosen does not allege that the Debtor Gallery was unjustly enriched by Chowaiki’s scheme.
More significantly, even to the extent that the Gallery may have been enriched prior to
bankruptcy, the gravitational center of the equities analysis focuses on the totality of the Debtor’s
creditors once bankruptcy was initiated. See In re First Cent. Fin. Corp., 377 at 218 (“[W]e
believe it important to carefully note the difference between constructive trust claims arising in
bankruptcy as opposed to those that do not, as the equities of bankruptcy are not the equities of
the common law.”) (citations and quotation marks omitted); In re Vichele Tops, Inc., 62 B.R.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 30 of 36

29
788, 792 (Bankr. E.D.N.Y. 1986) (“While courts, in nonbankruptcy matters, consider primarily
the interests of the parties before it, a court of bankruptcy has a broader scope. It must interpret
its enabling legislation in the light of its purpose.”) (internal quotation marks and citations
omitted).
In the chapter 7 context, where the Debtor’s assets are essentially confiscated and
converted into property of the bankruptcy estate, and where the Trustee is governed by equitable
obligations to apportion the estate so that all “unsecured creditors receive fair but not full
returns,” In re First Cent. Fin. Corp., 377 F.3d at 218, the Trustee simply cannot be said to hold
property “under such circumstances that in equity and good conscience he ought not to retain it.”
Id. (quoting Simonds, 45 N.Y.2d at 242); see In re Commodore Bus. Machs., Inc., 180 B.R. 72,
83 (Bankr. S.D.N.Y. 1995) (“[C]onstructive trusts are anathema to the equities of bankruptcy
since they take from the estate, and thus directly from competing creditors, and not from the
offending debtor.”) (quoting In re Omegas Grp., 16 F.3d at 1452).
The very purpose of bankruptcy is to protect the interests of all creditors from the actions
of individual creditors, to “eliminate[ ] strategic costs that would otherwise be associated with a
race to the courthouse.” Thomas H. Jackson, Bankruptcy, Non-Bankruptcy Entitlements, and the
Creditors’ Bargain, 91 YALE L.J. 857, 862 (1982); see also Young v. Higbee Co., 324 U.S. 204,
210 (1945) (“[T]o protect the creditors from one another”). No equities would be served here by
allowing Plaintiff to satisfy his losses while similarly situated creditors, many of whom hold
similar causes of action against the Debtor for fraud and fraudulent inducement, wait for pro rata
distribution. See In re Ades & Berg Grp. Inv'rs, 550 F.3d 240, 244 (2d Cir. 2008) (“There is no
inequity in treating [creditor] in the same manner as any other depositor/creditor who was
unfortunate enough to have placed its money’ with the [debtor].”); In re Flanagan, 503 F.3d 171,
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 31 of 36

30
182 (2d Cir. 2007) (“This type of privileging of one unsecured claim over another clearly thwarts
the principle of ratable distribution underlying the Bankruptcy Code.”).
Rosen’s pleadings do not demonstrate a “substantial reason” for the Court to allow him to
remove the Wired Funds from the bankruptcy estate, at the expense of other creditors. In re
First Cent. Fin. Corp., 377 F.3d at 218; see Miller v. Hartford Life Ins. Co., 64 F. App'x 795,
797 (2d Cir. 2003) (“[U]nder New York law, one who seeks to impose a constructive trust must
establish the facts giving rise to that remedy by clear and convincing evidence.”). As alleged by
Rosen himself, Chowaiki defrauded many others. See Am. Compl. ¶¶ 19-20, 21-32. Indeed,
Chowaiki pled guilty in the Criminal Case for having “devised a scheme and artifice to defraud
and for obtaining money and property by means of false and fraudulent pretenses . . .” involving
at least twenty-five pieces of art, and with proceeds traceable to the commission of the offense in
the amount of at least $16,635,370. Criminal Case, Docket No. 15. Shortly after filing for
bankruptcy, the Debtor Gallery’s schedules listed liabilities of $11,877,011.03 and assets of
$276,681.59. Case No. 17-13228, ECF No 7; see Motion to Dismiss ¶ 6. The Trustee further
reports that upon taking control of the estate, it came into the possession of between 150-200
pieces of art many of which are claimed by third-parties. First Hearing 17:2-10. To impose a
constructive trust on the estate would only serve to prejudice the other creditors in this case. See
In re Dreier LLP, 2016 WL 3920358, at *7 (S.D.N.Y. July 15, 2016), aff'd, 683 F. App'x 78 (2d
Cir. 2017) (“Equity is not served by disadvantaging one set of victims in order to restore another,
where the only source of assets is a limited common pool.”); In re Dreier LLP, 429 B.R. at 134
(“The right of a Ponzi scheme victim to . . . gain priority over other victims, is severely limited.”)
(citing SEC v. Credit Bancorp, 290 F.3d at 88-89).9
9 Rosen points to the allegation in his Amended Complaint that the Wired Funds remain intact and traceable in the
Debtor’s bank account in support of his request for the imposition of a constructive trust. Am. Compl. ¶ 33-35.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 32 of 36

