MOTIONTODISAMENDEDCOMPLAIMThomever

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Derrick Hanna, of Counsel forBrooklyn Bar AssociationVolunteer Lawyers ProjectAttorney for DefendantHanna & Vlahakis

7504 Fifth AvenueBrooklyn, NY 11209800-773-7867

UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK--------------------------------------------------------------------XIn Re: Case No.: 09-50086-ess

MICHAEL CHUN KIN LEE Adversary No.:10-01051

Debtor.

-------------------------------------------------------------------XRenaissance Economic Development Corp.

Plaintiff,-against-

Michael Chun Kin LeeDefendant.

------------------------------------------------------------------X

ATTORNEY AFFIRMATION IN SUPPORT OF THE DEBTOR-DEFENDANTS MOTION

TO DISMISS THE PLAINTIFFS AMENDED AND ORIGINALCOMPLAINT

DERRICK HANNA, an attorney duly admitted to practice before the Courts of

the State of New York and the Eastern District of New York, affirms under penalty of

perjury as follows:

Preliminary Statement

1. I am a partner at Hanna & Vlahakis and of counsel to the Brooklyn Bar, VLP,

attorney of record for debtor, and I am familiar with the facts and circumstances of

this case. I was retained to represent the client on October 14, 2008 my retainer

agreement is annexed hereto as Exhibit A.


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2. I have personal knowledge of the facts stated herein based on my review

of

the Complaints in this action and all prior proceedings.

3. I submit this affirmation in support of the Debtor-Defendants motion

seeking orders:

a.) pursuant to Fed.R.Civ.P.12(b)(6), made applicable herein by

Fed.R.Bankr.P. 7012, dismissing the original Complaint (Complaint) and the

First and Second Claim for Relief of the Amended Complaint in this action

(the Amended Complaint).

A copy of the Amended Complaint is annexed hereto as Exhibit B. ) for

a.) failing to state a claim for which relief can be granted; and b.) being

barred by

applicable statutes of limitation; and c.) granting such other and further

relief

as this Court deems proper.

4. The Motion should be granted and the Complaint and Amended Complaint

dismissed because:

a.) The Amended Complaint relies on entirely new allegations, so it does not

relate back, and is time barred. In Re Khafaga, 431 B.R. 329289 (Bankr.

E.D.N.Y.2010); In re Perez, 173 B.R. 284, 289 (Bankr. E.D.N.Y.1994);

b.) To the extent that the second claim of the Amended Complaint is the

same claim in the original complaint it fails to state a claim for relief. The

original complaint hinged on an erroneous statement in the Debtorsbankruptcy petition, Statement of Financial Affairs. Debtor corrected the

error by amendment and simultaneously cased Plaintiffs complaint to lack a

claim upon which relief could be granted. These factors are elucidated

herein and in the accompanying memorandum of law.

BACKGROUND


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5. The Debtor, filed his voluntary petition for relief under Chapter 7 of the

Bankruptcy Code on November 13, 2009. Pursuant to the Notice of Chapter 7

Bankruptcy the deadline set for filing of complaints objecting to discharge

was February 22, 2010

6. The Richard OConnell was appointed Chapter 7 Trustee.

7. This Court has jurisdiction over this Motion, pursuant to 28 U.S.C. 1334

and 157.

8. Upon information and belief, this matter is a core proceeding, under 28

U.S.C. 1334 and 157.

9. This district is the appropriate district to consider this Motion, pursuant to

28

U.S.C. 1408 and 1409.

THE AMENDED COMPLAINTS FIRST CLAIM FOR RELIEFMUST BE DISMISSED FOR FAILURE TO STATE A CLAIM OFNONDISCHARGEABILITY FOR DEBT, PROPERTY OR SERVICESOBTAINED BY FRAUD OR FALSE PRETENSES, 11 U.S.C. 523(a)(2)The Amended Complaints First Claim Fails to Relate Back

10. The Amended Complaints First Claim for Relief, asserting denial of

dischargeability

for debt, property or services obtained by fraud or false pretenses, 11 U.S.C.

