Ranasinghe v. U.S.BANK NATIONAL ASSOCIATION AS TRUSTEE FOR MORGA

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------------------------------------x
In re: 	Chapter 7
KEERTHI RANASINGHE, 	Case No. 23-42430-ess
Debtor.
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KEERTHI RANASINGHE,
Adv. Pro. No. 23-01112-ess
Plaintiff,
-against-
U.S. BANK NATIONAL ASSOCIATION AS
TRUSTEE FOR MORGAN STANLEY
MORTGAGE LOAN TRUST 2007-11AR,
PHH MORTGAGE AS SERVICER FOR U.S. BANK
NATIONAL ASSOCIATION, SUCCESSOR-IN-
INTEREST TO BANK OF AMERICA, N.A.,
SUCCESSOR-BY-MERGER TO LASALLE
BANK NATIONAL ASSOCIATION, AS TRUSTEE,
FOR MORGAN STANLEY MORTGAGE LOAN TRUST
2007 11AR, MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2001-11AR,
Defendants.
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MEMORANDUM DECISION ON THE
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
Appearances:
Keerthi Ranasinghe
224 Holden Boulevard
Staten Island, NY 10314
Debtor, pro se
Kevin R. Toole, Esq.
Robertson, Anschutz, Schneid, Crane &
Partners
900 Merchants Concourse (Suite 310)
Westbury, NY 11590
Attorneys for U.S. Bank National
Association as Trustee for Morgan Stanley
Mortgage Loan Trust 2007-11AR and PHH
Mortgage Corporation as Servicer for U.S.
Bank National Association, Successor-in-
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Interest to Bank of America, N.A., Successor-
by-Merger to LaSalle Bank National
Association, as Trustee, for Morgan Stanely
Mortgage Loan Trust 2007-11AR, Mortgage
Pass-Through Certificates, Series 2007-11AR
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Introduction
This adversary proceeding and Motion for Summary Judgment are the latest chapters in a
long-running mortgage foreclosure dispute spanning nearly fourteen years. It has been the
subject of at least two foreclosure actions in New York Supreme Court, commenced in
December 2012 and October 2016, the July 2023 Chapter 7 bankruptcy case of Keerthi
Ranasinghe, and now, this adversary proceeding brought by Mr. Ranasinghe against the
mortgage lenders nearly three years ago, in November 2023.
Litigation continues in the New York State Court action, where Mr. Ranasinghe’s appeal
of the Judgment of Foreclosure and Sale is pending. By contrast, Mr. Ranasinghe’s Chapter 7
bankruptcy case is substantially complete, the mortgage lenders sought and received relief from
the bankruptcy automatic stay in November 2023, to continue the state court proceedings, and
Mr. Ranasinghe received a bankruptcy discharge in February 2024.
This adversary proceeding has followed a long path of its own. The initial Complaint,
filed in November 2023, was comprised of several exhibits, but did not include a complaint or
adversary proceeding cover sheet. That was followed in December 2023 by the amended
Complaint. Following a period of discovery and case management conferences with the Court,
in May 2025, this Summary Judgment Motion was made. Several months later, in October 2025,
counsel for Mr. Ranasinghe indicated his intention to withdraw from representing him, and in
December 2025, the Court granted his motion to withdraw. But again, time passed, and in
March 2026, the Court entered an order formally relieving Mr. Ranasinghe’s counsel.
The submission of briefs and arguments on this Summary Judgment Motion has also
occurred over an extended period, beginning in May 2025, with argument in December 2025,
supplemental briefing in April 2026, and a renewed argument in June 2026.
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And now, with the benefit of a very full record, the Court turns to the question posed by
the Summary Judgment Motion: have the mortgage lenders shown that they are entitled to
judgment as a matter of law on the claims set forth in the Amended Complaint? As explained
below, the Court concludes that they have met their burden to show that there is no genuine
dispute as to a material fact, and they are entitled to judgment dismissing the Amended
Complaint with prejudice.
Jurisdiction
This Court has jurisdiction over this matter pursuant to Judiciary Code Sections 157 and
1334, and the Standing Order of Reference dated August 28, 1986, as amended by the Order
dated December 5, 2012, of the United States District Court for the Eastern District of New
York. This is a core proceeding pursuant to Judiciary Code Sections 157(b)(2)(A), 157(b)(2)(H),
157(b)(2)(I), and 157(b)(2)(K). Venue is proper in this Court pursuant to Judiciary Code
Sections 1408 and 1409.
Selected Background and Procedural History
The Debtor’s Chapter 7 Case
On July 11, 2023, Keerthi Ranasinghe, by counsel, filed a voluntary petition for relief
under Chapter 7 of the Bankruptcy Code. See In re Keerthi Ranasinghe, Case No. 23-42430,
ECF No. 1.
On September 22, 2023, PHH Mortgage Corporation (“PHH”), as Servicer for U.S. Bank
National Association, Successor-in-Interest to Bank of America, N.A, Successor-by-Merger to
LaSalle Bank National Association, as Trustee for Morgan Stanley Mortgage Loan Trust 2007-
11AR, Mortgage Pass-Through Certificates, Series 2007-11AR (“U.S. Bank”, and together with
PHH, the “Secured Creditor” or “Movants”) filed a motion for stay relief (the “Stay Relief
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Motion”) with respect to Mr. Ranasinghe’s residence located at 224 Holden Boulevard, Staten
Island, New York 10314 (the “Property”). See In re Keerthi Ranasinghe, Case No. 23-42430,
ECF No. 36.
On November 14, 2023, the Court held a hearing on the Stay Relief Motion, at which Mr.
Ranasinghe, by counsel, and the Secured Creditor, appeared and were heard, and the Court
granted stay relief. See In re Keerthi Ranasinghe, Case No. 23-42430, ECF entry dated
November 14, 2023. And on November 17, 2023, the Court entered an Order modifying the
automatic stay, to permit the Secured Creditor to pursue its rights under applicable law with
respect to the Property. See In re Keerthi Ranasinghe, Case No. 23-42430, ECF No. 46.
On February 1, 2024, the Court entered an Order discharging Mr. Ranasinghe. See In re
Keerthi Ranasinghe, Case No. 23-42430, ECF No. 49. As of the date of this Memorandum
Decision, Mr. Ranasinghe’s Chapter 7 bankruptcy case remains open.
The New York State Court Foreclosure Actions
Some background as to the New York State foreclosure actions concerning the Property
provides helpful context for the issues before the Court on this motion.
On December 13, 2012, U.S. Bank National Association, as Trustee for Morgan Stanley
Mortgage Loan Trust 2007-11AR, Mortgage Pass-Through Certificates, Series 2007-11AR (the
“2012 Foreclosure Action Plaintiff”) filed a foreclosure action with respect to the Property in
Supreme Court of the State of New York, County of Richmond, against Jayantha C.
Weerasinghe, Mr. Ranasinghe, Environmental Control Board, NYC Parking Violation, Capital
One Bank (USA), N.A., Criminal Court of the City of New York, and “John Does #1” through
“John Doe #12,” the last twelve names being fictitious and unknown to plaintiff, the persons of
parties intended being the tenants, occupants, persons or corporations, if any, having or claiming
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an interest in or lien upon the premises, described in the complaint (the “2012 Foreclosure
Action Defendants”), Index Number 12-130933 (the “2012 Foreclosure Action”). See
Opposition to the Summary Judgment Motion, ECF No. 34 (the “Summ. Judg. Opp.”), Exh. A
(2012 Foreclosure Action Summons and Complaint).
On January 18, 2013, the 2012 Foreclosure Action Defendants filed a motion to dismiss
the 2012 Foreclosure Action on grounds, among others, that the 2012 Foreclosure Action
Plaintiff did not have standing to bring the action. See Summ. Judg. Opp. Exh. B (2012
Foreclosure Action Order of Dismissal), at 2. On or about August 21, 2013, the New York State
Supreme Court granted the motion to dismiss because, among other reasons, “[w]hile plaintiff
has provided credible information, a recorded assignment, regarding the assignment of the
mortgage prior to the commencement of the action, it has not submitted a similar document or
evidence with regard to the note.” Summ. Judg. Opp. Exh. B (2012 Foreclosure Action Order of
Dismissal). at 2. Accordingly, the New York State Supreme Court granted the State Court
Defendants’ motion to dismiss the 2012 Foreclosure Action without prejudice. See id.
On October 24, 2016, U.S. Bank filed a second foreclosure action with respect to the
Property in Supreme Court of the State of New York, County of Richmond, against Mr.
Weerasinghe, Mr. Ranasinghe, New York City Environmental Control Board, and “John Does
#1” through “John Doe #10,” the last 10 names being fictitious and unknown to plaintiff, the
persons of parties intended being the persons or parties, if any, having or claiming an interest in
or lien upon the mortgaged premises described in the complaint, Index Number 135822/2016
(the “2016 Foreclosure Action”). See Summ. Judg. Opp. Exh. C (2016 Foreclosure Action
Summons and Complaint). And on March 8, 2022, the New York Supreme Court entered a
judgment of foreclosure and sale in the 2016 Foreclosure Action (the “2022 Judgment of
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Foreclosure and Sale”). See Motion for Summary Judgment, ECF No. 33 (the “Summ. Judg.
Mot.”), Exh. D (2022 Judgment of Foreclosure and Sale).
This Adversary Proceeding
On November 30, 2023, Mr. Ranasinghe, by counsel, commenced this adversary
proceeding by filing a complaint (the “November 2023 Complaint”) against U.S. Bank and PHH.
ECF No. 1. This filing includes several exhibits, but it does not include a complaint or an
adversary proceeding cover sheet. See id. Those exhibits include this Court’s Order modifying
the automatic stay, the summons and complaint in the 2012 Foreclosure Action, including a
description of the Property, the note and an adjustable rate rider and assignment of mortgage, but
no underlying mortgage documents, the 2012 Foreclosure Action Plaintiff’s Sur-Reply in the
2012 Foreclosure Action, the order of dismissal in the 2012 Foreclosure Action, and the deed to
the Property. Id. As the docket reflects, Mr. Ranasinghe’s counsel was contacted and asked to
file an amended complaint and adversary proceeding cover sheet. See ECF entry dated
December 1, 2023.
On December 5, 2023, Mr. Ranasinghe, again by counsel, filed an amended complaint,
titled “Complaint to Determine Dischargeability of Debt.” See Amended Complaint, ECF No. 3
(the “Amended Complaint” or “Am. Compl.”). As described below, the Amended Complaint
sets forth four claims for relief against U.S. Bank and PHH. See Am. Compl. ¶¶ 88-114. He
also filed an adversary proceeding cover sheet. See ECF No. 4.
On June 10, 2024, the Secured Creditor filed a stipulation, signed by Mr. Ranasinghe, by
counsel and U.S. Bank and PHH, in which Mr. Ranasinghe withdrew his First and Second
Claims for Relief. See Stipulation, ECF No. 17 (the “Stipulation”), at 2. The Stipulation also
provides that Mr. Ranasinghe, U.S. Bank, and PHH will “comply with any . . . rule 26 discovery
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served upon them by the other party in a timely manner pursuant to relevant rules, or as agreed to
by the . . . parties, or as ordered by the Court.” Id. On March 30, 2026, the Court “so-ordered”
the Stipulation, withdrawing the First and Second Claims for Relief. So-Ordered Stipulation of
Dismissal, ECF No. 45 (the “So-Ordered Stipulation”), at 2.
And on September 27, 2024, Mr. Ranasinghe, by counsel, filed a stipulated Joint
Discovery Control Plan, signed on behalf of Mr. Ranasinghe by counsel, and by U.S. Bank and
PHH by their counsel, setting forth a schedule for serving discovery including a timeframe for
serving requests for production of documents, an anticipated list of parties to be deposed, a
timeframe for serving expert reports, and a discovery deadline of January 30, 2025. See ECF
No. 19. The Joint Discovery Control Plan was so-ordered by the Court on October 17, 2024.
See ECF No. 20.
The Allegations of the Amended Complaint
In the Amended Complaint, Mr. Ranasinghe states that as of about February 13, 2007, he
owned a 99 percent interest, and Mr. Weerasinghe owned a one percent interest, in the Property.
Am. Compl. ¶ 12. Mr. Ranasinghe asserts that on February 13, 2007, Mr. Weerasinghe executed
a note (the “Note”) in favor of First National Bank of Arizona (“First National”) with a principal
amount of $380,000. Am. Compl. ¶¶ 13-14. And Mr. Ranasinghe alleges that he did not execute
the Note and has never been a party to the Note. Am. Compl. ¶ 16. In addition, he avers that
“the owner Keerthi Ranasinghe who owned 99% of the share of the [P]roperty has not executed
any Note or was not a party to the said Note.” Id. At the same time, Mr. Ranasinghe alleges that
“the said Mortgage identified Keerthi Ranasinghe and Jayantha Weerasinghe as ‘Brower’.” Am.
Compl. ¶ 18. That is, at least indirectly, the Amended Complaint identifies Mr. Ranasinghe as a
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mortgagor, though not a borrower, with respect to the Note and Mortgage secured by the
Property. See id.
The Amended Complaint also states that “[t]he original lender of the said mortgage was
First National Bank of Arizona the servicer of the mortgage was GMAC.” Am. Compl. ¶ 20.
And it states that the servicer of the mortgage changed, from GMAC to Saxon Mortgage. See
Am. Compl. ¶¶ 20-21, 23.
Mr. Ranasinghe alleges that following a default, Mr. Weerasinghe requested a
modification from the servicer, and that following an additional transfer of the Note, “[t]he
completed Modification agreement was received by the Plaintiff Keerthi Ranasinghe and
Jayantha Weerasinghe dated August 3, 2010.” Am. Compl. ¶ 28. See Am. Compl. ¶¶ 24-27. In
that modification, the lender was identified as “‘U.S. National Association as trustee for Morgan
Stanley Mortgage Loan Trust 2007-11AR’, which was a different name than the original lender
‘the First National Bank of Arizona.’” Am. Compl. ¶ 29. After that, the Amended Complaint
states, in October 2011, another entity, “OCWEN acquired the loan servicing company Saxon
Mortgage Services Inc.” Am. Compl. ¶ 30. And then, “[t]he Borrowers again defaulted the
Loan installments again.” Am. Compl. ¶ 31.
Mr. Ranasinghe next points to the circumstances of the 2012 Foreclosure Action and
avers that it “was commenced by a stranger but not the original lender.” Am. Compl. at p. 5. He
asserts that “[t]he original lender did not file any foreclosure action” and instead, that “[a]
stranger,” U.S. Bank, brought a foreclosure action in New York Supreme Court, Richmond
County, against Mr. Weerasinghe and him. Am. Compl. ¶¶ 32-33. And in that action, “[t]he
court granted the Motion to dismiss filed by the Defendant for lack of standing.” Am. Compl. ¶
37.
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The Amended Complaint next describes the 2016 Foreclosure Action commenced by
U.S. Bank. Am. Compl. at p. 6. It states, “[o]n October 24, 2016, the Second foreclosure action
was commenced by a new party other than the original lender. This new party was not the party
who commenced the first foreclosure action.” Am. Compl. ¶ 40. Again, “[t]he defendants were,
Jayantha Weerasinghe and Keerthi Ranasinghe.” Am. Compl. ¶ 41.
Mr. Ranasinghe alleges that “[t]he Complaint has attached a copy of the original Note
and separately filed two Allonges.” Am. Compl. ¶ 43. He also avers that “[t]he Note was
transferred from one trust to another Trust. But No trust documents were attached with [the]
complaint.” Am. Compl. ¶ 46. The Amended Complaint also describes a “new Allonge [that]
transferred the Note to the Bank of Nevada.” Am. Compl. ¶ 49. And it states, “all three
Allonges created misconduct[,] as the title to the Note was not clear and the Allonges were not
legally valid on the face of the documents and concluded the Allonges were fabricated.” Am.
Compl. ¶ 50.
The Amended Complaint also sets forth certain of the circumstances leading to the
dismissal of the 2012 Foreclosure Action. It states that the complaint in that action “contained
the original Note independently without any endorsement or Allonges.” Am. Compl. ¶ 54. It
also states that the court “concluded that there was no endorsement or any allonges attached to
the Original Note” and that “[t]he original Note was independently sitting in the Complaint.”