31
Rosen may, of course, file a proof of claim in the bankruptcy, and stand to be treated in
the same pro rata manner as the Debtor’s other creditors. However, he has not stated a claim
that is plausible on its face to show unjust enrichment and is therefore not entitled to the
imposition of a constructive trust. As such, Count III fails to state a claim for which relief can be
granted.
Furthermore, while the absence of unjust enrichment, standing alone, is fatal to a request
for a constructive trust, Rosen also does not plead a facially plausible fiduciary relationship with
Chowaiki or any other relationship of trust that might warrant the imposition of a constructive
trust. Rosen asserts in his Amended Complaint that the Gallery owed a fiduciary duty to him “by
virtue of his status as a partner” in a purported joint venture centered around the purchase and
resale of the Kandinsky. 10 	Am. Compl. ¶ 51. The Court finds, based on the alleged facts, that
While it is true that a claimant of funds held in trust or in escrow bears the burden of tracing these funds “to the
specific property at issue.” In re Schick, 234 B.R. 337, 344 (Bankr. S.D.N.Y. 1999), Rosen’s assertions here belie
his overall argument that a constructive trust is appropriate. This is because Chowaiki did not hold the Wired Funds
“in trust” at any time prior to bankruptcy. “Congress plainly excluded [from the property of the debtor within the
meaning of Section 541] property of others held by the debtor in trust at the time of the filing of the petition.”
United States v. Whiting Pools, Inc., 462 U.S. 198, 205 (1983). But “in trust” in that context refers to situations of
segregated escrow accounts, or other types of bailment relationships that involve fiduciary obligations. See In re
Dreier LLP, 527 B.R. at 138 (“[E]scrow funds present a distinct situation, because the property at issue is held in
trust and, therefore, the escrow agent has no legal or equitable interest in that property. With respect to [debtor /
defendant’s] other “client” victims, such as Gardi, no valid trust or escrow account existed . . . [because defendant]
simply stole the funds at issue without Gardi's knowledge.”).
Here, where there are merely allegations of an arms-length business transaction gone bad, Chowaiki was
fully entitled to comingle the Wired Funds with his own funds, and therefore no “trust” existed. See In re Black &
Geddes, Inc., 35 B.R. 830, 836 (Bankr. S.D.N.Y.1984) (“It is a firmly established principle that if a recipient of
funds is not prohibited from using them as his own and commingling them with his own monies, a debtor-creditor,
not a trust, relationship exists.”). While the Court can retroactively determine that a constructive trust had
materialized prior to bankruptcy as a consequence of a subsequent finding of unjust enrichment, see 5 Austin W.
Scott & William F. Fratcher, The Law of Trusts § 462.4 (4th ed. 1987) (“The word ‘constructive’ is derived from
the verb ‘construe,’ not from the verb ‘construct.’ … the court construes the circumstances in the sense that it
explains or interprets them; it does not construct them.”), as previously discussed, the Court ultimately concludes
that there is no unjust enrichment.
10 Rosen asserted an alternative argument for the first time in his Opposition to the Trustee’s Motion to Dismiss,
[ECF No. 14], alleging that even if the Court finds there is no joint venture between the parties, a fiduciary
relationship nevertheless arose between Rosen and Chowaiki based, inter alia, on Chowaiki holding himself out as
an expert in Kandinsky paintings. This coupled with Chowaiki’s other actions and his exploitation of Rosen’s long-
standing friendship with Barberi, allegedly fostered a relationship of trust between the two upon which Rosen relied.
However, the Court declines to sustain a claim of a fiduciary relationship on this basis since it is predicated on facts
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 33 of 36