523(a)(2), should be dismissed pursuant to Fed.R.Bankr.P. 7012, for failing

to state a claim for which relief can be granted.

11. It is barred by applicable statutes of limitation and otherwise fails to

state a

claim.

12. Fed. R. Bankr. P. 7012 makes Fed. R. Civ. P. 12(b)(6) applicable to this

adversary proceeding. Fed. R. Civ. P. 12(b)(6) authorizes this Court to

dismiss the Amended Complaint for failure to state a claim for which relief


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can be granted.

13. A defense based on applicable statutes of limitation may be asserted via

a

motion to dismiss for failure to state a claim when the facts that give rise to

the defense are clear from the face of the complaint. Nader v. The

Democratic Nat. Committee, 555 F.Supp.2d 137, 156 (D.D.C. 2008).

A copy of the Courts decision is annexed to the accompanying

memorandum of law as Appendix A (the Decision). See, pp. 6-12.

The First Claim for Relief

14. The Amended Complaints First Claim for Relief is based on denial of

dischargeability for debt, property or services obtained by fraud or false

pretenses, 11 U.S.C. 523(a)(2). See Exhibit B.

15. The time to assert a claim under 11 U.S.C. 523(a)(2) is sixty days after

the

first date set for the meeting of creditors under 11 U.S.C. 341(a).

Fed.R.Bankr.P. 4007( c.).

16. Pursuant to the Notice of Chapter 7 Bankruptcy the deadline set for filing

of complaints objecting to discharge was February 22, 2010. See Exhibit

17. Plaintiff filed its Amended Complaint on January 12, 2011 (See, Courts

ECF docket sheet).

18. However, the Amended Complaints First Claim seeking relief under 11

U.S.C. 523(a)(2) is time barred.


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19. It asserts new, previously omitted allegations absent from the initial

Complaint.

20. Plaintiff has made a vain attempt to create the allusion of relating back

by alleging that it relied on or about September 20, 2006 on alleged false

representations of Debtors ownership of Eight Star Inc., borrower and L& WExpress Van Services Corp., co-borrower in extending a loan in the amount of

$100,000. It cannot be said that the transaction in the initial Complaints

First Claim is the same transaction in the Amended Complaints First Claim.

Plaintiff through discovery is aware that Debtor has always owned the

corporations.

21. Plaintiff provides no evidence in the Amended Complaint for its sudden

belief that Debtor did not own the said corporations or was not the president

of them in 2006 or at any other time.

22. Plaintiff in the First claim of the Amended Complaint states that it was

induced into making a loan based upon alleged false representations by

Debtor of his ownership interest in the two corporations. However, this

contradicts Plaintiffs Second claim where it states that On March 28, 2007,

to induce Renaissance to make the loan, the defendant, in this action, Mr.

Lee executed a Personal Guaranty guaranteeing the full repayment of the

Promissory Note. See Exhibit page 5, para. 33. On the face of the

Amended Complaint there are contradictory claims of reliance and

inducement. Surprisingly Plaintiffs counsel made the following argument in

his Affirmation in Opposition dated June 3, 2010:

15. It is not necessary that Lee be issued a L&W stock certificate to prove

that Lee is a stockholder in L&W. See Generally, Dissoultion of C&M Plastics

Inc., 194 A.D.2d 1020, 599 N.Y.S2d 880 (3d Dept. 1993) (in order to

constitute a stockholder in a corporation, it is not necessary that the stock

certificate to which he or she is entitled actually be issued.)

16. Furthermore, the individual (in this case Lees) name need not be

recorded on the books of the corporation as a stockholder, to attain

shareholder status. See White v. Melillo, 165 misc. 318,300 N.Y.S. 1275 (CityCt. 1937).