Am. Compl. ¶¶ 57-58. And it avers that “[t]he court dismissed the action as the Note Holder
could not present to the Court to prove that the Note was assigned on July 27, 2012, as the
attorney informed the Court.” Am. Compl. ¶ 59. This, Mr. Ranasinghe alleges, “established that
no endorsement or allonges ever existed when the case was dismissed on August 21, 2013,” and
“this decision will become the law of the case.” Am. Compl. ¶¶ 60-61. And he states that
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“Defendants have not challenged or appealed against the decision of the First foreclosure action
by Supreme Court,” and that, under the doctrine of collateral estoppel, “the Bankruptcy Court
has to accept the decision of the first Foreclosure action and accept the issues that were resolved
by the first foreclosure action.” Am. Compl. ¶¶ 62, 67. See Am. Compl. ¶¶ 63-66.
Finally, Mr. Ranasinghe advances several allegations that are, in substance, assertions or
arguments for the relief that he seeks. He states that “Debtor Keerthi Ranasinghe has a 99%
ownership interest in the [Property, and] therefore has interest in the Bankruptcy Estate.” Am.
Compl. at p. 9. He also repeats that Mr. Weerasinghe “has only 1% interest in the [Property],”
that Mr. Weerasinghe “has signed the Promissory Note and liable for the debt personally.
Debtor Keerthi Ranasinghe was not liable for the debt,” and “[t]herefore, [the] Bankruptcy
should declare that Keerthi Ranasinghe has [a] 99% share in the estate.” Am. Compl. ¶¶ 69-71.
Next, Mr. Ranasinghe alleges that he “has a surplus in the Bankruptcy Estate and has
claimed in the schedule that he owned the [Property].” Am. Compl. at p. 10. The Amended
Complaint states that “[t]he Debtors . . . have provided evidence to establish that there is a
possibility of a surplus in the bankruptcy estate. If the [D]ebtor [is] successful in the Complaint
he is entitled to the value of the Property.” Am. Compl. ¶ 72. He again asserts that he “did not
sign the Note and is not liable for the debt.” Am Compl. ¶ 74. See Am. Compl. ¶ 75. By
contrast, Mr. Ranasinghe asserts, Mr. Weerasinghe “executed the Promissory Note when he had
1% ownership interest in the said property.” Am. Compl. ¶ 76.
Mr. Ranasinghe also states that, in substance, it may be assumed that he “has [liability]
under the Mortgage as he signed the Mortgage.” Am. Compl. at p. 11. But, he also avers, “after
filing bankruptcy the debtor was discharged in a Chapter 7.” Id. And he asserts that “[a]
bankruptcy discharge releases the debtor from personal liability for certain specified types of
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debts.” Am. Compl. ¶ 78. He also states, “[t]he Bankruptcy Court should discharge the Debtor’s
debt that arises under the Mortgage deed and or any decision in a foreclosure action.” Am.
Compl. ¶ 81.
And Mr. Ranasinghe again asserts that he “has a surplus in the Bankruptcy Estate and has
claimed in the schedule that he owned the [Property].” Am. Compl. at p. 11. He alleges that
“[t]he Debtors . . . have provided evidence to establish that there is a possibility of a surplus in
the bankruptcy estate. If the [D]ebtor [is] successful in the Complaint he is entitle[d] to the value
of the Property.” Am. Compl. ¶ 82. And he states again that he “did not sign the Note and is not
liable for the debt.” Am. Compl. ¶ 84. Mr. Ranasinghe also avers that “[a]s a security[,] non-
party Jayantha C. Weerasinghe signed the Mortgage. Therefore, the non-party was liable for his
share of ownership in the said property.” Am. Compl. ¶ 87.
In the First Claim for Relief, Mr. Ranasinghe seeks a declaratory judgment that he “was
discharged against the debt of the creditor.” Am. Compl. at p. 12. See Am. Compl. ¶¶ 88-94.
He asks “the [C]ourt to declare that the [D]ebtor was discharged after filing [C]hapter 7
Bankruptcy,” among other relief. Am. Compl. ¶ 93. As noted above, Mr. Ranasinghe has now
withdrawn the First Claim for Relief, and it has been dismissed. See Summ. Judg. Opp. at 5; So-
Ordered Stipulation at 2.
In the Second Claim for Relief, Mr. Ranasinghe seeks a declaratory judgment that U.S.
Bank “has no claim and interest against” him. Am. Compl. at p. 13. See Am. Compl. ¶¶ 95-106.
He refers to several exhibits attached to the Amended Complaint and asserts “[t]his Court has a
duty to accept the decision of the first foreclosure action to dismiss the creditor’s claim” and that
“[t]he creditor or their predecessor [is] not a legitimate party of interest as claimed by the
creditor before the Bankruptcy Court.” Am. Compl. ¶¶ 104, 106. As noted above, Mr.
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Ranasinghe has now also withdrawn the Second Claim for Relief and it has been dismissed. See
Summ. Judg. Opp. at 5; So-Ordered Stipulation at 2.
In the Third Claim for Relief, Mr. Ranasinghe seeks an order directing the Chapter 7
Trustee “to avoid any transfer of property of the [D]ebtor to the creditor that would be voidable
under applicable law.” Am. Compl. at p. 14. See Am. Compl. ¶¶ 107-11. He cites Bankruptcy
Code Section 544(b)(1), and notes that this “confers upon the trustee the rights and powers of a
creditor of the debtor, including the power to ‘avoid any transfer of property of the debtor or any
obligation incurred by the debtor that is voidable’ by such creditor.” Am. Compl. ¶ 109.
Mr. Ranasinghe also asserts that “[a]ssuming that the Creditor has a claim against the
[D]ebtor’s estate. It was unsecured as the [D]ebtor did not sign the Promissory Note and that
would be voidable under applicable law. The trustee may recover for the benefit of the estate.”
Am. Compl. ¶ 108. And he asks that “the [C]ourt . . . avoid transfer[ring] the [D]ebtor’s property
to the creditor and issue an order for the trustee to intervene in the [D]ebtor’s estate.” Am.
Compl. ¶ 111.
And finally, in the Fourth Claim for Relief, Mr. Ranasinghe seeks an order under New
York Debtor and Creditor Law (“NY DCL”) Section 274 directing the Chapter 7 Trustee “to
demand from the creditor to prove the claim by a preponderance of the evidence.” Am. Compl.
at p. 16. He recites the text of NY DCL Section 274, including that it sets forth a requirement
that a party seeking relief under this Section “has the burden of proving the elements of the claim
for relief by a preponderance of the evidence.” Am. Compl. ¶ 113. And he asks the Court to
“issue an order for the trustee to intervene in the [D]ebtor’s estate.” Am. Compl. ¶ 114.
The Summary Judgment Motion
On May 29, 2025, the Movants U.S. Bank and PHH filed this Motion for Summary
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Judgment Dismissing Adversary Proceeding Amended Complaint with Prejudice.
As to the First and Second Claims for Relief, the Movants argue that these are moot and
need not be addressed, as they are the subject of the parties’ Stipulation, and because Mr.
Ranasinghe has already received a discharge in his Chapter 7 bankruptcy case. Summ. Judg.
Mot. at 2. See So-Ordered Stipulation at 2. This is undisputed, and the Court will not address
the First and Second Claims for Relief further here.
As to the Third Claim for Relief and Fourth Claims for Relief, the Movants argue that
they are entitled to summary judgment and dismissal with prejudice on these claims because, as
described in greater detail below, “‘there is no genuine dispute as to any material fact and . . .
[they] are entitled to judgment as a matter of law.’” Summ. Judg. Mot. at 5 (quoting Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
On July 1, 2025, Mr. Ranasinghe, by counsel, filed Opposition to the Summary Judgment
Motion. In the Opposition, Mr. Ranasinghe acknowledges that he no longer seeks relief under
the First and Second Claims for Relief and that those claims are moot, based on the parties’
Stipulation, and because he has received a discharge in his bankruptcy case. Summ. Judg. Opp.
at 5. See So-Ordered Stipulation at 2.
As to the Third Claim for Relief and Fourth Claims for Relief, as described in greater
detail below, Mr. Ranasinghe responds that summary judgment is not warranted, on grounds,
among others, that the 2022 Judgment of Foreclosure and Sale entered in the 2016 Foreclosure
Action was precluded by the dismissal of the 2012 Foreclosure Action due to a lack of standing,
and that there remain outstanding discovery disputes. See Summ. Judg. Opp. at 5-15.
On July 8, 2025, the Court held a continued pre-trial conference and a conference on the
Summary Judgment Motion, at which Mr. Ranasinghe and the Movants appeared and were
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heard. At that conference, the Court set a date for a continued pre-trial conference and an in-
person argument on the Summary Judgment Motion for August 13, 2025, later rescheduled to
accommodate the parties’ and the Court’s schedule to October 29, 2025.
On October 29, 2025, the Court held a continued pre-trial conference and hearing on the
Summary Judgment Motion, at which Mr. Ranasinghe and the Movants appeared and were
heard. The Court set a date for a further continued pre-trial conference and in-person argument
on the Summary Judgment Motion for December 1, 2025.
The Court held a continued pre-trial conference and hearing on the Summary Judgment
Motion on December 1, 2025. At that hearing, the Court heard argument on the Summary
Judgment Motion from the Movants and from Mr. Ranasinghe, appearing pro se. At the
December 1, 2025, hearing, the Court closed the record and reserved decision.
The Motion To Withdraw as Counsel to the Debtor
At the October 29, 2025, continued pre-trial conference and continued hearing on the
Summary Judgment Motion, Mr. Ranasinghe’s counsel indicated his intention to withdraw as
counsel of record. The Court directed Mr. Ranasinghe’s counsel to file a motion to withdraw by
October 31, 2025, and allowed Mr. Ranasinghe to file a notice of appearance of new counsel by
November 5, 2025. Mr. Ranasinghe did not do so by that date, and as of the date of this
Memorandum Decision, he continues to proceed without counsel.
Later that same day, Mr. Ranasinghe’s counsel filed a First Motion to Withdraw as
Attorney. See ECF No. 35 (the “Motion to Withdraw”). And on November 17, 2025, the Court
entered an Order scheduling a hearing on the Motion to Withdraw for November 24, 2025. ECF
No. 38.
On November 24, 2025, the Court held a hearing on the Motion to Withdraw, at which
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counsel to Mr. Ranasinghe appeared and was heard. Noting that counsel to Mr. Ranasinghe did
not serve the Motion to Withdraw on the Chapter 7 Trustee or the Office of the United States
Trustee, the Court directed Mr. Ranasinghe’s counsel to make that service and adjourned the
hearing on the Motion to Withdraw to December 1, 2025.
On December 1, 2025, prior to the scheduled hearing, Mr. Ranasinghe’s counsel filed a
letter requesting to be excused from appearing at the December 1, 2025, hearing on the Motion
to Withdraw due to “an unexpected personal situation.” ECF No. 41. As a result, the Court held
a continued pre-trial conference, hearing on the Motion to Withdraw, and oral argument on the
Summary Judgment Motion, at which Mr. Ranasinghe, his brother, Prithal Ranasinghe, and the
Movants appeared and were heard, and Mr. Ranasinghe’s counsel did not appear.
On consent of Mr. Ranasinghe, and in the absence of opposition, the Court granted Mr.
Ranasinghe’s counsel’s Motion to Withdraw and directed him to submit a proposed order
relieving him as counsel, and also suggested, in the alternative, that the Court could enter an
order in light of Mr. Ranasinghe’s counsel’s circumstances. December 1, 2025, hearing
transcript, ECF No. 42 (the “Dec. 1, 2025, Tr.”), at 5. On March 13, 2026, the Court entered an
Order granting the Motion to Withdraw and permitting Mr. Ranasinghe’s counsel to withdraw as
counsel of record to him. ECF No. 44.
Supplemental Proceedings
On March 31, 2026, the Court entered an order restoring the Movants’ Motion for
Summary Judgment to the calendar and requested that the parties supplement the record to
address the status of any pending appeal of the 2022 Judgment of Foreclosure and Sale, to
address the question of whether the pendency of an appeal in state court affects the application of
the Rooker-Feldman doctrine, and for Mr. Ranasinghe to supplement his Opposition to describe
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the relief that he seeks in the Third Claim for Relief and the Fourth Claim for Relief. ECF No.
46 (the “Order Restoring Motion”). Pursuant to this Order, on April 10, 2026, the Movants filed
a supplemental motion for summary judgment. ECF No. 48 (the “Supplemental Motion for
Summary Judgment” or “Supp. Summ. Judg. Mot.”). That same day, Mr. Ranasinghe filed a
supplemental brief to the Opposition. ECF No. 49 (the “Supplemental Opposition” or “Supp.
Opp.”). And finally, on April 24, 2026, Mr. Ranasinghe filed a response to the Supplemental
Motion for Summary Judgment. ECF No. 53 (the “Opposition to the Supplemental Motion for
Summary Judgment” or “Opp. to Supp. Summ. Judg. Mot.”).
On June 8, 2026, the Court held a continued pre-trial conference and oral argument on
the Supplemental Motion for Summary Judgment and the Opposition to the Supplemental
Motion for Summary Judgment, at which Mr. Ranasinghe and the Movants appeared and were
heard. At that hearing, the Court closed the record and reserved decision.
The Supreme Court’s Decision in T.M. v. University of Maryland Medical System Corporation
On June 18, 2026, the Supreme Court rendered its decision in T.M. v. University of
Maryland Medical System Corporation, 608 U.S. __, 146 S. Ct. 1739 (2026) (“T.M.”). In T.M.,
the Court considered “whether the [Rooker-Feldman doctrine] bars suit when the state-court
judgment at issue is subject to further review in state appellate proceedings.” T.M., 146 S. Ct. at
1744. The Supreme Court held that the Rooker-Feldman doctrine applies to a federal proceeding
even when the state court judgment is pending appeal in state court, because federal district
courts “are ‘empowered to exercise [only] original, not appellate, jurisdiction.’” T.M., 146 S. Ct.
at 1747 (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 283 (2005))
(alteration in original).
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The Movants’ Arguments in Support of Summary Judgment
The Movants advance several arguments in support of their request that this Court enter
summary judgment on Mr. Ranasinghe’s Third Claim for Relief and Fourth Claims for Relief
and dismiss the Amended Complaint with prejudice.
At the outset, the Movants argue that U.S. Bank was the named plaintiff in the 2016
Foreclosure Action, in which the New York Supreme Court entered a valid judgment of
foreclosure and sale, and in doing so, determined that U.S. Bank had standing as the holder of
the Note and assignee of the mortgage. Summ. Judg. Mot. at 5, 7. As they state, “[t]he Property
and the Mortgage Loan are the subject of the [2016 Foreclosure Action]. The Supreme Court
determined the propriety of enforcing the Mortgage Loan based on the standing of the
Foreclosure Plaintiff as the holder of the Note and the Assignee of the Mortgage.” Summ. Judg.
Mot. at 5. They point to the 2022 Judgment of Foreclosure and Sale dated February 28, 2022,
entered by New York Supreme Court, Richmond County, in the 2016 Foreclosure Action. See
Summ. Judg. Mot. at 4 and Exh. D (2022 Judgment of Foreclosure and Sale).
And the Movants state:
The Supreme Court would have had to determine the forgoing rights of
U.S. Bank and its standing to prosecute the Foreclosure Action before
determining to grant to it the remedies under the Foreclosure Judgment.
Accordingly, U.S. Bank was entitled to have the foreclosure Judgment entered,
and the Supreme Court concurred in do so.
Summ. Judg. Mot. at 7-8.
The Movants also argue that Mr. Ranasinghe’s claims with respect to the Note and
Mortgage are barred by the Rooker-Feldman doctrine and the doctrines of res judicata and
collateral estoppel. See Summ. Judg. Mot. at 8-10. They observe:
Any issue or contention the Debtor may have regarding the Mortgage
Loan, and any attempt he may pursue to have the Court or the Trustee examine
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the Note, Mortgage, Mortgage Loan and the validity of the lien against the
Property are barred by multiple preclusive doctrines; res judicata, collateral
estoppel and the Rooker-Feldman Doctrine . . . .
Summ. Judg. Mot. at 8.