32
the transaction involving the Kandinsky was an arms-length commercial transaction and not a
joint venture. The relationship between Rosen and Chowaiki therefore did not give rise to any
obligations “stricter than the morals of the market place,” Meinhard v. Salmon, 164 N.E. 545,
249 N.Y. 458 (N.Y. 1928) and would be unlikely to entitle Rosen to a remedy of a constructive
trust, even if the equities were weighed in a non-bankruptcy context. See Faulkner v. Arista
Records LLC, 602 F. Supp. 2d 470, 482 (S.D.N.Y. 2009) (“Generally, an arm's length business
transaction, even those where one party has superior bargaining power, is not enough to give rise
to a fiduciary relationship.”) (quoting Sony Music Entertainment, Inc. v. Robison, et al., 2002
WL 272406, at *3 (S.D.N.Y. Feb. 26, 2002)).
The constructive trust doctrine is not “rigidly limited,” Simonds, 45 N.Y.2d at 241, 380
N.E.2d at 194, and the absence of any one factor in the analysis “will not itself defeat the
imposition of a constructive trust when otherwise required by equity.” In re Koreag, Controle et
Revision S.A., 961 F.2d at 353. However, the character of the relationship between plaintiff and
defendant is informative in determining whether inequitable unjust enrichment has occurred. See
id. at 353-54 (the heart of the issue is whether the “person wrongfully acquiring property can be
treated as a constructive trustee notwithstanding the lack of a fiduciary relationship.”).
For this reason, many cases in this circuit have ruled that a failure to plead a confidential
relationship precludes a constructive trust remedy as a matter of law, even after acknowledging
that this element is not a sine qua non of a constructive trust. See, e.g, Atateks Foreign Trade
Ltd. v. Dente, 798 F. Supp. 2d 506, 507-08 (S.D.N.Y. 2011); Faulkner v. Arista Records LLC,
602 F. Supp. 2d 470 (S.D.N.Y. 2009); DLJ Mortg. Capital, Inc. v. Kontogiannis, 2009 WL
outside the scope of what is alleged in the Complaint. Goodman v. Port Authority of N.Y.& N.J., 850 F. Supp. 2d
363, 384 n.3 (S.D.N.Y. 2012) (“In so far as Plaintiff and Port Authority assert new factual allegations, they are not
considered.”) (citing Adler v. Aztech Chas P. Young Co. 807 F. Supp. 1068, 1072 (S.D.N.Y. 1992)).
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 34 of 36

33
1652253 (E.D.N.Y. June 4, 2009). Even in In re Koreag, Controle et Revision S.A., the case
most often cited in New York for the proposition that the absence of a confidential or fiduciary
relationship does not “automatically defeat [a] claim of constructive trust,” the court nevertheless
concluded that “[c]learly, [defendant] was acting in some fiduciary capacity towards some
entities at the time it received the Disputed Funds.” 961 F.2d at 354 (emphasis in original).
Participation in a joint venture will create fiduciary obligations to other members of the
joint venture. Northern Shipping Funds I, LLC v. Icon Capital Corp., 921 F. Supp. 2d 94, 102
(S.D.N.Y. 2013). However, without analyzing each of the elements of a joint venture, it is clear
to the Court that Rosen has not pled any degree of co-management or control over the
transaction, which is an indispensible element of a joint venture. This is fatal to Rosen’s claim
of a joint venture with Chowaiki. See Cosy Goose Hellas v. Cosy Goose USA. Ltd., 581 F. Supp.
2d 606, 620 (S.D.N.Y. 2008) (“The party seeking to evince the existence of a joint venture must
establish each of the[] elements.”); Allen Chase & Co. v. White, Weld & Co., 311 F. Supp. 1253,
1260 (S.D.N.Y .1970) (“Perhaps the most important criterion of a joint venture is the joint
control or management.”). “The control deemed essential for a joint venture is power over
decision making.” Stratford Group, Ltd. v. Interstate Bakeries Corp., 590 F. Supp. 859, 863
(S.D.N.Y. 1984).
From the email exchange between Barberi and Rosen on or around October 11, 2017, it is
clear that the initial idea to buy and resell the Kandinsky was Chowaiki’s and that he was the
party that had the expertise necessary to carry out the transaction. Am. Compl. ¶ 11.
Additionally, it was Chowaiki who was wholly responsible for finding a potential client to whom
the Kandinsky could be resold. Neither Rosen nor Barberi had any role in negotiating a resale
price with said client. Id. ¶14. Indeed, Rosen acknowledged that “the identities of any potential
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 35 of 36

34
buyer or seller remained a secret known only to Chowaiki.” Opp, Memo. at 15. Aside from
investing a portion of the funds into the transaction, Rosen alleges that he had no input as to how
the deal would be directed, and merely stood to make a profit on his initial investment once
Chowaiki had concluded the proposed transaction. In view of the foregoing, the complaint
wholly fails to describe Rosen as anything other than a passive investor who had no right to
direct or control the transaction in any way. See McGhan v. Ebersol, 608 F. Supp. 277, 284
(S.D.N.Y. 1985) (a party's inability to exert control over another's decision-making demonstrates
that joint control is lacking). As such, any argument that an imposition of a constructive trust is
warranted by reason of a joint venture cannot overcome Plaintiff’s failure otherwise to state a
plausible claim for relief in Count III.
CONCLUSION
For the reasons set forth above,11 Plaintiff has failed to state a claim upon which relief
can be granted and the Motion to Dismiss is granted.
It is so ORDERED.
Date: 	New York, New York
November 16, 2018
s/ Mary Kay Vyskocil
Honorable Mary Kay Vyskocil
United States Bankruptcy Judge
11 The Court has considered the Trustee and Rosen’s remaining arguments, and to the extent not specifically
addressed herein, concludes that they lack merit.
17-01242-lgb Doc 44 Filed 11/20/18 Entered 11/20/18 13:52:06 Main Document
Pg 36 of 36