17. The fact that Lee and Zhens names do not appear in the corporate

records, or stock certificates, is not dispositive of the issue of whether, Lee

sold L&W to Zhen. (See, Courts ECF docket sheet document #23). Clearly


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Plaintiffs counsel previously made a strong argument that Debtor, Lee, is

the owner of L&W, further contradicting the Amended Complaint.

18. Plaintiff states in its Amended Complaint that it has a state court

judgment against Eight Star Inc., borrower and L& W Express Van Services

Corp., co-borrower. Therefore, Plaintiff cannot establish any damages,another essential element of its claim. There is a lack of a causal

relationship between the alleged fraud and alleged injury. Plaintiffs

Amended Complaint fails to state a claim upon which this court could grant

relief and must be dismissed. This case been ongoing for almost a year.

Plaintiffs attorney had on numerous occasions discussed his intention to

drop his case for its lack of merit. Defendants attorney relied on these

representations which were also recited in open court on the record. Yet on

the eve of trial at a time when extensive discovery was complete Plaintiff

desires to start all over again with wholly new issues. This is not only highly

prejudicial to the Debtor it also prejudices the limited resources of the

Brooklyn Bar, VLP. Plaintiffs attorney is well aware that Debtors attorney is

pro bono and is clearly attempting to frustrate Debtors counsel in order to

force a settlement.

24. Furthermore, the Amended Complaint as it concerns Section 523(a)(2)(A)

or (B) recites all new facts not present in the original complaint and therefore

does not relate back, pursuant to Fed.R.Civ.P. 15(c) made applicable

herein by Fed.R.Bankr.P. 7015, and must be dismissed. There is nothing in

Plaintiffs Amended Complaint that was not known to Plaintiff at the time ofthe original complaint and but for the lack of diligence on the part of Plaintiff

the claim was not timely made. The initial Complaint did not give Debtor fair

notice that he was being sued for the new alleged conduct relating back to

2006.

The Initial Complaints Claim

25. The initial Complaints Claim for Relief (A copy of the Initial Complaint

is annexed hereto as Exhibit C.), sought to deny the Debtor his discharge

for willful and malicious injury to property. This claim is founded in tort law

and clearly has no connection to the First Claim contained in the Amended

Complaint.

34. The initial Complaints Claim describes a claim solely based upon

debtors bankruptcy petition Statement of Financial Affairs which


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erroneously stated in paragraph #10 Other Transfers that debtor

transferred on 5/2008 L & W Express Van Service Corp to Zhen Yong Li.

Debtors counsel, after a thorough review of the documents, filed an

Amended Statement of Financial Affairs on November 13, 2009 correcting

the Statement of Financial Affairs by removing the erroneously stated

transfer. Plaintiff, to date, has not objected to the amendment which

effectively made his initial Complaint and second claim of the Amended

Complaint moot. Plaintiffs initial Complaint and second claim of the

Amended Complaint are identical. Plaintiff has had extensive discovery and

is aware that Debtor owns both corporations, is the president of both

corporations and has never transferred either of the corporations.

37. To the extent, the Amended First Claim relies on the new allegations, it

does

not relate back and is time barred. Standing alone this claim fails to state a

claim based on its contradictions in inducement and reliance and the failure

to plead the details concerning the claim that Debtor did not own the

corporations in 2006.

38. The transaction described in the original pleading is not the same as theclaim asserted in the amended pleading.

55. I declare the foregoing statements of fact to be true and correct under

penalties

of perjury, pursuant to 28 U.S.C. 1746.

WHEREFORE, the Defendant requests that this Court grant this Motion and

issue

orders: a.) pursuant to Fed.R.Civ.P.12(b)(6), made applicable herein by

Fed.R.Bankr.P. 7012, dismissing the Plaintiffs original and amended

complaint and for attorneys fees pursuant to 11 U.S.C. 523(d). Debtors

retainer agreement with the Brooklyn Bar, VLP allows for payment of

attorney fees by third parties pursuant to court order. Any fees awarded are


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the property of the Brooklyn Bar, VLP. See attached Attorney affirmation in

support of attorney fees being awarded.