And the Movants note that Mr. Ranasinghe appeared in and contested the 2016
Foreclosure Action, and that “the defendants therein (Borrower and/or Debtor) attempted three
times to overturn the Foreclosure Judgment.” Summ. Judg. Mot. at 9. These attempts included
“a motion to dismiss . . . that was denied on December 9, 2021 . . . a motion to vacate . . . that
was denied on October 11, 2022 . . . [and] a motion to reargue or for reconsideration . . . that was
denied on March 30, 2023.” Summ. Judg. Mot. at 9-10. And then, “[a]fter the third failed
attempt at vacating the Foreclosure Judgment, Debtor commenced the [bankruptcy case] shortly
after the third denial by the Supreme Court to gain the benefit of the automatic stay.” Summ.
Judg. Mot. at 10.
As to the finality of the foreclosure judgment, the Movants state, “there can be no
question that the Foreclosure Judgment is . . . final. There was no appeal taken from the
Foreclosure Judgment, and the Debtor has not obtained any stay of the effectiveness of the
Foreclosure Judgment either from the Supreme Court, or the Appellate Division.” Id.
That is, in the context of this history, and in view of the many attempts already made by
Mr. Ranasinghe in New York Supreme Court to overturn the 2022 Judgment of Foreclosure and
Sale, the Movants argue that it is final, binding, and valid.
Turning to the Amended Complaint’s Claims for Relief, the Movants note that Mr.
Ranasinghe and the Movants have stipulated that the First and Second Claims for Relief have
been “deemed to be moot as a result of the Order of Discharge entered in February 1, 2024,” in
Mr. Ranasinghe’s bankruptcy case. Summ. Judg. Mot. at 2. “Accordingly, only the third and
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fourth causes of action remain at issue between the parties and are before the court for
determination.” Id.
As to the Third Claim for Relief, the Movants note that “[t]here is little coherence to [the
Amended Complaint’s] contentions and arguments.” Summ. Judg. Mot. at 10. As to Mr.
Ranasinghe’s references to “materials” and “labor,” they suggest that Mr. Ranasinghe “somehow
is connecting such materials and labor provided to the conveyance of the mortgage lien on the
Property that was created with the[] recording of the Mortgage.” Id. And to the extent that Mr.
Ranasinghe seeks to avoid U.S. Bank’s lien interest in the Property, the Movants again assert
“that any attack on the Mortgage lien is prohibited under [Rooker-Feldman, res judicata, and
collateral estoppel].” Summ. Judg. Mot. at 11.
As to the Fourth Claim for Relief, the Movants argue it is “devoid of any law that would
be the basis for any relief this Court could grant.” Id. They acknowledge that the New York
Uniform Voidable Transactions Act allows a creditor to avoid a transaction that was made in
furtherance of a plan to hinder or delay creditors, and argue that it does not provide grounds for
Mr. Ranasinghe to overturn the 2022 Judgment of Foreclosure and Sale entered in the 2016
Foreclosure Action. Id.
Finally, in the Summary Judgment Motion, the Movants address the limits of the Chapter
7 Trustee’s discretion and authority. Id. The Movants state that while the Chapter 7 Trustee’s
powers under the Bankruptcy Code are broad, the Chapter 7 Trustee does not have the discretion
to avoid the 2022 Judgment of Foreclosure and Sale entered in the 2016 Foreclosure Action. Id.
And the Movants state that “[t]he trustee’s powers and rights are governed by Bankruptcy Code
section 704. Section 704 is exhaustive, but the Trustee does have the discretion to carry out
these duties as the Trustee deems appropriate or prudent.” Id.
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The Movants also note that the Chapter 7 Trustee has already exercised their discretion
by electing not to intervene to seek to overturn the 2022 Judgment of Foreclosure and Sale. Id.
Instead, in Mr. Ranasinghe’s main bankruptcy case, the Chapter 7 Trustee reviewed the Stay
Relief Motion and stated their lack of opposition to that motion. See ECF entry dated November
10, 2023. And the Movants suggest that in coming to that decision, the Chapter 7 Trustee
presumably reviewed Mr. Ranasinghe’s accompanying opposition to the Stay Relief Motion,
including his arguments with respect to the Note and 2022 Judgment of Foreclosure and Sale,
and determined not to intervene. See Summ. Judg. Mot. at 11. And, they add, the Chapter 7
Trustee has not intervened in this adversary proceeding. Id.
Mr. Ranasinghe’s Arguments in Opposition to Summary Judgment
Mr. Ranasinghe opposes the Summary Judgment Motion. In his Opposition, Mr.
Ranasinghe acknowledges that based on the parties’ Stipulation, the First and Second Claims for
Relief are now moot. Summ. Judg. Opp. at 5. And he enumerates eleven arguments –
denominated “Argument I” through “Argument XI” – as to why the Summary Judgment Motion
should be denied. See Summ. Judg. Opp. at 6-15.
First, Mr. Ranasinghe responds that the Defendants and Movants here have no power to
litigate because they are trustees for their respective mortgage-backed securities, but have not
submitted a proper pooling and servicing agreement to show their authority to litigate on the
trust’s behalf. Summ. Judg. Opp. at 6. As such, he asserts, the Movants may not seek summary
judgment without first establishing their capacity to act as trustees. Summ. Judg. Opp. at 7.
Second, Mr. Ranasinghe responds that the Defendants and Movants have “not proved
which defendant was the actual trustee of Morgan Stanley Mortgage Loan Trust 2007-11AR,”
or, in substance, the identity of the trustee for the mortgage-backed securities. Summ. Judg.
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Opp. at 8. He states that one defendant is “U.S. Bank National Association as trustee for Morgan
Stanley Mortgage Loan Trust 2007-11AR, Mortgage pass-through certificates, series 2007-
11AR” and the other is “U.S. Bank National Association, Successor-In-Interest to Bank of
America, N.A, [sic] Successor by Merger to LaSalle Bank National Association, As Trustee for
Morgan Stanley Mortgage Loan Trust 2007-11AR.” Id. And Mr. Ranasinghe asserts that “[t]he
movant should present a copy of the trust agreement to see who was the actual trustee in
[Morgan Stanley Mortgage Loan Trust 2007-11AR].” Id.
Mr. Ranasinghe’s third response is that the 2012 Foreclosure Action precludes the 2016
Foreclosure Action, because the parties litigated the issue of standing in the 2012 Foreclosure
Action and the state court decided in that action, and on the merits, that U.S. Bank did not have
standing. Summ. Judg. Opp. at 8-10.
Mr. Ranasinghe’s fourth response is similar to his third. He asserts that the 2016
Foreclosure Action was not litigated on its merits, but instead, was a default judgment. Summ.
Judg. Opp. at 11. He suggests, in substance, that in view of that default, the 2016 Foreclosure
Action decision is not a decision on the merits and cannot have any preclusive effect in this
adversary proceeding. Id. And Mr. Ranasinghe states that the decision in the 2016 Foreclosure
Action is not final, and is currently on appeal to the New York Supreme Court Appellate
Division, Second Department, Index Number 2022-09025. Id.
In his fifth response, Mr. Ranasinghe asserts that he “did not sign the Note and his debt
was a personal loan, therefore [the] foreclosure action cannot proceed.” Summ. Judg. Opp. at
11. As “[a]ll personal Loans [are] discharged in Bankruptcy,” Mr. Ranasinghe maintains that his
debt to U.S. Bank was discharged in his bankruptcy case. Summ. Judg. Opp. at 12.
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21
In his sixth response, Mr. Ranasinghe argues, in substance, that the Rooker-Feldman
doctrine does not preclude him from seeking relief in this adversary proceeding because U.S.
Bank has not proven that the 2016 Foreclosure Action is sufficiently identical to this adversary
proceeding. See Summ. Judg. Opp. at 12. He states, “[t]he defendant has failed to prove that his
case was prevent[ed from review in] Federal Court.” Id. And he states that “[w]hen Two
identical cases [are] decided, the defendant has the burden of pro[ving] that his case [is] likely to
prevent the Federal Court from reviewing the State Court decisions.” Id.
In his seventh response, Mr. Ranasinghe asserts that U.S. Bank filed “two different sets
of Mortgage Notes” in each of the 2012 Foreclosure Action, the 2016 Foreclosure Action, and
the Stay Relief Motion. Summ. Judg. Opp. at 12. See Summ. Judg. Opp. at 12-14. He states
that in the 2012 Foreclosure Action, U.S. Bank did not attach any proof of assignment of the
Note. See Summ. Judg. Opp. at 13. But, he argues, in the 2016 Foreclosure Action and the Stay
Relief Motion, U.S. Bank presented a copy of the assignment of the Note from First National to
U.S. Bank and from Ocwen to U.S. Bank. Id.
In particular, Mr. Ranasinghe states that in the 2016 Foreclosure Action, U.S. Bank
submitted three documents:
This complaint included:
(a) a copy of the original Note
(b) a copy of a Allonge from . . . First National Bank of Arizona (Amy Hawkins)
to U.S. Bank National Association as trustee for Morgan Stanley Mortgage Loan
Trust 2007-11AR, Mortgage pass-through certificates, series 2007-11AR
(c) a Copy of the Allonge from U.S. Bank National Association as trustee for
Morgan Stanley Mortgage Loan Trust 2007-11AR, Mortgage pass-through
certificates, series 2007-11AR (by OCWEN) to U.S. Bank National Association,
Successor-In-Interest to Bank of America, N.A, Successor by Merger to Lasalle
Bank National Association, As Trustee for Morgan Stanley Mortgage Loan Trust
2007-11AR.
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22
Summ. Judg. Opp. at 13 (emphasis in original).
And Mr. Ranasinghe states that U.S. Bank submitted these same three documents
together with a fourth document, the “(d) Copy of the Allonge First National Bank of Arizona
(Amy Hawkins) to First National Bank of Nevada without recourse (e) On the same Allonge:
First National Bank of Nevada to Pay to the order (No Name) without recourse.” Summ. Judg.
Opp. at 14. He concludes that U.S. Bank “filed a new set[] of Allonge to the Bankruptcy Court
when it filed the [Stay Relief Motion].” Id.
Next, in his eighth response, Mr. Ranasinghe asserts that U.S. Bank has failed to respond
to discovery requests that he has served seeking information as to why it submitted two different
sets of notes to New York State Court in the 2012 Foreclosure Action, the 2016 Foreclosure
Action, and now to this Court. Summ. Judg. Opp. at 14-15. He requests that the Movants
comply with his discovery demands, including his demand for a deposition. Summ. Judg. Opp.
at 15.
In his ninth response, Mr. Ranasinghe argues that he is “entitled to inquire why the
[D]efendants submitted two sets of Mortgage Notes to the Bankruptcy Court as they were not the
original lender.” Id. And he asserts that “[t]his new note filed in the Bankruptcy [C]ourt . . .
[e]stablishe[s] that the defendants have filed incorrect and false documents and obtained the
[2022 Judgment of Foreclosure and Sale] by fraud.” Id.
Finally, Mr. Ranasinghe’s tenth and eleventh responses concern his bankruptcy
discharge. In his tenth response, Mr. Ranasinghe reasons that he has received an order of
discharge, and “creditors have no legally enforceable action to collect discharged debt.” Id. And
in his eleventh response, Mr. Ranasinghe lists the creditors that the Court has informed about his
discharge. Summ. Judg. Opp. at 15-16.
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The Movants’ Arguments in the Supplemental Motion for Summary Judgment
Pursuant to the Order Restoring Motion, on April 10, 2026, the Movants filed their
Supplemental Motion for Summary Judgment. Supp. Summ. Judg. Mot.
In the Supplemental Motion for Summary Judgment, the Movants state that Mr.
Ranasinghe’s appeal of the 2022 Judgment of Foreclosure and Sale to the New York Supreme
Court Appellate Division, Second Department, was stayed due to Mr. Ranasinghe’s Chapter 7
bankruptcy case. Supp. Summ. Judg. Mot. at 2. As a result, the Movants characterize the 2022
Judgment of Foreclosure and Sale as “not final and unappealable.” Id.
The Movants request that this Court allow the New York Supreme Court Appellate
Division, Second Department, to determine the outcome of the 2022 Judgment of Foreclosure
and Sale because the matters were “fully addressed at the trial level and pending,” and the
Appellate Division is familiar with the issues and the applicable law. Summ. Judg. Supp. Mot. at
3. The Movants argue that “[a]bstention is warranted here because the issues relate to New York
state law.” Id. The Movants also refer to the principles of federalism and comity, asserting that
the state court has a strong interest in adjudicating disputes involving real property rights within
its jurisdiction and is well positioned to consider the issues of law and fact raised in this appeal.
Summ. Judg. Supp. Mot. at 3-4.
Alternatively, the Movants request that the Court grant the Summary Judgment Motion,
but without prejudice to Mr. Ranasinghe challenging the mortgage loan in this Court “after the
state courts have fully addressed the foreclosure judgment.” Supp. Summ. Judg. Mot. at 4.
Mr. Ranasinghe’s Arguments in the Supplemental Opposition
On the same day and pursuant to the same Order Restoring Motion, Mr. Ranasinghe filed
Supplemental Opposition in support of his previous Opposition to the Summary Judgment
Motion. Supp. Opp. Mr. Ranasinghe agrees that the appeal is still pending and sets forth several
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24
reasons why he should prevail in the Appellate Division, including, among others, that the
Movants did not provide sufficient notice of the 2016 Foreclosure Action as required by Section
1304 of New York Real Property Actions and Proceedings Law, that the Movants did not have
standing as plaintiffs in the 2016 Foreclosure Action because they were not the lenders, that the
Movants committed fraud by fabricating an allonge which was not disclosed during the 2022
Foreclosure Action, and that the Movants did not timely file a reply brief in the appeal. Supp.
Mot. Summ. Judg. Opp. at 2-3.
With respect to the Third Claim for Relief, Mr. Ranasinghe explains that he “seeks the
Court to issue an order to the Bankruptcy Trustee to intervene [in the 2016 Foreclosure Action]
as [an] interest[ed] party to dismiss the foreclosure action.” Supp. Opp. at 7. He asserts that he
has listed other creditors in his creditor matrix, and that the Chapter 7 Trustee should “avoid the
auction on behalf of the other creditors pursuant to 11 U.S.C[.] § 544.” Supp. Opp. at 7, 11. Mr.
Ranasinghe also argues that the Court should grant this relief because the Movants submitted
different documents in the 2016 Foreclosure Action leading to the 2022 Judgment of Foreclosure
and Sale, and the Stay Relief Motion, rendering the 2022 Judgment of Foreclosure and Sale
“unenforceable and void.” Supp. Opp. at 8. And Mr. Ranasinghe argues the Court should grant
this relief because of a deficient chain of assignments. Supp. Opp. at 8-11.
With respect to the Fourth Claim for Relief, Mr. Ranasinghe asks the Court to require the
Movants to prove their claim by a preponderance of evidence pursuant to Section 274 of the
Uniform Voidable Transaction Act. Supp. Opp. at 12. He asserts once more that the Movants
“ha[ve] violated the New York State law for foreclosure procedure by producing fabricated
Allonges” and that the Movants “[have] no right to commence the [2016 Foreclosure Action] in
the State Court.” Id. Finally, Mr. Ranasinghe states that the Rooker-Feldman doctrine is not
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applicable to the facts of this case and that this Court “has power either [to] undo the Foreclosure
auction or to issue declaratory judgment declaring that the creditor has no legal authority for the
[m]ortgage of the said property.” Supp. Opp. at 13.
Mr. Ranasinghe’s Arguments in His Opposition to the Supplemental Motion for Summary
Judgment
On April 24, 2026, Mr. Ranasinghe filed Opposition to the Supplemental Motion for
Summary Judgment. Opp. to Supp. Summ. Judg. Mot. In this Opposition, Mr. Ranasinghe
argues first that the Court should not consider the Movants’ request for abstention because the
Movants did not raise this argument in the original Summary Judgment Motion. Opp. to Supp.
Summ. Judg. Mot. at 3.
Next, Mr. Ranasinghe reiterates that the Movants made misrepresentations to this Court
by submitting three different sets of loan documents in the 2012 Foreclosure Action, the 2016
Foreclosure Action, and the Stay Relief Motion. Opp. to Supp. Summ. Judg. Mot. at 5. And
again, Mr. Ranasinghe asserts that the chain of assignments is deficient, and that making
misrepresentations to the Court “constitutes a serious Bankruptcy Code violation, likely
triggering severe [c]ivil and [c]riminal [p]enalties for [b]ankruptcy [f]raud, [p]erjury, and [f]raud
upon the court.” Opp. to Supp. Summ. Judg. Mot. at 11. Due to the dismissal of the 2012
Foreclosure Action, Mr. Ranasinghe also argues that the Movants should be judicially estopped
“[from] asserting a legal or factual position in a proceeding[] that directly contradicts a stance”
maintained in the 2012 Foreclosure Action. Opp. to Supp. Summ. Judg. Mot. at 12.
As to his argument that there was a deficient chain of assignments, Mr. Ranasinghe’s
position is that the Movants “were not the secured creditors,” and therefore, dismissal of this
Adversary Proceeding would allow the Movants to wrongly sell the Property, and prejudice other
creditors. Opp. to Supp. Summ. Judg. Mot. at 15.
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And finally, Mr. Ranasinghe addresses the relief that he seeks in the Third Claim for
Relief and the Fourth Claim for Relief. He requests the Court to order the Movants to “return the
Property pursuant to 11 U.S.C[.] § 542 . . . and 11 U.S.C[.] § 522.” Opp. to Supp. Summ. Judg.
Mot. at 17. He states that the Court may order the turnover of property belonging to the estate
“to reverse a foreclosure sale if the property was improperly transferred.” Id.
The Applicable Law
Consideration and Construction of Pro Se Submissions
At the outset, it is worth noting that the Amended Complaint and Opposition to the
Motion for Summary Judgment were filed by Mr. Ranasinghe’s counsel, on December 5, 2023,
and July 1, 2025. About four months later, on October 29, 2025, Mr. Ranasinghe’s counsel
requested to withdraw from representing Mr. Ranasinghe, and Mr. Ranasinghe has effectively
represented himself since that time, including at the December 1, 2025, argument on this
Summary Judgment Motion.
This matters because special consideration and rules of construction are appropriate in the
assessment of filings and requests for relief, and by extension, the arguments, that are made by
pro se parties. As the Second Circuit has observed
a pro se litigant is entitled to “special solicitude,” that a pro se litigant's
submissions must be construed “liberally,” and . . . such submissions must be read
to raise the strongest arguments that they “suggest.” At the same time, our cases
have also indicated that we cannot read into pro se submissions claims that are not
“consistent” with the pro se litigant's allegations, or arguments that the
submissions themselves do not “suggest,” that we should not “excuse frivolous or
vexatious filings by pro se litigants,” and that pro se status “does not exempt a
party from compliance with relevant rules of procedural and substantive law.”
Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 477 (2d Cir. 2006) (citations omitted). Cf.
Goode v. Cook, 2025 WL 816302 at *4 (2d Cir. Mar. 14, 2025) (finding that where the plaintiff
was represented by counsel in the filing of the complaint, and then responded pro se to a motion
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for summary judgment, Triestman did not require the court to liberally construe the complaint).
The Summary Judgment Standard
Federal Rule of Civil Procedure 56, made applicable to this adversary proceeding by
Bankruptcy Rule 7056, provides that a “court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it “might affect the outcome of the
suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
dispute of fact is “‘genuine’ . . . if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Id.
The moving party has the initial burden of demonstrating the absence of a genuine
dispute as to any material fact, and all of the inferences to be drawn from the underlying facts
must be viewed by the court in the light most favorable to the party opposing the motion. See
Anderson, 477 U.S. at 249, 255; Hayut v. State Univ. of N.Y., 352 F.3d 733, 743 (2d Cir. 2003)
(observing that the court’s role is “to view the evidence in the light most favorable to the party
opposing summary judgment, to draw all reasonable inferences in favor of that party, and to
eschew credibility assessments”).
As the Second Circuit has recently observed:
To warrant summary judgment in their favor, defendants must
demonstrate that “there is no genuine dispute as to any material fact and [that they
are] entitled to judgment as a matter of law.” Hancock v. County of Rensselaer,
882 F.3d 58, 64 (2d Cir. 2018). And to survive a defendant's motion for summary
judgment, “the plaintiff can no longer rest on the complaint's allegations,” but
must instead “produce evidence showing the presence of a genuine issue [of
material fact] . . . that would warrant resolution by trial.” Lugo v. City of Troy,
114 F.4th 80, 87-88 (2d Cir. 2024).
Miller v. Lamanna, 169 F.4th 118, 122 (2d Cir. 2026) (alteration and omission in original).
And as the Supreme Court has stated, the non-moving party “must do more than simply
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show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, the non-moving party must present
“significant probative evidence” that a genuine issue of fact exists. Anderson, 477 U.S. at 249
(quotation marks omitted). “Where the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party, there is no ‘genuine issue for trial,’” and summary
judgment is appropriate. Matsushita, 475 U.S. at 587 (quoting First Nat’l Bank of Ariz. v. Cities
Serv. Co., 391 U.S. 253, 289 (1968)). See Anderson, 477 U.S. at 249-50 (observing that “if the
evidence is merely colorable, . . . or is not significantly probative, . . . summary judgment may be
granted”).
As this Court has noted, statements in the pleadings, standing alone, do not meet this
burden. In re Allou Distribs., Inc., 446 B.R. at 49. Rather, “[e]stablishing such facts requires
going beyond the allegations of the pleadings as the moment has arrived to ‘put up or shut up.’”
In re Eugenia VI Venture Holdings, Ltd. Litig., 649 F. Supp. 2d 105, 117 (S.D.N.Y. 2008)
(quotation marks omitted) (quoting Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir.
2000), aff’d, 370 F. App’x 192 (2d Cir. 2010), cert. denied, 540 U.S. 811 (2003)). This means
that “[u]nsupported allegations in the pleadings . . . cannot create a material issue of fact.” In re
Eugenia VI Venture Holdings, 649 F. Supp. 2d at 117.
“Rule 56(e) . . . requires the non-moving party to go beyond the pleadings and by her
own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’
designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. at
324. A party “must ‘set forth’ by affidavit or other evidence ‘specific facts’ to survive a motion
for summary judgment . . . and must ultimately support any contested facts with evidence
adduced at trial.” Bennett v. Spear, 520 U.S. 154, 168 (1997) (quoting Lujan v. Defenders of
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Wildlife, 504 U.S. 555, 561 (1992)).
And as this Court has observed, “‘[t]he non-moving party may not establish that there is a
genuine issue to be resolved at trial through mere allegations or denials of the adverse party’s
pleadings, but rather must demonstrate by affidavit or other admissible evidence that there are
genuine issues of material fact or law.’” Blake v. Fusco (In re Fusco), 641 B.R. 438, 454
(Bankr. E.D.N.Y. 2022) (quoting Beare v. Millington, 2014 WL 1236750, at *3 (E.D.N.Y. Mar.
25, 2014), aff’d, 613 F. App’x 56 (2d Cir. 2015). See Major League Baseball Props., Inc. v.
Salvino, Inc., 542 F.3d 290, 310 (2d Cir. 2008) (stating that “[a] party opposing summary
judgment does not show the existence of a genuine issue of fact to be tried merely by making
assertions that are conclusory . . . or based on speculation” (citing Kulak v. City of New York, 88
F.3d 63, 71 (2d Cir. 1996))). See DeBernardo v. Lowe's Home Ctrs., 2023 WL 2291882, at *1
(2d Cir. Mar. 1, 2023) (stating that under Rule 56(a), “[s]ummary judgment should be granted if
‘the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law,’” Fed. R. Civ. P. 56(a), and that “[a] genuine dispute
exists when ‘the evidence is such that a reasonable jury could decide in the non-movant’s favor’”
(quoting Kee v. City of New York, 12 F.4th 150, 158 (2d Cir. 2021))).
At the same time, “it is also well-recognized that ‘the summary judgment rule would be
rendered sterile . . . if the mere incantation of intent would operate as a talisman to defeat an
otherwise valid motion.’” Nisselson v. Empyrean Inv. Fund, L.P. (In re MarketXT Holdings
Corp.), 376 B.R. 390, 401 (Bankr. S.D.N.Y. 2007) (quoting Meiri v. Dacon, 759 F.2d 989, 998
(2d Cir. 1985), cert. denied, 474 U.S. 829 (1985)).
The Rooker-Feldman Doctrine
As this Court has observed, “[t]he Rooker-Feldman doctrine establishes limits on the
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subject matter jurisdiction of federal courts.” Green v. Wells Fargo Bank, N.A. (In re Green),
2020 WL 3412679, at *11 (Bankr. E.D.N.Y. June 18, 2020). This doctrine bars federal courts
from reviewing and rejecting state-court judgments, brought by unsuccessful state-court litigants,
rendered before the federal court proceedings commenced. See Exxon Mobil, 544 U.S. at 284. It
is derived from two cases: Rooker v. Fidelity Trust Co., 460 U.S. 413 (1923) and District of
Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983). See Exxon Mobil Corp., 544 U.S.
at 284-85. These cases “give effect to the principle that the federal courts have only original
subject matter jurisdiction, and for this reason may not entertain direct or collateral attacks on a
state court judgment.” In re Green, 2020 WL 3412679, at *11.
And as the Supreme Court has observed, in defining the boundaries of the doctrine, “[t]he
Rooker-Feldman doctrine . . . is confined to cases . . . brought by state-court losers complaining
of injuries caused by state-court judgments rendered before the district court proceedings
commenced and inviting district court review and rejection of those judgments.” Exxon Mobil,
544 U.S. at 284. See In re Green, 2020 WL 3412679, at *11.
As the Second Circuit has observed, “Rooker-Feldman bars a federal claim, whether or
not raised in state court, that asserts injury based on a state judgment and seeks review and
reversal of that judgment; such a claim is ‘inextricably intertwined’ with the state judgment.”
Hoblock v. Albany Cty. Bd. of Elections, 422 F.3d 77, 86-87 (2d Cir. 2005). See In re Green,
2020 WL 3412679, at *11. And the Rooker-Feldman doctrine applies even where the state
court's decision was in error, because [the doctrine] “‘strip[s] federal subject matter jurisdiction
over lawsuits that are, in substance, appeals from state court decisions.’” In re Ward, 423 B.R.
22, 27 (Bankr. E.D.N.Y. 2010) (alteration in original) (quoting Book v. Mortg. Elec. Registration
Sys., 608 F. Supp. 2d 277, 288 (D. Conn. 2009)). See In re Green, 2020 WL 3412679, at *12.
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Courts agree that the Rooker-Feldman doctrine applies when four elements are met:
(1) the federal-court plaintiff lost in state court; (2) the plaintiff “must
complain of injuries caused by a state-court judgment”; (3) the plaintiff “must
invite district court review and rejection of that judgment”; and (4) “the state-
court judgment must have been rendered before the district court proceedings
commenced.”
In re Green, 2020 WL 3412679, at *12 (quoting Buckskin Realty Inc. v. Windmont Homeowners
Ass'n (In re Buckskin Realty Inc.), 2017 WL 1130166, at *2 (Bankr. E.D.N.Y. Mar. 24, 2017)
(quoting Green v. Mattingly, 585 F.3d 97, 101 (2d Cir. 2009))).
The Supreme Court has emphasized that Rooker-Feldman applies only if the federal suit
is filed “after the state proceedings ended.” Exxon Mobil, 544 U.S. at 291. And in T.M., the
Supreme Court recently explained that “the [Rooker-Feldman doctrine] bars suit when the state-
court judgment at issue is subject to further review in state appellate proceedings.” T.M., 146 S.
Ct. at 1744. Cf. Hunter v. McMahon, 75 F.4th 62, 70 (2d Cir. 2023) (stating that “if a federal-
court plaintiff's state-court appeal remains pending when she files her federal suit, the state-court
proceedings have not ended and Rooker-Feldman does not apply”), abrogated by T.M., 146 S.
Ct. at 1744; Amelio v. Quicken Loan, Inc., 2026 WL 1876070, at *2 n.2 (2d Cir. June 30, 2026)
(noting that Hunter was abrogated on other grounds by T.M.).
The Res Judicata Doctrine
As this Court and others have observed, the doctrine of res judicata, or claim preclusion,
determines the preclusive effect of a state court judgment in a subsequent federal lawsuit. As the
Supreme Court has explained, the doctrine is governed by the full faith and credit clause, which
requires “all federal courts to give preclusive effect to state-court judgments whenever the courts
of th[at] State . . . would do so.” Allen v. McCurry, 449 U.S. 90, 96 (1980). And of course, the
roots of this doctrine are in the Judiciary Code, which provides that “judicial proceedings in any
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State “shall have the same full faith and credit in every court within the United States . . . as they
have by law or usage in the courts of such State.” 28 U.S.C. § 1738. See In re Green, 2020 WL
3412679 at *13.
That is, Judiciary Code Section 1738 directs federal courts to look to the preclusion law
of the state in which judgment was rendered. Again, as the Supreme Court has explained:
“It has long been established that § 1738 does not allow federal courts to employ
their own rules of res judicata in determining the effect of state judgments.
Rather, it . . . commands a federal court to accept the rules chosen by the State
from which the judgment is taken.”
Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985) (quoting Kremer v.
Chem. Constr. Corp., 456 U.S. 461, 481-82 (1982). And here, that is the law of the State of New
York. See In re Green, 2020 WL 3412679, at *13.
Under New York law, courts agree that several elements must be established for res
judicata to apply. These are, “(1) there must be a final judgment in the first action; (2) that was
rendered ‘on the merits;’ (3) between the same parties in both actions; and (4) concerning the
same claims in both actions.” CIT Bank, N.A. v. Jach, 2019 WL 1383850, at *5 (E.D.N.Y. Mar.
27, 2019) (quoting In re Hunter, 4 N.Y.3d 260, 269 (2005)). In addition, the party “‘seeking to
invoke res judicata to prove that the doctrine bars the second action’” bears the burden of proof
on each of these elements. Brown Media Corp. v. K&L Gates, LLP, 854 F.3d 150, 157 (2d Cir.
2017) (quoting Computer Assocs. Int'l, Inc. v. Altai, Inc., 126 F.3d 365, 369 (2d Cir. 1997). See
In re Green, 2020 WL 3412679, at *13.
And courts likewise agree that “once a claim is brought to a final conclusion, all other
claims arising out of the same transaction or series of transactions are barred, even if based upon
different theories or if seeking a different remedy,’” Christen v. U.S. Bank N.A., 2024 WL
3443423, *8 (E.D.N.Y. July 17, 2024) (quoting Josey v. Goord, 9 N.Y.3d 386, 389-90 (2007)).
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See O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357 (1981).
Viewed another way, a principal objective of the doctrine of res judicata is to bring
finality and closure to matters that have been fully addressed between the parties in another
proceeding. As the Second Circuit has noted, “‘[t]he doctrine of res judicata is based on the
principle not only that the same parties in the same capacities should not be required to litigate
anew a matter which might have been determined and settled in the former litigation, but that
litigation should be determined with reasonable expedition.’” Lasker v. UBS Sec. LLC, 2009 WL
57137, at *4 (E.D.N.Y. Jan. 7, 2009) (quoting McKinney v. Widner, 746 S.W.2d 699, 705 (Tenn.
Ct. App. 1987)), aff'd, 358 F. App'x 225 (2d Cir. 2009). See In re Green, 2020 WL 3412679, at
*13.
In particular, it is well recognized under New York law that the fact that an appeal of a
decision or judgment is pending does not foreclose a res judicata defense. As one court
explained, “the pendency of an appeal does not deprive a challenged judgment of preclusive
effect.” Arnold v. Beth Abraham Health Servs., Inc., 2009 WL 5171736, at *4 (S.D.N.Y. Dec.
30, 2009). As another court observed, “‘the mere pendency of an appeal does not deprive a
challenged judgment or order of its res judicata effect.’” United States v. Meiri, 754 F. Supp. 3d
432, 442 n.6 (emphasis added) (quoting 5512 OEAAJB Corp. v. Hamilton Ins. Co., 138 N.Y.S.3d
555, 558 (N.Y. App. Div. 2d Dep’t 2020).
It is similarly well established that, even where a judgment by the state trial court may be
reversed by the appellate division, a federal court “may retain jurisdiction following proceedings
below in order to act on any motion arising from a reversal . . . but proceedings in the meantime
should go forward, with preclusive effect given to the state court’s determination of the
[challenged] issue.” Petrella v. Siegel, 843 F.2d 87, 90 (2d Cir. 1988).