Dated: Brooklyn, New York

By:/s/ Derrick HannaDerrick Hanna, of counsel

Brooklyn Bar, VLPHanna & Vlahakis7504 Fifth AvenueBrooklyn, NY 11209(718) 680-8400

________________________

MICHAEL CHUN KIN LEE


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UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK--------------------------------------------------------------------XIn Re: Case No.: 09-50086

MICHAEL CHUN KIN LEE Adversary No.:10-01051

Debtor.

-------------------------------------------------------------------XRenaissance Economic Development Corp.

Plaintiff,-against-

Michael Chun Kin LeeDefendant.

------------------------------------------------------------------XMEMORANDUM OF LAW IN SUPPORT OF

THE DEBTOR-DEFENDANTS MOTION TO DISMISS THE AMENDED

COMPLAINT AND ORIGINAL COMPLAINT

The Debtor-Defendant, Michael Chun Kin Lee, submits this memorandum oflaw in support of his motion seeking orders: a.) pursuant to

Fed.R.Civ.P.12(b)(6),

made applicable herein by Fed.R.Bankr.P. 7012, dismissing the original and

Amended Complaints for in this action for failing to state a claim for which

relief can be granted and being barred by applicable statutes of limitation;

and b.) granting such other and further relief as this Court deems proper.

The Motion should be granted and the original and Amended Complaint

dismissed because:

a.) The Amended Complaint relies on entirely new allegations, so it does not

relate back, and is time barred. Re Khafaga, 431 B.R. 329289 (Bankr.

E.D.N.Y.2010); In re Perez, 173 B.R. 284, 289 (Bankr. E.D.N.Y.1994);

b.) Plaintiffs original complaint and second claim of the Amended Complaint

rely on erroneous statements in Debtors original Statement of Financial


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Affairs which no longer exist due to Debtors amendment of such. Therefore,

Plaintiffs original complaint and second claim of the Amended Complaint fail

to state a claim for which relief can be granted.

Point I

THE AMENDED COMPLAINTS FIRST CLAIM FOR RELIEF

MUST BE DISMISSED FOR FAILURE TO STATE A CLAIM OF

NONDISCHARGEABILITY FOR DEBT, PROPERTY OR SERVICES

OBTAINED BY FRAUD OR FALSE PRETENSES, 11 U.S.C. 523(a)(2)

The Amended Complaints First Claim for Relief, asserting denial of

dischargeability

for debt, property or services obtained by fraud or false pretenses, 11 U.S.C.

523(a)(2), should be dismissed pursuant to Fed.R.Bankr.P. 7012, for failing to

state

a claim for which relief can be granted. It is barred by applicable statutes of

limitation and otherwise fails to state a claim.

Fed. R. Civ. P. 12(b)(6):

Fed. R. Bankr. P. 7012 makes Fed. R. Civ. P. 12(b)(6) applicable to this

adversary proceeding. Fed. R. Civ. P. 12(b)(6) authorizes this Court to

dismiss the

Amended Complaint for failure to state a claim for which relief can be

granted.

A defense based on applicable statutes of limitation may be asserted via a

motion to dismiss for failure to state a claim when the facts that give rise tothe

defense are clear from the face of the complaint. Nader v. The Democratic

Nat.

Committee, 555 F.Supp.2d 137, 156 (D.D.C. 2008), affd. on other grounds

567


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F.3d 692 (D.C. Cir. 2009). If no reasonable person could disagree on the

date on

which the cause of action accrued, the court may dismiss a claim on statute

of

limitations grounds. Id., citing, Smith v. Brown & Williamson Tobacco Corp.,

3

F.Supp.2d 1473, 1475 (D.D.C.1998), and Kuwait Airways Corp. v. Am. Sec.

Bank,

N.A., 890 F.2d 456, 463 n. 11 (D.C.Cir.1989).