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And under New York law, “a default judgment is a judgment on the merits” for res
judicata purposes. Martins v. Wood, 675 N.Y.S.2d 544, 545 (N.Y. App. Div. 2d Dep’t 1998).
See Yoon v. Fordham Univ. Fac., 173 F. App’x 936, 939 (2d Cir. 2006) (finding that a dismissal
for a plaintiff’s failure to proceed at trial was “an adjudication on the merits with res judicata
effect”).
The Collateral Estoppel Doctrine
Another preclusion doctrine of salience here is collateral estoppel. The doctrine of
collateral estoppel, or issue preclusion, addresses whether a party in a subsequent proceeding
should be prevented from contesting an issue that was decided in an earlier proceeding. “The
doctrine of issue preclusion ‘is a narrower species of res judicata, [which] precludes a party from
relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or
proceeding and decided against that party.’” Fequiere v. Tribeca Lending, 2016 WL 1057000, at
*8 (E.D.N.Y. 2016) (alteration in original) (quoting Tsirelman v. Daines, 19 F. Supp. 3d 438,
449 (E.D.N.Y. 2014)). See In re Green, 2020 WL 3412679, at *14.
As with res judicata, federal courts look to state law in determining whether to give
preclusive effect to a determination made in a state court. That is, “‘[a] federal court must give
to a state-court judgment the same preclusive effect as would be given that judgment under the
law of the State in which the judgment was rendered.’” Mejia v. N.Y.C. Health & Hosps. Corp.,
2014 WL 2115109, at *2 (S.D.N.Y. May 19, 2014) (quoting Migra v. Warren City Sch. Dist. Bd.
of Educ., 465 U.S. 75, 81 (1984)), aff'd, 622 F. App'x 70 (2d Cir. 2015). See In re Green, 2020
WL 3412679, at *14.
And also as with res judicata, several requirements must be met for a prior New York
state court judgment to have preclusive effect. As the Second Circuit has observed:
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Under New York law, collateral estoppel bars relitigation of an issue when (1) the
identical issue necessarily was decided in the prior action and is decisive of the
present action, and (2) the party to be precluded from relitigating the issue had a
full and fair opportunity to litigate the issue in the prior action.
Denton v. Hyman (In re Hyman), 502 F.3d 61, 65 (2d Cir. 2007) (citing Kaufman v. Eli Lilly &
Co., 65 N.Y.2d 449, 455-56 (1985)). See In re Green, 2020 WL 3412679 at *14.
That is, as then-Judge Sotomayor of the Second Circuit noted, “‘[u]nder New York law,
collateral estoppel prevents a party from relitigating an issue decided against that party in a prior
adjudication.’” Farrell v. Burke, 449 F.3d 470, 482-83 (2d Cir. 2006) (quoting Curry v. City of
Syracuse, 316 F.3d 324, 331 & n.4 (2d Cir. 2003)). See In re Green, 2020 WL 3412679, at *14.
And this result is not altered by the pendency of an appeal. Under New York law, “‘the
mere pendency of an appeal does not prevent the use of the challenged judgment as the basis of
collaterally estopping a party to that judgment in a second proceeding.’” DiSorbo v. Hoy, 343
F.3d 172, 183 (2d Cir. 2003) (quoting Amica Mut. Ins. Co. v. Jones, 445 N.Y.S.3d 820, 822
(N.Y. App. Div. 2d Dep’t 1981)). See 77 Water St., Inc. v. JTC Painting & Decorating Corp.,
148 A.D.3d 1092 (N.Y. App. Div. 2d Dep’t 2017) (holding that the trial court “properly invoked
the doctrine of collateral estoppel to preclude the plaintiffs from relitigating [a contract issue
when that issue] had already been determined against them in a prior order . . . in the underlying
action”).
Permissive Abstention
Judiciary Code Section 1334(c) provides two abstention doctrines: permissive abstention
under Judiciary Code Section 1334(c)(1), and mandatory abstention under Judiciary Code
Section 1334(c)(2). As the name suggests, the doctrine of permissive abstention permits a
bankruptcy court to decline to exercise its jurisdiction to decide a matter under Section
1334(c)(1), even when jurisdiction is present. Permissive abstention may be warranted “in the
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interest of justice, or in the interest of comity with State courts or respect for State law.” 28
U.S.C. § 1334(c)(2). See In re Taub, 413 B.R. 69, 79 (Bankr. E.D.N.Y. 2009) (describing the
considerations for permissive abstention).
In considering whether permissive abstention under Section 1334(c)(1) is appropriate,
courts apply the following factors:
“(1) the effect or lack thereof on the efficient administration of the bankruptcy
estate; (2) the extent to which state law issues predominate; (3) the difficulty or
unsettled nature of the applicable state law; (4) comity; (5) the degree of
relatedness or remoteness of the proceeding to the main bankruptcy case,
(6) the existence of a right to a jury trial, and (7) prejudice to the involuntarily
removed defendants.”
In re Korean Radio Broad., Inc., 2020 WL 2047990, at *7 (Bankr. E.D.N.Y. 2020) (“KRBI”)
(quoting In re Residential Capital, LLC, 488 B.R. 565, 577 (Bankr. S.D.N.Y. 2013).
Courts in this Circuit have also examined additional factors, including “the presence of a
related proceeding commenced in state court or other non-bankruptcy court” and “the likelihood
that the commencement of the proceeding in a bankruptcy court involves forum shopping by one
of the parties.” KRBI, 2020 WL 2047990, at *7 (quoting Little Rest Twelve, Inc. v. Visan, 458
B.R. 44, 60 (S.D.N.Y. 2011)).
The Trustee’s Discretion Under Bankruptcy Code Section 704
Bankruptcy Code Section 704 enumerates a plethora of duties and responsibilities for the
trustee in a Chapter 7 bankruptcy case. See 11 U.S.C. § 704(a)(1)-(a)(12). These include that
“[t]he trustee shall . . . investigate the financial affairs of the debtor.” 11 U.S.C. § 704(a)(4). As
the Supreme Court has explained, “[t]he estate is placed under the control of a trustee, who is
responsible for managing liquidation of the estate's assets and distribution of the proceeds.” Law
v. Siegel, 571 U.S. 415, 417 (2014).
In carrying out these duties, it is generally the trustee, not the court, that charts the
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appropriate course. That is, as one respected commentator has stated, the trustee “must proceed
without any direction or order from the court.” 6 Collier on Bankruptcy ¶ 704.07, at 704-22
(Richard Levin & Henry J. Sommer eds., 16th ed.) And as one appellate court noted, “the trustee
has the sole responsibility to represent the estate, by bringing actions on its behalf to marshal
assets for the benefit of the estate’s creditors.” Fisher v. Apostolou, 155 F.3d 876, 879 (7th Cir.
1998).
In addition, courts generally defer to a trustee’s exercise of their business judgment in
carrying out these duties. Again, as the Collier treatise states, “[g]enerally, the court will respect
the trustee’s business judgment in deciding that it is not worth pursuing assets.” 6 Collier on
Bankruptcy ¶ 704.03, at 704-13 (Richard Levin & Henry J. Sommer eds., 16th ed.) (citing
Frostbaum v. Ochs, 277 B.R. 470 (E.D.N.Y. 2002)).
As one example, in considering whether to second-guess a trustee’s decision to abandon
collection efforts, the district court in Frostbaum explained:
Because the cost of collection efforts, or litigating a claim, are often more
burdensome than beneficial, the “business judgment” rule has been employed in a
variety of bankruptcy contexts. . . . Under this rule, the trustee and the court in a
bankruptcy proceeding “must exercise their discretion fairly in the interests of all
who have had the misfortune of dealing with the debtor.”
Frostbaum, 277 B.R. at 475 (quoting Minges v. Zelman (In re Minges), 602 F.2d 38, 43 (2d Cir.
1979)).
There are several reasons why a trustee generally exercises their judgment independent
from the court and generally carries out their duties without specific or particularized direction or
order from the court. 6 Collier on Bankruptcy ¶ 704.07, at 704-22 (Richard Levin & Henry J.
Sommer eds., 16th ed.). One reason is that the trustee’s investigation into the debtor’s financial
affairs “avoid[s] needless and costly duplication of effort and expense” by the court. Id. In
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performing this role, the trustee provides a valuable practical benefit to the administration of a
debtor’s estate, conserves judicial resources, and optimizes judicial efficiency. See, e.g., In re
Curlew Valley Assocs., 14 B.R. 506, 511 (Bankr. D. Utah 1981) (reasoning that if parties
questioned the trustee’s business decisions, any motions brought by those parties “would impede
the expeditious administration of estates”).
Another reason is “to ensure that the court and the parties to the case are supplied with
the facts essential to proper administration of the debtor’s estate.” 6 Collier on Bankruptcy ¶
704.07, at 704-22 (Richard Levin & Henry J. Sommer eds., 16th ed.). That is, the trustee has the
important role of investigating the debtor’s estate, and presenting its findings to the court. The
parties may benefit from learning new information, while leaving the role of considering and
resolving disputed issues of law and fact to the court. See, e.g., In re Curlew Valley Assocs., 14
B.R. at 511 (in the context of a Chapter 11 trustee, observing that “[a] court which appoints a
trustee and confers with him regularly and ex parte for the purpose of managing a business may
find it difficult to rule impartially if those decisions in which it has participated are challenged.”).
To be sure, if a trustee fails to perform its duties, parties in interest in a bankruptcy case
have several avenues of recourse. “[A] creditor or a committee of creditors may seek court
permission to pursue [an] action in the name of the trustee.” 6 Collier on Bankruptcy ¶ 704.07,
at 704-23 (Richard Levin & Henry J. Sommer eds., 16th ed.). Additionally, “[f]ailure to
reasonably carry out [the trustee’s] fiduciary duties makes a trustee liable for damages.” 6
Collier on Bankruptcy ¶ 704.04, at 704-15 (Richard Levin & Henry J. Sommer eds., 16th ed.).
As the Frostbaum court observed, a trustee’s “failure to [carry out these duties] may result in
sanctions against the Trustee; in fact, a Trustee may be held liable for the costs incurred in
pursuing worthless claims.” Frostbaum, 277 B.R. at 476 (citing In re Keffas & Son Florist, Inc.,
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240 B.R. 466, 473-74 (Bankr. E.D.N.Y. 1999)).
Recovery of a Fraudulent Transfer Under Bankruptcy Code Section 544
Bankruptcy Code Section 544(b)(1) provides that “the trustee may avoid any transfer of
an interest of the debtor in property or any obligation incurred by the debtor that is voidable
under applicable law by a creditor holding an unsecured claim.” 11 U.S.C. § 544(b)(1). To seek
relief under Section 544(b)(1), “there must be an actual existing creditor holding an allowable
unsecured claim who would have had that right outside of bankruptcy,” sometimes called a
“‘golden’ or ‘triggering’ creditor.” Mendelsohn v. Kovalchuk (In re APCO Merch. Servs., Inc.),
585 B.R. 306, 314 (Bankr. E.D.N.Y. 2018) (quotation marks omitted) (quoting MC Asset
Recovery, LLC v. Southern Co., 2008 WL 11333464, at *3 (N.D. Ga. Dec. 11, 2006)).
Courts interpreting Section 544(b)(1)’s requirement that there be an actual existing
creditor with an allowable unsecured claim generally agree that an unsecured creditor must file a
proof of claim in the debtor’s case. 5 Collier on Bankruptcy ¶ 544.06, at 544-23 (Richard Levin
& Henry J. Sommer eds., 16th ed.) (citing Miller v. Fallas (In re J & M Sales Inc.), 2022 WL
532721, at *14-15 (Bankr. D. Del. Feb. 22, 2022)). That is, “[i]f there is no creditor against
whom the transfer is voidable under the applicable law, the trustee is powerless to act under
Section 544(b)(1).” 5 Collier on Bankruptcy ¶ 544.06, at 544-25 (Richard Levin & Henry J.
Sommer eds., 16th ed.).
Recovery of a Constructive Fraudulent Conveyance Under New York Debtor and Creditor Law
Section 274
New York Debtor and Creditor Law Section 274 applies to those creditors whose claims
arose before the asserted fraudulent conveyance. It provides:
A transfer made or obligation incurred by a debtor is voidable as to a creditor
whose claim arose before the transfer was made or the obligation was incurred if
the debtor made the transfer or incurred the obligation without receiving a
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reasonably equivalent value in exchange for the transfer or obligation and the
debtor was insolvent at that time or the debtor became insolvent as a result of the
transfer or obligation.
NY DCL § 274(a) (2025).
To establish a right to relief under NY DCL Section 274, a plaintiff must show the debtor
made a transfer without receiving a reasonably equivalent value in exchange for the transfer, and
must establish that the debtor was insolvent at the time of the transfer, or became insolvent as a
result of the transfer. See id. “A debtor is insolvent if, at a fair valuation, the sum of the debtor's
debts is greater than the sum of the debtor's assets.” NY DCL § 271(a). NY DCL Section 271
further imposes a presumption of insolvency upon the debtor when the debtor is “generally not
paying the debtors debts as they become due.” NY DCL § 271(b). The presumption imposes
upon the debtor the burden of proving it is more probable that the debtor is solvent rather than
insolvent. See id.
The party seeking to set aside a transfer bears the burden of proving each element of the
claim by a preponderance of the evidence. Mendelsohn v. Jacobowitz, (In re Jacobs), 394 B.R.
646, 660 (Bankr. E.D.N.Y. 2008). See NY DCL § 274(c).
Discussion
This adversary proceeding and Summary Judgment Motion call for the Court to consider
competing arguments grounded in notions of preclusion asserted by Mr. Ranasinghe in the
Amended Complaint and by the Movants in the Summary Judgment Motion.
In the Third Claim for Relief and Fourth Claims for Relief, Mr. Ranasinghe seeks relief
against PHH and U.S. Bank on grounds, in substance, and among others, that he prevailed in the
2012 Foreclosure Action in New York Supreme Court, and that result should preclude any other
outcome here. Mr. Ranasinghe states that “Defendants have not challenged or appealed against
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the decision of the First foreclosure action by Supreme Court,” and that, under the doctrine of
collateral estoppel, “the Bankruptcy Court has to accept the decision of the first Foreclosure
action and accept the issues that were resolved by the first foreclosure action.” Am. Compl. ¶¶
62, 67. See Am. Compl. ¶¶ 63-66. That is, having prevailed in that action, Mr. Ranasinghe
argues that he should prevail in this adversary proceeding too. See Am. Compl. ¶¶ 62-67.
In the Summary Judgment Motion, PHH and U.S. Bank also point to doctrines of
preclusion, including the Rooker-Feldman doctrine and the doctrines of res judicata and
collateral estoppel. See Summ. Judg. Mot. at 8-9. The Movants point to a different action in
New York Supreme Court, the 2016 Foreclosure Action, and the 2022 Judgment of Foreclosure
and Sale that was entered in that case. See Summ. Judg. Mot. at 9-10. They note that Mr.
Ranasinghe appeared in and contested that action, and “[a]fter the third failed attempt at vacating
the Foreclosure Judgment, Debtor commenced the [bankruptcy case] shortly after the third denial
by the Supreme Court to gain the benefit of the automatic stay.” Summ. Judg. Mot. at 10. They
also argue that “there can be no question that the Foreclosure Judgment is . . . final. There was
no appeal taken from the Foreclosure Judgment, and the Debtor has not obtained any stay of the
effectiveness of the Foreclosure Judgment either from the Supreme Court, or the Appellate
Division.” Id. So, the Movants assert, there is simply nothing left for this Court to decide with
respect to Mr. Ranasinghe’s claims against them, because the 2022 Judgment of Foreclosure and
Sale is final, binding, and valid. Id.
And in the context of this Summary Judgment Motion, the Movants urge that “‘there is
no genuine dispute as to any material fact and that [they are] entitled to judgment as a matter of
law’” on these claims. Summ. Judg. Mot. at 5 (quoting Celotex, 477 U.S. at 322).
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This Summary Judgment Motion also calls for the Court to consider the role of the
Chapter 7 Trustee, and relatedly, the role of the Court in supervising and directing the Chapter 7
Trustee’s discretion in the performance of their duties, including the duty to investigate the
financial affairs of the debtor and to marshal the assets of the estate.
Whether the Movants Have Shown that this Court Lacks Subject Matter Jurisdiction To Consider
Mr. Ranasinghe’s Claims Under the Rooker-Feldman Doctrine
A federal court’s subject matter jurisdiction is the starting point for everything that it
does. The Rooker-Feldman doctrine establishes limits on that jurisdiction by recognizing that
the “‘lower federal courts lack subject matter jurisdiction over a case if the exercise of
jurisdiction over that case would result in the reversal or modification of a state court
judgment.’” Neshewat v. Salem (In re Salem), 290 B.R. 479, 482 (S.D.N.Y. 2003) (quoting
Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir. 1998)). This limitation has particular
salience in the bankruptcy courts, because from time to time, parties to disputes here have
previously litigated the same or a similar matter in the state court. And as a limitation on the
court’s subject matter jurisdiction, the boundaries established by Rooker-Feldman are not
discretionary – they are mandatory.
The Movants argue that this Court lacks subject matter jurisdiction to consider Mr.
Ranasinghe’s claims under the Rooker-Feldman doctrine, among other reasons. Summ. Judg.
Mot. at 8-9. To establish that this Court lacks subject matter jurisdiction, the Movants must
show “(1) the federal-court plaintiff lost in state court; (2) the plaintiff must complain of injuries
caused by a state-court judgment; (3) the plaintiff must invite district court review and rejection
of that judgment; and (4) the state-court judgment must have been rendered before the district
court proceedings commenced.” In re Green, 2020 WL 3412679, at *12 (quotation marks
omitted).
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Whether Mr. Ranasinghe, the federal court plaintiff, lost in state court. The first Rooker-
Feldman element that the Movants must establish is that Mr. Ranasinghe, the “federal-court
plaintiff” here, lost in state court. Id.
Here, the record shows that Mr. Ranasinghe lost in state court when the New York
Supreme Court entered the 2022 Judgment of Foreclosure and Sale in the 2016 Foreclosure
Action. See Summ. Judg. Mot. Exh. D (2022 Judgment of Foreclosure and Sale). This
conclusion is also supported by the fact that Mr. Ranasinghe pursued several attempts to overturn
the 2022 Judgment of Foreclosure and Sale, including a motion to vacate and a motion to reargue
or for reconsideration. See Summ. Judg. Mot. at 10. That is, both the plain terms of the 2022
Judgment of Foreclosure and Sale and the events that followed show that Mr. Ranasinghe, the
plaintiff here, lost in state court. See Summ. Judg. Mot. Exhs. D (2022 Judgment of Foreclosure
and Sale), E (2016 Foreclosure Action State Court Docket).
And Mr. Ranasinghe’s argument that PHH and U.S. Bank and this Court are precluded
from considering the 2022 Judgment of Foreclosure and Sale by the dismissal of the earlier 2012
Foreclosure Action does not change this outcome. See Summ. Judg. Opp. at 11. Any questions
concerning the effect of that action, and the decision of the New York State Supreme Court to
dismiss that action without prejudice, were answered by the entry of the 2022 Judgment of
Foreclosure and Sale in the subsequent 2016 Foreclosure Action. See Summ. Judg. Opp. Exhs.
B (2012 Foreclosure Action Order of Dismissal); Summ. Judg. Mot. Exh. D (2022 Judgment of
Foreclosure and Sale).
For these reasons, the Court finds and concludes that the Movants have established that
the first element of the Rooker-Feldman test, that Mr. Ranasinghe, the federal court plaintiff
here, lost in state court, is satisfied.
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Whether Mr. Ranasinghe complains of injuries caused by a state court judgment. The
second Rooker-Feldman element that the Movants must establish is that Mr. Ranasinghe
complains of injuries caused by a state court judgment. In re Green, 2020 WL 3412679, at *12.
Here, the record shows that at the outset of this adversary proceeding, Mr. Ranasinghe
asserted four claims for relief, including two – the First and Second Claims for Relief – that
address, in substance, whether the Note and Mortgage secured by the Property – can be collected
from him. See Am. Compl. ¶¶ 88-106. The parties agree that those claims have been addressed
by the entry of a discharge in Mr. Ranasinghe’s bankruptcy case, and they have been dismissed.
See Stipulation at 2; Summ. Judg. Mot. at 2; Summ. Judg. Opp. at 7; So-Ordered Stipulation at 2.
And now, there remain two claims – Mr. Ranasinghe’s Third Claim for Relief and Fourth
Claims for Relief – that address, in substance, and by various means, the recovery of the
Property by the Chapter 7 Trustee for the benefit of Mr. Ranasinghe and his creditors. See Am.
Compl. ¶¶ 107-14. He seeks this relief in the form of a direction from this Court to the Chapter 7
Trustee, under Bankruptcy Code Section 544, and NY DCL Section 274. Id. That is, in these
Claims for Relief, Mr. Ranasinghe seeks, in substance, to undo the consequences of the 2022
Judgment of Foreclosure and Sale in the 2016 Foreclosure Action. See Dec. 1, 2025, Tr. at
25:18-22. And he seeks that relief in response to the injury that was, he asserts, brought about by
that judgment. See Am. Compl. ¶¶ 107-14.
For these reasons, the Court finds and concludes that the Movants have established that
the second element of the Rooker-Feldman test, that Mr. Ranasinghe complains of injuries
caused by a state court judgment, is satisfied.
Whether Mr. Ranasinghe invites this Court to review and reject that judgment. The third
Rooker-Feldman element that the Movants must establish is that Mr. Ranasinghe invites this
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Court’s “review and rejection of” the 2022 Judgment of Foreclosure and Sale that was entered in
the 2016 Foreclosure Action. In re Green, 2020 WL 3412679, at *12 (quotation marks omitted).
Here, as noted above, the record shows that, in substance, Mr. Ranasinghe seeks to assert
the preclusive effect of the dismissal of the 2012 Foreclosure Action, and to use the tools of the
bankruptcy process, to undo the consequences of the 2022 Judgment of Foreclosure and Sale
entered in the 2016 Foreclosure Action. See Dec. 1, 2025, Tr. at 25:18-22. As stated in plain
terms at the oral argument on this Summary Judgment Motion, Mr. Ranasinghe seeks “to undo
the foreclosure auction.” Dec. 1, 2025, Tr. at 25:21; see Dec. 1, 2025, Tr. at 25:18-22. The
relief that he seeks would, in both substance and effect, require this Court to “review and reject”
the 2022 Judgment of Foreclosure and Sale entered in the 2016 Foreclosure Action.
Mr. Ranasinghe’s assertions that the 2016 Foreclosure Action “was not litigated on [the]
merit[s],” that “the order of reference issued on default,” and that the “second foreclosure action
[is] not final but on Appeal,” do not tip the balance in his favor on this element. Summ. Judg.
Opp. at 11. At the outset, his assertion that the decision in that action was entered on default is
not consistent with the record here. Id. Rather, the record shows that in the 2016 Foreclosure
Action, Mr. Ranasinghe filed a motion to dismiss, a motion to vacate, and a motion for
reconsideration. Summ. Judg. Mot. at 9-10, Exh. E (2016 Foreclosure Action State Court
Docket). Mr. Ranasinghe contrasts this with the disposition of the 2012 Foreclosure Action,
which, he asserts, was adjudicated on the merits. Summ. Judg. Opp. at 8. But here again, the
record tells a different story, and shows that the 2012 Foreclosure Action was dismissed without
prejudice. Summ. Judg. Opp. Exh. B (2012 Foreclosure Action Order of Dismissal). And in all
events, the Rooker-Feldman doctrine is clear that if the necessary criteria are met, then a federal
court lacks the subject matter jurisdiction to review even erroneous decisions made by a state
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court. In re Ward, 423 B.R. at 27.
Mr. Ranasinghe also states that the 2022 Judgment of Foreclosure and Sale is presently
on appeal in the New York Supreme Court Appellate Division, Second Department, at Index
Number 2022-09025. Summ. Judg. Opp. at 11. But if anything, this would be yet another
reason for this Court to decline to exercise jurisdiction in the situation of a state court final
judgment that is on appeal. Viewed another way, the New York Supreme Court Appellate
Division is the appropriate venue for review of the 2022 Judgment of Foreclosure and Sale, not
this Court.
For these reasons, the Court finds and concludes that the Movants have established that
the third element of the Rooker-Feldman test, that Mr. Ranasinghe invites this Court to review
and reject the 2022 Judgment of Foreclosure and Sale entered in the 2016 Foreclosure Action, is
satisfied.
Whether the state court judgment was rendered before this adversary proceeding was
commenced. The fourth Rooker-Feldman element that the Movants must establish is that the
state court judgment at issue – here, the 2022 Judgment of Foreclosure and Sale – was “rendered
before this adversary proceeding commenced.” In re Green, 2020 WL 3412679, at *27
(citations omitted).
Here, the record shows that the 2022 Judgment of Foreclosure and Sale was entered in
the 2016 Foreclosure Action on March 8, 2022. See Summ. Judg. Mot., Exh. D (2022 Judgment
of Foreclosure and Sale). And the record also shows that this adversary proceeding was
commenced more than one year and eight months later, on November 30, 2023. See ECF No. 1.
The record also shows that even though an appeal of the 2022 Judgment of Foreclosure
and Sale is presently pending, the Rooker-Feldman doctrine nevertheless applies, and bars this
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Court from considering Mr. Ranasinghe’s claims as set forth in the Amended Complaint,
because this Court is a court of original, not appellate jurisdiction. T.M., 146 S. Ct. at 1744,
1747.
For these reasons, the Court finds and concludes that the Movants have established that
the fourth element of the Rooker-Feldman test, that the state court judgment at issue here was
rendered before this action was commenced, is satisfied.
* 	* 	*
For these reasons, and based on the entire record, the Court finds and concludes that the
Movants have shown that there is “no genuine dispute as to any material fact” so that they are
“entitled to judgment as a matter of law” as to each element of the Rooker-Feldman test on these
claims. Fed. R. Civ. P. 56(c). That is, the Movants have shown that, pursuant to the Rooker-
Feldman doctrine, this Court lacks subject matter jurisdiction to consider Mr. Ranasinghe’s
Third Claim for Relief and Fourth Claim for Relief.
Whether the Movants Have Shown that They Are Entitled to Summary Judgment Based on the
Doctrine of Res Judicata
The doctrine of res judicata determines the preclusive effect of a state court judgment in
a subsequent federal action. This doctrine finds its roots in the full faith and credit clause of the
U.S. Constitution and Section 1738 of the Judiciary Code. This Section provides that “judicial
proceedings” in any State “shall have the same full faith and credit in every court within the
United States . . . as they have by law or usage in the courts of such State.” 28 U.S.C. § 1738.
That is, federal law and the applicable state law – here, New York law – provide the framework
for considering whether res judicata applies.
The elements of res judicata under New York law are well established. These are: “(1)
there must be a final judgment in the first action; (2) that was rendered ‘on the merits’; (3)
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between the same parties in both actions; and (4) concerning the same claims in both actions.”
CIT Bank, 2019 WL 1383850, at *5 (quoting In re Hunter, 4 N.Y.3d at 269). The party “seeking
to invoke res judicata to prove that the doctrine bars the second action’” bears the burden of
proof on each of these elements. Brown Media Corp., 854 F.3d at 157 (quoting Computer
Assocs. Int'l, 126 F.3d at 369). See In re Green, 2020 WL 3412679, at *13.
The Movants argue that res judicata precludes this Court from revisiting the questions
that were addressed in the 2016 Foreclosure Action and the 2022 Judgment of Foreclosure and
Sale, including the question of the validity of the foreclosure sale, because each of the elements
of res judicata are satisfied here. Summ. Judg. Mot. at 8. The Court considers these elements in
turn.
Whether there is a final judgment in the state court action. The first element of res
judicata that the Movants must establish is that a final judgment has been entered in the 2016
Foreclosure Action.
Here, the record shows that, as noted above, a final judgment in the form of the 2022
Judgment of Foreclosure and Sale has been entered in the 2016 Foreclosure Action. See Summ.
Judg. Mot. Exh. D (2022 Judgment of Foreclosure and Sale). As the Movants correctly state,
“there can be no question that the Foreclosure Judgment is . . . final. The Debtor has not
obtained any stay of the effectiveness of the Foreclosure Judgment either from the Supreme
Court, or the Appellate Division.” Summ. Judg. Mot. at 10. And although there is an appeal of
the Foreclosure Judgment pending, the “‘mere pendency of an appeal does not deprive a
challenged judgment . . . of its res judicata effect.’” Meiri, 754 F. Supp. 3d at 442 n.6 (quoting
5512 OEAAJB Corp., 138 N.Y.S.3d at 558).
For these reasons, the Court finds and concludes that the Movants have established that
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the first element for res judicata to apply, that there is a final judgment in the form of the 2022
Judgment of Foreclosure and Sale in the 2016 Foreclosure Action, is satisfied.
Whether the final judgment in the prior action was rendered on the merits. The second
element of res judicata that the Movants must establish is that the judgment in the prior action
was rendered on the merits.
Here, the record shows that the court’s decision in the 2016 Foreclosure Action, as set
forth in the 2022 Judgment of Foreclosure and Sale, was a judgment on the merits of the parties’
dispute. Summ. Judg. Mot. Exh. D (2022 Judgment of Foreclosure and Sale). To be sure, Mr.
Ranasinghe argues that the 2022 Judgment of Foreclosure and Sale was not a judgment on the
merits because it was a default judgment. Summ. Judg. Opp. at p. 11. But for the purposes of
res judicata, “a default judgment is a judgment on the merits.” Martins, 251 A.D.2d at 465. See
Yoon v. Fordham Univ. Fac., 173 F. App’x at 939 (finding that a dismissal for a plaintiff’s
failure to proceed at trial was “an adjudication on the merits with res judicata effect”). As noted
above, Mr. Ranasinghe participated in that litigation, making a motion to vacate and a motion to
reargue or for reconsideration, among other relief. See Summ. Judg. Mot. at 10. And here as
well, Mr. Ranasinghe’s reliance on the dismissal without prejudice of the 2012 Foreclosure
Action does not change this result. See Summ. Judg. Opp. Exh. B (2012 Foreclosure Action
Order of Dismissal).
For these reasons, the Court finds and concludes that the Movants have established that
the second element for res judicata to apply, that the final judgment in the form of the 2022
Judgment of Foreclosure and Sale in the 2016 Foreclosure Action was rendered on the merits, is
satisfied.
Whether the prior action was between the same parties. The third element of res judicata
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that the Movants must establish is that the prior action was between the same parties that are
present here. This is because where “the same parties in the same capacities” have litigated a
matter, they “should not be required to litigate anew a matter which might have been determined
and settled in the former litigation.” Lasker, 2009 WL 57137, at *4.
Here, the record shows that the parties to this adversary proceeding – Mr. Ranasinghe and
PHH and U.S. Bank – were also parties to the 2016 Foreclosure Action and the 2022 Judgment
of Foreclosure and Sale. Summ. Judg. Mot. Exhs. D (2022 Judgment of Foreclosure and Sale), E
(2016 Foreclosure Action State Court Docket). They had the opportunity to litigate, and did
litigate, the same matters that are, in substance, before the Court in Mr. Ranasinghe’s Third
Claim for Relief and Fourth Claim for Relief. Id.
For these reasons, the Court finds and concludes that the Movants have established that
the third element for res judicata to apply, that the prior action was between the same parties, is
satisfied.
Whether the prior action concerned the same claims. The fourth element of res judicata
that the Movants must establish is that the prior action concerned the same claims that are
present here. Here as well, res judicata means that parties “should not be required to litigate
anew a matter which might have been determined and settled in the former litigation.” Lasker,
2009 WL 57137, at *4.
Here, the record shows that the matters addressed in the 2016 Foreclosure Action, leading
to the entry of the 2022 Judgment of Foreclosure and Sale, are the same as the claims that, in
substance, Mr. Ranasinghe seeks to address here. To be sure, the Third Claim for Relief and
Fourth Claim for Relief appear to seek relief in the form of directions from the Court to the
Chapter 7 Trustee, Mr. Ranasinghe acknowledges that these claims are, in substance, claims “to
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undo the foreclosure auction.” Dec. 1, 2025, Tr. at 25:21; see Dec. 1, 2025, Tr. at 25:18-22.