The First Claim for Relief

The Amended Complaints First Claim for Relief is based on denial ofdischargeability for debt, property or services obtained by fraud or false

pretenses, 11 U.S.C. 523(a)(2).

The time to assert a claim under 11 U.S.C. 523(a)(2) is sixty days after the

first date set for the meeting of creditors under 11 U.S.C. 341(a).

Fed.R.Bankr.P.

4007( c.). A complaint filed after that period must be dismissed. In re

Harten, 78

B.R. 252, 254 (9th Cir. BAP 1987), citing, McIlroy Bank & Trust v. Couch (In

re

Couch), 43 B.R. 56, 58 (Bankr.E.D.Ark.1984); see also FDIC v. Kirsch (In re

Kirsch), 65 B.R. 297 (Bankr.N.D.Ill.1986).

Plaintiffs time to commence this action was February 22, 2010.

This action was commenced on February 22, 2010. Discovery was to be

completed by August 16, 2010 pursuant to Scheduling Order dated June 17,2010. Discovery was delayed due to Plaintiffs counsels failure to go

forward with deposition of Debtor on scheduled date. Discovery was

completed on August 30, 2010.

The Court granted Plaintiff leave to file an amended complaint. Plaintiff filed

its Amended Complaint on January 12, 2011. However, the Amended

Complaints First Claim seeking relief under 11 U.S.C. 523(a)(2) is time


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barred. It asserts new, previously omitted allegations absent from the initial

Complaint. Therefore, the Amended Complaint does not relate back,

Fed.R.Civ.P. 15( c.) made applicable herein by Fed.R.Bankr.P. 7015, and

must be dismissed. Relating Back under Fed.R.Civ.P. 15(c) The time

limitation imposed under Fed.R.Bankr.P 4007( c.) is strictly enforced.

However, Fed.R.Bankr.P. 4007 operates in conjunction with

Fed.R.Bankr.P. 7015. Re Khafaga, 431 B.R. 329289 (Bankr. E.D.N.Y.2010); In

re Perez, 173 B.R. 284, 289 (Bankr. E.D.N.Y.1994). Fed.R.Civ.P. 15( c.) made

applicable herein by Fed.R.Bankr.P. 7015 governs relation back of

amendments. It provides, in pertinent part:

( c.) Relation Back of Amendments.

(1) When an Amendment Relates Back. An amendment to a pleading relates

back to the date of the original pleading when:

(A) the law that provides the applicable statute of limitations allows relation

back;

(B) the amendment asserts a claim or defense that arose out of the conduct,

transaction, or occurrence set outor attempted to be set out--in the original

pleading . . .

If the original pleading adequately identifies the factual circumstances out of

which the amended claim arises, the amendment will relate back. However,if an

amendment states an entirely new claim for relief based upon a different set

of

facts, it will not relate back. 7015. In Re Khafaga, 431 B.R. 329289 (Bankr.

E.D.N.Y.2010); In re Perez, 173 B.R. at 290.

If a claim does not relate back, additional or new grounds of objection may

not be added through an amendment filed after the deadline for filingcomplaints

objecting to dischargeability expired. Id., at 292, citing, Chaudhry v.

Ksenzowski

(In re Ksenzowski ), 56 B.R. 819, 829 (Bankr.E.D.N.Y.1985); Maes v. Herrera

(In


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re Herrera ), 36 B.R. 693, 694 (Bankr. D.Colo. 1984).

The Amended Complaints First Claim makes allegations and describes a

transaction omitted from the initial Complaints Claim. The allegations of

misrepresentations made prior to the parties executing the Loan Agreement

are

entirely new. The initial Complaints Claim was devoid of any allegation of

fraud or misrepresentation prior to the parties executing the Loan

Agreement.