For these reasons, the Court finds and concludes that the Movants have established that
the fourth element for res judicata to apply, that the 2016 Foreclosure Action and 2022 Judgment
of Foreclosure and Sale concerned the same claims that Mr. Ranasinghe now sets forth in the
Third Claim for Relief and Fourth Claim for Relief, is satisfied.
* 	* 	*
For these reasons, and based on the entire record, the Court finds and concludes that the
Movants have shown that there is “no genuine dispute as to any material fact” so that they are
“entitled to judgment as a matter of law” as to each element of res judicata on these claims. Fed.
R. Civ. P. 56(c). That is, the Movants have shown that, pursuant to the doctrine of res judicata,
they are entitled to summary judgment on Mr. Ranasinghe’s Third Claim for Relief and Fourth
Claim for Relief.
Whether the Movants Have Shown that They Are Entitled to Summary Judgment Based on the
Doctrine of Collateral Estoppel
Collateral estoppel, like res judicata, applies in the appropriate circumstance to bar a
party from attempting to relitigate “‘an issue . . . identical to an issue already decided . . . in a
previous proceeding in which that party had a full and fair opportunity to litigate.’” Farrell, 449
F.3d at 482-83 (quoting Curry, 316 F.3d at 331 & n.4). Collateral estoppel is a narrower
doctrine in some respects than res judicata, and requires the court to examine whether the “‘issue
[was] clearly raised in a prior action . . . and decided against that party.’” Fequiere, 2016 WL
1057000, at *8 (quoting Tsirelman, 19 F. Supp. 3d at 449).
Federal courts look to state law to determine whether to give preclusive effect to a state
court determination – here, the law of New York. And New York law provides that “collateral
estoppel bars relitigation of an issue when (1) the identical issue necessarily was decided in the
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prior action and is decisive of the present action, and (2) the party to be precluded from
relitigating the issue had a full and fair opportunity to litigate the issue in the prior action.” In re
Hyman, 502 F.3d at 65 (citing Kaufman, 65 N.Y.2d at 455-56).
As with res judicata, the Movants argue that collateral estoppel prevents Mr. Ranasinghe
from relitigating questions that were addressed and decided in the 2016 Foreclosure Action and
the 2022 Judgment of Foreclosure and Sale, including the question of the validity of the
foreclosure sale, because the elements of collateral estoppel are satisfied here. Summ. Judg.
Mot. at 8-9. The Court considers these elements in turn.
Whether the identical issue necessarily was decided in the prior action and is decisive of
the present action. The first element that the Movants must establish is that the identical issue
that is present here was necessarily decided in the prior action – that is, the 2016 Foreclosure
Action and the 2022 Judgment of Foreclosure and Sale. And of course, this calls for the Court to
consider what was decided in the 2016 Foreclosure Action, and what is “decisive” here.
To be sure, Mr. Ranasinghe’s Third Claim for Relief and Fourth Claim for Relief include
several references to Bankruptcy Code provisions and the power of a Chapter 7 trustee that could
conceivably appear to seek relief that is different than the relief awarded in the 2022 Judgment of
Foreclosure and Sale. See Am. Compl. ¶¶ 107-14. But these averments simply do not add up to
a claim for anything other than a claim “to undo the foreclosure auction.” Dec. 1, 2025, Tr. at
25:21; see Dec. 1, 2025, Tr. at 25:18-22. .
In the Third Claim for Relief, Mr. Ranasinghe cites certain Bankruptcy Code provisions
and seeks an “Order to the Trustee . . . to avoid any transfer of property of the debtor to the
creditor that would be voidable under applicable law . . .” Am. Compl. at p. 14. He also refers
to “materials and labor provided to the Town, for which the Debtor received no consideration,”
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without providing any context or connection for these references to his claims or the Movants.
Am. Compl. ¶ 109. That is, he does not identify the particular “materials,” “labor,” or “[t]own”
to which he refers. But this Claim for Relief is, in substance, and as Mr. Ranasinghe
acknowledged, a claim “to undo the foreclosure auction.” Dec. 1, 2025, Tr. at 25:21; see Dec. 1,
2025, Tr. at 25:18-22.
And in the Fourth Claim for Relief, Mr. Ranasinghe cites NY DCL Section 274 and
requests an “order [for] the Trustee to demand from the creditor to prove the claim by a
preponderance of the evidence.” Am. Compl. at p. 16. He also asks, without more, for “the
[C]ourt to issue an order for the trustee to intervene in the [D]ebtor’s estate.” Am. Compl. ¶ 114.
Again, it may well be that Mr. Ranasinghe is seeking an order from this Court to direct the
Chapter 7 Trustee “to undo the foreclosure auction” and recover the Property. Dec. 1, 2025, Tr.
at 25:21; see Dec. 1, 2025, Tr. at 25:18-22.
That is, in order for the Court to consider the relief that Mr. Ranasinghe seeks, in
substance, in the Third Claim for Relief and the Fourth Claim for Relief, “to undo the foreclosure
auction,” it would be necessary to revisit the identical issues that were considered in the 2016
Foreclosure Action and decided in the 2022 Judgment of Foreclosure and Sale.
For these reasons, the Court finds and concludes that the Movants have established that
the first element for collateral estoppel to apply, that the identical issue – the validity of the 2022
Judgment of Foreclosure and Sale – was decided in the prior action and would be decisive here,
is satisfied.
Whether Mr. Ranasinghe had a full and fair opportunity to litigate the issue in the 2016
Foreclosure Action. The second element of collateral estoppel that the Movants must establish is
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that the party to be estopped – here, Mr. Ranasinghe – “had a full and fair opportunity to litigate
the issue in the prior action.” In re Hyman, 502 F.3d at 65 (quotation marks omitted).
Here, the record shows that Mr. Ranasinghe appeared in and contested the 2016
Foreclosure Action. He pursued “a motion to dismiss . . . that was denied on December 9, 2021
. . . a motion to vacate . . . that was denied on October 11, 2022 . . . [and] a motion to reargue or
for reconsideration . . . that was denied on March 30, 2023.” Summ. Judg. Mot. at 9-10. That is,
Mr. Ranasinghe had not only an opportunity to litigate the issues leading to the entry of the
Judgment of Foreclosure and Sale, but in fact litigated those issues, over many years.
And the fact that the 2022 Judgment of Foreclosure and Sale was entered on default does
not preclude this Court from giving the 2022 Judgment of Foreclosure and Sale preclusive effect.
As one court has noted, “New York has long given default judgments collateral estoppel effect
and considered them conclusive between the parties with regard to all matters essential to sustain
the judgment.” Fairchild, Arabatzis & Smith, Inc. v. Prometco (Produce & Metals) Co., Ltd.,
470 F. Supp. 610, 617 (S.D.N.Y. 1979) (citations omitted).
To the same effect, this result is not altered by the pendency of an appeal of the 2022
Judgment of Foreclosure and Sale. Here again, the Second Circuit has held that “the mere
pendency of an appeal does not prevent the use of the challenged judgment as the basis of
collaterally estopping a party to that judgment in a second proceeding.’” DiSorbo, 343 F.3d at
183 (quoting Amica Mut. Ins. Co., 445 N.Y.S.2d at 822).
For these reasons, the Court finds and concludes that the Movants have established that
the second element for collateral estoppel to apply, that Mr. Ranasinghe had a full and fair
opportunity to litigate issues, including the validity of the 2022 Judgment of Foreclosure and
Sale, in the 2016 Foreclosure Action, is satisfied.
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* 	* 	*
For these reasons, and based on the entire record, the Court finds and concludes that the
Movants have shown that there is “no genuine dispute as to any material fact” so that they are
“entitled to judgment as a matter of law” as to each element of collateral estoppel on these
claims. Fed. R. Civ. P. 56(c). That is, the Movants have shown that, pursuant to the doctrine of
collateral estoppel, they are entitled to summary judgment on Mr. Ranasinghe’s Third Claim for
Relief and Fourth Claim for Relief.
Whether the Movants Have Shown that this Court Should Abstain Pursuant to Judiciary Code
Section 1334(c)(1)
The Court next considers whether the Movants have shown that this Court should abstain
in this bankruptcy case pursuant to Judiciary Code Section 1334(c). Here, courts undertake a
case-by-case and fact-specific analysis to determine whether abstention is warranted “in the
interest of justice, or in the interest of comity with State courts or respect for State law.” 28
U.S.C. § 1334(c)(1).
And here as well, the question of abstention under Section 1334(c)(1) is committed to the
sound discretion of the bankruptcy court. See In re Strathmore Group, LLC, 522 B.R. 447, 457
(Bankr. E.D.N.Y. 2014) (stating that permissive abstention lies within the sound discretion of the
bankruptcy court). The Court looks to the factors identified in KRBI to consider this question.
These are:
“(1) the effect or lack thereof on the efficient administration of the bankruptcy
estate; (2) the extent to which state law issues predominate; (3) the difficulty or
unsettled nature of the applicable state law; (4) comity; (5) the degree of
relatedness or remoteness of the proceeding to the main bankruptcy case, (6) the
existence of a right to a jury trial, and (7) prejudice to the involuntarily removed
defendants.”
KRBI, 2020 WL 2047990, at *7 (quoting In re Residential Capital, LLC, 488 B.R. at 577.
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The Effect or Lack Thereof on the Efficient Administration of the Bankruptcy Estate.
The first factor identified in KRBI is the effect that this Court's abstention would have on the
efficient administration of the bankruptcy estate. KRBI, 2020 WL 2047990, at *7 (citing In re
Residential Capital, LLC, 488 B.R. at 577).
Here, the record shows that Mr. Ranasinghe received a discharge in his Chapter 7
bankruptcy case. See In re Keerthi Ranasinghe, Case No. 23-42430, ECF No. 49 (Discharge).
With the entry of the discharge, Mr. Ranasinghe’s bankruptcy case is ready to be closed, save for
the pendency of this adversary proceeding. As a result, this Court’s abstention here would
facilitate an efficient resolution of the bankruptcy estate, and any remaining questions can be
resolved outside of bankruptcy.
Accordingly, this Court finds that this factor weighs in favor of abstention.
The Extent to Which State Law Issues Predominate Over Bankruptcy Issues. The second
factor identified in KRBI is the extent to which issues of state law predominate over bankruptcy
issues. KRBI, 2020 WL 2047990, at *7 (citing In re Residential Capital, LLC, 488 B.R. at 577).
Here, it is clear that state law issues predominate. The 2016 Foreclosure Action, and Mr.
Ranasinghe’s Claims for Relief largely concern matters of New York State foreclosure law.
While Mr. Ranasinghe alleges an avoidance claim, the relief that he seeks, to “undo the
foreclosure sale” is a matter that is better decided by New York State’s appellate courts.
Accordingly, this Court finds that this factor weighs in favor of abstention.
The Difficulty or Unsettled Nature of the Applicable State Law. The third factor
identified in KRBI is the difficulty or unsettled nature of the applicable state law. KRBI, 2020
WL 2047990, at *7 (citing In re Residential Capital, LLC, 488 B.R. at 577).
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Here, the record shows that the applicable state law is neither difficult nor unsettled. Of
course, state courts are more familiar with foreclosure actions, just as bankruptcy courts are more
familiar with Chapter 7 bankruptcy cases. But in either context, and in either court, the
applicable law should provide a straightforward framework for the parties to pursue their rights,
whatever they may be.
Accordingly, this Court finds that this factor weighs neither in favor of nor against
abstention.
The Question of Comity. The fourth factor identified in KRBI is the question of comity.
KRBI, 2020 WL 2047990, at *7 (citing In re Residential Capital, LLC, 488 B.R. at 577).
Here, the record shows that there is a pending proceeding in New York Supreme Court,
the applicable law is predominantly New York state law, and any appropriate relief can be
obtained in that forum. New York state courts are experienced and expert in overseeing
proceedings of this nature, and Mr. Ranasinghe has not identified any persuasive grounds for this
Court to displace that proceeding with an adversary proceeding in this Court.
Accordingly, this Court finds that this factor weighs in favor of abstention.
The Degree of Relatedness or Remoteness of the Proceeding to the Main Bankruptcy
Case. The fifth factor identified in KRBI is the degree of relatedness or remoteness of the
proceeding to the main bankruptcy case. KRBI, 2020 WL 2047990, at *7 (citing In re
Residential Capital, LLC, 488 B.R. at 577).
Here, the record shows that, at this stage in these proceedings, this adversary proceeding
is not intrinsically related to Mr. Ranasinghe’s Chapter 7 bankruptcy case. In that case, the
Movants have obtained stay relief with respect to the Property. Additionally, the Chapter 7
Trustee has filed a report of no distribution, stating that “[he has] neither received any property
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nor paid any money on account of this estate” and indicating that his work has been concluded.
In re Keerthi Ranasinghe, Case No. 23-42430, ECF entry dated September 11, 2023. That is,
this Adversary Proceeding concerns the Property, as to which the bankruptcy automatic stay is
no longer in effect, and which is no longer subject to the Chapter 7 Trustee’s administration.
Accordingly, this Court finds that this factor weighs in favor of abstention.
The Right to a Jury Trial. The sixth factor identified in KRBI is the existence of the right
to a jury trial. KRBI, 2020 WL 2047990, at *7 (citing In re Residential Capital, LLC, 488 B.R.
at 577).
Here, the record shows that at this stage in these proceedings, which have extended over
several years, neither the Movants nor Mr. Ranasinghe has sought to assert a right to a trial by
jury, in this forum or elsewhere.
Accordingly, this Court finds that this factor weighs neither in favor of nor against
abstention.
Prejudice to the Involuntarily Removed Defendants. The seventh and final factor
identified in KRBI is the question of prejudice to the involuntarily removed defendants – here, in
effect, the Movants as the defendants in this Adversary Proceeding. KRBI, 2020 WL 2047990,
at *7 (citing In re Residential Capital, LLC, 488 B.R. at 577).
Here, the record shows that the Movants prefer to return to state court to pursue their
rights in the 2016 Foreclosure Action and appeal. The Movants argue that the Court has already
granted stay relief, and that they want to avoid the “potential for conflicting holdings between the
bankruptcy court and the state court regarding the mortgage loan.” Supplemental Motion for
Summary Judgment at 4. The Movants – and indeed Mr. Ranasinghe as well – would be
prejudiced by the possibility of duplicative proceedings and conflicting holdings.
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Accordingly, this Court finds that this factor weighs in favor of abstention.
* 	* 	*
For these reasons, and based on the entire record, the Court finds and concludes that the
Movants have shown that this Court should abstain in this adversary proceeding pursuant to
Judiciary Code Section 1334(c).
Whether This Court Should Direct the Chapter 7 Trustee To Intervene in This Adversary
Proceeding and Mr. Ranasinghe’s Bankruptcy Estate
In the Amended Complaint, Mr. Ranasinghe “demands the court to issue an order for the
trustee to intervene in the debtor’s estate.” Am. Compl. ¶ 114. In their Summary Judgment
Motion, the Movants respond that “the [Chapter 7] Trustee has exercised [its] discretion by NOT
intervening.” Summ. Judg. Mot. at 11. They also point to the Chapter 7 Trustee’s absence of
opposition to the Stay Relief Motion. See In re Keerthi Ranasinghe, Case No. 23-42430, ECF
entry dated November 10, 2023 (stating that “Chapter 7 Trustee has reviewed the Motion to Lift
Stay and does not oppose the motion.”)
The Bankruptcy Code assigns a broad range of duties and responsibilities to the trustee in
a Chapter 7 bankruptcy case. See 11 U.S.C. § 704(a)(1)-(a)(12). As the Supreme Court has
explained, the trustee has “control” of the bankruptcy estate, and “is responsible for managing
liquidation of the estate’s assets and distribution of the proceeds.” Law, 571 U.S. at 417. And as
one appellate court has emphasized, “the trustee has the sole responsibility . . . [to bring] actions
on its behalf to marshal assets for the benefit of the estate’s creditors.” Fisher, 155 F.3d at 879.
Under Bankruptcy Code Section 704, while the trustee’s duties are broad, courts and
commentators agree that the “trustee must proceed without any direction or order from the
court.” 6 Collier on Bankruptcy ¶ 704.07, at 704-22 (Richard Levin & Henry J. Sommer eds.,
16th ed.). To the same effect, courts respect the trustee’s exercise of their business judgment,
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including with respect to steps to pursue and recover property of the estate. And “[g]enerally,
the court will respect the trustee’s business judgment in deciding that it is not worth pursuing
assets.” 6 Collier on Bankruptcy ¶ 704.03, at 704-13 (Richard Levin & Henry J. Sommer eds.,
16th ed.) (citing Frostbaum, 277 B.R. at 470).