The Initial Complaints Claim for Relief and the second Amended Claim, seek

to deny the Debtor his discharge for Willful and Malicious Injury by Mr. Lee

to Renaissance and to the Property of Renaissance which allegedly occurredon May, 2008 after Plaintiff entered into the Loan Agreement with the Debtor

in 2006. (Exhibit ). Based on the fact that the Debtor currently and always

owned the corporations in this case and Debtors amendment of his

Statement of Financial Affairs. It is clear that without the transfer of any

assets there could be no willful and malicious injury to property. Plaintiff was

given an opportunity to fix this claim and failed to.

Plaintiffs claim under 523(a)(2)(A) or (B), fails because the requisite causal

connection is lacking between the allegedly false written and oral statements

and the damages claimed by Plaintiff. Plaintiff cannot allege that theallegedly false reports provided by the Defendant induced it to enter into the

Loan Agreement, because the Plaintiff claims to the contrary in the original

and second claim of the Amended Complaint that On March 28, 2007, to

induce Renaissance to make the loan, the defendant, in this action, Mr. Lee

executed a Personal Guaranty guaranteeing the full repayment of the

Promissory Note. At that time Debtor owned real property known as 70-

87A Park Drive East, #887A, Flushing, NY.

Plaintiffs claimed damages in the original complaint arose when the Debtor

erroneously stated in his bankruptcy petition that he had transferred L & WExpress Van Service Corp. to Zhen Yong Li, in May of 2008. See Exhibits .

This error was corrected by amendment and Plaintiffs attorney was made

well aware that there was never any transfer and the Debtor owns the

corporations to date. Plaintiffs counsel was shown the corporate kits, which

contained all original shares of stock, for both corporations. Both

corporations were offered to Plaintiffs attorney pursuant to Plaintiffs alleged


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security interest and he refused. Therefore, Plaintiff cannot plausibly allege

that it suffered damages because it relied, let alone reasonably relied on

the Defendants erroneous statements in his original bankruptcy petition,

filed years after the Loan Agreement was made, as required under 523(a)

(2)(B). Daly v. Braizblot (In re Blaizblot), 194 B.R. 14, 19 (E.D.N.Y.1996).

There were no allegations in Plaintiffs original complaint about the Debtors

conduct prior to entering into the Loan Agreement with Plaintiff. (Exhibit ).

The Amended Complaints New Allegations

The Amended Complaint adds twenty three new paragraphs to the

pleadings.

The Amended Complaints First Claim Fails to Relate Back

It cannot be said that the transaction in the initial Complaints Claim is

the same transaction in the Amended Complaints First Claim. The initial

Complaints Claim describes a transaction that allegedly occurred after the

parties executed the Loan Agreement . The Amended Complaints First

Claim describes a transaction that allegedly occurred before the parties

executed the Loan Agreement.

To the extent, the Amended First Claim is based on allegations differing and

contradicting the initial Complaints Claim it fails to state a claim for whichrelief could be granted. To the extent, the Amended First Claim relies on the

new allegations, it does not relate back and is time barred.

The transaction described in the original pleading is not the same as the

claim

asserted in the amended pleading. The initial Complaint did not give Mr. Lee

fair notice that he was being sued for his alleged conduct before the parties

signed

the Loan Agreement. Therefore, the Amended Complaints First Claim does

not relate back and must be dismissed. In Re Khafaga, 431 B.R. 329289

(Bankr. E.D.N.Y.2010); In re Perez, 173 B.R. at 290.

CONCLUSION


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THE ORIGINAL COMPLAINT COMPLAINTMUST BE DISMISSED FOR FAILING TO

STATE A CLAIM AND THE AMENDED COMPLAINT MUST BE DISMISSED FOR

FAILING TO STATE A CLAIM AND BEING TIME BARRED

Dated: Brooklyn, New York

By:/s/ Derrick HannaDerrick Hanna, of counsel

Brooklyn Bar, VLPHanna & Vlahakis7504 Fifth AvenueBrooklyn, NY 11209(718) 680-8400

________________________

MICHAEL CHUN KIN LEE

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