This Court declines Mr. Ranasinghe’s invitation to direct the Chapter 7 Trustee to
intervene in this Adversary Proceeding, or otherwise to direct the Chapter 7 Trustee in his
administration of this Chapter 7 bankruptcy case, for several reasons.
First, it is simply not the role of the bankruptcy court to direct the work of a Chapter 7
trustee in their administration of a bankruptcy case. To be sure, the trustee may need to seek
court approval for certain kinds of actions. These include, for example, to “use, sell, or lease,
other than in the ordinary course of business, property of the estate,” under Bankruptcy Code
Section 363(b)(1); to “operate the business of the debtor for a limited period” under Bankruptcy
Code Section 721; and to obtain unsecured, priority, and secured credit under Bankruptcy Code
Sections 364(b) and 364(c). 11 U.S.C. §§ 363(b), 721. See 11 U.S.C. §§ 364(b), 364(c). But
that is different than the court somehow usurping the role of the trustee and directing the
administration of a Chapter 7 case.
Second, bankruptcy courts routinely – and appropriately – defer to the business judgment
of the trustee in the administration of a Chapter 7 bankruptcy case. As one court explained, “it
[is] appropriate to rely on the Trustee’s business judgment in abandoning collection of [a] claim .
. . [s]o long as this decision was not made arbitrarily, or in bad faith, . . . [and was made] for the
benefit of the estate.” Frostbaum, 277 B.R. at 475. And this is entirely consistent with the
allocation of roles between the court and the trustee.
Moreover, the record of this case does not indicate that there is any grounds to question
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whether the Chapter 7 Trustee has adequately performed his statutory duties and role in the
Debtor’s bankruptcy case. The Debtor does not allege facts to show, or even suggest, that the
Chapter 7 Trustee has come up short in investigating the Debtor’s affairs and marshaling any
available assets for the benefit of the estate. Nor has he asserted that the Chapter 7 Trustee has
engaged in any misconduct, manifested any ill will or intent, or otherwise failed effectively to
perform his duties. To the contrary, Mr. Ranasinghe has been successful in his bankruptcy case
and has received a discharge. See In re Keerthi Ranasinghe, Case No. 23-42430, ECF No. 49
(Discharge).
And in all events, as this Court has previously determined in the context of the Stay
Relief Motion, there is no equity available for creditors in the Property, and therefore, no
recovery for creditors would be realized if the Chapter 7 Trustee elected to pursue a sale of the
Property. The Chapter 7 Trustee indicated as much when he stated that he did not oppose the
Stay Relief Motion. See In re Keerthi Ranasinghe, Case No. 23-42430, ECF entry dated
November 10, 2023 (stating that “Chapter 7 Trustee has reviewed the Motion to Lift Stay and
does not oppose the motion.”). As another judge in this court has observed, “a trustee generally
may not administer an asset that is fully encumbered, as doing so cannot provide a benefit to
unsecured creditors, but must instead abandon that asset.” In re All Island Truck Leasing Corp.,
546 B.R. 522, 533 (Bankr. E.D.N.Y. 2016) (citing In re KVN Corp., Inc., 514 B.R. 1, 5-6 (9th
Cir. B.A.P. 2014)).
For these reasons, and based on the entire record, the Court finds that the Movants have
shown that this Court should not direct the Chapter 7 Trustee to intervene in Mr. Ranasinghe’s
bankruptcy estate or this Adversary Proceeding.
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Whether the Movants Have Shown that They Are Entitled to Summary Judgment on the
Constructive Fraudulent Conveyance Claim
In the Third Claim for Relief, Mr. Ranasinghe also requests, in substance, that the Court
direct the Chapter 7 Trustee “to avoid any transfer of property of the debtor to the creditor that
would be voidable under applicable law . . . pursuant to 11 U.S.C. § 544(b)(1).” Am. Compl. at
p. 14. He asserts, in substance, that Section 544(b)(1) permits a trustee to step into the shoes of a
creditor holding an unsecured claim. Am. Compl. ¶ 108. He states that the Movants have an
unsecured claim, because he did not sign the original promissory note:
Assuming that the Creditor has a claim against the debtor’s estate. It was
unsecured debt as the debtor did not sign the Promissory Note and that would be
voidable under applicable law. The trustee may recover for the benefit of the
estate.
Id.
And Mr. Ranasinghe avers that the property in question is “the materials and labor
provided by the Debtor to the Town, for which the Debtor received no consideration.” Am.
Compl. ¶ 109. He does not identify the “materials and labor” to which he refers, nor does he
specify the “town.” Id.
Finally, as to the applicable law, Mr. Ranasinghe refers to Article 10 and Section 270 of
the New York Debtor and Creditor Law, as follows:
Under Article 10 of the DCL, a “conveyance” is defined as “every payment of
money, assignment, release, transfer, lease, mortgage or pledge of tangible or
intangible property, and also the creation of any lien or incumbrance.” DCL §
270. The property alleged to have been conveyed in this case are the materials
and labor provided by the Debtor to the Town, for which the Debtor received no
consideration. While personal services provided by a judgment debtor are not
included within the definition of conveyances under DCL § 270, the Trustee is not
seeking a recovery based on any personal services provided by the Debtor.
Id.
In order to succeed on their Summary Judgment Motion as to this claim, the Movants
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must demonstrate there is no genuine dispute as to a material fact as to at least one necessary
element of Mr. Ranasinghe’s claim. Mr. Ranasinghe’s Third Claim for Relief under Bankruptcy
Code Section 544(b)(1) requires “the existence of an actual creditor with an allowable claim
against the debtor,” 5 Collier on Bankruptcy ¶ 544.06, at 544-23 (Richard Levin & Henry J.
Sommer eds., 16th ed.) (footnote omitted), that is unsecured, and that the allegedly fraudulent
transfer is voidable as to that unsecured creditor under applicable law.
As one court has explained, “the trustee must demonstrate that there existed an actual
unsecured creditor at the time of the transfer.” 9281 Shore Rd. Owners Corp. v. Seminole Realty
Corp. (In re 9281 Shore Rd. Owners Corp.), 187 B.R. 837, 852 (E.D.N.Y. 1995). Viewed
another way, such an “actual existing creditor holding an allowable unsecured claim” – or
“‘golden’ or ‘triggering’ creditor,” is necessary for the success of such a claim. In re APCO
Merch. Servs., 585 B.R. at 314) (quoting MC Asset Recovery, LLC, 2008 WL 11333464, at *3).
Here, the record shows that there is no genuine dispute as to a material fact with respect
to the existence of an actual existing creditor – or “golden” creditor – holding an allowable
unsecured claim at the time of the transfer, for several reasons.
At the outset, in order to succeed on this claim, Mr. Ranasinghe must demonstrate the
existence of “an actual existing creditor holding an allowable unsecured claim.” In re APCO
Merch. Servs., 585 B.R. at 314. But Mr. Ranasinghe’s Schedule E/F, listing his Unsecured
Creditors, lists no unsecured creditors at all. See Schedule E/F, ECF No. 17. And the Movants
state, and Mr. Ranasinghe does not dispute, that he signed the mortgage, but not the note. See
Summ. Judg. Opp. at 4; Dec. 1, 2025, Tr. 32:20-24.
In addition, even if this could somehow be overcome, so that Mr. Ranasinghe could
pursue this claim and, in substance, contest the validity of U.S. Bank’s mortgage on the property
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as a fraudulent conveyance, these bare allegations, without more, are not sufficient to give rise to
a genuine dispute as to a material fact. Instead, as the non-moving party, Mr. Ranasinghe “‘must
demonstrate by affidavit or other admissible evidence that there are genuine issues of material
fact or law.’” In re Fusco, 641 B.R. at 454 (quoting Beare, 2014 WL 1236750, at *3); Summ.
Judg. Opp. at 8.
And this he has not done. Instead, here, the record shows that the New York State Court
entered a valid judgment of foreclosure and sale in favor of U.S. Bank, and this Court lacks
subject matter jurisdiction to conduct, in effect, an appellate review of the 2022 Judgment of
Foreclosure and Sale under the Rooker-Feldman doctrine. See Exxon Mobil, 544 U.S. at 284;
Summ. Judg. Mot. Exh. D (2022 Judgment of Foreclosure and Sale). While the 2022 Judgment
of Foreclosure and Sale was entered on default, a default judgment is nonetheless still a
judgment. As the Supreme Court observed, “cases brought by state-court losers complaining of
injuries caused by state-court judgments rendered before the district proceedings commenced
and inviting district court review and rejection of those judgments” are improper and should be
dismissed for lack of subject-matter jurisdiction. Exxon Mobil, 544 U.S. at 284. See Summ.
Judg. Mot. Exh. D (2022 Judgment of Foreclosure and Sale).
Mr. Ranasinghe also points to the fact that the 2012 Foreclosure Action was dismissed
without prejudice because in that action, the plaintiff did not provide documentation of the chain
of assignments. See Summ. Judg. Opp. Exh. B (2012 Foreclosure Action Order of Dismissal).
But this too does not change the outcome here. U.S. Bank, a different entity than the plaintiff in
the 2012 Foreclosure Action, then commenced the 2016 Foreclosure Action in the name of the
correct entity, and proved the chain of assignment. See Summ. Judg. Mot. Exh. D (2022
Judgment of Foreclosure and Sale).
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Viewed another way, this Court is precluded from determining that U.S. Bank is an
unsecured creditor where, in the Judgment of Foreclosure and Sale, the New York State Court
has already determined that U.S. Bank is a secured creditor. See id. Nor has Mr. Ranasinghe
come forward with “significant probative evidence” that a genuine issue of fact exists as to
whether U.S. Bank’s claim is unsecured. Anderson, 477 U.S. at 249. Based on the entire record,
no “rational trier of fact” would be able to conclude that U.S. Bank is an unsecured creditor.
Matsushita, 475 U.S. at 587. Without an unsecured creditor, the Chapter 7 Trustee is unable to
step into the shoes of an unsecured creditor, and he is powerless to act under Bankruptcy Code
Section 544(b)(1). See 5 Collier on Bankruptcy ¶ 544.06, at 544-3 (Richard Levin & Henry J.
Sommer eds., 16th ed.) (footnote omitted).
Additionally, it is worth noting that Mr. Ranasinghe asks the Court to direct the Chapter 7
Trustee to bring a Bankruptcy Code Section 544(b)(1) claim. However, as the Movants correctly
note, the Chapter 7 Trustee has presumably reviewed the docket and chosen not to intervene in
this way in this Chapter 7 case. In light of the findings above that the Court will not direct the
Chapter 7 Trustee to intervene, the fact that the Chapter 7 Trustee has in fact, not intervened, and
that constructive fraudulent conveyance is a tool for the Chapter 7 Trustee, this Court will not
direct the Chapter 7 Trustee to intervene and pursue a constructive fraudulent conveyance claim
here.
For these reasons, and based on the entire record, the Court finds and concludes that the
Movants have shown that there is “no genuine dispute as to any material fact” so that they are
“entitled to judgment as a matter of law” as to each element of Bankruptcy Code Section
544(b)(1) on the Third Claim for Relief. Fed. R. Civ. P. 56(c). That is, the Movants have shown
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that, pursuant to Bankruptcy Code Section 544(b)(1), they are entitled to summary judgment on
Mr. Ranasinghe’s Third Claim for Relief.
Whether the Movants Have Shown that They Are Entitled to Summary Judgment with Respect to
New York Debtor and Creditor Law Section 274(c) and the Fourth Claim for Relief
In the Fourth Claim for Relief, Mr. Ranasinghe requests, in substance, that the Court
direct the Chapter 7 Trustee “to demand from the creditor to prove the claim by a preponderance
of the evidence,” as required by DCL Section 274(c). Am. Compl. at p. 16. He requests, in
substance, that “a creditor claiming relief under [DCL Section 274(a) or (b)] has the burden of
proving the elements of the claim for relief by a preponderance of the evidence.” Am. Compl. ¶
113. And he “demands the court to issue an order for the trustee to intervene in the debtor’s
estate.” Am. Compl. ¶ 114.
In response to the Fourth Claim for Relief, the Movants argue it is “devoid of any law
that would be the basis for any relief this Court could grant.” Summ. Judg. Mot. at 11. And they
note that, here as well, it does not provide grounds for Mr. Ranasinghe to overturn the 2022
Judgment of Foreclosure and Sale entered in the 2016 Foreclosure Action. Id.
At the outset, it is fair to note that New York Debtor and Creditor Law Section 274(c)
establishes, by its plain terms and as Mr. Ranasinghe asserts, the standard for the burden of proof
applicable to a Section 274(a) or Section 274(b) claim – that is, that a Section 274 claim be
proved “by a preponderance of the evidence.” NY DCL § 274(c). This is not disputed by the
Movants, nor could it be.
But that is different than allegations that set forth the elements of a claim under either of
these statutory provisions. New York Debtor and Creditor Law Section 274(a) permits a creditor
to void a transfer of assets under certain circumstances, including “if the debtor made the transfer
. . . without receiving a reasonably equivalent value in exchange . . . and the debtor was insolvent
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at that time or the debtor became insolvent as a result of the transfer or obligation.” NY DCL §
274(a). And New York Debtor and Creditor Law Section 274(b) permits a creditor to void a
transfer of assets “if the transfer was made to an insider for an antecedent debt, the debtor was
insolvent at that time, and the insider had reasonable cause to believe that the debtor was
insolvent.” NY DCL § 274(b). Neither of these types of claims is asserted by Mr. Ranasinghe in
the Amended Complaint.
And separately, here again, Mr. Ranasinghe seeks a direction that the Court “order the
Trustee to demand from the creditor to prove the claim by a preponderance of the evidence” -
that is, the applicable standard for the burden of proof in a Section 274 claim. But as described
above, it is simply not the role of this Court to direct the work of the Chapter 7 Trustee in his
administration of this bankruptcy case.
For these reasons, and based on the entire record, the Court finds and concludes that the
Movants have shown that there is “no genuine dispute as to any material fact” so that they are
“entitled to judgment as a matter of law” with respect to New York Debtor and Creditor Law
Section 274(c). Fed. R. Civ. P. 56(c). That is, the Movants have shown that, pursuant to New
York Debtor and Creditor Law Section 274(c), they are entitled to summary judgment with
respect to New York Debtor and Creditor Law Section and Mr. Ranasinghe’s Fourth Claim for
Relief.
Conclusion
For the reasons stated herein, and based on the entire record, the Motion of U.S. Bank
and PHH for Summary Judgment Dismissing Adversary Amended Complaint with Prejudice is
granted, as follows.
For the reasons stated herein, and based on the entire record, the Court finds and
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concludes that the Movants have shown that, pursuant to the Rooker-Feldman doctrine, this
Court lacks subject matter jurisdiction to consider Mr. Ranasinghe’s Third Claim for Relief and
Fourth Claim for Relief.
In the alternative, for the reasons stated herein, and based on the entire record, the Court
finds and concludes that the Movants have shown that, pursuant to the res judicata doctrine, they
are entitled to summary judgment.
In the alternative, for the reasons stated herein, and based on the entire record, the Court
finds and concludes that the Movants have shown that, pursuant to the collateral estoppel
doctrine, they are entitled to summary judgment.
In the alternative, for the reasons stated herein, and based on the entire record, the Court
finds and concludes that the Movants have shown that this Court should abstain from proceeding
pursuant to Judiciary Code Section 1334(c).
In the alternative, for the reasons stated herein, and based on the entire record, the Court
finds and concludes that the Movants have shown that, pursuant to Bankruptcy Code Section
544(b)(1), they are entitled to summary judgment with respect to the Third Claim for Relief.
In the alternative, for the reasons stated herein, and based on the entire record, the Court
finds and concludes that the Movants have shown that, pursuant to New York Debtor and
Creditor Law Section 274(c), they are entitled to summary judgment with respect to New York
Debtor and Creditor Law Section 274(c) and the Fourth Claim for Relief.
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An order and judgment in accordance with this Memorandum Decision shall be entered
simultaneously herewith.
____________________________
Elizabeth S. Stong
United States Bankruptcy Judge
Dated: Brooklyn, New York
September 25, 2026
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